As the 25th anniversary of the UK North Sea Piper Alpha disaster approaches, GL Noble Denton looks at regulatory best practice.
The 25-year anniversary of the Piper Alpha disaster provides an important opportunity to stop and reflect on the progress made by oil and gas companies and regulatory regimes on safety and integrity. But we all need to remain vigilant if we are to continue to mitigate the risks of future such disasters.
The anniversary of the Piper Alpha catastrophe in the North Sea provides a poignant reminder of just how far the oil and gas industry has come in the last 25 years. It also reminds us how potentially catastrophic it can be for companies across the oil and gas supply chain if their safety and risk management processes do not operate effectively.
In our industry, the difference between a near miss and a serious incident can often be minimal. A simple oversight or error, or a gradual habituation to a minor fault can feel less harmful the longer it is tolerated. Seemingly inconsequential factors can set off a catastrophic chain of events, as seen at Piper Alpha in 1988, at the Buncefield oil storage facility—where a fuel leak, in 2005, resulted in the largest explosion that the UK has seen in its peacetime history—and at Macondo in 2010.
The challenge for oil and gas companies and their regulators lies in recognizing where the risks lie, and creating and effectively operating systems that manage those risks.
Learning from past catastrophes
Regulations put in place after the Piper Alpha disaster have helped the industry build a stronger safety culture. This includes the UK requirement for operators to demonstrate that they are taking measures to manage hazards and reduce risks to become as low as reasonably practicable (ALARP) and the role played by the UK Health and Safety Executive in enforcing (and updating) the Safety Case regulations. While there is much in which to find merit in the UK’s regulatory regime, the anniversary of the Piper Alpha disaster, as well as more recent incidents, reminds us once again of the need to examine whether the regulations are still fit for purpose, and if they are able to evolve with the industry’s changing needs, technologies, and practices.
There are hard lessons learned from such disasters. While the US drastically revised its regulatory regime in the wake of the Macondo disaster, would it have made a difference had it amended its approach sooner? Although there is no definitive answer to this question, the likelihood of such an event would probably have been reduced.
The source of a disaster can be a long-term degradation of equipment or a short-term oversight (e.g. shortcuts made in the face of time pressure). An incident is often enabled by a lapse in safety management; for example, a risk management process that gradually, over time, becomes less effective due a human willingness to attempt, or accept, shortcuts.
The roots of the Macondo disaster are very different, yet there are parallels to be found to Piper Alpha in the health and safety culture and working practices that allowed the causes of the incident to be missed until it became too late.
Reactions to US regulatory change
In April 2013, GL Noble Denton set out to measure industry reaction to recent changes in the US regulatory regime. The resulting report, Reinventing Regulation: The impact of US reform on the oil and gas industry, reveals how tough the oil and gas regulatory landscape has become in the US, post-Macondo, according to oil and gas professionals operating there. An overwhelming majority (85%) said that they expect the US regulatory regime to get tougher in the coming two years, on top of the changes already implemented.
The research shows that the industry, in general, favors a goal-setting regulatory regime, in which the regulator defines the goals that have to be achieved and operators are free to decide how to achieve them. This type of regime is active in the North Sea, and was introduced to the UK’s oil and gas industry in reaction to the Piper Alpha incident. Of the respondents, 76% said that a goal setting regulatory regime was most effective in improving safety performance. There has typically been a more prescriptive approach taken in the US.
The danger with a prescriptive system is that an operator is able to act within the letter of the regulations and then stop, having “fulfilled” its duty. In the UK and many other regimes, in contrast, the onus is on the operator to think through its own challenges and issues, and to demonstrate that it has understood the risks and acted accordingly.
It is due, in part, to the goal-setting approach that UK regulation has worked since Piper Alpha. By placing the emphasis on the operator to recognize and meet its ALARP goals, and with such a goal not being an absolute, the operator needs to constantly strive to reduce risk. Regulations remain applicable even as oil and gas industry practices, technologies, and operating environments evolve.
In the North Sea, for example, a number of changes have occurred to the commercial arrangements under which platforms are operated, since the UK regulations were drafted. Many platforms are operating beyond their original design life expectancies. New projects and tie-backs place new demands on existing infrastructure. However, the largest risks still relate to the integrity of assets and the shrinking levels of production that are there to support them. The goal-setting regime in the UK has been able to cope with these changes over the last 20 years, with only minor amendments, and this has helped the UK industry benefit from improved safety performance.
Learning from goal-setting regimes
Unlike goal-based regulation, a prescriptive approach is not able to evolve in with industry practices and is not able to guard against future disasters. New technology that was not envisaged when the regulations were written could fail, with tragic results. This can make industry professionals question the regime under which they are working and its ability to guard against major disasters.
For this reason, many countries look to goal-setting regimes—such as those of Norway and the UK when establishing their own regulatory framework. GL Noble Denton is currently working with governments across Europe and the Middle East to help create new goal-setting legislation for their oil and gas industries.
In Ireland, we have been working with the Irish Commission for Energy Regulation (CER) to introduce new upstream safety regulations that cover onshore and offshore production. A team of safety and regulatory specialists has been working with the CER for a number of years to review different regulatory approaches being used around the world, to identify the ones most suitable for the Irish industry, and taking practices from the UK and Norway, among others, to develop local regulations.
In many ways, the Irish Commission is fortunate to have the time and freedom to analyze and evaluate regimes across the globe. That might not be possible were the regime being introduced in reaction to a major catastrophe.
Ireland isn’t the only country re-examining its approaches to regulation. All regulators will—or should—be constantly looking at what is going on elsewhere and seeing what they might be able to learn from approaches being adopted in other countries.
Change is likely to ripple out from the US regulatory changes, too. In Reinventing Regulation, industry professionals predict that the repercussions of US regulatory tightening will go well beyond the Gulf of Mexico. Six in 10 of those polled expect the current regulatory trends within the US to have implications for regimes elsewhere.
Looking forward by remembering the past
Piper Alpha taught us that a catastrophic chain of events can occur from any combination of issues or oversights. Many technical issues can be accounted for by putting systems in place to alert operators to degradation of aging assets or sudden faults. The challenge comes in ensuring that regulation remains current and live, so that operators are constantly challenging the processes that they use and regulators are taking a firm hand in assessing them in this.
Regulation will help improve industry practices but it’s just as important to focus our efforts on education. We should remember catastrophic incidents such as Piper Alpha and Macondo and the impact they had on people and the environment.
Those lessons should instill a safety culture that upholds the importance of risk management processes and reminds us of the dangers of complacency and deviation from them.
Download a complimentary copy of Reinventing Regulation from: www.gl-nobledenton.com
John Morgan is head of consulting and compliance for GL Noble Denton’s UK safety and risk practice. Based in Aberdeen, he is responsible for compliance, technical assurance and safety consultancy operations. In recent years, he has worked alongside a number of national government authorities to help them establish and optimize their regulatory regimes. He earned a PhD in Applied Mathematics from Oxford University.
Mike Johnson is principal consultant for GL Noble Denton’s UK safety and risk practice. Based in Loughborough, UK, he has spent much of his career studying the cause and effects of major accident hazards around the world. This has included leading full-scale explosion research and other experimental studies conducted following the Piper Alpha disaster. Most recently, he has been involved in investigating vapor cloud explosions in Buncefield, UK, and Jaipur, India. He earned an MA in Mathematics at the University of Cambridge.