Dry January is almost behind us, and a few of my friends and colleagues who have abstained from the demon drink after the Christmas mayhem may well be looking forward to having a wee sherry in February. Well done to all of those who managed the month. However, this post is about the world’s most expensive cocktail, and it’s definitely not one anyone will want to touch.
Many of us working in the oil and gas sector are waiting to see if the recent cuts in production from OPEC members will have a positive impact. The recent marginal gains in Brent crude suggest some green shoots are starting to appear, however, many operators are still a long way off investing in new projects.
This downturn is very different from previous cycles. This time, many assets are well beyond their initial design life, which leads to an increase in asset integrity challenges, inevitably leading to an increase in inspection and maintenance costs. From recent conversations with operators, the regulator and those in the service sector, it’s apparent that some safety critical maintenance activities are being deferred – ad infinitum!
It’s a vicious cycle for the operators. The diminishing returns and increases in operating costs over an extended period have led to some difficult decisions being made. Maintenance and inspection budgets have been slashed and huge numbers of experienced employees and contractors have been ‘let go’. I read recently that approximately 120,000 staff positions have been lost in the UK oil and gas sector over the past two years. This is likely to be the tip of the iceberg, as the industry’s workforce is made up predominantly of contractors. I wonder if those decisions were taken with full visibility of the competence profiles required to operate the business safely?
Spare a thought for those ‘lucky’ enough to still have a job … I hear of staff being asked to re-apply for their jobs, sometimes two, three or four times. People are expected to do more with less, with the constant threat of redundancy looming over them on a daily basis. I wonder how that affects morale? Is this environment conducive to objective decision making?
… but hold on, things just got a whole lot worse!
In February 2016, the UK’s Sentencing Council updated the Health and Safety Sentencing Guidelines. Prior to the update, operators were capped at £12k fines per incident, and cases were brought to court based in ‘actual harm’. That’s all changed. Operators now face uncapped fines, calculated on their revenues and assessed on ‘potential harm’. Previously, a “loss event” could have had unimaginable consequences. Now, those unimaginable consequences to human life, the environment and property/plant come with the very real possibility of putting an operator out of business.
ConocoPhillips UK recently lost an appeal to reduce a £3m fine for three separate gas leaks on one of its North Sea installations in November 2012. See article
Which leads me to the title of this article – Could this be the world’s most expensive cocktail?
Here’s some of the key ingredients you’ll need for that cocktail:
• Significantly reduced revenues
• Escalating asset integrity issues
• Increases in operating costs
• Reduced workforce knowledge
• Reduced workforce levels of competence
• 2016 HSE Sentencing Guidelines
If I were a CEO of a business operating in hazardous environments, this is a cocktail I’d never want to see mixed anywhere near my business. It’s widely accepted that good barrier management is paramount to identifying safety risks.
Concepts such as the bowtie barrier model were born out of the oil and gas industry, and indeed are now widely used across many other industries. While the bowtie model is an excellent concept for identifying risk, it falls short when it comes to helping identify cumulative risk.
If you’d like to understand how Nugensis Oil & Gas is delivering world class barrier management software solutions, and how we’re helping our clients identify cumulative risk, join us on one of our regular webinars, or indeed contact me direct.
Martin Slowey is Energy Director for Nugensis Oil and Gas, a software products business with a focus on providing Senior Managers and Executives with clear and simple safety barrier visualisation tools to facilitate effective decision support.
See more at the Nugensis Website