Reducing overall risk

Fire Boat response crews battle the blazing remnants of the offshore oil rig Deepwater Horizon April 21, 2010.
Photo courtesy of US Coast Guard

Society's Tolerance of industrial accidents has dropped dramatically. As incidents increasingly come under public scrutiny, even small-scale issues have the potential to diminish a company's brand value.

As the appetite for risk has fallen, oil and gas operators have had to employ increasingly sophisticated monitoring and control systems to provide multiple levels of safeguards for their wells, pipelines, and production facilities. They have also had to implement much more complex methods for managing processes.

Yet many firms lack visibility at the field or enterprise level because information relating to well production, barrier equipment, and design is held in different departments in various formats and under different timelines. These silos make it difficult for management teams to identify problems, make informed decisions, and take remedial action. They also present a major barrier to achieving a consistent approach to risk management and focusing resources accordingly.

Without an integrated source of well integrity data or a uniform method of analyzing that data, it is especially difficult for oil and gas companies to manage effectively the human and organizational aspects of risk. Major incidents in recent years have served to highlight how a lack of clear lines of accountability and communication, as well as inconsistent decision-making, result in early warning signs being missed before disaster strikes.

Improvements in safety

Despite a steady increase in activity levels, personal safety and industrial process incident rates have continued to be driven lower across the oil and gas sector. In 2010, a year that saw safety issues related to oil and gas exploration dominating headlines around the world, the rate of fatalities was the lowest on record. This finding was based on an analysis of 3,411 million work-hours of data in 102 countries by the International Association of Oil & Gas Producers (OGP), which has been publishing safety data since 1985.

The OGP's incident reporting system covers worldwide exploration and production operations, both onshore and offshore, and includes incidents involving both member companies and their contractor employees, who between them account for more than 70% of the world's oil production and over half of its gas.

The key performance indicators (KPIs) OGP uses to benchmark global safety performance are:

• Total recordable injury rate (TRIR) — the number of recordable injuries per 1,000,000 hours worked
• Fatal accident rate (FAR) — the number of company/contractor fatalities per 100 million hours worked
• Fatal incident rate (FIR) — the number of fatal incidents per 100 million hours worked
• Lost-time injury frequency (LTIF) — the number of lost time injuries (fatalities + lost work-day cases) incidents per 1,000,000 hours worked

According to OGP's latest available figures, the overall TRIR for the offshore and onshore sector dropped from 3.63 in 2002, to 1.45 in 2011, while FAR decreased from 4.81 to 1.88. FIR also declined from 3.87 in 2002 to 1.45 in 2011, with LTIF dropping from 1.09 to 0.43 over the same period.

Serious lapses

Despite the continuous improvements in personal safety, the oil and gas industry has had to deal with several process safety lapses in recent years. The most significant of these was the May 2010 Macondo (Deepwater Horizon) incident that happened in the Gulf of Mexico, given that previously, the oil and gas industry had drilled more than 14,000 deepwater wells around the world without major incident.

Within months of Macondo, the OGP established the Global Industry Response Group (GIRG), which is overseeing industry efforts to determine what can be done on an international scale to improve well incident prevention, intervention, and response capabilities. The GIRG has determined that more reliable well safety relied on renewed efforts in four key areas:

• Creation of an industry-wide well control incident database
• Assessment of blow-out-preventer reliability and potential improvements to this equipment
• Improved training and competences and more attention paid to human factors
• The development and implementation of key international standards pertaining to well design and well operations management

The OGP's Wells Expert Committee (WEC) is helping to drive these improvements, and aims to develop standards for global implementation. Meanwhile, the OGP has also produced a report detailing a series of new recommended best practices and a number of KPIs aimed at preventing major incidents.

Since major incidents rarely result from a single cause but rather by multiple failures that coincide and collectively result in an exceptional event with severe consequences, OGP uses a "Swiss cheese" model — so called because the object is to prevent any "holes" in safety preparedness from lining up. Similarly, the American Petroleum Institute (API) has published recommended practices for process safety performance indicators.

Complexity and confirmation bias

Benchmarking by using KPIs is critical given that every large organization is, by its very nature, complex. Moreover, different levels of understanding and accountability will exist within any large organization, making it a challenging task to ensure process safety and effective risk management across all aspects of its business. Indeed, even the best designed, engineered, maintained, and operated assets and facilities are still vulnerable to human failings and organizational complexity.

One recognized example of the latter is the asset-based organization model, which can lead to conflicts of interest. Under the asset model, there will be an engineer or someone responsible for managing a group of wells and who must balance good practice against production targets. If that person encounters a situation where he or she has to weigh safety concerns against production or financial targets, that individual may be more likely not to elevate concerns when compared to engineers that are only responsible for safety.

Another example of how process safety can be undermined by human error is where engineers and specialists working in groups have the tendency to normalize risk because they believe that a certain problem has already been solved or because they have collectively come to understand the risk within an acceptable limit. This can be the case where a test has been conducted thousands of times, an abnormal reading is returned on a single occasion, and is therefore more likely to be viewed as an anomaly. Whereas, if that test was being conducted for the first time and an abnormal result were returned, it would be cause for major concern.

This phenomenon is also known as "conformation bias" and is addressed in detail by Professor Andrew Hopkins in his book, Disastrous Decisions, which examines the human and organizational factors that contributed to the Macondo incident.

Constant risk

The renewed emphasis on process safety and work in the area of asset integrity has highlighted the importance of safety considerations through the lifecycle of an oil and gas asset, as well as for every phase of a major project.

Oil and gas firms typically operate hundreds or even thousands of wells simultaneously. Furthermore, the integrity of pipelines, process facilities and well barrier components is continuously threatened by the corrosive nature of the well fluids. Scaling, corrosion, and failed well barrier equipment are all common issues that call for great vigilance to minimize the risk of leakage.

As such, information on the status of safety-critical well barrier components must be completely dependable, and the components must operate as reliably as possible should a problem arise at any given point in time.

Yet many firms continue to rely on handover documentation and a patchwork of bespoke production management databases and spreadsheets to manage data, such as annulus pressure readings, valve and seal leak tests, and well logs. Without visibility at field or enterprise level, it is almost impossible to manage the huge volume of operating data necessary to ensure an optimum safe condition is maintained for the whole design life.

What is needed is a systematic management system, especially since it can take a long time to gather statistically relevant data. Industry bodies such as the OGP now recommend that systems be implemented for consistent collection and analysis of data and related information on more than just major incidents.

One emerging model is the well integrity management system (WIMS), which align all elements including the business process, handover, data management, and risk management. As a sub-set of asset integrity management, WIMS exist both at a documentation and software level, and combine key well operating and production data within a framework for decision-making, management processes, and organizational structure.

A holistic approach

An advanced WIMS can interface to a wide range of third-party databases to collate the necessary information for analysis and identification of wells shifting outside critical safe operating limits, for the assessment of equipment reliability and well risk, and for real-time estimation of corrosion in the well tubing. Data can also be acquired directly via tablet PCs in the field, entered manually, or via spreadsheet loader — and synchronized instantly with the central database to provide not only a comprehensive view, but also a single source of truth that promotes understanding of operating well data across the organization.

Documenting institutional well integrity management into a software product and working system can have major benefits for a large company when combined with a robust approach to knowledge management and placed in the hands of trained and experienced personnel. It ensures consistency of data, which is vital for oil and gas firms with global operations that need to be confident that the right people have access to the right information at the right time for rapid, informed, and consistent decision-making.

It also ensures consistency in terms of knowledge management and approaches to well integrity. This is essential given that large oil and gas firms tend to have a high turnover staff internally, as those tasked with managing well integrity are often moved to other posts within the firm after a couple of years.

With operating well data consolidated within a single user interface, the addition of smart functionality enables operators to analyze the well condition automatically in real time and generate concise reports customized to their individual requirements. This ensures they have the specific ‘tools' needed to satisfy local regulations, proactively identify potential problems, and plan test schedules and repairs. They can perform risk evaluation against complex criteria, for example, assessing tubing condition based on varying production conditions or calculating maximum allowable annulus surface pressure (MAASP) values in real time.

Automating for operational efficiency

Spills and leaks through loss of well integrity can harm people, the environment and a firm's reputation. In addition to the severe curtailment to production and cost of shut-in, there is also the cost of restitution and remediation. The aging of wells in many parts of the world tends to result in increasing the risk of leaks, particularly related to loss of integrity in the outer annuli of the well.

WIMS provides decision-makers with the intelligence they need to strike the right balance in today's risk-averse environment. They can make more informed decisions in terms of carrying out maintenance and repairs in a timely fashion, based upon a risk ranking strategy that not only ensures safety, but prioritizes resources in an optimum way to lower the overall risk level that it is carrying. It also makes people more efficient, empowering them with the tools and oversight to identify anomalies before they become incidents.

At the same time, WIMS can help address the human and organizational factors surrounding well integrity, by quickly focusing staff attention on problem areas of an asset, and by providing the ability to manage by exception. Given the deluge of data faced by oil and gas operators today, a system managing by exception and automatically identifying problems, issuing email alerts and risk-ranking wells that fail to meet safe operational limits, can make a huge difference.

Crucially, WIMS can ensure that the engineering/safety function operates independent of commercial considerations, so that design and risk decisions are free from the complexity of meeting financial targets. Using WIMS to manage the vast reserves of well integrity data available can help oil and gas firms negate the human and organizational factors that might otherwise prevent them from identifying risk areas within the well before they become incidents that erode brand value.

About the authors

Internationally-renowned engineer, Dr. Liane Smith (FREng) is the director and founder of Wood Group Intetech. Having joined the company from BP last year, Kyle Volf heads up Wood Group Intetech's operations in North America. Wood Group Intetech is an asset-integrity company and a pioneer in corrosion modelling and well integrity management services and solutions. Intetech has recently been acquired by Wood Group and will be known as Wood Group Intetech, part of Wood Group Kenny.