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May 5, 2017

OTC: Low-Price Environment Affects Safety

The new economic environment known as “lower for longer” has had no small effect on offshore safety, said a panel of experts at the 2017 Offshore Technology Conference.

Mike Drieu, environment, health, and safety adviser with Anadarko, left, and Marcelo Mafra Borges de Macedo, head of safety and environment at the Brazilian National Agency of Petroleum, Natural Gas, and Biofuels, participate in the Safety in the New Offshore World Panel on 2 May at the Offshore Technology Conference in Houston. Credit: OTC/Rodney White.

Lars Herbst, Gulf of Mexico region director for the Bureau of Safety and Environmental Enforcement (BSEE), pointed out three ways the lower-price environment could compromise safety offshore. The first was deferred maintenance. In 2017, he said, BSEE has seen a 100% increase in G-111 shut-in incidents of noncompliance compared with the previous 5 years. The G-111 form asks, “Does the lessee maintain all equipment in a safe condition to provide for the protection of the lease and associated facilities?” This increase, Herbst suggested, is a result of companies deferring maintenance because of the low-price environment.

The second effect Herbst pointed out was an increase in smaller operators that may not be well funded. “Some of the operators are not as well funded as the larger companies in the Gulf of Mexico, and their bottom lines are impacted much quicker than those larger operators,” he said. “This is exaggerated even further in the deepwater environment and the deepwater facility fields that carry higher operating costs. It is imperative that we continue to monitor these companies’ capacity to respond and mitigate consequences of incidents offshore.”

Herbst finished his list with bankruptcies. “It is quite shocking that bankruptcies seem to be more widespread, in my view, this downturn cycle than in previous downturn cycles,” he said, adding that, “Currently, nearly 25% of the facilities operated offshore were operated by financially at-risk companies.”

The concern, Herbst said, is that companies struggling near bankruptcy or recently emerging from bankruptcy may not have the funds to properly maintain their equipment. “It is quite shocking and does give us concern,” he said. “How do you keep up with the OPEX (operational expenditure) expenses around maintenance?”

Other panelists were Matt Mowrer, director of applied technology and data analytics at ABS Consulting; Mike Drieu, environment, health, and safety adviser with Anadarko; Marcelo Mafra Borges de Macedo, head of safety and environment at the Brazilian National Agency of Petroleum, Natural Gas, and Biofuels; and Sylvie Tran, general manager for safety and environment, deepwater Gulf of Mexico, at Shell.

Mowrer presented challenges and opportunities for offshore risk analysis, pushing for the collection of data as a strong way to effect safety. “More data is better,” he said.

Drieu addressed regulation as it pertains to safety, pointing out that pragmatism is more important than quality. “Of course, it’s always difficult when you’ve got a lot of regulations,” he said. “It’s not the number of regulations out there …, but it’s the pragmatic based on risk that you’re able to streamline and make those right decisions.”

Lessons learned, in all aspects of life, should lead to increased safety, Drieu said. As an example, he mentioned driving and some of the hard lessons learned over the years. “Do we really need to go back 30, 40 years ago to when you didn’t put a seat belt on when you drive down the road?” he said. The lessons learned should evolve into best practices, he said, and “good best practices ultimately lead to good regulation.”

All of the panel members agreed that sharing information and lessons learned was important for increasing safety in the industry, but none was sure how that could best be accomplished. An attendee asking what avenues existed for sharing lessons learned was met with silence until the moderator, Henrique Paula, senior vice president for strategic initiatives at ABS, mentioned that conferences were sometimes helpful.

Nonetheless, all agreed that the industry must continue to strive for safety excellence. “It is a journey that never ends, especially in this lower-for-longer world,” Tran said. “Safety is not a zero-sum game, and we must all be winners.”