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Operational Risks in Today’s Oil and Gas Industry
Maria SaraceniBarrister, Francis Burt ChambersFebruary 2013
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Risk Overview• Geopolitical / terrorism / insurgent attacks• Geographic• Geological• Asset Management• Information Technology overload• Price / Cost• Shareholder expectations• Supply & demand• Ageing Infrastructure• Environmental• Transparency Issues ( bribery, corruption)• Operational hazards (blowouts, spills, personal injury, etc.)• Relationships with stakeholders (investors, shareholders, governments, regulators, unions,
workforce, media, etc.)• Adverse weather conditions• Regulatory complexity• Workforce
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OSH Risks
• “ There is a need for a shared commitment by governments, regulators and industry to take meaningful steps to avoid incidents like Montara and Macondo in the future, and that this objective can only be achieved if they work together to promote ongoing improvement in skills development, competence and a culture of compliance. The recent international offshore petroleum regulators and operators summit also reaffirmed the critical role of an independent, well-resourced regulator to challenge industry to be rigorous in its operations, practices and prevention and mitigation techniques.”
Jane Cutler, NOPSEMA , March 2012
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OS & H
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OSH Aspects of Risk
• Improve overall risk perception• Develop pro-active safety performance lead indicators• More effective emergency management• Consistent regulatory framework• Asset integrity• Process Safety• Competency levels• Contractor engagement• Effectiveness of Safety Case Regime
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OSH aspects of risk (cont)• Occupational health (shift-work arrangements and health effects,
fatigue, stress, psychological well-being, physical stressors, exposure to flammable / poisonous chemicals e.g. Benzene, food quality, adequacy of accommodation, etc)
• Occupational safety (identifying hazards; assessing risks and making changes)
• Drug & alcohol testing• Manage process safety as an integrated and comprehensive
system• Process safety knowledge and expertise• Process safety culture• Safety culture• Safety leadership / senior management commitment
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OS & H“… it’s obvious how Chevron has lost months and billions of dollars.
On any normal project, workers pick up their safety glasses from the site store. There is usually a choice and workers take the best fit. Not on the Chevron project. The geniuses in the HSE department have decided workers are unable to make complex decisions about which safety glasses fit them. A “safety glasses technician” spends several minutes with each worker discussing the intricacies of various brands of glasses and which would best fit the particular shape of head owned by that particular worker.
It sounds like a Monty Python movie, but this is resource construction, the Chevron way...”
Chris Cain, WA Branch SecretaryFeb. 13, 2013Maritime Union of Australia
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Workforce Risks
“The lack of hair” in management boards of…oil and gas companies highlights the coming labour shortage in the sector.”Y. Hussain, 11 Dec 2012, Canada
ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration) has 5 areas:- General policies- Employment- Training- Conditions of work and life- Industrial relations
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Workforce Aspects of Risk• High performance work practices including empowering
employees with higher task autonomy• Reducing job titles and layers of management• Implementing extensive training programs• Higher employee selectivity• Performance-based pay• Implementing profit sharing.• Inadequate regional infrastructure (inc. airports) in WA• Increased demand for temporary accommodation• Diversity (women, indigenous , youth etc.)• Flexibility
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Workforce Aspects of Risk (cont)• Skills shortages• Job security• Outsourcing / contract labour• Poaching of competitors employees• Insufficient trained personnel• Lack of skilled engineers & technologists• Work / life balance• Ageing workforce• Working conditions (remuneration, pay equality ,fringe
benefits ,working hours, annual leave) • Long distance commuting workers• Shift-work arrangements
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Workforce Aspects of Risk (cont)• Workforce involvement• Employee / employer relations• Demographic Transformation ( from Baby Boomers to Gen-Y)• Employee migration (FIFO)• Substitution of technology for labour• Immigration policy
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Workforce Aspects of Risk (cont)
“There may be no other industry today that demands a more diverse set of human, political, mechanical and technological capabilities than the oil and gas exploration and production industry…(A)s the environment grows more diverse and unforgiving and the challenge is more complex, skilled human resources are ageing and growing scarce.’Meeting the Challenges of Today’s Oil and Gas exploration and production industry: IBM Consulting Services, 2004
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Industrial Relations Aspects of Risks
• Unionisation• Collective / green-field agreements• Permissible matters in collective agreements• Industrial action• Dispute resolution• Contract labour• Union right of entry
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Industrial Relations Aspects of Risk (cont)
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