IADC: Management must equate safety with profits

Mike Sumrow
Drilling Editor

To be effective in its safety initiatives, the oil and gas industry must incorporate safety into management systems, making it equal in importance to production and profits. The industry adage that "safety is first" is a cliché that can set companies up for failure.

That was the message delivered by Rodney R. Foreman, principal safety representative for El Paso Production Co., at the 2002 IADC (International Association of Drilling Contractors) Land Contractors Day earlier this month.

According to Foreman, contractors are responsible for 92% of the man-hours worked at El Paso's operations, highlighting the importance of the operating company in actively managing drilling contractors at its drillsites.

Foreman explained that getting back to the basics of managing safety at the drillsite—ensuring that environmental, health, and safety (EH&S) issues receive equal consideration with drilling costs and drillsite operational issues—yields significant gains in productivity and safety performance.

As example, Foreman highlighted El Paso's South Texas drilling operations success story.

Injury rate, productivity

By applying drillsite EH&S initiatives and a systematic approach to identifying hazards, assessing risk levels, and controlling hazards and critical worker behaviors, the company's contractor injury statistics dropped significantly.

Compared with a 2001 worldwide industry total injury rate of 3.52 injuries/200,000 man-hr worked and a US land rig injury rate of 8.54 injuries/200,000 man-hr worked, El Paso's contractor total recordable injury rate dropped to 0.55 in 2001 from 1.74 in 2000.

The company and its drilling contractors achieved this, even in light of an increase in activity to 1.5 million man-hr worked in 2001 from 803,000 man-hr in 2000.

According to Foreman, El Paso discovered 1.3 tcf of gas in South Texas in 2001, drilling deep, high-pressure Vicksburg wells that involved a lot of fracturing stimulation.

El Paso drilled 78 South Texas wells last year, with average initial production potential of 25 MMcfd/well. The initial production potential of El Paso's top 10 South Texas wells was 51-83 MMcfd.

Foreman commented, "We believe you can operate safely and find these big wells."

Indirect injury costs

While the well-being of personnel is the most important reason for supporting a strong EH&S culture, other reasons include employee morale, public image, regulatory issues, and economics.

Foreman said that data from El Paso's insurance company indicate that indirect or hidden costs of worker's injuries can be five to nine times the direct costs.

Assuming that a hypothetical injury resulted in direct costs of $250,000, taking the most conservative fivefold estimate, the amount would indicate indirect costs of $1.25 million for legal expenses, lost productivity, investigation time, tool and equipment damage, and decreased output of the worker upon return.

If a company were to require a 10% rate of return on investment, the incident would require a capital investment of $12.5 million to cover these indirect costs.

Foreman noted that for this hypothetical case, the indirect costs would require capital investment equal to two of El Paso's South Texas Vicksburg wells.

Making safety equal

Foreman said, "Management is responsible for protecting the company's investment in people and property. Management will accomplish this by demonstrating that safety is equal to production and profits."

Explaining how the company would accomplish this on a day-to-day basis at the drillsite, Foreman reviewed the scenario of the daily rig report.

Every morning, the operating company's drilling manager would call the rig. He would ask the operating company's representative, the rig-site drilling supervisor, how much hole the rig made (the interval drilled), what the operational costs were, and what the mud weight was at report time.

Foreman added that, suppose one morning the drilling manager would ask the drilling supervisor whether there were any injuries or near-misses.

In order to answer the question, the drilling supervisor would likely have to ask the tool pusher, who in turn would have to ask the driller, who in turn would have to ask the derrick man.

Foreman asked, "The next day, if the drilling manager asks the same questions [of the rig site drilling supervisor], do you think he'll know the answers?" He answered, "We think he will, and that's what we mean by making safety equal."

Foreman indicated that El Paso teaches its drilling supervisors to elevate safety and actively manage it along with the cost and operational issues

"A lot of tool pushers pull back and say, 'No, safety is first on our rig,'" Foreman explained.

The example they're given, however, is that there could be a time that the driller, tool pusher, or operating company drilling supervisor must make a decision based on risk.

The roustabouts may not agree with the decision; the tool pusher may not agree with the company man's decision. But they go ahead with the action and are successful.

Foreman said, "In the eyes of the others, he's shot all of the 'safety-first' stuff away, because they didn't believe that it was safe." He indicated that for companies to rely on the "safety first" cliché, they are setting themselves up for failure.

Process model

Foreman said El Paso focuses on a process model that includes five elements: accountability, responsibility, training, documentation, and established standards. The company has taken these and directed them back to the drillsite.

Commenting on El Paso's EH&S culture, Foreman said "We have to have management commitment in any process for that process to be successful."

In addition, there must be line accountability, established standards, and the standards must be understood and maintained for a company to achieve EH&S excellence.

Foreman said "We trended years of data on our drillsites and our production sites on incidents—not necessarily injuries, but where equipment was damaged, where people were injured, and in some cases where there was loss of life."

He added, "What we found the majority of the time was that the breakdown in EH&S culture came from [a lack of] line accountability. Do drilling supervisors really know the difference between responsibility and accountability?"

Foreman said El Paso has found instances where company drilling supervisors have stayed in the trailer and assigned not only their responsibility but also their accountability to contractor employees.

Foreman said, "There are some operations on that rig that we feel are his responsibility—not to sit in the trailer and hope that the rig manager or tool pusher is watching that operation for him."

Training becomes important to ensure that issues such as line accountability are clearly understood. Foreman explained that the training's primary focus is the drilling supervisor. El Paso also incorporates rig managers or tool pushers into the programs.

Foreman said, "We feel if we only train our contract employee or our supervisor, we only get half of the equation. The drilling directors and drilling managers conduct the training, not training representatives."

He concluded that for the drilling supervisors to be trained by the people they work for adds emphasis: It's a matter of getting back to basics.

Related Articles

Statoil reduces capital budget by $2 billion following 4Q losses

02/06/2015 Statoil ASA has reduced its organic capital expenditure to $18 billion in 2015 from $20 billion in 2014. The move comes on the heels of a fourth qu...

BHI: US rig count down 87 units in 10th straight week of losses

02/06/2015 The US drilling rig count plunged 87 units, a decline that was again spurred mostly by oil rigs, to settle at 1,456 rigs working during the week en...

Oil-price collapse may aggravate producing nations’ other problems

02/05/2015 The recent global crude-oil price plunge could be aggravating underlying problems in Mexico, Colombia, and other Western Hemisphere producing natio...

North Reggane gas project development drilling starts in Algeria

02/05/2015

The North Reggane consortium has started development drilling at its gas project in the Algerian Sahara.

Oil production begins at Nasr Phase-1 offshore Abu Dhabi

02/05/2015 The first phase of Nasr oil field offshore Abu Dhabi will be producing 22,000 b/d by yearend, according to United Arab Emirates news agency WAM.

Woodside lets FEED contract for Greater Western Flank project

02/05/2015 Woodside Petroleum Ltd. has let a contract to Wood Group Kenny for the front-end engineering and design for the flowline system and associated proc...

Deloitte studies oil supply growth for 2015-16

02/04/2015 A Deloitte MarketPoint analysis suggested large-field projects, each producing more than 25,000 b/d, could bring on 1.835 million b/d in oil supply...

Inpex starts development drilling at Ichthys field

02/04/2015

Inpex Corp. has started development drilling in Ichthys gas-condensate field in the Browse basin, about 200 km offshore Western Australia.

BG’s 2015 budget ‘significantly lower than 2014’

02/03/2015 BG Group plans capital expenditures on a cash basis of $6-7 billion in 2015, a range it says is “significantly lower than 2014” due to “a lower oil...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


Cognitive Solutions for Upstream Oil and Gas

When Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected