DNV Celebrates 125th Anniversary of Operations in the U.S.
Offshore Engineer recently interviewed Antony DSouza, Executive Vice President and Regional Manager, Americas DNV, to mark DNV's significant milestone of 125 years of operation in the United States, and to learn more about the company’s path from having a single surveyor in the U.S. in 1898 to currently having nearly 1,200 experts in the country.
By Bartolomej Tomic
OE: The world has seen a lot of challenges during the last two years. What do you see as the key challenges and opportunities for the offshore energy industry, specifically?
DSouza: If you look at the oil and gas industry before the pandemic, it was already going through a downturn that was then aggravated by the pandemic crisis. It put the industry on hold, especially when it comes to investing in future projects. The companies were not fully ready to just go back at full speed for capital projects.
In the past, the oil and gas industry spent about $500 billion a year on capital projects. That has gone significantly down. But then, in the last two years, things have started returning to normal, businesses started opening, and consumers are spending money, needing goods and services to be delivered. That brought up the need for energy, and of course, the Ukraine War put more demand for energy security and supply.
So, now the industry is back to a normal level, but we are still worried about how sustainable this demand is going to be. The companies are going to be more careful in committing capital to future projects, and I think they will be very selective in picking their projects.
Also, the supply chain complications that we see because of the pandemic put a strain on their plans for future projects. In fact, some companies put their project on hold and deferred those projects for a couple of years until the supply chain becomes normal.
So, I think you will see the demand is coming back, and the companies are getting more comfortable, but with the worry about how sustainable this demand will be.
Also, the offshore wind industry is very buoyant because of the policies around the world. Even the Ukraine war actually gives some incentive for companies to fast-forward some of the commitment to cleaner energy.
In the U.S.A., you see the Inflation Reduction Act that commits policy on government funding that will motivate people to look at offshore wind more positively.
There are some challenges with grid integration, and [it remains uncertain] whether the grid is ready to take on all this [offshore] wind energy planned by 2030. [Ed. Note – The United States has set a goal of installing 30 GW of offshore wind by 2030]. The grid needs to be upgraded. Also, there are issues with the supply chain and the infrastructure limitations that we see from the pandemic. Still, by the time these projects mature, I think the industry will be ready to commit to the offshore wind industry.
OE: The topic of collaboration is a vital part of driving transformation, particularly as the offshore energy industry faces myriad emissions reduction and energy transition challenges. Do you feel the industry as a whole is moving in the right direction here? What more can be done, and how is DNV driving collaboration in the offshore energy sector?
DSouza: We see companies are pivoting from being oil and gas companies into becoming energy companies. Because of the policies around the world, energy security, and new energy needs, everybody agrees that we really need to collaborate. It will not come from one company or one particular fuel. So, DNV has been very vocal in all the public forums, saying that the future fuel is collaboration; the more companies come together, collaborate and understand their own position in the whole energy mix, and their contributions, the better.
Stakeholders of all kinds—supply chain, policymakers, the big energy industry, and manufacturers—need to come together and make this work. I can see in almost every conference I attend these days, people talk about collaboration more than ever, and are willing to share what they are doing with others, hoping that others will engage with them so that we don't have to duplicate efforts, and go forward.
OE: DNV is celebrating 125 years in the U.S., an impressive milestone. Can you give a brief background on why this then-young Norwegian classification society back in 1898 decided to cross the ocean to establish itself in the United States, and also, what are some of the highlights of DNV's long history in the country?
DSouza: First of all, I just want to emphasize how proud we are of our long history in the United States, with the market expertise we have built up, our highly capable resources within U.S., and importantly of the fruitful and lasting customer relationship that we’ve established over 125 years. DNV actually grew from one surveyor to close to 2,000 employees in the U.S. alone in this period.
The short answer to your first question is we followed the customer. That's how we ended up in the United States. By the end of the 1800s, there was a big transformation from wooden ships to iron steamships, quite a contrast to current developments in areas such as digitalization and decarbonization. We just followed those iron steamships, and there was a need for us to go to places like U.S. and China and other places, to establish a presence there so that our clients could be serviced locally.
Our first surveyor’s name was Hans Johansen. A very experienced surveyor, Johansen arrived in New York City in 1898 and established the first DNV office; and now we are celebrating our 125th year in the U.S.
I'm actually getting some congratulations letters from government officials, and our clients. So it's very good to see that people acknowledge what we’ve contributed to the United States.
OE: On that note, what are some of the highlights of the DNV's long history in the country? So what are the contributions?
DSouza: We initially established our office to serve the maritime industry, but in the 1980s, DNV recognized the growing importance of the petrochemical industry and expanded its focus. As a result, Houston became a crucial base for DNV, and today, our Americas headquarters is located in Houston, Texas. This office has become a center of excellence for the offshore drilling and production industries and a hub for equipment manufacturers.
In addition to serving the maritime industry, we also became a major player in the offshore market from the 1980s onwards. We have led or participated in many record-breaking efforts in the deepwater market and are proud to remain an active player in that market today. Looking ahead, with the energy transition aiming to shift from fossil fuels to cleaner sources by 2050, we still believe that oil and gas will continue to play a significant role for a foreseeable time.
We expect oil to remain an active part until 2035, with gas playing a very important role even beyond that point.
Today, we have about 39 offices in the United States, and are very well represented in almost all parts of the U.S., including Hawaii and other places.
OE: So, what are the key themes DNV's discussing with its client base in the U.S. in 2023? What DNV services and innovations are you delivering this year to customers and stakeholders in the region?
DSouza: We allocate 5% of our revenue towards research and innovation, which provides X.Y. with significant foresight for our stakeholders. Our publications, such as the Energy Transition Outlook and the Path to Zero Carbon, are highly sought after by both our clients and the general public. Many companies even utilize our reports in their board meetings to help develop their own strategies.
Lately, in the past five years, we know that we are going to achieve more efficiency through digitalization. So, as part of our research and innovation, we invested heavily in digitalizing our services and also to help our clients digitalize. That was between 2016 and 2020, and because of that, when the pandemic hit, we were fully ready to do things very remotely or work from home, and our services were delivered seamlessly during that time.
But in the new strategic period, from 2021 to 2025, our focus has been mostly on decarbonization. We are exploring various options and technologies available, not only in the maritime and oil and gas industry but also in other industries where we operate. Our goal is to leverage these technologies and bring them to the industries we work in, to assist our clients in their decarbonization efforts.
Decarbonization is going to be on everyone's agenda, especially with some of the policies that are coming out of Europe, the emission trading systems that really require companies to pivot and do their part and make sure that they don't get penalized so that they can trade with the European countries without penalties. So, we are helping our clients to measure their emissions, document them, and verify them in a way that their stakeholders can trust those reports.
In the race towards decarbonization, there is a pressing need to discover the fuel of the future. According to DNV, this won't be just one single fuel; it’s going to be many. However, the challenge is determining these fuels' suitability in the short and long term. So we are helping our clients navigate that complex landscape with confidence.
OE: Obviously, the offshore oil and gas business in the U.S. is well established, but the offshore wind business is in its infancy in the U.S. With DNV's long history in Europe and Scandinavia, which have a generations lead on U.S. offshore wind, what lessons learned or a device can you offer to the industry as whole as these established markets and emerging markets mature together?
DSouza: DNV is a leading classification society and risk management service provider when it comes to the energy industry, particularly in the offshore sector.
The offshore wind industry requires significant funding, and committing capital can be relatively risky, but the industry needs the size and scale, along with policy support. DNV has gained considerable experience from our work in Europe, which we are now applying to new locations like U.S. and Korea.
The regulatory framework [in the U.S.] is not ready yet. For instance, it took around 20-30 years for the first FPSO in the U.S. Gulf of Mexico to gain acceptance. The U.S. Coast Guard collaborated with DNV, and that collaboration served as a basis for the U.S. Coast Guard to come up with a policy letter for FPSOs. DNV is now replicating this effort for the offshore wind industry.
Bottom-fixed offshore wind technology is proven and relatively easy to implement, which is why its development on the East Coast of the United States is progressing more rapidly. However, offshore wind development on the West Coast is expected to take more time due to California's strict environmental policies. DNV will work closely with its clients, policymakers, and regulators to navigate the regulatory policies in a way that is both environmentally friendly and sustainable.
There is also the importance of collaboration. We think that many competencies needed for the offshore wind industry can be found in the offshore oil and gas industry, where the U.S. has a solid base. In the south, they have a lot of experience working offshore, and those skills are readily transferrable to the offshore wind industry. We already see that many oil and gas experts are moving into the offshore wind industry. And if you look at the supply chain, turbine manufacturers, cable manufacturers, they're all used to supplying similar equipment to the offshore oil and gas industry. So the supply chain is relatively ready as well.
From the DNV side, we have built strong expertise within renewables in U.S., where we now have about 1,200 experts to support this industry.
When it comes to the local content, that may be a little bit challenging, especially on the west coast. Still, it is natural that all these [offshore wind] companies will eventually set up shops to support the offshore wind industry closer to where the action is.
• Editor’s Note: The interview has been edited for brevity and clarity.