Risk management and Emergency preparedness in the Oil and Gas Industry

The 1982 disaster on the Ocean Ranger drilling rig revealed significant flaws in the offshore industry's regulation by the government and the private sector in Canada. The tragedy claimed the lives of 84 people and the rig itself, exposing the inadequacy of emergency training, flawed rig design, and poorly enforced safety regulations.

How can companies in this industry effectively manage risks and prepare for emergencies using the latest best practices and digital solutions to operate more safely and efficiently?

Canada is a significant global oil and natural gas producer, operating in 12 out of 13 provinces and territories. It ranks fourth in oil and sixth in natural gas production globally, contributing significantly to the country's GDP and providing many job opportunities. However, this industry is also inherently risky, with hazards ranging from oil spills to fires and explosions. Disasters such as the Ocean Ranger Drilling Rig disaster in 1982 or the Deepwater Horizon oil spill in 2010 are sobering reminders of the hazards associated with oil and gas production.

Effective management of risk and emergency preparedness is crucial for the safe and sustainable operation of oil and gas companies. In recent years, digital solutions have become a critical tool, providing new methods for data collection and analysis, real-time monitoring of operations, and prompt responses to emergencies in this industry. 

Regulatory Compliance

Ensuring compliance with regulatory requirements for risk management and emergency preparedness is an imperative in this industry as it can result in severe consequences such as hefty penalties, harm to reputation, and heightened risks of incidents. Utilizing digital regulatory monitoring tools can help stay up-to-date with constantly evolving regulatory texts and ensure compliance.

Here is a couple of prevalent regulations that apply to this industry:

• 29 CFR 1910.119 of the Occupational Safety and Health Administration (OSHA): Regulation for the management of highly hazardous chemicals, including those used in the oil and gas industry. It requires employers to develop and implement a Process Safety Management (PSM) program that includes elements such as process hazard analysis, operating procedures, and employee training.
• 40 CFR Part 112  of the Environmental Protection Agency (EPA)  on Spill Prevention, Control, and Countermeasure (SPCC) rule. This rule requires facilities that store, handle, or transport oil in quantities greater than 1,320 gallons to develop and implement an SPCC plan. The plan must include measures to prevent oil spills, as well as procedures for responding to spills if they occur.

In addition to these regulations, the oil and gas industry in Canada is also subject to other federal and state requirements related to risk management and emergency preparedness. 

• The Canada Labour Code, Part II : Responsibilities of employers and employees with respect to occupational health and safety, including the development of hazard prevention programs and emergency procedures.
• The National Energy Board Onshore Pipeline Regulations : Apply to the construction, operation, and maintenance of onshore pipelines in Canada, including requirements for risk assessment, emergency response planning, and incident reporting.
• The Canada Oil and Gas Operations Act : Regulates offshore oil and gas operations in Canada and includes provisions related to safety and environmental protection, including requirements for emergency response planning and reporting.
• The Transportation of Dangerous Goods Act : A federal legislation sets out requirements for the safe transportation of dangerous goods by road, rail, air, and water, including the preparation of emergency response plans and training of personnel.

Risk management in the industry

Risk assessment

In this industry, identifying and evaluating potential risks associated with operations is decisive. To improve the risk assessment process, digital templates are available and can be gamechanger. The first step is identifying potential risks, such as natural disasters, operational failures, human errors, and security breaches. Next, each risk is evaluated based on likelihood of occurrence and potential impact on the operations, people, and environment. Methods like Failure Modes and Effects Analysis (FMEA) and Hazard and Operability (HAZOP) study are used to assess the risk, with digital formats now available for FMEA method.

Risk Mitigation

There are several strategies that can be used to reduce the likelihood and impact of potential hazards. These strategies include engineering controls, administrative controls, and personal protective equipment.

• Engineering controls involve designing equipment and processes in a way that reduces the likelihood of hazards occurring. For example, using pressure relief valves to prevent over-pressurization in a pipeline. 
• Administrative controls involve procedures and policies that help to reduce exposure to hazards, such as regular safety inspections and training programs. 
• Personal protective equipment (PPE) includes gear such as hard hats, safety glasses, and respirators that provide a physical barrier between the worker and the hazard.

Emergency Preparedness

Emergency Preparedness Planning

Emergency preparedness planning involves identifying potential hazards, assessing risks, and developing plans and procedures to prevent and respond to incidents. Companies must develop comprehensive Emergency Response Plans (ERPs) that outline the steps to be taken in the event of an emergency, including notification procedures, evacuation plans, and medical treatment protocols. Each Canadian province has its own specific ERPs directives and requirements that must be followed, such as the Directive 071: Emergency Preparedness and Response of the Alberta Energy Regulator or the Emergency Response Plan Requirements (INDB 2018-01) of the British Columbia Oil and Gas Commission.

The purpose of an ERP is to enable rapid, coordinated, and effective responses to emergencies. ERPs are essential for minimizing the impact of an incident, protecting personnel, and limiting damage to equipment and facilities. ERPs must be updated regularly, and employees should be trained on emergency procedures to ensure that they are prepared to respond in a crisis.

Emergency Response

The Deepwater Horizon oil spill  in 2010 serves as a stark reminder of the devastating consequences that can result from a lack of emergency preparedness. This incident claimed 11 lives and resulted in the largest marine oil spill in history. There was a lack of a comprehensive emergency response plan. BP's Emergency Response Plan states that a worst-case scenario could result in a spill of 250,000 barrels per day, however the response team was not equipped to handle the scale of the spill, plus a staggering confusion over roles and responsibilities, and inadequate training of personnel. 

In the event of an emergency, response teams must be able to act quickly and effectively to prevent the incident from escalating. The American Petroleum Institute's Recommended Practice 75 (API RP 75) requires companies to develop and maintain emergency response plans that include procedures for notification, investigation, emergency shutdown, evacuation, and medical treatment. The latest edition of this standard (Recommended Practice for a Safety and Environmental Management System for Offshore Operations and Assets) expands the reach of SEMS globally, to contractors and sub-contractors, as well as acknowledges advancements in technology and advancements to improve risk management for offshore oil and gas operations.

Technologies such as digital monitoring tools, predictive analytics, and advanced sensors are increasingly being used to enhance emergency preparedness and response in this industry. Besides technologies, response teams should be well-equipped, adequately trained, and able to coordinate with other response organizations to ensure a timely and effective response to the different types of emergencies (fires, explosions, spills, and natural disasters).

Incident investigation

Incident investigation is a necessary component of risk management in the oil and gas industry. When incidents occur, it is important to conduct a thorough investigation to determine the root causes and develop corrective actions to prevent similar incidents from happening in the future. In recent years, the industry has increasingly turned to digital solutions to streamline and improve the incident investigation process. These digital solutions can help to centralize data, making it easier to conduct a comprehensive analysis of the incident.

SaaS-based digital solutions such as Integrated Risk Management, Risk prevention Plan (RPP), Occupational Risk Assessment can offer significant benefits in emergency preparedness and incident investigation. By using a cloud-based platform, data from different sources can be collected and analyzed in one place, allowing for a more comprehensive and accurate understanding of the incident. This can help investigators to identify patterns and trends that might not be immediately apparent when analyzing data from multiple sources manually.

Additionally, SaaS-based solutions can offer powerful analytics tools that can help investigators to quickly identify the root causes of incidents. For example, advanced analytics tools can be used to perform a causal analysis, which can help to determine the underlying factors that contributed to the incident. By providing a more detailed understanding of the incident, these tools can help to identify the most effective corrective actions to prevent similar incidents in the future.

Effective risk management and emergency preparedness are fundamental for the safety of workers and the environment in this industry. Companies must develop and implement risk assessment and mitigation strategies, emergency response plans, and incident investigation processes. Compliance with regulatory requirements is also essential. Fortunately, digital solutions can now streamline these processes and enable centralized data analysis, leading to informed decision-making and improved safety outcomes.

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