Safety

Legislation, Commerce, and Ethics Drive Design of Quieter Facilities in Australia

Legislation, economics, and ethics are major drivers behind the adoption of engineering noise controls during offshore-facility design in Australia.

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Legislation, economics, and ethics are major drivers behind the adoption of engineering noise controls during offshore-facility design in Australia. The global challenge facing noise advisers is to understand how these factors influence the adoption of engineering noise controls and to work closely with project teams to ensure that operational-noise risk is as low as reasonably practicable (ALARP). Implementing these controls during the front-end engineering and design (FEED) can ultimately protect a company and its workforce during facility operation and can turn major capital projects (MCPs) into valued legacy operations.

Introduction

It is commonly said that “health and safety are good for business” without seeing substantiated claims. However, if health and safety truly are good for business, it should be demonstrably so. This may involve an evaluation of the costs vs. benefits of each health and safety initiative, as well as the feasibility of implementing them. One such initiative is hearing preservation.

Cost/benefit analysis (CBA) is an ­important tool that can be used to compare the net economic worth of various health and safety initiatives to determine how best to allocate finite project resources to maximize a project’s value. Various international cost/benefit models exist to help companies perform economic evaluations of health and safety initiatives. An Australian ALARP model recently used by Chevron Australia during the design of an offshore production facility in the North West Shelf of Western Australia is one of them.

Additionally, discounted-cash-flow (DCF) analysis is introduced as a means of supplementing conventional CBA to help decision makers determine when, during the lifetime of a project, engineering noise controls should be implemented to maximize a project’s net present value (NPV).

The decision to implement effective engineering noise controls is not based solely on economics, but it is a major driver behind the selection and implementation of proposals that can affect a company’s bottom line. Other key drivers are legislation and business ethics or cultural expectations.

Legislative Drivers

Noise legislation in the Australian offshore petroleum industry combines “goal-setting” and prescriptive requirements.

The goal-setting legislation, governed by the Offshore Petroleum and Greenhouse Gas Storage Act 2006, requires the registered operator of a facility to take all reasonably practicable steps to ensure that the facility is safe and without risk to the health of any person at or near the facility. In other words, the onus is on the operator to demonstrate that all reasonable steps have been taken to protect the health of any person at or near that facility.

With respect to noise management, this duty is supplemented by a prescriptive requirement under the Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009. These prescriptive requirements are explicit in nature. Therefore, exposures above the exposure standard alone are not enough to establish noncompliance with the regulations; however, excessive exposures and noncompliance with the approved code of practice is.

The legislation as written does not require new offshore-facility designs to incorporate all reasonably practicable engineering noise controls to protect future workers. Rather, a person must first be exposed to a noise source before an operator is legally required to do anything about it. This may seem counterintuitive to best-practice facility design and suggests that the legislation is not a major driver toward quieter facilities; however, the reality is very different.

Should a proposed operator of a facility undertake a noise-exposure study during FEED and find that noise exposures would probably exceed the exposure standards when that facility is fully operational, they can do one of three things:

  1. Implement all reasonably practicable engineering noise controls before the production phase of the facility
  2. Implement some engineering noise controls but not all that are reasonably practicable
  3. Do nothing (i.e., implement no further engineering noise controls before the production phase of the facility)

If a facility owner chooses to do nothing during FEED (Option 3), it is accepting that it would likely be allowing workers on the facility to be exposed to a level of noise in excess of the exposure standards. Therefore, Option 3 is likely to put the operator in a position of noncompliance when the facility becomes operational.
During the production phase of a facility, the onus is still on the operator to demonstrate to the regulator that all reasonably practicable steps have been taken to minimize noise exposures on the facility. However, it is potentially much more expensive to make this demonstration when the facility is operational than during FEED or even detailed design. If some controls are implemented before production (Option 2), it might lessen the effect of expenditure later on and potentially the likelihood and severity of regulatory intervention (regulatory risk), but it may still occasionally give rise to conditions in which workers are overexposed to noise.

Alternatively, Option 1 may be adopted, which involves the consideration and subsequent implementation of all reasonably practicable engineering noise controls before the facility’s production phase. This should be the design goal of any offshore facility in Australia because it is the most cost-effective and defensible approach to managing both regulatory and occupational-noise risks.

Fig. 1 shows what is meant by the term ALARP. ALARP is determined when the risk to health has been reduced as far as can be achieved without the costs of implementing the control becoming disproportionately higher than the benefits of having it. Further cost is unnecessary and can be considered wasteful.

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Fig. 1—ALARP diagram.

Commercial Drivers

Fig. 2 indicates the general relationship between the cost of implementing engineering controls and flexibility to make design variations as an MCP progresses from FEED to operation.

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Fig. 2—Cost vs. time in application of engineering noise controls.

 

During FEED, capital expenditure is the most significant cost that needs to be considered; however, as an MCP moves toward detailed design, should re-­engineering and variations be required, then additional labor and contractual costs can quickly mount. This can become compounded further if a retrofit is required during the production phase, with the introduction of further re-engineering, variations, installation costs, piping modifications, commissioning costs, and loss of production.

Fig. 3 shows how an initial outlay of Australian dollars (AUD) 300,000 during FEED can increase to AUD 725,000 by the end of FEED if re-engineering and variations are introduced. In comparison, the identical changes made a few years later during operations could cost AUD 2,275,000 in 2010 dollars.

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Fig. 3—Cost comparison of implementing engineering noise controls during various phases of an MCP. The model presents costs in 2010 dollars and does not account for projected inflation, foreign exchange rates, or other cost factors, including the time value of money.

 

Therefore, considering appropriate engineering controls during FEED can significantly reduce the financial outlay compared with implementing the same controls later. Furthermore, strategic selection of engineering noise controls during FEED can dramatically reduce noise exposures when the facility starts production.

Incorporating DCF Analysis Into CBA. DCF analysis is a useful tool to assess the value of engineering noise controls because it can be used to demonstrate how investment decisions made during facility design can affect a company’s future earnings per share.

The workplace-interventions net-cost (WIN) calculator developed in Singapore evaluates the net costs of health and safety interventions, such as noise controls, by estimating net-annualized costs, adjusted for the investment costs of the interventions (labor and capital), anticipated productivity enhancements from the changes, and cost savings resulting from averted hearing loss (e.g., litigation, compensation, insurances, rehabilitation). The model is one example of a cost/benefit approach; however, another model is already being applied successfully in Australia and is gaining broad acceptance in the offshore oil and gas industry.

This model, originally developed by an Australian acoustic-engineering consultancy for evaluating engineering noise controls, works by weighing the benefits of each proposed noise control in terms of the overall reduction in noise exposure it provides vs. the costs or uncertainties associated with its implementation. The latter include:

  • Financial costs (i.e., What is the capital cost of the control?)
  • Operability costs (i.e., Does the control affect operation of the equipment?)
  • Maintainability costs (i.e., Does the control affect equipment maintenance?)
  • Process costs (i.e., Can the control affect overall facility performance?)
  • Project-execution costs (i.e., Is the project schedule affected?)
  • Occupational health and safety risks (i.e., Does the control increase or introduce certain occupational health and safety risks?)
  • Integrity of the solution (i.e., Is it proven or novel technology?)

The Australian-consultancy model (the ALARP model) may be used to demonstrate that noise risks are ALARP and is appropriate for this purpose. This is a distinct advantage over the WIN calculator because it can potentially satisfy a regulator that the intent of the legislation has been achieved. However, a disadvantage of the ALARP model is that it does not take into account potential cost savings that may be realized from averted hearing loss, potential productivity enhancements, or labor intervention costs for each proposed control.
The ALARP model could be enhanced by considering productivity effects, labor intervention costs, and savings associated with averted hearing loss and be supplemented by use of DCF analysis to determine when a control should be implemented during an MCP in order to maximize the NPV. Most likely, this will be during FEED for production-critical equipment. DCF analysis, therefore, is an important driver for determining when engineering noise controls should be implemented.

Ethical Drivers

Adverse noise exposure accounts for approximately 37% of all hearing loss in Australia, which is most commonly sourced from workplace noise and recreational noise. Therefore, operators of MCPs in Australia have a societal obligation as good corporate citizens to reduce their contributions to occupational exposure as far as is reasonably practicable. Because it is a very simple process to model noise exposures during facility design, it is becoming increasingly difficult for operators of MCPs to overlook noise control on the facilities they are designing.

An analogy that can be used to compare conventional facility design with an ALARP model for noise control is speeding in a motor vehicle. One may get into a vehicle and choose to speed. Every time one does so, one is breaking the law, regardless of whether one gets caught. This implies that speeding is unreasonable.

Designing a conventional facility where workers are likely to be exposed to unreasonable noise is really no different. Therefore, the ethical solution is to design a facility where people are not exposed to unreasonable noise levels in the first place. In order to do this, operators of MCPs should take all reasonably practicable steps to minimize hazardous noise before production, when noise exposures (hence risk) actually occur.

The analogy highlights an ethical dilemma facing operators of MCPs who may believe that speeding is not acceptable but that exposing workers to unreasonable noise is. In a real sense, a step change in safety culture is required to create a mindset that is intolerant of any level of hearing loss. This ought to be a key goal of any noise-­management program.

This article, written by Editorial Manager Adam Wilson, contains highlights of paper SPE 156732, “Why Quiet? Legislative, Commercial, and Ethical Drivers Behind the Design of Quieter Offshore Facilities in Australia,” by Andrew Chandran, Chevron Australia, prepared for the 2012 SPE/APPEA International Conference on Health, Safety, and Environment in Oil and Gas Exploration and Production, Perth, Australia, 11–13 September. The paper has not been peer reviewed.