Risk management is one of the most important factors when it comes to oil and gas industry. In recent years with the development of technology, the complexities in managing the oil and gas industry has become a tedious task. There has been many manmade disasters due to poor risk management in the oil fields where exploration and refining of oil and natural gas are done (Swuste, Zwaard and Lemkowitz 2017). Since the product being explored is highly explosive and need more than adequate security and risk management elements to work in a hassle free environment. Ignorance of any security elements, however minute it may be can compromise the security of the entire facility and can prove to be a disaster.
In the following discussion, analysis of the risk management issues and factors is done with proper details and inputs. Learning from the previously happened accidents in the oil and gas establishments provides a great insight in making this risk management framework (Walter 2017). Since the oil or natural gas disasters costs a large amount of money and take many lives it should be dealt seriously. The following discussion contains the risk management and safety elements and methods as how the risks can be mitigated.
Risk in the oil and gas industry can be categorized into different modules. Each of the risk factors is equally important in context of safety of the entire establishments which oil and gas industry has (Stackhouse and Stewart 2017). The companies of oil and gas industry are exposed to risks which may be of economic, environmental, operational, resource and political nature. The details about the safety and risks and their management are discussed below.
Safety factor in the oil and natural gas industry is majorly based on the learning outcomes of previous disasters. This is by far the best known method with which the safety of the oil exploration and transportation establishments can be assured (Stackhouse and Stewart 2017). There are certain safety measures which can minimize the risk and ensure safety in the oil and natural gas industry which are discussed below.
Changing the Safety Culture: With the change in oil exploration techniques practiced world over there is a need to upgrade the safety culture among the large organizations. Participants who are engaged in the civil aviation industry know the value of safety and precautionary measures but it is uncommon in the oil and natural gas industry (Silvestre and Gimenes 2017). They need to be incentivized to improve the safety measures and need to develop a self-policing mechanism which may persuade the staffs of the oil establishments to comply with the safety rules and norms. There is also a dire need to constantly upgrade the safety technology as oil explorations have now moved into deep ocean waters where the parameters of safety have changed radically. This upgradation can save many lives and can avoid many oil disasters in deep waters which can also harm the marine ecosystem.
Industry Standards: Many companies of oil and natural gas industry ignore or do not comply with the industry standards which are prescribed for the purpose of oil and natural gas exploration. Industry standards are made keeping safety factors in mind for different tools, instruments and situations which are used during oil exploration (Selleck 2017). All the tools and equipments and machines which are used are in compliance with the industry standards. Drilling and other refining activities in the oil and natural gas establishments also have some industry standards which may be API or any other standard depending on the type and place of exploration. Many disasters can be avoided just by following these industry standards.
Self-policing by the industry: Oil and natural gas exploration is done by the authorized companies in countries where oil reserves are found in abundance. It is a long term project which can last for decades (Olson and Wu 2017). To monitor the type of work going on in the oil exploration establishments there are certain industrial agencies of the parent country or the host country which does the work of self-policing. These industries or agencies do technical audits and inspections to make sure that proper use of advanced technology for exploration is done or not. If they find any lacuna in the process then they provide the company with proper technologies which helps in minimizing the risk and increases safety.
Safety Management Systems: There are industrial safety control structures provided by the above mentioned industries which are made for proper oil and natural gas explorations. These safety management systems are also available with the oil exploration companies but are not well designed (Meidell and Kaarbøe 2017). These safety systems are made a prerequisite for applying for the oil and natural gas exploration license. They are actually, the guidance rules which describe step wise methodology as to how the oil exploration can be done safely.
Deploying Safety Engineers in Decision Making: There is a specific and separate study for the engineering of oil and natural gas exploration. These engineers have deep knowledge about the drilling and exploration processes with prescribed safety measure and precautions (Li, Sun and Fan 2017). There should be a group of these engineers who can advise the decision makers on the exploration establishments as what safety measures are to be taken to avoid the risks involved in each process of exploration. Engineers design the entire structure of exploration process keeping the safety systems in their top priority. Using them for influence the decisions can minimize risks to a great extent.
Training and Certification: Workers who are used in the oil and natural gas industry are the ones who have to risk their lives in doing many jobs which are not done by machines. They suffer the major loss when anything unplanned happens in the oil exploration sites (Kato 2017). Many disasters are initiated by a mistake done by these workers who work on the ground level. This is due to the lack of training and knowledge of the workers. There should be a rule or mechanism for hiring these workers in which the workers should get proper training for their respective jobs or they should be certified by any known agency to work at such sites.
Learning from Mistakes: There have been many disasters in the companies of oil and natural gas industry all over the world. There have been investigations in every disaster and accident in which the reports have been formulated. In the report all the causes of accidents and lack in security gets listed (Jennings 2017). These details can be used in making the security structure of the companies in which the reasons of accidents can be mitigated and more emphasis can be laid to cover up the lacuna. This practice can help a lot in the risk management of the oil and natural gas site.
Hazard Analysis: The major system of learning from the previous disasters is the analysis which is done of the hazards which occurs in the large scale disasters. There is a technique called HAZOP which means Hazard and Operability study which proves to be instrumental in the analysis of hazards (Hofmann, Burke, and Zohar 2017). These studies and analysis find out the minute details and reasons for why the disaster happens in the oil and natural gas industry. With the help of this analysis and study a company can educate the risk management staff and draw conclusions to avoid the same types of hazards which exist in their company.
Maintenance: There are various equipments and machines which work round the clock on the oil and natural gas sites. These machines are heavy duty and can take a huge amount of work load and can run for longer durations as per the requirement of the work. Machines and tools are expensive and they need maintenance from time to time so that they do not malfunction which can create disastrous situations (Hayes 2017). In the oil and natural gas industry many machines work together to complete one job and their work are interdependent on another machine. If there is any kind of failure in one machine then the rest of the machines in its cluster will fail. To prevent such thing from happening proper maintenance of the equipments should be done.
Third party certification: In the oil and natural gas industry this method of risk management holds good importance. It is a common practice that engineers and supervisors of the company which is involved in the oil and natural gas exploration overlook some safety measures to keep the work going and to meet their respective targets (Bjerre, Stegelmann and Mandø 2017). These minute ignorance in safety measures can grow up to become a hazard and can further lead to a disaster. To mitigate this issue, a third party certification is required. In this method a regulatory agency is hired to look after and inspect the functioning of the exploration site and prepare a report by doing technical auditing. Officials of these agencies are impartial and have no interest in the benefit of the company and present a transparent report about the shortcomings in the security measures of the site. Considering this report in further exploration will help in risk management of the company.
Piper Alpha is a UK based oil and natural gas exploration platform which underwent a huge explosion in the year 1988. It is regarded as the worst disasters in offshore oil exploration till date. The accident killed almost 150 crew members and rest of them very seriously injured (Baker 2017). This disaster is known to be the eye-opener for many other companies of the oil and natural gas industry. This facility was constructed in two parts, the first one being gas processing module and the other one was made of high-pressure condensate pumps. The design of this facility was simple for the accident to happen.
But the major reason for the accident was known, as there was maintenance work going on simultaneously on the safety valve and one of the high-pressured condensate pumps. After the exclusion of pressure safety valve of condensate pump for upkeep, the condensate pipe stayed provisionally closed with a blind extension as the maintenance work remained incomplete in the day time due to the end of shift (Arora and Lodhia 2017). Unaware of the repair work which was being done on one of the pumps, a night staff started the substitute pump. Due to this action, the blind extension together with all the firewalls could not contain the pressure which resulted in multiple explosions.
This happened due to the ignorance of staff and management of the Piper Alpha as there was lack of communication between the ground staff and other officials who were in charge of the maintenance work (Antonsen and Almklov 2017). First of all, they should not have started the maintenance work simultaneously on both the condensate pumps and safety valves. If the maintenance was so necessary then the entire section of work should have been kept closed or under quarantine. This happened due to lack of importance given to the staff training and deploying safety engineers.
Conclusion
It can be concluded from the above discussion that risk management is the most important aspect of management in oil and natural gas industry. There are certain risk management practices which are mentioned and discussed in details which if applied can minimize the chance of a disaster and can increase the level of safety measures in the exploring company. It has been observed that many oil exploration companies across the world do not pay much attention to the risk management factors which is a wrong approach as these disasters are catastrophic and their consequences is lethal. It destroys lives, economy of the company, creates turmoil in the global prices of oil and natural gas and has many more serious repercussions effecting the business and economy of the entire world.
As in the case of Piper Alpha, a minute ignorance during the maintenance costed the company an entire establishment and many lives were even lost due to the explosion. It can be summed up from the above discussion that any oil and natural gas exploration company should spend and prioritize their risk and safety management to avoid disasters like explosions and oil spills.
References
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