1. 09 March 2010 LNG bunker ship to ship DNV involvement in LNG bunkering ship to ship project

2. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 2 Challenge – Speed and standardisation

3. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 3 LNG fuel: The technology is proven. It is time for growth.  Current driving forces: - An array of new environmental regulations underway (NO x, SO x, CO 2 (?); EU and IMO) - Additional costs for LNG propulsion are sponsored (Government, cargo owners) - Sea freight is loosing market shares due to poor frame conditions and conservative thinking  Ships: - 14 LNG fuelled ships (non-tankers) in Norway; mainly ferries and offshore ships (growing) - No LNG fuelled ships (non-tankers) outside Norway  Technology: - LNG engines, storage and supply systems are already available and approved, but still room for improvements (on LNG tank configuration etc)  LNG distribution and pricing: - 13 LNG terminals currently available for fuelling ships in Norway (growing) - LNG supply is currently dominated by very few suppliers - Price of LNG fuel is higher than oil, but is expected to decrease relatively to the oil price - Local LNG terminals, mainly developed for industrial customers - Pricing of the LNG fuel is based on long term contracts; not market driven

4. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 4 LNG business from a DNV perspective  DNV pioneering LNG marine transportation, LNG carried and used as fuel on board LNG carriers for about 5 decades  14 vessels operate on LNG fuel along the Norwegian coast today, all built to DNV class* trading in congested and narrow waters, coastal trade  DNV has already a strong position within LNG technology and is constantly working to be recognized as a competent LNG partner within all engineering disciplines, maritime as well as all other areas of the logistics chain.  DNV has developed rules for LNG propulsion to make it viable, safe and secure for maritime transportation  DNV has great insight and understanding on the new IMO and EU regulations  DNV continuously involved in industry projects to be on top and know current and upcoming technical solutions * In addition some LNG carriers are also using LNG for propulsion, however not all these are in DNV class

5. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 5 May10 Spring 10 Jan10 Dec09 LNG bunkering ship to ship project from DNV perspective Project Office Management - Communication and benefit tracking Step 1 Project framing Step 2 Initial HAZID workshop Step 3 Concept development Step 4 Approval in principal Step 5 Detailed development Information and discussion with steering committee and stakeholders in between and during each activity is integral for project success This project phaseNext project phase

6. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 6 HAZID objective  The aim of the HAZID workshop was to review the LNG Bunkering Ship to Ship concept in order to identify potential hazards that needed to be addressed to ensure safety in the ship to ship transfer of LNG (bunkering system and operation). Main objectives of the analysis are: - Identifying potential hazards that shall be addressed in further concept development work - Provide input on possible solution that shall be assessed n the concept development work - Provide input to external communication from the project clearly describing how potential risk have been identified and addressed trough the project - Provide required input for acquiring concept approval for concept solution from DNV Before bunkering: Approach – Approach by bunker vessel and receiving vessel including preparations on both vessels Mooring – Bunker vessel and receiving vessel mooring and further preparations Connect – Connection transfer and communication systems During bunkering Transfer – Transfer of LNG from bunker vessel to receiving vessel including required communication After bunkering Disconnect – Disconnection of transfer and communication system Release – Dis-moooring between bunker vessel and receiving vessel and potential after-work Withdraw – Safe withdraw including additional after-work on both vessels

7. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 7 The Hazard identification workshop will identify potential hazards and risk that needs to be managed in the concept development phase Statistics and data HAZID methodology Project experience Workshop facilitation Preparations Documentation and reporting 1. 2. 3. NameCompany Lars-Olof SvenssonCryo AB Martin BjurlidCryo AB Ove NorbergCryo AB Audun BrandsæterDet Norske Veritas Harald BergsbakDet Norske Veritas Andreas MagnussonFjordtank Rederi Lars-Arne JohanssonFKAB Magnus WikanderFKAB Osborne JohanssonFKAB Mattias HansonGasföreningen Kjetil Sjølie StrandI.M. Skaugen Edvard MolitorSSPA Sweden AB Patric Westdal Svenskt Marintekniskt Forum Carl Johan von SydowTopoil AB Klas LjungmarkTransportstyrelsen Mathias SundbergViking Line ABP Johan AlgellWhite Smoke (ex FKAB)

8. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 8 The analysis identifies a number of hazard areas that needs to be managed in the concept evaluation phase Fire/explosion Hazards generated by neglecting ergonomic principles & human intervention External Hazards Pollution Grounding Mechanical hazards Other hazards generated by materials and substances Leakage of liquid LNG causing loss of structural integrity Environmental Hazards Consequence Probability Collisions Hazards generated by malfunctions Electrical hazards

9. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 9 The analysis identifies a number of hazard areas that needs to be managed in the concept evaluation phase  Fire/explosion - Leakage in system - Potentially catastrophic consequences - Minimising probability by operational and technical solutions and reduce possible leak sizes by technical solutions  Hazards generated by neglecting ergonomic principles & human intervention - Poor design causing trips, noise or difficult operation - Hazards due to malpractice and vandalism - Ensure to focus on operability and maintainability in the concept development - Establish proper operation and maintenance routines and minimise vandalism by restricting access  External Hazards - Fire and smoke during bunkering - May provide ignition source - Safe breakaway solutions and operational routines  Pollution - Pollution to sea and to air - Will evaporate if no ignition source and cause GHG spill  Grounding - Not like ly to occur during bunkering operations  Mechanical hazards - Sharp edges or dropped objects causing equipment damage - Protect the bunker station and ensure clear operational guidelines for bunkering minimising proximity activities

10. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 10 The analysis identifies a number of hazard areas that needs to be managed in the concept evaluation phase  Other hazards generated by materials and substances - Hazard from contact low temperature causing frost injuries and potentially asphyxiation - Minimise exposure and utilise gas detectors  Leakage of liquid LNG causing loss of structural integrity - Brittle fracture due to spill or inaccurate operation - Operating procedures and material selection  Environmental Hazards - Unsafe operation due to external environment (cold, ice, rain, waves) - May convey equipment damages - Set clear operation guidelines based on material strength  Collisions - Collisions (internal as well as external) or with quay - May cause equipment damage and spill - Restrict vessel operations during bunkering - Implementation of safety/distance zone  Hazards generated by malfunctions - Control system failures and power outage - Manual and automatic control of bunkering process - Safe shutdown process and redundant power supply  Electrical hazards - Electrostatic phenomena or contact - Could be ignition source or cause personal injuries - EX zone and potential adjustment

11. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 11 Catastrophic consequence hazards identified will be managed in the concept evaluation and may be further evaluated  The ambition of the HAZID study is to identify potential hazards. In this process the consequence and frequency has been estimated conservatively.  The expected frequency of events with a catastrophic outcome needs to be further analysed by using for example event tree analysis.  The goal of an event tree analysis is to determine the probability of a specified scenario.

12. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 12 The HAZID analysis provide concrete input to the concept development work  For each Hazard possible safeguards and input for concept development has been developed. The input is based on both operational procedures as well as technical solutions. This provide general input to the concept design phase.  In the concept design work the handling of each HAZARD will be documented.  This will ensure audit trail and possibility to see how each hazard has been managed in the project as well as potential new hazards identified in the concept evaluation work IDOperationHazard Type Description of consequence and probability Comments Possible Safeguards and input for concept development 19During bunkering Hazards generated by malfunctions Unsafe operation due to power outage Loss of control causing spill or tank overfill. Operation o Operational routines and drills for BV and RV blackout o High alertness with regards to electrical power generation. Technology o Safe shutdown logic o Backup systems o Redundant power supply (switchboard) o Manual operation mode

13. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 13 In the concept development stage DNV will serve as discussion partner and sounding board DNV will provide continous support in the concept development work ensuring that the solutions developed are aligned with DNV requirements in terms of: - Scope - Level of detail - Documentation etc. This work is headed by Marius Leisner DNV Headquarters Hövik, he wll be working very close with FKAB and Cryo.

14. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 14 Conclusion LNG fuel  Environment – LNG is the only solution catering both SOx and NOx demands and partly CO 2 /GHG emissions  LNG Technology - engines, storage and supply systems are already available and approved,  Financial drivers - LNG fuelled ships can be financially viable  LNG Distribution - infrastructure can easily be improved - Local storage terminals on quay-side, refuelled by small scale LNG carriers or semi developed for industrial customers - Need for more generic bunkering solution to be attractive for a larger group of ship owners. HAZID analysis  The analysis has identified a number of potential hazards that needs to be managed in the concept development work. The main risk are centred around: - Fire/explosion - Hazards generated by neglecting ergonomic principles & human intervention - Other hazards generated by materials and substances - Mechanical hazards - Electrical hazards  The analysis has defined input to the concept development in terms of operational aspects as well as technological aspects  The HAZID work will be used for documenting the handling of each hazard in the concept development work.

15. © Det Norske Veritas AS. All rights reserved. Tuesday, 09 March 2010 15 Safeguarding life, property and the environment www.dnv.com