ARCTIC SHIPPING SPECIAL REPORT
One of the biggest challenges in developing
Arctic shipping has nothing to do with ice
By DERMOT LOUGHNANE
March 2, 2009
When we think of the shipping required for a new resource development in the high Arctic, the image that it conjures up is of a new ship with lots of steel and lots of horsepower crashing through very large pieces of ice. The challenge would then appear to be how to get the ship the distance from A to B and the torturous ice conditions that are in between.
Granted, this is a challenge and not to be underestimated by any means. The flip side of this image, however, is that for a seasonal operation (i.e. only operating in the Arctic for the summer months), the shipowner is going to have to go out in winter and find employment for a large, oddly shaped and thirsty piece of kit.
The disadvantage he or she is going to experience in the commercial market is an issue that may add greatly to the cost of summer operations, perhaps to the point of threatening the economic viability of the project.
What determines whether an operation is seasonal or year-round? There are a number of factors that are considered and many have more to do with the development ashore than with the ship. In Arctic scenarios, however, the shipping and its cost can be a much larger factor than for similar projects in the south because of the large capital cost of high ice class ships.
Obviously, ice class ships are best employed to work in ice, however, in some projects, the higher cost and implications of operating through the winter in ice, combined with non shipping factors, determine that the shipping will only be done seasonally. For instance, if the commodity is of relatively lower value, it is more likely to be stockpiled during winter rather than shipped all year-round.
The value of the commodity to be transported and the margin that it can bear for transportation are determining factors. Diamonds are likely to be worth enough to justify a seat on a plane south, whereas coal presents a challenge where ice and icebreaking ships are involved.
There are other aspects that affect the choice between year-round shipping through ice and seasonal operations. It is likely more difficult to gain regulatory approvals for year-round operations, due in part to the disturbance to the natural habitat posed by year-round icebreaking, and, to a lesser extent, the perception that the risk of pollution is higher.
If the analysis indicates it is better or at least more economical to operate on a seasonal basis, based on the factors previously mentioned, then the second set of challenges to do with “off-season” employment have to be addressed.
Due to the requirements or peculiarities of high ice class shipping, a ship that may be perfect for crashing through all that ice and a beauteous thing to watch can be the last one asked for a dance in the commercial sock hop if not designed with its non-Arctic employment prospects in mind. This is due to a number of factors peculiar to the requirements of high ice class shipping that affect both operating and capital costs for the operation.
Biggest among these is of course the fact that high ice class ships require two things to be able to break ice effectively: a great deal of horsepower and a healthy helping of steel. When this horsepower and steel are in a dedicated or non-commercial icebreaker, it isn’t such an issue, or at least it can be tackled in different ways. In commercial ships, however, the situation is exacerbated by the increase in ice class: the higher the ice class the more steel required and the higher the horsepower usually installed.
The issue with cargo ships, whether they are dry bulk, oil or otherwise, is that the horsepower requires fuel – often a good deal of it and, depending on the design, sometimes of the more expensive variety.
Whatever the size or type of ship you are trying to employ in the spot or time charter market, one thing that surely makes an otherwise good ship unattractive is for it to consume twice as much fuel as similar ships under consideration. Recent work that Tactical Marine Solutions completed for a client on Panamax-sized ships indicated the fuel consumption required to power the ice class would be up to 100 tonnes per day. In contrast, consumption by a similarly sized vessel in the commercial market is more like 30 to 40 tonnes per day (not including container ships). Having triple the consumption of a competitive vessel would be a significant handicap in finding employment for the ship in the “off-season,” even with the lower costs of bunkers that have applied lately.
There are several solutions to this problem available in the marketplace right now, one of which is electronic control of the engine. This could allow you to have the full power of, say, 25k MW and the accompanying fuel consumption of 100 tonnes per day in the Arctic, with a much lower power rating of 12k MW and 50 tonnes per day in open water. As an estimate, this offers a savings in operating costs of approximately US$30,000 per day at the recent high bunker prices for each day it operates outside of the Arctic. There is an increased capital cost of course, but with savings of $30,000 per day on the aforementioned ship, this quickly dwarfs the capital requirement.
One other way in which the power and fuel consumption can be reduced is through the adoption of a twin screw or father/son arrangement for the main propulsion, or the use of diesel electric propulsion.
Government, offshore and exploration ships have certainly used the twin and diesel electric propulsion option and the redundancy it provides is an added advantage when in the Arctic. The capital cost, however, is greatly increased and, given the demonstrated reliability of single engine commercial ships in the Canadian Arctic over the past 30 years, hard to justify.
Apart from the fuel conundrum, the other aspect of the Arctic challenge is the increased amount of steel in a high ice class ship. All that strength comes at a cost. The increased steel weight either results in less cargo-carrying capacity or increased dimensions for the same carrying capacity. This can be made worse if the passage or Arctic port has limiting draft, common in the western Arctic or in the approaches to the central part of the Arctic.
The effect of this can be mitigated somewhat by enlarging dimensions that don’t necessarily affect access to ports and terminals. For instance, widening the beam rather than increasing the length, which is frequently a limiting factor at terminals.
On the softer side of things, the operating costs for a crew in the Arctic can be significantly higher than for an international crew, and for good reason. More officers, both navigating and engineering, are required; double manning on the bridge for lookout and manoeuvring; plus more frequent and longer standbys in the engine room. However, in the “off-season,” this can be mitigated by the reduction to more conventional crew sizes plus the use of an international crew if one is not being used already.
Ideally, of course, an icebreaking ship is best employed for what she was designed for, and all of the extra icebreaking related premiums can be turned into a positive if employment in ice is found for the off-season. In reality, however, the opportunity for back-to-back icebreaking employment is rare. It’s more likely that you will have to absorb an off-season trading penalty amounting to the sum of the increased operating expenses plus the discount experienced or anticipated in the open market due to the icebreaking characteristics of the ship. And this penalty has to be loaded onto the freight rate for the summer or Arctic shipping season.
If this eventuality is kept to the forefront during the system design, there are less surprises of the unpleasant variety for everyone concerned as the project comes into production.
Dermot Loughnane is the principal consultant at Tactical Marine Solutions Ltd., a marine management consultancy with proven ability to design, evaluate or improve the performance of shipping systems, even in the most challenging environments. www.tactmarine.com