frontier energy

OTC 2014

ISSUE

INSURANCE • TECHNOLOGY • COMMUNITIES • EVENTS

ATLANTIC CANADA Special report MEMORIAL

UniversityTesting the limits

Northern Sea RouteOpen for business?

Offshore AlaskaThe Knowledge Gap

Arctic ShippingInsurance report

OIL, GAS & SHIPPING IN THE ARCTIC AND ICE-AFFECTED REGIONS www.frontierenergy.info SPRING 2014

[email protected]

www.fugro.com

...COUNT ON FUGRO

FOR ARCTIC CAPABILITIES...

Fugro understands the challenges of working in harsh

Arctic environments.

We have the experience, resources and expertise to provide

wide-ranging support to oil and gas exploration and development

operations in the Arctic. No matter how remote the location, how

extreme the conditions or how complex the undertaking, our

advanced survey and mapping systems, technical knowledge

and risk management solutions combine to enhance the safety,

efficiency and environmental performance of your project.

Fugro - Local Support - Global Reach

Features

IN THIS ISSUESpring 2014

Regulars

On the coverHarbour view, St John's, Newfoundland & Labrador

OTC 2014

ISSUE

INSURANCE • TECHNOLOGY • COMMUNITIES • EVENTS

ATLANTIC CANADA Arctic test lab MEMORIAL

UniversityTesting the limits

Northern Sea RouteOpen for business?

Offshore AlaskaThe Knowledge Gap

Arctic ShippingInsurance report

OIL, GAS & SHIPPING IN THE ARCTIC AND ICE-AFFECTED REGIONS www.frontierenergy.info SPRING 2014

14

28 10

07

04 NEWS USCG slams Kulluk tow; Arctech's new icebreaking rescue vessel launched; Alaska LNG advances to pre-FEED; Arctic Economic Council moves forward; Gazprom joins oil spill group

24 EVENTS Frontier Energy's comprehensive events listing helps you plan your calendar and highlight the key upstream, shipping, scientific and research conferences, exhibitions and events

28 INSIGHT Food insecurity is a major issue for Aboriginal communities in Canada's North

06 CANADA: NEW INVESTMENT Minister Terry French opens our Canada special report with a look at why Atlantic Canada is the pathway to the Arctic

07 CANADA: NEW DEVELOPMENTS The producing fields offshore Newfoundland may be mature but new investment is unlocking extra barrels in Iceberg Alley, including the giant Hebron development

10 CANADA: JIPs St John's is a key centre of Arctic research and know-how

11 CANADA: EXPLORATION Following last year's discoveries, excitement is brewing in the Flemish Pass Basin

12 CANADA: MEMORIAL UNIVERSITY Frontier Energy learns about the latest research breakthroughs

14 MIND THE GAP Endeavor Management discusses safe ice-risk management in the US Arctic

16 NORTHERN SEA ROUTE The experts at ABS analyse best practice in this Arctic short cut

18 NEW TECHNOLOGY Frontier Energy shines a spotlight on the ATC award winners

20 INSURANCE Increased access to Arctic waters is an emerging risk, reports Allianz

22 NEW FACES Frontier Energy talks to the new boss of DNV GL

26 ARCTIC FUTURES We round up some of the different perspectives on Arctic development at last year's symposium

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[email protected]

www.fugro.com

...COUNT ON FUGRO

FOR ARCTIC CAPABILITIES...

Fugro understands the challenges of working in harsh

Arctic environments.

We have the experience, resources and expertise to provide

wide-ranging support to oil and gas exploration and development

operations in the Arctic. No matter how remote the location, how

extreme the conditions or how complex the undertaking, our

advanced survey and mapping systems, technical knowledge

and risk management solutions combine to enhance the safety,

efficiency and environmental performance of your project.

Fugro - Local Support - Global Reach

01www.frontierenergy.info SPRING 2014

CONTENTS

CROWLEY DELIVERS PROJECT SOLUTIONS

When Doyon needed to deliver an 8 million-pound drilling rig to a remote, man-made island in the Arctic, they called on Crowley to deliver.

Our solutions team designed, engineered and installed a

temporary dock and causeway to safely deliver the rig to the island – and then removed all traces of the temporary facility to comply with permitting requirements after the successful rig delivery.

When you have a tough job that needs to be done right, you can count on Crowley – from concept through completion.

Crowley.com/FE | 907.777.5505

Worldwide Logistics • Liner Shipping • Petroleum & Chemical Transportation • Alaska Fuel Sales & Distribution • Energy SupportProject Management • Ship Assist & Escort • Ship Management • Ocean Towing & Transportation • Salvage & Emergency Response

FRAM*

“Oil spill response preparedness and

technology is many times better than in 1989...

but there is no room for complacency”

www.frontierenergy.info

EditorAmy [email protected]

Editor in ChiefBruce McMichael

Canadian CorrespondentAndrew Safer

PublisherStephen [email protected]

Design & LayoutIn The Shed Ltdwww.in-theshed.co.uk

© 2014 All material strictly copyright, all rights to editorial content are reserved. Reproduction without permission from the publisher is prohibited. The views expressed in Frontier Energy do not always represent those of the publishers. Every care is taken in compiling the contents, but the publishers assume no responsibility for any damage, loss. The publisher, Renaissance Media, assumes no responsibility, or liability for unsolicited material, nor responsibility for the content of any advertisement, particularly infringements of copyrights, trademarks, intellectual property rights and patents, nor liability for misrepresentations, false or misleading statements and illustrations. These are the sole responsibility of the advertiser.

Printed in the UK.ISSN 2047-3702

Published by Renaissance Media Ltd, c/o Maynard Heady LLP, Matrix House, 12-16 Lionel Road, Canvey Island, Essex SS8 9DE.Registered in England & Wales. Company number 5850675.

March 24 marked the 25th anniversary of the Exxon Valdez disaster, an event that has cast a long shadow over Arctic development. The ecological and economic devastation from the cargo of oil that spilled from the supertanker when it ran aground in Prince William Sound, Alaska, remains a reminder of the very real risks posed by an oil spill in Arctic waters, where remote location, ice cover, rugged shorelines, harsh weather, sensitive habitats, and threatened commercial and subsistence fisheries make spill detection, containment and clean-up an urgent and significant challenge.

Hard lessons were learned from the disaster, which cost ExxonMobil more than US$4 billion in clean-up costs plus extensive reputational damage as court cases dragged on for decades. The disaster was an impetus to tighten regulation and oversight of oil transportation and also provided a unique opportunity to learn about the long-term effects of oil and clean-up activities, some of which were in themselves harmful to this sensitive environment.

Many changes have been made to prevent another Exxon Valdez including more extensive US Coast Guard monitoring of tankers via satellite, a two vessel escort for each tanker passing through the Sound, the use of specially trained marine pilots through the Sound, all tankers in Prince William Sound to be double-hulled by 2015 and regular oil spill contingency planning and drills. What's more, oil spill response preparedness and technology is many times better than in 1989, with the industry investing heavily in new technologies to manage and mitigate the risks of operating at these northerly latitudes.

Yet there is no room for complacency. As polar ice melts and widens access to untapped resources and previously ice-bound shipping lanes, the risks mount: as our insurance report on page 20 highlights, shipping casualties in Arctic waters have already increased. And the lack of Arctic know-how in the workforce is a real concern: see the report from Endeavor Management, recently hired to work with Shell, on page 14.

A week after the Exxon Valdez anniversary, the US Coast Guard released its report into Shell's mismanaged tow of the Kulluk in December 2012, which led to the grounding of the drilling unit on Sitkalidak Island. The 152 page report makes for uncomfortable reading and is a stark reminder that the industry is still culpable of failures to adequately identify and manage risks and may allow other priorities to sway decision-making. Shell has, for now, withdrawn its plans to resume drilling in the Chukchi Sea this summer but other operators are pressing ahead elsewhere in the Arctic: ExxonMobil and Rosneft plan to venture into the Kara Sea this summer, Statoil is edging ever further north in the Barents Sea and Gazprom has just shipped its first cargo of oil from the Prirazlomnoye oilfield in the Pechora Sea.

Shell said it has already implemented “lessons learned” from the Kulluk incident. The world will be watching to make sure those lessons are stringently applied wherever the industry ventures north.

Amy McLellan, Editor

Get connected!

Fram is not only the Norwegian word for ‘Forward’, it is also the name of the one of the first ice-strengthened and most famous polar exploration vessels of the late 1800s and early twentieth century. It was captained by Norwegian explorer, Fridtjof Nansen, a Norwegian explorer, scientist, diplomat, humanitarian and Nobel Peace Prize laureate. Sharing his polar travel experiences with fellow adventurers and scientists, his technology innovations in equipment and clothing influenced a generation of subsequent Arctic and Antarctic expeditions. The word encapsulates what we aim to bring you with the magazine – a forward looking guide to the future of oil, gas and shipping activities in the Arctic and other ice-affected regions while keeping environmental protection and safety at the heart of operations.

Follow us at www.twitter.com/frontierenergy for the latest news and comment

*

CROWLEY DELIVERS PROJECT SOLUTIONS

When Doyon needed to deliver an 8 million-pound drilling rig to a remote, man-made island in the Arctic, they called on Crowley to deliver.

Our solutions team designed, engineered and installed a

temporary dock and causeway to safely deliver the rig to the island – and then removed all traces of the temporary facility to comply with permitting requirements after the successful rig delivery.

When you have a tough job that needs to be done right, you can count on Crowley – from concept through completion.

Crowley.com/FE | 907.777.5505

Worldwide Logistics • Liner Shipping • Petroleum & Chemical Transportation • Alaska Fuel Sales & Distribution • Energy SupportProject Management • Ship Assist & Escort • Ship Management • Ocean Towing & Transportation • Salvage & Emergency Response 03

EDITOR’S LETTER

www.frontierenergy.info SPRING 2014

Baltika underway

The icebreaking rescue vessel Baltika, built by Arctech Helsinki Shipyard, has successfully completed sea trials. This is the first ship ever to break ice sideways, enabling it to generate a 50 metre wide channel in 0.6 metre thick ice. Bow and stern first the vessel can operate in 1 metre thick ice. Baltika will be delivered to the Russian Federal Agency of Sea and River Transport for use in ice-breaking, rescue and oil combatting operations in the Gulf of Finland.The Finnish shipyard is now building a new icebreaker for the Finnish Transport agency for delivery in winter 2016. The new icebreaker, which will be dual-fuelled by diesel and LNG, has been designed especially for the demanding icebreaking operations in the Baltic Sea and will be able to move continuously through about 1.6 m thick level ice, to break a 25 m wide channel in 1.2 m thick ice at speed of 6 knots. In open water the service speed will be minimum 16 knots.

Arctech delivers innovative sideways icebreaking rescue vessel

IN NUMBERS

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The number of active ships in the US polar icebreaking fleet2

33oil companies

are collaborating on a 3D seismic survey in the Barents Sea

Arctic sea ice extent in February 2014 averaged

14.44 million sq km

The USCG evacuate crew from the troubled Kulluk

A US Coast Guard admiral has promised a thorough investigation into potential breaches of the law and safety regulations when a drilling rig that had been working for Shell ran aground offshore Alaska on New Year's Eve 2012. Rear-admiral Joseph Servidio highlighted failures to assess and manage the “extremely high risks” of towing the uniquely shaped Kulluk drilling unit through the Arctic waters off Alaska during the winter months, adding that he was “most troubled by the significant number and nature of the potential violations of law and regulations”.

Both Shell and its marine contractor Edison Chouest Offshore come under fire in the report for safety-related failings. These included failures to report marine casualties, failure to report safety-related vessel issues and improper/illegal bridge and engine-room watch-keeping systems.

The 152-page report is another blow to Shell's reputation as it seeks to advance exploration in the Arctic waters of the Chukchi Sea. The 2012 campaign was dogged with controversy and near-misses, culminating in the Kulluk running aground in heavy seas while under tow to Seattle. The company's case that safety is a priority was undermined by some of the findings of the report, which included evidence that the timing of the tow had partly been driven by the desire to avoid millions of dollars of tax that would be owing to Alaska should the Kulluk still be in the state's waters as of January 1st.

In a statement Shell said it would take any findings seriously. “Already, we have implemented lessons learned from our internal review of our 2012 operations. Those improvements will be measured against the findings in the USCG report as well as recommendations from the US Department of Interior," Shell said in a written statement.

The company decided against drilling in 2013 but had planned to return to the Chukchi Sea in summer 2014. This however was derailed after a legal ruling that the licences had been improperly issued in 2008 because of the regulatory processes used by the Department of the Interior. Alaska's pro-industry Governor Sean Parnell said Shell's withdrawal was disappointing but understandable. “Multiple years of federal regulatory delay, litigation delay, and one year of operational issues have created barriers to Alaskans’ near-term economic prospects,” said Parnell in January.

In April 2014, Shell hired Houston-based Endeavor Management to provide advisory services in preparation for the potential resumption of Shell's Chukchi Sea drilling campaign.

See page 14

Kulluk report: Shell safety failings under scrutiny

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The Alaska legislature has given the greenlight to Bill 138, which provides the legal framework for the state to become an owner in the Alaska LNG project and move the project into the Pre-FEED stage. Governor Sean Parnell said this was “truly a historic moment for Alaskans”. The US$45-US$65 billion mega-project, which will deliver stranded North Slope gas to Alaskans and energy-hungry markets in the Far East, brings together ExxonMobil, ConocoPhillips, BP, TransCanada and the state of Alaska. It involves the construction of a gas treatment plant at Prudhoe Bay to remove carbon dioxide and other impurities from produced gas, a 58-mile pipeline from Point Thomson gas field to Prudhoe Bay, an 800-mile pipeline from Prudhoe Bay to Nikiski and an LNG plant, storage and tanker terminal at Nikiski.

Alaska LNG Bill gets OK

04

NEWS

SPRING 2014 www.frontierenergy.info

25 years since the

Exxon Valdez oil spill in

AlaskaSources: Eni Norge, Governor's Office, Rosneft,

Harvard-Smithsonian Center for Astrophysics, Bloomberg, IPCC, Rosneft

The BICEP2 telescope at the South Pole measured the generation primordial

gravitational waves

13.8 billion years ago

Winter temperatures in the Kara Sea plunge

to -46°C. Rosneft plans its first wildcat

here in 2015

Eni's Goliat development in the Barents Sea, Norway's northernmost oilfield, will involve 22 production wells

Number of the senate bill that provides the legislative

framework for the giant Alaska LNG and gas pipeline project

The Northern Sea Route could be ice-free 125 days by summer 2050

ExxonMobil and Rosneft plan to invest

US$450 millionto create and fund an

Arctic Research Center

138

The Arctic Council, which represents the eight Arctic Nations and indigenous communities, has pushed ahead with plans to create an Arctic Economic Council. A council meeting in Yellowknife, Northwest Territories in late March saw senior Arctic officials agree to move forward with the creation of the AEC, which is a key initiative of Canada's Arctic Council chairmanship. Canada's Arctic Council theme is Development for the People of the North, with a focus on responsible resource development, safe Arctic shipping and sustainable circumpolar communities.This has led to charges by Greenpeace that under Canada's leadership the Arctic Council is pushing a pro-oil agenda. It has also accused the Arctic Council of a lack of transparency.The Chair of the Arctic Council and Canada’s Minister for the Arctic Council, the Honourable Leona Aglukkaq, said the new economic council will play an important role in building a sustainable and vibrant future for the region, for the benefit of Northerners. The Arctic Council brings together Canada, Denmark (including Greenland and the Faroe Islands), Finland, Iceland, Norway, Russian Federation, Sweden, and the USA and six indigenous people's organisations.The agreement came as the non-profit Council of Canadian Academies released a new expert panel calling for urgent action to tackle food insecurity among northern Aboriginal peoples.

See Insight p28

Arctic Economic Council gives voice to development agenda

Washington's Bureau of Safety and Environmental Enforcement (BSEE) has announced that it is investing up to US$600,000 for targeted oil spill response research in drift ice conditions. The bureau called for white papers on new mechanical technologies for cleaning up oil spills in drift ice conditions that could be found in an Arctic environment and will select up to three designs for prototype development and testing at Ohmsett, the bureau's National Oil Spill Research and Renewable Energy Test Facility in New Jersey. White papers are due by April 21, 2014. This is the third BAA from BSEE for oil spill response research proposals within the last year. The first announcement, with up to US$7 million in support, closed in January, while the second, announcing an additional U$5 million, closed April 10.

BSEE tops up funding for oil spill response research SBI ice-breaker support

SAFE Boats International has delivered a harsh environment support craft, the CB-OTH-IV POLAR, to the 420-foot ice breaker, USCG Cutter Healy. It comes as the USCG seeks to maintain a polar presence due to an increase in commerce and traffic in the Arctic and Antarctic.

Crowley wins H&S award

Florida-headquartered Crowley Maritime Corporation has won a H&S award from Shell Oil Products for its work in Alaska. The company was also named Alaska Trucking Association’s “Safe Fleet of the Year” in 2013.

Gazprom joins oil spill group

Gazprom Neft has become the first Russian company to join the Arctic Oil Spill Response Technology Joint Industry Programme. The four-year JIP was launched in December 2012 to carry out research on dispersant testing, oil spill detection and mapping in low visibility and ice.

Offshore leak JIP

20 industry players have signed up for a new DNV GL-led JIP to enhance offshore leak detection. The study brings together the likes of BP, Eni and Lundin Petroleum.

See DNV GL page 22

Drilling in the Barents Sea

Norway's Ministry of Petroleum and Energy has announced the APA 2014, comprising the predefined areas in mature parts of the Norwegian continental shelf. The new areas include three blocks in the Barents Sea. The application deadline is September 2nd with awards due in Q1 2015. The 23rd licensing round is also gearing up, opening up less explored areas of the NCS: in January 40 companies submitted proposals for blocks they would like to see included in the 23rd round, including new areas in the previously undrilled south-eastern Barents Sea.

Norway launches APA 2014

Company briefs

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NEWS

Newfoundland & Labrador: the world's largest natural cold-ocean research laboratory

knowledge and expertise to pioneer the path to offshore resource development. In the middle of Iceberg Alley, we are blazing new trails in unmanned vehicle technology and satellite-based iceberg monitoring. Our oil and gas innovators have experienced the full range of what the ocean can offer: drifting sea ice, towering icebergs and colossal waves. Our mature offshore supply and service industry is over 500 companies strong and specialises in meeting the operational requirements and challenges of cold, harsh and ice-infested environments.

Home to centres of excellence focused on commercialization and research dedicated to remote sensing innovation and addressing challenges that impede safe and sustainable development of hydrocarbons in the Arctic, as well as some of the world’s top research and development infrastructure, our experts are leaders in cold ocean technologies and harsh environment operations. In St John's the National Research Council houses world-class experts and facilities, such as the offshore engineering basin that can create waves up to one metre high, a 200 metre tow tank and the longest ice tank in the world. Memorial University’s Fisheries and Marine Institute houses a state of the art, full-motion simulator, which is one of only two like it

in the world able to replicate operations conducted on a ship’s navigation bridge in various scenarios, including ice-covered waters. The centrifuge at C-CORE is one of the largest centrifuges in the world and the only one in North America that can freeze and thaw test samples to model cold region phenomena – sometimes up to a 20 year cycle.

Business-led research and development is also rising in Newfoundland and Labrador as the industry aims to better understand and prepare for the challenges of development in the Arctic and demonstrate viability and proven safety.

As activity in the Arctic increases and new opportunities emerge, Newfoundland and Labrador’s first-rate academic and training institutions are poised to respond to the rising demand for innovative technology solutions, information and

highly skilled workers. With progressive, new approaches, our public and private institutions excel at providing customized training and essential skills in northern

communities that incorporate Aboriginal language and culture, and are reflective of industry needs. Our institutions are at the forefront of creating educational partnerships in Canada’s Arctic and other circumpolar countries, including Iceland, Norway and Greenland.

We understand the challenges of working in what others call “harsh” environments because we call it home. In Newfoundland and Labrador, we are leaders in exploring new frontiers and excel at turning challenges into opportunities.

Newfoundland and Labrador is Canada's most easterly province, surrounded by

the cold water and extreme weather conditions of the North Atlantic Ocean. While we may not be “in” the Arctic, our experts are developing innovative solutions to Arctic challenges based on centuries of living and thriving in Arctic-like conditions. Our experience, expertise and geographic location on international shipping lanes and northern sea routes makes us the path to the Arctic.

The water surrounding Newfoundland and Labrador is colder than anywhere else south of 60 degrees, colder even that the waters near Norway and parts of Alaska, Greenland and Iceland. This combination of cold temperatures, strategic location, similar operating conditions and regional expertise means that Newfoundland and Labrador is the ideal staging ground for Arctic-related activities. Indeed, Erik Finnstrom, senior vice president of exploration for North America at Statoil Canada, has referred to Newfoundland and Labrador as “a real-time Arctic laboratory”.

As a result of our centuries-old relationship with the sea, almost every aspect of life in Newfoundland and Labrador has been influenced by the ocean. It has created a strong legacy of exploration, discovery and innovation that continues to inspire us today. We have embraced our home on Iceberg Alley – and are proud of it.

Newfoundland and Labrador's Ocean Technology sector is using traditional

With centuries of seafaring experience in the heart of Iceberg Alley, decades of successful natural resource development in cold, harsh and ice-infested environments; and a thriving Arctic R&D sector, Newfoundland and Labrador is the ideal staging ground for Arctic-related activities, writes Terry French, Newfoundland and Labrador's Minister of Innovation, Business and Rural Development

One senior Statoil executive has referred to Newfoundland

and Labrador as “a real-time Arctic laboratory”

Terry French

Memorial University: Pushing the Envelope on Arctic Research p12

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ATLANTIC CANADA


New developments in ICEBERG ALLEY

Atlantic Canada is no stranger to oil and gas production and has pioneered solutions to deal with iceberg risks and harsh weather. And new developments are being greenlit to stem production declines from mature fields. Amy McLellan reports

When it comes to Canadian oil production, it's fair to say that the oilfields off the east

coast have been eclipsed by the massive, albeit controversial output of the nation's oil sands deposits in Alberta. According to CAPP’s 2013 Crude Oil Forecast, output from the sticky, energy-intensive oil sands in the west of the country is set to ramp from the current level of under 2 million bpd to 5.2 million bpd by 2030, accounting for the bulk of the nation's total production of 6.7 million barrels per day by 2030. By contrast, CAPP forecasts that production from Atlantic Canada will remain flat at around 200,000 bpd through to 2025, before slipping to 100,000 bpd in 2030.

The output from the producing fields off the east coast is of vital economic importance, however. According to the regulator, the Canada-Newfoundland and Labrador Offshore Petroleum Board, since 1966 cumulative expenditures by the industry have tallied almost C$34 billion and as of the end of 2012 more than 7,300 people were working in direct support of petroleum-related offshore activities. 2012 saw almost C$165 million

spend on exploration, generating more than 1,613 person months of employment while ongoing production activities accounted for of C$1.68 billion in 2012, of which more than half (53%) were in Newfoundland and Labrador itself and a further 18% in the rest of Canada.

There are four fields in production out here. Off the coast of Newfoundland & Labrador there are now three producing oilfields while Nova Scotia hosts the Sable and Deep Panuke gas fields, which came online in 1999 and 2013 respectively [see table].

Groundbreaking technology

These projects have been groundbreaking in their scale and technical achievement. Terra Nova, for example, was the first development in North America to use FPSO technology in a harsh weather environment. The Terra Nova, one of the largest FPSO vessels ever built, is a double-hulled, ice-reinforced vessel with a global DP system that reduces the impact of waves by allowing the FPSO to change to more favourable headings in high winds and storms.

Hibernia, which was discovered in 1979, remains a flagship for how the industry manages iceberg risk. The giant platform was built to withstand the impact of a one-million tonne iceberg with no damage and contact with a six million tonne iceberg, estimated to be the largest that can drift into that water depth and only expected once in 10,000 years, with repairable damage. The

field lies in just 80 metres of water so the odds of a large iceberg ever hitting the platform are extremely low but the Hibernia consortia have an aggressive ice management strategy to minimise the risks of contact. This includes airborne, satellite and radar briefings that can identify approaching icebergs up to 18 nautical miles away, pinpoint the locations of icebergs while specialist support vessels collect ocean current information and use side scan sonar to measure its draught. All the data is fed into complex mathematical models to predict which icebergs might drift close to the production area and those that require intervention are tackled while still 20 km or more away, with PSVs “lassooing” the iceberg to tow it onto a different trajectory. The oil pipelines on the seabed are encased in concrete to protect from bottom-scouring by icebergs.

New developments

These are now mature oilfields, however. According to the C-NLOPB, in the 2012-2013 fiscal year, Hibernia pumped an average of 129,563 barrels per day and Terra Nova 19,627 bpd, a fraction of their peak output. But the industry is investing to drain more barrels, and extend the life of the existing infrastructure, by tying-in new pools of oil. The US$1.8 billion Hibernia Southern Extension (HSE) Unit development, for example, is expected to stem the production decline from the field and will see the first subsea wells on the field with full start-up expected later in 2014.

The Terra Nova FPSO is one of the largest vessels ever built

White Rose Extension project: contract awards still to come

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ATLANTIC CANADA


Engineering giant Wood Group has renewed its sponsorship of the Wood Group Chair of Arctic and Harsh Environment Engineering at Memorial University for a second five-year term. Wood Group is investing C$500,000 to sponsor the chair in the Faculty of Engineering and Applied Science over the next five-year period, from 2014 to 2019. With the Arctic and cold regions a strategically important and challenging area of future industry development, Wood Group’s objective is to develop enabling technology and environmentally robust solutions, said Mike Straughen, group director of HSSE and executive sponsor of the programme. Several of the company's business units - Wood Group Kenny, Wood Group Mustang and Wood Group PSN - are already committed to extreme environment technology development in key areas such as subsea and pipeline engineering, ice mechanics and Arctic structures.

Wood Group renews links with Memorial University

And new fields, discoveries that have long lain dormant, are finally getting the greenlight for development. Key among these is the 707 million barrel Hebron heavy oilfield, which was discovered almost 35 years ago. The Exxon-operated US$14 billion development, which reached FID in December 2012, involves another iceberg-ready GBS and will have production capacity of 150,000 bpd. Contractors working on the project include Worley Parsons (topsides) and joint venture Kiewit-Kvaerner Contractors (the gravity-based structure) while in April 2014 drilling company KCA Deutag made its debut in Canada as it picked up the multi-million dollar contract for platform drilling operations and maintenance services. First oil is expected towards the end of 2017.

Another development is Husky Energy's White Rose Extension project to tap the West White Rose oil pool. The development comprises a concrete gravity structure and topsides with production sent via subsea flowlines to the SeaRose FPSO for processing, storage and offloading. The CGS will be constructed in a purpose-built graving dock at Argentia, Newfoundland and Labrador: Dexter Construction Company has won the contract to build the graving dock. Other key contract awards are still pending, promising the potential of a further jobs and investment boost for the region.

Memorial University: a hub of Arctic know-how

Hibernia: the gravity-based structure is built to withstand an iceberg

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HiberniaNortheastern Grand Banks, 315 km southeast of St John’s, NL

ExxonMobil (33.125%),Chevron (26.875%),Suncor (20%),Canada Hibernia Holding Corp (8.5%), Murphy Oil (6.5%), Statoil (5%)

1979 1997 With 1.2 million barrels of oil, 1.7 TCF of gas and 202 million barrels of NGLs, Hibernia was the first commercial oil production off Canada's East Coast. The massive platform stands 224 metres high, 33 metres taller than the Calgary Tower. The Hibernia Southern Extension project is now underway

Sable Offshore Energy ProjectScotian Shelf, 200 km off Nova Scotia

ExxonMobil (50.8%), Shell (31.3%), Imperial Oil (9%)Pengrowth Corp (8.4%),Mosbacher (0.5%)

1972 1999 The development comprises the Thebaud hub and four satellite platforms (Venture, Alma, North Triumph and South Venture) with gas sent by pipeline to the Goldboro Gas Plant in Guysborough County and the NGLs sent to Point Tupper on Cape Breton Island for fractionation

Terra NovaGrand Banks, 350 km east-southeast of St. John's, NL

Petro-Canada (33.99%), ExxonMobil (22%), Statoil (15%), Husky Oil (12.51%), Murphy Oil (12%), Mosbacher (3.5%), Chevron (1%)

1984 2002 The 516 million barrel oil field is produced via an FPSO, the first development in North America to use FPSO technology in a harsh weather environment

White RoseGrand Banks, 350 km east of St John’s, NL

Husky Energy, (72.5%), Suncor (27.5%)

1984 2005 The field is produced via the SeaRose FPSO. The North Amethyst field, 6 km to the southwest, was the first-near field tieback off Canada's East Coast: it was brought onstream in 2010, less than four years after its discovery.The West White Rose extension will involve a wellhead platform tied back to the FPSO, with first oil due in 2016-17

Deep Panuke250 km southeast of Halifax, Nova Scotia

EnCana 1998 2013 The field will produce for 13 years, draining some 892 BCF of gas with a peak gas rate of 300 million cubic feet of gas per day

Field name & location

Partners(operator in bold)

Discovered Onstream Notes

Atlantic Canada's producing fields

Sources: NOIA, companies

08 SPRING 2014 www.frontierenergy.info

ATLANTIC CANADA

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FrontierEnergy_W190xH280_april2014.indd 1 02/04/14 10.47

The Arctic has long been considered a prospective region for field development and

hydrocarbon production due to the large volumes of oil and gas estimated to be in place in the North. According to the US Geological Survey, the Arctic is estimated to contain over 400 billion barrels of oil equivalent. This represents roughly one quarter of the world’s undiscovered, yet recoverable, oil and gas. Production companies are willing to invest in a variety of Arctic offshore drilling, engineering, construction, and operation solutions in order to advance technology and reduce risk in these regions.

The increasing number of offshore fields being safely and economically produced in the Arctic demonstrates that technical solutions are available to develop these hydrocarbon reserves. Throughout the last few years, several projects in the Arctic have continued to make advancements and these include: the first shipment of oil from the Prirazlomnoye gravity-based structure in the Pechora Sea; continued drilling campaigns in the Barents Sea, Baffin Bay, and the Chukchi and Beaufort Seas; seismic acquisition in the Kara, Barents, Laptev, and Chukchi Seas; and preliminary engineering for numerous prospects in the North American Arctic, the Barents Sea, and the Grand Banks of Newfoundland, Canada.

In addition, expanding international knowledge about Arctic conditions, improvements in material behaviour, advances in analytical techniques,

Arctic R&D push: the subsea future

wider acceptance of progressive design philosophies, and implementation of reliable Arctic operational strategies are enabling additional offshore Arctic prospects to be developed.

Arctic Development Roadmap

Fundamental to the safe and economic development of the Arctic is research and development, with the purpose of expanding current capabilities and minimizing risk to construction and operations. There are several initiatives and joint industry projects taking place in St. John’s, Newfoundland, with Arctic topics ranging from pipeline trenching to leak detection to oil spill response.

The Centre for Arctic Resource Development (CARD) brings together industry, academic, and technology partners to conduct medium- to long-term R&D focused on improving Canada's capacity and capability to support safe, responsible, cost-effective, and sustainable hydrocarbon development in Arctic and other ice prone regions. CARD's recently completed Arctic Development Roadmap identified, organized and prioritized key R&D topics for advancing required knowledge, technology, methodology, and training. A high level overview of the Roadmap has been included in this year's Survey of Arctic & Cold Region Technology for Offshore Field Development (INTECSEA, 2014).

Petroleum Research Newfoundland and Labrador (PRNL) is a not-for-profit organization that facilitates research and technology development on behalf of its members - the key E&P companies active in the Newfoundland and Labrador offshore region. PRNL identifies and scopes opportunities, manages R&D procurement, and contracts and oversees projects on behalf of industry funders and other partners.

Petroleum Research manages a number of JIPs that address the technological advancements needed to safely, efficiently, and economically proceed

with hydrocarbon exploration and development in the Arctic. These include:

• The Arctic and Sub-Arctic subsea technology JIP investigated conventional, enhanced, and active subsea production technologies such as subsea separation, boosting, compression, and direct electric heating along with the power and controls required to implement these technologies. The specific objective of this project was to update, expand, and compile the State of the Industry information and to better characterize the relative nature of each emerging technology by evaluating its application to several pre-defined notional field development scenarios.

• A JIP for the development of a trenching system for subsea pipelines, flowlines and umbilicals in ice scour environments aims to develop a full-scale, commercially-ready burial/trenching system. This requires a system which is capable of trenching to depths greater than current industry norms (burial depths greater than 3 metres; trenching in soil conditions that are difficult and highly variable (primarily those of glacial origin); trenching in water depths beyond the majority of trenching requirements (water depths up to 300 metres); and operating in harsh marine conditions (for example, the western North Atlantic).The results of the multi-phased project will allow future field developments to be planned based upon a reliable, predictable trenching solution.

• A JIP studying subgouge displacements for the design of buried submarine pipelines in cold regions is currently ongoing to in order to better understand required burial depths for offshore Arctic pipelines and advance the state of practice for the design of buried submarine pipelines in cold regions. The multi-phased project aims to develop a large scale 1g physical test database to be used for calibration and verification of numerical models and better define the parameters that affect subgouge displacements.

It's not just ships and offshore structures that need protecting from ice: Mike Paulin and Joe Cocker of INTECSEA in St John's, Newfoundland look at the latest technological advances for Arctic offshore pipelines and the raft of subsea JIPs underway in this oil hub

Heading North: operators are already working in Arctic waters

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Arctic R&D push: the subsea future

Atlantic Canada could become a new exploration hotspot after Statoil's basin-opening Bay du Nord oil strike, writes Amy McLellan

Effective leak detection

Offshore oil and gas pipelines and subsea systems are designed to withstand leakage. However, implementation of improved systems for detecting and mitigating leaks is still a necessary precautionary measure. Harsh environment, ice cover and limited accessibility present unique research opportunities for leak detection in the Arctic. INTECSEA Canada is researching an effective Leak Detection System (LDS) for pipelines and other subsea equipment. Fibre Optic Cable (FOC) systems have high potential to be used in the Arctic and other cold regions, including offshore Newfoundland and Labrador. Despite current FOC use for other subsea

applications, no comprehensive testing has been reported in the public domain to date regarding FOC subsea applications in the Arctic and other cold regions. This project intends to close this gap. With improved ability to detect and identify leaks, an operator can make better operational decisions. Rapid and reliable leak detection systems minimize potential oil release to the Arctic and minimize risk to people, the environment, and assets.

Aside from the subsea-oriented JIPs described here, PRNL has a number of other projects underway related to exploration and production in ice-prone waters, including studies of ice loads on floating structures, and Escape, Evacuation and Rescue (EER) systems in ice.

Exploration hopes in the waters off Canada's East Coast were given a shot in the arm last

year when Norwegian oil giant Statoil made two new discoveries to build on the success of its 2009 Mizzen oil strike. While Mizzen is reckoned to hold up to 200 million barrels of recoverable oil, the Stavanger-based company believes the Bay du Nord discovery, some 500 km northeast of St. John's in the Flemish Pass Basin, could hold 300-600 million barrels of recoverable oil. At the upper range, this would be the third-largest find in Atlantic Canada. The Harpoon discovery is still under evaluation.

The three discoveries are significant, but all require further work to firm up

Bay du Nord puts Atlantic Canada on the map

the resource and potential development solutions in this frontier basin. Indeed, with only four wells drilled in Statoil's 8,500 sq km of licenced acreage, this is still very much an under-explored area although already it is talking about the Flemish Pass having the potential to become a core producing area for the group post-2020.

All three discoveries are in approximately 1,100 metres of water in a tough operating environment so commerciality thresholds will be high. The good news is the oil strikes so far suggest the resource potential, given further drilling, may well be there. And the province is keen to encourage further drilling: in December 2013 the regulator announced a new scheduled land tenure system to provide longer lead times for exploratory work in frontier areas.

Analysts believe the finds since 2009 will put the region back on the industry's radar and prompt further investment by

major oil companies. This year will see Husky get busy with the drillbit in the southern Flemish Pass Basin, targeting the Aster prospect, and Statoil plans to drill more wells in the Bay du Nord area. A deep water semi-submersible drill rig will arrive in the province in Q3 2014 to start drilling and a 1,900 sq km seismic programme is also on the books.

Future developments

Arctic offshore design, subsea equipment technology, operating strategies, and our understanding of Arctic environmental conditions will continue to advance and the options available for Arctic and cold regions field development will grow as result. Other Arctic development concepts are becoming feasible, such as ultra-long subsea tiebacks, all-electric subsea control technology, full subsea separation and water re-injection, seafloor chemical storage and injection, and gas reinjection advancements have made possible the concept of full subsea (no-host) completions in the Arctic.

Statoil used the West Aquarius for the Bay du Nord wildcat

Ice gouging: one of many challenges found in Arctic and cold regions Research and development is ongoing to better understand the potential soil forces on the pipeline, and

to safely and economically bury Arctic pipelines to significant depths

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Architects and Marine Engineer’s annual Vice Admiral EL Cochrane Award in 2013 for a paper they co-authored on moving ice loads. The physical experiments recently conducted confirmed the numerical models Quinton had developed that served as the basis for the paper. Daley notes that because experiments are typically conducted by using a press, they are only capable of measuring loads pressed in straight, which is why very little is known about glancing loads.

Physical experiments allow the researchers to discover interactions that couldn’t have been foreseen.

“There had been a little bit of oil from the machining process on the back of the plate,” he recounts, “and the oil smoked when the load went by.”

A video camera mounted inside the moving-load apparatus recorded the smoke, which indicated that the impact that causes a dent in steel produces significant heat—a fact that had been unknown. Based on this, Daley sees implications for developing a thermal camera-based sensor technology that could monitor the entire hold of a ship for overload capacity, acting as a safety monitoring system.

This discovery also has applications for design temperatures.

“At very cold temperatures, metals are more susceptible to fracture,” Daley says. Knowing that the steel is heated prior to a possible fracture is a valuable piece of information because heat makes the metal much tougher. It’s a built-in self-correcting mechanism that engineers had not been aware of until now. Daley figures this might explain the relatively low incidence

New discoveries about the capacity of ships and offshore structures to withstand ice

loads are keeping the $7.2 million Sustainable Technology for Polar Ships and Structures (STePS²) project on the leading edge of Arctic research.

The team working in the Structures Lab at the Faculty of Engineering and Applied Science at Memorial University are conducting physical experiments to test the overload capacity of steel plate. The business end of the device that PhD student Bruce Quinton designed for this purpose is a stationary steel wheel which rolls against the steel plate that is being pushed against it by a hydraulic ram. The load was kept constant while the plate was moved against it sideways, resulting in a deep dent.

“This creates an elongated indentation—a scoring load,” Principal Investigator Dr. Claude Daley explains. “The novel thing is that as it begins to move sideways, the structural capacity drops in half. There is much less resistance when the load is translating sideways.” This type of glancing movement is the norm for ship-ice interaction.

Daley, Quinton and National Research Council of Canada colleague Dr. Robert Gagnon received the Society of Naval

of fracture problems at cold temperatures. “This would have already affected

damage experience,” he notes, “so in a general way, this has been taken into account in design.”

However, knowing about this phenomenon will pave the way for more efficient designs. “It will allow you to not waste your steel in places where you don’t really need it,” Daley says.

He sees both the general safety level and economics improving with this knowledge. As for the smoke he and his colleagues noticed, he adds with a smile, “you wouldn’t see that in a numerical model.”

Side by side with the physical experiments, the STePS² team has been making advances in the simulation of complex ship-ice interactions. Rather than using the standard approach for numerically modelling global forces, they are using software developed inhouse which computes the forces of physical interactions between large numbers of components (such as ice floes) over much larger time and space scales than is possible with conventional finite-element analysis modeling.

Daley demonstrates on his laptop, creating a simulation involving 0.3 sq km of open pack ice, with ice covering 50% of the area, ice floes ranging from 5 to 60 metres across, and a circular offshore platform 80 metres in diameter, with a standard mooring holding it in place.

“These interactions took place over half an hour, and our software did the simulation in seconds,” Daley observes, adding that the processing occurs between 40 and 90 times real time, depending on the scenario, which is thousands of times faster than some methods, and millions of

Experiments underway at Memorial University in St John's are unlocking new insights into the impacts of ice on ships and offshore structures. Frontier Energy's Andrew Safer gets a tour of the lab for the latest updates on this pioneering work

STEPS²: Pushing the Envelope on Arctic Research

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To start your path to the Arctic, please contact us by email at [email protected] or call toll-free 1-800-563-2299.

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times faster than other methods. “When you need an answer in an hour,”

he adds, “a simulation that takes days or months is of no use. What I just simulated here would take weeks or months to solve using any of the common approaches.”

An offshore operator could use this system on the bridge of a ship, Daley explains, along with satellite imagery and weather information, to develop an ice management plan that ensures that ice won’t push the platform off-station. The simulations would support the decision-making process regarding the deployment of ice-breaking vessels, what size ice features need to be broken up, and when the platform needs to be moved off-station. “What is the biggest feature that can be safely left unbroken?” is one of the questions that could be answered. “You could save a lot of effort and emissions if you know that you can let, say, a 20-metre floe drift against the structure without causing any harm,” Daley notes. Simulations could be run for events in the coming hours, days, or weeks. Before using this system operationally, however, it needs to be validated through a rigorous program of checking and cross-checking.

In the coming months, the STePS² team will conduct dynamic ice-crushing tests by colliding a 1-metre diametre ice cone between two 8,000-pound swinging steel masses in a purpose built pendulum apparatus. The impact module was developed by Dr. Robert Gagnon, a physicist at the National Research Council.

Static ice-crushing tests previously conducted by the STePS² team generated 660,000 pounds of force. “If we can get close to that in the large double pendulum,” said Daley, “we’ll be pleased. It will certainly be the biggest impact test ever done in a laboratory.” The five-year STePS² project will end this summer.

STePS²’s industry partners include Husky Energy, American Bureau of Shipping, Samsung Heavy Industries, Rolls-Royce Marine and BMT Fleet Technology. Government partners include the Atlantic Canada Opportunities Agency, with funding through its Atlantic Innovation Fund, Research & Development Corp of Newfoundland and Labrador, MITACS, and the Natural Sciences & Engineering Research Council of Canada. The National Research Council of Canada is a key research partner.

18,000 students and 5,000 faculty and staff from more than 90 countries Total Engineering students (2013): 1,630 (1,142 undergraduate; 488 graduate)Bachelor of Engineering degrees (2013): 270PhDs in Engineering (2013): 12Students enrolled in Ocean and Naval Architectural Engineering: 100

Major Engineering research facilities:58m towing tankMarine simulation lab Underwater vehicles labs (2)Coldroom-ice test labStructures lab Concrete labRock drilling labShip bridge simulator and Large Flume tank (at the Marine Institute)Large centrifuge facility (at C-CORE)Open water towing tank (at National Research Council, on campus)Ocean engineering wave basin (at NRC)Ice towing tank (at NRC)

Memorial University of Newfoundland: a world-class research centre

To start your path to the Arctic, please contact us by email at [email protected] or call toll-free 1-800-563-2299.

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in the United States, there is no question there is going to be offshore development in other Arctic nations.” Activity today in Russian Arctic waters and Russia’s long-term LNG contract commitment with China validates this earlier observation.

With the 2005-2008 sales of Arctic OCS leases, Washington prepared the US to follow suit. Now with Prudhoe Bay fields in decline and the Alaska Pipeline

carrying only a fraction of its capacity, the development of additional oilfields in the area has broad national implications.

On October 19, 2009 USGS published its “Arctic Oil and Natural Gas Potential” report, which laid out the potential “undiscovered recoverable” oil and

Three decades of relative inactivity in US offshore Arctic oil and gas activity have taken a severe

toll on the availability of experienced personnel with oil and gas exploration and production backgrounds to both drill and develop Arctic Outer Continental Shelf (OCS) resources. The skilled and experienced people who developed the fields discovered more than 30 years ago are likely no longer in the work force. A significant offshore Arctic “knowledge and experience” gap exists for design and drilling, just as demand for this expertise is increasing rapidly in the Arctic OCS Regions.

The last great wave of oil and gas activity in the US Arctic occurred with development of the onshore Alaska Prudhoe Bay fields in the 1970s, but new exploration offshore was stymied by declining prices, the Exxon Valdez tanker oil spill, environmental opposition, and the challenges of ice-covered waters. Yet, as former Deputy Interior Secretary David Hays put it: “Regardless of what happens

natural gas reserves in the Arctic region, including areas of the Alaska OCS. That report concluded that the Arctic as a whole holds approximately 22% of the world’s undiscovered conventional oil and gas resources. In a world with burgeoning energy demands, particularly in China and India, Arctic energy will undoubtedly play a significant role.

In 2009, the same USGS Report cited the following factors as slowing or preventing Arctic offshore development:

• Harsh winter weather requires equipment be “specially designed” for temperature extremes.

• In Arctic seas, the icepack can damage offshore facilities, while hindering the movement of personnel, materials, and equipment.

• Long supply lines from the world’s manufacturing centers require equipment redundancy and a large inventory of spare parts and materials to insure reliability.

• Limited transportation access and long supply lines reduce transportation options and increase costs.

A significant offshore Arctic “knowledge and experience”

gap exists

With little activity on the US Arctic Outer Continental Shelf in recent decades, one of the big challenges for operators is the offshore Arctic knowledge gap as experienced personnel have left the

work force. Joseph White and Victor Schmidt of Houston-based Endeavor Management report

MIND THE GAP: America's lost offshore Arctic experience

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The Arctic, including areas in the outer continental shelf, holds

approximately 22% of the world’s “undiscovered recoverable” oil and

natural gas reserves


ICE RISK MANAGEMENT

These factors can be overcome with the application of appropriate technology and adequate resources. However, it is the lost “hands on” experience and expertise of Arctic OCS personnel that is now a concern.

The major difference between the onshore Arctic and the Arctic OCS is floating ice, which must be controlled for safe offshore operations. Dealing with the ever-changing ice in Arctic waters is one of the most challenging issues. Whether the task is moving vessels through the ice or keeping ice clear of drilling vessels and production facilities, ice management requires the right resources, sufficient expertise, and the right plan.

An effective ice management program must have a clearly defined purpose with specific goals. The location or region to be serviced must be identified based on the activity to be protected, whether it’s a stationary drilling operation, production facility, or maintaining access for support vessels.

Ice management vessels protecting a location must have the specific capabilities to deal with the likely ice conditions. The vessels must have the ability to detect ice by radar and visual observation, operate safely in close proximity to identify ice concentration and thickness, and to break up large floes that threaten operations.

By all measures, the Arctic OCS Region will be more challenging than other OCS regions such as the Gulf of Mexico for well blowouts, oil spill containment, and oil recovery due to the remote and unforgiving environment, lack of infrastructure, logistical difficulties, ice, harsh weather, and high sea states. Limited visibility, whether caused by fog, haze, or darkness, reduces the amount of information that crews can gain from direct observation. Navigation by dead-reckoning becomes problematic, so sophisticated global positioning equipment and vessel and oil tracking tools are needed to coordinate any clean-up activity.

More challenging is the recent change in the US regulatory environment, resulting from the Deepwater Horizon incident in the Gulf of Mexico, that operators may be seeking to apply in other Arctic OCS Regions to enhance safety precautions. The Macondo well blow-out and subsequent clean-up brought intense scrutiny to offshore drilling activity by the popular press and among environmental groups. It also prompted the division of the former Minerals Management Service (MMS), creating the Bureau of Ocean Energy Management (BOEM) and Bureau of Safety and Environmental Enforcement (BSEE).

Authors

Joseph White is a member of Endeavor Management’s Arctic Team, with over 40 years of technical support for operations and engineering design experience, of which more than 25 years has been offshore Arctic related.

Victor Schmidt is Business Development Manager for Endeavor Management, with over 38 years of geoscience and media experience.

1962 Tazovskoye Field, Russia, discovered

1967 Prudhoe Bay Field, Alaska, discovered

1978 Panarctic Oils Ltd. Drake F-76 well (Canada) was completed as the world’s first Arctic subsea gas well in 181ft of water, one-half mile offshore

Early 61 large oil fields discovered within the Arctic Circle1990s 43 in Russia: 35 in the West Siberian Basin, 5 in Timan-Pechora Basin,

2 in South Barents Basin, 1 in Ludlov Saddle. 11 in Canada’s Northwest Territories 6 in Alaska 1 in Norway

2005 US offshore Beaufort Sea lease sales issue 117 leases for US$47 million

2007 US offshore Beaufort Sea lease sales issue 90 leases for US$42 million

2009 USGS issues updated estimates for Arctic oil and gas resources US offshore Chukchi Sea lease sales issue 487 leases for US$2.7 billion Pioneer Natural Resources brings Ooogurruk field online (5 miles

offshore Beaufort Sea).

2012 46 of the 61 large fields discovered in early 1990s are in production: 41 in Russia, 4 in Alaska, 1 in Norway 15 remaining large fields have yet to go into production: 2 in Arctic Alaska, 11 in Canada’s Northwest Territories, 2 in Russia Shell Oil begins exploratory drilling in the Beaufort and Chukchi Seas.

Time Line of Arctic Oil and Gas Discovery

As a new US regulatory agency focused on industry regulation and enforcement, BSEE issued a comprehensive new policy on August 17, 2012 that clearly extended regulations for the offshore oil and gas industry to contractors and their subcontractors. This new paradigm means that contractors must be concerned about legal liability and the risk that they and their insurers now incur when their services or equipment are to be utilized in US OCS waters.

The roll call of obstacles – scarce and fragmented expertise, environmental and operational challenges, and intensive regulatory requirements predicated on a recent mishap – appears daunting. Though the potential rewards for oil and gas development in the US Arctic OCS and other Arctic regions are huge, they come with high risks, high costs, and lengthy lead times – and they could easily become catastrophic.

Both operators and contractors need to be aware of the additional responsibility now required by US authorities. They need to develop appropriate approaches to Arctic OCS operations and identify, assemble, and access those individuals having “hands on” Arctic OCS experience to meet the challenges head on successfully and safely.

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CLASSIFICATION

www.frontierenergy.info SPRING 2014 15

ICE RISK MANAGEMENT

through the NSR, and the Russian Government, through the Northern Sea Route Administration (NSRA), continues to expand and modernize the permitting process under which ships of all flags can enter or transit the region.

For ship owners, changing conditions have opened new operational and trading opportunities. Using the NSR for a voyage between principal European and Asian ports can reduce the distance by nearly 4,000 miles compared to the traditional route through the Suez Canal. For example, the distance between Rotterdam and Japan, using the Suez

Canal is approximately 11,000 miles. Via the NSR, the route is approximately 7,600 miles, which equates to a saving of around 10 days. This means not only a shorter overall transit time – with the implication of greater vessel productivity over the course of a calendar year – but also considerably lowers bunker consumption with an associated reduction in emissions.

While the NSR extends for about 3,000 miles, the actual voyage length depends on the ice conditions and the draft of the transiting vessel. Annual navigation falls into two main seasons: the summer season (typically July to November) and the extended season (December through June). During the summer, standard routes are determined by the position of ice massifs, the distribution and characteristics of open floating ice and open water. In the winter and spring, the location of standard navigation routes is determined by the characteristics of the ice and the ability of the icebreakers to create a safe passage.

The Arctic warming trend has resulted in a decline in the extent of sea ice coverage – by as much as 30% in some areas. Sea ice formation and growth depend on the air temperature falling below freezing and subsequent lowering of sea surface temperatures below -1.6°C. During the period in which the route is open, vessels can expect to encounter moderate and strong winds, low air temperatures, a high number of days with fog, and late in the season, long polar nights, snowstorms and possible blizzards.

In general, the region can be categorized into three climate areas. The Atlantic region, which includes the Barents Sea, the western part of the Kara Sea and part of the Arctic basin extending to the north, is characterized by frequent

Once impenetrable by any vessel other than powerful icebreakers, the Northern Sea

Route (NSR) between Europe and Asia, across the northern waters of the Russian Federation, is now open to passage by most commercial vessels for a protracted period during the summer and autumn periods. Climatic changes associated with the long-term trend toward increased global temperatures have rendered the fabled Northeast Passage largely ice free for a limited time each year.

The Russian Federation recently has begun to encourage international shipping

The change in climate has brought with it a change in navigation possibilities, and with those have come challenges. Han Yu and James Bond of ABS discuss the opportunities of the Northern Sea Route

NORTHERN SHORT CUT: opportunity and challenges

Ice remains a serious challenge in Arctic waters

The NSR runs through the Kara, Laptev, Vostochno-Sibirskoye (East Siberian) and Chukchi seas. It can be entered from the west through the Yugorskiy Shar Strait or the Karskiye Vorota Strait, or by passing north of the Novaya Zemlya Islands around Mys Zhelaniya; and from the east through the Bering Strait. Open water depths vary from 20 to 200 m.

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winter storms and fog and precipitation in the summer.

The Pacific Area, made up of the eastern part of the East Siberian Sea and the Chukchi Sea, is influenced strongly in the winter by Pacific weather systems. The air temperature is higher, as is wind strength, and the amount of precipitation is greater than in the surrounding areas. Summer can be stormy with wide fluctuations in temperature and periods of dense fog.

The third sector, the Siberian Area, comprises the eastern part of the Kara Sea, the Laptev Sea, and the western part of the East Siberian Sea. It is influenced in the winter by the Siberian Low, with air temperatures that tend to be lower than in surrounding areas. Temperatures are higher than in neighboring areas in the summer near the continental coast, but even in the warmest months, the northern parts of the area remain cool.

It is clear that while the NSR offers the advantage of time and cost savings, there are concerns that need to be addressed if this route is going to be used safely.

Guidance in this area is critical.To support ship owners and operators

intending to transit the commercial shipping routes through the Arctic seas, ABS has released the Navigating the Northern Sea Route advisory. The primary objective of this publication is to provide information needed to navigate challenges safely and efficiently.

The advisory, which was developed with assistance from Russia’s Central Marine

Arctic activity will not be restricted to transiting ships. According to the US Geological Survey, the Arctic holds an estimated 13% (approximately 90 billion barrels) of the world’s undiscovered conventional oil resources and 30% of its undiscovered conventional natural gas. If those Arctic reserves are to be recovered, drilling and production units will have to be built to withstand the move to and from the work site. For Russia, the majority of the planned offshore development areas lie within the jurisdiction of the NSRA and the transit of drilling units and the large contingent of support vessels will need to comply with NSRA regulations.ABS is investing in research and development projects that are targeting some of the most significant Arctic challenges. Work is taking place at the ABS Harsh Environment Technology Center (HETC) in St. John’s, Newfoundland, where high-end Graphical Processing Unit (GPU) technology is being used to simulate ice management scenarios. Researchers at HETC, which was formed in conjunction with Memorial University, are modeling realistic ice breaking and collision scenarios to capture the specific capability of an icebreaker while at the same time calculating the interaction among the resulting broken ice pieces. Plans are in place for these simulations to be extended to include a rig with a fixed position with mooring system flexibility and limits. Ice loads on the icebreakers and eventually the rig and mooring systems will be extracted from the simulation.

Tackling drilling and production challenges

From Left: Han Yu, with 30 years' industry experience, is a manager on the ABS Shared Technology team and is responsible for the harsh environment program, Houston-based James Bond, with 25 years of experience in the marine and offshore industries, is Director, Shared Technology in the ABS Corporate Technology group

Research & Design Institute (CNIIMF), provides owners with the information they need to apply for permits and to identify the possible technical and operational risks that could arise when trading in some of the world’s most challenging commercial shipping environments.

The advisory is available on the ABS website at www.eagle.org and additional up-to-date information is available on the NSRA website www.NSRA.ru.

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Infield Systems is a consulting and advisory company for the offshore oil, gas, marine and renewable energy industries as well as being a market leader in the provision of research, project data, market forecasts and GIS mapping. Working with leading global organisations across both the energy and the financial services sectors, Infield Systems is widely acknowledged as the definitive independent source for information, research and analysis on the offshore energy sector. Infield Systems’ Consultants and Analysts are renowned for their accurate analysis and insightful forecasts, produced through close collaboration with both the forecasting and modelling team and the research department.

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was only by chance, when used in Alaska, that its Arctic application was recognised. “While we were working in Alaska we found it also penetrates ice and can work out thickness,” explains Saade.

Sea ice thickness measurements are important because it helps distinguish first-year sea ice from multi-year sea ice, as well as help identify cracking ice networks and ice ridges Data is developed in the field, using a specially designed workflow that processes the raw radar data into sea ice mapping deliverables, available to clients within hours of the airborne mission and providing actionable intelligence for assessing the risk of on-coming ice conditions and enabling operators to mitigate high-risk ice floes impacting fixed locations in the Arctic.

“It's about giving operators enough

lead time to mitigate the movement of the ice and define safe limits of operation,” says Saade, who says the company was delighted with its double win at ATC. “The award was very satisfying in terms of the recognition of the effort we put into this. Fugro has invested a considerable amount of research money for the betterment of the industry.”

Narwhal

The other winner at the February event was Houston's ION Geophysical, which picked up the award for its Narwhal ice management system. The NYSE-listed company launched the technology in September 2013 with a

Dutch group Fugro was a double winner at this year's Arctic Technology Conference, when

it picked up two Spotlight on Arctic Technology awards. The first award was for its integrated 3D iceberg mapping technique, which brings together subsea and surface data to generate complex 3D models of icebergs. This has many applications when it comes to helping industry mitigate the risks of working in iceberg-prone areas.

“It's a way of imaging the keels of icebergs and ice-floes to get a better idea of the total mass and dimensions,” explains Edward Saade, Fugro’s regional survey director for the Americas. “At certain amounts of thickness the iceberg becomes a danger to any kind of structure that might be in the Arctic and by using this technology we can get an understanding of its true size and understand what can be done to change its direction.”The other award is for Fugro’s GeoSAR sea ice mapping system which is mounted on an aircraft to acquire sea ice data over very large areas. Its a dual frequency (X-band and P-band) interferometric airborne radar mapping system mounted on a Gulfstream II jet aircraft that can acquire sea ice data at a rate of 288 sq km per minute, enabling large-area coverage over Arctic regions.

“This is a one of a kind technology,” says Saade. Indeed P-band frequency is typically used in jungle environments to penetrate and map thick canopy and it

view to helping operators reduce risk and improve efficiency in seismic data acquisition and drilling operations in the Arctic. The Narwhal system enables operators to gather, monitor, and analyse data from various sources, including satellite imagery, ice charts, radar, manual observations, wind, and ocean currents, to forecast weather and predict ice movements in these harsh environments. With the ability to track, forecast, and monitor potential ice threats, operators can make informed, proactive decisions to ensure the safety of people, assets, and the environment, while minimizing operational downtime.

The company drew on its own experience of working in the Arctic, where it has been active since 2006 when it acquired its first regional seismic survey: it now has 15 projects and eight seasons of Arctic data acquisition under its belt, yielding some 65,000 km of data, including over 30,000 acquired under the ice.

Des Flynn, VP of ION's Concept Systems group, which developed Narwhal, currently in commercial use in the Canadian Northwest Passage and offshore Baffin Island, said one of the unique aspects of the technology is the way it manages “trafficability”.

He describes this as the ability to use all of the ice information to define go/no-go areas, plan routes, optimize vessel operations, and identify escape routes - in multi-vessel and platform operations. “The system's unique enterprise capability allows multiple vessels, platforms, and onshore operations to share and visualize all available information in a common operational picture, thereby improving efficiencies and providing the entire operation with greater situational awareness," says Flynn.

www.arctictechnologyconference.org

This year's Arctic Technology Conference in Houston threw the spotlight on new technologies that promise to improve efficiencies and reduce risks when working in the Arctic, reports Amy McLellan

Fugro and ION Geophysical IN THE SPOTLIGHT

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GeoSAR is a one of a kind technology


NEW TECHNOLOGY

Fugro and ION Geophysical IN THE SPOTLIGHT

Registration Hotline: +44 (0)20 7017 5518 Email: [email protected] the latest programme or to register visit: www.ibcenergy.com/FKA2453FEAD

Thursday 22nd – Friday 23rd May 2014etc. venues, Dexter House, London, UK

IBC Energy’s 2nd annual seminar

Strategies for safer drilling and well operations in the Arctic

Scan with

smartphone QR Reader App:

Drilling in Ice-Affected Regions

Quote VIP Code FKA2453FEAD and SAVE £100

Fresh insights into the latest drilling rig and well concepts and technology

Update your knowledge on:

n Directional surveying challenges in high latitude offshore drilling

n Legal regimes for operating in the US and Canadian Arctic

n Ice-guard vessels for drillship and rigs in the High North – a benefit or just another cost?

n Impact of Arctic conditions on human behaviour and performance

n Drilling, completion and well integrity challenges in Arctic environments

n Winterisation solutions, options and techniques for Arctic drilling rigs

n Operational and environment challenges for Arctic drilling rigs and their impact on design

n Best practice and standards for safe and efficient well control management

Your expert speakers include:• Roger Ekseth, Development Manager,

Gyrodata Inc.• Dr Pierre Cerasi, Senior Research

Scientist, SINTEF Petroleum Research• Barry Davies, Human Factors Technical

Lead, Lloyd’s Register Consulting• Bruce Harland, VP Business

Development, Crowley Marine Services Inc.

• Wylie Spicer, Of Counsel, Norton Rose Fulbright Canada

• Sten Wärnfeldt, Manager, Radar Technology

• Christopher Hart, Senior Counsel, Fulbright & Jaworski Houston

• Trond Spande, Winterisation, GMC Elektro

What’s new for 2014?• More time to network with the expert

speaker panel and attendees during the Drinks Reception at the close of day 1

• Technology Innovation Panel Showcasing the very latest products and solutions aiding safer drilling in Arctic waters

• Knowledge Sharing Panel Challenges and solutions for Arctic drilling operations

• Discussion Q&A Session more time to foster discussions, share experiences and ask questions of the experts

Follow us on

Arctic Oil & Gas Series IBCEnergyEvents EnergyEventTV

Exhibitors to date:

An interest in the opening up of trade routes in the Arctic region as the permanent ice

pack recedes brings with it environmental protection concerns, salvage restrictions, navigation complications and operations in freezing conditions.

According to the IMO, there has been a tenfold increase in the number of vessels using the Northern Sea route during recent years, with 46 ships recorded in 2012, compared with 34 in 2011 and only four in 2010. Latest figures show 71 large ships, working mostly with Russian icebreakers, navigated the route in 2013 but Russia expects a 30-fold increase in shipping by 2020 and ice-free water over most of its length by 2050. Meanwhile, Washington-based think tank, The Arctic Institute notes that the polar research institute of China has suggested that, by the year 2020, 5% to 15% of China’s trade value – about US$500 billion – could pass through the Arctic.

Development of logistics, supplies and infrastructure, special qualifications for ships’ officers and the provisions of adequate ice-breaking capacity all need consideration in such a remote area, as do rescue and salvage operations. Navigational technology in the high north is constrained as GPS is not dependable at that latitude. Also, there is currently a lack of good charts, communication systems and other navigational aids,

all of which pose challenges for mariners.

Indeed, shipping casualties in Arctic waters have increased to an average of 45 per year during 2009-2013

from only seven during 2002-2007. Damage to machinery caused a third of these incidents, higher than the average elsewhere, reflecting the harsher operating environment.

There are additional issues related to territorial waters in the Arctic which has led to worry over the degree and nature of the responsibility borne by coastal states

Melting sea ice is opening new sea routes, and creating new risks, finds German insurance giant Allianz Global Corporate & Specialty in its second annual Safety and Shipping Review 2014

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Rahul Khanna

New routes,NEW RISKS

Shipping casualties in the Arctic have

increased to an average of 45 per year

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INSURANCE

for the maintenance and support needed for Arctic navigation; the implementation of the relevant provisions of the United Nations Convention on the Law of the Sea (UNCLOS) and other measures; the potential for offshore exploration; and the protection of the unique marine environment in the Arctic Ocean.

In recognition of the shift in traffic to these inhospitable regions, the IMO has been proactively working to establish a Polar Code. This draft international code of safety for ships operating in polar waters will cover the full range of design, construction, equipment, operational, training, search and rescue and environmental protection matters relevant to ships operating in the inhospitable waters surrounding the two poles. It is the combination of relevant requirements, provisions and recommendations that have

been developed by the IMO over the years. Currently, maritime activity in

the Polar regions is covered by four legislations: Marpol, providing the mandatory level environmental protection with zero discharge requirements for Antarctica; STCW, giving guidance and recommendations for training and competency of officers and masters on ships in polar regions; SOLAS, detailing safety requirements applicable to all ships which are subject to the Convention and operating in polar regions; and UNCLOS, offering the legal framework governing the rights and responsibilities of nations in their use of ocean space.

A working group aims to finalize the draft code in 2014 for adoption by the IMO’s MSC and the Marine Environment Protection Committee (MEPC). “The Polar Code will be the first unified,

New routes,NEW RISKS

Increased use of alternative green fuels is an emerging risk, according to Allianz's Safety and Shipping Review 2014.Bio-fuels, hydrogen, compressed natural gas and liquefied natural gas (LNG) all offer viable solutions to power the global shipping fleet. Of these fuels, LNG has captured the imagination of shipping lines. Last year Bloomberg reported the global fleet of 42 LNG-powered ships will almost triple by 2014 and increase 42-fold to almost 1,800 vessels by 2020, according to DNV GL, the largest company certifying the merchant fleet for safety. Re-fueling of these ships is expected to take place at ports and some European and Asian ports are already preparing themselves to supply LNG. There are safety concerns with this move, however, as the industry will see the rise of ports that have never previously handled LNG providing bunkering stations on dock. Experts question whether this shift might compromise the unblemished safety record of LNG. “We need to ask what risks LNG-fuelled ships will present to the industry,” says Captain Rahul Khanna, Senior Risk Consultant, Marine, AGCS. “The technology itself is not new; the concern is storing the

Greener fuels: an emerging risk

LNG as fuel and handling it onboard. LNG expertise is not easily available – there needs to be a change in mindset and training.”The Lloyd’s Market’s Joint Hull Committee has nominated a committee to find out more about the risks associated with LNG as a fuel, which will complement research already completed, including the creation of a code by classification societies on gas-fuelled ships. “The industry was well equipped to handle a few ships here and there, but when this starts to become a common choice of fuelling ships then that changes the game a little bit,” says Khanna. “We are not too late, but this is the right time to start considering the challenges and putting things in place to meet them. An even bigger challenge is how do you actually bunker a ship with LNG? How do you deal with LNG ashore? It is not something that can be easily handled; it requires specialization, technical expertise and know-how.”

comprehensive standard for all operators in the Arctic,” notes Dr Sven Gerhard, Global Product Leader, Hull & Marine Liabilities at AGCS.

The Allianz Safety & Shipping Review 2014 in numbers

2013 saw 94 losses reported worldwide

Losses were down 20% compared to 2012

This continues the downward trend,

with losses declining by 45% since 2003

Source: Allianz Global Corporate & Speciality

More than a third of 2013 losses were in China, Indonesia, Philippines, Japan and Korea

The most common cause of losses was foundering, accounting for almost three-quarters of all losses, with bad weather a significant driver

There were 2,596 casualties in 2013, with the East Med & Black Sea region the top hotspot

January is the worst month for all casualties and losses in the Northern Hemisphere, with

23% more losses than in the quietest month (June). In the Southern Hemisphere, July is

the worst month, with 41% more losses than April.

More than a third of the vessels lost were

cargo ships (32), with fishery (14)

and bulk carriers (12) the only other vessel

types to record double-digit losses

The number of piracy attacks declined by over 10% in 2013

Between 2002-2013, the British Isles saw the most shipping casualties,

accounting for nearly one in five of all losses

and reflecting the Strait of Dover’s status as the busiest

international seaway

Allianz's second annual safety and shipping report

INSURANCE


gas industry in 2014, nearly three in ten operators intend to expand into challenging territories this year, with deepwater locations, the Arctic and East Africa the most commonly cited destinations. The survey found strongest interest in deepwater sites in East Africa and the Arctic for 2014, although these sites will not get to full production until around 2018. Over half (52%) expect subsea technologies to absorb the strongest investment in coming years to support these frontier developments.

Helping industry operate safely in these challenging environments is why DNV GL spends 5% of its revenue on innovation, running joint industry projects and developing standards, said Tørstad, the former Chief Technology Officer of the pre-merger DNV.

This is particularly important when it comes to the Arctic, where the pace of development will be limited by the availability of technology to allow safe operations. Although as Tørstad, who has a background in science and business administration from the universities of Oslo and Bergen respectively, points out, “there's not one Arctic but several regions with very diverse environments.”

“There's a perception that it's a totally pristine environment but parts of the Arctic has had industrial activities for several decades, it's populated and in some perspectives well regulated. Also in this context, the Arctic is far from being a homogeneous region,” she adds.

And while the polar ice may be melting, opening up access to once unworkable areas, the near-term development of these waters is by no

means a foregone conclusion. “The speed and extent of development

will be highly dependent on each country and the companies that will undertake the work. It will be a question of their access to other energy resources and the balance of risk and reward between those resources and Arctic resources,” she says. “The US, for example, has much higher energy security now from low risk onshore shale drilling and that may mean there's less interest in the Arctic. There's an overall energy portfolio view that will determine how quickly companies and countries develop the Arctic.”

Echoing views put forward by other Arctic watchers, she says development should continue with a careful and stepwise approach as part of a careful balancing with other resources around the world. Quoting Statoil's Runi Hansen, she stresses: “There's no race to the Arctic, this is a long term development.”

This means developing the least challenging locations before the harshest ones so the technology and infrastructure have time to develop and risks can be kept at a level comparable to those in other parts of the world.

Building competence

One of the big challenges for companies moving north is the capacity to understand, manage and mitigate the unique risks posed by this ice-affected region.

“The seasonal changes limit the operating window, which means there's less room for manoeuvre, less redundancy, less opportunity to accommodate a week or month's delay,” she says. “It means there's a higher frequency of decisions,

DNV GL brings together two companies with parallel 150 year histories

Owners: DNV Foundation (63.5%), Mayfair (36.5%)

Headquarters: Høvik outside Oslo, Norway

Employs: 16,000 people across 300 sites in 100 countries

Businesses: Maritime, Oil & Gas, Energy and Business Assurance

Estimated revenues: €2.5 billion

Elisabeth Tørstad, CEO of DNV GL - Oil & Gas talks to Frontier Energy about her new role and the opportunities and challenges of Arctic development

A BALANCED APPROACHElisabeth Tørstad, CEO of DNV GLDrilling in the Barents Sea: the stepwise approach means developing less hazardous areas first

Three months after the September 2013 merger of Norway's DNV and GL of Germany to create

the world’s largest ship and offshore classification society and a top-three certification body, Elisabeth Tørstad took over as CEO of its oil and gas division. At the time of her appointment, she took care to point out that as the industry moves into deeper, harsher and more challenging areas, the role of classification societies will be ever more vital.

Indeed, according to DNV GL's annual benchmark industry study, Challenging climates: The outlook for the oil and

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Arctic requires not only the important competence of working in a harsh cold climate but also the understanding of the potential risks, and what the likely consequences of an accident could be for the personnel, environment and company. Tørstad says while technology can go some way to plugging the gap, it can’t fully replace human intervention.

“While we cannot fully duplicate and replace the experience of retiring professionals in the sector, we can work smarter through structured approaches to managing industry knowledge and ensuring that the competence built is effectively transferred to younger generations,” she says. “A more diverse approach to recruitment would also help to address the issue. The skills it takes to manage the construction of a space shuttle or hospital are not necessarily so dissimilar to what’s needed to manage the construction of an oil platform.”

For DNV GL, it is a time to help the industry build competence and nurture best practice for safe operations in the Arctic. The society is fully integrated following the merger and is able to draw on a wider pool of skills and know-how.

“It takes time to learn to work together and transfer to common systems and work procedures, but we all get lots of energy from learning to know new colleagues and experiencing our strong combined expertise and market position,” says Tørstad.

Offshore Leak detection has moved higher up the agenda with the move into the environmentally sensitive Arctic. Existing sensors all have limited coverage and application areas: some only detect gas, for example, some cover a small area with high sensitivity while others cover a large area with low sensitivity. The challenge is to integrate these into a complete system that provides the required coverage and sensitivity, both subsea and at the surface while at the same time avoiding frequent false alarms. Now 20 companies and regulators are participating in DNV GL's JIP on Offshore Leak Detection, including operators Lundin, BP, ENI, Petrobras and GDF Suez Norway, technology company FMC Technologies and regulatory bodies the Norwegian Ministry of Climate and Environment and the Petroleum Safety Authority Norway.The aim is to be able to detect acute discharges, with a high level of certainty, at the earliest possible stage. A planned outcome will be a DNV GL Recommended Practice that addresses the leak detection system through all the lifecycle phases of offshore development projects. The project will define relevant functional requirements and general specifications for a leak detection system as well as developing a methodology for designing an integrated system, including surface and subsea technologies.

Industry coming together to find the right solutions

As shipping activities in Arctic areas increase so too do the risks, which rise almost 30% for cruise ships and almost 15% for bulk carriers compared to more conventional routes. DNV GL reached this risk assessment by examining the case of a cruise ship sailing off the coast of Greenland and a bulk carrier transiting the Northern Sea Route. The study showed that, in the cruise ship scenario, the overall risk is nearly 30% higher than elsewhere, largely due to the survival challenges faced by the people on board. The risk to the bulk carrier was almost 15% higher because of the danger of collision with ice.

“We needed to gain a deeper understanding of the risk in the different parts of the Arctic in order to make better decisions about future developments,” says Knut Ørbeck-Nilssen, President DNV GL Maritime. “We had to put guesswork aside and apply a scientific approach to clarify risk levels in the Arctic. In doing so, we employed typical DNV GL methods: we identified the risks and then

Arctic Shipping – the next risk frontierproposed recommendations to mitigate probabilities and consequences.”

A report recently released by DNV GL, The Arctic – the next risk frontier, proposes a number of design concepts to reduce risk. For cruise ships, enhanced damage stability, a collision-resistant hull and lifeboats better suited to the Arctic are all measures aimed at improving survivability in the case of an accident. For bulk carriers, hovercraft lifeboats enabling mobility over both water and ice and checks on the ice strengthening to ensure that it matches the actual ice conditions are important measures to manage the risks.

“Research into new technologies is critical, as is the need for greater cooperation and regional planning,” says Ørbeck-Nilssen. “The decision to progress with industrial activity in the Arctic will involve a ‘social licence to operate’ from the local communities and society at large. DNV GL will work together with the maritime industry and authorities to make the activity as safe and environmentally friendly as possible.”

be it to do with safety, operations or economics, and this is an important part of the risk picture.”

This means there's a real need to build competence in the shipping and offshore industries.

“Many companies, like Statoil, are taking a stepwise approach to building competence in the Arctic,” says Tørstad. “It's important to remember, however, that there's not just one Arctic and experience in one part of the Arctic won't necessarily mean competence in dealing with other ice conditions in other parts of the region.”

This drive to build competence will not be easy in an industry already battling a lack of trained personnel. As DNV GL's Challenging Climates report points out, the industry’s dwindling pool of engineering talent has topped industry leaders’ list of professional concerns for a second year running: 47% of respondents considered skills shortages to be the top barrier to growth with the hardest to fill positions being project managers, offshore-related engineers and safety and risk engineers. This trend is driving up salaries to unprecedented levels in some areas: the median daily rate that respondents to DNV GL’s research admitted they are willing to pay individual contractors in technical areas with a particular expertise shortage is US$1,000.

The unique skillset required of Arctic operations could prove scarce: as the report points out, operating in the

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Offshore Technology ConferenceMay 3 – 5, 2014Reliant Park, HoustonThe world's foremost offshore event, OTC is the world's foremost event for the development of offshore resources in the fields of drilling, exploration, production, and environmental protection, a great place to gain technical knowledge and make valuable contacts.www.otcnet.org/2014

International Oil Spill Conference 2014 May 5 – 8, 2014 Savannah, GeorgiaThe International Oil Spill Conference (IOSC) provides a vital forum for professionals from the international response community, private sector, government, and non-governmental organizations to come together to tackle this great challenge with sound science, practical innovation, social engineering and imagination. www.iosc.org

33rd International Conference on Ocean, Offshore and Arctic EngineeringJune 8 – 13, 2014Palace Hotel, San FranciscoOMAE 2014 will bring together researchers, engineers, managers, technicians and students from the scientific and industrial communities to discuss new technology, its application in

industry and promote international cooperation in ocean, offshore and Arctic engineering.www.asmeconferences.org/omae2014

Challenges of Changing Arctic: Continental Shelf, Navigation and Fisheries June 26, 2014Bergen, NorwayThis Arctic Council invitation-only event is organised by the Icelandic Ministry of Industries and Innovation, the Virginia Center for Oceans Law and Policy, and the University of Bergen. www.arctic-council.org

ICETECH 2014July 28 – 31, 2014Banff Conference Centre, Canadian RockiesOrganised by the Arctic Section of the Society of Naval Architects and Marine Engineers (SNAME), the event will discuss performance of ships and structures in ice with special sessions on looking to the future in a warming world. www.icetech14.org

Offshore Northern Seas 2014 (ONS 2014) August 25 – 28, 2014 Stavanger, NorwayOffshore Northern Seas 2014 (ONS 2014) is a biennial event, providing a platform for the presentation of the political, economic and technological issues involving the

international oil and gas industry, as well as showcasing the latest innovations within the industry. ONS 2014 will incorporate the ONS Innovation Park, with a special focus on the oil and gas industry’s increasing reliance on cutting-edge technology. The Innovation Park also serves as a background for the prestigious Innovation Awards. With over 1,000 exhibitors and around 60,000 visitors, ONS 2014 will be one of the Offshore industry’s leading events. www.ons.no

3P Arctic, The Polar Petroleum Potential ConferenceOctober 6 – 9, 2014Park Inn by Radisson Pribaltiyskaya, Saint Petersburg Organised by the American Association of Petroleum Geologists, 3P Arctic has been running since 2009 and is the leading geoscience event for the Circum-Arctic basins.www.3parctic.com

SPE Russian Oil and Gas Exploration and Production Technical Conference and ExhibitionOctober 14 – 16, 2014All-Russia Exhibition Centre, MoscowA showcase for the latest developments in upstream technologies and services, the main theme of this dual technical conference and exhibition is "Sustaining and optimising production: challenging the limits with technology". The event provides a showcase for leading Russian and international suppliers and provides organisations with an opportunity to engage face to face with Russia's exploration and production community.www.russianoilgas.ru

7th Annual Arctic Shipping North America Forum 2014October 2014St John's, NewfoundlandNorth America's leading shipping event dedicated to Arctic shipping operations. The event provides the opportunity to hear from ship operators on what works and what is missing for operations in the High

Noia (Newfoundland & Labrador Oil & Gas Industries Association) is Canada’s largest offshore petroleum association. With more than 600 members in Atlantic Canada and around the world, Noia is at the centre of East Coast Canada’s oil & gas industry. Noia members provide products and services for the petroleum sector while associate members include petroleum companies, trade associations, educational institutions and government bodies and agencies. The annual Noia Conference is the largest offshore conference in Canada and provides delegates with crucial information on trends, new technology and business opportunities in the East Coast Canada oil & gas industry.www.noia.ca

NOIA Conference 2014 June 17 – 20, 2014 St. John’s, Newfoundland, Canada

TO ADVERTISE your event in the magazine, website or eNewsletter, please contact [email protected]

North, assess the potential impact of Canada's chairmanship of the Arctic Council, discover the details of US policy towards the Arctic and understand the viewpoint of the Northern Communities in establishing effective marine policies in the Arctic. www.informamaritimeevents.com/event/arcticshippingnorthamerica

10th Annual Arctic Oil & Gas ConferenceNovember 4 – 5, 2014Thon Hotel Arena, near Oslo, Norway Arctic Oil & Gas Conference: Delivering technology innovations and operational excellence for safe, sustainable and economical development of Arctic resources. Roundtable sessions on sustainable development of the Arctic’s natural resources, offshore pipeline design & engineering challenge, non-technical challenges in operating in Arctic regions and the latest advances in ice-breakers for the oil & gas sector.www.ibcenergy.com/event/Arctic

Arctic Circle October 31 – November 2, 2014Reykjavík, Iceland A forum is discuss the latest views and news from the Arctic. The 2013 assembly had more than 1,200 participants from 40 countries.www.arcticcircle.org

Global Shipping Trends and PatternsNovember 5 – 6, 2014LondonACI’s event will examine the key market forces directly impacting on the shipping industry right now, including new opportunities in the Arctic.www.wplgroup.com

EVENTS


SPE RUSSIAN OIL AND GAS EXPLORATION AND PRODUCTION TECHNICAL CONFERENCE AND EXHIBITION14 - 16 October, 2014 | All-Russia Exhibition Centre | Moscow, Russia

www.russianoilgas.com

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ROG 2014 Concept.indd 1 22/04/2014 14:35

to draw interest from a wide range of states, including Russia, the US, the Scandinavian countries, Canada and China, resulting in increased legal and political tensions in the region.

It was evident Durant would like to see the Arctic out of bounds to oil and gas activities, stating that she would have liked to see the EU stand more firmly behind a UN-led world moratorium on pollution, military and industrial activities in the region.

The oil executive

Gro G Haatvedt, who at the time of the Symposium was senior VP for Exploration in Norway at Statoil, said that for the oil giant there is not

one Arctic, but several Arctic environments. The “Workable Arctic” is those basins in which the oil and gas industry can drill and operate today

using existing technology, such as the Norwegian Barents Sea and the coast of Newfoundland. The “Stretch Arctic” is the area where incremental innovation is needed, but where solutions are considered achievable with focused technology in the medium to long-term.

The politicians

Didier Reynders, Belgian Deputy Prime Minister, stressed the long-term responsibility of the international community as the future of the Arctic would directly impact the well-being of generations to come. The current generation of global leaders, according to Reynders, could design solutions to safeguard the Arctic with imagination and courage.

A retreat in sea ice is unlocking mineral resources and faster transport routes, creating humanitarian and economic concerns but also a wide range of opportunities for innovative entrepreneurs. The minister pointed out that fishing, mineral mining, and oil and gas extraction are becoming increasingly significant in a world in dire need of a new sustainable social economic model.

Reynder addressed the need for a multi-lateral and multi-dimensional approach to Arctic governance. The Minister voiced Belgium’s hope that the Arctic Council would further develop its important work and that the EU could take part more efficiently in the work of the Arctic Council.

Isabelle Durant, Vice-President, European Parliament, opened her presentation by reminding the audience that global warming not only has environmental consequences, but also political repercussions. Newly-opened access and natural resources have started

The “Extreme Arctic” will need more radical innovation, like east coast of Greenland.

Statoil has been operating in the Norwegian Barents Sea, north of the Arctic Circle, for more than 30 years, where it has one energy plant, two oil and gas development projects and several exploration wells in the Norwegian Barents Sea.

For Statoil, the Arctic is an important source of energy for the future. In the face of an expected 30% global energy demand increase in the coming 30 years, Statoil considers energy to be an important element to keep pace with economic growth and rising living standards that might lift millions of people out of poverty.

She stressed the challenges of working here - volatile climatic conditions, vast

The Arctic Futures Symposium, organised by the International Polar Foundation, brings together a wide range of stakeholders and policy-makers. Here's a flavour of the opinions voiced at the fourth annual event, held in Brussels in October 2013

Views of the NORTH

Global leaders need imagination and courage to

safeguard the Arctic

Delegates at the Arctic Futures Symposium

Gro G Haatvedt discusses Statoil's view of the Arctic

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distances, ice-filled waters and vulnerable Arctic communities – and emphasized Statoil’s stepwise approach in its operations, gradually moving northwards to harsher environments, always under close supervision of the Norwegian authorities, who “make sure that the industry does not move faster than technology allows it to”.

Haatvedt used the Snøhvit LNG plant as a prime example of a successful operation in the Norwegian Arctic. The plant took 26 years from discovery to production, going through multiple phases, during which Statoil took great efforts to establish trust between communities, governments and the industry. Haatvedt mentioned the positive coexistence with fisheries and local communities along the Norwegian coast. In Hammerfest, where the Snøhvit plant is located, jobs were created, a declining trend in population was reversed and the increased tax income helped build new infrastructure such as schools, sports complexes and cultural facilities.

The community leader

Reggie Joule is Mayor of Alaska's Northwest Arctic Borough, which covers 36,000 sq km, contains 11 villages, none of which are connected by road, and is home to 7,500 people, 80% of whom are indigenous. He highlighted the importance of the land for the community’s food security: fish, sea and land mammals, local plants and birds constitute the basis for subsistence in the region.

“Putting away food is like putting money in a bank – as soon as the snow melts in the spring, we are filling up our caches for the next winter because our harvesting season is so short,” Joule explained.

Mayor Joule discussed the prospective development of Alaska’s outer continental shelf because it could impact local marine food sources. If oil production occurs one day, the lack of ports and first responder capacity in the region will pose big

challenges, he said. He highlighted the costs of living in

this region with the Nana Corporation currently looking for partners to explore for gas in the Kotzebue Basin to offset the use of expensive diesel and stove oil, which can cost as much as US$11 per gallon, a challenge for a region that has unemployment of 50% in some areas. Electricity costs are also high, with some communities facing electricity bills of US$ 500-1,200 a month in winter.

The shipowner

Anders Backman, head of Polar Operations and chair of ice council at Viking Supply Shipowners, doesn't expect to see a dramatic increase in Arctic shipping outside offshore activities.

The primary focus should be on marine safety, Backman stressed. Companies should be required to have reliable safety management, including experienced staff, periodic training, efficient ice management for the provision of data, and increased standard requirements for the ships themselves. The vessels operating in Arctic waters must be specifically designed for this purpose.

If appropriate available technology and experience is used, there is no higher risk to operate in the Arctic than in any other areas, Backman argued. From his own experience, he said that insurance costs for operations in Arctic waters may even be lower than in other areas if preconditions like experienced personnel and best available technology are met. One reason for this is that the risk of collision in the area is close to zero, compared to much higher risks of collision in the English Channel.

The climate scientist

Peter Wadhams, professor of Ocean Physics, University of Cambridge, explained that after the last ice age ended some 11,700 years ago, atmospheric CO2 levels slowly climbed back to 280 ppm, and have remained more or less steady at about 280 ppm from 10,000 BC to 1850 AD. Since 1850, atmospheric CO2 concentrations have shot up to 400 ppm. Wadhams described this as “an inadvertent experiment on a massive scale to our atmosphere”.

For the Arctic sea ice, this means an accelerated retreat. He highlighted the reduction of multi-year ice: whereas it used to occupy almost the entire Arctic Ocean prior to 2004, it had retreated to a narrow fringe by 2012, and has widely been replaced by first year ice. It is also getting thinner. “It’s only shrinking very

slowly, but once it shrinks to a certain point, and the summer melt exceeds the winter growth, we will see a collapse rather than a continued gradual shrinking,” the professor warned, predicting that September sea

ice will be gone by 2015/16, gradually leading to ice-free summer periods of up to 3-4 months.

Professor Wadhams also highlighted the threat of methane release from the subsea permafrost. Scientists have already observed methane plumes coming up from the seabed in the East Siberian Sea. The Professor projected that 50 Gigatons (Gt) of methane could be released in the next ten years, adding further to global warming and could cost the global economy an estimated US$60 trillion (using the Stern Review model) over a century, far exceeding the benefits from Arctic shipping and oil production, he warned.

With the appropriate technology and expertise, there's no higher risk to

operate in the Arctic than in any other areas

Major Joules in conversation Peter Wadhams, professor of Ocean Physics at Cambridge University

ARCTIC FUTURES


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The EU seal ban demonstrates a

fundamental lack of understanding of Arctic Peoples

Leona Aglukkaq is a familiar face for those with an interest in Arctic matters. She is Canada's Minister of the Environment and the current chair of the Arctic Council.

Prior to this, the Nunavut MP was Canada's Minister of Health, and it was in this role that she commissioned a report into food insecurity among Aboriginal communities in the North. Canada may be a G8 nation, with GDP of US$1.5 trillion and a top five energy producer, but many of those living in its empty northern reaches are still scratching a subsistence living.

The report, Aboriginal Food Security in Northern Canada: An Assessment of the State of Knowledge, prepared by a panel of 15 experts for the Council of Canadian Academies, makes bleak reading. It found that Aboriginal households across Canada experience food insecurity at a rate more than double that of non-Aboriginal households, 27% compared to 12%, with those households with children at greatest risk. A 2007-2008 survey indicated that nearly 70% of Inuit preschoolers aged three to five lived in food insecure households, and 56% lived in households with child-specific food insecurity. Women are more affected than men.

One of the issues identified is the extremely high cost of food in remote areas. The average expenditure on food in Nunavut was calculated as C$1,317 per month, as compared to a national average of C$609: yet the median income of Inuit adults is less than C$20,000 per year, or C$1,666 per month. A 2 kg box of spaghetti that might cost C$3 in much of Canada can cost C$18.79 in Clyde River while a frozen pizza, typically sold for around C$8, could be almost US$28 in Iqaluit.

Another issue is "nutrient transition" in the rapidly changing North as Inuit communities move away from nutrient-rich traditional diets to imported market-based food. This can have health impacts because the most affordable market food is often the least nutritious and loaded with fat, sugar and salt, putting communities at risk of chronic diseases like diabetes and micronutrient deficiencies.

The report warned the “serious and complex problem” of food insecurity will require consideration of many contributing factors, including environmental change, culture, governance and economies. And there's no silver bullet: a range of holistic approaches, including poverty reduction strategies, will be required.

Poverty among indigenous communities in Canada is a long-standing issue. Last year the Canadian Centre for Policy

Alternatives and Save the Children Canada found the average child poverty rate for all indigenous children is 40%, compared to 15% for non-indigenous children, and that indigenous children trail the rest of Canada’s children on practically every measure of wellbeing: family income, educational attainment, crowding and homelessness, poor water quality, infant mortality, health and suicide.

In a joint statement, President of Inuit Tapiriit Kanatami, Terry Audla, and President of the Inuit Circumpolar Council – Canada, Duane Smith, agreed that food insecurity is a “significant struggle” for many Inuit in northern Canada. “We have seen first-hand that it is having a negative impact on northern individuals, families and communities, and also on the larger Canadian health care system and economy,” said Audla and Smith. “It [the report] reaffirms the need to address food insecurity in Inuit Nunangat and the need to involve the people and communities most impacted by food insecurity in the development of long-term solutions.”

Traditional ways of living are increasingly under pressure in the North. The EU's 2010 ban on imports of seal products has been seen as yet another attack on centuries-old traditions. The Inuit maintain that seal harvests of abundant seal populations are sustainable and helps sustain livelihoods and ways of life.

“The seal ban demonstrates a fundamental lack of understanding of Arctic Peoples on the part of the EU,” said Audla in November, when the WTO upheld the EU ban.

This is creating wider ripples. The EU has requested permanent observer status at the Arctic Council, but Canada, in its role as Chair, has indicated that a decision will not be reached until the trade issue is resolved.

Leona Aglukkaq, as chair of the Arctic Council and a native of Nunavut, recently told the WTO that sealing “is part of my culture and heritage”. “The seal hunt has been at the very heart of the economic well-being of these communities, both before and after the first European seal hunters came to our shores,” said Aglukkaq, who has been accused by the likes of Greenpeace of pursuing a pro-oil development agenda in the Arctic.

Yet the Council of Canadian Academies report makes clear why Aglukkaq would support carefully regulated sustainable development. Finding a lasting solutions to the problems of poverty and food insecurity will require the involvement of those most affected by food insecurity: people living in the North.

Hunger stalks Canada's North

Poverty and food insecurity are serious problems for Aboriginal households in the Canadian North, where rapidly changing social, environmental and economic conditions

are combining to create an emerging public health crisis

An Inuit man rows his catch to shore Inuit children examine the catch

INSIGHT


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