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Beyond Macondo

05 April 2016

Much has been done to reduce the risk of another major incident such as the Macondo disaster, but more change is needed. This is the key message in a summary by DNV GL of findings and recommendations of 21 major inquiries into the BP Deepwater Horizon drilling rig explosion and oil spill in the Gulf of Mexico in 2010. The inquiries were conducted by governmental, industry and independent organisations in the US, UK, Norway and the Marshall Islands.

The report flags the legacy of reforms to reduce risk and improve occupational and process safety[1]. It was carried out because no single investigation provided a full overview of the actions recommended to prevent another Macondo. Five years on, and with the prospect of further investigations to be carried out, particularly around long-term environmental effects of the spill, it is timely to review key lessons and recommendations and look at where more improvements can be made.

Lessons learned

The Deepwater Horizon drilling rig suffered a major blowout event on 20 April, 2010. The catastrophe killed 11 men and left 17 seriously injured. Thirty-six hours later, the rig sank and there was a prolonged release of gas and crude oil. The spill was estimated by the US Government to be five million barrels – the largest recorded offshore blowout event. A massive and prolonged investigation was carried out by multiple US Government agencies, operator BP, and many organisations, including DNV GL.

Among technically-focused investigations, the US Justice Department commissioned DNV GL to carry out a forensic examination of the Transocean blowout preventer (BOP) recovered from the seafloor once the well had been killed [2]. The objectives were to determine the performance of the BOP system during the well control event, any failures that may have occurred, the sequence of events leading to failure(s) of the BOP and the effects, if any, of a series of modifications to the BOP stack that BP and Transocean officials implemented.

The DNV GL report made a number of detailed recommendations to industry regarding design and operation issues. These included: better testing of back-up control systems – as some system components did not perform as intended; improved processes to prevent common mode failure of back-up control systems, and better means to verify the operation or state of various components of BOPs in an emergency. The US Chemical Safety Board (CSB) investigated the BOP failure after DNV GL’s forensic examination. It concluded that regulations should be updated to identify critical parts of safety equipment and ensure that these operate reliably.

Among the most high profile studies, the US Deepwater Horizon Commission[3] and its chief counsel[4]  included lessons learned for industry, government and energy policy. The Commission stressed how culture was a key factor for enhancing safety and discussed issues affecting BP, its contractors, and the industry in the Gulf of Mexico generally.

The organisation and response by US federal and state agencies, and the cooperation of BP and the whole industry, was commended by the national incident commander, Admiral Thad Allen.

Implementing change

In other nations, the Norwegian Oil and Gas Association (formerly OLF), led an inquiry for which DNV GL reviewed regulatory differences between the US and Norway. This concluded that the Norwegian Continental Shelf had robust legislation and safe operations[5]. It made 45 recommendations for improvements to prevention, intervention and response, and summarised those related to well control and response issues. It also made recommendations to enhance Norwegian operations and engineering standards.

DNV GL’s summary of inquiries flags the need for updates and change. Many key recommendations for further improvements have been adopted in one form or another. The report highlights the continual need to address and update safety processes, procedures and the regulatory framework to learn lessons from incidents of any scale and severity.

The US has seen major changes to the Mineral Management Service (MMS) regulator, with the emergence of two new US regulatory entities: the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM). This has separated safety oversight from resource management and emphasises goal-based safety and includes increased numbers of inspectors to boost presence offshore in both safety and environment.

The American Petroleum Institute (API) and the International Association of Drilling Contractors (IADC) have worked on an interface requirement between the lessee and contractor. A formal safety and environmental management approach (SEMS) has now been implemented with the Center for Offshore Safety defining the protocols and approving third party audit service providers. This was a BSEE regulatory requirement based on API RP 75 and COS helped with the implementation.

BSEE has issued detailed well rules to enhance casing design and cementing and now requires third party certification of BOPs prior to deployment – a task DNV GL is actively assisting with. The organisation has provided guidance on safety culture and is working to implement a confidential reporting system. The Bureau has also established the Ocean Energy Safety Institute to research several longer term problems. The United States Coast Guard has issued guidance on additional fire and explosion assessments it would like to see and proposed rules for better area classification and DP systems. There have been consortia established in the US and by the International Association of Oil & Gas Producers (IOGP) at four international locations to provide emergency response support. API and NORSOK have updated standards for drilling and well control, and have made their safety standards freely available. Detailed assessments of fire and explosion lessons have also been made and are starting to find their way into designs.

Changes overseas have seen the European Union (EU) adopt a safety-case approach similar to that of the UK, for all EU offshore developments. Australia has expanded coverage of its regulator, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), to address drilling and environmental impacts because of incidents like Montara, the 2009 oil spill in the Timor Sea, approximately 250km north-west of the Western Australian coast, and Macondo, and to move closer to the goal of having a single offshore regulator.
Still, some important recommendations for the US regulatory system have yet to be adopted. These include suggestions to adopt a safety case approach with a greater focus on risk assessments with a risk target, and to nominate safety critical items with defined performance standards. It is not yet known if these will be adopted, or perhaps addressed in some other equivalent manner.

Dynamic Barrier Management

The oil and gas industry globally has made several significant changes for the better as a result of Macondo; the changes in well design practices are particularly notable. What happened at Macondo was not unique. Many elements behind the blowout, fatalities and colossal oil spill had been seen before. It was clear that lessons from previous incidents were not being embedded into a risk management system and culture, as much as many involved would have liked.

It is clear however, that the industry has still to fully comprehend that Macondo, as with all other major accidents that DNV GL has investigated, could only happen due to failure of several different barriers. The positive consequence of this failure mechanism is that risks of major accidents generally build up over time. In contrast to what is typically the case in occupational safety, it is thus possible to prevent major accidents through monitoring and taking action on leading indicators. The mechanism is however, complex and the number of preventive barriers, whether physical, human or organisational, is large – and all are generally prone to degradation and change during operation. Knowing when and how to react to leading indicators of barrier degradation is therefore not straightforward.

Technical and human barriers are typically monitored through audits and inspections during operation. This is an important source of knowledge of barrier status. However, a high number of audits by several different parties do not necessarily result in a low overall risk level, unless the industry is able to consolidate the data, and use the combined output as decision bases, including as input to future audits and inspections. A barrier management system might enable safety cases and risk assessments made during design to be carried over into operation, and it can be developed to support input from various sources and thus give an updated or dynamic view on barriers and their degradation. Such a system is typically developed to enable shared decision support for one installation or within one operating company, meaning that it needs multiple interfaces and should be able to provide different output formats and levels of detail for different purposes.

In addition to preventive barriers, it is also important to identify and monitor the status of mitigating barriers that may limit the impact of any events. It is therefore important to:
·  know the actual status of barriers;
·  easily monitor and analyse barrier performance;
·  ensure that degradations are managed efficiently;
·  and optimise operational risk levels while accounting for degraded barriers.

Therefore, improved emergency response solutions are part of the portfolio of instruments to limit harm to people, the environment and assets.

The industry, along with regulatory agencies worldwide, is beginning to understand the importance of a barrier management framework. DNV GL, for example, has worked on a dynamic barrier management system where the updated barrier status and associated effect on operational risk are presented in an integrated manner, to enable sound and efficient decision support to improve safety performance.

Data smart

Analysis of data from companies’ annual and sustainability reports shows a ten-fold reduction in reportable and lost time incidents per 200,000 man hours over the last 20 to 30 years. This demonstrates significant progress in occupational safety over the last few decades, achieved through systematic efforts throughout the industry. There is further potential for improvements in this area, but even more so in major accidents.

The drive to collect a greater variety of data and the ability to determine what information is most appropriate and useful, is helping companies realise remote operations, optimise production time and shape business strategies. Avoiding the clutter and dissecting data can also enable a step-change improvement to safety barrier management, which commonly involves risk-based inspection and traditional maintenance and testing regimes.

Cost challenges

Faced by low oil prices, companies want lower costs and improved operational efficiency. In this respect, safety levels are challenged. Smarter barrier management is key to obtaining a desired safety level at the right cost, in a manner already demonstrated by risk-based inspection.

In a tough market there is a tendency to assume that new solutions are associated with increased costs, but cost reductions in the oil and gas industry do not necessarily mean negative impacts on safety performance and delivery. In tough times, a lower level of activity may reduce some of the high pressure on resources, enabling oil and gas companies to gain access to the right personnel with the right experience and competence. Development projects are also stretched over a longer period, providing time for planning and making it more likely that solutions will be robust and safe.

Operators can use a structured risk-based approach to balance work processes and activities in maintenance and operational programs, saving costs and at the same time improving safety performance.

However, a unilateral focus on cost-cutting may have severe impacts on safety through a lack of maintenance, inadequate training, poor safety culture, etc. Cost reductions may also prevent the implementation of new and improved ways of controlling risk, such as dynamic barrier management, irrespective of whether this would actually be a cost-driver or not.

Conclusion

Fortunately, major accidents are rare, but the lack of regular exposure to the risk might lead to an erroneous perception of low risk. One challenge for the industry is to maintain a long-term view on risk management related to major accidents, while also dealing with ongoing and near-term challenges and operational needs.

The case for dynamic barrier management becoming the prevailing model of barrier management is strong as it reduces ignorance through more frequent sampling of barriers and smarter use of more relevant, richer and up-to-date monitoring data. It increases and improves decision support for prioritising critical maintenance, implementing compensating measures, and for day-to-day risk analysis.

By ensuring more regularity in operations, the concept supports both asset safety and operational efficiency by avoiding process upsets. Early indications of barrier degradation provide flexibility to schedule small, multiple corrective actions rather than intrusive and large ones. It ultimately reduces the cost of barrier management as prevention is cheaper than correction. It can provide a better balance between safety and cost.

There have been too many major hazard incidents over the last 25 years: Macondo, Montara and Piper Alpha offshore, and Texas City onshore, to mention a few. The industry has been taking on learnings from these sad events, but more work is needed to prevent similar accidents from happening in the future. Industry leaders and decision makers have the potential to lift safety performance to new levels through collaborative approaches and through implementation of risk management tools and cultures that ensure the safety of their workforces.

References

1. ‘Summary of Macondo inquiries’, DNV GL, 2015. Download at: dnvgl.com/macondo
2. ‘Forensic examination of Deepwater Horizon blowout preventer, Vol I and II (appendices)’, DNV GL, 2011
3. National Commission on the BP Deepwater Horizon oil spill and offshore drilling – main report and multiple topic papers, 2011
4. Report of the chief counsel to the National Commission on the BP Deepwater Horizon oil spill and offshore drilling, 2011
5. ‘Deepwater Horizon lessons learned and follow-up’, Norwegian Oil & Gas Association, 2012


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