forum no. 2 2006

no 02 2006

Claude Mandil, International Energy Agency:

Towards a clean, clever and competitiveenergy future

DNV Forum

Also inside:> Offshore cooperation across borders

> Aker Yards preferred for innovation

> Underground storage of CO2

0802 20

01 Editorial

02 Director of the International Energy Agency Claude Mandil:Towards a clean, clever and competitive energy future

08 Nuclear energy: Farewell… and welcome back

12 Offshore cooperation across borders

14 Aker Yards´ CEO Karl Erik Kjelstad: Preferred for innovationPresident of Aker Yards in Finland Yrjö Julin: The Formula 1 of shipbuilding

20 President of Höegh Fleet Services, Yngvil Åsheim: At the forefront of shipping

24 Americans go for underground storage of CO2

26 COSCO forges ahead

28 GlobalSantaFe and BHP Billiton Petroleum:Partnering for excellence

30 Automotive leadership excellence

34 News

36 Last word

contents

30

1

Global energy consumption levels are accelerating.

With no major changes to the present energy policy,

the world’s CO2 emissions will have increased by a

factor of 2.5 by 2050. Politicians and executives are

realising the threatening scenarios this increase

entails. However, as the director of the International

Energy Agency, Claude Mandil, underlines in this

edition of DNV Forum: there is no single solution

for a sustainable energy future. A broad approach and

portfolio are needed and diversification is the key.

To meet the surging world demand for energy, compa-

nies are striving to bring to life innovative ways of

developing new oil and gas fields. Alternative sources,

renewable energies and energy efficiency are topics

high on the agenda. Pioneering projects are exploring

new technologies across the energy spectrum with the

aim of obtaining a sustainable energy mix.

In this demanding business environment, companies

with a superior ability to source and deploy new tech-

nology will have a competitive edge. To achieve such

a position, risk management is paramount. In DNV,

we are experiencing an industry-wide increased need

for a deeper understanding of critical risk factors and

subsequently a growing demand for risk management

services. Zero tolerance for failure and increased focus

on Corporate Social Responsibility are societal expec-

tations adding to the complexity.

To help the whole energy spectrum to manage risk,

DNV has now established a new business area – DNV

Energy – which combines the energy expertise to be

found throughout our organisation. We have supported

the oil and gas industry since the very beginning of

the oil exploration in the North Sea. We believe the

industry appreciates long-term involvement, ensuring

experience and documentation beyond what short-

term subcontractors can provide.

By drawing on our combined forces and our under-

standing of a rapidly changing market, we hope to

make a difference by helping our customers in the

global energy market to succeed.

A deeper understanding

of risk

“THERE IS NO SINGLE SOLUTION FOR A SUSTAINABLE ENERGY FUTURE. A BROAD APPROACH ARE NEEDED ANDDIVERSIFICATION IS THE KEY.”

HENRIK O. MADSEN

President and Chief Executive Officer

Towards a clean, clever and competit ive energy future

tit ive energy future

4 DNV Forum no 02 2006

Acting as energy policy advisor for its 26

member countries in their efforts to

ensure reliable, affordable and clean ener-

gy for their citizens, the International

Energy Agency, IEA, was founded during

the oil crisis of 1973-74. While its initial

role was to coordinate measures in times

of oil supply emergencies, the energy mar-

kets have changed and so has the IEA.

Executive director Claude Mandil has

widened the focus of the agency – which is

part of the OECD family – to well beyond

oil crisis management. Today the agency

works on broad energy issues, including

climate-change policies, market reforms,

energy-technology collaboration and out-

reach to the rest of the world.

90-DAY OIL STOCKS

IEA member countries today hold oil stocks

equivalent to at least 90 days of net oil

imports.

“Our members stand ready to take cooper-

ative measures to meet any oil supply emer-

gency, and the IEA will then coordinate

those measures,” explains Claude Mandil.

He was appointed Managing Director of

Gaz de France in 1998 and then Chairman

and CEO of the Institut Français du

Pétrole in 2000 prior to being asked to

lead the IEA in 2003. The measures he

refers to include, for example, stock draw,

demands for energy consumption restraint,

fuel switching and surge production.

“Although the world has changed since

we were founded more than 30 years ago,

we still have an important role to play,” he

emphasises, pointing at recent examples

such as when hurricanes struck the US

Gulf of Mexico in September 2005, damag-

ing refineries and disrupting supply sys-

tems. Another ‘worst case’ scenario is one

in which Iran stops its oil exports of 2.7

million barrels a day.

“We are well prepared for such events. If

we weren’t, the world could soon be facing

a major catastrophe. The IEA has devel-

oped a safety net based on cooperation

and international solidarity. This is only

possible as long as the countries are pre-

pared and willing to cooperate with us,”

he says, mentioning the situation that

occurred in 2003 when Venezuela experi-

enced strikes and unrest and the US start-

ed its military operations in Iraq. The

world was facing a situation involving insuf-

ficient oil production. OPEC was contacted

and Saudi Arabia was asked if it was willing

to increase its production, which it did.

“The strategic stocks are only supposed

to be a last way out,” explains Claude

Mandil.

THE THREE ES

The IEA today has a staff of around 170,

mainly energy experts and statisticians

from the member countries. However,

as the world has changed since the IEA’s

foundation, the agency’s current work is

based on the three Es; Energy supply secu-

rity, Economic growth and Environmental

protection.

Aiming for a sustainable

energy future“There is no single solution for a sustainable energy future. A broad portfolio is needed

and diversification is the key word. We must not put all the eggs into one basket,” says

energy deep thinker and managing director of the International Energy Agency, Claude

Mandil. TEXT: EVA HALVORSEN PHOTO: NINA EIRIN RANGØY

“In the current lighting environment there are enormous sources of waste. Light is routinely supplied to spaces where no one is present. Over-lighting occurs frequently and there are vast differences in the efficiency of competing lighting sources and in the way systems are designed to deliver light to where it is needed. While the problem is global, we have the means to address this waste now,” says Claude Mandil.


“As far as energy policy is concerned, all

countries need to stand on these three

legs. If not, the whole energy policy will

suffer and energy poverty cannot be avoid-

ed,” states Claude Mandil. He is ashamed

of the present situation, in which 25% of

the world’s population – 1.5 billion people

– have no access to electricity and are

totally untouched by progress.

“However, this is not mainly an econom-

ic or technical problem. A key issue is poor

governance, which results in little interest

in investing in these countries,” he says.

At the other end of the scale he refers

to Norway as a good example. The IEA last

year commended the Norwegian energy

policy for its exemplary management of

Norway’s resources.

“Norway’s transparent and forward-

looking management of its petroleum

resources provides a good example to

other countries. The skilful development

of Norway’s large oil and gas resources has

made the country Europe’s largest

exporter of oil and gas and a significant

contributor to Europe’s security of supply.

But Norway is now facing challenges as the

growth in energy consumption is outpac-

ing that of onshore production and real

difficulties must be overcome if the Kyoto

target is to be met without compromising

security of supply,” he says.

The IEA aims to help governments

worldwide to understand the nature of a

good energy policy.

“A sound energy policy is good for all

the three Es at the same time. And all the

three Es are equally important. Any gov-

ernment failing to realise this is running

the risk of collapsing its energy policy,”

claims Claude Mandil continuing: “The

world needs more investments in all the

three Es.”

CHINESE POWER SECTOR REFORM

The IEA also pays attention to non-mem-

ber countries to help them improve their

energy policy. The three giants – India,

China and Russia – are on its list, as are

Indonesia, South Africa, Brazil and

Mexico, among others, all of which are

facing difficult situations.

“Take China, for instance. Every two

years, China adds as much power-genera-

tion capacity as the total energy produc-

tion in France or Canada. The country is

now the biggest electricity consumer in the

world after the US and its needs are still

growing. With its rapid rate of expansion,

China’s power sector is unique. At the

same time, it shares many challenges that

other countries have long grappled with:

How to reflect the full costs of generating

electricity in prices to consumers while

increasing access to this essential commod-

ity? How to provide stable and secure

power economically? How to reduce the

environmental burdens of generating

power? Taking on these challenges,

Chinese policy will have implications for

energy markets and for pollution that

affect all of us,” says Claude Mandil.

Two years ago, the IEA and Chinese

officials agreed that applying the lessons of

liberalisation from other countries to

China’s specific circumstances could help

to refocus and re-energise this country’s

power-sector reforms. An IEA study pub-

lished this summer was the result of that

effort, and it came at a time when the

country is deliberating on a new compre-

hensive energy law as well as on revisions

to its electricity law. Since China first

embarked on an effort to gradually liber-

alise its power sector, great progress has

been made, according to Claude Mandil.

“China should be congratulated for this,”

he says, stressing, however, that “important

challenges remain. Too much electricity is

wasted by consumers and by networks, so

too many power plants are being built to

meet this demand. Too much fuel is wasted

in generating power, and too much pollu-

tion is released as a result.”

ENERGY EFFICIENCY IS VITAL

And this brings us over to the next topic

which is very close to Claude Mandil’s

heart: Energy efficiency.

“Large amounts of energy savings are

available at a low cost,” he claims, strongly

urging governments to increase their ener-

gy efficiency efforts. “If today’s policy con-

tinues, the world’s CO2 emissions will be

increased by a factor of 2.5 by 2050.

However, if we radically change our energy

use by utilising the technology available

today, the emissions in 2050 will only have

increased by 6%,” he says.

At the G8 meeting in Gleneagles,

Scotland, last summer the IEA was asked

to play a major role in delivering the sum-

mit’s Plan of Action. Six key priorities were

identified, and energy efficiency was one

of these. Among other things, energy effi-

ciency best practice studies were called for,

and an IEA study on lighting was recently

published.

“Without rapid action, the amount of

energy used for lighting will be 80% high-

er in 2030 than today. However, if we sim-

ply make better use of today’s efficient

lighting technologies and techniques,

global lighting energy demand need be no

greater at that time,” Claude Mandil says,

adding: “This important work shows that

the potential for energy savings in lighting

is simply enormous and can be achieved

using technologies that are not only readi-

“Improved energy efficiency is an indispensable component of any policy mix and is available immediately,” says Claude Mandil.

“ENERGY EFFICIENCY HAS A KEY ROLE TO PLAY AND IS AVAILABLE IN THE SHORT TERM.”

7DNV Forum no 02 2006

ly available in the market but also econom-

ically competitive during the product’s life

cycle. Moreover, more efficient lighting

also results in lower CO2 emissions.”

He also mentions a range of other

efforts we all could – and should – make,

such as checking energy consumption

levels when we buy new appliances: limit-

ing the standby consumption to 1 Watt for

electrical appliances would reduce the

peak electricity load by 20GW, the equiva-

lent of approximately twenty large power

plants. Furthermore, the IEA recommends

the adoption of more energy-efficient

lighting and regular monitoring of the tyre

pressure in our cars to ensure a far more

efficient use of energy. “We need diversifi-

cation, and we need a lot more research

into and development of renewable energy

sources. A sustainable energy future is pos-

sible, but only if we act urgently and deci-

sively to promote, develop and deploy a

full mix of energy technologies,” concludes

Claude Mandil.

Nuclear energy:

Farewell… and welcome back

and welcome back Chapelcross power station was Scotland’s first commercial nuclear facility. The station

opened in 1959 and became the mainstay of electricity production in South West

Scotland. After 45 years of successful operation the reactors were switched off in 2004.

During 2007, the four cooling towers will be explosively demolished, removing a

significant feature of the Dumfriesshire skyline. TEXT: HARALD BRÅTHEN PHOTO: NINA EIRIN RANGØY


The decommissioning of Chapelcross will

be an important milestone in the closure

of more than 20 elderly nuclear power sta-

tions in Britain. Nuclear energy provides

19% of the country’s electricity which will

fall to 6% as old plants cease generation.

But this is not the end of the nuclear story.

In a 216-page review called The Energy

Challenge published on 11 July, the British

Government has introduced a range of

measures to cope with the forecast energy

crisis. So what are the British going to

focus on? They propose a mixed approach

to energy saving and supply including the

building of new nuclear stations.

RETURN TO GREEN FIELDS

Standing in the middle of a cooling tower is

a strange experience. A huge cavern, 85-

metres high and made of solid concrete,

with a giant circular opening at the top.

Like the Pantheon in Rome, you can only

see the sky above. And where there were

previously huge clouds of steam from the

cooling process, there is now emptiness.

From being a power generating unit with

a capacity of 200 MW, the nuclear power

station at Chapelcross is now a complex

demolition project whose end goal is to

return the site to green fields. Chapelcross

is a major employer in the region and local

people value its contribution to the commu-

nity. The cooling towers have been an icon-

ic landmark on the horizon for nearly 50

years and many will be sad to see them go.

SAFE DECOMMISSIONING

Although nuclear power is experiencing a

renaissance, it is critical that the decom-

missioning of older power stations is car-

ried out safely – both for the community

and for more than 400 production workers

that are being retrained as project employ-

ees and decommissioning specialists.

Mike Travis, has been the site manager

at the Chapelcross power station since it

ceased generation in 2004: “The closure

and decommissioning of a nuclear power

station is very demanding and involves

numerous challenges. Safety is a very

strong and natural part of our culture so

we are ready for the challenges ahead.

Radioactivity is still a hazard but there are

now many new ‘dangers’ we have to look

out for. We’re now a building site in

reverse. Instead of building a power station

we are going to demolish one – and that

may be more dangerous than either build-

ing or operating such a station.”

PROUD OF OUR PERFORMANCE

DNV has been hired to assess the safety,

environmental and business performance

at 11 British Nuclear Group facilities. The

assessments use isrs7 – DNV’s world lead-

ing system for measuring, improving and

demonstrating management system per-

formance. British Nuclear Group,

Chapelcross is the first site in the world

to have an isrs7 award level assessment.

“We’re all proud and pleased to be

awarded a Level 7, in the first level assess-

ment that has been performed with this

new version of ISRS,” says Andy Feltham,

the environment, health, safety and quality

manager at the Chapelcross power station.

“An important challenge for us is to simpli-

fy our work processes without compromis-

ing safety. The isrs7 assessment has been

helpful in exploring how this can be

achieved, with its thorough process involv-

ing more than 50 site personnel. The DNV

team helped us identify our strengths and

highlight areas for improvement.”

99% WILL BE REUSED

The team at Chapelcross gives priority to

major hazards first. This means the removal

of 400 tonnes of spent nuclear fuel that is

still contained in the four nuclear reactors.

This spent nuclear fuel will be transported

to the Sellafield nuclear facility a few miles

over the border in England. The nuclear

fuel will be recycled there – and 99% will

be reused, while the last 1% will be isolated

and stored securely for several centuries.

This work is expected to be completed in

2009. In just over 20 years, the entire power

station area will then be decommissioned

in accordance with the strategy of the

Nuclear Decommissioning Authority, the

organisation responsible for managing

this process across the UK.

Chapelcross will conduct another isrs7

assessment once the defuelling has been

completed, to help them prepare for

decomissioning. In the meantime, Mike

Travis and his team will use DNV to help

develop systems for managing business

risk. “What can hurt us as a unit? What

can stop us? What commercial risks are we

running? We need a methodical, high level

look at what can hurt us in the future,”

says Mike Travis, who is in charge of the

annual budget of GBP 70 million.

SAFER AND MORE EFFICIENT

The Chapelcross power station has come

to the end of its operational life, but the

world needs more and more energy.

Nuclear power is experiencing renewed

popularity throughout most of the world.

New power stations are going to be built.

They will be built to the highest safety

standards, more efficient and ten times as

productive as the first power stations built

in the 1950s.

British Nuclear Group's Andy Feltham (left),Walter Kennedy and Mike Travis with theirisrs7 Award.


n Climate change must be tackled while

ensuring secure energy supplies

n Replace existing nuclear power stations with

new stations

n Provide incentives for large organisations

such as supermarkets and hotels to cut

carbon emissions

n Boost investment in renewable energy

n Drive low efficiency domestic electronic

goods out of the market

! The Energy Challenge

The main proposals in “The Energy Challenge”, published by the British Government in July 2006:

Like the Pantheon in Rome, you can only see the sky above,

when inside one of the 85 metres high cooling towers. Here, Site Manager Mike Travis.


“Hydro has delivered projects worth more

than NOK 100 billion – without exceeding

any deadlines or overrunning any budgets.

This is something that is noticed,” says

Hydro’s Senior Vice President Bengt Lie

Hansen.

Hydro wants to take its experience

of carrying out huge, complex projects

on the Norwegian shelf with it to Russia.

MAJOR CHALLENGES

The Shtokman field lies 600 km offshore.

The challenges involved in bringing the

gas safely ashore are innumerable. Key

words such as winter, ice, cold, the lack of

light, winterised rigs, 30-35 minus degrees,

icebergs, reservoir assistance using com-

pression, logistics, language – are all some

of the heavy challenges.

Hydro’s management looks on the dis-

tance from the shore as being among the

greatest technical challenges involved in

the development. The company has spent

a lot of time and used a lot of its resources

to solve this together with the Russians –

most recently with Gazprom.

“We’ve looked at technical solutions

and mapped the reservoir,” says Technical

Director Per Kjærnes.

Now, Deep Sea Delta, a rig on Hydro

contract, is assisting Gazprom’s drilling

company, Gazflot, on Well 7 on the

Shtokman field.

“The drilling cooperation with the

Russians is of great value for all parties. We

hope this work will pave the way for a fruit-

ful cooperation in future development

stages of Shtokman,” says Per Kjærnes.

A BLUEPRINT OF THE ORMEN LANGE

DEVELOPMENT

Bengt Lie Hansen and Per Kjærnes choose

to look at the Hydro operated Ormen

Lange development as the most relevant

reference project looking towards a devel-

opment of Shtokman.

“The challenges involved are much the

same,” says Per Kjærnes, who has dealt

with the Ormen Lange field since 1996.

Together with Bengt Lie Hansen he points

out several factors from the Ormen Lange

development:

n The technological challenges involved

in putting in place one of the world’s

largest subsea facilities – and then

bringing the gas ashore subsea through

120 km of pipeline.

n The ability to carry out and complete

the project within the time limits and

costs stated in the project schedule.

Start: 1 October 2007.

Cost: NOK 66 billion.

n The social responsibility, with the

emphasis on creating local and regional

effects through deliveries from the local

environment. 75% of the deliveries to

The Norwegian oil and offshore industry has an impressive project history. Hydro’s Senior

Vice President Bengt Lie Hansen and Technical Director Per Kjærnes mention Ormen

Lange, T0GI, Troll A and C and Oseberg on the Norwegian continental shelf. And Statoil

can undoubtedly add its many billion krone projects to this list. Both these two oil majors

are currently currying favour and hoping to be chosen as partners of the gigantic Shtokman

development in the Russian part of Barents Sea. TEXT: HARALD BRÅTHEN PHOTO: KNUT VADSETH

Offshore cooperation

across borders


the onshore facility come from Norwegian

industry. This is the largest percentage

during the Norwegian oil industry’s 35-

year history.

“We believe the Shtokman field can bene-

fit from our experience from the Ormen

Lange development,” says Bengt Lie

Hansen, continuing; “We have shown that

it’s possible to implement a solution that

involves bringing the gas ashore via a sub-

sea facility and pipelines.”

SUPPLIER PROGRAMME IN RUSSIA

Hydro has already been in Russia for more

than 50 years and has carried out various

tasks in connection with the Shtokman

field for 17 years. The company has devel-

oped a climate of trust and cooperation

throughout these years.

“We want to forge links with good sup-

pliers and are clever at understanding the

interaction with these suppliers, in which

the division of labour, responsibilities and

tasks has to be crystal clear,” says Bengt Lie

Hansen.

Having carried out a supplier pro-

gramme in north-west Russia since 2002,

Hydro tries to help Russian industry

improve in order to meet the require-

ments of the offshore industry.

A result of the supplier programme is

the collaboration between the Murmansk

Shipyard and Reinertsen in Trondheim.

This has already resulted in several module

deliveries to Norway.

COMPETITIVE NORWEGIAN INDUSTRIAL

CLUSTER

“In developing the Ormen Lange field,

the Norwegian industrial cluster has

demonstrated the competitive ability of

Norwegian industry,” says Bengt Lie

Hansen. “DNV’s efforts on the Bluestream

pipeline under the Black Sea have also

been valuable.”

This applies not least to the collabora-

tion on DNV’s pipeline rules. The further

development of these rules will be impor-

tant when the Shtokman field is to be

developed.

n The Shtokman field, which lies east of

Murmansk, was discovered in 1988.

n The field contains approximately 3,600

billion standard cubic metres of gas – more

than three times the volume of gas in the

North Sea’s Troll field.

n The distance to land is approximately

600 km.

n The field’s water depth is 350 metres. By

comparison, the water depth in the Ormen

Lange field is 850-1,100 metres.

n Five foreign companies are competing to

become partners in the licence. These

include Hydro and Statoil.

! The Shtokman field

“We believe the Shtokman field can benefit from Hydro’s experience from the Ormen Lange field development off the Norwegiancoast,” say Technical Director Per Kjærnes and Hydro’s Senior Vice President Bengt Lie Hansen.

Preferred for innovation


Aker Yards is one of Europe’s largest, and

among the world’s five largest ship-

builders. Building complex and sophisti-

cated vessels, it virtually sets new standards

with almost every ship. With a history last-

ing for three centuries, the company’s

product range today includes cruise ships,

ferries and merchant vessels as well as off-

shore and specialised vessels.

The world’s biggest cruise ship so far,

the Freedom of the Seas was delivered recently.

This ship was built by Aker Yards at Turku

in Finland.

“This is an excellent example of contin-

uous innovation and a good customer rela-

tionship,” says Karl Erik Kjelstad, who has

been Aker Yard’s CEO since 2003.

GROWING TOGETHER

“We have cooperated with Royal Caribbean

Cruiselines (RCL) for more than 35 years.

Our collaboration started with the Song

of Norway in 1970, and since then we’ve

been constantly developing new concepts

together that have been trend-setters in

the cruise segment. We try to listen to our

customers; what they want and what their

ideas are. In this way, our customers have

grown together with us,” he says.

However, the Freedom of the Seas’ world

record will soon be broken. Aker Yards will

shortly start to build an even larger ship

for RCL, Genesis, and Karl Erik Kjelstad has

great faith in future growth in the cruise-

ship industry. This is why Aker Yards

acquired Alstom’s Chantiers de l’Atlantique

yard in France recently. They had been

looking for a good shipyard with expertise

and experience in building large cruise

ships.

“It took 2 million engineer hours to

develop the prototype of the Freedom of the

Seas, which represents a peak for our engi-

neering resources. With the acquisition

in France, we’ll have more resources for

coping with such peaks,” he explains.

INCREASED ARCTIC EXPERTISE

The company is also a specialist in ships

operating in Arctic areas. In 2003, it

realised that more and more projects

required Arctic expertise.

“Having operated an ice lab in Finland

since 1970, three years ago we wanted to

extend our activity in this segment and

built a new, larger ice lab. We’ve also estab-

lished a separate company in Helsinki

together with ABB Wärtsilä and Aker

Kvaerner. Aker Yards now have excellent

expertise in ice and are perceived as an

interesting supplier. We have actually built

65% of all the icebreakers in the world,”

he states.

The company has just delivered the

Norilsk Nickel which is a specialised contain-

er ship that can go both forwards and

backwards, a so-called “double acting ship”

with full ice class. This summer, Norilsk

Nickel signed a contract for building

another four vessels. The company has

also delivered a ship with a similar solution

which now operates as a coast guard vessel

at Svalbard, and the latter is classed by DNV.

“We intend to work with DNV in the

future, too,” says Karl Erik Kjelstad.

ADVANCED TECHNOLOGY FOR THE

OFFSHORE SECTOR

Another core area for Aker Yards is the

offshore sector, for which it has developed

new designs and concepts.

“The customers define their wants and

needs and we contribute our own thoughts

and ideas. Our technological development

takes place through projects and good

relationships with our customers,” he

explains.

Lately, the company has taken part in

developing a concept using concrete in

a ship hull, and a prototype is now being

built in Germany. They have also devel-

oped an LNG concept involving a new

containment system that is both safe and

production-friendly. DNV has been the

technology partner in the development

of both these projects.

Thanks to its business model and flexible cost base, Europe based Aker Yards manages to

be competitive. “Several yards may be involved when we build a vessel,” explains CEO of

the 17-yard group Karl Erik Kjelstad.

TEXT: EVA HALVORSEN PHOTO: NINA EIRIN RANGØY

“The customers define their wants and needs and we contribute our own thoughts and ideas. Our technological development takes place through projects and good relationships with our customers,” says CEO of Aker Yards Karl Erik Kjelstad.

16

“DNV has wide ranging expertise and

a long tradition of running innovation

projects. This has been useful for us in

our continuous struggle to be pioneering,”

he explains.

SUCCESS IN HIGH-COST COUNTRIES

Aker Yards has managed to find a balance

and be successful in building ships in high-

cost countries over the past few years. It

has done so by finding niches to which it

delivers special ships with a high technical

content. The ships’ hulls are built in

Romania and Ukraine.

“Precise planning and innovative devel-

opment are crucial to achieving design

and construction solutions for specialised

vessels. Typically, our customers present

their framework requirements, challenging

our ability to identify and solve their prob-

lems. Unconventional and innovative

thinking and a wealth of experience along

with modern project planning shorten our

delivery times. In total, this means that we

are an interesting supplier,” explains Karl

Erik Kjelstad.

The company has prepared a thorough

strategy for what it is to manufacture itself

and what is to be outsourced. A lot of the

equipment with a high-tech content is

currently manufactured by the maritime

cluster in Norway.

“There has never been so much mar-

itime activity along the Norwegian coast

as there is today,” he states.

HANDS-ON MANAGEMENT

Another important criterion for success

is to develop a company culture that sup-

ports the goals which have been set. Karl

Erik Kjelstad has great faith in a hands-on

management philosophy. This entails to

be available to customers 24/7, a dedicat-

ed staff with a high level of expertise, and

placing emphasis on building long-term

relationships. Secondly, a successful

company manages to keep its staff:

“We make conditions suitable for a life-

time career in Aker Yards,” he concludes.

In Finland, the ship yard industry has a

long history, stretching back hundreds of

years. The last few decades have seen the

once booming industry falter and slowly

build itself up again. Amidst mergers and

restructuring, Aker Yards has emerged as

a leader.

“It has been a tough period, but it has

been absolutely necessary. Without it,

there would be no growth or the develop-

ments and increased productivity that we

see today,” says Yrjö Julin.

Before the mergers the number of

workers employed in Finnish shipyards

was many times higher, he explains, but

new production methods have changed

the industry completely. “We have seen

a trend of non-core activities being out-

sourced, so that today we talk about an

assembly yard philosophy. We manage

the projects, and the conceptual and basic

design of the ships, but otherwise we use

more than 600 companies, both from the

Finnish maritime cluster and outside. In

this way Aker Yards in Finland can build

some of the most complex ships in the

world with an in-house staff of less than

4,000 people,” says Yrjö Julin.

Aker Yards is however trying to reduce

the number of companies in their supply

chain.

“We are giving bigger and bigger vol-

umes to turn-key companies and sub-con-

tractors. Instead of trying to do everything

ourselves, we are trying to share out larger

and therefore more attractive volumes to

our co-players,” explain Yrjö Julin.

Aker Yards builds the biggest cruise ships in the world;

the most valuable commercial ships ever constructed.

They are world leading in ferries, with ice-technology that

few (if any) can match. “We have secured know-how and

technology to stay in the Formula 1 of shipbuilding for

decades,” says Yrjö Julin, president of Aker Yards Yards

business area Cruise & Ferries, and responsible for the

operations in Finland. TEXT: ANDERS ØVREBERG PHOTO: JOUNI SAARISTO

President of Aker Yards in Finland.

YRJÖ JULIN

RCCL's the Freedom of the Seas underconstruction at Turku ship yard in Finland.The ship is the largest cruise ship everbuilt, and measures 339 meters and160.000 grosse tonnes.

The Formula 1 of shipbuilding

The Formula 1 of shipbuilding

18

STAYING IN THE RACE

At present, the Finnish maritime cluster,

which is mainly industrial and manufactur-

ing, including harbours and shipping com-

panies – total some 50,000 workers with a

turn-over of 11 billion euro of annual sales.

“40 years ago, Sweden was the second

biggest ship builder in the world. Their

strategy was to build tankers and container

ships using a high level of automation.

Today the Swedish shipbuilding industry

doesn’t exist. In Finland we chose another

strategy; to go for the most difficult and

demanding ships to build – cruise and

passenger ships,” says Yrjö Julin.

That strategy has paid off. Since June

2004 the Aker Yard stock has increased

almost four times over. Aker Yards’ funda-

mental competitive advantage has been

and is this focus on sophisticated ships

with high technology content.

“There are probably around 1,200 ship

yards in the world, but only four compa-

nies are able to build the big cruise ships

of today: Fincantieri, Meyer Werft,

Mitsubishi Heavy Industries and Aker Yards.

And we have secured know-how and tech-

nology to stay in what we call the Formula

1 race of shipbuilding for decades,” says

Yrjö Julin.

THE FRENCH CONNECTION

In June, the Chantiers de l’Atlantique yard

in France became part of the Aker Yards

group. Yrjö Julin has been tasked with lead-

ing the integration process of the yard into

the group’s family of 17 yards.

“The French yard will be an integrated

part of the Aker Yards Cruise & Ferries

business area, which I lead, and I’m look-

ing forward to benchmarking between

Aker Yards, Finland and the coming Aker

Yards, France. Not just on prices, but also

on how we are working,” he explains, and

underlines the importance of drawing

benefits of this large-scale organisation.

“We have spent the last years merging

and trying to get synergies out of this

Finnish system. We have also been able to

benefit from the other Aker yards units,

and have utilised the capacity across bor-

ders. For example, sections of floating

hulls come to Finland from Aker Yards,

Germany. And the next challenge is to

do the same by combining the cruise and

ferry know-how between the Finnish and

the French yards.”

The goal is to lift the level of competi-

tiveness of the whole company, and not

merely copy what the others are doing.

A third level, he calls it, and with rapid

developments in the cruise industry, sharp-

ening the competitive edge is crucial.

FLOATING CITIES

Aker Yards has built icons such as SS

France, Queen Mary 2, and RCCL’s Voyager

class. Last, but certainly not least, Aker

Yards did recently deliver the world’s

largest cruise-ship to date, RCCL’s Freedom

of the Seas.

“If you think about it a cruise ship is

like a floating city. They have, cinemas,

hospitals, hairdressers, skating rinks, shops

“WE NEED TO HAVE AN ALMOST EXPONENTIAL

INCREASE OF CAPACITY AND CAPABILITY

TO KEEP UP WITH THE DEVELOPMENTS”

19

and more. Then on top of that, you have

water purification, propulsion, navigation

and all the technology to keep it moving

around the world. It’s an immensely com-

plicated system, and every time we build a

new class of cruise ship – it’s a prototype.

After just a few sea trails, off you go to take

on and entertain several thousand people

onboard. It’s a miracle really, but we make

it work,” says Yrjö Julin.

The development of the cruise market

is a continuing success story and the ships

get bigger and bigger. The Song of Norway,

the first purpose built cruise ship, was

18,000 gross tonnes. The new Genesis

class, under construction for RCCL is

220,000 gross tonnes, even larger than the

existing Freedom class.

“We need to have an almost exponen-

tial capability to keep up with the develop-

ments. Building the hull is nothing for us,

but creating the rest of the ship is where it

gets difficult and that’s where the money

is. We don’t have ready-made models, as

everything is custom made. Even every

piece of furniture is created for the ship.

There is no way a ship yard can do this

alone,” says Yrjö Julin.

With 17 yards in the Aker Yards group,

there should be plenty of helping hands.

“Building the hull is nothing for us, but creating the rest of the ship is where it gets difficult and that’s where the money is,” says YrjöJulin, president of Aker Yards in Finland. Everything is custom made, even every lamp and every piece of furniture.

At the forefront of shipping


As president of Höegh Fleet Services, naval

architect and former DNV manager Yngvil

Åsheim is responsible for Höegh’s techni-

cal management and crewing.

“We believe that having in-house expert-

ise makes us a better supplier,” she states.

Emphasising competence development

as a vital part of her management philoso-

phy, she works systematically to further

develop her staff. By expertise she means

both technical expertise and softer areas

such as attitudes, communication skills,

cultural awareness and management style.

Reports say that she succeeds very well in

implementing her philosophy. She knows

her technical area very well, and by placing

emphasis on the soft areas she has taken

the company one step further. Doing

things her own way, always with a smile

and a ‘personal touch’, she has managed

to become a popular leader with a high

standing within the company.

Höegh has strategically decided to focus

on two business segments. About 80% of

its total turnover comes from Höegh Auto-

liners, while the remaining 10% comes

from Höegh LNG (liquefied natural gas).

Höegh Autoliners operates a fleet of about

50 vessels in global trade and is one of the

world’s largest transporters of vehicles and

heavy rolling cargo. Höegh LNG has five

vessels in operation, and two of these will

serve the Snøhvit natural gas field in the

North Norwegian Sea, transporting LNG

to the US and Spain.

Yngvil Åsheim is also responsible for the

planning and supervision of all of Höegh’s

newbuilding projects. In order to meet the

growing demand, the company has imple-

mented a programme to build 20 new car

carriers and two new LNG vessels. Once

a newbuilding contract is signed, Yngvil

Åsheim assumes responsibility. She is

currently managing newbuildings in the

Philippines, Korea and Croatia. The two

new LNG vessels built in Japan have just

been launched.

“We are now going to build two

advanced LNG vessels – shuttle regasifica-

tion vessels (SRV) – for regasification

onboard. These vessels will serve a deepwa-

ter terminal off Boston and will be deliv-

ered by Samsung, Korea, in 2009,” she

explains. “The concept was developed as a

joint industry project, and DNV conducted

an evaluation of it at an early stage.”

ALWAYS NEW EXCITING PROJECTS

In order to be at the technological fore-

front of shipping, Höegh makes sure to

always have new exciting development

projects going on.

One of the projects currently going on

is an interesting one regarding a ballast

water handling installation.

“Ballast water is defined as one of four

environmental threats to the world’s

oceans, and we are now testing a prototype

developed by a small Norwegian company

called Oceansaver in close cooperation

with the Norwegian maritime cluster. The

prototype is showing promising results,”

she explains. DNV has also taken part in

this project.

Taking its environmental responsibilities

seriously, the company has allocated con-

siderable resources to this work. Höegh was

among the first shipowners to be certified

according to the ISO 14000 environmental

standard, and it has now initiated a project

focusing on exhaust scrubbers.

Transporting more than 1.6 million cars every year, Höegh Autoliners sees to that all the

cars get safely home to the next phase of their lives. Keeping the company at the fore-

front of shipping, President of Höegh Fleet Services, Yngvil Åsheim, always has innovative

projects going on: ranging from technological developments to cultural awareness.

TEXT: EVA HALVORSEN PHOTO: NINA EIRIN RANGØY

“WE ARE NOW GOING TO BUILD TWO ADVANCEDLNG VESSELS – SHUTTLE REGASIFICATION VESSELS –FOR REGASIFICATION ONBOARD.”


ALL ONBOARD

Representing the more soft areas, the ‘All

onboard’ programme was implemented

this year. Following the unfortunate inci-

dent involving Höegh’s vessel Minerva off

the US coast in 2003, when bilge water was

discharged directly to the sea, the compa-

ny realised that it had to establish a new

business-culture platform to avoid such

occurrences in the future.

“We understood that it was necessary

for us to allocate considerable resources in

order to develop the right attitudes among

our people. But we didn’t believe in a one-

off campaign. That’s why we launched All

onboard. However, we realised that we

needed more competence about cultural

differences, both to develop the pro-

gramme and to make sure we reached

everyone we wanted. It was also important

for us to ensure that all those that were to

travel around and present the material

understood these challenges,” explains

Yngvil Åsheim, and it is easy to observe

that she is enthusiastic about this initiative.

Established in 1927, Höegh had a lot of

good values from its history to build on in

order to bring the company into the

future. One aspect that needed improve-

ment, however, was the reporting routines

to allow the flow of crucial information,

i.e. regarding operational deviations and

environmental breaches. It was important

to get the message across that the company

valued the reporting of such information.

REACHING ACROSS CULTURES

“We developed the material and, assisted

by DNV’s cultural awareness expert

Pellegrino Riccardi, we succeeded in

reaching superintendents and crew man-

agers so that they got better equipped to

communicate the programme to the sea-

farers. Four key messages were chosen:

Live our values, think consequences, speak

out, and take responsibility,” says Yngvil

Åsheim proudly.

All onboard has received positive feed-

back and Höegh has experienced a formi-

dable increase in reported cases. Other

shipowners are already looking into the

concept.

“We took action and can see great

results. Realising that this is a new kind

of knowledge necessary to operate in the

new risk reality, we are now planning the

next stage; ‘All onboard 2007’, which will

build on our good experience and ensure

the development we want,” concludes

Yngvil Åsheim.

“We realised that we needed a better understanding of interpersonalbehaviour, and DNV’s cultural awareness expertise took us one stepfurther in getting our ‘All onboard’ concept implemented in the Höeghorganisation,” says Yngvil Åsheim, President of Höegh Fleet Services.

Höegh Autoliners named General

Motors´ “Supplier of the Year”

Höegh Autoliners has been named as a

General Motors’ “Supplier of the Year”

for the past three years in a row.

In competition with several thousand

other suppliers Höegh Autoliners won

for its business performance in providing

GM with world-class services.

! Facts


Although the USA does not participate in

the Kyoto Protocol, it has initiated a num-

ber of measures to combat the problem of

CO2 emissions. Established in 2003, WEST-

CARB (West Coast Regional Carbon

Sequestration Partnership) is one of seven

research partnerships co-funded by the

U.S. Department of Energy to explore

regional carbon sequestration opportuni-

ties and conduct pilot-scale validation tests.

Having identified the major sources of

man-made CO2 in its territory, WESTCARB

planned a number of storage demonstration

pilots last year which they now are putting

into action.

“We will explore opportunities for

removing CO2 from the atmosphere,” says

project manager Dr. Larry Myer, who is

employed at the Lawrence Berkeley

Laboratory. “This will be done by enhanc-

ing natural processes and by capturing the

CO2 at industrial facilities before it is emit-

ted, both of which will help slow the

atmospheric build up of this greenhouse

gas and its associated climatic effects,” he

explains.

The WESTCARB research partnership

has over 70 partners, and this year DNV

will join as an active research partner,

sponsored by the Norwegian Research

Council. The goal is to arrive at systematics

that enables verification of emission reduc-

tions so that these can be included in CO2

accounts. Such systematics will also form a

basis for calculating emission credits that

companies can invest in, just like the Kyoto

Protocol makes arrangements for.

MULTIPLE SOLUTIONS REQUIRED

“Slowing and ultimately reducing man-

made CO2 emissions is a complex chal-

lenge that will require multiple solutions,

including more efficient energy use, alter-

native fuels, electric-drive transportation,

electricity from non-CO2-emitting energy

sources, and carbon sequestration,” states

Larry Myer.

DNV will contribute on aspects of stor-

age of CO2 in underground reservoirs.

The collaboration will cover large-scale

testing, modelling, data gathering and risk

assessments. Among other things, DNV

will develop a method for calculating how

much CO2 is actually permanently abated.

Thus a confirmed value can be obtained

regarding the actual prevented emissions

Geological storage of CO2 is by professionals recognised as one of the best solutions to

limit the climate change problem. The WESTCARB partnership is developing storage sites

in six US states for removing CO2 from the atmosphere. DNV will develop new verification

systematics. TEXT AND PHOTO: EVA HALVORSEN

Project manager WESTCARB

LARRY MYER

Americans go for

underground storage of CO


when for example natural gas is being

burnt in power stations where the separat-

ed CO2 from the combustion process is

pumped down into underground reser-

voirs again.

VERIFICATION STATEMENT

“In particular, DNV will look more closely

at verification systematics for the whole

chain of capture, transportation, storage

and post-storage of CO2. Loss occurrences

will take place in all links, and it will be

of vital importance to be able to quantify

these. At the end of the day we want to

issue a ‘verification statement’ to all emis-

sion reduction projects where the CO2 is

stored underground,” he states.

Using current technology, an emission

volume equivalent to very many times the

world’s annual emissions can be stored in

reservoirs for thousands of years. However,

many pieces of the jigsaw puzzle have to be

put in place before such a solution can

be implemented.

WIDE EXPERIENCE

Over the past seven years, DNV has been

involved in various projects and pro-

grammes concerning all aspects of the

climate change gas issue.

“We have high hopes for this collabora-

tion,” concludes Larry Myer.

underground storage of CO2

CARBON SEQUESTRATION:The ‘capture’ of CO2 for further long-term storage away from the atmosphere.

CO2 can be captured in two basic ways –by enhancing natural processes thatremove it from the air and by applyingindustrial processes that remove it fromfuel gas or exhaust gas at major ‘pointsources’, such as power plants, oil refiner-ies, and cement plants.


China Ocean Shipping Company (COSCO)

is one of the flagship enterprises in China

and the second largest shipping company

in the world. Currently, COSCO owns and

operates a merchant fleet of some 600 ves-

sels with a total carrying capacity of up to

35 million dwt. Specialising in shipping

and modern logistics, COSCO acts as a

shipping agency, providing services relat-

ing to freight forwarding, shipbuilding,

ship repair, terminal operation, trade,

financing, real estate and the IT industry.

In addition, it aims to play a leading role

in each of these areas.

INNOVATIVE MANAGEMENT SYSTEM

President and CEO Captain Wei and his

senior management team are dedicated to

the building of an innovative management

system and are keen to implement new

concepts to take an international lead

within shipping.

Describing DNV’s role in COSCO’s suc-

cess in building an innovative management

system, Captain Wei comments, “The exter-

nal audits are one of the most important

contributing factors to COSCO’s success.”

“COSCO’s senior management puts

great emphasis on management innova-

tion and expects DNV to provide value-

added services that go beyond traditional

compliance audits based on certification

standards,” Sangem Hsu, DNV’s country

manager in China explains.

DNV’s Risk Based Certification approach

provides audits tailor made for a particular

company. Before each audit, the audit

team carries out organisational surveys to

identify the relevant business risk and the

focus areas of COSCO. Based on the

results of the survey, the relevant criteria

from Baldridge National Quality Award,

COSO ERM, Global Compact, and Global

COSCO has had its modern enterprise management system certified by DNV and credits

external audits as being an important contributing factor to its success.

TEXT: CATHY ZHANG PHOTO: MAGNE RØE

DNV’s country manager in China.

SANGEM HSU

COSCO forges ahead


Reporting Initiative key focus areas for

COSCO are identified and audited along-

side the ISO standard requirements.

MANAGEMENT COMMITMENT IS KEY

TO SUCCESS

Says Sangem Hsu: “COSCO’s senior man-

agement’s commitment is key to the suc-

cess. DNV’s certification services help

COSCO in building a management frame-

work which integrates enterprise risk

management and sustainable development

into the ISO-based management system.”

Sangem Hsu continues: “It’s impressive

that President and CEO Captain Wei and

his senior management are present at each

opening and closing of audit meetings.

They are at the forefront of advanced

management science and always show

great interest in the new management

practices and concepts.”

SUSTAINABILITY IS THE WAY AHEAD

Earlier this year, DNV also signed an

agreement with COSCO to support its

sustainable development under the

United Nations Global Compact.

Captain Wei has set his company’s vision

for establishing a social responsible culture

across the entire company. The pro-

gramme will cover the ten core principles

of the United Nations Global Compact

initiative, which was established by UN

Secretary-General Kofi Annan in 1999.

The Global Compact is supported by over

a thousand companies and international

labour and civil society organizations

around the world.

DNV’s cooperation with COSCO dates

back to 1999, when DNV began providing

certification services to its headquarters.

In 2001, COSCO received certificates

according to three standards: ISO 9001:

2000 for quality-, ISO 14000 for environ-

mental-, and OHSAS18000 occupational

health and safety management systems.

This made the company the first state-

owned enterprise in China to receive all

three certificates at the same time, indicat-

ing that a comprehensive management sys-

tem had been built within the company.

“This was a milestone for COSCO to

compete in the international market-

place,” says Sangem Hsu. In 2006, the

COSCO took it one step further by achiev-

ing integrated certification according to

the three management system standards.

As part of its push to go global, COSCO has established an integrated quality-, environment- and safety-management system. “The external audits are one of the most important contributing factors to COSCO’s success,” said President and CEO Captain Wei, left,when COSCO was awarded the certificate at the ceremony in Beijing this spring. DNV’s CEO Henrik O. Madsen to the right.

COSCO forges ahead


The ultra-deepwater rig, working in the US

Gulf of Mexico for BHP Billiton Petroleum,

has been awarded the US Department of

the Interior’s Mineral Management Service

(MMS) Safety Award for Excellence for the

outstanding manner in which it conducted

its contract drilling operations in the

Houma district in the Gulf of Mexico

throughout 2005. The GSF C.R. Luigs

underwent nine MMS inspections during

2005 without a single non-compliance and

had no lost-time accidents during the year.

In addition to the MMS award, the rig

was honoured as GlobalSantaFe’s “Rig of

the Year 2005” for the floater category.

This internal award recognises outstanding

safety, environmental, and operational per-

formance.

DEDICATED EMPLOYEES

GlobalSantaFe leaders recognise the com-

mitment and energy it has required to

achieve these awards.

“The success of the GSF C.R. Luigs is a

direct result of the hard work of our dedi-

cated employees, and consistent positive

interaction with a great customer, BHP

Billiton,” says GlobalSantaFe Vice President

of Operations, Marion Woolie.

The partnership between GlobalSantaFe

and BHP Billiton continues with the new

Neptune development in the US Gulf of

Mexico. BHP Billiton is building on the

achievements of GSF C.R. Luigs for the

GlobalSantaFe rig, the GSF Development

Driller I.

John Stobart, World Wide Drilling Man-

ager says: “Through our partnership with

GlobalSantaFe, BHP Billiton benefits not

only from good safety practices but also

exceptional drilling performance. Safety is

the way we do our business. At BHP Billiton

it’s called zero harm. It means that all BHP

Billiton, contractor and service company

management drive an identical message

of care to our crews. It means crews and

managers share a zero tolerance approach

to unsafe acts and conditions. It means we

are aware of and aggressively look out for

hazards and manage all risks. It means no

one has to prove it is unsafe to stop work,

but we all have to prove it is safe to start.

Finally, it means our best-in-class rigs are

safe and happy homes to loyal crews who

line up to come back.”

HSE CULTURE DRIVES BUSINESS

PERFORMANCE

DNV has worked with both rigs conducting

assessments against the requirements of

BHP Billiton’s World Wide Drilling HSE

and Community Management System and

assisting both organisations in their pursuit

of excellence. DNV staff visited Houston

and offshore Gulf of Mexico to conduct

these assessments and were hugely

impressed by the outstanding cooperation

and joint leadership displayed by Global-

SantaFe and BHP Billiton. It was evident

that both GlobalSantaFe and BHP Billiton

use their health, safety and environmental

culture and activities to drive their business

performance.

When two high performing organisations such as GlobalSantaFe and BHP Billiton

Petroleum partner, it is probably not surprising when the result is excellent performance,

but the achievements of the GlobalSantaFe drillship GSF C.R. Luigs have surpassed all

expectations. TEXT: NICK JACKSON PHOTO: BHP BILLITON/DREW DONOVAN

Partnering

for excellence

GlobalSantaFe´s drillship GSF C.R. Luigs.

World Wide Drilling Manager,BHP Billiton

JOHN STOBART

Awarding automotive leadership

motive BILL FORD WAS ASKED ABOUT HIS FAVORITE FORD AUTOMOBILE. “THAT’SEASY,” HE SAID. “THE MUSTANG EXCITES ME THE MOST. IT ALWAYS HAS AND IT ALWAYS WILL, AND THE DAY THAT IT DOESN’T IS THEDAY THAT SOMEBODY HAS TO LOOK FOR ANOTHER JOB.”


Throughout the 42 years of Automotive

Industry Executive of the Year Award’s

existence, it has given recognition to indi-

viduals who embody the innovative think-

ing necessary to lead the automotive indus-

try where it needs to go and the courage

to say so when the industry needs a new

direction. Since 2005 DNV has sponsored

this award, where past winners include

names such as Dieter Zetsche, Rick

Wagoner, Jac Nasser, Robert Eaton,

Thomas Stallkamp, Roger Smith, Lee

Iacocca, Bob Lund and Henry Ford II.

Bill Ford accepted the award at a recep-

tion in Detroit this spring in front of 225 of

the industry’s leading chairmen, CEOs and

presidents. A number of the invited guests

represented Ford’s own supply chain, and

they got to experience something or rather

someone out of the ordinary.

ALL THE TITANS

Instead of the customary monologue, Bill

Ford made his remarks short and quickly

placed himself in the hot seat, opening up

for questions from the audience. But in his

remarks, Bill Ford opened by noting how

humbled he was to join the list of past win-

ners “who are virtually all the titans in our

industry.” One of the titans, Henry Ford II,

was his uncle.

He continued to address the current

global automotive climate and spoke open-

ly about what the CEOs in the room must

do if they want a future for their compa-

nies in the automotive industry.

“Great opportunities exist for compa-

nies who are willing to change quickly,”

Bill Ford said. “But we have to be willing to

do it at a fundamental level. Incremental

improvements are not enough anymore.

In a word, we need to capture innovation.

Cost cuts alone are not going to lead us to

victory.”

Bill Ford said that while Ford Motor

Company made about $1 billion last year

in its global operations, the North

American business needed a lot of atten-

tion. The most important strategy he will

use to return his company to profitability

in North America? “We’re getting honesty

on the table,” he said. “That means hon-

esty about our competitive position, the

strength or lack thereof of our products,

and the robustness or lack thereof of our

processes.”

“We must be brutally honest,” he told

the audience. “Where do we have vulnera-

bilities? And how do we go about fixing it?

This process is quite energizing to people.

One thing I’ve said is I can deal with any-

thing – except the lack of truth. If I don’t

get good input, I can guarantee you I’m

going to make a lousy decision.”

DRIVING ENVIRONMENTAL CONCERN

Bill Ford said that continual assessment

in several key areas is also crucial to Ford

Motor Company. “In 1998 Ford became

the first automaker to get ISO 14001

certification in all our facilities around

the world,” he pointed out, “and we’ve

enjoyed big cost savings from this. I’m

proud to say that all our Q1 suppliers

around the world have also achieved ISO

14001 certification and have seen similar

bottom-line benefits.”

Building automobiles in an environ-

mentally friendly way has long been a pri-

ority for Bill Ford. “I always felt that if I

was ever in a position to do something

What it takes to have afuture in the automotiveindustryRecognizing excellence in automotive leadership, the Automotive Industry Executive of

the Year Award has a rich history spanning 42 years. This year chairman and CEO of Ford

Motor Company William Clay Ford, Jr. was awarded the prize. At the following reception

he spoke openly about what the CEOs must do if they want a future for their companies

in the automotive industry. TEXT: CARLA KALOGERIDIS PHOTO: FORD


about making automotive manufacturing

better for the environment, I would.

Today, our Ford Rouge Plant in Dearborn,

Michigan is a model of our efforts in this

area, and I think it will become the stan-

dard for automotive manufacturing in the

near future.”

IMPROVING HUMAN WORKING CONDITIONS

Another area where Bill Ford looks to

assessments for feedback is in human

working conditions. In 2003, Ford Motor

Company adopted a code of Basic Working

Conditions for all its employees worldwide.

The code is aligned with international

standards and includes training and third-

party assessments. Bill Ford said he

believes it’s “the farthest-reaching code in

the automotive industry.” Last year, Ford

Motor Company extended the code to all

its suppliers as part of contract conditions.

Bill Ford said suppliers have shown strong

support for the programme.

“We’re holding our suppliers account-

able to a human rights standard and assess-

ing them on it the same way we assess for

quality standards,” he said.

IN THE HOT SEAT

During the question and answer session,

Bill Ford was asked about a range of topics

– from how he plans to battle rising health

care costs to building a winning corporate

culture to publicly admitting his favorite

Ford automobile. Invited media were most

interested in the question of bankruptcy.

When asked if bankruptcy was inevitable

for his company, he answered:

“Bankruptcy is not an option. We have

tremendous liquidity. We made money

last year, and I think it was Yogi Berra who

said, ‘Nobody ever went broke making a

profit.’ We’re acutely aware of the state of

our industry, and we’re working very hard

on the fundamentals of our business to

restore Ford Motor Company’s North

American operations to profitability. If you

look at Ford Motor Company, our busi-

nesses around the world look pretty good.

We’ve got one big problem and that’s the

U.S. auto market – and we’re going to fix

that.”

In concluding his comments, Bill Ford

said, “We’re in a fight with companies that

have different legacy costs, different levels

of government support and different cost

structures. But we can’t worry about that.

We have to attack our own problems.”

Past winners include among others:

n Dieter Zetsche, DaimlerChrysler

n Rick Wagoner, GM

n Carlos Ghosen, Renault/Nissan

n Jac Nasser, Ford

n Robert Eaton, DaimlerChrysler

n Thomas Stallkamp, DaimlerChrysler

n Roger Smith, GM

n Lee Iacocca, Ford

n Bob Lund, GM

n Henry Ford II, Ford

n John DeLorean, GM

n Nobuhike Kawamoto, Honda

! The Automotive industry executive of the year award

“Great opportunities exist for companieswho are willing to change quickly,” saidchairman and CEO of Ford Motor Company,William Clay Ford, Jr.


> > news

Certification scheme for

earth observations

Echelon Consulting Ltd, one of the leading independent Information

security and safety consultancies in the UK has been acquired by DNV.

This move is part of DNV’s IT risk management growth strategy and

follows the recent acquisitions of Utrecht based consulting and educa-

tion company, CIBIT, and Hamburg based IT Management company,

Tireno.

DNV offers a broad range of risk management services, including

IT risk management. More than 500 employees work with IT-related

services in DNV.

Echelon has a service portfolio of information security consultancy,

safety assessment and managed security operations centres (SOC).

Echelon is particularly strong in the UK central government, law

enforcement and military sectors, but is also active in sectors such

as telecommunications, media, banking, finance, transportation and

utilities. The company was established in 1993, is located in Fleet,

Hampshire, and operates with 22 perma-

nent staff, complemented by contractor

support.

DNV acquires Echelon

Earth observation services worth Euro 600 million will be sold in 2006.

Estimated growth is 20% annually. The European Space Agency (ESA)

has asked DNV to help define a possible certification regime.

”Certification can play a role in improving product quality and

thereby getting users to trust the products and services,” states Narve

Mjøs, head of space activity in DNV, who is project responsible of this

project.

DNV has previously carried out several projects to help the space

industry define safety, quality and certification regimes, including

Galileo, Europe’s parallel to GPS.

SOX assistance to Frontline

DNV´s Nina Hesby and Narve Mjøs are ready to help the spaceindustry develop a certification regime for earth observations.

DNV assisted Frontline in the establishment of a new internal control

regime, based on the requirements from the Sarbanes-Oxley Act.

The project included scoping, documentation of processes, risks,

controls, test plans, tests, procedures, checklists, implementation of

control environment and IT-general controls.

The Sarbanes-Oxley Act requires a very formal and strict approach

to internal control over financial reporting which introduced many

challenges for a dynamic organisation like Frontline. DNV contributed

with its experience within risk management and process design to

assist Frontline to establish a sustainable control system.

COO of DNV IT risk management, Annie Combelles.

Red Cross and DNV:

Clean Water project in China

The Norwegian Red Cross and DNV have collaborated in a project to

improve the quality of water for villagers in Jilin province in North

Eastern China.

Clean water has arrived in the Jilin province with the help of the

Red Cross and DNV. At the recent ceremony marking the arrival of

tap water, the Norwegian ambassador to China, Tor Christian Hildan,

commended the Norwegian and Chinese Red Cross and DNV for their

efforts to help the local villagers.

“It is very encouraging that projects like this are helping to improve

the health and wellbeing of the people here,” said ambassador Hildan.

The Norwegian ambassador toChina, Tor Christian Hildan, seenhere opening the tap water at therecent ceremony marking the closeof the clean water project in ChengDong Village in Jilin Province.


First ever Hardware In the Loop test

certificate

“Many shipowners can reduce their fuel cost by 10%. Emissions

to air can then be reduced correspondingly and the shipowner’s

bottom line will be improved – both achieved by a systematic

focus on fuel efficiency,” says Tor E. Svensen, Chief Operating

Officer of DNV Maritime.

Through studies, testing and a systematic approach, DNV and

Norwegian shipowner Stolt-Nielsen have initiated these results –

a win-win situation for both the shipowner and the environment.

A 10% saving on fuel will reduce the shipowner’s costs and increase

its bottom-line figures.

For example, a 10% reduction

in NOX emission of one single

VLCC will reduce the ship’s NOX

emissions by 400 tonnes a year

– the same amount as that

emitted by 10,000 cars.

COO of DNV Maritime Tor E Svensen.

Reduced emissions and improved

bottom line

The diving and construction support ship Acergy Osprey was in June

issued the first ever Hardware In the Loop test certificate following

successful tests of the dynamic positioning system onboard.

The safe operation of a vessel is more and more depending on com-

plex and critical onboard control systems, such as dynamic positioning.

Because of this, those who charter the ships (e.g. major oil companies)

are requesting improved performance and verification of the safety of

the vessels.

Since 2003, DNV has in cooperation with the Norwegian company

Marine Cybernetics been developing a new test and certification regime

called Hardware In the Loop (HIL) testing. HIL testing is a test method

which can be utilized to assist in the verification of adequate perform-

ance and safety levels of the complex onboard systems. The CyberSea

HIL simulator provided by Marine Cybernetics enables a wide range of

detailed testing of control systems both at the factory, during commis-

sioning, and in the sailing phase.

Hybrid riser for Technip

The Acergy Osprey is a 100 mclass, diving support, construc-tion ship. The ship is designedto perform various subseawork tasks, and is equippedwith diesel electric propulsionand a Class III dynamic posi-tioning system.

Technip was contracted by Petrobras to carry out the engineering,

procurement, construction and installation of the export riser

linking the DNV-classed P-52 semi-submersible floating production

unit (FPU) with PRA-1, a fixed platform. Technip appointed DNV

for third-party verification of the detailed design and pre-commis-

sioning certification, according to Brazilian regulations, of the

riser and the flowline.

P-52 is located at a water depth of 1,800 m in the Roncador field in

the Campos Basin, off the coast of Brazil, and is linked to a fixed plat-

form, PRA-1, located at a water depth of 100 m. The export riser is a

free-standing hybrid riser which will connect P-52 to the 18-inch,

approximately 56-km-long subsea oil export pipeline system.

The riser consists of a vertical steel pipe tensioned by near-surface

buoyancy with a flexible jumper connecting the top of the riser to the

FPU. Using a novel concept, this is an important and challenging task

for DNV, which always aims to be ahead of its competitors in the

development of new technology.

CCS and DNV tighten cooperation

Nauticus software for ship design is to be used at the Rules andResearch Institute in Shanghai.

Amongst a range of mutual exchanges between the two classification

societies, the recent purchase of the Nauticus software is further indi-

cation of China’s technological advance.

China Classification Society is a member of IACS and a central play-

er in the fast growing Chinese shipbuilding and shipping industries.

CCS will use the Nauticus software at the Rules and Research Institute

in Shanghai.

news < <


The Norwegian Parliament approved the

management plan that opened up the

Barents Sea for petroleum development in

June 2006. In 2007, the Snøhvit-LNG plant

will come into operation and it is expected

that the Goliat oilfield will be declared

commercial and that a decision will be

made to start on Snøhvit’s second con-

struction stage.

On the Russian side, the development

of the Shtokman field is likely to dominate

the overall situation. This field develop-

ment is scheduled to have a more or less

continuous construction period of 20-25

years when realising the three develop-

ment stages that will result in both LNG

and pipeline gas for Europe.

Only a very few wells have so far been

drilled on the eastern part of the

Norwegian shelf. Major discoveries are,

however, expected, and field developments

and shore-based processing plants are

likely to follow within the next 10-15 years.

A possible situation in 2020 might be as

shown on the map.

Norway is now preparing for a situation

when there will be spare capacity in the

North Sea gas grid. This situation calls for

more gas to be put into the Norwegian

pipeline system farther north in order to

secure the future gas supply to Germany

and Great Britain. The map shows a pro-

posed extension of the Norwegian pipe-

line system to the Barents Sea called the

Western Arctic Pipeline. This will be in

addition to the Russian plans to connect

the Barents Sea by a gas pipeline to the

Baltic Sea pipeline. A system like this con-

tains the necessary flexibility that the con-

sumer nations are aiming for and allows

last word!

The Barents Sea:

Key to the security of energy supplySo far, not enough attention has been paid to the logistics challenges

involved in constructing and operating processing facilities in the

Barents Sea.

Norway to optimise the utilisation of its

gas grid in the south.

VERY LONG PIPELINES

The major challenge from a development

point of view might be the distance to

shore. Processing facilities and year-round

shipping terminals cannot be established

on Svalbard, so very long pipelines have

to be built to the mainland. This situation

calls for a new kind of cooperation among

the oil companies (and countries) when

possible “far distant fields” are to be devel-

oped in the most cost-effective manner.

So far, not enough attention has been

paid to the logistics challenges involved in

constructing and operating processing

facilities in the Barents Sea. Construction

work has to take place all year round and

in accordance with a very tight time sched-

ule, taking into account weather condi-

tions, etc. The Snøhvit development,

which took place in a sheltered area, has

shown us that when developments take

place in more exposed areas and involve

construction materials having to be deliv-

ered all year round, a lot of attention has

to be paid to the maritime transport sys-

tem and related logistics back-up system.

OTHER IMPORTANT ELEMENTS

In that respect, the ongoing discussions

about Shtokman have had too much focus

on “who will be the winners”, based on the

companies’ experiences in warmer climates.

A realistic time schedule and proper atten-

tion to the logistics challenges might be

just as important elements as experience

in constructing shore-based processing

facilities elsewhere.

JOHAN PETTERBARLINDHAUG

The Western Arctic Pipeline is a proposed extension of the Norwegian pipeline system tothe Barents Sea. This will come in addition to the Russian plans to connect the BarentsSea by a gas pipeline to the Baltic Sea pipeline.

DNV worldwide

www.dnv.com

Regional officeHead office

PUBLISHED BYDNV Corporate CommunicationsNO-1322 Høvik, NorwayTel: +47 67 57 99 00Fax: +47 67 57 91 60

EDITOREva HalvorsenTel: +47 67 57 97 [email protected]

DESIGNCoor Graphic [email protected]

PRINTGAN Grafisk, Oslo

COVER PHOTO© Nina Eirin Rangøy

© Det Norske Veritas 2006

DNV is a global provider of services for managing risk.Established in 1864, DNV is anindependent foundation withthe objective of safeguardinglife, property and the environ-ment. DNV comprises 300 officesin 100 countries, with 6,100employees.

WWW.DNV.COM

DNV Forumcorporate magazine

27,000/ 8-2006 0609-002

forum no. 2 2006

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