Arctic ice classed tonnage development is opening up new energy frontiers at a time when many tanker owners are still suffering from red ink balance sheets due to the prolonged recession. The harsh winter in northern Europe and the Baltic provided a lifeline for many ice class 1A tankers as they were able to penetrate deeper thicknesses of ice without the aid of icebreakers keeping the energy supply chain flowing. It was the maximum classification limits test in harshest of conditions for this relatively new ice class. Around 280 ice class 1A vessels are in service with some 70 per cent under 20,000 dwt vindicating the vision of shortsea owners and yielding rich dividends in terms of premium hire rates while non-ice tonnage suffered.
Progress in development of offshore oil and gas fields in the Arctic prompted deepsea owners to order larger sizes of conventional tankers and shuttle vessels of which record numbers entered service in the last year. Not all are trading in ice regions but it is one more earning option which owners know will be in demand in the future. Some 200 ice class 1A types are on order although this remains a niche trade area in the context of the global tanker fleet but the new ice class age has definitely arrived. Technology is gaining ground all the time and this year saw the first purpose-built LNG carriers ordered. The fact that so many owners are capitalising on the Arctic potential can only serve to encourage further development of oil and gas exploration.
The Barents Sea, Kara Sea, Laptev Sea, Beaufort Sea, Greenland Sea, Davis Strait and Arctic Ocean are the key areas of oil and gas development whilst it is also relevant to mention developments in sub Arctic conditions in the Caspian Sea and Black Sea as well as the Sea of Okhotsk. Undiscovered oil in the Arctic is estimated at 90 million barrels with a further 1.7 trillion cubic feet of natural gas. Russia is the driving force but has called on the experience of ice region traders and owners to pool their expertise and co-operation in meeting the challenge of getting new energy discoveries to a global market. Against a recession hit conventional trading market tanker owners are expecting rich pickings in the years ahead.
The relatively fast pace of some developments has caught the market by surprise as there are still many commercial and technical barriers to overcome. An acute shortage of icebreakers for escort duties has proved a headache with Finland and Russia having ‘neglected’ ordering new tonnage as winters became milder but these are expensive vessels to operate. The harsh winter of 2010/2011 has changed this thinking with joint ownership of new icebreakers under consideration between Russia and Finland. Some ice class supply vessels are also doubling up as icebreakers to fill the void but service is restricted. Mindful of safe passages Russia has banned non-ice class 1A tankers from trading to Arctic regions in the winter months. This in turn lifted newbuilding commitments for this class of tanker.
While it is not expected that the Arctic Ocean will never become ice free, shippers are ready to exploit the current thinning ice trend giving longer shipping seasons and better access to energy production in remote areas. In the long term new Arctic shipping routes will be opened up including the Northwest Passage. A milestone was passed in August last year when Sovcomflot’s aframax tanker SCF Baltica achieved a voyage time of 11 days from Murmansk to Pevek in northern Russia. Under escort of nuclear ice-breakers the vessel covered 2,500 nautical miles via the Barents Sea, the Vilkitskiy Strait, Taimyr ice field, Sannikov Strait, Laptev Sea and ice fields of the East Siberian Sea. The tanker’s commercial cargo of 70,000 tonnes of gas condensate was delivered early and underlined the real possibility to reduce transit times along the Northern Sea Route unlocking the potential to deliver hydrocarbons to the Asia-Pacific region.
Shipyards and designers have been locked in negotiations to solve the inherent problems that are faced to conquer Arctic ice regions. Several breakthroughs have already been achieved but in some cases propulsion systems and related equipment such as dynamic positioning are still under research due to the severe temperatures endured by on-station vessels. Solutions are easier for tankers from the propulsion perspective and the application of Aker Arctic’s double acting (DAS) ice breaking concept combined with ABB Azipod electric propulsors has proved a success with a variety of vessels such as dedicated shuttle tankers, icebreakers, containerships, bulk carriers and supply vessels utilising such propulsion assistance which has eased problems for the short summer season
Among the new developments Russia’s Gazprom plans to build an offshore platform to provide logistical services for the Shtokman gas and condensate project in the Barents Sea. The Rubin Central Design Bureau in St. Petersburg won the tender and construction of the US$500 million platform will be allocated to state-owned Sevmash or privately owned Vyborg shipyard. The Norwegian Moss-designed CS-50 floating hull is expected to be selected for the proposed platform and both these yards have built such hulls-only before. The need for a platform is because Gazpromdobychashelf opted to use Murmansk for the second and future stages of the Shtokman field development. These developments will entail a distance of 600km making round trip helicopter flights almost impossible. The platform will have several helipads and be capable of operating up to five helicopters each holding 100 transit passengers. The platform will be able to fully operate for 45 days for crew and 20 days for passengers.
There is growing co-operation between STX Finland and Russia’s United Shipbuilding Corporation (USC). The latter is pioneering new shipyards and upgrading existing Russian yards to meet specialist construction demand for Arctic trading. STX has proven experience in offshore construction. Under a new Finnish joint venture between the two companies, a new company, Arctech Helsinki Shipyard Oy, won an order from Sovcomflot for two multi-functional icebreaking supply vessels valued at US$200 million in total.
The two vessels will serve the Sakhalin-1 Arkutun-Dagi gas field in Far East Russia and supply Exxon Neftegaz’s platform. The vessels will independently operate in extreme temperature conditions up to minus 35°C in 1.7m of thick ice. In each vessel four engines will generate total power of 18,000kW and propulsion power of 13,000kW.
STX’s Arctic technology combined with Russia’s desire to finance expansion of its Arctic fleets and shipyards will lead to more orders for Arctech which will deliver the Arctic supply vessels in March and June 2013. STX Finland will still remain the major shareholder in Aker Arctic Technology but the joint venture holds an option to buy 20.4 per cent of shares from STX Finland. Arctech is the former cruise and ferry building site in Helsinki but concentration will now be focussed on construction of ice tonnage including icebreakers.
STX has also been working closely with Sovcomflot in construction of Arctic LNG carriers. This resulted in a recent order for two ground-breaking prototype 170,200m3 so-called ‘Atlanticmax’ units to be built in South Korea. The scheduled deliveries in December 2013 and June 2014 were too early for Russian yards to participate. The ice class 2 vessels will incorporate dual-fuel diesel-electric propulsion units still to be confirmed and will be winterised with a strengthened membrane containment system. Dual class notations with Russian Maritime Register of Shipping and Lloyd’s Register will be adopted. They will be able to serve Sakhalin 2 and Shtokman LNG terminals plus other global locations all year round.
More ships are planned for construction in Russian yards. STX will train personnel from USC in the construction process and seafaring crews will be trained as closely as possible on Sovcomflot ships although this order marks its debut in this sector. Gazprom Global LNG will charter the duo over 15 years with optional extensions for a further 15 years. Sovcomflot has attached options for two more vessels.
With strengthening LNG demand other owners have booked shipyard slots at lower prices now for conventional tonnage but with options built in to change to ice strengthening, winterisation features and regasification kit. It is likely that Russian owners will lead the way for the Arctic but overseas companies will be hopeful of charters. Sovcomflot has plans for the first Russian-built 75,000m3 LNG carriers at the Baltic Shipyard in St Petersburg. Gaz Transport & Technigaz (GTT) will provide the tank containment system and a contract has been signed with the French company to train Russian engineers, welders and managers.
United Shipbuilding Corporation also entered into a joint agreement with Daewoo, South Korea for construction of eight ice class aframax tankers. Six will be built at Daewoo and two at Zvezda, the latter being a new shipyard under construction in Far East Russia. The Russian yard will contribute in future years Arctic tonnage. Far East Shipping Company (FESCO) is already engaged in talks with USC for specialised Arctic vessels and orders may be placed in the next 18 months at Zvezda. Apart from revitalising Russia’s shipbuilding facilities USC has also entered into a long-term strategic partnership with engine builder Wärtsilä for co-operation in development of modern ship designs and manufacture of propulsion systems to cope with challenging environments.
The huge area of the Arctic is thought to hold around 27 per cent of known reserves but some 84 per cent untapped reserves are also estimated to exist. Quite apart from hazardous voyages which are now being slowly conquered there is still a relative shortage of seismic vessels to geologically test for and map out potential new energy locations.
Polarcus is one such owner intending to specialise in seismic shooting in the Arctic region. Having recently taken delivery of three specialist 3D seismic vessels built to Ulstein SX 133 and SX 134 class, two more vessels are to be built by Ulstein in Norway. With DNV Ice Class 1A notation the owner has co-operated extensively with DNV to develop an extensive set of Arctic procedures in order to safely combat the unique hazards likely to be encountered when conducting seismic operations in the Arctic. These are the first truly Arctic-ready seismic surveyors and comply fully with environmental legislation. The hulls are specially strengthened for long transits and ice hazards but they can only work in the short summer season. MP