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.

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