Risk management is the process of identifying, assessing and controlling threats to an organization’s hazards and failure of processes (Ingraffea et al. 2014). From the beginning, oil and gas industry has faced a huge number of hazardous incidents causing fatal results internally as well as externally. Therefore, along with the monetary investment strategic risk management is also essential for the oil and gas industry. Oil and gas industry has become one of the most essential as well as distributed industries after the industrial revolution in Europe, where more than 75% industrial operations depends on oil and gas industry for the essentiality of fuel (Ingraffea et al. 2014). Hydrocarbon which is the source of any ignition in industrial work can be segregated into two segregated sections namely oil and gas. The petrochemical industry that deals with various hydrocarbons and other highly inflammable components is naturally highly hazardous as well. An oil and gas company has to invest 48% of their administration expanses only for safety and security issues (Lees 2012).
This report will focus on the existing risk management procedure and the necessary changes for oil and gas industry while considering the national and international level health and safety issues. The utilisations and outcomes of existing strategic risk management tools will be discussed with the evaluation of industrial compliances. 5 Historical incidents in oil and gas industry have been selected and will be analysed critically. The business case and safety report will be presented at last to pint out the activities that an organisation should do or not in order to reduce the occupational hazards. The purpose of this report is to present the essentiality of health and safety risk management system in oil and gas industry with supportive evidence for developing more effective and comprehensive health and safety management plan for the oil and gas industry.
As per the definition of risk management, Risk management is the process of identifying, assessing and controlling threats to an organization’s hazards and failure of processes. These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters (Adgate, Goldstein and McKenzie 2014). The risk management process consists of four stages namely Hazard identification, frequency analysis, consequence analysis, evaluation of the risk assessment. Along with the monetary investment strategic risk management is also essential for the oil and gas industry. Oil and gas drilling, servicing and refining activities deal with many different types of artificial heavy and dangerous equipments as well as hazardous natural components and chemicals. Oil and gas operations usually are divided into two separate activities namely upstream activities and downstream activities. The upstream activities are the set of operations before processing or refining the hydrocarbon which includes the drilling, exploration, production and completion (Shahriar, Sadiq and Tesfamariam 2012). On the other hand downstream activities involve the process of post extraction operations, transportation to crude oil terminals, refining the crudes, retail transportation and other logistics operations. Surprisingly, in both upstream and downstream phase the histories of hazardous incidents can be found. Most of the oil and gas production centres are situated in remote places, far away from any health pr security service facilities. Because of this in case of any accidents receiving emergency help from the authority becomes very critical and hard.
Currently in any oil and gas industry several risk assessment and prevention techniques are used that include the risk identification, hazard reporting, taking preventions, providing compensations to the employees and documentation. The initial procedure is the identification of risks including the frequency and consequences measurement. In risk measurement system the most utilised method is risk management matrix that consists of two parameters namely the occurrence and consequence (Kelland 2014). The severity score of any risk is measured by multiplying those two components. As an example, if any industrial operation the occurrence of falling is high and scored 8 out of 10, and the resultant consequences are low and scored 3 out of 10. Then the risk severity of falling for that premise is 8×3=24 out of 100, which can be considered as low in the conventional standardisation process in risk management system (Vinnem 2013).
In risk management system, managing the risk comes after the analysis of the risks and also includes the mitigation plan to avoid those identified risks. The most utilised risk management method is the bowtie method of risk management that consists of 6 essential components namely Threats, Escalation factor, barrier, Consequences, Top Event and hazard (Kelland 2014).
The it is a risk management framework that consists all the necessity platforms to conceptualise the pre-hazard and post-hazard attributes as per the severity score of any risk As an example, has been presented bellow for the oil and gas industry risk management method.
Ensuring the preventive barriers is essential for any company. Any fault in preventive barrier can lead the threats as well as consequences to the devastated outcomes of the hazard. At the same time for reducing the risk oil and gas industry should also take care of their Escalation barriers as well. In this case recruiting and training can improve the facility system and the enhance communication system can help to improve emergency support.
The major trend, which has been noticed in the conventional risk management process in oil and gas industry is, the companies give more priority to frequently occurring hazards over the risks with high consequences. Issues like leakage in terminals, disputed valves in junctions, pressure imbalance in materials reserves and others do not occur frequently (Adgate, Goldstein and McKenzie 2014). Therefore, in spite of having high amount of resultant consequences the oil and gas industry often neglects to take regular monitoring activities and install effective precaution system proactively. As a result, when a less frequent with high impact hazards occurs, it causes an unexpected level of destruction and loss in oil and gas industry. This discrepancy has caused many devastating and fatal issues with huge mortality from last decade. There are many regulations and measurement tools, frameworks are available in various sources that can be utilised in risk management plan of any oil and gas company.
Many regulations and legislative procedure have been made mandatory to keep a risky workforce operation less vulnerable. Both online and offline sources the legislative frameworks proposed by state and national level government and international associations are available. In the following section 4 most significant and mandatory regulations and legislative frameworks are discussed that aimed to secure the health and safety of workforce in any industry including oil and gas industry.
HASAWA 1974: (Health and Safety at Work etc Act)
Health and Safety at Work Act was imposed by United Kingdom government in 1974. This act makes an extended provisions to secure the health, safety, security and welfare of the workforce (Rosendahl 2012). As per the regulation, any organisational operation that comprise even a single workers, requires effective emergency handling system, fire extinguishing, hazard reporting and other facilities. This act has taken dangerous substances, emissions, risky procedure into the account of health and safety breaching considerations. According to the history of fatal cases, in oil and gas industries the major risks are Vehicle collisions, Explosions and fires, Falls, Electrician and hazardous energy, Chemical exposures and struck-by/caught-in/caught-between hazards (Skogdalen and Vinnem 2012). The law states that breach of this regulation can impose monetary and other form of penalisation on the responsible authorities of the accused organisations.
RIDDOR: Reporting of Injuries, Diseases and Dangerous Occurrences Regulations
Reporting of Injuries, Diseases and Dangerous Occurrences Regulations was placed in action from 1995. This low states the employers as well as employees, even who are self employed to report specified hazardous situation and incidents to the government. This act considers all work related direct and indirect health and securities issues as the subject of workplace hazards (Tombs and Whyte 2013). Vehicle accidents are common in oil and gas industry that occurs in the Heavy load transportation and logistics operations. Flammable gases, vapours, and hydrogen sulphide released from tanks, walls and other storage system usually cause fire hazards. As per the regulation all work premises either public or privet, need to have a well recorded report of hazardous issues and precaution plans with their effectiveness. The RIDDOR records must be kept confidential under the compliances of Data Protection Act. All the identified risks and the regular activities against the risk have to be maintained by all organisations and also to be presented to the government.
COMAH: (Control of Major Accident Hazards Regulations 2015)
Control of Major Accident Hazards Regulations ensures that the any business organisation take all the necessary measures for preventing the major hazardous situations while minimising the resultant consequences. This legal framework includes emergency planning, land use planning, site safety management and compensations. Electrical sources can also cause fire hazards because of its high energy ignition power. Falling is another considerable risk that causes due to the high altitude operations in drilling platform, elevated equipments and loading unloading machines. This act also ensures that an organisation takes all the responsibilities for the treatment of the injured employees. (McKenzie et al. 2012) These responsibilities includes the financial support, treatments, special medical leave, psychological support and other aspects.
DSAEAR : Dangerous Substances and Explosive Atmospheres Regulations 2002
Dangerous Substances and Explosive Atmospheres Regulations is a set of regulations to secure the occupational health and safety industrial premises. DSAER was imposed by United Kingdom in 2002 for the European Union. The purpose of this regulation is to reduce the risk of fatality and serious injuries resulted from dangerous substances and chemical exposures (Sousa, Almeida and Dias 2014). Struck-by/caught-in/caught-between hazards are various types of machine hazards that caused for multiple rolling machine, high pressure lines, falling equipments and others. Chemical exposure is caused by leakage of silica, DPM, VOC, Dermal components, led solvents, PAH and others (Vinnem 2013). This regulation limits certain operations due to the use of inflammables and acidic components in industrial use. Industries like, oil and gas, mining, transportation, logistics are the major focus of this regulation.
List of cases:
|
Date |
Location |
Fatalities |
Consequences |
Identification of Hazard (negligence in terms of hazardous regulation) |
|
27 March 1980 |
Norway (Alexander L. Kielland, North Sea, Norway) |
The accident killed 123 people |
The accident led to the provision of appointment of s command organization who would give clear order to abandonment during the time of emergency. This tragedy also led to the requirement of lifeboats hooks and also establishment of structures which will facilitate the faster abandonment of the sinking oil rigs. |
The accident occurred because of a crack in the 6 bracings that held the entire rig. Also the investigation found significant amount of lamellar tearing in the in the flange plate (Hannevik et al., 2014). |
|
15 February 1982 |
Canada (The Ocean Ranger Disaster) |
All the 84 crew that included the 38 contractors and 46 Mobil employees were killed. |
The commission that was formed for the inquiry of the incident recommended that federal government must invest every year into the research and development of the technologies used in rescue and search operations. It also led to improving the design aspect of the lifesaving equipment. |
It was found that the crew not properly trained and the number of the safety equipment were insufficient. The supply ship had no safety protocol and the platform itself had a number of the flaws. It was even concluded by the Royal commission that the inspection and regulation by the Canadian and United States government were ineffective (Ismail et al. 2014). |
|
6 July 1988 |
North Sea (piper alpha, North Sea, united Kingdom) |
The accident killed 167 people |
The accident led to the various changes such as emergency response and evacuation, safety culture, handover, permits for maintenance, priority of person safety over the other process safety, management of change. |
The accident occurred due to leakage of gas in one of the condensate pipes on the platform. The condensate injection pump was not meant to be switched on. Communication errors occurred during the shift change and one of the staff switched on the pump (Shallcross 2013). |
|
3 November 1989. |
South China Sea (Seacrest Drillship disaster, South China Sea, Thailand) |
After the rig capsized, 91 workers were killed |
A lawsuit was filed which was deemed to be invalid |
It was concluded that the accident was caused by the severe waves and the weather. Even the forecast information did not provide the location and the force of the storm. The wrong forecast failed to initiate the emergency procedures and evacuation procedures (De Sanctis, Paciarotti and Di Giovine 2016). |
|
20 April 2010 |
Gulf of Mexico (Deepwater Horizon Disaster) |
11 people were killed and a total 5 million barrels of oil spilled occurred |
The accident led to the huge oil spill and it led a negative environmental impact, affecting the economy along with negative health consequences, and offshore oil drilling policies were changed. |
The accident occurred due to the failure of the blowout preventer (BOP). Also not enough cement was present between the production casing and protection casing (Cope et al. 2013) |
The various accidents that occurred in the offshore oil and gas industries demonstrated that there are various tyspes of hazards. Accidents that occur in the offshore oil rigs are mainly caused by the technical lapses, mechanical facilities, climatic conditions and human factors.
In accidents like Piper Alpha, the accident has occurred due to a compromise in the gas compression module and thus resulted into a leakage of the gas condensate. Majority of the accidents including the Deep Water Horizon have occurred that severely compromised the and negatively impacted the economy, pollution of the environment, health and life of the workers along with the deteriorating condition of the energy supply security (Skogdalen, Khorsandi and Vinnem 2012). The different types of hazards include: release of oil on to the sea surface and subsea; explosion after the release of the gas, ignition and formation of the explosive clouds; hazards from fires after the hydrocarbons are realised into the atmosphere. While it is also important to highlight that in other accidents like Piper Alpha, human error and communication error played a major role in the accident. During the shift change, it has been seen that the workers that have worked in the previous shift failed to properly inform the workers of the second shift. This led to a communication gap and an accident took place that even costed lives of innocent men.
In the Ocean Ranger accident, it was found that the crew not properly trained and the number of the safety equipment were insufficient. The supply ship had no safety protocol and the platform itself had a number of the flaws. It was even concluded by the Royal commission that the inspection and regulation by the Canadian and United States was flawed. Thus, even the accidents have occurred that could have been averted. The lack of safety protocol played a major role in increasing the tendency of occurrence of the accident. Even the lack of proper leadership and guidance duing the emergency evacuation led to worsening condition in accident like Alexander L. Kielland (Abimbola, Khan and Khakzad 2014).
The major accidents that occur in the oil and gas rigs, lead to the level of pollution and emission that cannot be mixed with the other normal activities. Majority of the pollution occurs after an accident occurs and it results into the release of huge quantities of pollutants and hydrocarbons in an uncontrolled fashion in a relatively short period. The lack of awareness and lack of knowledge to tackle during an emergency situation also increases the chances of occurrence of an accident. It has been found in Ocean Ranger Disaster that the worker was not properly trained to deal with the emergency situation and the emergency procedure were not followed in a proper way. It is evident from a majority of analysis that the risks arising from the equipment failure is highly dependent on the harsh condition. In the offshore oil and gas rigs, equipment failure has been seen to be dominating the majority of the accidents (Deyab et al. 2018).
Bibby offshore in one of the most largest offshore oil and gas companies in United Kingdom. The aim of this company is to provide verities of oil and gas construction and transportation services through extensive marine, technical and commercial operations. Currently the organisation operating several high quality subsea construction projects in North Sea. The Workforce management system of this company is guided by a autonomous monitoring and risk management board named QHSE (Quality Health and Safety Excellence). To ensure the occupational health and safety operation QHSE has proposed several Health and Safety non negotiable policies named Integrated Policy Statement (IPS), which is update in 2015. The purpose of the Integrated Policy Statement is to outline the requirements of the organisation and the framework for senior management ensuring the mental and physical health, safety and security of employees from any potential hazard.
As per the Integrated Policy Statement of Bibby offshore oil and gas service organisation the framework of the health and safety management system is based on a evaluate cycle (Bibbyoffshore.com 2018). The health and safety evaluation starts from leadership and planning through stakeholder obligations, risk factors and regulatory compliances. In the next phase of this assessment the support activities is based on the environmental programs, compensation policies, hazard identification and reporting system. In the operation section a checking protocol is planned to execute a 3rd line audit system, first line verification system, survey tools and management reports. In the next phase, the performance evaluation begins with the improvement activities which aligned with the QHSE strategy, updating the licensing system, publishing the annual HSE report to government and others.
The health and safety assessment and management system of Bibby offshore company has some minor discrepancies that can cause faulty communication, lack of integration and reporting disputes. The QHSE strategy of the company lacks the risk prioritisation parameters. Along with the frequency and outcomes, other parameters like legal issues, CSR value should be also considered. Apart from that, the organisational policy never mentions a special task force based operation for emergency evacuation in remote places. Apart from that, the last update in risk management strategy was made in 2015. The management of QHSE should update their existing hazard reporting and emergency service system urgently to avoid any hazardous situation in near future.
Conclusion:
From the above discussion it can be said that the petrochemical industry that deals with various hydrocarbons and other highly inflammable components is naturally highly hazardous as well. However, from the beginning, oil and gas industry has faced a huge number of hazardous incidents causing fatal and devastating results. The focus of this report was existing risk management procedure and the necessary changes for oil and gas industry while considering the national and international level health and safety issues. It has been found that, Oil and gas operations usually are divided into two separate activities namely upstream activities and downstream activities. It has been seen, that in both upstream and downstream phase the histories of hazardous incidents are equally distributed.
From the review of regulatory environment and legislations it has been found, that many regulations and legislative procedure have been made mandatory to keep a risky workforce operation less vulnerable. As per the 5 critical incidents of occupational hazards in oil and gas industry, lack of hazard reporting and monitoring process have been found as the major contributor to the fatalities. Canadian Ocean Ranger Disaster took the life of 84 crew members and the 38 additional workers, because of the lack of monitoring procedure. Such accidents in majority of the times occur due to the failure of the safety equipment and dysfunctional safety measures while causing overall loss of 25 million USD (Vinnem 2012). Therefore, after reviewing the policy statement of Bibby offshore company it has been found, that the management of QHSE should update their existing hazard reporting and emergency service system urgently to avoid any hazardous situation in near future.
References:
Abimbola, M., Khan, F. and Khakzad, N., 2014. Dynamic safety risk analysis of offshore drilling. Journal of Loss Prevention in the Process Industries, 30, pp.74-85.
Adgate, J.L., Goldstein, B.D. and McKenzie, L.M., 2014. Potential public health hazards, exposures and health effects from unconventional natural gas development. Environmental science & technology, 48(15), pp.8307-8320.
Bibbyoffshore.com 2018. Sustainability | BIBBY OFFSHORE. [online] Bibbyoffshore.com. Available at: https://www.bibbyoffshore.com/sustainability.aspx [Accessed 15 Nov. 2018].
Cope, M.R., Slack, T., Blanchard, T.C. and Lee, M.R., 2013. Does time heal all wounds? Community attachment, natural resource employment, and health impacts in the wake of the BP Deepwater Horizon disaster. Social Science Research, 42(3), pp.872-881.
De Sanctis, I., Paciarotti, C. and Di Giovine, O., 2016. Integration between RCM and RAM: a case study. International Journal of Quality & Reliability Management, 33(6), pp.852-880.
Deyab, S.M., Taleb-Berrouane, M., Khan, F. and Yang, M., 2018. Failure analysis of the offshore process component considering causation dependence. Process Saf Environ Prot [Internet], 1(8), pp.220-232.
Hannevik, M.B., Lone, J.A., Bjørklund, R., Bjørkli, C.A. and Hoff, T., 2014. Organizational climate in large-scale projects in the oil and gas industry: A competing values perspective. International Journal of Project Management, 32(4), pp.687-697.
Ingraffea, A.R., Wells, M.T., Santoro, R.L. and Shonkoff, S.B., 2014. Assessment and risk analysis of casing and cement impairment in oil and gas wells in Pennsylvania, 2000–2012. Proceedings of the National Academy of Sciences, p.201323422.
Ismail, Z., Kong, K.K., Othman, S.Z., Law, K.H., Khoo, S.Y., Ong, Z.C. and Shirazi, S.M., 2014. Evaluating accidents in the offshore drilling of petroleum: Regional picture and reducing impact. Measurement, 51, pp.18-33.
Kelland, M.A., 2014. Production chemicals for the oil and gas industry. CRC press.
Lees, F., 2012. Lees’ Loss prevention in the process industries: Hazard identification, assessment and control. Butterworth-Heinemann.
McKenzie, L.M., Witter, R.Z., Newman, L.S. and Adgate, J.L., 2012. Human health risk assessment of air emissions from development of unconventional natural gas resources. Science of the Total Environment, 424, pp.79-87.
Rosendahl, T. ed., 2012. Integrated Operations in the Oil and Gas Industry: Sustainability and Capability Development: Sustainability and Capability Development. IGI Global.
Shahriar, A., Sadiq, R. and Tesfamariam, S., 2012. Risk analysis for oil & gas pipelines: A sustainability assessment approach using fuzzy based bow-tie analysis. Journal of Loss Prevention in the Process Industries, 25(3), pp.505-523.
Shallcross, D.C., 2013. Using concept maps to assess learning of safety case studies–The Piper Alpha disaster. Education for Chemical Engineers, 8(1), pp.e1-e11.
Skogdalen, J.E., Khorsandi, J. and Vinnem, J.E., 2012. Evacuation, escape, and rescue experiences from offshore accidents including the Deepwater Horizon. Journal of loss prevention in the process industries, 25(1), pp.148-158.
Skogdalen, J.E., Khorsandi, J. and Vinnem, J.E., 2012. Evacuation, escape, and rescue experiences from offshore accidents including the Deepwater Horizon. Journal of loss prevention in the process industries, 25(1), pp.148-158.
Tombs, S. and Whyte, D., 2013. Transcending the deregulation debate? Regulation, risk, and the enforcement of health and safety law in the UK. Regulation & Governance, 7(1), pp.61-79.
Vinnem, J.E., 2012. On the analysis of hydrocarbon leaks in the Norwegian offshore industry. Journal of Loss Prevention in the Process Industries, 25(4), pp.709-717.
Witter, R.Z., Tenney, L., Clark, S. and Newman, L.S., 2014. Occupational exposures in the oil and gas extraction industry: State of the science and research recommendations. American journal of industrial medicine, 57(7), pp.847-856.
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