Study projects regulatory future

Regulators and operators can learn from each other to reduce the risk of major incidents, says Graham Bennett


Oil and gas industry regulatory regimes are evolving, allowing both active and planned offshore operations to progress efficiently, while ensuring that due attention is given to health, safety and environmental (HSE) performance

Discussion of the history and future for regulation around the world is described in a new DNV GL report: ‘Regulatory Outlook: The way forward for offshore regulatory safety regimes’. It outlines possible future developments and what DNV GL believes an effective offshore safety regime should look like.

Occupational safety has improved greatly in recent years, explained Graham Bennett, business development manager for UK & Sub Saharan Africa, DNV GL - Oil & Gas. “Our analysis of data from companies’ annual and sustainability reports shows a ten-fold reduction in reportable incidents per 200,000 man hours over the last 20 to 30 years when lost-time injuries are excluded. The industry deserves to be congratulated for this.”[1]

“However, while occupational safety as measured by reportable incidents has improved in general, major accidents and near-misses still happen, and more could be done to reduce the risk of these occurring,” he stressed. “The industry should also strive to learn and share more from what it is successful at in major accident management.”

Analysis of the European Union (EU) major accident report system (MARS)[2] and the US Environmental Protection Agency risk management plan-star (RMP-Star)[3] databases shows a steady frequency of major accident events and no reduction in their level of severity. Similarly, insurance broker Marsh[4] examined insurance claims for property damage losses in the hydrocarbon industry between 1974 and 2013, and found no clear reduction since 1994.

Statistics from the country performance project of the International Regulator’s Forum (IRF) for Global Offshore Safety also supports this picture. Fatalities per million hours worked from 2008 to 2012 do not show a unified trend towards global improved performance.

Global-local challenge
The findings of more than 20 major inquiries following the 2010 Macondo incident are summarised in a newly published DNV GL report.[5] “The data points to the need to identify new ways to reduce major accident hazards,” Bennett said. “Social, political and economic frameworks for regulation vary considerably worldwide and may evolve in different directions,” he added. “Therefore, oil and gas companies operating globally must not only increase oversight where requirements are less developed, but also proactively align global operating standards and procedures towards unique local regulatory changes.” In its ‘Regulatory Outlook’ report, DNV GL assesses offshore regulatory frameworks in Mexico, Brazil, the EU, Angola and Australia. It also covers the Arctic from an international regulatory perspective, as well as nationally for Alaska (US), Canada, Greenland, Norway and Russia.

“The report discusses possible scenarios for regulatory developments in these jurisdictions. The company mapped these scenarios to its safety model[6] to identify key factors that could help reduce major accident hazards (MAHs) in each region.

The DNV GL safety model incorporates six interconnecting performance levers and dependencies which, if recognised, should lessen the probability of a major accident occurring. In no particular sequence, these are:

  • Existence of performance-based regulations and independent verification
  • Clear roles and responsibilities for safety, including ensuring that stakeholders share common goals
  • Information sharing from monitoring safety performance
  • Advanced barrier management that includes mitigating as well as preventive barriers
  • Stakeholder access to a tool that records up-to-date risk identification and provides a complete view of risk exposures for an asset, asset cluster, project or company
  • Interaction between people, technology and the organisation.

“We cannot say with certainty how national or regional regimes will develop, but we have been able to present a range of possible future developments and our views on what an effective offshore safety regime should look like,” Bennett said.

A global safety scenario, where each major accident is reviewed and lessons learned by all regulators and industry players, includes many elements of DNV GL’s preferred approach. This scenario also envisages large fines for MAHs, and harmonisation of HSE regimes to reduce compliance costs and administration.

Gauging the path of regulation
Four fundamental scenarios for the development of regulatory regimes are analysed in DNV GL’s new Regulatory Outlook report.

  • Global safety: Each major accident in the industry is reviewed and learned from globally by both industry players and regulators.
  • New moral imperative: Governments recognise society's unwillingness to tolerate major accidents, so operators' responsibility for safety is increased.
  • Operators rule: Governments are reluctant to improve their regulatory capability, and rely on operators’ global experience.
  • Local safety: Regulators focus on improving their own safety regimes.

These scenarios correspond to varying degrees with current regulatory regimes and are not intended as accurate illustrations of the future. However, they are a useful starting point for discussing how safety regimes should develop, particularly when used in conjunction with DNV GL’s safety model.

Download your complimentary copy of Regulatory Outlook.

References[1] DNV GL internal study on occupational HSE performance, data based on the annual reports and sustainability reports of key companies, 2014
[2] ‘Offshore major accident safety: Is SEMS enough?’, Pitblado R and Bjerager P; DNV GL. OTC-130TC-P-412-OCT, 2013
[3] ‘Accident epidemiology and the RMP rule: Learning from a decade of accident history data for the US chemical industry’, Kleindorfer PR; Lowe RA; Rosenthal I; University of Pennsylvania, Wharton Business School, Final report for cooperative agreement; R-83033301, 2007
[4] ‘The 100 Largest Losses – 1974-2013, 23rd edition’, Marsh & McLennan Companies, 2014
[5]'Summary of Macondo inquiries', DNV GL, 2015
[6] ‘Enhancing offshore safety and environmental performance’, DNV GL, 2013. An updated version of the DNV GL safety model in this publication is being published in 2015 in the DNV GL report ‘Offshore safety – initiatives to improve major accident hazard performance’.