Memorandum submitted by the Institution
of Mechanical Engineers
The Future of Deepwater Exploration and Production
EXECUTIVE SUMMARY
This submission is from an experienced risk and reliability
professional with 20+ years experience in the industry and involvement
in professional engineering bodies. Deepwater exploration brings
economic benefits and risks can be managed but only by a transparent
and acceptable process which must be given precedence over experience
and ego. Spin offs to emerging technologies such as coal gasification
and carbon capture are also very valuable. Production effectiveness
and integrity are closely related and considerations need to be
re-united in a holistic positive measured process, safety regimes
having concentrated too much on consequence mitigation rather
than engineering integrity assurance. The engineering profession
has been active in formalising methods and standards and is now
actively addressing formalised practitioner competences. The forthcoming
ISO for management contains the essential risk management framework
but this cannot function without the appropriate political support.
ABOUT MYSELF
I am a Chartered Engineer and Chartered Marine Engineer,
currently member of Council and Chairman of the Institution of
Mechanical Engineers Safety and Reliability Group and a Fellow
and member of Council of the Safety and Reliability Society. I
also attend the Inter (Engineering) Institutional Group on Safety,
the Hazards Forum and have been active on the working group re-issuing
Engineering Council Risk Guidelines.
Following "mainstream" engineering activities
I specialised in performance and risk analysis and modelling,
supporting design teams within several large oil and gas projects
(green and brown-field) and later as a consultant carrying out
detailed quantitative assessments for most of the majors within
the North Sea, Far East and Australia including the DTI as well
as in similar work in defence and transport. For the last five
years I have been committed to very large heavy oil "upgrader"
refineries project ($28 billion overall, $8 billion for the UK)
and will be leading the team responsible for technical and business
risk assurance, reporting to the sponsoring government and financial
institutions.
RESPONSES TO
THE QUESTIONS
What are the implications of the Gulf of Mexico
oil spill for deepwater drilling in UK?
1. There are currently several deepwater developments
in place and several more are planned to the benefit of the British
Economy. While there have not been any severe safety incidents
the production performance has not been impressive (I carried
out a detailed review for one operator). Given the awareness spurred
by the GoM spill the public will demand (and deserve) greater
transparency and effectiveness in integrity management if further
development is to be allowed.
2. They also deserve a more consistent revenue
flow through better asset design and management. These are not
mutually exclusive and indeed the better HSE performers are also
the better revenue generators. If the continued exploitation of
UK resources is to receive full public support then there must
be visible evidence of well designed assets with consistent and
stable performance in every aspect.
3. No-one intended the GoM (or any other) disaster
to happen and those concerned did not believe that their safety
process was incomplete and inadequate. They fell into the trap
of placing reliance on "previous experience" or "expert
opinion", especially in the field, in effect a subjective
approach that lacked a continuous, objective, quantified risk
reference mechanism against which not only the expected
but also the unexpected can be assessed.
4. The current "status quo" of a "static"
safety case, i.e. one that is not continually updated by feedback
from actual conditions and inclusion of everyone involved will
no longer convince the wider public and sufficient mechanisms
to build and maintain confidence in a manner that the former can
understand and support is essential, "black arts"
may spawn "experts" and "gurus" but do little
to contain risk.
To what extent is the existing UK safety and environmental
regulatory regime fit for purpose?
5. The purpose of regulation is to erect boundaries
within which people are constrained to work through a structured,
reasoned and recognised thought process before their intended
actions are sanctioned or supportable.
6. Since the Cullen report there has been a
division between production and "safety" in the belief
that an "independent" view of integrity is best. I am
of the opinion that it is time for the two to be linked again,
although perhaps retaining legislative independence because there
has been too lax a control on performance effectiveness and disconnect
between reliability of equipment and safety.
7. Unlike the MoD the department responsible
for oil and gas exploration and production did not direct licence
holders (who are in many ways "contractors to bring the UK
resource to market") to demonstrate their design and operations
maximise revenue potential - safely, the best whole value proposition
in production and integrity. Accordingly there has been, with
too few exceptions a sorry history of poor design and operations
which have resulted in production efficiency by their own design
(based on the many assessments I have carried out for majors and
government).
8. Other fundamentally good performing assets
were adversely affected by arbitrary cost cutting because the
relationship between maintenance, support, production efficiency
and integrity was not understood or denied in the face of short
term pressures. Sadly the savings made were greatly outweighed
by lost revenue because of the lack of (or in some cases dismissal)
of objective measurement processes.
9. While such analyses and processes to ensure
good design and effective and efficient operations are mature
and proven, especially in defence; their application in the North
Sea has actually declined in the last 10 years having been resisted
as an imposition by those focussed on rapid career progression
and allergic to "inconvenient" news, sadly to the detriment
of profit and consequent tax revenue and integrity.
10. The safety regimes have focused heavily on
mitigating and managing consequences rather than fundamental integrity
assurances in equipment and systems by design and ensuring the
right testing and assurance mechanisms are in place and enforced.
HSE would concur with this as much of their current focus demonstrates.
11. An appropriate mechanical engineering analogy
is of steam locomotive boilers which exploded with frightening
regularity 150 years ago but by attention to materials, design
and operations, not theoretical "safety cases", the
risk was eliminated.
12. HSE have over the last five years made strides
in addressing the need to focus on making safety related engineering
"work" in Key Programme 3 but they would admit there
is a long way to go. They "invited" companies and contractors
to a seminar for encouragement two years ago (at which I was an
"observer") to enforce the thrust to "ensure it
does what it says on the tin" - i.e. that it is reliable.
A lot of the difficulty lies in the disjoint between the often
well thought out and comprehensive strategies at management level
and "experience" at grass roots level which carries
on regardless. This is by no means unique to oil and gas as demonstrated
in other recent accidents.
13. Often the purpose of essential assurance
actions are not fully understood by the persons carrying them
out, demonstrated by "valve tested - now working" whereas
continual feedback, especially when equipment does not "do
what it is supposed to" adjusts actions and their frequency
to meet quantified performance standards.
14. Competences need formalisation. A significant
number of self appointed "gurus" in safety and reliability
emerged to meet the market demand since 1988 but whose qualifications
and expertise often did not support the responsibilities they
assume.
15. The Professional Institutions have in recent
years become more aware of the need to regularise competences
and qualifications in the profession although even this has not
been without resistance however all the relevant bodies from Engineering
council to small training providers are making strides to bring
a formality to this.
16. Suffice to say however that it needs to move
from being optional and political support is essential for that.
Clear reasoning supported by a joined up process, "thinking",
as my colleague Prof John McDermid was quoted by Charles Haddon
Cave QC in his report into the loss of Nimrod XV230 and this applies
every bit as much in deepwater exploration and production, more
so as there is very limited scope for it once a mishap occurs.
17. A "joined up" holistic process
of quantified production and integrity is essential. Too much
revenue has been lost to date (cumulatively a large proportion
of the current national debt) and is at risk in the future and
furthermore the current procedures do not give any cause for HSE
and others to feel confident on safety and environmental issues.
18. The demonstrable transparency that the public
need to feel at ease is best served by a partnership between the
engineering profession and government.
19. An assessment and authentication process
needs to be in place for every asset and asset interaction from
concept through to final environmentally responsible disposal.
It must capture and contain every decision making mechanism, reflecting
the risks and the cost benefits of every option taking into account
risk. "Flying by the seat of the pants" is still too
common and seems to have been a major contribution to the recent
disaster. It is now time for cowboys to ride off into the sunset.
What are the hazards and risks of deepwater drilling
to the west of Shetland?
20. Principally loss of containment of oil and/or
gas with potentially immense safety and environmental consequences
but unseen is the threat of lost revenue through poor design and
ineffective operations.
21. Unlike Gulf of Mexico, or indeed North Sea, distances
and sea conditions make rescue and mitigation much more difficult.
These are very unlikely to arise from completely unknown sources
and therefore potential hazards can be proactively identified,
designed out or mitigated.
22. Identified consequences should form the basis
of proactive contingency strategies aligned to know possibilities
and criticalities as the core of ongoing risk assessment. This
should be the "norm" and follow comprehensive guidelines
and draw on specific competences (but not prescription) and not
be left to the discretion of the individual practitioner.
Is deepwater oil and gas production necessary
during the UK's transition to a low carbon economy?
23. Yes. There are, as yet aspects of society's needs
where alternative fuels have not been identified or are unlikely
to be (aircraft etc) in the foreseeable future. A balance is essential
to bridge the gap and we should not be "feared" unnecessarily
to exploit the potential.
To what extent would deepwater oil and gas resources
contribute to the UK's security of supply?
24. Firstly by continuing supplies but also in stimulating
technology development to allow UK to get better and exploit future
resources more effectively. Other energy sources such as coal
gasification, which has massive potential, has benefitted from
drilling technology spun off from the impetus to exploit deep
water resources.
25. Carbon capture and storage also benefits from
this and will become much more expensive if left to develop alone
without the ability to draw on the investment and experience of
oil and gas production which of course can justify much greater
levels of investment.
The mechanism necessary to assure safety
26. Safe engineering requires fit for purpose technology,
workable and practical management strategies backed by comprehensive,
co-ordinated and holistic performance measurement, not just good
words and intentions. Engineering is not inherently unsafe it
only becomes so when it is misapplied or mistreated.
27. Few applications really push technical frontiers
and assurance can be achieved simply by pausing for thought at
the appropriate moments and drawing on evidence of similar technology.
Unfortunately there is often an unwillingness or inability to
face the possibility that risks exist (it has been ok for xx years)
or other perceived greater priorities have overruled, usually
costs or ego.
28. The Engineering Professions and the specialist
bodies have been striving to develop and refine usable techniques
for some 40 years now, not without resistance and IMechE is taking
the lead to bring a degree of co-ordination and collaboration
to bear. (I would say that wouldn't I - but it is true, we are
pushing the others hard and have significant representations from
HSE, MoD etc. We are currently opening dialogue with the Cabinet
Office).
29. A "management" ISO is imminent (i.e.
will be published in a couple of years once it has overcome the
filtering process) and is summarised below because it already
forms the basis of a risk management strategy
29.1. Develop a clear understanding of the purpose
and the factors that could affect it.
29.2. Establish the appropriate organisation
to manage achievement of that purpose.
29.3. Set out clear management responsibilities,
boundaries and interfaces with mechanisms of assessment, analysis
and authentication; emphasised as a good investment, not impediment
or challenge to status.
29.4. Inspire leadership to give a sense of visible
direction and control from top to bottom.
29.5. Demonstrate clear management commitment
to compatible risk measurement and assessment processes integrated
fully into the business processes, never "bolt on" or
vulnerable to the reluctant or belligerent.
29.6. Ensure commitment by all in setting objectives,
satisfying needs and requirements.
29.7. Formalise assigned and communicated management
reporting systems.
29.8. Proactively plan for measurable objectives
which should have a credible time frame for achievement and can
be actively verified and monitored to build a "corporate
memory" from the outset.
29.9. Listen to and address issues and concerns
at every level, planning action accordingly to address them and
implementing these actions into the management system. (Countless
engineering mishaps have the root cause in unwillingness to consider
the opinions of others.)
29.10. Build awareness with relevant external
parties to ensure they are aware of their responsibilities
29.11. Ensure planned changes are subjected to
formal change control mechanisms.
29.12. Monitor the management system effectiveness
from concept through design, manufacture, installation, commissioning
and service from the outset.
29.13. Instigate an appropriate audit programme,
taking into consideration the criticality of the activities and
processes concerned and the results of previous audits.
29.14. Plan regular reviews of the management
process.
30. Note that there is no mention of safety, reliability
or any other terminology or "fancy flute music statistics"
in the above. They are metrics which demonstrate the outcome of
an effective management process, not the process itself.
What is the Engineering Profession doing to be
better organised to respond to risks?
31. Safety and Reliability techniques have matured
over 30 years but their application still remains voluntary and
practitioners unregulated. The profession has now created clear
lines of communication between the different bodies to ensure
no aspect falls "between the gratings" or is too jealously
guarded. Duty holders will be left in no doubt as to their roles
and responsibilities and practitioners suitable enabled to discharge
them.
32. To guard against the irrational portrayal of
engineering as "unsafe" and hazardous outcomes "inevitable"
amongst the less well informed to the detriment of mankind's well
being and prosperity, engineers need to provide an effective,
consistent and understandable risk management framework. There
may seem to be many symptomatic root causes of failures there
is actually only one, namely the unwillingness to dispassionately
and objectively consider the proposed function with the fitness
for purpose of the proposed response to it and putting aside short
term considerations of which the greatest and most deadly are
cost and ego.
33. Domestic appliances are an example of continuous
improvement, and there is a trail of corporate corpses of those
who dismissed the need for thinking about better performance in
that area. The necessary techniques and processes to enable reliability
exist in standards and are taught in mainstream academic institutions.
34. HSE have an initiative to bring this awareness
to undergraduates (but incredibly is having difficulty in finding
funds!). Many of the specialist assessment techniques are "owned"
by cross industry specialist bodies (IOSH, SaRS etc) but their
application is best steered through the relevant professional
institutions and adapted to the specific industries by engineers
intimately connected to them. This forms the strategy that the
co-ordinated efforts of the engineering professions and specialist
bodies are embracing.
35. This reins in both the "expert" who
rains down the boiled oil of confusion completely divorced from
any knowledge of the specific technology and the "experienced
engineer" who feels any directive to carry out safety and
reliability assessments, especially by those perceived as "amateurs"
as a slight to their virility.
36. The Engineering Council Guidelines lay down the
principles that engineers should follow. All this however will
be "toothless" unless there is political awareness and
firm legislative direction. There needs to be a partnership between
government and the profession to achieve this, it will take a
little time but it is imperative.
September 2010
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