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89 No regulatory framework for offshore oil and gas operations existed until the 1950s, when growing concerns regarding off-shore jurisdiction led to the passage of two key pieces of legis- lation. The Submerged Lands Act (SLA) of 1953 granted the federal government the title to and ownership of submerged lands making up the majority of the continental margin, while the Outer Continental Shelf Lands Act (OCSLA) of that same year is the principal law gov- erning oil and gas exploration and production activities on subsea lands beyond state boundaries out to the limit of U.S. jurisdiction of mineral rights (EIA 2005). Beyond that limit, these activities are governed by international law or by the laws of another sovereign country. The OCSLA gave authority to the U.S. Department of the Inte- rior and the U.S. Coast Guard (USCG) to implement certain safety and environmental regulations according to each organizationâs capa- bilities and expertise. Other actsâthe Natural Gas Pipeline Safety Act of 1968, the Hazardous Liquid Pipeline Safety Act of 1979, and the Pipeline Safety Act of 1992âextended some regulatory authority to the U.S. Department of Transportation (U.S. DOT). Today, the capa- bilities and expertise for permitting and inspecting oil and gas wells and production (including producer pipelines) reside in the U.S. Depart- ment of the Interiorâs (DOIâs) Bureau of Safety and Environmental Enforcement (BSEE), which was created in 2011 after the Minerals Management Service (MMS) was reorganized1 and assumed MMSâs responsibilities for safety and environmental enforcement. The capa- bilities and expertise for certifying and inspecting floating offshore units and marine operations reside in USCG, which is now under the Department of Homeland Security. The capabilities and expertise for offshore transportation pipelines reside in the Pipeline and Hazardous 1 In the reorganization, in May 2010, MMS was split into three agencies: the Bureau of Ocean Energy Management, BSEE, and the Office of Natural Resources Revenue. 4 | U.S. Offshore Safety Regulation Pertaining to Safety Culture
90 Strengthening the Safety Culture of the Offshore Oil and Gas Industry Materials Safety Administration (PHMSA), created within the U.S. DOT in 2004. BSEE is the only one of the three agencies focused on per- mitting and inspecting oil and gas wells and production on the U.S. Outer Continental Shelf (OCS); USCG regulates nearly all maritime activi- ties; and PHMSA regulates pipelines both on- and offshore. It should be noted that these federal agencies have little authority or responsibility over oil and gas activities that occur completely within a stateâs jurisdiction. Certain commonalities exist within BSEE, USCG, and PHMSA. Each employs professionals with backgrounds closely associated with the industry it regulates. Each has a staff of engineers who review and approve plans and a field-based staff of inspectors who physically check compliance at individual federally permitted work sites. Additionally, BSEE and USCG have safety management auditors, and PHMSA is developing a safety management audit program and will require safety auditors. Each of the three agencies charges fees that are based roughly on the daily cost of its regulatory activities. Fees collected by USCG go to the general U.S. Treasury, while BSEEâs fees augment its annual bud- get. Additionally, BSEE receives annual appropriations from Congress for such expenses as overhead, policy development, rent, and train- ing. The USCG and PHMSA programs are funded through annual appropriations. None of these agencies is responsible for collecting U.S. royaltiesâa responsibility that resides within the Office of Natural Resources Revenue, another agency of DOI, which has an agreement with BSEE to support measurement of oil and gas production. Each agency minimizes its dependence on industry-provided logistics and accommodations to the extent possible. For example, BSEE and USCG share government-contracted offshore helicopter services and minimize inspectorsâ overnight stays in offshore facilities and consumption of industry-provided food. None of the three agencies is authorized to advocate for the industry it regulates. That said, all of the agencies have a duty as outlined in the OCSLA to facilitate U.S. oil and gas production within the bounds of human and environmental safety. Each agency enforces prescriptive stan- dards with similar but distinct processes and penalties. All have a dedi- cated staff for accident investigations and have historically participated jointly in investigations when warranted by circumstances. When defi- ciencies with respect to regulatory requirements are found, each agency
U.S. Offshore Safety Regulation Pertaining to Safety Culture 91 has the authority to assess civil penalties. If evidence of criminal viola- tions is found, the agencies refer that information to the Department of Justice for further investigation and potential prosecution. All agencies cooperate with the Department of Justice in such criminal investigations. All three agencies use some form of risk-based approach for both strategic and tactical resource allocation for new work, such as the devel- opment of regulations, and for daily assignment of inspectors. Each is influenced by lessons from previous major accidents and also monitors risk indicators such as personal injuries, spills, temporary loss of vessel or well control, introduction of new technologies, and known end-of- life-cycle operations. Each relies on industry-developed technical stan- dards. Agency technical experts participate on standards development committees of industry associations such as the American Petroleum Institute (API)2 and the International Association of Drilling Contrac- tors (IADC), professional organizations such as the American Soci- ety of Mechanical Engineers, and international classification societies3 such as the American Bureau of Shipping. Each agency references final- ized industry standards throughout its regulations. However, because the industry consensus process differs from the public consensus pro- cess defined in the Administrative Procedures Act, agency regulations often augment industry standards with additional requirements result- ing from external studies and public comments. The OCSLA assigns responsibility for the safety and health of offshore workers to USCG, the principal federal agency in matters of safety and health on the OCS. BSEE also has some safety and health regulations applicable to OCS operations. The Occupational Safety and Health Administration (OSHA) retains responsibility for any matters related to worker safety and health for which neither USCG nor BSEE has requirements. USCG and OSHA responsibilities are clearly specified in a USCGâOSHA memorandum of understand- ing (MOU) dated December 19, 1979. According to Baram (2014), âOCSLA does not create any special role for labor unions or workers in its offshore safety regime,â but it gives USCG authority to âreview any allegation from any person of a violation of safety regulation.â 2 API is a trade association that was founded during World War I. 3 A classification society is an organization outside of the government whose primary purposes are to develop technical standards for the construction and operation of ships and offshore structures and to evaluate the extent to which ships and offshore structures meet those standards.
92 Strengthening the Safety Culture of the Offshore Oil and Gas Industry When accidents or events that threaten people or equipment occur in the offshore industry, BSEE, USCG, and PHMSA all have roles and duties designed to mitigate loss of life, damage to the environment, and loss of offshore oil and gas production. Hurricane preparedness and response are well practiced and coordinated in the Gulf of Mexico because of the frequency of hurricanes in the area. Responses to other incidents and accidents are less practiced but are still addressed in contingency plans and memorandums of agreement (MOAs) among the agencies. All of the federal agencies involved in the offshore oil and gas indus- try and the industry itself have pursued a number of initiatives intended to improve the industryâs safety record and help strengthen its safety culture. This chapter highlights the most prominent of these initiatives. The MMS and BSEE initiatives are summarized in Table 4-1. The TABLE 4-1 Milestones in the Development of MMSâBSEE Safety and Environmental Management Systems Program and Safety Culture Policy Year Initiative Significance 1990 Cullen report on Piper Alpha tragedy (1988, U.K. sector of the North Sea) published (Cullen 1990) Cullen called for a goal-setting regulatory regime that would emphasize management systems and safety case analyses. MMS studied Cullenâs find- ings and began considering different regulatory approaches. 1990 Alternatives for Inspecting Outer Continental Shelf Operations released by National Research Council (NRC 1990) The report recommends that MMS refocus its regulatory program to increase the emphasis on human and organizational factors and manage- ment systems. 1991 MMS Federal Register Notice issued MMS announced the SEMP concept and its intention to investigate alternative strategies for promoting safety and environmental protection. 1993 API RP 75 published MMS participated in the development of RP 75, which was the first safety and environmental management standard for offshore oil and gas operations. 1996 MMS begins collecting SEMS performance measures data The objective of this data collection effort was to measure industry progress in developing and evaluating SEMPs. 1997 MMS begins conducting annual performance reviews of OCS operators SEMP implementation was a topic of these face-to- face reviews. 1998â2000 SEMP Performance Measures Workshops held MMS and industry discussed progress in SEMP implementation and reviewed performance data. (continued)
U.S. Offshore Safety Regulation Pertaining to Safety Culture 93 TABLE 4-1 (continued) Milestones in the Development of MMSâBSEE Safety and Environmental Management Systems Program and Safety Culture Policy 2002 SEMP changed to SEMS This change was made in recognition of the comprehensive and systematic management approach required. 2004 API RP 75 update published The update incorporated provisions to enhance environmental management. 2006 MMS publishes SEMS Advance Notice of Proposed Rulemaking MMS requested input on the direction of the regu- latory program and the next steps in implement- ing SEMS. 2009 MMS publishes SEMS Notice of Proposed Rulemaking and convenes public meeting In its first mandatory SEMS proposal, MMS proposed a limited SEMS program consisting of four elementsâmechanical integrity, operating procedures, hazards analysis, and management of change. 2010 MMS publishes SEMS Final Rule The SEMS Final Rule was published 3 months after the flow from the Macondo well had been stopped. It required SEMS programs that address all 12 elements of RP 75. 2011â2015 COSa provides SEMS support COS developed auditing protocols and auditor accreditation programs. 2012 Evaluating the Effectiveness of Offshore Safety and Environmental Management Systems released by National Academiesâ Transportation Research Board (TRB 2012) The report considers methods for evaluating the effectiveness of safety management systems and emphasizes safety culture. 2012 BSEE publishes draft Safety Culture Policy Statement The draft Safety Culture Policy Statement listed nine elements of a robust safety culture and requested comments. 2013 BSEE publishes SEMS II This SEMS update promoted employee participa- tion and empowerment. It also added a require- ment for audits by accredited third parties. 2013 BSEE publishes final Safety Culture Policy Statement This was the first safety culture policy statement for oil and gas operations in U.S. offshore waters. 2013 API committee initiates update to RP 75 The committee began considering the addition of safety culture elements. 2015 PHMSAâAPI committee publishes RP 1173 The goal of API RP 1173, which establishes require- ments for pipeline safety management systems (PSMSs), is to provide a framework for reviewing an existing or developing PSMS and implement- ing a new PSMS. Note: SEMS = Safety and Environmental Management Systems; RP = recommended practice; SEMP = Safety and Environmental Management Program; COS = Center for Offshore Safety. a COS is a unit of API that was established in 2010 after the Deepwater Horizon incident.
94 Strengthening the Safety Culture of the Offshore Oil and Gas Industry remainder of this chapter first reviews in turn federal safety manage- ment and safety culture initiatives, industry self-regulation and third- party initiatives, and international regulation of offshore oil and gas operations. It then considers approaches for advancing safety culture. The final section presents findings, conclusions, and recommendations. FEDERAL SAFETY MANAGEMENT AND SAFETY CULTURE INITIATIVES The three federal regulatory authorities with responsibility for offshore safety and environmental management (BSEE, USCG, and PHMSA) have long recognized that improved safety performance in the offshore oil and gas industry requires more than compliance with prescriptive standards. Each agency addresses the larger issues of safety culture in similar but not identical ways. Department of the Interior Regulatory Programs for the Outer Continental Shelf Safety and Environmental Management Program In 1990, the National Research Councilâs (NRC) Committee on Alter- natives for Inspection of Outer Continental Shelf Operations (NRC 1990) completed a report for MMS that considered strategies for enhancing safety in the offshore industry and increasing the effectiveness of the OCS regulatory program. The NRC committee recommended that MMS refocus its regulatory program to increase the emphasis on human and organizational factors and management systems. MMS also was influenced by international developments, including the United Kingdomâs regulatory reforms following the Piper Alpha tragedy and Norwayâs transition to a risk-based regulatory system. In a 1991 Federal Register (FR) Notice, MMS announced its intent to consider new safety regulations in the form of the Safety and Environ- mental Management Program (SEMP). Central to the SEMP concept was the recognition that responsibility for safety rests with operators. Because safety performance, as reflected in casualty data, had reached a plateau, MMS believed that further gains were dependent on manage- ment and cultural improvements. MMS could not inspect safety into a companyâs culture; instead, it advocated a program to encourage a culture
U.S. Offshore Safety Regulation Pertaining to Safety Culture 95 in which safety is integral to the way the industry does business, and all employees in each company, from roustabouts in the field to executives in the board room, make a total commitment to achieving safety. The goal of SEMP was to help sustain this type of culture in the offshore industry. APIâs Recommended Practice 75 For many years, MMSâs approach to promoting safety and environmen- tal protection involved prescriptive rules, review and approval of plans and permits, and inspectionâenforcement. MMSâs 1991 Federal Register Notice announced the agencyâs intention to investigate alternative strate- gies for promoting safety and protecting the environment and requested public input. Most respondents asked MMS to defer publishing SEMP regulations so the industry could develop a voluntary approach. Consis- tent with the objective of encouraging safety leadership by the industry, MMS accepted this recommendation. API, with MMS participation, subsequently developed and in 1993 published API Recommended Practice (RP) 75, Recommended Practices for Development of a Safety and Environmental Management Program for Outer Continental Shelf (OCS) Operations and Facilities, and a companion hazards analysis document (API RP 14J). After the publication of API RP 75, MMS worked with industry representatives to develop prototype plans for instituting a safety man- agement system and auditing protocols that would assist those compa- nies that had limited experience with safety management systems. A series of six workshops on performance measures and SEMP concepts, which were open to anyone in the industry, was held from 1998 to 2000 to focus attention on continuous improvement and effective administra- tion of safety management systems. These safety management systems were viewed as a means of addressing human and organizational factors and enhancing safety culture. OCS Performance Data Survey In 1996, MMS began collecting safety performance data that were sub- mitted voluntarily by offshore operators. These data supplemented the required incident reports that MMS was already receiving. The volun- tary submittals included incident rates normalized by hours worked and National Pollutant Discharge Elimination System (NPDES) dis- charge noncompliance rates. In 1997, MMS began conducting annual
96 Strengthening the Safety Culture of the Offshore Oil and Gas Industry performance reviews of every offshore operator.4 These mandatory performance reviews examined the operatorâs compliance with safety regulations and its incident record, assessed its progress in implement- ing SEMP, and addressed topics of concern such as hurricane prepared- ness and crane safety. In 2002, in response to a request by MMS, members of API and the Offshore Operators Committee (OOC) formed a steering committee to examine how the environmental component of API RP 75 could be enhanced. In response to the steering committeeâs suggestion, API expanded RP 75 to incorporate concepts from International Organisa- tion for Standardization (ISO) 14001âEnvironmental Management Systems.5 Thereafter, the MMS SEMP program became known as Safety and Environmental Management Systems (SEMS) in recogni- tion of the comprehensive and systematic management approach that is required. In 2000, enthusiasm for the voluntary SEMPâSEMS program began to wane, as evidenced by the decline in industry participation in a survey that was part of the OCS Performance Measures Program (see Figure 4-1). This trend continued through the decade. As a result, MMS determined that additional action was needed to ensure that all opera- tors were fully committed to comprehensive safety and environmental management programs. In 2006, MMS published an Advance Notice of Proposed Rule- making (ANPRM) to seek public input on the direction of the reg- ulatory program and the next steps in implementing SEMS. In the Federal Register (30 Code of Federal Regulations [CFR] Part 250, May 22, 2006), MMS offered the industry three options6: 1. Keeping the current regulatory program. Continue the current program, which is largely based on overarching performance-based regulations supplemented by specific prescriptive safety and envi- ronmental regulations and requirements when necessary. The use of API RP 75, while encouraged, is strictly voluntary. 4 https://www.gpo.gov/fdsys/pkg/FR-2006-05-22/html/E6-7790.htm. Accessed March 22, 2016. 5 https://www.gpo.gov/fdsys/pkg/FR-2006-05-22/html/E6-7790.htm. Accessed March 22, 2016. 6 Excerpted from http://www.gpo.gov/fdsys/pkg/FR-2006-05-22/html/E6-7790.htm.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 97 2. A mandatory limited SEMS approach. Continue the current regulatory program and add the four critical SEMS elementsâ hazard analysis, management of change, operating procedures, and mechanical integrity. 3. A complete SEMS approach. Implement a new performance-based, comprehensive safety and environmental management approach. The MMS would develop performance-based regulations that address the 12 elements from API RP 75 and additional elements similar in nature to those detailed in Section 4 of ISO 14001.7 While Option 1 (maintenance of the current regulatory program) was voluntary, Options 2 and 3 incorporated mandatory components. Consistent with their view that the OCS safety record was good and continuing to improve, OOC and API supported Option 1 (status quo), indicating that the industry was not prepared to embrace mandatory 7 ISO 14001 specifies the requirements of an environmental management system for small to large organiza- tions. Section 4 contains environmental management system requirements. 60 70 67 49 37 41 36 38 40 28 33 22 17 91 71 86 79 81.9 85.2 84.6 85 81.7 73.7 73.9 76.2 75.7 63.8 70.9 57.3 47.2 84.5 96.4 99.4 96.1 0 10 20 30 40 50 60 70 80 90 100 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 N um be r o f P ar c ip an ts a nd Pe rc en ta ge o f T ot al O CS B O E Parcipants Percentage of OCS BOE FIGURE 4-1 Number of participants in the OCS Performance Data Survey, 1997 to 2013 (BOE 5 barrel of oil equivalent). Source: Adapted from BSEE n.d.-a.
98 Strengthening the Safety Culture of the Offshore Oil and Gas Industry SEMS requirements or a SEMS-based regulatory system. Other com- menters, however, most notably offshore safety regulators from Norway, Australia, and the Netherlands, recommended a complete SEMS approach. They argued that SEMS should be fully, not partially imple- mented (Option 2) because a total systems approach embracing all the SEMS elements (Option 3) was needed to be successful in advancing safety in the offshore industry. In the ANPRM, MMS also suggested the possibility of a SEMS pilot program in which a limited number of companies with outstand- ing performance records, as demonstrated by their incident and compli- ance data, could manage their operations under a comprehensive SEMS program (essentially Option 3). For the duration of this pilot, participat- ing companies would operate under a separate regulatory regime with fewer prescriptive requirements. The intent of the pilot program was threefold: (a) to determine whether SEMS should be expanded beyond a voluntary regulatory program, (b) to provide MMS with experience in auditing and using SEMS to advance safety and environmental pro- tection, and (c) to determine whether SEMS is practical for the oil and gas industry as a whole or only specific companies. Only one company, a major international producer, expressed interest in the pilot and the opportunity for reduced oversight (i.e., fewer inspec- tions and approvals for pilot participants) and greater responsibility. In light of the limited industry interest and internal uncertainty, MMS did not pursue the SEMS pilot program. After a 3-year period of information gathering and a continued decline in industry participation in the OCS Performance Data Survey, MMS published a Notice of Proposed Rulemaking (NPRM) (74 FR 28639, June 17, 2009) for a limited, but mandatory, SEMS program consisting of four elementsâmechanical integrity, operating proce- dures, hazards analysis, and management of change. In response to indus- try requests, MMS also convened a public meeting on September 2, 2009, in New Orleans to discuss the proposed rule. In their written and oral comments, API and OOC continued to oppose mandatory SEMS requirements and reiterated their position that the industryâs safety record was excellent and improving. The following API and OOC comment, which was submitted to DOIâMMS just 7 months prior to the Deepwater Horizon accident and was based on limited incident data, demonstrated a limited under-
U.S. Offshore Safety Regulation Pertaining to Safety Culture 99 standing of the importance of safety management in minimizing pro- cess safety risks during drilling operations (well control)8: OOC and API examined the 33 MMS Accident Panel Investigation Reports that were used as part of the justification for imposing a man- datory SEMS program. We noted that 14 of the 33 incidents (42%) were related to loss of well control events. While several of these events could be attributed in part to mechanical integrity issues, it was difficult for us to understand how a mandatory SEMS program would have prevented or otherwise changed the outcome of these specific events. Most of those well control incidents were in fact related to the absence or failure of management systems and would have been prevented with more effective risk assessment, operating procedures, and project execution. The API and OOC comment suggests a continued focus on compli- ance and a limited understanding of the connection between management systems and well control. In a subsequent comment, these organizations appeared to assert that well plans and MMS Application for Permit to Drill (APD) approvals were sufficient to ensure well control9: Well control is one of the cornerstones of any successful oil and gas exploration and production program. Both offshore operator well planning and MMS application of permit to drill (APD) reviews and approvals focus on ensuring that operator drilling programs maintain well control at all times. It is difficult to understand how a mandatory SEMS program will significantly influence what is already a vital and highly scrutinized activity. This comment was submitted to DOIâMMS on September 15, 2009, 25 days after the Montara well blowout in the Timor Sea, which con- tinued for another 50 days. After the Montara blowout, many of the public statements from the U.S. oil and gas industry were focused on explaining why a Montara- like blowout could not happen in the United States, rather than express- ing the industryâs intent to learn more about the Montara incident and its causes and share that knowledge across the industry. Indeed, such an incident did subsequently happen in the U.S. OCS in the form of 8 Excerpted from http://www.mdl2179trialdocs.com/releases/release201302281700004/TREX-05963. pdf. Accessed October 19, 2015. 9 Excerpted from http://www.mdl2179trialdocs.com/releases/release201302281700004/TREX-05963. pdf. Accessed October 19, 2015.
100 Strengthening the Safety Culture of the Offshore Oil and Gas Industry the Deepwater Horizon accident,10 with much worse consequences. The root causes of the Montara and Macondo well blowouts were similar. Had industry paid more attention to understanding and responding to the findings of the Montara inquiry, during which the management failures involved were discussed in great detail, the suspension of the Macondo well might have been managed better with less damage. Final SEMS Rule: Mandatory SEMS Requirement On October 15, 2010, 3 months after flow from the Macondo well had been stopped, the interim DOI regulator, the Bureau of Ocean Energy Management Regulation and Enforcement (BOEMRE11), published the Final SEMS Rule. The rule required operators to implement a SEMS program addressing all elements of RP 75 by November 15, 2011, and to submit their first completed SEMS audit to the new DOI regulator (BSEE) by November 15, 2013. More than 20 years after MMS had introduced SEMS (then referred to as SEMP), a mandatory SEMS requirement had finally been established. While it is impossible to say what would have happened if the Deepwater Horizon accident had not occurred, many believe that SEMS would not be mandatory today were it not for that accident. The case study in Box 4-1 illus- trates some of the weaknesses in the industryâs collective safety culture: leadership, hazard identification and risk management, work processes, continuous improvement, and communication. In 2012, the Transportation Research Board (TRB) published a follow-up report to the NRC (1990) report that had helped initiate the SEMS concept. The 2012 TRB report considers methods for eval- uating the effectiveness of safety management systems. It also includes important comments regarding the development of a proper safety culture. Particularly noteworthy are the reportâs first two conclusions, which specifically address safety culture: Conclusion 1: If BSEEâs goal is, as it should be, to encourage a culture of safety so that individuals know the safety aspects of their actions and are motivated to think about safety, then the agency will need to evolve an evaluation system for SEMS that emphasizes the evaluation of attitudes 10 This accident occurred as a result of the Macondo well blowout and the explosion of the Deepwater Horizon rig. 11 BOEMRE, which briefly replaced MMS, was itself replaced on October 1, 2011, by the Bureau of Ocean Energy Management (BOEM), BSEE, and the Office of Natural Resources Revenue as part of the reorga- nization mentioned earlier.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 101 BOX 4-1 Cementing Standards Among well control incidents occurring during 1971 to 1991 and 1992 to 2006, the greatest problem area was cementing operations (see the figure below). In 2000, MMS requested that API develop a cementing standard addressing the zonal isolation issues associated with many well control inci- dents. This project was repeatedly delayed, and the standard (RP 65-2) was not issued until after the Deepwater Horizon accident in April 2010. RP 65-2 (issued in May 2010) and the revised version (Standard [S] 65-2) (issued in December 2010) effectively address the zonal isolation issues that were the root causes of the Montara and Macondo well blowouts in 2009 and 2010, respectively. 0 5 10 15 20 25 30 35 40 45 50 Stuck pipe Drill into another well Casing failure Cemenng Equipment failure Formaon fracture Swabbing 1971â1991 1992â2006 Lo ss o f W el l C on tro l ( % ) Factors that contributed to loss of well control from 1971 to 1991 and from 1992 to 2006. Source: Danenberger (1993); Izon et al. (2007).
102 Strengthening the Safety Culture of the Offshore Oil and Gas Industry and actions rather than documentation and paperwork. All of the ele- ments of SEMS must be addressed, but it is much more important that those who are actually doing the work understand and implement SEMS than it is that SEMS documentation be verified with a checklist. Conclusion 2: A SEMS program that contains all the elements laid out in the SEMS regulation is necessary but not sufficient for creating a culture of safety. An organizationâs safety culture will reduce risk; SEMS is but a means to that end. a. A culture of safety must be supported throughout the organizationâ from the top to the bottomâto be effective. b. A culture of safety only exists where the work occurs. If it does not actually drive the actions that people take, then it is only theoretical. Merely following a strict interpretation of a minimal SEMS program will not guarantee safe operations offshore. An effective SEMS pro- gram cannot rely on checklist compliance; the program must become ingrained in the operationâs management structure to be successful. The tenets of SEMS must be fully acknowledged and accepted by workers and be motivated from the top. Only then can an effective culture of safety be established and grow. This guidance from the TRB report is reflected in a subsequent BSEE rule known as SEMS II (effective as of June 4, 2013), which pro- motes employee participation and the empowerment of field-level per- sonnel. (See Box 4-2 for a list of SEMS II requirements.) The rule also adds a requirement for audits by accredited third parties. This require- ment is not entirely consistent with the TRB report, which empha- sizes that the primary responsibility for auditing lies with operators and states that âa properly conducted, truly independent internal audit is potentially more effective than an independent third-party audit, as it reinforces ownership of the safety cultureâ (TRB 2012, 92). This committee concurs with that position. As discussed in the TRB (2012) report, both internal and third-party audits have their advantages, but operators are best positioned to determine the auditing approach that is most effective for their facilities and organizations. The appropriate focus of regulators is on assessing the quality and effectiveness of the audits, their findings, and follow-up actions. Consistent with SEMS II, the Center for Offshore Safety (COS), a unit of API that was established after the Deepwater Horizon accident,
U.S. Offshore Safety Regulation Pertaining to Safety Culture 103 BOX 4-2 BSEE SEMS II The SEMS II final rule expanded and revised the existing 30 CFR Part 250, Subpart S, regulations for SEMS and added several new requirements. Opera- tors were required to integrate these new requirements into their existing SEMS program. The additional safety requirements contained in this final rule that were not covered in previous regulations included â¢ Developing and implementing a stop work authority that creates proce- dures and authorizes any and all offshore industry personnel who witness an imminent risk or dangerous activity to stop work; â¢ Developing and implementing an ultimate work authority that requires offshore industry operators to clearly define who has the ultimate work authority on a facility for operational safety and decision making at any given time; â¢ Requiring an employee participation plan that provides an environment that promotes participation by offshore industry employees as well as their management to eliminate or mitigate safety hazards; â¢ Establishing guidelines for reporting unsafe working conditions that enable offshore industry personnel to report possible violations of safety, environmental regulations requirements, and threats of danger directly to BSEE; â¢ Establishing additional requirements for conducting a job safety analysis; and â¢ Requiring that the team lead for an audit be independent and represent an accredited audit service provider. Source: Excerpted from BSEE (n.d.-b). developed audit protocols, auditor accreditation programs, and guid- ance documents to facilitate the administration of SEMS. COS also gathers performance data that could improve risk assessments and pro- mote continuous improvement. While COS is making important con- tributions to offshore safety, its affiliation with API, which is known for its public advocacy programs, raises questions about COSâs objectivity, credibility, and motives. A COS that was independent from API would more likely be recognized as a safety leader in the United States and
104 Strengthening the Safety Culture of the Offshore Oil and Gas Industry internationally. In addition, COSâs influence is limited by the extent of its membership at this point in time. Initially, COS membership was open to deepwater operators only; however, when that restriction was lifted and membership was broadened to all organizations, indepen- dent companies with shelf operations elected not to join COS because of the cost of membership. As a result, COS membership is currently limited to 13 operating companies, most of which are major interna- tional producers. Although COS provides programs for accrediting auditors and gathering safety performance data, it is possible to comply fully with SEMS without being a member of COS. Final Incident Reporting Rule When MMS published the ANPRM seeking public input on SEMS in 2006, it took a related and complementary regulatory action in pub- lishing the final incident reporting rule on April 17, 2006. Because prior reporting requirements were not sufficiently specific, particularly with regard to less serious accidents, MMS was concerned that some inci- dents were not being properly reported. The intent of the new report- ing rule was to improve the consistency and reliability of incident data so that trends could be better assessed and problem areas more readily identified. During the public comment period, API and OOC strongly opposed the revised reporting rule. They thought the rule was overly prescriptive and burdensome,12 and they questioned how the informa- tion would be used (71 FR 73 [April 17, 2006]). In response, MMS stated that incident reporting requirements had to be highly prescrip- tive to ensure consistency and comparability, and that the information would be used to assess the need for standards or regulatory changes, determine research needs, and identify unsafe procedures. MMS also said that these data would be available for free to the industry, which has no comprehensive incident data system. MMS expected the data to be of great assistance to the oil and gas industry in developing risk assessments and continuously improving its safety programs. A marked spike in the numbers of injuries, fires, and crane incidents after the pub- lication of the new rule suggested that the reporting of these incidents had been incomplete in previous years. 12 http://www.bsee.gov/Inspection-and-Enforcement/Accidents-and-Incidents/incidents/AC57-4-17-06- pdf. Accessed March 22, 2016.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 105 Gas Release Incident Reporting Another requirement that MMS considered was the reporting of gas release incidents, which are important leading indicators of process safety issues. This type of data was already being collected and analyzed by safety regulators in the United Kingdom, Norway, Australia, the Netherlands, Brazil, Canada, and elsewhere. Despite the international consensus in support of analyzing gas release incident data, however, API and OOC strongly objected to the collection of these data and elevated their concerns about this and other provisions in the reporting rule to the Office of Management and Budget (OMB). Although MMS was generally successful in making its case before OMB, ultimately the gas release reporting requirement was compromisedâonly gas releases that initiate an equipment or process shutdown must be reported. As a result, BSEE is still unable to assess gas release data in a meaningful manner and cannot compare such data for the United States with those from other countries. Deepwater Operations Plans Program Another important development during the âvoluntary SEMS eraâ of the 1990s and 2000s was the Deepwater Operations Plans (DWOP) program (30 CFR, Subpart B Â§250.285 to Â§250.295). In the absence of regulations and industry standards for deepwater production facilities, MMS had to assess projects in a more holistic manner. DWOP, which are analogous to safety cases and are dependent on comprehensive risk and barrier assessments, became the primary means of regulating deep- water development projects. The DWOP program has been extremely successful; since its implementation in 1995, more than 6 billion barrels of oil and 17 billion cubic feet13 of gas have been produced from deep- water (greater than 1,000 feet) facilities with only one fatality (a crane incident) and no significant pollution incidents.14 Through 2013, 1,271 DWOP had been approved for 410 deepwater projects.15 13 https://www.data.bsee.gov/homepg/data_center/production/production/summary.asp. Accessed Sep- tember 25, 2015. 14 Information obtained from BSEE incident and production data. http://www.bsee.gov/Inspection-and- Enforcement/Accidents-and-Incidents/Listing-and-Status-of-Accident-Investigations. Accessed October 19, 2015. 15 Information from the presentation of Mike Conner, BSEE, at the 2014 BSEE Standards Workshop that was held in NOLA, January 28â29, 2014.
106 Strengthening the Safety Culture of the Offshore Oil and Gas Industry In contrast with deepwater production facilities, deepwater drilling operations have been regulated in a more traditional manner, and their performance record has not been exceptional. The overall fatality rate for deepwater wells has been higher than that for shelf drillingâ0.0072 versus 0.0048 fatalities per well (see Table 4-2). The higher fatality rate per well may be attributable in part to the added time required to drill deepwater wells and the greater complexity of these operations. How- ever, one would expect these time and complexity factors to be offset somewhat by the use of newer equipment and assignment of the best personnel to costly deepwater projects. With regard to process safety, the deepwater drilling record was quite good prior to the Macondo incident. On average, losses of well control occurred at a rate of 1 incident per 499 deepwater wells drilled during 1992â2006, compared with 1 per 370 wells drilled on the shelf. No fatalities were associated with any of these deepwater wells.16 However, a disaster like Macondo would likely have been prevented with a more holistic assessment of risks, barrier manage- ment practices, and operational controls, as practiced in the DWOP program. BSEEâs Safety Culture Policy Statement SEMS is now an integral part of an ongoing effort by BSEE to empha- size the role of management systems and human and organizational factors in maintaining a safe working environment. Consistent with these objectives, BSEE released a draft Safety Culture Policy Statement 16 http://drillingcontractor.org/dcpi/dc-julyaug07/DC_July07_MMSBlowouts.pdf. Accessed March 22, 2016. TABLE 4-2 Fatality Rates for Deepwater Versus Shelf Drilling: 1950s Through 2013 Drilling Type Drilling Fatalitiesa Wells Drilledb Fatalities per Well Deepwater 31 4,315 0.0072 Shelf 229 47,789 0.0048 a Figures calculated with data from http://www.bsee.gov/Inspection-and-Enforcement/Accidents- and-Incidents/Listing-and-Status-of-Accident-Investigations. b Figures calculated with data from http://www.data.bsee.gov/homepg/data_center/well/borehole/ master.asp.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 107 on December 20, 2012. This policy statement appeared to be a positive message that all parties could embrace. Despite assurances from BSEE that no safety culture regulation was being proposed or considered, however, OOC raised concerns that the draft policy statement could lead to new regulations. OOC commented that MMS had reneged on its commitment to voluntary SEMS (even though SEMS was a volun- tary program for 20 years despite inconsistent industry participation), implying that BSEE could do the same with respect to its safety cul- ture policy. In a letter sent to BSEE dated March 20, 2013, OOC also cast doubt on the effectiveness of mandated safety culture regulations by criticizing the pioneering safety culture program of the Petroleum Safety Authority of Norway: As can be seen from the Petroleum Safety Authority Norway (PSA) experience, mandating a safety culture may not always achieve the desired results. This comment is puzzling because PSA is highly respected in Nor- way and internationally; the Norwegian offshore industry has an out- standing safety record; and PSAâs safety culture program has widespread support in the Norwegian oil and gas industry. BSEEâs final Safety Cul- ture Policy Statement, published on May 9, 2013, outlined the agencyâs approach to safety culture, provided a common definition of safety cul- ture, and informed the offshore community about BSEEâs safety expec- tations. In issuing the policy statement, BSEE noted its commitment to a regulatory approach designed to lead the offshore oil and gas industry beyond checklist inspections toward a systemic, comprehensive safety regime. The BSEE definition of safety culture and BSEEâs nine charac- teristics of a robust safety culture are discussed in Chapter 2. Vision for Appropriate Regulation As described above and summarized in Table 4-1, the regulatory agen- cies and industry groups have undertaken a number of initiatives to advance safety in the oil and gas since 1990. While the SEMS and safety culture initiatives are important steps, as is BSEEâs initiative to estab- lish a voluntary near-miss reporting program called SafeOCS (formally launched on May 5, 2015), the implications of these actions for the broader regulatory program remain unclear. A âprescribe, approve, and inspectâ culture is still deeply rooted in the industry and the regulatory
108 Strengthening the Safety Culture of the Offshore Oil and Gas Industry agencies. Most of the regulatory changes in the immediate aftermath of the Deepwater Horizon accident reinforced this traditional compliance culture instead of emphasizing management systems, risk assessment, operator responsibility, and safety culture. The 2010 BOEMRE Drill- ing Safety Rule (75 FR 198 [October 14, 2010]) produced prescriptive operating requirements and more regulatory reviews and approvals. The companion SEMS rule was an add-on to the regulatory pro- gram rather than its new centerpiece. There was no apparent change in the fundamental regulatory philosophy, and most of the regulatorsâ resources continued to be dedicated to sustaining the traditional âpre- scribe, approve, and inspectâ programs. The challenge for BSEE is to identify the path forward that would be most effective in achieving and sustaining outstanding safety and environmental performance. To meet this challenge, several questions must be answered: â¢ Is the traditional regulatory program conducive to safety leadership, personal accountability, teamwork, dialogue, risk-free reporting, dia- logue, and other characteristics of an advanced safety culture? â¢ Should BSEE transition to a SEMS-based regulatory program with prescriptive requirements only as necessary to monitor and assess performance? â¢ Should the DWOP approach be expanded to other complex opera- tions, such as deepwater and Arctic drilling? For those who favor greater emphasis on safety management systems and culture, the BSEE SEMS program has offered some encourage- ment. While BSEEâs mission statement mentions only âvigorous regu- latory oversight and enforcement,â its vision statement now emphasizes innovation, culture, risk reduction, and collaboration: BSEE Mission: BSEE works to promote safety, protect the environ- ment, and conserve resources offshore through vigorous regulatory oversight and enforcement. BSEE Vision: We will expand our role as a world leader in safety and environmental stewardship. With innovative regulatory approaches and appropriate collaboration with industry, we will foster a culture of risk reduction and compliance among operators that results in reduc- ing the risk of accidents and spills and an enhanced ability to respond
U.S. Offshore Safety Regulation Pertaining to Safety Culture 109 to those that do occur with prompt and appropriate regulatory action. We will serve as a model for other regulatory agencies and interna- tional peers and attract the best graduates and experts in engineering and technology through our unrivaled training and expertise. The offshore industry as a whole needs to begin by developing its vision of appropriate regulatory oversight and a strategic plan for achiev- ing its safety and environmental objectives. Its vision needs to include a description of the regulatory system that can best enable the accom- plishment of these objectives, encourage continuous improvement, and enhance safety culture, while its strategic plan needs to include a strategy for safety leadership. Historically, the industry has opposed most regula- tory initiatives but has offered no vision for the type of regulatory system it supports. The industry also needs to demonstrate that it can address fundamental and long-standing management concerns. For example, a technologically advanced industry might be expected to have sophisti- cated incident data collection and analysis capabilities, which still is not the case. Other concerns, such as the consistency and rigor of industry standards and the absence of an independent safety organization, need to be addressed as well. The industry needs to begin with a vision statement and a strategy for safety leadership. While each company is responsible for its own safety performance, the industry as a whole needs to be col- lectively committed to a culture that can provide the best opportunity for creating and maintaining a safe working environment. USCGâs Approach to Offshore Safety Culture International Safety Management (ISM) Code and Prevention Through People (PTP) Program USCGâs approach to addressing safety problems due to human and organizational causes in the marine and offshore industry includes the International Safety Management (ISM) Code and a nonregulatory program called Prevention Through People (PTP). The ISM Code, developed by the International Maritime Organi- zation (IMO),17 became mandatory for ships in 1998 and for mobile offshore drilling units (MODUs) and offshore support vessels in 2002. 17 IMO is a United Nations agency that sets global standards for safety, security, and environmental perfor- mance for the international shipping industry.
110 Strengthening the Safety Culture of the Offshore Oil and Gas Industry It addresses the responsibilities of those who manage and operate ships and MODUs and prescribes international standards for carrying out those responsibilities, including pollution prevention, safely. To this end, the code requires that ships, MODUs, and offshore support ves- sels have safety management systems. Application of the ISM Code is intended to support and encourage the development of a safety culture in both shipping and offshore operations. The PTP program is described as âa systematic people-focused approach to reducing casualties and pollution.â18 Developed by USCG in cooperation with the marine and offshore industry, it is based on the recognition that âsafe and profitable operations require the constant and balanced interactions between management, workers, the work environment, and technology.â19 In effect, the program encourages com- panies to assess their safety culture. The vision of PTP is âto achieve the worldâs safest, most environmentally sound and cost effective marine operations by emphasizing the role of people in preventing casual- ties and pollution.â20 USCG and the marine community believe that the PTP vision could achieve a safety culture through the persistent application of five principles: (a) honor the marinerâworker, (b) take a quality approach, (c) seek nonregulatory solutions, (d) share commit- ment, and (e) manage risk.21 The program has encouraged the marine and offshore industry to work in concert to improve safety culture and therefore safety performance. One such effort addressed current safety and environmental issues through joint governmentâindustry quality teams that developed practical actions that could be quickly imple- mented. This model of USCG and industry jointly tackling specific safety issues continues today. In its review of the PTP program, the NRCâs Subcommittee on Coordinated Research and Development Strategies for Human Perfor- mance to Improve Marine Operations and Safety (NRC 1997) stated the following: The PTP program is a bold departure from the traditional use of reg- ulation to address safety issues. The sub-committee believes the PTP 18 http://www.uscg.mil/proceedings/archive/1999/Vol56_1999Special_Issue.pdf. Accessed March 22, 2016. 19 http://www.uscg.mil/proceedings/archive/1999/Vol56_1999Special_Issue.pdf. Accessed March 22, 2016. 20 http://testimony.ost.dot.gov/test/pasttest/97test/kramek1.pdf. Accessed March 25, 2016. 21 http://www.uscg.mil/proceedings/archive/2000/Vol57_No2_Apr-Jun2000.pdf. Accessed March 22, 2016.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 111 concept is extremely valuable, particularly in its balanced approach to risk management and its emphasis on partnership. The PTP program recognizes the need for all participants in the marine transportation system (including government agencies, industry, classification soci- eties, industry associations and mariners) to work cooperatively to increase system effectiveness and safety. In effect, the NRC committee embraced USCGâs approach to improv- ing a safety culture by involving all stakeholders, including government and industry. Combined with USCGâs regulatory requirement for safety management systems for ships, MODUs, and offshore support vessels in the ISM Code, the PTP program goes beyond regulation to address the prevention of accidents by focusing on the people who do the work, as well as those who manage at all levels of the organization. In fact, many industry leaders have become âChampions of Prevention through Peopleâ and provided guidance to USCG. It merits noting that the PTP program is inherently different from safety management systems. While the DOI experience reviewed above suggests that safety management systems should be mandatory, safety culture programs are difficult to manage. In fact, external, mandatory regulatory requirements may be antithetical to the concept of safety culture, which must be developed and maintained internally. QUALSHIPS 21 Another program initiated by USCG to foster safety culture in the ship- ping industry is QUALSHIPS 21, which recognizes high-quality foreign- flag ships that visit U.S. ports and rewards them for their commitment to safety and quality. In January 2001, USCG implemented this program âto identify high-quality ships and provide incentives to encourage quality operations.â22 For example, ships that meet QUALSHIPS 21 criteria rela- tive to those that do not are inspected less frequently by USCG. Safety and Environmental Management Systems for Vessels in the OCS USCG has announced that it is considering developing a SEMS regulation (ANPRM, September 13, 2013, Safety and Environmen- tal Management System Requirements for Vessels on the U.S. Outer Continental Shelf; 33 CFR Parts 140, 141, 142, 143, 144, 145, 146, and 22 http://www.uscg.mil/hq/cgcvc/cvc2/psc/safety/qualship.asp. Accessed March 22, 2016.
112 Strengthening the Safety Culture of the Offshore Oil and Gas Industry 147 [Federal Register 2013]) for its segment of the offshore industry. This regulation would be a companion to BSEEâs SEMS and SEMS II. Safety Management and Safety Culture Initiatives of the Pipeline and Hazardous Materials Safety Administration PHMSA has jurisdiction over a 1.66 million mile pipeline network, a small fraction of which is on the OCS. Jurisdiction over OCS pipelines is divided between BSEE and PHMSA in accordance with a 1996 MOU. As described in the MOU, as well as regulations of BSEE (30Â CFR Part 250) and PHMSA (49 CFR parts 192 and 195), PHMSA has jurisdiction over transporter-operated OCS pipelines and producer- operated pipelines downstream of the last valve on the last OCS pro- duction facility to which the pipeline is connected. Currently, active pipelines on the OCS total 19,117 miles23â11,831Â miles overseen by the U.S. DOT (PHMSA) and 7,286 miles by DOI (BSEE). In 2007, active pipelines on the OCS totaled almost 25,000 miles, divided about equally between BSEE and PHMSA jurisdiction. The reduction in active pipeline mileage, particularly that overseen by BSEE, reflects the decrease in production and infrastructure in the shallow-water areas of the Gulf of Mexico. BSEE incident data reveal that during the past 10 years (2005 to 2014), five fatalities have been associated with pipeline operations. Four of the five involved diving operations, while the fifth occurred when an employee was struck by equipment on a pipe lay barge. According to BSEE spill data for all OCS pipelines, most of the pipeline spills of 50Â barrels or more during this 10-year period were associated with hurricane damage (see Table 4-3). PHMSAâs jurisdiction is much broader than the offshore sector. Thus an overview of its regulatory program needs to consider the entire U.S. pipeline network, of which 80 percent is used for gas distribution, 12Â percent for gas gathering and transmission, and 7 percent for car- rying hazardous liquids (U.S. DOT n.d.). Despite the vast and aging pipeline infrastructure, pipeline safety and spillage records have gen- erally improved over the past two decades. The number of pipeline incidents resulting in major injuries or deaths declined from 65 (yearly 23 Bimal Shrestha, BSEE, personal communication, May 29, 2015.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 113 average from 1991 to 2000) to 41 (yearly average from 2001 to 2010), and the number of liquid pipeline spill incidents, including spills of any amount, declined from 153 in 2002 to 116 in 2011 (U.S. DOTÂ n.d.). However, recent major incidents have demonstrated weaknesses in some operatorsâ safety management systems, including insufficient knowledge of pipeline risk characteristics and inadequate evaluation of options for reducing or mitigating consequences. Integrity Management Programs for Pipeline Operators PHMSA and the pipeline industry have applied integrity manage- ment principles to advance safety in this complex and diverse indus- try. âPipeline Integrity Management in High Consequence Areasâ (49Â CFR 195.452) outlines a process for evaluating and reducing pipe- line risks.24 PHMSA conducted a risk management demonstration project in the late 1990s and advised Congress that risk management could indeed supplement the PHMSA regulations, with an emphasis on high-consequence areas (HCAs). HCAs are defined as areas where a pipeline failure would have a significant impact on public safety or the environment; they include populated areas, areas containing drinking water and sensitive ecological resources,25 and commercially navigable waterways.26 Subsequently, the Pipeline Safety Improvement 24 http://www.ingaa.org/File.aspx?id=16945. Accessed March 24, 2016. 25 https://primis.phmsa.dot.gov/comm/FactSheets/FSHCA.htm. Accessed March 24, 2016. 26 https://primis.phmsa.dot.gov/iim/faqs.htm. Accessed April 29, 2016. TABLE 4-3 Oil Spills >50 Barrels from All U.S. Department of the Interior and U.S. DOT Pipelines in U.S. OCS and Their Causes, 2005â2014 Cause and Year Number of Spills Volume per Spill (barrels) Hurricanes Katrina and Rita, 2005 10 50â960 Hurricane Ike, 2008 6 55â1,316 Human error, external impact, and equipment failure, 2006 1 870 Human error, 2007 1 187.5 Equipment failure, 2009 1 1,500 Source: BSEE (n.d.-c).
114 Strengthening the Safety Culture of the Offshore Oil and Gas Industry Act of 2002 (P.L. 107-355)27 required PHMSA to develop and issue reg- ulations addressing risk analysis and integrity management programs for pipeline operators (the core elements of integrity management programs are listed in Box 4-3). Consistent with that act, PHMSA has issued regu- lations and guidance that establish processes for managing pipeline risks. Pipeline operators must prioritize, assess, evaluate, repair, and validate the integrity of hazardous liquid or gas pipelines that could, in the event of a leak or failure, affect HCAs.28 Integrity management programs iden- tify HCAs; integrate construction, operating, and inspection data; ana- lyze risks by pipeline segment; establish corrosion, damage assessment, and repair procedures; and describe continuous improvement programs. API RP 1173, Pipeline Safety Management System PHMSA considers an integrity management program to be one of the operational controls within a broader safety management system. Recog- nizing that comprehensive safety management systems and a strong safety culture are critical to continuous improvement and outstanding safety performance, PHMSA and an API committee issued API RP 1173, specifying pipeline safety management system (PSMS) requirements, in July 2015. The goal was to provide a framework for reviewing an existing or developing and implementing a new PSMS. API RP 1173 provides the flexibility needed to apply it to unique operating environ- ments and varied pipeline systems. Its essential elements include the following: â¢ Leadership and management commitment; â¢ Stakeholder engagement; â¢ Risk management; â¢ Operational controls; â¢ Incident investigation, evaluation, and lessons learned; â¢ Safety assurance; â¢ Management review and continuous improvement; â¢ Emergency preparedness and response; â¢ Competence, awareness, and training; and â¢ Documentation and recordkeeping. 27 https://www.gpo.gov/fdsys/pkg/PLAW-107publ355/content-detail.html. Accessed March 24, 2016. 28 https://www.federalregister.gov/articles/2003/12/15/03-30280/pipeline-safety-pipeline-integrity- management-in-high-consequence-areas-gas-transmission-pipelines#h-9. Accessed March 24, 2016.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 115 BOX 4-3 Core Elements of Integrity Management Programs for Pipeline Operators â¢ Identifying all locations where a pipeline failure might impact an HCA. â¢ Developing a risk-based plan (known as the Baseline Assessment Plan) to conduct integrity assessments on those portions of the pipeline. Integrity assessments are performed by in-line inspection (also referred to as âsmart piggingâ), hydrostatic pressure testing, direct assessment, or other technology that the operator demonstrates can provide an equivalent understanding of the condition of the line pipe. â¢ Integrating the assessment results with other relevant information to improve the understanding of the pipeâs condition. â¢ Repairing pipeline defects identified through the integrated analysis of the assessment results. â¢ Conducting a risk analysis to identify the most significant pipeline threats in segments that can affect HCAs. Examples of pipeline threats include corrosion, excavation-induced damage, material defects, and operator errors. â¢ Identifying additional measures to address the most significant pipeline threats. These measures include actions to prevent and mitigate releases that go beyond repairing the defects discovered through integrity assessment. â¢ Regularly evaluating all information about the pipeline and its location- specific integrity threats to determine when future assessments should be performed and what methods should be selected to conduct those assessments. â¢ Periodically evaluating the effectiveness of the integrity manage- ment program and identifying improvements to enhance the level of protection. â¢ Identifying the specific integrity assessment method(s) for each segment that can affect an HCA. These methods must be based on the identification of the most significant integrity threats for the specific segment. Source: Excerpted from Maintaining Safety and Pipeline Integrity. Pipeline Safety Information. http://www.pipelinesafetyinfo.com/integrity_management_programs. Accessed March 24, 2016.
116 Strengthening the Safety Culture of the Offshore Oil and Gas Industry Building on the RP 75 experience, members of the RP 1173 com- mittee added new elements, most notably safety culture, to the PSMS. RP 1173 includes indicators of a positive safety culture within an orga- nization and also addresses evaluation of a safety culture29: The pipeline operator shall establish methods to evaluate the safety culture of its organization. Operators shall assess the health of their safety culture using methods that assess employee perception of the safety culture. Methods to assess the perception of the culture include but are not limited to questionnaires, interviews, and focus groups. Policies, operating procedures, continuous vigilance and mindfulness, reporting processes, sharing of lessons learned and employee and con- tractor engagement support an operatorâs safety culture. Observations and audits of how each of these are being applied in the daily conduct of operations provide indications of the health of an organizationâs safety culture, including conformance with policies, adherence to operating procedures, practicing vigilance and mindfulness, utilizing reporting processes, integrating lessons learned and engagement of employees and contractors. Failure in application of these provides an indica- tion of potential deterioration of the safety culture. Management shall review the results and findings of perception assessments, observations and audits and define how to improve application of the supporting attributes. The elements of safety culture in RP 1173 are similar but not identi- cal to those outlined by BSEE (see Chapter 2). RP 1173 defines safety culture as the shared values, actions, and behaviors that demonstrate a commitment to safety over competing goals and demands. It identifies the critical elements of a strong safety culture as follows: â¢ Leadership is clearly committed to safety. â¢ There is open and effective communication across the organization. â¢ Employees feel personally responsible for safety. â¢ The organization practices continuous learning. â¢ The work environment is safety-conscious. â¢ Reporting systems are clearly defined and nonpunitive. â¢ Decisions demonstrate that safety has priority over competing demands. â¢ Mutual trust is fostered between employees and the organization. 29 Excerpted from http://www.pipelinelaw.com/files/2014/09/API-RP-1173.pdf. Accessed October 19, 2015.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 117 â¢ The organization is fair and consistent in responding to safety concerns. â¢ Training and resources are available to support safety. The inclusion of the elements of safety culture in RP 1173 will increase attention to the importance of a strong safety culture and encourage companies to integrate cultural considerations fully into their management programs. To date, PHMSA has not incorporated this standard into its regulations, so operators are not required to con- form to it; however, the pipeline industry collaborated in its develop- ment and approved it. The RP 75 committee is currently drafting a revision of that standard, which offers an opportunity to incorporate a chapter on safety culture and its elements as in RP 1173. INDUSTRY SELF-REGULATION AND THIRD-PARTY INITIATIVES Oil and Gas Industry Initiatives The U.S. offshore industry prides itself on a history of self-regulation. Pioneering companies that ventured offshore, such as KerrâMcGee and Shell Oil, actively participated in standards development through appropriate API committees and through safety programs organized by OOC, IADC, and the Society of Petroleum Engineers (SPE). These industry-led organizations developed the engineering standards and best practices that largely serve as the foundation for offshore explora- tion and development throughout the world. For example, most API standards are translated into ISO standards and further referenced by national regulations wherever offshore drilling and production occur. Except for certain API monogram equipment and individual certifica- tion services, offshore operators use industry standards themselves as the basis for internal engineering, construction, and operation quality control. Most offshore operators and their contractors employ health, safety, quality, and environmental (HSQE) specialists to verify compli- ance with industry standards, as well as company policies and contract stipulations. As discussed in Chapter 2, the offshore industry does not have a common definition of safety culture. Instead, it has focused on safety management practices. Developed years before the 2010 Deepwater Horizon accident, API RP 75 prescribes best practices that should be included in a companyâs safety management program and suggests that
118 Strengthening the Safety Culture of the Offshore Oil and Gas Industry company HSQE personnel audit records on each offshore platform or rig regularly. After the Deepwater Horizon accident, BSEE made API RP 75 mandatory for all offshore operators by incorporating it into the SEMS regulations. As mentioned in Chapter 3, the industry also responded after the Deepwater Horizon accident by establishing COS within API. The focus of COS is on assisting deepwater operators with safety manage- ment by developing standardized audit procedures, accreditation pro- grams for auditors, and data sharing mechanisms. The COS SEMS auditor certification standard has been officially recognized by BSEE. COS works with industry stakeholders to promote the highest level of safety for the U.S. offshore oil and gas industry through effective lead- ership, communication, teamwork, utilization of disciplined manage- ment systems, and independent third-party auditing and certification. It works to draw lessons learned from successful safety management programs, and to stimulate cooperation and sharing among industry participants to enhance the collective safety management knowledge of the industry and develop tools and good practices based on that knowl- edge. The agencyâs responsibilities, mission, and objectives can be found at its website.30 Three independent third-party organizationsâABS Quality Evalu- ations (ABS-QE), Bureau Veritas Certification (BV), and DNV Busi- ness Assurance (DNV)âhave been fully accredited by COS to conduct SEMS audits for operators and contractors, following the audit protocol established by COS. As accredited audit providers, ABS, BV, and DNV evaluate the implementation and effectiveness of SEMS that can lead to the systemsâ certification to COS standards.31 To date, BSEE has incorporated three COS documents into the new SEMS II rule: the COS-2-01 Qualification and Competence Requirements for Audit Teams and Auditors Performing Third-Party SEMS Audits of Deepwater Operations, the COS-2-03 Requirements for Third- Party SEMS Auditing and Certification of Deepwater Operations, and the COS-2-04 Requirements for Accreditation of Audit Service Providers Per- forming SEMS Audits and Certification of Deepwater Operations.32 30 http://www.centerforoffshoresafety.org. Accessed August 4, 2015. 31 http://www.centerforoffshoresafety.org/COS-Accreditation-Press-Release-FINAL.pdf. Accessed March 22, 2016. 32 http://www.centerforoffshoresafety.org/COS-Membership-Expansion.pdf. Accessed March, 22, 2016.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 119 COS could be even more effective in encouraging safety manage- ment practices across the industry if its members and associate mem- bers represented a larger cross section of the industry. Barriers to this expansion of membership may include the annual cost of membership and the requirement to undergo regular SEMS audits and make the data available. There also is a perception of bias because COS is asso- ciated with API, which, in addition to its extensive work on industry standards and safety, is an advocate for operators. On the third anniver- sary of the Macondo incident (April 2013), most members of the Oil Spill Commission Action (OSCA) project33 reiterated that an organi- zation independent of API is needed. The OSCA 2013 report states: The industry-sponsored Center for Offshore Safety, which has focused on developing criteria for certifying safety and environmental auditors, holds promise of helping to ensure that the firms involved in offshore drilling perform at the top of their game, but more needs to be done. We continue to believe, however, that if it is to establish widespread credibility the Center when fully operational should become indepen- dent of the American Petroleum Institute (API). Safety Approaches of Other Industries: A Model for the Offshore Industry? Other industries have taken somewhat different approaches to ensur- ing safety in their operations from that taken by the offshore industry. The Institute of Nuclear Power Operations (INPO), for example, was founded by the nuclear industry after the partial meltdown of the Three Mile Island nuclear power plant in 1979. Like the Deepwater Horizon accident, that incident brought national attention to questions of indus- try safety and integrity, as well as a severe loss of public trust. The leaders of the nuclear power industry responded to guidance from the Three Mile Island Presidential Commission34 that it âdramatically change its attitude toward safety and regulations.â The needed changes included a system to set and police the industryâs own standards of excellence to ensure effective management and safe operation of nuclear power plants. 33 This commission is an outgrowth of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, which, as discussed in previous chapters, President Obama established in response to the explosion of the Macondo well in the Gulf of Mexico on April 20, 2010. 34 http://www.threemileisland.org/virtual_museum/pdfs/188.pdf. Accessed March 25, 2016.
120 Strengthening the Safety Culture of the Offshore Oil and Gas Industry Shortly after the commission issued its report in 1979, the leaders of the nuclear industry created INPO as a nonprofit organization. INPOâs mission is âto promote the highest levels of safety and reliabilityâto pro- mote excellenceâin the operation of commercial power plants.â35 The immediate past chief executive officer (CEO)âpresident of INPO36 cited to the committee five key factors that have allowed INPO to be successful: â¢ CEO engagement; â¢ A focus on nuclear safety (and nothing else); â¢ Industry support; â¢ Accountability; and â¢ Independence from the boards of the member companies, members (individual member companies), and the regulator. The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling considered the applicability of the INPO model to the offshore oil and gas industry. Citing both similarities and differ- ences between the nuclear power and offshore oil and gas industries, the National Commission made a strong case for a self-regulatory model for the offshore industry based on a modification of the nuclear model: Like the nuclear power industry in 1979âin the immediate aftermath of the Three Mile Island accidentâthe nationâs oil and gas industry needs now to embrace the potential for an industry safety institute to supplement government oversight of industry operation. Akin to INPO such a new safety institute can provide the nation with assur- ances of safety necessary to allow the oil and gas industry access to the nationâs energy resources on the outer continental shelf. The National Commission also suggested that the INPO model could serve as the touchstone for the offshore industry, but that to be credible, the industryâs institute would need to be completely free from other interests and agendas and separate from API. The instituteâs suc- cess would also depend on industry-wide commitment to rigorous auditing and continuous improvement; in effect, all operators on the COS would have to participate in the institute. COS meets some of 35 http://www.inpo.info/AboutUs.htm. Accessed March 25, 2016. 36 Admiral James Ellis, U.S. Navy (retired), personal communication, Washington, D.C., October 7, 2014.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 121 these criteria, but it is not independent and does not represent all off- shore operators (see Box 4-4 for the COS mission and objectives). In developing COS, organizers considered not only INPO but also other programs as potential models, including the United Kingdomâs Step Change in Safety, the chemical industryâs Responsible Care program, OSHAâs Voluntary Protection Program, and the Safety Case Regime for international operators.37 A notable example of a safety organization that COS might also consider is the Center for Chemical Process Safety (CCPS), which was formed by the American Institute of Chemical Engi- neers, a professional society representing more than 50,000 members in industry, academia, and government. CCPS was formed in 1985 after the 1984 Bhopal gas leak disaster and has since been the leading source of guidelines and other chemical process safety materials. 37 COS website FAQs http://www.centerforoffshoresafety.org/faqs.html#No11. Accessed January 19, 2016. BOX 4-4 Center for Offshore Safety: Mission and Objectives The Center for Offshore Safety (COS) is designed to promote the highest level of safety for offshore drilling, completions, and operations through leadership and effective management systems addressing communication, teamwork, and independent third-party auditing and certification. COS will achieve opera- tional excellence by â¢ Enhancing and continuously improving industryâs safety and environmental performance; â¢ Gaining and sustaining public confidence and trust in the oil and gas industry; â¢ Increasing public awareness of the industryâs safety and environmental performance; â¢ Stimulating cooperation within industry to share best practices and learn from each other; and â¢ Providing a platform for collaboration between industry, the government, and other stakeholders. Source: Excerpted from http://www.centerforoffshoresafety.org/about.html. Accessed April 29, 2016.
122 Strengthening the Safety Culture of the Offshore Oil and Gas Industry Role of Third-Party Organizations The U.S. government recognizes certain third-party organizations, including classification societies, independent training institutions, and testing laboratories, as capable of acting on behalf of the govern- ment regulators. These are not advocacy organizations, and unlike API and other industry-led organizations, they receive no member contribu- tions. Instead, they rely on fees for service. Some have a not-for-profit status, but they are not charities. For example, the American Bureau of Shipping, a classification society established in 1862, reinvests rev- enues exceeding expenses back into training, technology, and standards development. Classification societies are the only third parties employing survey- ors and auditors who routinely go offshore to verify compliance with specifications and audit management systems. Unlike the marine trans- portation industry, in which IMO standards are applied when audits are conducted, the offshore oil and gas industry does not subscribe to a single worldwide standard. The business model for classification societies depends on minimizing casualties, pollution, and operational downtime for their clients. Classification society engineers, surveyors, and auditors tend to promote higher standards and more thorough oversight of the industry when they perceive that the consequences of an accident scenario have increased. Currently, USCG recognizes certain classification societies, includ- ing the American Bureau of Shipping, as capable of conducting engi- neering reviews, offshore inspections, and management system audits on its behalf. BSEE recognizes the American Bureau of Shipping and other third parties on a case-by-case basis, to be hired by an offshore operator as a certified verification authority. INTERNATIONAL REGULATION OF OFFSHORE OIL AND GAS OPERATIONS Different nations take different approaches to establishing safety in their offshore oil and gas operations. More than 80 nations have established or planned offshore oil and gas safety programs. Their regulatory sys- tems are influenced by their governmental structure, the respective roles of stateâprovincial and federal authorities, the size and sophistication
U.S. Offshore Safety Regulation Pertaining to Safety Culture 123 of the operating companies and contractors, the presence of national oil companies and the manner in which such public entities are regulated, the respective roles of existing agencies, the role of labor organizations, the governmentâs familiarity with the maritime industry, the presence of onshore energy and mineral development activities, cultural factors, and outside influences (neighboring countries, foreign assistance programs, trade organizations, and international companies). As is the case with all energy development, countries must balance economic, national security, safety, and environmental considerations in accordance with national policies and legislation. The division of responsibilities for land manage- ment, plan approval, permitting, safety regulation, and environmental oversight varies considerably. The synergies and efficiencies associated with a single land management, safety, and environmental authority must be weighed against the importance of independent regulators and the need to prevent conflicts of interest that could compromise safety and environmental programs. Shift from Compliance Management to Safety Management Most early offshore regulatory programs emphasized detailed operating requirements, plan and permit approvals, and compliance inspections. Over the past 30 years, however, the views of offshore safety regulators have evolved significantly. Performance objectives began superseding pre- scriptive requirements, and the regulatory focus shifted from compliance management to systematic safety management. Instead of just verifying that safety equipment was functioning properly, regulators began verify- ing that companies had management systems in place to assess risks and ensure that safety systems and operational controls were functioning as intended. Magne Ognedal, safety director of the Norwegian Petroleum Directorate and director of Norwayâs PSA from 2004 until his retire- ment in 2013, was a leading voice in this evolution of regulatory thinking: Many years have passed since we had to admit that writing safe design and operations requirements into our detailed regulations was not the way to go. We realized that the maintenance of detailed regula- tory requirements on how to construct safe installations or operate them properly was resource intensive, and that these requirements would sooner or later lag behind best industry practices. Such detailed requirements could even hamper technological development.
124 Strengthening the Safety Culture of the Offshore Oil and Gas Industry So, since 1985 we have systematically worked on revising our detailed regulatory specifications. We introduced a new kind of regulatory portfolio with just a few regulations mainly stating what should be accounted for by the duty holders. Our statutory requirements today describe the goals that should be strived forânot how to achieve them. Only where we find it essential will we specify detailed measures that need to be adhered to by duty holders. To provide predictability, our formal regulations are supported by guidelines that also make refer- ence to industry standards.38 Shortly after Norway began transforming its regulatory process, a massive fire and explosion on the Piper Alpha platform in the U.K. sector of the North Sea killed 167 workers. The report of Lord Cul- len, who headed the Piper Alpha inquiry, influenced offshore regulatory programs worldwide. Cullenâs findings emphasized management sys- tems and safety case assessments. According to Cullen (1990), Many current safety regulations are unduly restrictive because they impose solutions rather than objectives. They also are out of date in relation to technological advances. Guidance notes lend themselves to interpretations that discourage alternatives. There is a danger that compliance takes precedence over wider safety considerations and that sound innovations are discouraged. Cullenâs report expresses the view that management systems should describe the safety objectives, the system by which those objectives are to be achieved, the performance standards to be met, and the means by which adherence to those standards is to be monitored. Safety cases should describe potential major hazards on an installation and iden- tify appropriate safety measures. Safety cases should demonstrate that the safety management systems of the company and the installation are adequate to ensure that the design and operation of the platform and its equipment are safe. In addition, Cullenâs report recommends set- ting goals related to safety performance because previous prescriptive approaches had failed. The report of the International Expert Meeting in Noordwijk, the Netherlands39 (1997), reinforced Ognedalâs and Cullenâs views regarding 38 M. Ognedal, Norwegian Petroleum Directorate and Petroleum Safety Authority, personal communication, January 2010. 39 http://embosman.tripod.com/cgi-bin/page0006.htm. Accessed April 29, 2016.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 125 the importance of management systems, performance standards, skilled regulators, and active communication between operators and regulators: In many countries the offshore industry is developing faster than the governmentâs ability to regulate them [sic], and the traditional approach to regulation is inhibiting the industryâs capacity for inno- vation and technological change. This is because regulators impose a prescriptive approach, telling the industry exactly what measures it must take and requiring little interpretation on the industryâs part. Prescriptive regulations can foster a âcompliance mentalityâ within industry and discourage the development of new technologies and creative practical solutions. There is also a limit to the extent to which it is possible to add more and more specific prescriptions without this resulting in counterproductive regulatory overload. Under this approach governments also maintain a strict, regular and costly inspection service, which is resource intensive. In contrast, perfor- mance standards specify the outcomes to be achieved but not how to achieve them. For this reason, they can accommodate to changes in technology and the creation of new hazards. They also allow firms flexibility to select the least costly or least burdensome means of achieving compliance. On the other hand, because they are sometimes imprecise, performance standards are to that extent more difficult to enforce. The success of performance-based approaches depends on effective goal setting, with active communication and a sophisticated and multidisciplinary skills profile of both the operators and regulating authorities. Today, offshore regulatory regimes in Norway, Australia, the United Kingdom, New Zealand, and the Netherlands focus on opera- tor safety management systems as opposed to prescriptive regulations. Safety culture has become an important theme for regulators in these countries. In 2002, Norwayâs PSA became the first offshore regulator to stipulate that companies must have a sound health, safety, and envi- ronment (HSE) culture. The United States and Canada have adopted elements of this approach (i.e., SEMS in the United States and man- agement system requirements in Canada) while maintaining their pre- scriptive regulations. Norwayâs petroleum regulations of January 1, 2002, specifying that enterprises must have a sound HSE culture represented the first time a requirement for safety culture had been expressed so directly in Norwegian
126 Strengthening the Safety Culture of the Offshore Oil and Gas Industry or international regulations. PSA also created a pamphlet40 intended to be a useful tool for the industry in developing an effective HSE culture. The pamphlet describes the nature and characteristics of a sound HSE culture, suggests methods for understanding an organizationâs HSE culture, and lists factors that can affect an HSE culture. International Safety Improvement: Opportunities and Challenges In 1994, the International Regulatorsâ Forum (IRF) was organized at a meeting during an Offshore Technology Conference in Houston, with the objective of improving offshore safety through cooperative programs and information sharing. Representatives of Canada, Nor- way, the United Kingdom, and the United States participated in this first meeting. IRF has now grown to include 10 countriesâthe origi- nal four plus Australia, Brazil, Denmark, Mexico, the Netherlands, and New Zealand. Safety culture emerged as the central theme of the 2010 IRF Offshore Safety Conference in Vancouver. Delegates agreed that certain regulatory and management practices are condu- cive to developing and sustaining a strong and vibrant safety culture. In that regard, IRFâs consensus findings and recommendations41 were as follows: â¢ Regulatory regimes function most effectively when a single entity has broad safety and pollution prevention responsibility. Gaps, overlap, and confusion are not in the interest of safety or regulatory efficiency. â¢ The regulatorâs core responsibilities and objectives must be clearly identified. Managers must minimize distractions so that regulatory personnel can focus on these objectives. â¢ Safety management and regulatory priorities should be identified through a comprehensive risk assessment program. Training and competency development programs should be updated to reflect the new risk information. Contracting strategies should be reviewed to assess their safety and risk implications. 40 Pamphlet available online at http://www.ptil.no/getfile.php/z%20Konvertert/Products%20and%20services/ Publications/Dokumenter/hescultureny.pdf. Accessed October 19, 2015. 41 Excerpted from http://www.irfoffshoresafety.com/conferences/2010conference/summary.aspx. Accessed March 25, 2016.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 127 â¢ Government and industry should promote an improvement mental- ity, not a compliance mentality. Continuous communication among regulators, operators, contractors, workers, industry associations and public interest groups is essential for continuous improvement. â¢ Operators and contractors must manage their companies to achieve safety objectives and must continually assess the effectiveness of their management programs. Regulators should challenge industry to resolve potential safety problems rather than seek to resolve the problems for them. â¢ Regulators should serve as catalysts for learning by distributing infor- mation, hosting workshops, participating in research, and identify- ing gaps in standards and best practices. Wherever possible, the best standards should be identified and applied internationally. â¢ Accident investigations should be conducted independently and findings should be promptly and broadly distributed. Industry or government should maintain comprehensive and verified incident databases. Offshore companies should regularly discuss the causes and implications of past accidents with their employees. â¢ Industry and government cannot rely solely on incident data to iden- tify risks. New indicators must be explored and assessed, particularly for major hazards and safety culture. Worker input is also essential. â¢ Peer-based audit programs should be considered for both regulators and operators. â¢ Industry and regulators should make better use of technology for real-time monitoring of safety parameters. â¢ Sustaining outstanding safety performance is critical to the reputa- tion of industry and government. All personnel should be trained to be safety leaders and should be empowered to stop work without blame. â¢ Industry and government should investigate other actions and pro- grams that might help promote, sustain, and monitor a culture of safety achievement. IRF remains concerned about safety culture in the offshore oil and gas industry and active in its pursuit of solutions. In a communiquÃ© result- ing from its 2015 Conference and General Meeting, IRF announced the formation of a Safety Culture Workgroup, which will âidentify five key components of organizational culture that impact safety, and find
128 Strengthening the Safety Culture of the Offshore Oil and Gas Industry factors that inspectors may observe in the field that are indicators of strong safety culture.â42 Internationally, much work remains to be done to enhance the safety culture of the offshore industry. Continuous improvement is dependent on timely, comprehensive, and verified international inci- dent data that can be used to answer such important questions as the following: â¢ Where are incidents occurring and why? â¢ What equipment is failing? â¢ How effective are standards and training programs? â¢ Where are improvements needed? Although IRF, the International Association of Oil and Gas Pro- ducers (IOGP), and IADC collect and publish some data, the absence of a comprehensive international data collection system is an obstacle to sustained safety improvement. International safety improvement may also be constrained by inconsistent standards that are not always timely or sufficiently challenging. IOGP studied 13 offshore safety regu- lators and found that they referenced 1,142 different standards from 60 different standards development organizations. Only 13 percent of these standards were referenced by 2 or more of these regulators. Three North Sea regulators (from Denmark, Norway, and the United Kingdom) referenced 465 standards, but only 6 of those standards were referenced by all 3 nations. IOGP concluded that there is little harmonization in the use of standards. Timeliness also is a concern with respect to both the development and adoption of standards. For example, an important cementing (zonal isolation) standard that might have helped prevent both the Montara and Macondo well blow- outs was delayed for a decade before being issued by API in 2010. Concerns also have been expressed about the consensus approach to standards development and the influence of participants who are com- mitted to maintaining the status quo or protecting their companyâs special interests. 42 http://www.irfoffshoresafety.com/conferences/2015conference/2015%20IRF%20AGM%20Communique. pdf. Accessed April 29, 2016.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 129 APPROACHES FOR ADVANCING SAFETY CULTURE How Regulators Can Best Influence Safety Culture in the U.S. Outer Continental Shelf Regulators also help create the conditions that encourage operators, contractors, and subcontractors to do the right thing even when it is difficult (Hudson and Hudson 2015). Thus they have the ability to improve safety performance and enhance safety culture. The committee found that safety consciousness and a bias toward action on safety improvements have been trending upward since 2010. Incidents are now examined with consideration for management, organizational, and cultural factors, as well as an incidentâs imme- diate causes (human error, technological deficiencies, poor mainte- nance, inappropriate training). The industry as a whole appears to have reacted to the Deepwater Horizon accident in ways that reinforce a stronger safety culture, although grading the actual safety level of the offshore industry, even on a relative scale with other industries, is difficult. The offshore regulators have initiated a number of actions intended to improve safety offshore. The committee observed that industry par- ticipants have accepted the regulatorsâ actions but view them as focused on enforcement rather than enhancement of safety culture. As dis- cussed earlier, the regulatory structure in the United States has largely emphasized compliance over performance, so the industryâs response is to be expected. Although a fundamental responsibility of the regulators is to imple- ment laws, influencing safety culture in positive ways will require that they undertake new and different initiatives. Goals for offshore safety culture shared between the industry and regulators would help define new activities focused on those goals, such as coaching, sharing lessons learned, and independently assessing the achievement of such a culture. If the offshore oil and gas industry is to go beyond its compliance mind- set, changes in the regulatorsâ policies will be necessary. BSEE, USCG, and PHMSA currently maintain MOUs to document their relation- ships and responsibilities so as to avoid overlap and optimize limited engineering and inspection resources. A new MOU addressing concepts of and implementation plans for offshore safety culture would help the regulators extend cooperation with the industry. The industry sees its
130 Strengthening the Safety Culture of the Offshore Oil and Gas Industry regulators collectively as âthe government,â but when introducing safety culture initiatives, regulators also will need to assume the role of par- ticipants in the effort to strengthen safety cultures across the indus- try. The respective roles of operators and regulators need to be clearly delineated, as well as part of an overarching vision for the regulatory program. Ideally, the role of the regulators is to ensure that the operat- ing companies have systems to optimize their safety performance; the regulatorsâ role is not to do the operatorsâ jobs for them. Alignment with safety culture criteria among all offshore regulators and third-party safety professionals would help the industry accept new safety culture initiatives. The transition of regulators and third parties from compliance officials to safety culture models and coaches will require training and time. Joint training and a common evaluation pro- gram would appear to be the most efficient and effective way forward. Experienced SEMS managers and auditors would be a logical source for instructors and evaluators of compliance regulators and third-party personnel. Mingling safety compliance professionals and management audit professionals in a training context could also be expected to gen- erate cross-cutting, safety cultureâoriented solutions to challenging gaps in industry performance. Finally, if regulators are to become proficient in supporting safety culture models, it will be essential for both government and industry executives to address the barriers that currently reinforce the complianceâenforcement-only view of government regulators. For example, transparency and sharing of company information are hindered by a fear of legal liability, and dialogue with offshore workers is inhibited by the strict ethics guidelines imposed on government inspectors and engineers. Role of Third-Party Organizations Overhauling the use of responsible third parties, such as the classifica- tion societies, could be an effective way for both government and industry to change the current complianceâenforcement-only perception of the regulators. The government regulators could delegate certain day-to-day offshore compliance inspection and auditing functions to third parties while expanding the governmentâs safety oversight and risk management responsibilities.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 131 Elsewhere in the world, classification societies perform most of the compliance and auditing duties that have been reserved for USCG and BSEE in the United States. Regulators in other countries focus on over- sight of the classification societies and risk mitigation activities instead of reviewing detailed engineering drawings and conducting equipment inspections and tests themselves. Typically, non-U.S. regulators also rely on the classification societiesâ internationally accepted rules instead of trying to maintain detailed government regulations. Classification societies and government regulatory agencies (i.e., BSEE, USCG, and PHMSA) have different rulemaking processes. Classification societies belonging to the International Association of Classification Societies (IACS) have mature rulemaking processes that are supported by the various IACS member societies. Because classifi- cation societiesâ rules are strictly technical in nature, they are updated continually to keep pace with new technology. In contrast, BSEE and USCG government regulations must adhere to the Administrative Pro- cedures Act. Consequently, their updates are less frequent and more administratively complex. Another benefit of expanding the role of a designated third party would be the potential for operators to have a trusted advisor that could periodically tell them what they need to hear before they hear it from the regulators. The committee notes that INPO has been highly effec- tive in this role. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS Vision for Appropriate Regulation Historically, the offshore industry has opposed most regulatory initia- tives but has offered neither a vision for the type of regulatory system it would support nor plans for fostering a strong safety culture through- out the industry and achieving safety and environmental objectives. The regulators have also been unclear regarding their regulatory phi- losophy and strategy. Recommendation 4.1: The offshore oil and gas industry, in con- cert with federal regulators, should take steps to define the optimal mix of regulations and voluntary activities needed to foster a strong safety culture throughout the industry, including contractors.
132 Strengthening the Safety Culture of the Offshore Oil and Gas Industry To this end, the following specific steps should be taken: â¢ Required participation in an independent industry organization ded- icated to safety leadership and achievement. COS has made excellent progress in establishing data gathering and SEMS support pro- grams, and could fulfill this role. However, measures should be taken to ensure their independence (see Recommendation 4.4Â below). â¢ Collaboration between regulators and operators, contractors, and subcontractors in designing a safety system that instills safety at all levels of all organizations participating in the offshore oil and gas industry and balances the needs of industry and the interests of the public. â¢ Adaptation or implementation of an evidence-based decision-making process regarding safety that entails â Regular data reporting that is complete and accurate, â Analysis of the data reported to identify causes as well as trends, and â Sharing of data across the industry and regulators so that lessons learned can be used to continuously improve the safety of the industry. In these efforts, it is essential that the industry and regulators go beyond ideas and possibilities to develop concrete plans for execution. Accident, Incident, and Inspection Data A commonly noted problem in studying accidents in the offshore oil and gas industry is the lack of complete and accurate data related to accidents and near misses. Currently, BSEE accident and incident data are available to the public, but inspection data are not publicly accessible. Recommendation 4.2.1: Regulators, with help from industry, should define the critical factors necessary for understanding the precursors to accidents, determine what data need to be submitted to which regulatory agencies, and establish mechanisms for regu- lar collection of those data. In addition, regulators and the industry should review what data need to be made available to the public and take appropriate steps to make those data accessible.
U.S. Offshore Safety Regulation Pertaining to Safety Culture 133 Recommendation 4.2.2: Because accident, incident, and inspection data all are needed to identify and understand safety risks and correc- tive actions, the committee recommends full transparency such that regulators make all these data readily available to the public in a timely way, taking into consideration applicable confidentiality requirements. Summaries of voluntarily reported near misses or hazardous events, absent information that should be kept confidential, such as company names and facility identifiers, should also be released. Recommendation 4.2.3: BSEE should issue regular reports summarizing performance trends and safety issues. Recommendation 4.2.4: BSEE should improve the organiza- tion of its incident data to facilitate public access and review. The PHMSA database is a good, user-friendly system that could serve as a model. Application of Safety Management Principles to Improve Safety Performance MMSâBSEE, USCG, and some industry representatives recognized in the 1990s that offshore industry safety programs needed to go beyond detailed prescriptive equipment regulations. Accordingly, they initiated programs such as SEMPâSEMS, PTP, and QUALSHIPS 21. Opera- tors are responsible and accountable for ensuring compliance with reg- ulations and operating in accordance with their management systems. BSEE and USCG offshore inspectors verify that operators are fulfilling those responsibilities. However, most offshore inspections focus on pre- scriptive equipment regulations and follow a standard checklist. Thus, they have a âone-size-fits-allâ character regardless of the operatorâs safety performance, and may inhibit the development of safety culture by pro- moting a compliance mentality. Recommendation 4.3: BSEE and USCG should provide safety leadership and foster safety culture in the industry by reducing inspection frequencies for companies and facilities with excel- lent performance and inspection records. Regulators should make greater use of risk principles in determining inspection frequencies
134 Strengthening the Safety Culture of the Offshore Oil and Gas Industry and methods, such that operators with good performance records are subject to less frequent or less detailed inspections. Inspectors should consider shifting from traditional compliance inspections to inspections that follow the safety management approach outlined in the SEMS rule. Audit results should be considered in develop- ing inspection programs and their schedules. BSEE and the Bureau of Ocean Energy Management should also consider simplified plan and permit approval processes for operators with outstanding per- formance and compliance records and transparent SEMS and inci- dent reporting systems. Independent Group Dedicated Solely to Offshore Safety BSEE and USCG deal with many industry associations whose charters include safety (e.g., API, OOC, IADC). However, these organizations also have advocacy responsibilities, and their primary mission is to sup- port and promote their membersâ interests, not to identify weaknesses and concerns. As a result, conflicts can arise when advocacy and safety conflict. In addition, the public does not always trust that such industry associations are sincere when they state that safety is their first priority or assess the performance of their members. Recommendation 4.4: The U.S. offshore industry should imple- ment the recommendation of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling for an indepen- dent organization whose sole focus would be safety and protection against pollution, with no advocacy role. COS, although a strong, pos- itive step in this direction, is nonetheless organized within API and therefore not independent of that organizationâs industry-advocacy role. Moreover, the current cost of membership in COS limits par- ticipation. COS should be independent of API, and membership in COS should be a key element of the fitness-to-operate criteria for all organizations, including operators, contractors, and subcontractors, working in the offshore industry. The details of who would make membership in a single safety organiza- tion mandatory and how that might be accomplished would have to be worked out. For example, would a regulator establish this requirement,
U.S. Offshore Safety Regulation Pertaining to Safety Culture 135 or would industry be accountable for making membership a condition for participating in offshore work? Would an operator make member- ship a requirement for its contractors? Similarly, the process for making membership mandatory would also have to be determined. Would the regulator announce its expectation of membership in an independent safety organization focused on self-improvement and indicate that nonparticipants would be subject to more frequent inspections? Alter- natively, the regulator might publish a Notice to Lessees (NTL) requir- ing all operators to participate in the safety organization; however such an NTL would need to be tied to an existing regulation. The regulator might also revise the qualification regulations for lessees and operators or include a stipulation in all new lease contracts requiring participa- tion in the independent safety organization. Safety Culture Champions The nine characteristics of an effective safety culture released by BSEE in 2013 are not well known in the industry, and BSEE lacks the means to move the entire offshore industry closer to these desired characteristics. Recommendation 4.5: The Secretary of the Interior, in coopera- tion with the Commandant of USCG, should seek prominent leaders in the offshore industry to champion the nine characteristics of an effective safety culture identified by BSEE, develop guidance for safety culture assessment and improvement, and facilitate informa- tion exchange and sharing of experiences in promoting safety culture. Safety Management Systems SEMS and SEMS II regulations are now part of the regulatory system for the industry. They are currently in their embryonic stage, so prac- tices are still emerging. SEMS audit information provided to BSEE by the operators thus far appears to be minimal and insufficient for assess- ing the success of the safety management scheme. SEMS II requires an independent third-party lead auditor, but this provision does not apply to contractors. USCG has proposed developing SEMS for offshore industry contractors subject to USCG regulatory authority. PHMSA and the pipeline industry have issued a safety management standard,
136 Strengthening the Safety Culture of the Offshore Oil and Gas Industry RP 1173, that includes safety culture elements. The inclusion of safety culture elements will encourage companies to fully integrate cultural considerations into their management programs. Recommendation 4.7: BSEE and USCG should work with oper- ators and contractors to develop a system for capturing meaning- ful audit results and related information to be submitted to BSEE and USCG. USCG SEMS requirements should be consistent with those published by BSEE. APIâs RP 75 Committee should include a chapter on safety culture in the revised version of this document, which is currently being drafted. MOUs on Promoting Safety Culture BSEE, USCG, and PHMSA each oversee elements of oil and gas oper- ations on the OCS, and each agency has emphasized the importance of a strong safety culture. However, the three agencies have not formally agreed to work cooperatively regarding offshore safety culture. Existing MOAs and MOUs apply only to prescriptive regulations, investigations, and response. Recommendation 4.8: BSEE, USCG, and PHMSA should develop MOUs specifically addressing the concepts of and implemen- tation plans for offshore safety culture and defining accountabilities among the three regulators. REFERENCES Abbreviations BSEE Bureau of Safety and Environmental Enforcement EIA U.S. Energy Information Administration NRC National Research Council OSCA Oil Spill Commission Action TRB Transportation Research Board U.S. DOT U.S. Department of Transportation Baram, M. 2014. The U.S. Regulatory Regime for Preventing Major Accidents in Offshore Operations. In Risk Governance of Offshore Oil and Gas Operations
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