INTERNATIONAL MARITIME ORGANIZATION E IMO INTERSESSIONAL MEETING OF THE GREENHOUSE GAS WORKING GROUP 1st session Agenda item 2 GHG-WG 1/2 23 May 2008 ENGLISH ONLY DEVELOPMENT OF A DESIGN INDEX FOR NEW SHIPS Development of an appropriate Design Index for Mobile Offshore Drilling Units Submitted by the International Association of Drilling Contractors (IADC) Executive summary: Strategic Direction: 7.3 High-level Action: 7.3.1 Planned output: 7.3.1.2 and 7.3.1.3 Action to be taken: Paragraph 12 Related documents: SUMMARY This document provides the views of the IADC regarding the development of an appropriate Design Index for Mobile Offshore Drilling Units (MODUs) MEPC/Circ.471; MEPC 57/4/5 and MEPC 57/WP.8 Introduction 1 Historically, IMO has recognized the need to differentiate between coastal State and flag State authorities and responsibilities with respect to the activities undertaken by MODUs, for example:.1 MARPOL applies to pollution from fixed or floating platforms other than pollution resulting from the release of harmful substances directly arising from the exploration, exploitation and associated offshore processing of sea-bed mineral resources (article 2). In this regard, Annex I regulation 21 establishes special oil discharge requirements for drilling rigs and other platforms. For reasons of economy, this document is printed in a limited number. Delegates are kindly asked to bring their copies to meetings and not to request additional copies.
GHG-WG 1/2-2 -.2 Article 2(5) of MARPOL further differentiates between coastal State and flag State authority in its definition of Administration: Administration means the Government of the State under whose authority the ship is operating. With respect to a ship entitled to fly a flag of any State, the Administration is the Government of that State. With respect to fixed or floating platforms engaged in exploration and exploitation of the sea-bed and subsoil thereof adjacent to the coast over which the coastal State exercises sovereign rights for the purposes of exploration and exploitation of their natural resources, the Administration is the Government of the coastal State concerned..3 A similar scheme was followed with the adoption of Annex VI, as regulation 19(2) provides that: (2) Emissions directly arising from the exploration, exploitation and associated offshore processing of sea-bed mineral resources are, consistent with article 2(3)(b)(ii) of the present Convention, exempt from the provisions of this Annex. Such emissions include the following: (a) (b) (c) (d) emissions resulting from the incineration of substances that are solely and directly the result of exploration, exploitation and associated offshore processing of sea-bed mineral resources, including but not limited to the flaring of hydrocarbons and the burning of cuttings, muds, and/or stimulation fluids during well completion and testing operations, and flaring arising from upset conditions; the release of gases and volatile compounds entrained in drilling fluids and cuttings; emissions associated solely and directly with the treatment, handling, or storage of sea-bed minerals; and emissions from diesel engines that are solely dedicated to the exploration, exploitation and associated offshore processing of sea-bed mineral resources..4 Both the London Convention (article IV(1)(c) and the 1996 Protocol (article 1.4.3) exclude governance of disposal of wastes directly arising from sea-bed activities. In article 1.4.3 of the 1996 Protocol, this exclusion was extended to storage of wastes to address the storage of excess gas produced in offshore wells and the need to avoid an inadvertent prohibition of this practice. 2 The approach which has historically been taken by the IMO is consistent with the provisions of the United Nations Convention on the Law of the Sea regarding rights governing the continental shelf, which provide, inter alia: Article 77. Rights of the coastal State over the continental shelf 1. The coastal State exercises over the continental shelf sovereign rights for the purpose of exploring it and exploiting its natural resources.
- 3 - GHG-WG 1/2 Article 81. Drilling on the continental shelf The coastal State shall have the exclusive right to authorize and regulate drilling on the continental shelf for all purposes. UNFCC approach to governance of operations on the continental shelf 3 The UNFCC approach to oil and gas exploration and production operations on the continental shelf is reflected in the IPCC Guidelines for National Greenhouse Gas Inventories which provides the following general guidance: National inventories should include greenhouse gas emissions and removals taking place within national territory and offshore areas (emphasis added) over which the country has jurisdiction. There are, however, some specific issues to be taken into account: Emissions from fuel for use on ships or aircraft engaged in international transport (emphasis added) should not be included in national totals. To ensure global completeness, these emissions should be reported separately. Where emissions are captured from industrial processes or large combustion sources, emissions should be allocated to the sector generating the unless it can be shown that the is stored in properly monitored geological storage sites as set out in Chapter 5 of Volume 2. 4 The following sector specific reporting guidance is provided relating to oil and gas well drilling: Category Code and Name Definition Gases 1 B 2 Oil and Natural Gas Comprises fugitive emissions from all oil and natural gas activities. The primary sources of these emissions may include fugitive equipment leaks, evaporation losses, venting, flaring and accidental releases. 1 B 2 a iii 1 Exploration Fugitive emissions (excluding venting and flaring) from oil well drilling, drill stem testing, and well completions 1 B 2 b iii 1 Exploration Fugitive emissions (excluding venting and flaring) from gas well drilling, drill stem testing, and well completions N 2 O NO x CO IMO s scope of interest with regard to greenhouse gases 5 IMO has variously described the scope of its interest as international shipping or ships engaged in international transport.
GHG-WG 1/2-4 - 6 At its 56th session, the Marine Environment Protection Committee agreed on the establishment of a greenhouse gas (GHG) module in the Global Integrated Shipping Information System (GISIS) and approved the format for that module (MEPC 56/23, annex 10). The module provides a means of recording fuel consumption at sea and in port and includes the following mandatory parameters : Cargo unit (TEU, Tonnes, Passengers, m 3 for liquid bulk cargoes) Ship category (in accordance with Fairplay definitions 1 ) Gross tonnage Index (g/x*nm) Indexing commence (year) Index period (days) Deadweight (DWT) Cargo capacity (in terms of cargo units) The MODU fleet and its employment 7 Challenges presented for developing a Design Index appropriate for mobile offshore drilling units include:.1 MODUs only move internationally on an infrequent basis;.2 with the exception of Drillships, most MODUs are not self-propelled; thus, even if they do move internationally, there is minimal fuel consumption related to their movement;.3 all recently-constructed MODUs employ multiple diesel-electric generators to power an electric distribution system supplying power to general services, drilling and related equipment, positioning thrusters, and (if fitted) propulsion motors, making it difficult to segregate the regulatory concerns of the flag State from those of the coastal State; and.4 MODUs do not transport any cargo, so there is no definable Cargo unit as envisioned for use in the GISIS module. 8 In addition, since the purpose of a MODU is to drill wells, not remain in transit, it should be noted that:.1 the Administration for a MODU on location is the host coastal State, not the flag State; and.2 under UNFCC s reporting scheme, emissions from offshore oil and gas drilling activities are to be allocated to the host coastal State, not the flag State. 1 Fairplay provides definitions for: Drilling Ship, Drilling Rig semi submersible; and Drilling Rig, jack up.
- 5 - GHG-WG 1/2 9 It is useful to understand the size and nature of the MODU fleet. IADC s estimate of the current MODU fleet and anticipated new additions (through 2011) is as follows: MODU Type In Service Construction Contracted Total Drill ship 40 27 65 Semi-submersible 167 44 211 Self-elevating 413 77 490 Submersible 7 0 7 Drilling barge 51 0 51 Totals 678 148 826 IADC s views regarding a Design Index for MODUs 10 IMO, through MARPOL Annex VI, is already deeply involved in the certification of engines installed on board MODUs (since such engines are rarely solely dedicated to the exploration, exploitation and associated offshore processing of seabed mineral resources ). Whilst IADC believes it could be reasonably argued that IMO should defer entirely to coastal State jurisdiction and refrain from developing a Design Index for MODUs, IADC recognizes that benefits could accrue from such an index while maintaining a consistency of approach to matters related to MODU design. Proposal for a Design Index for MODUs 11 In view of the above, IADC recommends that consideration be given to establishing the Design Index for MODUs as: g/hp-hour Where g is grams of and HP is the maximum continuous rated power output of the engines comprising the unit s main power plant when operating at their rated speed. Action requested of the Intersessional Meeting 12 The Intersessional Meeting is invited to consider the proposal set forth in paragraph 11 above, taking into account the information provided in this document, and take action as appropriate.