Energy, cost and emission reduction By modification of existing equipment and

1. Energy, cost and emission reduction By modification of existing equipment and Optimization of operation strategy. Arne Ljungberg Chief Engineer – Stena Don 19-04-2017

2. Basic philosophies for this study and proposals • Only use energy necessary to perform our operation safely. • Only perform measures that not will compromise our ability to perform our operation or DP-class. • Produce the energy necessary for the operation as efficient as possible. • Implemented measures should preferably also intend to reduce maintenance costs. • Recover low grade energy from systems in the operation. • Implement measures to reduce possibility for human error as a result of implemented system changes. The most effective way to save energy is to not use it.

3. This presentation will be in six sections Measures with focus on reduction of energy consumption in the two sea water systems and one system related to a drilling system in our operation. Measures to produce the power necessary for our operation more efficient. Recover energy from processes that already are present in our operation. Presentation of result from the three sections above. Examples of operational philosophies and improvements of efficiency for processes which could be improved to further reduce our fuel consumption, costs and improve our total operational efficiency. Questions and discussions. All slides are numbered. If you have any questions during the presentation, please note the number of the slide and your question and then we can discuss it during section six.

4. Section 1 – Reduction of energy consumption

5. Section1 – Reduction of energy consumption 5 • To make this project proposal manageable, it is limited to evaluate and calculate three different system for reduction of energy consumption, two sea water systems and one drilling related system. The common similarity between these systems is that they could be considered as relatively “passive” subsystems to the operation. There are many other subsystems which could be improved, but at this stage we set the limit to these three. • For the energy reduction we will be using the same basic technology as an Energy Storage System – Rectifiers and frequency converters – Variable Frequency Drive. But with a different philosophy, instead of storage of energy we focus on reduce the demand for energy in some subsystem's in our processes. • We are talking about very well known, established and relatively low cost technology. We don’t have to “invent the wheel”. It is just a question of application solutions. • The reduction of energy demand from the processes we look at will also lead to a greater power reserve which then could be used for other purposes as positioning and drilling operations.

6. Section1 – Reduction of energy consumption 6 Main Sea Water System Full Ahead ! • One of the first system that normally is evaluated when energy optimizing merchant ships is the cooling water system. • The reason is that the design criteria for a cooling water system are full load on engines and a tropical sea water temperature. • These criteria's are very rarely present and a lot of work is carried out unnecessarily during normal operation. • To adjust the seawater flow to the demand, the most common method is to use VFD’s. Stena Line started to install VFD’s for sea water pumps during the late eighties. 32⁰C VS. 4 – 10 ⁰C

7. Section 1 – Reduction of energy consumption 7 Main Sea Water System • If we start to compare the lay out of the sea water system on Stena Don with a ship, we can see that there are some major differences between the systems. • The pumps are still at same location bellow the water surface, but the coolers are located in the engine room in the box girder. • The cooling water is released to funnels at atmospheric pressure at a point higher than the coolers. This extra pump height require a quite a lot of energy.

8. Section 1 – Reduction of energy consumption 8 Main Sea Water System One of three engine room’s • As the design is today, full sea water flow is pumped thru all LT-coolers regardless if an engine is running or not. • Rebuild the system to only have sea water flow in the LT-cooler when the engine is running. • Same principal as the rig saver valve for turbocharger. Open a valve when the engine is started /running. • Control required sea water flow to cooling demand from engine’s in operation. • These modifications will reduce the power demand for sea water pumps with at least 70% Running

9. Section 1 – Reduction of energy consumption 9 Auxiliary Sea Water System • Same principles as for the main sea water system • But the modification of this system will be easier because it is much less complex and also more simple to control. • Same assumption regarding power reduction – 70% H

10. Section 1 – Reduction of energy consumption 10 Hydraulic Power Unit – Main lifting system • This system could be divided into three subsystems.1. Feed pump system2. Lifting pump system3. Hydraulic power pump system (main ring line) • We will only be looking at one of these subsystems for this presentation – the feed pumps.There are also improvements which could be done for the other systems, but they are more related to operational behaviors. Main HPU Room

11. Hydraulic Power Unit – Feed system Section 1 – Reduction of energy consumption 11 Cooler • Technical data • Four directly driven displacement pumps, 185 KW each • Pump flow 3285 l/min * 4 = 13 140 liters / minute • Pump pressure approximately 30 Bar System Tank Approx. 35 000Liters • System function • The feed pumps provide an oil flow to the lifting pumps when there is a movement of the top drive. This flow demand is varying depending on operation mode and required movement speed of top drive. • When there not is a requirement for flow, all oil is pumped via the pressure relief valves back to system tank. • There is no or very limited flow demand for at least 90% of the total operational time. To Liftsystem Pumps • Operational data • Utilization time for feed system – 80%(total 111 000 running hours during four years of operation) ~30 Bar

12. Section 1 – Reduction of energy consumption 12 One minute of work in feed pump system ! 13 140 liter = 11 432 Kg 14 085 Kg = 345 m 280 m Hydraulic oil Density 870 Kg/m3 TANK 13 140 liter/minute – 30 Bar pressure

13. Section 2 – Efficient power production

14. 14 Section2 – Efficient power production • Operate the engines in a load range where they are more fuel efficient. • This will be achieved by run one engine in each engine room when our operational support systems (power management and consequence analysis system) and ongoing operational situation allow a such set up. An estimate is that this will be possible for approximately 65% of our operational time • Is it possible to operate with only one engine and still fulfill requirements for operation in DP3? • investigations done so far have not indicated that the regulatory framework would contradict this solution. • BUT ! • To reduce the increased risk for a partial black-out when we operate with only one engine in each independent cell, some modifications are suggested to the fuel supply and monitoring system for engines. • AND • Implement a new auto start function in Siemens IAS. A “watchdog” system where we define alarm critical for the operation of the engine. If any of these alarm occurs during operation it will automatically initiate a start up of the stand-by engine in same engine room.A such feature is already present in for instance Kongsberg systems under the name AGS - Automatic Generator Start What can we do to produce required electrical power more efficient with present power plant?

15. Section2 – Efficient power production 15 Engine running profile • As we operate today we always have six engines running and the typical load / engine is between (20%)-750 KW to (35%)-1300 kW for approximately 65% of the operational time. • If change our operational philosophy and operate with one engine the typical load will be between (40%)-1500 KW to (70%)-2600 KW

16. Section2 – Efficient power production 16 • Historical Data • Average annual fuel consumption for engines 13 510 m3 (year 2011 – 2014) • Total electrical power produced / year ≈ 48 500 000 KWh • Total engine running hours / year, ≈ 55 000 Hours • Total maintenance cost for engines / running hour, between 32$ and 35$ depending if major breakdowns are included or not.

17. Section 3 – Recover energy Section 3 – Recover Energy

18. Section 3 – Recover energy 18 Heat recovery • During the winter season we sometimes have problem to keep correct temperature in the hydraulic system and HPU room. • During the summer it is sometimes very hot in the HPU room. Main HPU Room

19. Section 3 – Recover energy 19 • As a result of the energy saving measures to the feed pump system we will not supply heat to the oil by the heat looses in that process. • Which of course is very good, because constant pumping over pressure keeping valves is a very effective way to mechanically wear the oil. And the extremely high energy looses in very limited areas also create “hot spots”, which in turn creates residues in the oil. For instance varnish products which we have had serious problem with in the system. • To keep the oil temperature in the system tank at an optimal operational temperature independent of the external conditions we have to implement compensatory measures.

20. Section 3 – Recover energy 20 • Insulate main HPU system tank. • A part of the only heat recovery system available on board is located just a few meters from the HPU tank. • Install a heat exchanger system to utilize energy from diesel engine HT -cooling water system to heat hydraulic oil when required. Heat recovery “Plug & Play System”

21. 21 Section 4 – Results / Calculations Section 4 – Results / Calculations For calculation of fuel saving as a result of energy saving measures, we will use the fuel consumption figure (237 g/KWh) from todays operational set up for the operation.But for the remaining energy demand for the equipment's where we have implemented measures we use (212 g/KWh) a mix between running one and two or three engines.

22. 22 Section 4 – Results / Calculations • Main Sea Water System • Two pumps are always in operation  2 * 8760 = 17 520 Hours / yearReduced power consumption 70% of 125 KW * 2  175 KWRemaining power demand 30% of 125 KW * 2  75 KW • Reduced energy demand17 520 h * 175 KW  3 066 000 KWh • Reduced fuel consumption( 17 520 H * 175 KW * 0,237 Kg) / 0,85 (fuel density)  855 m3 / year

23. 23 Section 4 – Results / Calculations • Auxiliary Sea Water System • One pumps are always in operation  8760 Hours / yearReduced power consumption 70% of 82 KW  57,4 KWRemaining power demand 30% of 82 KW  24,6 KW • Reduced energy demand8760 h * 57,4 KW  502 800 KWh • Reduced fuel consumption( 8760 h * 57,4 KW * 0,237 Kg) / 0,85 (fuel density)  140 m3 / year

24. 24 Section 4 – Results / Calculations • HPU Feed Pumps • Here we have to do some assumptions from the figures we have today • Total running hours for pumps = 80% * 8760 h * 4 pumps  28 032 h • Very limited or no flow demand for 90% of total running hours  25 229 h • Reduced power demand for the 90% of the time  166,5 KW / pump • Remaining power demand for the 90% of the time = 10%  18,5 KW / pump • Total energy demand / year as we operate today28 032 h * 185 KW  5 186 000 KWh • Energy demand after energy saving measures(10% * 28 032 h*185 KW) + (90% * 28 032 h * 18,5 KW)  985 000 KWh • Energy saving(5 186 000 KWh – 985 000 KWh)  4 201 000 KWh • Reduced fuel consumption( 4 201 000 KWh * 0,237 Kg) / 0,85 (fuel density)  1 170 m3 / year

25. 25 Section 4 – Results / Calculations • Energy saving as result of higher fuel efficiency when running one engine • Here we also have to consider the energy saving measures performed to sea water systems and HPU. The total demand for energy is now decreased. It now looks like this. • Historically energy demand / year (the figures from 2011 to 2014).  48 500 000 KWhEnergy saving sea water and HPU system.3 066 000 KWh + 502 800 KWh + 4 201 000 KWh  7 770 000 KWh • Remaining amount of energy to produce.48 500 000 KWh – 7 770 000 KWh  40 730 000 KWh • Amount of fuel to produce this amount of energy. • (40 730 000 KWh * 0,212 Kg/KWh) / 0,85 (fuel density)  10 160 m3

26. 26 Section 4 – Results / Calculations • Summary of energy optimizing measures • Historical annual fuel consumption  13 510 m3 • Fuel saving • Main Sea Water System  885 m3 • Auxiliary Sea Water System  140 m3 • HPU Feed Pumps  1 170 m3 • Improved Engine fuel efficiency  1 185 m3 • Total fuel saving ≈ 3 350 m3 • The final result of these measures will then be that the total energy efficiency factor of Stena Don increase with almost 25%

27. Section 4 – Results / Calculations 27 • Reduced Maintenance cost for engines. • The total running hours for our power plant is today approximately 55 000 running hours, this means that we in average are running 6,25 engines / day. • If we now take a closer look at our assumption of operating with three engine for 65% of the time and then assume that we have 6,7 engines running for the remaining 35%. The reason for 6,7 is that the time we formerly have been running 9 engines are shared over the whole year when we get the figure 6,25 engines / day • Then the figure for engines/day will be like this(8760 * 3 * 0,65) + (8760 * 6,7 * 0,35) ≈ 38 000 Running hours ≈ 4,35 Engines / dayA reduction of approximately 30% • This give us an reduction of maintenance cost.(55 000 hours * 32$) – (38 000 hours * 32$) = 544 000$ • But there is a possibility to improve that reduction figure to approximately 680 000$. • When we are operating the engines with higher load there also is a possibility to extend the overhaul intervals. There is another rig operating in DP3 class in the North Sea with exactly the same type of engines, the same number and power rating of thrusters. But they only have two engines in each engine room. This means that we will have very similar load pattern on our engines if we running one engine when possible. And because of the more favorable load situation they have 25% longer maintenance intervals for the major overhauls.

28. Section 4 – Results / Calculations 28 Reduced environmental foot print and taxes Total fuel saving 3350 m3 = 2 847,5 ton Emission factors for Stena DonTotal reduction NOx = 0,03835 Kg/Kg fuel  109 200 Kg CO2 = 3,335 Kg/Kg fuel  9 496 000 Kg CO = 0,00315 Kg/Kg fuel  8 970 Kg NOx tax in Norway 2017 – 21,59 NOK/Kg NOx  Reduced tax = 2 350 000 NOK In addition to the economical and environmental gains it probably also could be a positive factor for our reputation and marketing. If we are able to show the market our intentions and that we have improved our total efficiency factor with 25%.

29. Section 5 – Furtherimprovements Section 5 – More possibilities

30. 30 Section 5 – Furtherimprovements • Operational philosophies • Is it necessary to always run six thrusters? Could we stop one thruster when the weather situation is very good? If we stop a thruster and the auxiliary systems for the thruster we will save approximately 400 liter/day. • Drilling operations, is it possible to run some operations with a reduced number of lifting pumps? • Technical improvements • Install VFD’s for ventilation systems in engine rooms, HPU room etc. • Heating of stand-by engines, is it possible to utilize the energy in recovery circuit from the engines in operation?

31. Section 6 Finally we were through all slides.Thanks for listening. Section 6 – Questions