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15 Jul 2016

Hazardous Industries: Expanding the Culture of Safety

 

Currie

Currie

When banks began to investigate the potential offered by the Internet some 20 years ago, forward-looking experts saw how products and services could be tailored to individual customer wishes. By analyzing online behavior, they could provide advice and suggestions perfectly in line with individual clients’ needs. However, a significant number of people from the banking industry were certain this would never happen. People would be far too concerned about sharing personal information or conducting transactions online.

This assumption was soon proven wrong. What’s more, the vast uptake of social media has shown that most people don’t think twice about sharing their—often very personal—data. There is an ongoing debate about security and reliability and the measures being taken to guarantee them. The public, the press, government bodies, Internet providers, financial institutions, and security experts are engaged in a lively debate. Threats are publicized, and measures taken are communicated and evaluated.

More than Measures
How does this approach compare to industries that deal with hazardous substances? Here, stakeholders including managers, employees, the press, the government, shareholders, and the general population have a real need for current, reliable information on safety and the measures taken to enforce it. The government has a responsibility to protect its citizens. Companies have an obligation to protect their employees. Insurance firms and shareholders and the general public also have a keen interest in closely guarded safety measures. Consequently, you might think there would be as much debate on the topic of industrial safety as there is around online privacy, identity theft, cybercrime, or hacking. Instead, the consensus seems to be that safety is not an issue, as long as there are sufficient protective measures in place. Most people seem to assume all is well when it comes to the safety of potentially hazardous industrial installations. But exactly which measures are in place? Just how secure are they, really? How are they deployed and updated? Which technological tools and controls are used to check their effectiveness? How are the people using them trained?

Check and Double Check
Consider this: A fire at a chlorine plant can affect the safety of an entire large city. Imagine a few dozen chemical companies and utilities placed close together, as is the case at countless industrial location worldwide. At each of these, thousands of safety-related actions are carried out every day.

Of course, in hazardous industries, safety is paramount. Procedures are in place, rules are scrupulously observed, ongoing education and dialogue are stimulated, reporting is transparent, and every company actively strives toward a culture of safety. Best practices are shared, and trade associations, executives, and employees are aware of risks and correct procedures. However, there is often a real risk that information is not accurate and outdated documentation doesn’t reflect the current situation. What’s more, decisions that need to be made can be incredibly complex. One might have to weigh processes dependencies, current status of work, the consequences of delaying work, and much more.

The only way to be absolutely certain nothing goes wrong is to carefully check and double check each individual action. That is why processes are continuously monitored, with alarms and sensors at every step.  However, it is vital that we realize that, although information technology is closely monitored, the human intervention required to carry out maintenance is not. In a tightly regulated area such as industrial safety, even the slightest error can have far-reaching consequences. During shift handovers, somebody, at some point, is guaranteed to forget to pass on important information. All too often, hazardous industries rely on informal processes and manual reporting.

In practice, a plant manager or operations manager, who is responsible for security processes, has to balance many different tasks and responsibilities around the clock. If you have to handle hundreds of work permits a day, you cannot cross-check each of them manually. Those responsible for safety have limited options in the area of software and tools that help them carry out their jobs properly. Of course, companies have huge volumes of processes documentation and guidelines. But this actually has an adverse effect. Because everything is written down, a false sense of security is created.

Root Causes
However strict the measures taken and the awareness of all those involved, industrial activities can never be completely free of risks. There is a huge difference between simply laying down guidelines and actively pursuing a culture of safety. The latter includes checking whether rules are followed and taking immediate action when this is not the case.

Risks need to be analyzed and mapped in the greatest possible detail and appropriate mitigation measures must be taken. However, safety management, monitoring, and control should not be added as an afterthought. These elements are just as important as the measures themselves. Without the right tools and controls in place, precautions have very little practical value. Embedded software, for example, can make the difference between simply listing guidelines or actual constant monitoring and improvement.

Companies should dedicate substantial time and resources to constant evaluation and updating of safety processes as well as finding root causes and acting upon them immediately. Technology, such as permit-to-eork and control-of-work software, is pivotal in supporting decision making by providing reliable access to the right information at the right time.

In addition, there must be an ongoing dialogue between all stakeholders. Not only should companies, investors and safety experts be open and transparent, the press, national and local governments, special interest groups, and the general public should voice their concerns and expect these to be addressed. As one hazardous industry employee put it: “Every day is another narrow escape.” In 10 years, I believe we will look back and wonder how this easy-going attitude to safety regulation was possible. Not unlike how the financial industry might look back at the initial concerns regarding online security.

eVision Industry Software is the global leader in control-of-work software. It helps high-risk industries improve control over their operational processes by delivering fully auditable, real-time corporate risk management as well as increased operational efficiency. eVision has clients on every continent and is headquartered in The Hague, The Netherlands, with offices in the Middle East and Australia and a global partner network.

12 Jul 2016

New Guidelines Published for Transferring Personnel Offshore

 

A new guidance document published by the Marine Transfer Forum, “Offshore Personnel Transfer by Crane—Best Practice Guidelines for Routine and Emergency Operations,” aims to support an international market that performs more than 5 million passenger transfers every year.

Personnel are transferred to an offshore rig using a crane. Photo credit: iStock.com/AndrCGS.

Personnel are transferred to an offshore rig using a crane. Photo credit: iStock.com/AndrCGS.

Developed by EnerMech, DNV GL, Reflex Marine, and Seacor Marine, the guidelines benefit from a range of expertise reflecting the key roles in ensuring safe and efficient marine transfer operations.

The development of the guidelines involved a period of detailed industry consultation. The International Marine Contractors Association, the Institute of Occupational Safety and Health (IOSH), and Damen Shipyards also made key contributions, ensuring the guidelines reflect best practices and are relevant to the growing marine renewable energy sector as well as traditional offshore sectors.

Simon Hatson, chairperson of IOSH’s Offshore Group, said, “We welcome the publication of these new guidelines. The offshore industry is one in which workers face many inherent risks, but all workers, irrespective of their industry, should be covered by a culture of care. These guidelines will assist operators in continuing to protect the safety and health of employees who face risk on a daily basis. IOSH is delighted to have been able to have an input in their development.”

“Market conditions, new technologies, evolving logistics demands in offshore wind, and increasing industry trends toward marine- vs. helicopter-based logistics all bring the case for marine transportation methods into sharper focus,” said Robin Proctor, client support manager with Reflex Marine and the company’s main contact for the Marine Transfer Forum. “This guidance will help operators review the options and implement the most appropriate solutions.”

View the guidelines here (PDF).

 

Read more about the Marine Transfer Forum here.

7 Jul 2016

Symposium Focuses on a Sustainable Circular Economy

A symposium set for 18–19 February 2017 in Denver is reimagining the global economy in a circular, sustainable way. The Engineering Solutions for Sustainability: Materials and Resources Symposium carries the theme “Towards a Circular Economy.”

In a circular economy—an alternative to the traditional linear economy of “make, use, dispose”—resources are used for as long as possible with the goal of extracting maximum value from them while in use. And, at the end of service life, they are recovered, reused, recycled, or stockpiled until economically viable recycling technologies are available. The importance of recycling resource efficiency and intersecting life cycles will be examined for materials and manufacturing sustainability within areas of societal need.

The symposium is designed to focus on approaches for providing the resources and materials needed to meet basic societal needs in critical areas of minerals and metals, energy, water, transportation, and housing through a circular economy.

Abstract submissions are being accepted for the symposium until 31 August. Submissions are invited on pertinent topics with a focus on the circular economy, including the following:

  • Basics of a circular economy and an integrated materials and energy flow
    • Raw material and energy inputs
    • Efficient raw materials and energy production and delivery
    • Materials and energy efficient design
  • Feasible engineering solutions to address challenges and improve effectiveness
    • “Low-waste” production, remanufacturing, management, and resource recovery
    • Enhanced distribution systems for input materials and energy, manufactured goods, and materials recovery and reuse
    • Addressing challenges of use, consumption, reuse, repair, and waste
    • Improved waste collection and recycling systems
    • Performance metrics
  • Interdependence of sectors and vision for sustainable development
    • Cross-sectoral flows and linkages
    • Water/land/energy nexus and bridging philosophical gaps
    • Effective public policy measures
    • Education and research
    • Integration of sustainability in an organization’s business plan
  • Case studies from energy and mineral fuels, industrial minerals, stone and aggregates, chemicals, metals, food, bio-based materials, and other industries

Read more about the symposium here.

Submit an abstract here.

7 Jul 2016

President’s Column: Minimizing Impact

Meehan

Last December, I had the pleasure of returning to the Kingdom of Saudi Arabia and touring the giant Manifa oil field. Manifa produces a heavy, sour crude oil from six, long (up to 40 km), stacked reservoirs in shallow water. The shallow waters have abundant sea grasses and corals and are teeming with marine life. Shrimping and fishing are important parts of the local economy. The development of the Manifa field is a fascinating story showing how creative solutions can minimize impact on the environment.

Manifa was discovered by Saudi Aramco in 1957. The discovery well targeted both the shallower formations productive in the large Safaniya coastal field and the deeper Arab formations so productive onshore. Neither zone was productive; however, the discovery found excellent productive layers in between, including three that were only produced in small volumes onshore and three that had never before proved productive. The heavy, sour crude was similar to Khursaniyah, one of the three major types of crude present in large quantities in the kingdom. Demand was less for this crude than for Safaniya and Arab crudes, but the market for heavy sour crudes was improving. The first development was in 1962, and the field was brought on-stream in 1964. The field produced for 20 years before being mothballed in 1985 because of low demand.

Manifa’s history can be contrasted with that of Prudhoe Bay in Alaska. While specific reserve estimates for Manifa are not public information, both fields are very large. The Prudhoe Bay field was discovered in 1968 and did not begin production until 1977. Prudhoe production peaked at approximately 1.5 million BOPD in 1989. Prudhoe Bay crude averages 27.6 °API and had a significant domestic market to serve. Manifa crude is 26–31 °API and has from 2.8 to 3.7% sulfur content, with less of a market at the time. It is fairly astonishing that roughly comparable fields would go down such radically different paths.

Manifa would remain mothballed until 2006. Saudi Aramco redeveloped the field consistent with a very long life production time horizon for its large reservoirs. But the old way of approaching shallow offshore fields would not be acceptable.

The design and operations practices of the Manifa oil field enable high production with minimal environmental impact.

The use of jackup rigs in these shallow waters would have required excessive dredging, and the size of the reservoir eliminated the possibility of effective development from the shore. A new approach to development would be needed. A creative plan to develop man-made islands connected by a causeway would allow conventional onshore rigs to be used to develop this offshore field.

A long causeway was considered, but early designs would have decreased water circulation vital to distributing nutrients and oxygen vital to marine life. With more than 4 million man-hours of work in the design phase, a solution was developed to build 27 man-made islands connected by 41 km of causeways. To ensure needed water circulation, the causeway does not go all the way across the bay and 14 bridges were built into the causeway to further improve circulation. Production commenced in 2012 ahead of schedule and under budget in a development that earned a UNESCO Environmental Responsibility Award nomination.

It is an impressive development, of which Saudi ­Aramco is rightly proud, with eventual production capacity of 900,000 BOPD or more. As our helicopter approached the massive processing facility, I looked at the three large flare stacks. There was nothing being flared. Was the field shut-in? No, the design and normal operations of the field use all of the produced gas, and creative operations practices mean that almost no gas is flared. Excess electricity produced by the facilities goes into the power grid.

Walking to the edge of the offshore islands, I looked into the crystal blue-green waters. They were much clearer than the waters at the Pacific island resort I had come from a few days earlier. I was struck at how small the impact of a 900,000‑BOPD facility could be.

This production volume is comparable to the individual Eagle Ford, Bakken, and Permian Basin unconventionals. Not a fair comparison to be sure, but the contrast was striking. As I have flown over the Dallas/Fort Worth area, the vastness of the surface impact of more than 16,000 wells is notable. Major unconventional plays cover huge areas, and most wells to date have not been drilled from multiple-well pads.

Individual well productivities and reserves for unconventionals are far lower than in the Middle East, or even Alaska, requiring orders of magnitude more wells to develop comparable reserves or production. In 2014, the combined production of the Bakken/Three Forks (North Dakota) and Eagle Ford (south Texas) plays was more than 2.4 million BOPD, with proved reserves of just under 11 billion bbl of oil. These reserve estimates are likely to grow, perhaps one day equaling or exceeding Prudhoe or Manifa. Subsequent drilling will need to minimize impact through techniques such as these:

  • Making better use of pad drilling to decrease surface impact
  • Minimizing traffic
  • Optimizing the use of flowback and produced water for subsequent hydraulic fracturing operations
  • Eliminating fugitive methane emissions and flaring

Close cooperation with regulators is one step forward. As regulators use both “carrot” and “stick” approaches to reducing impact and maximizing economic and technical recoveries, operators should be able to see clear priorities for subsequent developments. With current prices, activity levels and capital investments have dropped dramatically. This decrease in activity provides us a chance to carefully analyze our own performance and identify ways of improving performance when prices recover to acceptable levels.

A significant number of unconventional wells drilled have not proved commercially viable. How can we find ways either to improve their performance—through better geosteering, alternative completion approaches, or otherwise—or to eliminate their drilling? The well that is not drilled has the least environmental and economic impact of all. Some production logs have indicated that a significant number of hydraulic fracture stages contribute very little to wellbore inflow. These logs may be misleading, or perhaps those apparently non­producing stages helped to increase the production at subsequent stages. But guessing is not good enough. Existing integrated natural fracture, hydraulic fracture, geomechanical, geological, and reservoir flow models continue to have incomplete physics. Now is the time to solve these problems and find ways to produce the massive unconventional fields in North America more safely and economically, with minimal environmental impact, and to make unconventional fields around the world more viable.

 

5 Jul 2016

New DNV GL Hazard Awareness Training Center Spearheads Joint Industry Project

Testing at the DNV GL Spadeadam Testing and Research center. Photo courtesy of DNV GL.

More than GBP 3 million has been invested in the Spadeadam Testing and Research center to enhance its offering to perform rarely available trials in a controlled and secure real-life environment. The site features some of the world’s most advanced destructive and nondestructive test facilities. The new training and conference facility will enhance experiential learning for the oil and gas, chemical, utilities, and security industries.

Tørstad

Elisabeth Tørstad, chief executive officer for DNV GL Oil and Gas, said, “While the industry is understandably preoccupied with generating shorter-term value, we must be vigilant in ensuring safety remains as a top priority. Our challenge is to continue giving the message to clients that cutting costs without understanding the bigger risk picture can end up being ineffective and ultimately very costly to the business.

“The primary role of the Spadeadam Testing and Research center,” Tørstad said, “is to provide our clients with the knowledge and understanding to ensure risks are reduced and operations are safer. It is the availability of this infrastructure that allows Spadeadam to respond so effectively across a number of sectors.”

The Rt Hon The Lord Cullen of Whitekirk KT, who opened the center on 29 July, said, “I welcome the creation of this conference center for the support of training. Hazard awareness is essential for the successful management of safety in the interface between people, plant, and equipment with which they have to work.”

Vamadevan

Spadeadam will run full-scale experiments, using available test rigs, for a new DNV GL-led joint industry project, CostFX, to investigate cost-efficient explosion load descriptions for process areas. The project, which is still open to new participants, is driven by a need to improve and align knowledge between the health, safety, and environment and structural disciplines on explosion load criteria. The aim is to reduce complexity and overdesign in current models and methodologies for explosion protection while balancing demand for valid, accountable safety margins. The results will be used to generate standards and guidelines to allow structural engineers to predefine design explosion loads for standard installations, mitigating the need for costly, specialist analyses. For nonstandard installations, a direct link from complex explosion load assessments to structure response and design analyses will be provided. Overall saving in project execution, duration, and steel thickness is foreseen, while areas where increased safety is needed will be identified, providing both increased safety and reduced cost.

Work carried out at the site, which is the largest facility of its kind in the UK, consists of confidential, large-scale, major hazard tests, including flammable gas dispersion, fires, explosions, pipeline fracture tests, and blast and product testing in a safe and secure environment.

Hari Vamadevan, DNV GL Oil and Gas regional manager for UK and West Africa, said, “The demonstrations today, showcasing an explosion simulation and a pipeline failure, have been a real testament to the capability of the center at Spadeadam. The ability to show first-hand the reality of these types of scenarios shows just what can happen when things go wrong. Our highly specialized hazards awareness courses demonstrate how this can be prevented and that the experience and variety of work being carried out is unrivalled.

“Although the oil and gas and other industries are facing challenging times,” Vamadevan said, “safety is one area which cannot be compromised, and it is important that we provide an environment where research and training can be conducted safely, securely and confidentially.”

22 Jun 2016

World Energy Council Report Points to Innovation as Key To Drive Sustainability

The energy sector is at a transition point and faces a number of growing challenges. Innovative policies and technologies are the key to addressing these challenges, according to a new report by the World Energy Council.

The report was presented to ministers and government representatives as they met at the seventh Clean Energy Ministerial (CEM7) in San Francisco on 1 June.

The World Energy Trilemma 2016, “Defining Measures To Accelerate the Energy Transition,” published by the World Energy Council in partnership with global consultancy Oliver Wyman, has identified five focus areas to drive progress on the energy trilemma of sustainability, security, and energy access and meet the goals of 2020 and beyond. The report will provide the foundation for many discussions at the 2016 World Energy Congress in Istanbul in October 2016.

Joan McNaughton, chairperson of the World Energy Trilemma study group, said, “The Paris agreement has raised the bar on what countries must do to have a sustainable energy policy—one which delivers not just on energy security, access, and affordability but is also capable of delivering the Paris commitments. Having a high GDP (gross domestic product) or great natural resources can help, but good policy with a clear sense of strategic direction, implemented well, is what really drives good trilemma performance.

“More substantive dialogue with business leaders and the investment community will help policymakers to produce policies which are robust in a world of fast-changing dynamics of energy supply and demand and an accelerating pace of technological and business change. The sooner countries start on the transition, the cheaper it will be.”

The report highlights five key findings emerging from innovative policies, interviews with policymakers and private sector energy leaders, and an analysis of 5 years of the energy trilemma index:

  • Transforming Energy Supply. Policymakers and decision makers must set clear energy targets and provide clarity to the market.
  • Advancing Energy Access. Countries are reforming regulatory frameworks to decrease the cost of doing business and increase private investments in modern infrastructure expansion.
  • Addressing Affordability. While subsidies can be vital for low-income consumers in the short-term, long-term subsidies can erode the profitability of utilities.
  • Energy Efficiency. Cost savings alone are insufficient to stimulate the adoption of energy efficiency standards. Performance ratings, incentives, and labeling programs also encourage consumer energy efficiency.
  • Decarbonization. Dynamic and flexible renewable energy investment policies are the key to responding to evolving market dynamics and technological developments.

Speaking ahead of the CEM7 meeting, Christoph Frei, secretary general of the World Energy Council, said, “Solely expanding infrastructure is not enough. Countries must look to a range of innovative mechanisms that enable access for people to utilize the benefits of modern energy for income-generating activities. Pay-as-you-go business models and mobile banking solutions to promote the take-up of renewable powered energy services are examples of such mechanisms.

“Investment and policies intended to change demand and supply at national level will either take time to deliver visible progress or likely will be disruptive. Countries must act now to progress on the trilemma with secure, equitable, and environmentally sustainable energy to support a thriving energy sector, a competitive economy, and a healthy society. In San Francisco, a great focus will be on innovation to achieve these objectives. We will take into account any outcomes and lessons learned at our World Energy Congress later in the year.”

Many of the sessions at the 2016 World Energy Congress in October will revolve around how business and government can innovate in order to balance the trilemma. For example, two sessions—Innovative Business Models: The New Frontier and Enabling the Energy Transition: Benchmarking 150 countries—will look at how innovations in energy technology such as e-storage or changes in business priorities can help balance the trilemma and deliver a shift to a low-carbon economy. The focus of Day 3 will be on policy, with approximately 100 ministers and up to 10,000 delegates discussing policy action to drive the energy transition.

Francois Austin, global head of energy practice at Oliver Wyman, said, “Many emerging and developing economies continue to struggle to expand their energy infrastructure to support advanced energy security, reliability, and access. To increase private sector investments in infrastructure expansion and modernization, countries should, and are, beginning to reform regulatory frameworks to decrease the cost of doing business and increase competitiveness in the electricity market.

“To ensure policy and regulation keeps up to date with changing business models and evolving consumer, industry, and government expectations, policymakers should stimulate broader industry engagement, including the energy sector, new entrants to the energy industry, and with businesses that are transforming their energy consumption profile.”

Read the full report here.

9 Jun 2016

HSE Now Reader Survey

HSE Now needs your help. In order to better serve our readers, we are conducting a readership survey. The online survey should only take about 10 minutes to complete and can be accessed with the button below.

In 2012, the Society of Petroleum Engineers (SPE) recognized the need to better serve its members within the health, safety, security, environment, and social responsibility (HSSE-SR) discipline. SPE created HSE Now as a way to meet that need and disseminate technical information within the HSSE-SR discipline. In 2013, HSE Now launched with both original content and content curated from sites throughout the Internet.

Since that time, HSE Now has continued to grow. It is our goal to continue that growth and to continue to provide quality, relevant content for HSE professionals. This survey is your chance to help us guide this resource to best serve you.

Thank you for taking the time to answer the questions, and thank you for reading HSE Now.

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24 May 2016

Call for Papers Opens for SPE’s North America HSE Conference

17HSSE

The 2017 SPE Health, Safety, Security, Environment, and Social Responsibility Conference—North America will be 18–20 April in New Orleans.

Since 1993, this conference has brought together HSE professionals for knowledge sharing, learning, and networking. Experts from industry, government, and academia attend to share insights and best practices. The event will include presentations and discussions to help attendees address the health, safety, security, and environmental challenges facing the exploration and production industry.

Paper proposals are being accepted until 31 May. Papers are being accepted in more than 75 categories.

Read more about the conference here.

Submit an abstract for consideration here.

5 May 2016

Lloyd’s Register Sees Improvements in Offshore HSE

Six years after the Deepwater Horizon drilling rig incident, has safety and environmental protection of offshore oil and gas drilling in US waters improved? Lloyd’s Register believes improvements have been made. Expertise in health, safety, and environment (HSE) best practice and regulations is adding value to American drillers and operators in their efforts to mitigate and manage their HSE risks.

“I know I sound like a broken record,” said Brady Austin, Lloyd’s Register’s quality, health, safety, and environment (QHSE) group service owner based in Houston. “But operators and/or lessees are required to assess their operations and put into effect a management system to maintain and keep those offshore operations safe. Every operator in US waters has to have a detailed plan to assess those offshore operations, and the SEMS (Safety and Environmental Management Systems) plan goes into great detail.”

Last month marked the sixth anniversary of the Deepwater Horizon drilling rig accident and the onset of the 2010 Gulf of Mexico oil spill. Postspill reforms continue 6 years later, with the Bureau of Safety and Environmental Enforcement (BSEE) issuing well-control rules and new regulations on blowout preventers (BOPs). Meanwhile, a lot of work is moving forward with American Petroleum Institute (API) and the Center for Offshore Safety (COS) on SEMS. The word on the ground highlights that both industry and regulators are proceeding much more harmoniously.

“The SEMS is very much collaborative,” Austin said. Work on SEMS was one of the earliest initiatives to move forward postspill after the former Minerals Management Service was reorganized into three independent agencies: BSEE, the Bureau of Ocean Energy Management, and the Office of Natural Resources Revenue.

Largely based on recommendations by the API, SEMS aims to steer the industry toward tight and highly regimented workplace safety management practices while trying to keep the initiative with the industry itself, rather than see industry forced to simply respond to the government’s commands.

As an example, offshore operators must submit to third-party audits of their SEMS program. Where auditors find opportunities for improvement, companies must inform BSEE what their corrective action plan is to reduce systemic issues within the effectiveness of their SEMS plan. SEMS audits and the COS aim to identify industry opportunities for improvement and elevate these possible recommended practices through API committees, formalizing what API and others deem as suitable safety standards, with BSEE playing an advisory role.

Lloyd’s Register, which has recently expanded its offshore equipment training capacity in Houston, has been conducting SEMS training and has been working closely with BSEE and the COS to conduct SEMS audits. Austin agreed that the oil and gas industry and BSEE are on the same page with the direction of SEMS. The company’s HSE and operational experts’ specific understanding of best practice and regulations enable teams across the world to add value to support operators in their efforts to mitigate and manage their risks. Considering the current market, audits are a proactive way to reduce risk when properly implemented.

“When you’re dealing with technical issues, you can get technical,” he explained. “But, when you’re dealing with a management system, you are assessing how a company deals with technical implementation, because every company does things differently, and, even though they all work toward the same guidelines and understand what must be done, they’re not told how to do it.”

“SEMS rule and the implementation of the SEMS audits and industry participation in it is definitely improving things,” Austin said.

While documentation is important to the audit, it should focus on other evidence such as records, interviews, and observations. “Opportunities for improvement will be identified during an audit, the real management commitment comes in at the corrective/preventive action implementation,” Austin said.

“The regulator has stated many times at various conferences that they are focusing on what a company does to improve, not so much the identified opportunities for improvement,” he said. “Those are good things.”

The information gained from COS member-company SEMS audits is anonymously shared within the oil and gas industry to improve safety and environmental practices continually and reduce potential incidents in US waters. Non-COS member companies can elect to have this information shared as well.

Read more about Lloyd’s Register here.

Read more about Lloyd’s Register courses and training here.

28 Apr 2016

Virtual Tours Show Environmental, Safety Aspects of Sites

The Environmentally Friendly Drilling (EFD) program conducts a number of research projects on air, water quality, land, and efficiencies. In addition, the field tests performed have enabled the program to document “unintended benefits,” including improvements in public perception.

EFDThe retention of training for the newest generation of oil and gas workers is greatly enhanced by using a computer-based virtual platform. In 2012, the EFD program team launched the EFD Virtual Drilling Rig website, a free online interactive educational tool to help foster environmental awareness in the mindset of oil and gas employees and to assist in workforce development. The program uses gaming software to allow the user to tour a rig and identify, through hot spots, attributes that improve environment or safety performance.

The Virtual Hydraulic Fracturing site was released in 2014. This EFD virtual site allows visitors to walk around a hydraulic fracturing site without leaving their desks. Numerous hot spots are located on the site that provide information on process technologies and practices. When a user clicks on a hot spot, a manual pops up that provides general information; introduces environmentally friendlier alternatives; and provides literature, case studies, and videos on the equipment and practices.

When programs like this are made available on the web, they also becomes a publicly available tool that can have a positive or negative effect on the industry.

One virtual site currently under development is a production pad. This project is similar to the others in the way visitors navigate and learn. It includes a focus for regulator training and is also being developed to inform the public on what is going on “behind the fence.”

The EFD team is now developing a Virtual Offshore Safety Awareness (VOSA) site. This approach enables workers to improve their understanding of innovative improvements to safety and environmental technologies and culture associated with offshore development. The VOSA site will be free to use for individuals, trainers, and other organizations and programs for their own educational efforts. Subject-matter experts, safety and environmental specialists, educators, associations, and workers from the industry will be consulted so that current concerns and best practices can be included in the hot-spot material. The completed VOSA site will be designed around the Gulf of Mexico; however, information about other regions could be included in the pop-up manuals. This effort is funded in part by the National Academy of Sciences Gulf Research Program and EFD members.

These virtual sites have been used in a variety of settings, such as introductory classes for new employees, for oil and gas administrative employees who support the company but have never been to a site, and for college students focused on oil and gas careers. With these projects came the added benefit of communicating to those outside of industry, including the public; educational and training institutes; high school science, technology, engineering, and math students deciding on college and career paths; regulators; congressional staff; local officials; nongovernmental organizations; and health professionals. This information is about not only the processes of energy production but also the various improvements to safety technologies and environmental protection systems being used to address various issues associated with development.

None of these projects would be possible without the help of subject-matter experts. The EFD team is always looking for experts and companies to help keep these up-to-date and increase the distribution. An added objective is to work with companies and organizations that provide health, safety, and environment training so they can use these tools as part of their programs to keep the students motivated and improve retention.

The Virtual Site is free to use, and feedback is always welcome.

Visit the virtual site here.

Read more about EFD here.

26 Apr 2016

Expansion in Mexico Puts Spotlight on HSE Expectations

With the recent changes to Mexico’s constitution, many global exploration and production (E&P) operators and service companies are currently entering Mexico for the first time. To tap Mexico’s vast offshore resources, operators will call on state-of-the-art E&P technology. A key enabler to this anticipated growth is aligning Mexico’s new regulatory requirements and existing health, safety, environment, and sustainability culture. Strong performance in this arena offers a wide range of benefits, assists with meeting local requirements, and minimizes operational risk for all participants.

MexicoFocusing on the theme Collaboration for Future Growth, SPE held its first health, safety, and environment (HSE) symposium in Mexico 30–31 March 2016 to share process improvements, technological advancements, and innovative applications that will enhance HSE performance in Mexico’s emerging market. As with other SPE events of this type, its success lies in an open exchange of ideas, which was certainly the case given the very active participation of the attendees during the various technical sessions and panels.

One such panel, titled Growing Importance of HSSE-SR, focused on addressing the importance and impact that health, safety, security, environment, and social responsibility (HSSE-SR) have on all aspects of the oil and gas industry’s activities. The panel addressed the challenges facing operators, service companies, and others working to safely explore, develop, and produce oil and gas resources in a manner that is compatible with the balanced environmental and economic needs of the communities in which they operate. A key objective of the panel was to stress how the industry must effectively address the broad HSSE-SR expectations as a means to earn and protect the trust of all public and private stakeholders.

The panel was moderated by Roland Moreau, SPE vice president of finance and former HSSE-SR technical director. The panelists were

  • Charlie Williams, executive director of the Center for Offshore Safety
  • Salwan Ibrahim, technical advisor of offshore medical services for International SOS
  • Brian Sullivan, executive director of IPIECA, a global oil and gas industry association for environmental and social issues
  • Dean Slocum, founder and principal of Acorn International, a leading advisor to the international energy and extractives industries on social and environmental risk management

Highlights from each of the panelists follow. If you wish to delve into more detail about any of the topics discussed, please contact the panelists individually using the noted contact information.

Safety and Environment Management Systems, more frequently referred to as SEMS, is a performance-based approach to building and maintaining a strong culture of safety for oil and gas exploration. Williams addressed the role of data collection and analysis as a cornerstone to continual improvement of a company’s safety management. Based on the idea that the strength of any company’s safety management is the strength and quality of its “barriers,” the Center for Offshore Safety (COS) has developed and implemented a program to collect safety performance indicator (SPI) data related to the strength of COS member barriers. COS uses this SPI data, along with related learning-from-incident (LFI) submissions, to help guide future activities of the COS. This program has already resulted in the publication of guidance for effective leadership site engagements, as well as tools and guidance to assist companies in the execution of an effective audit of their SEMS program.

Duty of care is the basis of all occupational health and wellbeing promotional programs. Understanding that health is not merely the absence of physical disease but also includes social and psychological wellbeing is important, and this concept travels across the boundaries of sites and projects to have an influence on employees’ families and the communities around them. Investment in wellbeing programs, therefore, is a key tool to implement corporate social responsibility in addition to its positive effect on achieving operational goals and critical for business continuity.

Various corporations and companies have evolved through various stages in relation to the integration of a wellness agenda in their overall systems:

  • Fitness for Work Phase. Initial programs are observed in many locations, satisfying the company’s desire to ensure that they have the right workforce from a health point of view and have established a checkpoint for wellbeing review at the start of employment and then on regular intervals.
  • Fitness at Work Phase. This is the next level concept, where the focus has shifted to include the wellbeing of the workforce while performing the job, so the workplace starts to become a center for health promotion. This also leads to a shift in allocating resources for proactive prevention (primary prevention) of health risks at work beyond just being able to respond (reactive or tertiary prevention).
  • Fitness for Life Phase. This is the advanced stage, wherein wellness drive extends to the community and the site or the project becomes part of the bigger picture in serving the upgrade of society wellness.

Examples of wellness programs are many, including weight-reduction and -management programs, diabetes control, smoking cessation, infectious diseases prevention, and travel health. Each one is different in terms of content, target audience, individuals vs. groups, and associated activities for example.

However, in the design of any successful wellness programs, the following criteria are essential:

  • It is employee centered and focused.
  • It is based on the worksite-risk assessment, identifying health threats at work and establishing means of mitigation.
  • It adopts a phased approach that is progressive but made specific to the company’s policies and work environment.
  • It establishes proper communication channels, such as direct employee or group interaction vs. indirect and multimedia tools.
  • It includes rapid and facilitated access to medical services when needed if a health-related concern is identified.

The IPIECA is a forum for the global industry to share knowledge and good practice and respond to emerging issues through collaboration. One topic that highlights a key challenge facing the industry is this challenging market and finding a way to enable the industry to deal with it efficiently.

In this market, the industry can ill-afford downtime resulting from poor environmental and social performance. Collaboration, where it makes sense to do so, are an efficient way forward to enable improvements in performance.

An example of IPIECA’s work is the Biodiversity and Ecosystems Services Fundamentals guidance. The result of collaboration between 31 companies, it provides advice about applying fundamental practices through the asset life cycle.

Symposium participants agreed that getting social responsibility right is critical to the success of E&P ventures. Slocum took us a level deeper to examine why one element of corporate social responsibility (CSR)—human rights—is such an important and challenging emerging issue for the industry. “Every one of you will be far more directly involved in and responsible for human rights issues in your operations in the next 5 years than in the last 5,” he said, “so it’s critical to understand the fundamentals and risks.”

Business risks related to human rights affect decisions about labor, contracting, security, and community impact management. Risk associated with human rights and other nontechnical risks are critical to the industry for three main reasons:

  • Unlike financial, engineering, reservoir, or safety risks, they are extremely sensitive to local community interpretation and require local community involvement in generating solutions.
  • We lack the established models for defining financial and technical risks when it comes to understanding human rights and other nontechnical risks, although an important body of “good international industry practice” guidance is emerging.
  • Management of human rights issues is becoming an increasingly influential determinant in the success or failure of capital investments and operations in the industry, particularly in countries such as Mexico that are opening to new investment in developing their reserves.

Slocum highlighted some key human rights risks facing the oil and gas industry, provided an outlook of how these risks will evolve in influencing projects and operations, and offered a glimpse of what measures the industry should take to better tend to its responsibility for proactively respecting human rights.

If you have additional questions about the panel or wish to discuss specific topics that should be considered in the future, please contact Roland Moreau or Trey Shaffer.

25 Apr 2016

National Content in Mexico: Time Is of the Essence

A Mexico energy reform topic that often takes a back seat in the discussions on bidding rounds and international investors is national content. Referred to as local content in other parts of the world, national content will be an essential policy tool for ensuring that the energy reform benefits the people and businesses of Mexico, as well as the new international investors.

The International Association for Impact Assessment defines local content as the “requirement, expectation, or commitment of a company to ensure that value is retained locally through employment and/or procurement.” Emerging market countries such as Mexico are increasingly establishing local content requirements because of their success and the promise of sustainable economic development and foreign direct investment.

From a social- or public-good perspective, why is local content important?

  • Socioeconomic impact: Oil and gas project spending on local content—including employment, procurement, and infrastructure—is at least as much as and typically more than government earnings through taxes and royalties, according to a recent African Development Bank and Gates Foundation report on Creating Local Content for Human Development (PDF). Considering that approximately 80% of upstream oil and gas spending is on suppliers and local content targets range from 5% to 80% around the world, the potential socioeconomic impact in local content regimes is significant.

    National-Content-Fig1

    Fig. 1—Source: SBC, 2014.

  • Job creation: As clearly evidenced by research findings from Schlumberger Business Consulting (SBC), Fig. 1, and confirmed by various industry experts, the most significant opportunities for job creation are among oil and gas suppliers.
  • Community expectations and social license to operate: Oil and gas companies rate local content among the most significant expectations in the communities where they operate. If companies are able to satisfy community stakeholders’ key expectations around local content, they will be able to earn the sometimes elusive social license to operate.

On 28 and 29 October in Mexico DF, the National Content Congress brought together key stakeholders advocating, designing, and, likely, implementing national content in Mexico’s emerging oil and gas private sector.

Regulatory authorities from the Ministry of Economy explained the policy requirements, including the national content formula, and its role in recommending local content targets to the Ministry of Energy, which includes the targets in licensing contracts. Global operators described their national content priorities and approaches, while service companies explained their focus and local strengths. Global and local professional services firms shared insights and research findings on local content in other markets, while highlighting local implementation opportunities and challenges.

National-Content-Table1

Table 1

Throughout the 2 days, there were some insights and new information shared. For example, the representative from the Ministry of Economy shared the local content targets established in the contracts signed during the first two bidding rounds (Table 1).

To provide guidance to license holders, the Ministry of Economy will be publishing examples of national content compliance plans in the coming weeks. The four types of compliance plan examples to be published are

  • Individual compliance plans for contractors and signatories
  • Supplier development plans for Tier 1 suppliers
  • Supplier development plans for states and municipalities
  • Supplier technology development plans

In order to ensure suppliers have access to funding to develop capacity and competency to serve the oil and gas industry, the Ministry of Economy is establishing a public fund. As of September 2015, the Fund to Promote Supplier Development had just over USD 27 million available in grants or investment for qualifying local companies.

Chevron and Shell representatives spoke about their priorities and efforts related to local content in Mexico. Setting an example for many of its peers, Shell discussed its extensive groundwork in assessing local content opportunities in Mexico over the past several years. Key criteria for selecting local content suppliers that the operator representatives mentioned include compliance with legal requirements; business ethics; health, safety, and environment (HSE) standards and performance; financial capacity; technical capacity; and protection of sensitive client information.

Industrial safety, as a practice in the oil and gas industry in Mexico, is a new regulatory arena. Only recently was a new regulatory entity established (Agencia de Seguridad, Energía y Ambiente) to develop and monitor HSE compliance requirements. Highlighting the importance of HSE for the oil and gas industry, many oil and gas representatives at various conferences over the past several months have noted that, despite forced cutbacks throughout oil and gas companies because of the economic downturn, safety is an area that will not be compromised for any project. Considering the nascence of HSE in Mexico and importance to the industry, it is likely to be a major determinant of whether and how many local content suppliers are contracted by global investors.

The National Hydrocarbons Commission described the global fall in oil prices as beneficial to Mexican oil and gas companies. With fewer international companies bidding, smaller, less-experienced companies are able to enter the market without fierce competition.

Given the history of oil and gas in Mexico, a panelist emphasized the risk and desire to avoid developing an oligarchy of suppliers. Because Pemex, the national oil company, had a long-standing proclivity for selecting suppliers on the basis of relationships and other factors that may not satisfy requirements in laws such as the Foreign Corrupt Practices Act, certain measures should be put in place to help facilitate meritocratic and democratic supplier sourcing and development.

During the last panel session of the conference, Overcoming Barriers To Drive National Content Development, the diverse group of legal, regulatory, and economic panelists all supported the claim that the social risk, impact management, and community engagement, particularly of indigenous groups, will be among the more critical factors to overcoming barriers to national content development. Although not mentioned during this panel, Mexico’s mining sector has many local content implementation lessons learned that could be shared with onshore oil and gas project implementers. Chief among them are the issues of security, including the risk of criminal elements in communities and supplier companies, which can eclipse many of the other local content challenges typically experienced in other countries.

A reporter from El Daily Post who participated in the last panel discussion provides his take-aways and commentary on key risks for global industry operators in the article The Yellow Brick Road to National Content Development.

In general, there was a common opinion among attendees that national content is moving forward slowly in Mexico. According to some insiders, it is moving much more slowly than other aspects of the energy reform.

Additionally, while Mexico has officially established a local content methodology for ensuring compliance, informally, there are on-going discussions about the best way to structure and implement national content in Mexico.  Side discussions and pointed calls for more incentives, as opposed to penalties for noncompliance, highlighted some of the on-going incertitude and the need for even greater collaboration and incentive-based policy-making.

Mexico is at a critical time in establishing a strong foundation for national content. Energy reforms open opportunities to invest not only in the natural resources of Mexico but also in the people, businesses, and future of Mexico. To do so, both the oil and gas industry and government must start early to assess opportunities for local content, evaluate the local content resources available and start to develop local content providers well in advance. Starting late and lack of collaboration across sectors are among the key reasons that local content has not reached its full potential in many other countries around the world.