cost effective outcomes from fpso safety case

Cost Effective Outcomes from

FPSO Safety Case

By:

Brendan Fitzgerald, Managing Director, Vanguard Solutions

Joe Patrick, Managing Director, Hunter Oil

Paul Breen, Technical Director, Vanguard Solutions

FPSO Congress September 2010

Cost Effective Outcomes from FPSO Safety Case

22 FPSO Congress 2010 Singapore


• Brief History

• What is a Safety Case?

• The Management of Safety

• Why do we need a Safety Case?

• Benefits of doing a Safety Case

• Safety Cases – Lessons Learned?

• A suggested Blue Print for success

• Conclusions



A Brief History

• European Union Major Hazard Facilities –Seveso 1 (1982) & Seveso 2 (1996)

• UK Railways 2000 & amended 2003

• European Union Railway Safety Directive (2004/49/EC)

• Australia Major Hazard Facilities National Standard 1996 & Updated 2002

Safety Cases are required in various

industries in Europe and Australasia.



A Brief History

• UK Offshore Installations (Safety Case) Regulations 1992 & Updated 2005

• Australia Offshore Facilities 1992, 1996, 2005 & 2009

• New Zealand Offshore Facilities 1993 & 1999

• Timor Leste Offshore Facilities - 2003

OFFSHORE SAFETY CASE REQUIREMENTS



A Brief History

• UK Defence Forces

• Australian Defence Forces

• Some oil companies apply Safety Case worldwide, e.g. BHP, Shell and Woodside.

OTHER AREAS OF SAFETY CASE USE



A Brief History

• International Review panel – 2008

• Bills & Agostini – 2009

“Safety Case still represents best means of managing major hazards offshore”



What is a Safety Case?

• H. Conlin et al, Trans IChemE, Part B, July 2004

“A consistent and coherent set of arguments used to justify the safety of a

system at all stages in its lifecycle”




http://www.nopsa.gov.au/safety.asp under the heading "Safety Case Approach"

• Identifies the hazards and risks;

• Describes how the risks are controlled; and

• Describes the safety management system in place to ensure the controls are

effectively and consistently applied.

A safety case is a document produced by the operator of a facility which:




Safety case is a process, not just a document

• It introduces a need for an audit trail with documented decisions

• Brings a greater awareness of hazards and their management

• It always involves a culture change



The Management of Safety

H.W. Heinrich Industrial Accident Prevention: A Scientific Approach, 1931




Commonly used modification from Heinrich




Jop Groeneweg, Leiden University, 2010 APPEA Safety Conference

Not holding the handrail

Fall from Stairs

Fatal Fall

Serious Leak

Rig Explodes

We need another model!

We need another model!





Personal

Safety

Fall from Stairs

Fatal Fall

No Handrail

Process

Safety

Rig Explodes

Serious Leak

Minor Leak




Personal

Safety

Process Safety

These are two different processes.

So management systems must recognise they are

two different processes ...

with different drivers.




Different elements of safety management systems address personal safety from

those that address process safety

So it is not enough to say that SMS addresses safety.



The Management of SafetyRecent observations suggest that industry focus is on

slips, trips and falls …

Personal Safety

Fall from Stairs

Fatal Fall

No Handrail

Process Safety

Rig Explodes

Serious Leak

Minor Leak

… with reducing attention paid to maintenance of technical integrity and major hazard controls.



“But the more profound problem is a failure to put risks in perspective. BP and other companies tend to measure safety and environmental compliance on a day-to-day, checklist basis, to the point of basing executive bonuses on those metrics. But even if worker accident rates fall to zero, that may reveal nothing about the risk of a major disaster.”


Andrew Hopkins, Energy Bulletin, 10 May 2010



Widely accepted failings of prescription include:

Traditional means of the management of safety has been prescriptive in nature.


• Quickly out of date as industry changes

• Industry only performs to minimum – no incentive to exceed



Widely accepted failings of prescription include:


• Industry lets regulator work out what is needed and comply verbatim – so operator fails to identify or understand the hazards and risks they are supposed to manage – controls may be inadequate or inappropriate

• Prescriptive regulations become a hurdle to be cleared, with the focus on the hurdle, not on managing the hazard



The witnesses’ reliance on merely a qualitative opinion showed, in my view, a dangerously

superficial approach to a major hazard.

Piper Alpha Inquiry report, Lord Cullen criticised attitude to management of risk from a high pressure gas fire:


… … I consider that management were remiss in not enquiring further into the risks of a rupture of one of the gas risers and in such an event the risk of structural damage and injury to personnel.



Why do we need a Safety Case?

Do we really understand our facilities?

Here are some you may recognise!




27 July 2005, Mumbai High North – 22 fatalities




August to November 2009, Montara – total loss of WHP and rig - unknown environmental impact




20 April 2010 – Deepwater Horizon Macondo Blowout –

11 fatalities, massive & unknown environmental impact




That’s all well and good – but what has that got to do with FPSOs?




8 August 2010, MT Gagasan Merak FSO

– Cargo tank explosion – 4 injured




2009, Formosaproduct Brick Product Tanker

– Ship Collision




28 August 2009, Tanker Elli breaks back in ballasting error for tank entry




Ship collisions don’t happen with offshore facilities, do they?




11 August 2010 – Kodeco Platform – unknown vessel collision




8 June 2009 – Big Orange XVIII collision with Ekofisk Complex



–Nothing could possibly go wrong, right?

–You’ve carefully thought out all the angles

– It comes naturally to you

–You’ve done it a thousand times

–You know what you’re doing, it’s what you’ve been trained to do your whole life.




Think Again




• How do you demonstrate adequacy of safety management to Company Board otherwise?

• ISO 9000 process & ISO 31000 elements link directly to the Safety Case process

• So good quality management requires a Safety Case!!

• Demands of duty of care – how do you demonstrate adequacy without a Safety Case?




• International companies – consistency of application across assets ( e.g. Shell, BP, Union Carbide)

• How do you demonstrate safety in design without Safety Case? – Are standards / Class enough?

• How else could hazards and the SMS be linked?

• HAZOP is an integrity assurance process – not hazard identification!!

• So if just apply codes and standards, what other hazards/ risk mitigation measures would be missed?



Safety Cases – lessons learned?

The Enemies of Safety are :

Complacency

Arrogance

Ignorance

Professor Nancy Leveson, MIT, “Future Trends in Process Safety”, Honeywell User Group Summit, June 2007



Factors in Complacency

• Discounting risk

• Over-relying on redundancy

• Unrealistic risk assessment

• Ignoring low-probability, high-consequence events

• Assuming risk decreases over time

• Ignoring warning signs

Reflecting on recent major accident events -does any of the above sound familiar ?





• Schedule

• Cost

• Performance

• Safety


Do we effectively put this into practice ?

Managing TradeoffsGood risk management requires understanding the outcomes, implications,

impact and tradeoffs between:




Example: Schedule Pressure and Safety Priority

0

0.2

0.4

0.6

0.8

1

1.2

1.4

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Safety Priority

Sc

he

du

le P

res

su

re

Low High

Low

High

Overly aggressive schedule enforcement has little effect on completion time (<2%) & cost, but has a large negative impact on safety

Priority of safety activities has a large positive impact, including a positive cost impact (less rework)

Professor Nancy Leveson, MIT, “Future Trends in Process Safety”, June 2007



Cost

Generic impact of

late change on

Project cost with time

Impact of Safety CaseTo influence Project Costs

Concept Construction Operations

Cost of implementing

Safety Case

hardware changes

Detailed Design




• Blowdown philosophy set early, with late application of safety case – identified problem resulting in expensive change


• People / competence / skills gaps – a major ongoing issue - with an ageing workforce how do we effectively manage current and future projects and operations?

• Managing the wrong thing – i.e. managing the detail and overlooking the big picture (example is OHS vs MAE risk)



• The Myth of major shutdown / In-Water Surveys with no time off riser – how many projects achieve it?


• But we build this into the design basis and hence into the risk profile….



Oil Company and FPSO Contractor Relationships


• Typical contract arrangement gives minimal incentives for overall safe performance, but generally penalties for being unsafe!

• The FPSO Contractor is contractually incentivized to keep producing - they generally lose money if production stops – is there another way?

• The Safety Case can and should give the FPSO Contractor a route to cost recovery!




• Lump sum / low cost Safety Case v quality and understanding

• The outcomes of the Safety Case are not known till well after the contract is signed – is lump sum a fair and realistic contract strategy?

Oil Company and FPSO Contractor Relationships



Quote from Conlin et al:

Often the Safety Case is produced by following a prescriptive set of instructions which stifle true thought about whether defined activities are as safe as they need to be because it is easier to write a Safety Case that way and then to audit the Safety Case against the internal procedure.


Some problems with Safety Case implementation



And further from Conlin et al:

Because of the practice of describing the organisation that is in place rather than debating what options have been considered, the fact that safety science (engineering?) has had insufficient input into the design is not being revealed.





Safety Cases are not off-the-shelf, production line exercises in documentation.



Just producing a book, ticking a box, does not meet the intent!

To be effective, the safety case process must be allowed to take its course, to examine critically and interact with the design and the organisation.




If you want a Ferrari, but only specify something with wheels and an engine, don’t complain when a second hand Toyota needing maintenance work appears on the driveway!




A suggested Blue Print for Success

• Management leadership – must have this to work

• Apply realistic schedule and budget

• Develop and apply safety design philosophy

• Do it early!

• Embed experienced Safety Engineer in engineering design team as interface to Formal Safety Assessment team

• Apply risk based decision-making process

• Create an audit trail




• Safety Engineering will provide linkage across the interfaces

• Marine

• Production

• Mooring

• Subsea

• Sub-surface

• Expect & support this!




• Operating envelope / management of risk – i.e. the Safety Case should define the operating envelope and hence allows you to understand the area in which your operational risk controls need to be applied and are designed to work.

• How do you know you are operating outside the envelope if you have not defined it or passed the knowledge on to operations!

For Operations:



• Manage carry forward of residual risk – the Safety Case provides a means of doing this in a way that allows the residual risk to be actively managed rather than forgotten.

• Basis for SMS – i.e. the Safety Case will provide a means of linking the facility, the hazards identified, the operations and the hazard and risk controls, whether via hardware or the SMS

• Clarify and manage separation of OHS risk (personal safety) and MAE risk (process safety) – the two triangles rather than one.

Benefits of Doing a Safety Case?




• Identifies low probability / high consequence events and assists to understand and manage them

• Provides an Audit Trail for: quality, safety, development and risk management deliverables

• Do it early enough and you should get optimum design (from safety, risk & cost viewpoint)

• Without Safety Case, would you ever have a blast wall?




• Enable targeted maintenance – i.e. to safety critical elements through performance standards

• Culture change – always occurs with safety case process, always positive

• So the Safety Case should allow you to efficiently focus resources – i.e. manage the right thing!



1. The Safety Case is not a silver bullet cure for all ills. It does offer, however, the best means available for effective management of major hazard risks and process safety.

Conclusions

2. Effective development and implementation of the Safety Case process requires significant effort by any organisation. This effort is well worthwhile as it can deliver:

– Cost benefits in project performance

– Increased performance in operations, due to greater reliability in plant, equipment and resources

– Improved communication of hazard management for the lifetime of the facility (i.e. a corporate memory!)



3. Safety Case provides a competent and auditable process for senior management to demonstrate management of development, project and operational risk to satisfy corporate requirements

Conclusions

4. There is a trend that our industry may be focussing on occupational HSE with diminished attention to management of residual and process risk. Safety Case provides management focus to overcome this.



5. Quality and quantity of risk assessment combined with industry shortages of skilled personnel is a concerning issue going forward

Conclusions

6. With ongoing cost, schedule and implementation pressures there are better ways to contract and manage the preparation of Safety Cases.



References/1Seveso I. 1982. Directive 82/501/EEC on the control of industrial major accident hazards involving dangerous

goods, 1982. European Economic Community.

Seveso II. 1996. Council Directive 96/82/EC of 9 December 1996 on the control of major-accident hazards involving

dangerous substances. European Community.

Control of Major Hazard Facilities – National Standard NOHSC:1014(2002). National Occupational Health and

Safety Commission declared under s.38(1) of the National Occupational Health and Safety Commission Act 1985.

Commonwealth of Australia.

The Offshore Installations (Safety Case) Regulations 2005. Statutory Instrument 2005 No. 3117. London: HMSO.

ISBN 0 11 073610 9.

Petroleum (Submerged Lands) Act 1967, Schedule of Specific Requirements as to Offshore Petroleum Exploration

and Production 1992. Commonwealth of Australia.

Petroleum (Submerged Lands) (Management of Safety on Offshore Facilities) Regulations 1996. Statutory Rules

1996 No. 298 as amended made under the Petroleum (Submerged Lands) Act 1967. Commonwealth of Australia.

Draft Petroleum Regulations 1993. Petroleum Inspectorate, Ministry of Commerce, New Zealand, made under the

Health and Safety in Employment Act 1992, Department of Labour, New Zealand.

Health and Safety in Employment (Petroleum Exploration and Extraction) Regulations 1999, made under the Health

and Safety in Employment Act 1992, Department of Labour, New Zealand.

Offshore Petroleum (Safety) Regulations 2009 made under Offshore Petroleum and Greenhouse Gas Storage Act

2006. Commonwealth of Australia Interim Regulations issued under Article 37 of the Interim Petroleum Mining

Code, Specific Requirements as to Petroleum Exploration and Exploitation in the Joint Petroleum Development

Area, Timor Sea Designated Authority for the Joint Petroleum Development Area. Dili, Timor Leste.



References/2

Railway Safety Directive. 2004. Directive 2004/49/EC of the European Parliament and of the Council of 29 April

2004 on safety on the Community’s railways and amending Council Directive 95/18/EC on the licensing of railway

undertakings and Directive 2001/14/EC on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure and safety certification.

Future Arrangements for the Regulation of Offshore Petroleum Safety – Australian Offshore Petroleum Safety Case Review, 2001. Department of Industry Science & Resources. Commonwealth of Australia.

Bills, K. and Agostini, D. 2009. Offshore Petroleum Safety Regulation – Better practice and the effectiveness of the National Offshore Petroleum Safety Authority, Australian Government, Commonwealth of Australia.

H Conlin, PG Brabazon & K Lee, Exploring the Role and Content of the Safety Case, Trans IChemE, Part B, July 2004

H.W. Heinrich Industrial Accident Prevention: A Scientific Approach, 1931


Andrew Hopkins, Energy Bulletin, 10 May 2010

Lord Cullen. 1990. The Public Inquiry into the Piper Alpha Disaster. Department of Energy, London: HMSO. ISBN

0 10 113102.


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