Advancing Understanding of Offshore Oil and Gas Systemic Risk in the U.S. Gulf of Mexico Current State and Safety Reforms Since the Macondo Well–Deepwater Horizon Blowout (2023) / Chapter Skim
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4 A Model for Assessing Industry Risk Profile
4 A Model for Assessing Industry Risk Profile
Pages 97-138
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From page 97... ...
In the absence of such information, the committee relied on its collective judgment, decades of offshore operational management experience of three of its members, and available relevant quantitative and qualitative information and material presented in Chapters 2 and 3, to estimate the current U.S. offshore oil and gas industry systemic risk profile and its improvement over time.
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From page 98... ...
Using this concept of maturity, the committee evaluated offshore systemic risk management through five distinct and complementary lenses -- culture, technology, human resources, barriers, and the regulatory environment -- and assessed the level of maturity of systemic risk management associated with these five levels of risk control. Based on the unique attributes of maturity as viewed through the five lenses, an overall assessment of the maturity of each of the risk elements was made that the committee believes describes the risk profile in offshore oil and gas operations today, and separately, the estimated risk profile at the time of the Macondo incident.
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From page 99... ...
Risk Profile for Offshore Oil and Gas System People Human-Systems Integration Systems Controls Culture That Human Risk Human Resources Hardware Regulatory Supports Safety Systems and Design Environment Integration 1. Definition of a Culture that Supports Safety 4.
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From page 100... ...
On the Systems side, there are two distinct risk controls: Hardware and Design, and Regulatory Management. Maturity Models and Risk Evaluation The committee considered the risk elements from five different perspectives that were viewed as critical to an assessment of the risk elements: Culture, Technology, Human Resources, Barriers, and Regulatory Environment.
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From page 101... ...
This is an organization where there are real concerns about safety management. Level 3 -- Neutral: An organization that is aware of its processes and is working toward consistency and uniform performance, but is still focused on procedures or compliance with existing rules.
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From page 102... ...
This would be reflected in the assessments of several risk elements, particularly under the risk controls of Culture, Human Resources, and Human-Systems Integration. Some other descriptors commonly used for the maturity levels in literature on this subject are: Level 1: Documenting, Emerging, Awareness, No Formal Plan, Unacceptable Level 2: Controlling, Managing, Reactive, Inconsistency, Concerning Level 3: Engaging, Involving, Uniform Systems, Some Best Practices, Neutral Level 4: Participating, Cooperating, Proactive, Common Approach, Good Level 5: Institutionalizing, Continually Improving, Generative, Continual Improvement, Mature Industry-wide maturity for the 15 risk elements was considered by developing models for each of the five lenses through which the elements were viewed (Culture, Technology, Human Resources, Barriers, and Regulatory Environment)
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From page 103... ...
achievement of this level is indicated by a downward trend in precursor TABLE 4-1 Culture Maturity Model Attribute 2 3 4 5 Shared, accepted The industry The industry The industry has Every industry generally uses has adopted fully embraced the attribute at definition of Bureau of BSEE's concept of a culture the Level 4, safety culture Safety and definition of that supports plus Environmental safety culture. safety.
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From page 104... ...
and reflect a others. strong culture that supports safety.
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From page 105... ...
Industry There is no Initiatives Industry practices standards industry are being and training for safety standard implemented incorporate the culture and for the to share best science of safety safety climate management of practices culture and climate. management safety culture for the and climate management of (including safety culture associated and climate training)
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From page 106... ...
Risk Control: A Culture That Supports Safety The committee's discussion and treatment of organizational culture in this report drew on the Transportation Research Board's (TRB's) report on the safety culture of the U.S.
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From page 107... ...
Policy statements by key industry leaders and associations endorsing the BSEE definition and guidance in developing a culture of safety developed by industry associations and the COS would serve as evidence that the industry has embraced this definition. Pre-Macondo, there was little specific discussion in the industry regarding safety culture as a term or a concept, and there were no industry definitions and practices or regulations specifically regarding safety culture.
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From page 108... ...
Indicators of management commitment and individual accountability and reports on the ongoing third-party audits of SEMS implementation serve as indicators of whether SEMS are being employed as intended or simply as an exercise in regulatory compliance. In addition to a shared and accepted definition of safety culture, elements of safety culture include consistent and robust industry leadership and communication, alignment of management and management systems with safety values, industry-wide shared accountability, use of incident and safety metrics and best practices, use of checklists, industry standards for the management of culture and climate, and industry standards for assessment of culture and climate.
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From page 109... ...
The committee assumes a correlation between culture, SEMS as an overall management system, and a company's process safety record and perceives that the state of the practice offshore is not very advanced in using metrics, or indicators, of these three elements to drive continuous improvement. Risk Element 3: Assessment and Measurement of a Culture That Supports Safety The 2016 TRB report stressed both the challenges and importance of organizations having a deliberate, ongoing process of assessing their cultures and provided best practice guidance in doing so (NASEM, 2016a)
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From page 110... ...
There were no industry definitions, practices, or standards regarding safety culture specifically, and the regulatory environment was largely based on prescriptive regulations generally focused on equipment, equipment design, and equipment standards. As with Elements 1 and 2, there was also the voluntary nature of API RP 75 and the lack of metrics and definitions.
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From page 111... ...
Other output measures of competence in education and training are also addressed in risk elements 9 and 15. Evidence for a high level of maturity for this risk element would include the extent to which industry requires training and certification that incorporate documentation of competency in areas that include appropriate
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From page 112... ...
Thus, it is the committee's view that overall, industry maturity is at Level 2, while specifically recognizing Level 3 improvements in well control training and in competency development and assessment in a few companies. 2 For an example, see https://racichart.org.
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From page 113... ...
Despite emphasis on SWA, BSEE incident investigations find situations in which workers could have implemented SWA but did not.3 These facts lead to an overall assessment of industry maturity at Level 3. A key factor influencing worker willingness to exercise SWA is whether they perceive that they can do so without recrimination.
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From page 114... ...
MMS had a strong focus on industry equipment standards pre-Macondo, and the regulatory emphasis on developing standards and incorporating them into regulations suggested a relatively high level of maturity for this risk element. However, industry standards did not exist for everything, were largely focused on individual pieces of equipment, were not systems based, and did not include concepts such as barrier management, human factors, and human performance.
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From page 115... ...
Risk Element 7: SEMS Implementation As with any safety management system, SEMS are intended to serve as the overarching process by which plans are developed and implemented for drilling and producing hydrocarbons safely. This includes identification, evaluation, and management of specific risks at individual locations, evaluation of performance; and the continuous improvement and implementation of practices and technologies in a continuous cycle of improvement.
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From page 116... ...
In this regard, it is also important to consider that the term SEMS can refer to three things: • As a general description of this type of management system, which can include process safety management systems, safety manage ment systems, operations management systems, and so forth; • As referred to and defined in API RP 75, Fourth Edition; and • As BSEE regulation requires and references to API RP 75, Third Edition, plus other BSEE requirements. Pre-Macondo, there was not a BSEE SEMS regulation, but MMS did encourage voluntary adoption of API RP 75 and mandated adoption later when industry voluntary participation indicated to BSEE that it was necessary.
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From page 117... ...
This is quite dramatic progress in the space of only 10 years and is reflective of the overall industry assessment of maturity for this risk element as being at Level 3. The implementation and verification of effective BSEE SEMS by all operators has further enhanced and supported the importance and inclusion of human factors considerations and enhancements.
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From page 118... ...
Risk Element 8: Checklists, Procedures, and Job Safety Analyses This risk element considers use of specific formalized safety-focused practices. Included would be the development and use of written work procedures designed to minimize risk and to support the safe execution of work by operating staff as well as ongoing improvements in developing, using, and communicating JSAs.
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From page 119... ...
Although JSAs tend to be focused on individual jobs and include elements of occupational safety and individual safety equipment, they do generally lay out the safe process of executing the job described. So, although not explicitly process safety documents, failures associated with JSAs can and have led to process safety incidents.
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From page 120... ...
The committee notes a particularly weak industry culture toward the appropriate and effective use of checklists as well as recognizing when JSAs and the JSA process must be improved. Risk Element 9: Behaviors The industry efforts in this risk element should ultimately reflect the competence of the workforce and their ability to carry out their work while being fully situationally aware.
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From page 121... ...
Measures for assessing this risk element include results of SEMS audits, industry participation in SafeOCS, COS reports of root causes of incidents, and the existence of training programs to enhance situational awareness. Does industry require demonstrations of competence rather than simply allowing individuals to work offshore based on their level of education or training attainment?
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From page 122... ...
as well as how to mitigate these risks and address the problems, not just how to respond if something goes wrong. The improvements over the last decade in information sharing related to training an effective workforce is reflected in the committee's view that this risk element is at Level 3.
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From page 123... ...
Of the two risk controls within this system, the first is Hardware and Design and the three risk elements of Hardware and Design discussed below focus on the physical design and operation of barriers and on how technology is developed and incorporated into offshore systems for improving barrier management. Risk Element 10: Barrier Identification The committee uses "barriers" as they are defined and applied in the bowtie model which is used widely in the offshore oil and gas industry (IOGP, 2016)
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From page 124... ...
Also historically, there was not a focus on, and was little recognition of, the importance of identifying and managing contingent barriers. Even today, neither regulation nor industry standards sufficiently reflect modern terminology, thinking, and practice about barriers and use of the bowtie model.
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From page 125... ...
This risk element addresses barriers to maintain well control during drilling and barriers to contain hydrocarbons during production. For physical barriers, this would include guidance, standards, and operations regarding the number of physical barriers maintained during drilling, temporary abandonment, completion, and abandonment and tests of whether cement plugs and other physical barriers are, in fact, preventing the inflow of hydrocarbons into the well.
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From page 126... ...
For this risk element, the committee evaluates how the industry is continuing to innovate in the development and application of technologies that can further enhance safety, risk management, and safety management. In particular, the committee's interest is in how technology is being applied to human performance, human factors, and decision making to support improved systemic risk management and SMS.
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From page 127... ...
Despite improving maturity levels in technology and the demonstrated good results in technical integrity and reliability of equipment, the development and application of technology to reduce systemic risk and manage systemic risk was maturing slowly. The industry was using new technology to optimize and improve efficiency as well as equipment integrity.
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From page 128... ...
This was a result of some limitations in the technology but also due to an industry focus on optimization and efficiency including more uptime, less downtime, less nonproductive time, and so forth, and not as much on systems and system integration to manage risk and enhance safety. Although there was a generally low level of focus on how automation could support systemic risk management, the availability of automated subsystems and systems targeted at operational efficiency and maintenance did improve safety in varying degrees.
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From page 129... ...
Despite higher technology maturity in many aspects, the overall maturity progress in effectively utilizing technology to manage systemic risk and support SMS, human performance, and human factors has been slowed by a strong focus on using technology for operational efficiency and operational optimization. This is evident in three areas where industry is advancing and developing technology quickly: RRTM, automation, and utilizing operational data.
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From page 130... ...
Automation does enhance safety, including removing staff from harm's way, but the automation technology needs to focus more on systemic risk management support through appropriate risk data collection and analysis leading to risk decision support and potentially eliminating the need for certain decisions when appropriate. Utilizing Operational Data The maturity level of this technology relative to systemic risk management has progressed modestly.
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From page 131... ...
The availability and volume of systemic risk data need to be improved as well as clarity on what types of data can best be used to manage systemic risk. The current maturity assessment of this risk element does not reflect the industry's past success in developing and applying technology; it only focuses on whether the industry is appropriately taking into account technology that is available today or ready for development and adoption by the offshore industry and technology that can support systemic risk management.
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From page 132... ...
Risk Element 14: Inspections BSEE is required under federal law to inspect every offshore facility at least once per year regardless of the risk level assessment of offshore facilities. This has stretched the agency's workforce at times, and its budget, because many of these trips require expensive travel by helicopter to many offshore rigs and production platforms.
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From page 133... ...
They primarily focus on compliance metrics and contraventions and there is a general lack of systematic thinking about how inspections can inform operating company leadership about weaknesses in the operators' safety culture. If the operators were more effectively and fully managing and monitoring their own safety and environmental performance, it would ease the requirement for prescriptive inspections and enable richer learning and development.
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From page 134... ...
To arrive at its judgments, the committee developed a framework that looked at systemic risk based on individual risk elements that are grouped into three systems: People, specifically looking at culture and human resources, Human-Systems Integration, and Systems, with a focus on barriers and the regulatory environment. The committee's collective assessments of the risk elements were influenced by the maturity model concept, wherein the highest level of maturity
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From page 135... ...
Conclusion 4-1: The committee's assessments of the 15 risk elements in its model cannot be aggregated into a single measure of the industry systemic risk profile, but it is possible to generalize from them and describe overall trends and gaps.
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From page 136... ...
e. Regulatory Environment as a mechanism for risk control has three risk elements: requirements for Barrier Verification, Inspections; and requirements for Worker Certification.
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From page 137... ...
Conclusion 4-4: A model of systemic risk that recognizes the overall risk profile as a sum of its parts is important for understanding the current state as well as progress made in improving the risk profile. Future improvements in the risk profile of offshore energy operations will be the result of concerted effort by operators and regulators to
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From page 138... ...
Addressing the individual risk elements and improving industry's maturity level with respect to them will result in an overall improvement in the systemic risk profile for offshore energy operations. REFERENCES BSEE (Bureau of Safety and Environmental Enforcement)
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