INDUSTRY IS FOCUSED ON PREVENTION TO AVOID INJURIES, LOSS OF LIFE, AND FINANCIAL COSTS OF FAILURE
BRADY AUSTIN, LLOYD'S REGISTER, HOUSTON
PAST OFFSHORE disasters like the 1988 Piper Alpha in the United Kingdom and the 2010 Macondo well failure set the stage for a strong drive to improve the safety culture in offshore US waters. Although it can be difficult to measure change in the safety culture of the oil and gas industry, most people would agree the devastating impacts of these two high-profile accidents led to many changes in how we approach safety.
Unfortunately, it sometimes takes a terrible tragedy to make industry refocus safety considerations, in addition to continuous improvement. Although we can never know when and where our next major incident will occur, we know from past experience that most incidents occur as a result of management system failures. A good management system is focused on preventing failures.
It would be a challenge for most companies in today's environment to survive the financial costs of a major accident. Some cost estimates for the Macondo disaster go as high as $70 billion for BP, the operator. As we all know, the entire industry suffered tremendous financial loss and if there was a positive element from this tragedy, it is that the oil and gas industry and regulators united to establish the Safety and Environmental Management System, or SEMS, for all offshore operations in US waters. One of the benefits of SEMS is there is now more sharing of information and collaboration across the industry and regulators.
SEMS ELEMENTS
SEMS has similarities to management system methodologies like the more familiar ISO 9001 and 14001 or even some of the many industry specific methodologies such as American Petroleum Institute (API) Spec Q1 and Q2. After the Macondo incident, it was a logical step by the regulators to use the industry's "book of knowledge" that was created by the API.
The original Workplace Safety Rule was made mandatory in October 2010 for SEMS and was composed of the previously voluntary practices in the API Recommended Practice 75 (RP 75) Safety Environmental Management Program (SEMP), which is now also being revised by API to more effectively address the needs of the industry, particularly with contractor involvement. SEMS regulations will likely be revised again when API RP 75 is finalized. SEMS has four main objectives:
- Focus attention on the influences that human error and poor organization have on accidents,
- Continuous improvement in the offshore industry's safety and environmental records,
- Encourage the use of performance-based operating practices, and
- Collaborate with industry in efforts that promote the public interests of offshore worker safety and environmental protection.
SEMS should not be viewed as a static program, but rather something that is continually being refined and updated. One of the recent revisions, often referred to as SEMS II added in additional safety requirements not covered in previous regulations. Ultimate work authority was one of the big issues when the Macondo well blowout occurred in the Gulf of Mexico and it was one of the key areas incorporated when SEMS II was released.
Having worked about 20 years on offshore platforms in the Gulf of Mexico, I don't want to imply that there was never a strong safety culture with some operators before Macondo since the industry has always understood the risks. However, I think the difference today is a greater appreciation for the complexity of our operations, increased role of contractors, better cooperation within industry and the regulators, and the need to focus on the management system elements as a major contributing factor to accidents. SEMS took the recommended practices and made them mandatory. SEMS will continue to evolve as industry data is collected and shared anonymously across companies. In addition, the industry and regulators meet frequently to discuss safety through numerous standing committees of various professional associations.
Operators must develop an effective SEMS to identify, address and manage safety and environmental hazards and impacts during the design, construction, start-up, operation, inspection, maintenance and decommissioning of all new and existing offshore oil and gas operations. SEMS prescribes a minimum of 17 components or elements that you must address in your operations to be considered a compliant system.
Those 17 elements are: General, Safety and Environmental Information, Hazard Analysis, Management of Change, Operating Procedures, Safe Work Practices, Training, Mechanical Integrity (Assurance of Quality and Mechanical Integrity of Critical Equipment), Pre-Startup Review, Emergency Response and Control, Investigation of Incidents, Auditing (Audit of SEMS Elements), Record-Keeping, Stop Work Authority, Ultimate Work Authority, Employee Participation Plan, and Reporting Unsafe Working Conditions.
A good hazard analysis or risk assessment process will help an operator define their best approaches to address each of these 17 elements. You can use that assessment/analysis to explain which of those elements apply to your operations and how your management of these risks will prove beneficial to your company. There are aspects of SEMS that can be applied to every company, regardless of status. Once you apply SEMS, you will discover areas that can lead to efficient, continuous improvement.
SEMS AUDITS
One feature that makes SEMS unique is the requirement for audits. The Bureau of Safety and Environmental Enforcement (BSEE) 'SEMS II' audit requirement became effective June 5, 2015 and all operators on the US Outer Continental Shelf (OCS) must use an independent third-party Audit Service Provider (ASP) to evaluate their SEMS. BSEE assigned these responsibilities to the Center for Offshore Safety (COS), which was established by the Presidential Oil Spill Commission that investigated the Macondo accident. The COS, which falls under API, serves as the Accreditation Body (AB) for all ASPs.
Audits are a key feature since offshore operators or lessees are required by the government to be audited by an ASP at least every three years. The requirement for the external audits does not replace the need for companies to also conduct internal audits. The purpose of a SEMS audit is to identify deficiencies in your management system such as failing or not effectively implementing a portion of the requirements. The other way to identify those deficiencies is through an incident investigation, which is reactive and not a recommended or desirable approach.
Audits are a proactive approach to prevent future system failures that could lead to incidents and to measure the implementation and effectiveness of a company's SEMS program, or management system. While documentation is important to the audit, audits should focus on other evidence such as interviews and observation of personnel conducting their work. SEMS audits are management system audits, not compliance audits.
Just going through the audit process, a company is going to increase their efficiency in operations. Upon completion of an audit close out-briefing, and while the final report is being generated, the operator will start the process of creating and implementing corrective actions. It is important for the auditor to verify the operator's processes to ensure they follow internal procedures for risk management during the creation of corrective actions as required by the regulations in concurrent audits. While an audit may cost money in the short-term to fix some things, as you continue down the path of continual improvement, audits will make your systems and operations more efficient, and that will result in significant savings over the long-term.
As I mentioned earlier, SEMS focuses on the management system and whenever you read about an accident, more than likely it was a failure of their management system. People don't want to make mistakes, but sometimes improper training and operational pressures can cause people to do the wrong thing. When failures happen, look at the management system as the cause or a major contributing factor. Once those failures are identified, sustainable corrections can be implemented.
Under SEMS, the government is not as concerned about the opportunities for improvement identified during an audit, but what they are concerned about is ensuring that the corrective actions implemented are effective in addressing the identified deficiency. Overall, the main goal is continual improvement, and a good auditor can always find something that can be improved to benefit the organization as well as identify the processes the organization excels at that may benefit the company and industry overall.
Although SEMS applies to all operators or lessees in US waters, it may also be a good business practice for those operators to consider the benefits of their contractors having an audited SEMS program. The industry and regulators are working on revising API RP 75 so it can be more easily applied to all contractors. I don't think BSEE will require the estimated 5,000 to 7,000 contractors to have a SEMS program since that would be too much for them to manage, but I can envision operators requiring their contractors to be audited by an ASP under SEMS. Some contractors, such as Schlumberger and Pacific Drilling, have already obtained voluntary COS member certification under SEMS.
Most of the work done offshore is by contractors, but the operator is responsible for everything that happens on their platforms/facilities under the current BSEE rules. In the rules, the word "you" is mentioned about 191 times throughout the document, which makes it pretty clear on who is ultimately responsible. If you are an operator, wouldn't you want your contractors to mitigate risk as required by your SEMS? Through their contracts, operators have now started to require the contractors to have a SEMS program. In essence, the operators have started to regulate the contractors while the regulators monitor the operators and the ASPs monitor overall SEMS effectiveness.
Another advantage of a contractor having either a compliant or conformant SEMS program audited by an ASP is to make it easier for the operators to hire them. A contractor with a SEMS certificate may eliminate some of the performance audits that operators might have to perform and it should give them an advantage over their competitors. From an operator perspective, the SEMS contractor would be a better fit since they would have a common understanding of the 17 elements and are a known entity from a SEMS standpoint.
There are a lot of misperceptions that regulators want to tell you how to do things. While it may be true with some specialized, technical areas such as the well control rule announced on April 17, BSEE can be very prescriptive. But in a management system approach like SEMS, a prescriptive approach will not work because each company does things differently. Operators know their operations, hazards, and risks better than anyone, and they regulate the contractors that do the work in those hazardous environments. As more contractors get their SEMS programs established and audited by an independent third-party COS accredited ASP, they will stand out from the rest.
SUMMARY
Although the Chemical Safety Board (CSB) in their investigation of the Macondo accident stated: "The offshore regulatory changes made thus far do not sufficiently place the onus on industry to reduce risk or empower the regulator to ensure proactive and effective industry management and control of major hazards," SEMS is a good start as it will continue to be refined by industry and regulators. One of the strengths of SEMS is that it does not try to establish a prescriptive approach. Most accidents occur because of a shortcoming in the management systems area.
BSEE has the right approach in letting operators or lessees define their programs along the 17 elements and using the SEMS audits to ensure compliance and completion of those corrective actions. I am convinced SEMS will become better over the next few years as data is shared across the industry from audits and we tap the expertise of other industries such as aviation, nuclear energy, and even NASA. SEMS is a win-win for everyone.
ABOUT THE AUTHOR
Brady Austin is Quality, Health, Safety and Environment (QHSE) Service Line Owner for Lloyd's Register in North America. In this position, he is responsible for overseeing items such as offshore safety training and is involved in a wide variety of industry task groups for the American Petroleum Institute, International Association of Drilling Contractors, Center for Offshore Safety and Ocean Energy Safety Institute. The majority of his background has been in production, primarily in Process Safety Management (PSM) offshore in the Gulf of Mexico. He started as an offshore entry level employee and worked his way up to facilities manager. He has also worked at the Bureau of Safety and Environmental Enforcement as a senior level inspector after the Macondo well integrity failure before joining Lloyd'sRegister in 2012.
