Iran considers gas

oil&gas g
Information from Det Norske Veritas for the Oil, Gas and Process Industries No.3 August 2002
Changing
weather conditions
2 Iran
influence platform design
considers gas
exports to India with
a new pipeline
3 'Neglecting
new trends
might dry up the market,'
says professor Noreng
7 Hydro
page 4
raises
safety standards
Photo: Husmo-foto/Megapix

During the whole life of the oil and gas industry,
the actors have had to face continuous change.
Those able to adapt have survived, while many
have disappeared.
The variety of challenges coming up now might
be larger than ever. The new industry structure
with old players disappearing and new emerging
creates few, but large companies, and a variety
of specialised niche companies introducing completely
new business models.
Many fields to be developed require technology
that is not technically or commercially proven, and
the industry’s ability to attract the right talents
will be critical.
We have also seen indications that environmental
issues affect the industry in various ways. The
demands on cleaner production will affect the
industry, but there are indications of climate
change materialised as higher waves and
stronger winds, which will affect the integrity of
existing installations.
Our intention is not only to be one of the
survivors in the industry, but also to assist our
customers in finding solutions to some of these
challenges. Some examples are given in this
edition of Oil & Gas News.
Elisabeth Harstad
Chief Operating Officer
DNV Technology Services
Facing
continuous
change
2 Oil & Gas News 3 – 2002
Deeper challenges
in the pipeline
Holding the world’s second-largest reserves of natural
gas, Iran is now considering gas exports to India. DNV is
evaluating the technical challenges of a pipeline reaching
greater depths than ever before.
DNV has signed a contract with the National Iranian Oil Company
(NIOC) for a gas pipeline feasibility study, similar to that of the Blue
Stream project across the Black Sea.
DNV is to help in evaluating whether it is technically possible to build
such an offshore pipeline from Iran beneath the Indian Ocean. The
project poses new technological challenges to the DNV pipeline and
materials engineers, as this pipeline would reach greater depths than
any other offshore pipeline. If the Iran-India pipeline were to be
built, it would be over three times the length of the 390 km long,
2,150 m deep Blue Stream, and reach a depth of 3,500 m.
Among the problem areas DNV will consider in the feasibility study
are the structural strength, material properties and hydraulic conditions
(flow and hydrates) exposed to the tremendous pressure at
such a depth. The installation process and the difficult conditions on
the ocean floor in the Indus Delta will also be evaluated.
DNV will verify studies carried out by Snamprogetti and Saipem.
The pipeline project is a cooperation between NIOC and the Gas
Authority of India Limited.
For further information, contact:
Nils.Andreas.Masvie@dnv.com

Fighting maturity
by diversity
‘There is an urgent need to meet the challenges and trends facing the oil and
gas industry today,’ says Professor Øystein Noreng at the Norwegian School
of Management. ‘Neglecting them could lead to reduced profitability and
stagnation, and the danger of drying up the market. The key is cooperation.’
Noreng sees new trends emerging: an
increased two-way split of the market,
with smaller companies gradually taking
larger shares of the upstream business,
while the large oil companies concentrate
on downstream business. The average
field size is decreasing as oil
provinces mature, while research and
development are steadily drying up.
Admission ticket
‘One way to succeed is to change the
existing allocation policy in some of the
oil nations,’ says Noreng. ‘The present
situation in Norway is a good example,
where almost all of the operators in the
North Sea are the largest oil companies
in the world such as Statoil, BP and
ExxonMobil. I think it is vital to encourage
more foreign and smaller companies
to operate in this area as a means to
increase diversity and pluralism. This will
improve services and knowledge among
• Øystein Noreng is a Professor at the
Norwegian School of Management.
Since 1990 a holder of the FINA Chair in
petroleum economics and management,
currently the TotalFinaElf chair.
• Noreng has degrees in history and
economics, M.A. in political science,
University of Oslo, 1967 and a Doctorate
(Ph.D.) in political science at the
University of Paris (Sorbonne I), 1972.
• He has been a post-doctoral research
fellow and Trygve Lie Fulbright fellow at
the Institute of Energy Studies, Stanford
University, 1977-1978. A visiting
research scholar and King Olav V Birthday
Fellow at John F. Kennedy School
of Governmen at the Harvard University,
1986-1987. An adjunct research fellow
at the Centre for Energy and Marine
Transportation, Columbia University,
2002.
all parties involved, and raise chances to
export that knowledge internationally.
There should, however, be an admission
ticket to get a licence, which should
include a documented research and
development policy in each company
to enhance knowledge development in
relation to petroleum in Norway.
I believe that R&D must be increased to
gain more efficiency and profitability out
of existing resources.’
Weakening advantage of
large-scale business
Øystein Noreng has just finalised a
report for the Norwegian Ministry of
Petroleum and Energy, focusing on
structural changes and trends in the oil
and gas industry.
‘One way to succeed is to change
the existing allocation policy in
some of the oil nations,’
says Professor Noreng.
In it he concludes that the tendency in
upstream operations is that smaller and
medium-size oil companies are gradually
winning more of the reserves and recovery
volume. At the same time large oil
companies with extensive technological
and economic resources are concentrating
on large oil fields in new areas, heavy
in capital and time, while smaller companies
concentrate on smaller projects in
mature areas which are less resourcedemanding.
The heterogeneity in the
resource basis and the prospect portfolio
will weaken the advantage of large-scale
business.
The balance between large and small
companies upstream, therefore, is being
displaced in favour of the latter due to
more small projects available than large.
Øystein Noreng, does not
believe any new oligopoly will
dominate the industry
Consolidation
Development in up- and downstream
activities is changing. Downstream is
constantly facing stricter requirements
for product quality and discharge, which
require new investment. This gives a
large-scale operation advantage and is
the reason behind recent mergers, in
addition to the need to secure raw oil
access. The need for the large oil companies
to secure access to natural gas is also
pressing, and the result is a consolidation
of refining and distribution of products,
reduced competition and perhaps a
long-term trend toward higher downstream
margins.
Diversity
In mature oil nations such as the U.S.,
Canada and Great Britain new oil companies
are being created based on technology
and capital available in the
market. Many new suppliers are entering
the upstream oil and gas business. The
question Noreng raises in his report is
whether a long-term tendency of larger
multiplicity might result in increased
competition: at least he does not believe
any new oligopoly will come to dominate
the industry.
Beate.V.Orbeck@dnv.com
Photo: Scanpix
Oil & Gas News 3 – 2002 3

Future perspective
Changing weather con
and the effect on offshore installa
Recent ship losses in the North Atlantic and the North Sea have been due to giant waves of exceptional height
and abnormal shape. Design of new platform concepts in deepwater fields requires a thorough knowledge
of the environmental climate and a detailed assessment of loading and platform response.
Since offshore activities started in the North Sea, DNV has been
active in developing new methods and computational tools for
load and response assessment of offshore structures. Numerical
and probabilistic analyses have become key elements to ensure
safe operation of offshore installations.
During the past 10 years climate change due to the greenhouse
effect has received a lot of attention. Some reviews have indicated
a gradual increase in mean and significant wave heights during
the past 30 years, which has caused concern in the offshore
industry that previous long-term extreme load predictions may
need to be reconsidered. Others have concluded that extreme
events occur more frequently than before, supporting a belief
that the climate may show an unstable trend.
Before any conclusions can be made it is important to determine
whether the observations reported are a result of local phenomena
or a general feature of the North Atlantic, and whether
they are oscillations of the ocean-atmosphere system in natural
long-term variations, or trends due to climate changes.
4 Oil & Gas News 3 – 2002
More accurate recording
The reported increase of wave heights could be due to improvements
and changes of instrumentation and observation practices.
Early ship-borne wave records have been unable to monitor
the effect of high frequencies. New laser and radar measuring
techniques are able to resolve higher crests than traditional wavebuoy
techniques. Wave statistics can also be affected in heavy sea
states when measurements are interrupted, which previously
occurred more frequently. These early measured wave heights
may therefore exhibit a negative bias and the temporal development
will show a spurious upward trend. It turns out that
modern ways of measuring wave heights, like laser and radar
techniques, are able to measure more accurately higher wave
crests. Data indicating very high wave crests were earlier considered
not reliable and sometimes removed from the time series.
Numerical ocean response models
Since natural long-term variations occur, a long-term history of
measured data is needed to establish appropriate environmental

ditions Photo:
ions
Husmo-foto/Megapix
design criteria for specific projects. In the absence of such data
the hindcast method must be applied. The method calibrates
numerical ocean response models for wave and current, based
on time and space evolution of the surface marine wind field. To
investigate the effect of climate changes, the Norwegian project
Regional Climate Development Under Global Warming (Reg-
Clim) is estimating probable environmental changes in the
North Sea and major parts of the Arctic, given a global increase
in greenhouse gases. In recent years several ships have been lost,
accidents believed to be due to individual waves of exceptional
height or abnormal shape. Ocean response models have not
been able to forecast such extreme waves with reasonable confidence.
These events have initiated research to improve the modelling
of non-linear waves and their interactions with wind and
currents.
Design issues
There are several design issues for offshore installations involving
interaction between large waves and structures. For buoyancy
tethered structures such as TLPs extremely large and steep waves
may cause high-frequency resonant oscillations known as ringing.
Moored stationary FPSOs are susceptible to large impact forces
due to bow wave slamming and green water. For floating structures
in general, air gap and wave/deck impact is of concern as
well as fatigue of mooring and riser components. In deep water
the current will have a relatively larger effect on the response of
the floater due to loads on the extended length of moorings and
risers. A recent important design issue for SPAR platforms in the
Gulf of Mexico is vortex-induced oscillations of the floater itself
due to strong loop currents. Knowledge of the temporal variation
of these currents is essential for safe design of the structure.
All of the above design issues involve interaction between large
waves and fixed or floating structures. To strengthen the knowledge
base in this area, DNV is presently active in the EU-supported
research projects MAXWAVE, REBASDO and SAFE-
FLOW.
– The MAXWAVE project deals with impact of very large waves
on marine structures. The first part of the project aims at developing
better physical and statistical models for freak waves, the
second addresses wave design criteria for ships and offshore
structures, and the third focuses on improving forecasts including
warnings of extreme wave events.
– The REBASDO project deals with reliability-based design of
FPSO systems. The objective is to develop risk-based methods for
design and safety assessment of FPSO units including mooring
and riser systems. The project will have an impact on future riskbased
rules and codes for structural design. It is important to
establish accurate extreme-value distributions for responses of
floating structures for a given return period. Particular attention
is given to directional wave effects and prediction of wave crest
characteristics.
– The SAFE-FLOW project deals with bow wave slamming and
extreme loads due to green water on the deck of FPSOs. The
project identifies critical wave impact conditions and develops a
methodology for green water impact loading and response calculation.
Future design of offshore installations will focus more on the
effect of interactions between the structure and extreme wind,
waves and current. Attention must be given to environmental
design criteria, ensuring that possible long-term climate change
is taken into account.
Arne.Nestegard@dnv.com
Arne Nestegård is part of the DNV Fellow
scheme. His profession is fluid dynamics. He is a
Doctor of Philosophy from the Massachusetts
Institute of Technology and has a Master of Science
from the University of Oslo.
The purpose of the DNV Fellow scheme is to appoint outstanding
individuals to maintain, develop and propose actions on
core technologies identified as being of particular importance
to DNV, each for an assignment period of three years.
Oil & Gas News 3 – 2002 5

Qualification
Qualifying new
technology at Ormen Lange
DNV has been assigned by Norsk Hydro to assist in qualifying new technology to
identify and mitigate the risks involved at the Ormen Lange field in the North Sea.
Ormen Lange is a major gas discovery in
the western part of the Haltenbanken,
located in water depths of about 900 m.
New technology is needed to facilitate
certain areas of the field development,
and as a means of cost reduction.
For Norsk Hydro it is vital to ensure that
the new technology is sufficiently qualified
to perform as intended, and that sufficient
information is available when
decisions are to be made about which
technical solutions are to be implemented.
It relates to risk management and the
ability to identify all uncertainties and to
implement measures to control and mitigate
them.
6 Oil & Gas News 3 – 2002
DNV’s contribution to this process has
included:
•Management of qualification of largebore
downhole safety valves, based on
the DNV Recommended Practice
Qualification Procedures for New
Technology, DNV-RP A203.
• Development of analysis approach
and acceptance criteria for freespanning
pipelines considering vortex-induced
vibrations and interaction
with fishing gear.
• Decision support on new technology
regarding differentiation and selection
of the most desirable full process
offshore concept, either a Spar, Semi
or TLP.
The Ormen Lange field, on
the Haltenbanken in the North Sea
Photo: Hydro Media
• Reliability, Availability and Maintainability
(RAM) analysis for the different
concepts as a basis for concept selection
and optimisation.
Norsk Hydro is the operator and responsible
for the development phase, while
Norske Shell is the operator for the production
phase. Concept selection is to
take place 2002/2003.
Tommy.Bjornsen@dnv.com
POSC Caesar specifications awaken interest
Statoil has successfully adopted parts of the POSC Caesar specifications in implementing new data
warehouses for the Åsgard A and B platforms in the North Sea, and in a development project at
the Kristin platform. The methodology has awakened interest in other parts of the industry too.
The POSC Caesar specifications are
being used as standards for interoperability
and data integration across disciplines,
phases and projects. It is being
developed by the POSC Caesar Standardisation
Organisation in co-operation with
organisations in the U.K., the Netherlands
and the U.S..
Different versions of the specifications
have been used in more than 40 capital
development projects in the oil and gas
industry. Leading engineering and oil
companies have done extensive testing,
and today most of these companies are
using software based on the specifications.
The methodology has also found
interest in industries such as shipping,
process, aerospace, defence and building
and construction.
Specifications turned into standards
POSC Caesar has a special responsibility
for maintenance and enhancement of
the ISO 15926 standard: Integration of lifecycle
data for process plants including oil and
gas production facilities.
ISO 15926 consists of a generic data
model which defines a methodology for
handling information, and a reference
data library that defines the meaning of
terms used in the industry. As the model
is generic it is also applicable across
industries. The only change required to
cover a new area is extensions of the
reference data library. The model can
support all disciplines and life cycle
stages of a facility, data about functional
requirements, physical solutions, type of
objects, individual objects and activities.
Nils.Sandsmark@dnv.com
The POSC Caesar methodology is being used
in a wide range of industries, such as oil
and gas, process, shipping and aerospace

Hydro raises its
North Sea safety standards
Norsk Hydro has initiated a comprehensive
project to monitor the status of all
technical safety systems on its offshore
installations in the North Sea. Together
with DNV, a set of new performance standards
has been established for all installations.
Safety system integrity
The principles of the IEC 61508 standard
for design and regular follow-up of safety
system integrity, as one key element
of the company’s safety management
system, have been incorporated. Procedures
for testing, reporting and measurement
of safety system integrity are currently
being implemented for all installations
as an integrated part of the maintenance
management system.
Technical status
To further improve safety standards and
awareness of major accident risk, Norsk
Hydro has initiated a comprehensive
project to record the current technical
status of all technical safety systems
through in-depth reviews of technical
functionality, system integrity, vulnerability
and management systems including
document handling and operator qualifications.
Necessary measures will be
implemented on all plants to improve
the functionality of the safety systems, to
keep major hazard risk at an acceptable
level.
Performance standards
Norsk Hydro has requested DNV to assist
the company in management, planning,
preparation and execution of the project.
It requires detailed technical knowledge,
practical expertise and a good
understanding of the system functionality in
an overall risk perspective.
New regulations on the Norwegian Continental Shelf are putting greater
pressure on the operators to control and manage technical safety. Norsk Hydro
has taken action to monitor the functionality and integrity of technical safety
barriers, considered vital to control major accident risk.
During field development, quantitative
risk analysis and industry standards are
applied to design the safety systems. In
the operational phase maintenance,
inspection and condition assessment are
important activities when assessing technical
conditions of safety barriers. The
human aspects related to competence,
experience and attitude, and the management
systems, are also crucial to
maintain the overall technical performance
in both a short- and long-term perspective.
A set of performance standards for all
technical safety barriers has been established.
Principles for assessing and measuring
of the criticality of findings and
observations have been established to
prioritise compensating measures. The
standards are based on Statoil’s framework
and experience, improved to reflect
Norsk Hydro’s specific technical requirements
for safety systems, operational
practice and special needs. 18 performance
standards have been established as
the key guideline for interviews, document
reviews, visual inspection or performance
tests of safety barriers.
On-site reviews will be carried out on all
Norsk Hydro’s offshore installations in
the North Sea and at the Sture oil terminal
during 2003. The review team will be
managed by DNV and manned with technical
consultants from DNV and Norsk
Hydro to ensure the necessary independence
from daily operations.
Erik.Ostby@dnv.com
Consultancy
The Sture terminal, 60 km north of Bergen
Photo: Hydro Media
From the Oseberg field, located in the North Sea
about 130 km northwest of Bergen
Photo: Hydro Media
Oil & Gas News 3 – 2002 7

New Offshore Codes from DNV
DNV Offshore Codes include Offshore
Service Specifications, Offshore Standards
and Recommended Practices. The
Recommended Practices have been further
expanded by the following new publications:
DNV-RP-A203: Qualification Procedures
for New Technology
A systematic approach to qualification of
new technology ensures that the technology
functions are reliable within specified
limits. The document is applicable
to components, equipment and assemblies
which can be defined as new technology,
in hydrocarbon exploration and
exploitation offshore.
DNV-RP-C102: Structural Design
of Offshore Ships
A description of the activities in a typical
design process, and a guideline for the
application of technical requirements
and acceptance criteria given in the DNV
Offshore Standard OS-C102 for offshore
ships.
DNV-RP-C103: Column-Stabilised Units
Presents recommendations for strength
analyses of the main structures of col-
DNV Offshore Codes online
The DNV Offshore Codes are proving to be
very popular among DNV’s clients. From a
modest start early 2001 the web-site now has
an average of 80 external user sessions per
day. User feedback shows it has become a
preferred choice for reading, searching,
DNV (Det Norske Veritas) is an independent, autonomous Foundation working to safeguard life,
property and the environment. DNV comprises 300 offices in 100 countries, with 5,500 employees.
DNV services to the oil,
gas and process industries
We are helping clients within the
following service areas:
• Safety, health and environment
• Qualification and innovation
• Verification and
classification
• Asset operations
For further information,
see www.dnv.com/ogpi
Oil & Gas News 3 – 2002
umn-stabilised units. A guideline for
application of technical requirements
and acceptance criteria given in the DNV
Offshore Standard OS-C103 for columnstabilised
units.
DNV-RP-F105: Free-Spanning Pipelines
Rational design criteria and guidance
for assessment of pipeline-free spans
subjected to combined wave and current
loading. The premises for the document
are based on the development of
pipeline-free span technology in recent
R&D projects, as well as design experience
from recent and ongoing projects.
DNV-RP-G101: Risk-based Inspection of
Offshore Topside Static Mechanical
Equipment
A method for a risk-based inspection
(RBI) plan to be established for offshore
production systems. The document outlines
methods for evaluating probability
and consequence of failure, assessment
of risk level, and conclusion on appropriate
actions such as an inspection to
manage risks.
For more information, contact:
Tore.Sildnes@dnv.com
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Smedvig’s column –
stabilized drilling unit
West Venture under construction
at the Hitachi
Zosen yard in Japan
downloading and obtaining supporting information
related to DNV’s Offshore Codes.
Visit the site by accessing DNV’s home page
www.dnv.com and select:
• Oil, Gas and Process
• Offshore rules and standards online
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Layout: DNVE Graphic
Communications
Print: GAN Grafisk AS
Managing risks
during Marine
Operations
Recent years have seen a dramatic
increase in incidents during marine operations.
Serious injuries and significant
material loss have resulted in heavy costs
and a steep increase in insurance premiums.
As a response to this DNV together with
Statoil, Norsk Hydro, Gard and Aker
Marine Contractors is developing a DNV
Recommended Practice for Risk Management
during Marine Operations.
The main objectives of the Recommended
Practice (RP) are to define guidelines
and recommendations for risk management
during marine operations, increase
the overall awareness and consciousness
of actual exposure to risks, and provide a
basis for a consistent and uniform understanding
and application of processes,
tools and methods used.
Statoil and Norsk Hydro have funded the
project. It will be tested on selected projects
during autumn 2002. A final and
approved revision of the RP is scheduled
for publication in January 2003.
Henrik.Sverdrup@dnv.com
Draugen GBS under tow to
the field in the North Sea
DET NORSKE VERITAS
Head Office Norway
N-1322 Høvik, Norway
Tel: +47 67 57 99 00
Fax: +47 67 57 99 11
Updated list of all regional
offices at DNV’s web site:
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5500/08/2002 Design by DNVE Graphic Communications Print by GAN Grafisk 0208-001