How the lessons learned collaborating over safety can be applied to other activities within the oil and gas sector
17 January 2019
Collaboration is the current buzzword in the oil and gas industry. In this article, Laura Petrie of Aberdeen-based commercial lawyers Ledingham Chalmers LLP looks at how the UK offshore sector built a collaborative environment in the area of safety and how we might apply those lessons across the whole industry.
Collaboration as a concept is nothing new to those engaged on a daily basis with the safety of those working offshore.
Multiple parties often come together to achieve a common goal in getting workers through their shift as well as home safely at the end of it. They do so without even thinking about this approach being a ‘new’ method of working.
Starting a safety culture
Following the devastating events of Piper Alpha in 1988, the oil and gas industry recognised that a complete overhaul of its approach to safety was required.
Building on the recommendations from the Cullen Report, many operators and supply chain companies reviewed their safety practices and policies. They did so from the ground up, engaging with the workforce on a scale previously unseen in any industry.
The development of a strong safety culture meant that operators and supply chain companies had to ensure that the culture was endemic across their entire workforce – both on and offshore.
The culture had to be understood, supported and enforced by all employees at all levels. Engagement with the workforce on a wide scale meant that many took ownership of not just their own safety but that of their colleagues and other co-workers.
Through this structure of engagement and encouraged ownership, various significant safety initiatives have developed, all borne out of suggestions from the workforce which have then been developed and implemented by management.
These initiatives — including the green hat policy, as well as more generic changes to permit processes, incident feedback and the (love them or hate them) ‘toolbox talks’ — have all proved effective steps on the way to a strong safety culture primarily because they have the support of the workforce and the buy-in of the management teams.
Culture of collaboration
As the safety approach post-Piper Alpha indicated, the requirement was to generate a ‘culture’ where safety was the primary goal.
The same is true for generating a collaborative environment, there needs to be a culture generated in which individuals and companies can clearly see how they are contributing and how they benefit. As I’ve said already, the primary element of generating a culture is to allow individuals and companies to see their contributions in action; have ownership of the development of those contributions; and also see, and receive, the benefits of the changes they’ve helped bring about.
Collaboration as a concept will mean different things to different people, but the end results should share some similarities: a strong collaborative environment should generate new ideas, lead to improved efficiency and cost-savings and build stronger relationships. All those things are positive, so why does the thought of collaboration seem to turn off so many oil and gas workers when we’ve already shown how adept we are at achieving it, specifically when it comes to safety?
Collaborate for collaboration
One of the primary blockers to achieving a collaborative culture is that the concept of collaborating needs to be turned inwards in the first instance.
While it is relatively straightforward to bring together various parties, connected by a similar goal, in order to achieve a change that obviously benefits everyone (as with safety) it is much more difficult to engender change within an organisation when individuals have to assess their actions and performance. That’s where the ‘culture’ concept becomes vital.
Organisations, whether operators or the supply chain, should be actively encouraging their workforce at all levels to come forward with new ideas; to have rewards in place should those ideas prove fruitful; and to ensure that strong, trusting relationships are built across all levels of the workforce – both between management and employees and across teams.
This makes it sound as though it is the organisation’s responsibility to have in place policies, procedures and bonus schemes but, as with safety, it is not just the organisation that needs to take responsibility. Individuals need to challenge practices or cultures that are not conducive to collaboration.
But, they need to be safe to do so.
In recent months I have come across many stories from teams in both operator and supply chain companies. Repeatedly I’ve attended events where senior and managerial team members talk extensively about their organisation’s commitment to collaboration and the many varied collaborative projects they are working on.
Yet afterwards, speaking with less senior team members though, the response is more subdued.
Here, people from these same organisations say that when collaborative suggestions are brought back from meetings with third parties, or proposed during internal meetings, they are less well received.
Moreover, when meeting to negotiate or discuss the agreements intended to give effect to collaborative concepts, the negotiating positions taken are very clearly not in the spirit of achieving this goal.
This differentiation between internal and external approaches to collaboration does not create the safe environment needed to generate the workforce engagement, ownership and commitment required to achieve a collaborative culture. If a collaborative culture doesn’t exist internally in an organisation, then proposing to engage in collaboration externally becomes less credible.
It’s not possible for changes to occur immediately, so organisations and individuals need to consider the steps they should be taking to bring about a cultural shift and encourage collaboration: in short, they should collaborate to determine the steps for collaboration.
There are five key areas where steps should be taken to generate a collaborative environment:
• Build trust — no industry can operate without human interaction and the oil and gas industry has people at its heart. Trust needs to be developed across all the relationships inherent to the industry. At an organisational level teams need to trust each other and their management. From a commercial perspective there needs to be trust between the management team and their commercial and legal advisers. Trust is built when people feel valued and that their contributions are worthwhile.
By allowing individuals and teams to take greater responsibility and contribute as early as possible on projects, trust will be developed. In order to do this, individuals need to take greater interest in their organisations beyond their daily role, and organisations need to share information at the earliest opportunity.
Commercially, being open and honest about goals, commercial positions and any limitations ensures parties are developing that trust early on.
• Identify risks and rewards – organisations must demonstrate that there is value in collaboration but also be clear about where there are gaps, risks and likely difficulties in achieving it.
Most organisations will have a set of principles or parameters by which they assess projects and decisions. When considering these in the context of collaboration, it is important to focus on the intended goal (the reward) and all the risks associated in achieving that rather than using a staged process.
Frequently, organisations impose process management which requires breaking projects down into steps and then making decisions on progression based on results at each step. Collaborative projects take time and will typically throw up more risks than rewards during the early stages. Accordingly, organisations need to factor collaborative projects (and building a collaborative culture) into long term strategies for their business.
• Timing and timelines – collaborative projects are frequently borne out of a desire to meet a deadline and commercialise a concept but, as noted above, collaboration takes time.
The collaboration to improve safety in the UK oil and gas industry made significant changes in a short period, but the real effect of those changes has only become apparent over time and it is fair to say that collaboration remains ongoing.
Seeking to collaborate within a defined timeframe is possible, but all parties must be committed; have clear actions; and be willing to accept inevitable over-runs. Moreover the collaborative enterprise should only begin when all parties engaged are ready.
Where actions are required from one party over another or others, there is a risk that the project becomes more aligned to typical supplier-type relationships than a truly collaborative endeavour.
• Mutuality – organisations must break the perceived master/servant relationships and align themselves alongside their employees or commercial contacts.
The industry is working together to achieve one goal (as indicated by the Oil and Gas Authority) and that is to achieve maximum economic recovery of hydrocarbon reserves. Economic recovery ensures efficiency, shared rewards and properly allocated risks – all markers of a strong collaborative enterprise.
Indeed, one of the industry’s key contracting principles (mutual indemnities or ‘knock-for-knock’ provisions) is borne out of the mutuality principle: that the parties take responsibility for their own risks in return for sharing in the rewards the contracted work generates. Collaborative projects do not necessarily lend themselves to mutual indemnities (given the more bespoke nature of each party’s role in the collaborative project) but the concept of each party accepting responsibility for risks attributable to its organisation/role generates a balanced, fair environment.
• Continuing engagement – don’t stop collaborating.
As highlighted above, collaboration needs to be endemic within an organisation as well as forming part of its commercial contracting approach. If a collaborative project stalls or fails, the concept of collaboration is unlikely to be the reason, rather the implementation of the approach.
Reverting to the safety example, incidents and accidents do still occur in the UKCS. When an issue arises, the industry continues to push forward, collaborate better, and find a solution rather than simply seeking to ‘give up’ or reverse previous approaches. The continued adaption and progression stems directly from the fact the industry continues to engage in safety improvements. Applying this logic, it’s fair to say continued engagement in building a collaborative culture will provide results.
Stop, collaborate and listen
The key theme to take from both the lessons learned in the arena of safety and this article generally, is that the UK oil and gas industry is one which is highly susceptible to adapting and responding to its own needs.
Following a tumultuous period of oil price crashes, job losses, reduced contracts and, for some, insolvency, a large proportion of organisations have weathered the storm and the majority of the industry’s workforce is still standing.
This is in part due to a desire to take stock of the industry as a whole, look at projects, developments and opportunities and ensure that the right people, teams and partners are working together.
The time now is perfect to truly focus on collaboration and take the lessons learned in growing one of the world’s best safety regimes and apply those across both our organisations and the sector as a whole.
So, in showing my age and taking some liberties in paraphrasing, it’s time to pull our boots on for collaboration and stop doing what we’ve always done, collaborate more with each other and listen to all suggestions from across the industry on how to become even better.
About the author
Laura Petrie is a corporate and commercial lawyer at Ledingham Chalmers in Aberdeen with significant experience in upstream oil and gas. She frequently advises operators on a range of exploration and production matters and also undertakes transactional work, both on an asset and corporate basis, advising on due diligence preparation or review, SPAs, and allocation of decommissioning liability on acquisition/divestment.