Principles of safety policy under review after oil spill

Sept. 9, 2010
The Deepwater Horizon semisubmersible explosion and subsequent Gulf of Mexico oil spill have prompted a worldwide review of industry practices and regulatory structures.

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Sept. 9 -- The Deepwater Horizon semisubmersible explosion and subsequent Gulf of Mexico oil spill have prompted a worldwide review of industry practices and regulatory structures.

Principles of regulation are being examined while oil companies, consultants, and lawmakers work toward improved management and regulations for potentially hazardous offshore activities.

The effectiveness of US regulations that require very specific, minimum safety standards is being questioned. Some observers say minimum standards allow companies to hide behind the letter of the law instead of working to protect workers and the environment through self-regulation.

Det Norske Veritas suggests the US government reduce its reliance on specific deepwater safety regulations and instead focus on performance-based regulations that require companies to implement risk-management plans for specific projects.

Performance-based regulations allow companies to determine the best way to achieve safety targets, said DNV, an independent risk management foundation that released a position paper Sept. 3 after the Norwegian Oil Industry Association requested a comparison of US and Norwegian offshore regulations.

“The operator needs to take full responsibility for risk management,” said Peter Bjerager, DNV Energy North America senior vice-president and director of operations. DNV’s position paper is entitled “An effective US offshore safety regime.”

Separately, the Energy Policy Research Foundation Inc. in Washington, DC, said the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling might be inclined to suggest very prescriptive provisions on how offshore operations should be conducted to prevent accidents.

“While such an approach is politically appealing, it may not lead to a higher level of safety,” EPRINC said in a June memorandum. “Offshore exploration technology is advancing at a rapid pace. Alternative regulatory regimes, such as safety cases, should be given careful review.”

Governments in the UK and elsewhere use a safety-case system in which each project receives individual review.

“The US historically has resisted the safety-case system, but that may be changing,” EPRINC Pres. Lucian Pugliaresi told OGJ. He said regulations that reward a strong safety culture are likely to yield better long-term results than specific regulations, which are quickly outdated by technological advances.

Regulation structures vary
In its study, DNV noted US and Norwegian regulations differ, saying the US has “prescriptive regulations” that specify minimum actions required for compliance while Norway’s regulations are performance-based, allowing companies to determine best approaches case by case.

Prescriptive regulations set the lowest acceptable safety level, leaving regulatory agencies with the greatest sense of responsibility to confirm compliance, DNV said. Performance-based regulations provide for continuous technological advances by placing responsibility with the owner or operator.

“In Norway, it is the overall responsibility of the operator to ensure safe and prudent operation of the entire petroleum activities in line with the regulations. In the US, this responsibility is shared between the operator and the authorities through prescriptive requirements and authority approvals,” DNV said.

Norwegian regulations are mainly risk-based while US regulations do not require participants in offshore drilling activities to systematically identify and mitigate risk, the position paper said. Also, Norway separates the authority for resource management and health, safety, and environment management, while the same authority traditionally has handled both in the US.

Elisabeth Torstad, chief operating officer of DNV Americas and sub-Saharan Africa, said DNV recommends a risk-management approach as the basis for a revised US regulatory regime to improve the safety of offshore exploration and production.

“It will also meet the public expectations for assessment of all risks, as well as accommodate further development in safety and environmental protection,” Torstad said. She believes risk-management tactics could reduce the risk of major accidents tenfold.

DNV contends that an efficient regime must possess the following characteristics:

• Performance-based supplemented by prescriptive regulation.

• Consideration of technology, organization, and people.

• Clear roles and responsibilities.

• Enforced identification, reduction, and control of risks.

• Shared performance monitoring.

• Practical and economically feasibile.

• Balance between risk, control, and operations.

DNV said the most effective model is based on a performance-based regulation requiring safety cases and supplemented by prescriptive regulation for selected areas. American Petroleum Institute standards and class societies such as DNV Offshore Codes could contribute to government prescriptive regulations.

Contact Paula Dittrick at [email protected].