The Quality (R)Evolution –Regulatory Development & DP Assurance in the Americas Revised

The Quality (R)Evolution

• Introduction• A Perfect Storm• Tragedy• Economic Necessity• Regulation

• A Perfect Opportunity• Learning from Past Mistakes• Economic Potential• Industrial Evolution

• The Quality (R)Evolution• A Local & Global Opportunity

• Dynamic Positioning Assurance• Challenges to Progress

What is the Quality (R)Evolution?

• Evolution• “Recommended Practice” Becomes guidance Becomes rules/regulations

• Revolution• Industry evolution is being expedited as a result of:• Tragedy• Economic necessity• Regulation

The Repercussions of the Deepwater Horizon

Image: USCG, DWH ROI, 22 April 2011

DP Incidents

Data: International Marine Contractors Association. Dynamic Positioning Station Keeping Incidents: Incidents Reported for 2007 (DPSI 18). IMCA M 198, August 2009.

US Gulf of Mexico Drilling Moratorium

“Drill Baby, Drill!”

USCG DWH ROI – 22 April 2011

Appendix I – Potential legal issues associated with vessels employing dynamic positioning systems

• Outlines the gaps found in DP regulation found during the course of the Deepwater Horizon investigation.

• Memorandum “is the basis document everything will derive from.”

Lessons learned

The Deepwater Horizon’s DP capabilities are in no way implicated in the tragedy, but the subsequent investigation uncovered several DP related issues with regard to DP regulation.

Issues highlighted in the DWH report

•Definitions:•Self propelled motor vessel•On location•Underway

•Manning implications

•Authority over foreign vessels utilizing dynamic positioning (DP) systems engaged in Outer Continental Shelf (OCS) activities in the US.

Definitions

Clarification of terms used in current regulations:

Self-propelled motor vessels• In light of the broad and generally applicable regulatory definitions of “motor vessel”

and “self propelled,” a vessel operating in DP mode… is considered a self-propelled vessel.

On location• Under our current regulations, any vessel holding position solely through the use of

its DP system cannot be “on location.”

Underway• Because a vessel operating under DP is not at anchor, nor is it made fast to shore

or the ocean bottom, it is by definition “underway.”

Manning implications

As defined above, any vessel or watercraft operating under the control of a DP system is classified by the USCG as self-propelled and underway.

Therefore, manning requirements are dependent on size of the vessel and fall under the applicable federal regulations, specifically 46 U.S.C. Part F that specifies complement , citizenship requirements, watch length and rotations, and minimum number of licensed individuals.

U.S. Authority over foreign DP capable assets

The U.S. maintains a certain amount of authority over ANY vessel operating on its jurisdictional waters, as outlined in 46 U.S.C. §§ 2301-2302 and 43 U.S.C. §§ 1331-1356a.

Regulations may be promulgated by the Coast Guard as deemed necessary.

•Evolution•“Best industry practice”Becomes guidanceBecomes rules/regulations

The GREY AREA

The USCG is attempting to impose/enforce regulation on a sector of the industry that has no international regulation, only guidance and recommended practice.

Where this is of particular concern is in enforcing manning requirements. Neither the U.S. or international regulatory bodies have any clear requirements for the minimum manning of DP vessels.

The very last line of Appendix I states:

Any new regulations to be promulgated should consider current international standards/practices and that DP technology is constantly evolving.

Where will regulations increase/tighten?

Data: Economist Intelligence Unit, Ltd. Deepwater Ahead? The outlook for the oil and gas industry in 2011, Economist Intelligence Unit (magazine), January 2011.

What are the greatest challenges?

Data: Economist Intelligence Unit, Ltd. Deepwater Ahead? The outlook for the oil and gas industry in 2011, Economist Intelligence Unit (magazine), January 2011.

Where do the opportunities lie?

Data: Economist Intelligence Unit, Ltd. Deepwater Ahead? The outlook for the oil and gas industry in 2011, Economist Intelligence Unit (magazine), January 2011.

The Quality (R)Evolution and its global impact

A local and global opportunity

• Current industry climate provides opportunity to affect positive change within the industry

• Guidance already exists in the form of IMCA guidelines, NI recommendations, etc.

• Existing guidelines provide the majority of NOSAC recommendations to the USCG and MTS DP Guidelines.

• Regulation in place in the US• Applied to foreign vessels working in the US• Adoption of similar standards by foreign operators in order to compete• Standards incorporated into company operating guidelines

The dynamics of DP Assurance

RegulatoryChanges

Guidance

Incidents &Repercussions

DecisionMaking

DecisionMaking

Capabilities

Capabilities

EconomicConsiderations

Capabilities

Original image: Kongsberg

Progress

Components of DP Assurance

DP ASSURANCE

CMID

DP Procedures

DP Manning

DP FMEA

DP Annual Trials

DP Documentation

IMO

IMCA

Class

Company Internal Requirements

Safe Mode of Operation

OVID

ISM & Maintenance

DP Capability

USCG

FSOG

Operational Procedures

Oil Majors’ Requirements

The tools of Dynamic Positioning Assurance

• CMIDs• DP and Ballast FMEA• DP Proving trials• DP Annual trials• Vessel DP Operation Manuals• Company DP Operation Manuals• DP Procedures• DP & Ballast FMEA Gap Analysis

• DP Suitability Surveys

• DP Condition Surveys

• DP Training

• DP Reps/Leads

• Safe Mode of Operations

• ASOG and FSOG

• DP Incident Investigations

• `

How are DP Assurance goals attained?

Establish and maintain relationships in the industry to track new developments and changes

Work alongside clients and industry partners to develop specific, built-to-suit DP Assurance programs

•Bridge the gap between existing regulations, recommended practice, and client requirements•Company and vessel specific guidelines•Establish guidelines that accurately reflect capabilities

Provide continuous support throughout the length of the client/provider relationship

Conclusions

Dynamic Positioning Regulation is a work in progress and SHOULD continue to be so in order to grow alongside an evolving industry and technology

The ultimate goal of any regulation is to improve the overall safety standard of an entire industry

In the field of DP Assurance, regulation—whether it is currently in place or proposed—should not represent an obstacle to productivity or profitability

DP Assurance provides the guidance and tools necessary to create opportunity in an evolving regulatory environment by encompassing a proactive rather than reactive approach

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Thank you for your attention.

Any questions or comments?

Contact :

Chad N. Fuhrmann – DP Assurance Lead, AmericasChad.fuhrmann@nobledenton.com+1 281 685 0836