Preparing for the potential implications of events in the Gulf of Mexico

03 December 2010

With the implications of events in the Gulf of Mexico still resonating through the oil and gas industry, offshore operators and their suppliers need to be prepared for the regulatory changes that are currently being proposed.

Sweeping changes to the US Offshore Oil Industry regulator - now called the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) - are being implemented.  In addition, recommendations have been made to increase the enforcement of safety regulations and procedures. It is expected this will include the adoption of a so called “Safety Case” approach - something already in place in Australia, the UK and The Netherlands.  This approach describes the commitment of an offshore operator to managing the risks on its facility to acceptable levels. It describes and quantifies the type of risk present at the facility and the safeguards - human, systems and engineering - in place to control them. These safeguards specifically include those required for responding to an emergency. Another key part is a description of the management arrangements in place for ensuring that the required overall performance of the safeguards is maintained at all times.

The regulators in those countries with a Safety Case regime only allow offshore operations to proceed after the Safety Case has been accepted. Indeed, some companies choose to adopt Safety cases even without legislative demands, typically following accepted guidelines as a basis, for example those prepared by the International Association of Drilling Contractors (IADC). Now there is a real focus on making the preparation of such cases the norm rather than the exception.

Instead of waiting for laws to be passed before preparing safety cases, corporations can be proactive in making changes now to the way in which they assess and manage risk. 

An integrated approach to safety cases to reduce risk
ERM adopts an approach to Safety Case development which enables all major accident risks to be identified and presented, together with a description of how these risks are being managed. This includes all risks which have a major safety, health, environmental or business impact. Often the risks considered can result in more than one of these impacts at the same time so it is important to consider potential consequences in the widest context. When describing the management of risk at a facility, we consider the combined importance of engineered safety systems, management systems and procedures, human factors and safety culture. If any of these is deficient, the whole risk management process is vulnerable.

This ‘integrated’ approach to Risk Management is in our view highly effective and provides a high degree of assurance that risks are being adequately controlled and that the performance of the overall risk management function is being maintained.

This approach to safety is not just about meeting regulatory requirements, but determining a company’s operational Risk exposure as a whole. Risk evaluation needs to be at the heart of everything an organization does, becoming the every day norm rather than the exception.  A proactive approach to risk is essential to ensure that high  impact, low probability, scenarios do not get overlooked.

Implications for the Future
Accidents with high corporate consequences could happen to any operator, onshore or offshore.  Taking early steps and being prepared to evaluate, understand and manage the risks involved, will inevitably enhance assurance levels which not only satisfies the regulators, but also stakeholders. This is not just about satisfying new regulatory requirements, or newly formed governance committees, it is about making exploration and production a sustainable activity going forward.

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