Wärtsilä Corporation Annual report 2014

The gas ambassador

John Hatley, Americas Vice President, Ship Power, expounds on Wärtsilä’s past, present and future role in the gas value chain.

Born and raised on the coast in Seattle, Washington, John Hatley’s life was always going to revolve around the sea. Boating ran in his family and he would see commercial traffic such as coastal freighters and barges passing by their home daily.

“I was indoctrinated from a very young age to the water,” he describes, “and all the activities related to it. And as a young man I was fortunate enough to receive a congressional nomination for the US Marine Academy at King’s Point.”

Thus began an education that would provide John with the perfect springboard into a career in the marine industry. After graduating from King’s Point in 1976 with dual licenses as a Deck and Engineering Officer and a deep understanding of entire ship systems, from bridge to engine room, another unique opportunity arose: a graduate scholarship from the Society of Architects and Engineers. He used this to pursue his developing interest in ship design, entering the University of Michigan Master's programme to study Naval Architecture and Marine Engineering.

Achieving his master’s degree at Michigan in 1980 (with high honours), John began his career in a combination role, working for shipping companies and a well-known naval architecture firm. “Combining my design background with ship operations knowledge has been the give and take of my working life, and I’ve experienced career roles amongst several of our current customers,” John explains. “So I’ve had a rotation in the ship operations field, in the ship design field, with ship owners, investors, business development, and at shipyards, providing insights across these business windows.”

On land

In the 80s, John became more and more involved in ship operations internationally, including a period in ship construction at Samsung with sailing time as a Chief Engineer in global shipping trades. Having worked on the move and overseas a great deal, it was around this time that he began to hear the call of the shore.

“In the late 80s I found a wonderful companion for life, my wife Stephanie. At that time, I pretty much decided a good marriage is one where you can be more at home than at sea or around the world. So I came ashore and went to work for a pension fund investment company that held a portion of assets in the shipping segment for diversification.”

With work experience covering virtually every perspective possible on the marine industry, the only unconquered territory for John was management. A helpful nudge from an executive of a Fortune 500 company provided the entrance he had been waiting for.

“In the late 90s,” he says, “one of my mentors said to me: ‘John, you need to complement your deep operations and technical expertise with a business degree, and then carry this forward, merging them into business development.’ So I followed his advice, went back to graduate school and got my MBA at the University of Washington while working full time.”

Following a unique project at GE, John soon found himself in a position to exploit his entire range of skills. The offer of a senior position at Wärtsilä was both a logical step and a form of renewal. “Now I could go back and put everything to use: my naval architecture training, my knowledge of ship design, and my experience with ship operations ranging from large, two-stroke engines – the most powerful engines in the world – spanning all the way down to four-stroke diesels, electrical automation, and propulsion. I went from handling a slice of the pie to a whole menu of items. So I took the opportunity and it’s been terrific.”

Home at last

To outsiders, Wärtsilä’s position as a supplier of LNG-related technologies and services in the current gas-centric climate may seem like a strategic risk paying off. With his decades of experience in the marine industry, John seems uniquely placed to explain the company’s series of fortuitous decisions. How did the role of gas in shipping shift during his career?

“In the 1970s,” he begins, casting his mind back to the start of his working life, “for the US, steam was slowly undergoing a transition to diesel replacement, and in the 80s large-scale shipping relied exclusively on heavy fuel oil. There was really no thought of LNG other than as a cargo for the large ocean-going carriers, principally transporting from sources in the Middle East to the demand areas of Japan, Europe and the US.”

During that era, LNG had no standing as a marine fuel, and LNG carriers utilised natural gas boil-off as their cargo tanks slowly warmed up during the extended ocean journey. As John explains, these ships also made alternative use of the gas to assist in their propulsion, initially in steam boilers, and then later, during the mid 1990s, as a fuel for reciprocating engines. This remained the case until the year 2000, when the first coastwise vessels in Norway, small ferries and off-shore supply ships, began to run on natural gas as a fuel.

“That’s really when I think the coastal and port area vessels began to inherit a lot of the technologies and knowledge from the larger ocean-going carriers that, at that time, had been operating successfully for a number of years already.”

John has a way with metaphor, and sees the progress of LNG technology as generational: “The largest 50-centimeter bore gas engines were designed for the high power needs of LNG carriers crossing the oceans. That’s the grandfather. The father is represented by the 34-bore gas engines, which were originally intended to serve as generator engines for steam ships running on natural gas, but soon became the choice for power generation on land. And then today’s grandson: the 20-series engine, a lower-power solution for both smaller vessels and generator set applications. This latest series completes a power band that now spans a broad market: the smaller river and lake vessels, much larger vessels along the coastlines, and, with our newest low pressure two-stroke addition, the large ocean-going vessels.”

The conversation, of course, soon turns to the environmental benefits of LNG, currently driving interest and activity worldwide. “Wealthy populations’ demands for stronger environmental stewardship are reflected by the politicians in their regions, and they’re charting our future direction. It’s predicted that soon the Baltic and North Americas control areas will be joined by Japan, Australia, the Mediterranean and that others will also adopt similar measures to reduce emissions. So our customers around the world are seeing a clear structural and societal change aimed at becoming better environmental stewards for the sake of future generations, and this expanding opportunity is moving the market growth trajectory rapidly and continuously.”

Wärtsilä addresses the whole gas value chain from market source to consumption, covering the entire energy spectrum.

As well as the development of gas in the marine sphere, John is equally keen to point out Wärtsilä’s parallel work with gas in land-based power generation. “I wasn’t here in the 90s when the company really went in to reciprocating gas engines,” he says, “but I’ve spoken with those that were, and our initial ambition was to target the large ocean-going carriers moving LNG around the world. Gas was a substitute for lower efficiency steam-turbine engines that had been the choice from the 70s and 80s.”

“That was the traditional choice,” he explains, providing historical perspective. “However, that technology and market space can equally apply to power utilities, where the generation of electrical power would enjoy similar benefits from the use of gas. This is why we’ve seen gas become such a popular choice for balancing renewables. And you have to remember: the engine doesn’t know if it’s afloat at sea or on solid ground. It can function perfectly well in either case. So, in joining this company, suddenly a new market opened up to me in power generation.”

There is an infectious zeal to the way John describes the current business environment for both shipping and power generation, along with Wärtsilä’s potential within it. It’s little wonder he has earned the nickname of “gas ambassador” for the company. John’s newfound capacity to exploit the full quota of his skills evidently arrived at an exciting moment for the marine industry in general.

At Wärtsilä, he found himself in a position to witness the convergence of diverse expertise on the LNG value chain. “This company is now uniquely positioned globally, with an incredibly expansive breadth,” he enthuses. “We address the whole gas value chain from market source to consumption, covering the entire energy spectrum. Wärtsilä spans the entire range from gas receipt to liquefaction, marine transport logistics, storage, regasification, and consumption in power plants for electricity production.”

A short talk with John Hatley demonstrates that Wärtsilä approaches the market with more than just this expansive technology offering. There are passionate experts behind this story, and their actions are navigating the industry toward a new course: its destination is the sustainable age of shipping.

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