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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.


    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.


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.

12 Apr 2016

Seminar Prepares Operators To Meet Mexico’s National Content Requirements

Oil and gas operators planning to operate in Mexico must meet minimum targets for national content, also called local content. While the oil and gas industry has experience complying with local content requirements—and, in some cases, going beyond compliance to create sustainable supply chains and stronger social licenses to operate—for many, Mexico’s national content formula is a new compliance requirement.

To help the industry prepare for these new content requirements, Local Contenect and the Energy Conference Network are holding a 1-day seminar to provide key compliance information and insights. The seminar will be held 18 May in Houston.

Read Mexico’s national content requirement here (PDF in Spanish).

Read more about the seminar here.

12 Apr 2016

IOGP Names Outstanding Young Professional in Oil and Gas HSE

With 8 years of health, safety, and environment (HSE) experience, Muriel Barnier has been awarded the inaugural Outstanding Young Professional Award.

Muriel Barnier

Gordon Ballard, executive director at the International Association of Oil and Gas Producers (IOGP), presented the Schlumberger employee with the award at the biennial SPE international HSE conference in Stavanger.

The Outstanding Young Professional Award is an IOGP initiative in association with the conference. It recognizes the achievements of an individual with fewer than 10 years of professional exploration and production experience. The recipient must have demonstrated professional accomplishments and evidence of outstanding talent, dedication, and leadership in at least one aspect of health, safety, security, the environment, or social responsibility (HSSE-SR).

“Everything about Muriel’s entry indicated that she is already on the way to becoming an industry leader,” Ballard said. “She is eloquent about the importance of the industry, and her presentation provided valuable insights about how to gain grassroots support for our HSE initiatives.”

Barnier’s winning video presentation focused on how the HSE for Youth program, which she developed and manages, helps share the industry’s experience within a wider community to keep people safe and make the oil and gas industry more acceptable and sustainable to the wider world.

In addition to developing the Schlumberger HSE for Youth program, she has coauthored five SPE papers and has two master’s degrees and a bachelor’s degree, all with highest honors, each time graduating as class valedictorian.

In 2015, Barnier was awarded the UK’s National Examination Board in Occupational Safety and Health International General Certificate.

“The response rate and quality of entrants was exceptionally high,” said Jack Hinton, Baker Hughes’s executive vice president of health, safety, and the environment and conference executive committee member. “We received over 70 entries from around the world.”

“I would like to thank all the entrants and their nominators for taking part,” Hinton said, “and hope that, in future years, the award will continue to attract such high-quality applications.”

The other finalists were Yu Chen of the China National Offshore Oil Corporation, Bev Coleman of Chevron, Omar De Leon of ExxonMobil, and Emma Thomson of BP.

12 Apr 2016

HSSE-SR Conference Celebrates 25 Years

This video presents the history behind the health, safety, security, environment, and social responsibility conference from its inception in 1991 to today.

7 Apr 2016

International HSE Conference Kicks Off With Climate Change Discussion

Very few issues evoke the same level of passion and controversy as climate change. Despite multiple viewpoints, the issue is here to stay, and the energy industry has a definitive role to play. The opening session of SPE’s biennial international HSE conference will feature a keynote address by Nathan Meehan, SPE’s 2015–16 president, who will provide a visionary view of what lies ahead for the industry. The opening session, titled Climate Change—The Road Ahead for the Oil and Gas Industry, will focus on the need for collaboration and—in light of the current global business climate—the imperative to maximize HSE programs and help achieve the needs of shareholders and stakeholders alike.


The 2016 SPE International Conference and Exhibition on Health, Safety, Security, Environment, and Social Responsibility will be held 11–13 April in Stavanger. In alignment with the conference’s theme of Sustaining Our Future Through Innovation and Collaboration, the opening session panelists will share their forward-looking perspective on opportunities for the energy industry to innovate and collaborate on the subject of climate change.

The conference will continue with daily plenary sessions, 15 panel sessions, and 41 technical sessions over the 3 days.

Special events during the conference include a Getting to Zero safety workshop designed to further the conversation on eliminating safety incidents in the pursuit of incident-free worksites. The workshop will address two main questions: How do we get to zero? And, what is the next big development in continuing the journey to zero?

Continuing the theme of looking toward the future, several events at the conference will be geared toward students and young professionals.

A student paper contest will give young authors the opportunity to advance to the international student paper contest at SPE’s Annual Technical Conference and Exhibition (ATCE) this year in Dubai.

Also, the first-ever European Health, Safety, Security, and Environmental (HSSE) Student Challenge will take place on the second day of the conference. The objective of this event is to give students interested in the HSSE arena of the oil and gas industry a chance to display knowledge on HSSE topics and interact with industry professionals. The Student Challenge will consist of multiple question‐and‐answer rounds of competition. Questions will include a mix of topics about the oil and gas industry regarding the environment, social performance, sustainability, and health and safety. Each round will have periods of short‐answer and rapid‐succession questions (i.e., multiple choice, one-word answers), as well as a long‐answer period when teams will work together on an answer to be submitted and reviewed by a panel of judges. Prizes will be awarded to the first and second places.

Participants in the HSSE Challenge also will be given access to a young professionals luncheon. The luncheon, with the theme of Building a Culture of Safety, will be held the first day. Paul Schubert, upstream safety, security, health, and environment manager for Exxonmobil will be the keynote speaker.

The conference will also be the site of the European regional qualifier for PetroBowl, the competition after which the HSSE Student Challenge was modeled that is held annually at ATCE.

Read more about the conference here.

6 Apr 2016

Beyond the Headlines: Fugitive Gas and Flaring—Current and Future Realities

Are fugitive releases of natural gas and flaring environmental concerns? Can these be ameliorated today and even better in the future? Yes and yes.

A paper in 2011 by Howarth et al. suggested that fugitive methane emissions (releases directly to the atmosphere) from shale gas production amounted to 3.6% to 7.9% of all gas recovered and that those numbers were worse than coal. The authors took the comparison of greenhouse gas emissions to the precombustion stage. Because the dominant use of coal is for electricity production, post-combustion comparisons are merited. In so doing, natural gas is favored because power plants using natural gas are up to about 50% more efficient on conversion than coal plants.

Many of these original assumptions have been challenged and the data verified, most recently by an ongoing study by Allen et al. in a 2013 report in the Proceedings of the National Academy of Sciences. This Environmental Defense Fund-sponsored study reports that 0.42% of “the emissions are released” at the production site. The study is ongoing, and more clarity is needed, especially regarding the locations and amounts of the releases. Because this and other studies were almost a direct consequence of the Howarth paper, much good came of that despite the justifiably disputed elements of the original work.

The principal reason for environmental concern about releases of methane is that it is a more powerful greenhouse gas than carbon dioxide. The potency numbers are somewhat in dispute, and the general public may be confused. There is general agreement with the belief that methane is about 25 times more potent than carbon dioxide.

The oil and gas industry continues to take steps to minimize methane release. Methane in the water flowing back from the well is usually separated, so collection is not an issue. If a pipeline is available, it is utilized. In the early days of a prospect, there may not be an export line. In these cases, at the very least, the gas ought to be flared, thus reducing the potency of the released gas.

The inadvertent release of methane can come from hatches, gaskets, and the like that are not properly sealing. Also, in the distribution system, some valve systems operate using natural gas as the actuating fluid, and some release occurs each time they are operated. Alternative valve mechanisms are available, using compressed air, for example. Leaks are currently measured using infrared cameras. The ARPA-E Methane Observation Networks with Innovative Technology to Obtain Reductions program is uniquely targeting innovative means for identifying methane leaks on the rigsite from a variety of sources. All of the foregoing ought to underline the fact that the industry is now fully aware of the issue and is getting its collective arms around solving the matter. Solutions are in the economic interests of the operators: Gas that leaks away is gas that does not get sold.

Flaring of Associated Gas
When oil is produced, there usually is natural gas associated with it. This is because all oil was formed from the action of pressure and temperature on organic matter a couple of hundred million years ago. The early immature form of this matter is known as kerogen. Continued thermal maturation converts it first to oil and finally to gas. At any given time, if oil is the predominant fluid, chances are some part of it matured all the way to gas. This, then, is the “associated gas.” The proportions are greater when the oil is light, as in the case of shale oil. Incidentally, the same holds if the predominant fluid is gas. Some fraction could be relatively immature, with oil-like larger molecules such as propane and butane. These are known as natural gas liquids (NGLs). Much of the shale gas production has this associated liquid. When it substantially does not, because of a high state of thermal maturity, it is known as “dry” gas. The Haynesville is one such play.

Associated gas is often economically or logistically stranded. Gas pipelines may not exist because of the low flow volumes forecast or the sheer distance. In the latter category are offshore platforms, especially off the west coast of Africa. In areas such as the Bakken, it could be a matter of timing; the pipelines are slow to arrive. In many cases the volumes are too low to support export lines. In any case, the world today flares in the vicinity of 5 Tcf/year. North Dakota today flares about a third of the associated gas, which amounts to about 0.13 Tcf/year. Even at today’s depressed gas prices, that amounts to more than USD 350 million in economic loss, not to mention the environmental impact of the carbon dioxide.

Monetizing Low Volume Associated Gas
There is a truism in chemical processing: Size matters. Bigger is better for the economies of scale. Consequently, conventional processes fail to address the unique needs of low volume natural gas to be converted to something movable and saleable. So, how low are these volumes involved? To estimate this, we investigated the distribution of flared gas in North Dakota and the results are shown in Fig. 1.

Fig. 1—Distribution of flared gas in North Dakota by well pad. Courtesy of RTI International.

Of note is that the majority of flared gas is from pads producing as little as less than 50 Mcf/D (50,000 cubic feet per day) to 200 Mcf/D. An ARPA-E funded project (2012) is in development to target feeds of 50–300 Mcf/D to convert the associated gas to methanol. The process is designed to all be housed on two flatbed trucks. This will allow the unit to be moved to different locations. This and similar developments (World Bank 2014) could also service other stranded gas sources such as those described earlier at shale gas production locations. Any new processes must take into consideration the fact that the associated gas is not pure methane. It will typically have ethane, propane, and butane to several percent. Even flaring equipment has to be adjusted to ensure complete combustion of these diverse gases.

Two other recent developments could target this opportunity. One is efficient compression of the gas to where the compressed gas can be transported to a central location for processing or transmittal. Another is known as mini-­liquefied natural gas (LNG) in which the gas is liquefied and then transported. Here, too, the technological advance is that conventional LNG plants are up to 100 times larger than these units. This class of solutions is sometimes collectively referred to as virtual pipelines.

Other Manmade Sources of Methane
Farm animals classified as ruminants are large sources of methane. In the US, this source is estimated to account for emissions on the same scale as from the oil and gas industry. Cattle in particular are the largest single source. The grass they eat is inefficiently converted to useful energy in the animal. Some of it reacts with resident bacteria to yield methane. This is expelled from both ends of the animal: flatulence as well as burping. The most promising avenue for amelioration is diet modification such as the addition of lipids to the feed (Martin et al. 2007). Similar to the motivation of oil and gas operators to use the fugitive gas, here, too, the farmer would benefit because more of the feed would go to make meat or milk. However, the remedies proposed above for the oil industry will not easily apply here.

The third-largest source of fugitive methane is landfills together with animal waste impoundments such as swine lagoons. These are fairly well-suited to utilize the small footprint, gas-conversion technologies mentioned earlier. This gas source will not have the larger molecules such as propane. But it may have contaminants such as carbon dioxide and possibly sulfur-bearing gases. The processes would have to account for these. This is technically feasible.

In summation, emissions of manmade greenhouse gases, in particular fugitive methane and carbon dioxide from gas flaring, are environmental concerns. Active steps are currently being taken to ameliorate the effects. Ongoing innovation in this space is likely to yield significant results and ought to be encouraged.


  1. Howarth, R.W., Santoro, R., and Ingraffea, A. 2011. Methane and the Greenhouse-Gas Footprint of Natural Gas From Shale Formation. Climatic Changehttp://www.acsf.cornell.edu/Assets/ACSF/docs/attachments/Howarth-EtAl-2011.pdf, (retrieved 14 March 2012).
  2. Allen, D.T., Torres V.M., Thomas, J. et al. 2013. Measurements of Methane Emissions at Natural Gas Production Sites in the United States, PNAS, 110 (44): 17768–17773.
  3. ARPA-E. 2012. Compact Inexpensive Reformers for Natural Gas (28 November 2012), http://arpa-e.energy.gov/?q=slick-sheet-project/compact-inexpensive-reformers-natural-gas  (accessed 30 January 2016).
  4. World Bank. 2014. Associated Gas Monetization via Mini GTL: Conversion of Flared Gas Into Liquid Fuels and Chemicals, April 2014 Update.
  5. Martin C., Ferlay A., Chilliard Y., et al. 2007. Rumen Methanogenesis of Dairy Cows in Response to Increasing Levels of Dietary Extruded Linseeds. 2nd International Symposium on Energy and Protein Metabolism and Nutrition, Vichy, France, 9–13 September.

Vikram Rao

Vikram Rao, SPE, is executive director of the Research Triangle Energy Consortium (www.rtec-rtp.org), a nonprofit organization founded by Duke University, North Carolina State University, RTI International, and the University of North Carolina at Chapel Hill. Its mission is to illuminate national energy priorities and those of the world and to catalyze research to address these priorities.

Rao also advises the nonprofit RTI International, venture capitalist Energy Ventures, and firms BioLargo, Global Energy Talent, Biota Technology, and Eastman Chemicals. He retired as senior vice president and chief technology officer of Halliburton in 2008 and followed his wife to Chapel Hill, North Carolina, where she is on the University of North Carolina faculty. Later that year, he took his current position. He also is past chairman of the North Carolina Mining and Energy Commission.

Rao’s book Shale Gas: the Promise and the Peril was released in 2012 by RTI Press and can be found at www.rti.org/shalegasbook. It is written for general audiences and is intended to inform the debate about fracturing for shale gas. The revised edition with six new chapters and extensive revision was released in August 2015 (www.rti.org/shaleoilandgas).

Rao holds a bachelor’s degree in engineering from the Indian Institute of Technology in Madras, India, along with a master’s degree and a doctorate in materials science and engineering from Stanford University. He is the author of more than 30 publications and has been awarded 40 US patents and foreign analogs.

6 Apr 2016

Column: Changing How We Manage HSE—Getting to Zero

For the more than 7 billion people on our planet, every measure of quality of life, from gross domestic ­product per capita and infant mortality, to education levels and access to clean water, is correlated to the consumption of modern fuels, including oil and gas. Now more than ever, our industry faces imperatives: delivering affordable energy more safely, economically, and sustainably—that is, in a way that responsibly meets the needs of today’s populations without jeopardizing the Earth or its future populations. Sustainability will depend on continuing to close gaps, not only in technology, but also in health, safety, and environmental (HSE) performance, to eradicate HSE incidents from our operations. The expectation is a future with an ­incident-free workplace and where everyone returns home safely each day. Closing the HSE gap will require major shifts in cultural, organizational, and human performance paradigms.

Changing the Culture
For years, HSE was seen as a regulatory obligation to meet government requirements. It was governed by, and managed in reaction to, rules and regulations. Control and discipline were prevalent. An incident-free workplace was generally not considered possible, and when it was considered, it was only as a vision, at best.

Over time, industry HSE culture began to shift from dependent to independent as the process and complexity of operations became better understood, and commitment to safety became more personal and individual. An incident-free workplace began to be seen as a possibility but still as a target to achieve rather than a realistic goal.

A further evolution from an independent to an interdependent safety culture took place over the first decade of the 21st century, with a stronger focus on cooperation within and across teams. Employees and well and asset team members began to see themselves as their peers’ keepers. HSE became recognized as “the right thing to do” for two very important reasons.

  1.  It is part of our moral and ethical responsibility to our employees, customers, contractors, and the communities in which we work, and to the future of our planet.
  2.  It is good for business. There is no downside to good HSE practices. Conversely, the cost of poor practices can drive companies out of business.

In 2009, a 3-day SPE Forum Series titled “Getting to Zero—An Incident-Free Workplace: How Do We Get There?” was envisioned in Park City, Utah, and held there the following year. The series heralded a new paradigm shift, in which an incident-free workplace became an expectation. The December 2015 JPT column by 2016 SPE President Nathan Meehan, “The Perfect Day,” explains the concept of “Getting to Zero” and describes the journey thus far.

Coincidentally, 2009 was the year when Baker Hughes made the decision to reorganize from a number of companies made up of product lines and services to a single company with an interdependent culture. This decision redefined who we were and how we did business, including how we manage HSE. With safety as much our purpose as energy, we made it integral to the company and outlined a business framework for it, as we did for other key aspects of the business. We were no longer content with incremental HSE improvement, and getting to zero became a reflection of who we were. The perfect HSE day became the embodiment of our definition of zero and all that was necessary to achieve it: teamwork, engaged and visible leadership, willingness to change, trust, a culture of perfection, a common HSE vocabulary, and a single, universal metric: zero. No longer would employees need to understand HSE acronyms, jargon, or incident rates. Instead, we defined the perfect HSE day as one in which everyone in the company arrives home safely, with no recordable injuries, no serious motor vehicle accidents, and no significant environmental spills. Success became easy to track. Either a day was HSE-perfect or it was not. Each day became a new opportunity to achieve zero, and every employee could see how his or her actions affected company outcomes. Zero was no longer a vision or target but an expectation.

The most powerful aspect of the perfect HSE day is the way it has engaged everyone in our company to think about HSE differently. It has catalyzed a culture shift and, in so doing, has produced remarkable results. In 2012, the year we began tracking perfect HSE days, we recorded 22. The number jumped to 42 the following year, then soared to 92 in 2014—the equivalent of a perfect quarter. Last year, we recorded 146 perfect HSE days. Already this year, we are achieving them at a pace that will place us well over 200 by year end. While this is remarkable, we have more room for improvement, both within our company and throughout the industry.

Drilling Through Data
A recent operator/supplier forum addressed the important question, “What can we do differently to prevent serious and sometimes catastrophic HSE incidents from happening?” The answer lies in two seemingly different but highly interrelated and interdependent realms: data science and human factors.

Data science unlocks hidden patterns in typically available information. For years, our industry’s technological advances in capturing and using data have enabled us to find and develop hydrocarbons to meet the world’s energy demand. Now, we are beginning to leverage data science to better exploit previously untapped revelations from safety and incident data. Our company uses data drilling to leverage concepts and techniques behind “big data” to enable us to reveal previously unseen personal and process-safety-related trends in existing safety-incident data for “near miss” incidents—where an event occurs but injuries or fatalities are avoided—and for incidents where harm was caused. The data come from a variety of sources both inside and outside traditional safety-related databases and helps us to more clearly understand the root cause of incidents, which precipitates more accurate intervention strategies and effective risk management.

What Lies Beneath
Preventing serious and catastrophic HSE incidents depends not so much in understanding how an incident occurs as why it occurs—because when we understand why something happens, we can take action to prevent it. This requires going beyond the industry view of seeing “why” as outputs of traditional root-cause tools such as TapRooT, ThinkReliability, 5-Why, and others. Too often, we use these tools to focus on who is responsible, what went wrong, and what people failed to do, assuming that human actions are the cause of incidents.

To more clearly answer the question of why, we must assume that human actions are influenced by systemic issues. Taking this approach causes us to dig deeper into the systems and processes of an organization, the influence of leaders, what we say and do, what we measure and what we do not, the culture of the organization, and how these factors influence employees.

To this end, we developed “What Lies Beneath,” a thought-provoking, interactive learning session based on a hypothetical, industry-­stereotypical, dropped-object incident. While the exercise uses a dropped-object incident, the underlying learning outcomes can apply to prevent any type of incident.

The session challenges traditional thinking and allows participants to explore a different perspective on why something happened or could happen. It illustrates how human and organizational factors influence employee decisions and actions. It allows us to put ourselves at different stages of a workflow and ask ourselves, “What weaknesses do I see? What could lead employees to make poor decisions? What organizational factors are influencing the actions and decisions of the employees?” This approach does not absolve accountability of employees. Instead, it enables us to look beyond personal accountability and punishment, to identify and resolve the deeper systemic issues that contribute to poor decision making and, ultimately, HSE incidents.

HSE incidents are not just about the person, the equipment, and what happened at the rig or the facility. The issues go deeper—to gaps in processes and communication and to the culture and thinking of the organization that lie beneath an incident. Looking at what lies beneath is not just a forensic tool to analyze why things happened; it also can help us proactively evaluate our processes, workflow, and culture not only around HSE but also around every other aspect of the business. It answers the why of executing—or not executing—work flawlessly. To provide new insights and support collective industry efforts in getting to zero, our company is making its “What Lies Beneath?” materials freely available to the industry.

Our industry has made great strides in the way we manage HSE. Zero—an incident-free workplace—has evolved from a vision to a target to an expectation. Meeting that expectation will require maintaining the momentum. We are still working to align priorities, better develop a common HSE language, and enable a more widespread mindset that achieving a future with zero incidents is possible. We must continue to evolve our culture so everyone across the industry is empowered and responsible to make the right decision each and every time, and is supported by the organization and systems to be error free. And, we must do this in the face of ever-changing market conditions that can form a barrier to HSE commitment and making the best decisions.

Changing how we manage HSE is the next frontier for our industry. How we go about that change will shape the industry and the world it serves far into the future.

Jack Hinton

Jack Hinton, SPE, is vice president of health, safety, and environment for Baker Hughes. Before joining Baker Hughes in 2005, he was dean and professor at the Kazakhstan Institute of Management, Economics, and Strategic Research for 2 years. He previously spent 26 years at Texaco serving in leadership roles that included director of environment, health, and safety, and vice president of international petroleum.

Hinton sits on the Management Committee of the International Association of Oil and Gas Producers, is a member of the Kazakh-British Technical University Business School Advisory Board, and serves as chairman of the Board of Advisors for the Southwest Center for Occupational and Environmental Health.

Hinton holds a doctorate degree in occupational health and an MS degree in environmental science, both from The University of Texas Health Science Center at Houston. Hinton also received a BS degree in biology and chemistry from Trevecca Nazarene University.

6 Apr 2016

President’s Column: Sustainability and the Role of Petroleum Engineers

There are many definitions of sustainability, but the 1987 United Nations Brundtland Commission’s remains a standard: “Meeting the needs of today without compromising the ability of future generations to meet their own needs.”

Nathan Meehan

Some think oil and gas have little role in a sustainable ­future; global realities suggest otherwise. How is it that a finite energy resource and a source of greenhouse gas emissions can be part of a sustainable future? Oil and gas are ­essential to meeting the “needs of today;” their prudent use is the safest way to ensure we do not compromise the “ability of future generations to meet their own needs.”

The Society of Petroleum Engineers Board of Directors adopted the following definition of sustainability in 2014: “Exploration, development, and production of oil and gas resources provide affordable energy that contributes significantly to well-being and prosperity.

“SPE encourages the responsible management of these oil and gas resources and operations including the appropriate management of social and environmental impacts and their related risks.

“SPE demonstrates this commitment by offering its members opportunities to train, share knowledge, and advance practices for doing business in ways that balance economic growth, social development, and environmental protection to meet societal needs today and in the future.”

Petrowiki also has an excellent discussion of sustainability, including references to noteworthy papers from www.OnePetro.org.

Safe, affordable energy is central to quality of life. It is essential for farmers to be able to produce sufficient food; for the transportation of this food to consumers; and for housing, heating and cooling, clothing, and all other necessities of life. Quality of life is strongly correlated to energy use.

Supplying energy for the world is a monumental task. There continue to be improvements in renewable energy sources; however, reasonable forecasts of growth in renewables suggest fossil fuels will remain the primary source of the world’s energy for decades to come. Only radical growth in nuclear power could seriously diminish this result. The realities reflecting public concerns over nuclear safety and proliferation of radioactive materials make such growth unlikely.

While coal resources are abundant, concerns over greenhouse gas emissions and the possibilities of pricing carbon through taxes, caps, exchanges, or other mechanisms and the relatively low cost of natural gas continue to make natural gas a more attractive fuel. This is true whether you expect it to be a relatively near-term “bridge fuel” to a renewable future or (as I do) part of our longer-term energy solutions.

If oil and gas are to be part of a sustainable solution to our energy needs, there are some things we can and should do better as petroleum engineers.

Minimizing Methane Emissions
It is important to reduce or eliminate leaks and incidental releases of methane since, on a pound-for-pound basis, methane has a 25-times greater impact on climate change than does carbon dioxide. Natural gas and petroleum systems account for 29% of all US methane emissions. Domestic livestock and associated manure management account for 36%. Landfills and coal mining combined account for another 28%. In total, methane accounts for 10% of US greenhouse gas emissions. Methane emissions associated with natural gas and petroleum systems have declined significantly from 1990. In spite of substantial increases in natural gas production from 2005 and widespread growth of pipelines and processing facilities, the decline in emissions has continued. We must continue this progress and eliminate fugitive emissions of methane associated with oil and gas production, transportation, and processing. There will be a role for drones and other technologies in improving monitoring and early detection capabilities.

Reduce or Eliminate Flaring
Flaring should be infrequent, temporary, and efficient. Technologies to make flaring highly efficient are available and represent best current practices. Long-term flaring of volumes of gas that cannot be (easily) sold needs to be eliminated globally. This goal may require commitments to gas reinjection, local use, local power generation, local compressed natural gas manufacturing, or other innovative solutions. Regulators need to set aggressive but technically achievable standards and timetables. Regulatory agencies should focus on the largest problems first and use a balanced approach. Operators need to develop fields with the goal of eliminating flaring in mind. Unconventional (tight oil) operators in areas without low-pressure gathering systems will need to develop many-well drilling pads enabling sufficient volumes of natural gas to be used locally or otherwise exploited. In such cases, gas represents a secondary product so regulatory and taxing bodies should preferentially treat developments that use semicommercial volumes of gas rather than flaring it.

Energy Efficiency and Conservation
We should support energy efficiency measures. Such measures make the most sense when they have a reasonable economic benefit. The current price environment makes it more difficult to justify such measures, whether they involve a homeowner installing additional insulation or an airline purchasing more fuel-efficient airplanes. Government subsidies for such efficiency-improvement measures may make sense when widespread adoption of a marginally commercial solution will lead to cost reductions or significant improvements in the required technologies. Conservation measures imply a change in consumer behavior rather than just an improvement in efficiency. The current product price environment is less likely to encourage conservation efforts whether it is in transportation, recreation, or other decisions. Government actions mandating conservation efforts may be viewed as heavy-handed. The “carrot” approach is more likely to achieve results than the “stick.”

Wellbore Integrity
Wells completed with casing, liners, and cement prevent migration of fluids from one zone to another. Such integrity is vital to minimizing the likelihood that hydrocarbons or salt water might migrate behind pipe and contaminate other formations. Casing collapse, casing leaks, and inadequate primary cementing or deterioration of cement must be avoided and technologies implemented to ensure wellbore integrity. Cement-job design including spacers, quality control during implementation, and long-term monitoring ensure that desired fluids are produced and all other fluids stay in place. Advances in fiber-optic monitoring technology such as distributed acoustic sensing may be useful for monitoring critical wells.

Reducing Surface Footprint
When many wells need to be drilled, drilling from a central wellpad or cluster reduces surface footprint, minimizes transportation disruptions, and allows produced or flowback water to be used more effectively. It is also easier to operate and leads to shared use of production facilities and commercial use of small volumes of gas. Many individual unconventional wells are not commercial, even if the combined results of all wells drilled is economic. Many individual hydraulic fracture stages do not appear to contribute measurably to flow. Engineers must collaborate with earth scientists, petrophysicists, geomechanics professionals, service providers, and others to eliminate the need for unnecessary stages or wells. This will improve economic returns, lower the demand for water, and minimize all other environmental impacts of production.

Elimination of Spills
Whether a surface spill during oilfield operations or a catastrophic blowout, consistent planning, use of best available technology, and flawless execution are keys to eliminating spills. Eliminating small spills is good business. Eliminating large spills may mean staying in business. Blowout control eliminates spills and saves lives.

Optimized Field Development and Management
An asset team working on simulating reservoir performance and designing an optimized plan may not think of their work as contributing to sustainability. But the reality is that almost everything we do as petroleum engineers contributes to sustainability. Can we recover the most barrels with fewer wells? Can we invert the waterflood injection pattern and lower total fluid handling requirements? Can our well monitoring plans identify damaged wells early and allow them to operate at maximum efficiency? As we drill, complete, equip, and produce wells more efficiently, we are further contributing to sustainability. We make it possible to meet the world’s needs today and improve people’s lives by providing safe, affordable energy. The more efficient we are the more affordable that ­energy becomes.

Many oil and gas companies voluntarily issue a sustainability report and similar measures are in place for service companies and others. The real measure of our role in sustainability remains our individual commitment to doing the right job and getting that job done right. As I travel throughout the world, I am more convinced than ever that we as an industry, and as SPE members in particular, are committed to improving today’s quality of life, but not at the expense of the generations to come.