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Safety paradoxes in the wake of Deepwater Horizon

Oil companies must account for safety and emergency preparedness in their value creation, energy strategy adviser Hans Henrik Ramm told the safety lunch at the ONS oil show in Stavanger.

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Confronting safety paradoxes in the oil and gas industry in the wake of the Deepwater Horizon disaster

Hans Henrik Ramm
has been an important contributor of new thinking within the petroleum industry over the course of many years. He is the founder and head of Ramm Energy Partner and is also the man behind the email-based commentary service “Behind the News”, where he shares his viewpoints on important topics pertaining to the industry.

Ramm has previously worked as an advisor for several companies within the industry. He has also been a journalist and editor and has written several books.

Read the whole speech here

In his view, safety and preparedness should be recognised on a par with other returns. He proposed that companies include a new bottom line in their accounts: the value of accidents prevented.

 “This would also make the dialogue about cost efficiency of safety standards more constructive”, he claimed. “The debate needs to focus more on these expenses as investment in saved lives.”

Ramm was the main speaker at the fourth biennial safety lunch, held by the Petroleum Safety Authority Norway in cooperation with ONS on 30 August.

His speech to the lunch brought together a number of safety paradoxes in the petroleum industry following the 2010 Deepwater Horizon disaster in the Gulf of Mexico.

A key consideration is the “learning paradox”, Ramm noted. “After every major accident we see that we actually already knew how to do things the right way. But something still went wrong.”

He related this to the “black swan” paradox – unforeseen events causing great damage, where people seek explanations which make them seem less arbitrary than they actually are.

The path from small and insignificant errors to a “black swan” is difficult for individuals to grasp. Ramm noted how lack of time and inadequate management helped to cover over these small errors which nobody reflected over, but which could ultimately lead to a major accident.

He also addressed paradoxes related to technology. Although the industry has demonstrated that technological miracles are possible, little innovation happens with safety and preparedness.

“Because accidents, and in particular very large accidents, are very rare, the market for specialised products that could avoid and mitigate accidents is too small to justify much effort from suppliers,” he maintained.

“Hence, collective action by many peer companies as well as authorities is required – and it is possible.”

Ramm highlighted the way cluster mechanisms could also be used to develop knowledge, technology and services in the safety and preparedness area.

Few cluster companies exist here today, he noted, and said that the reason was probably the same – the black swan is too elusive to provide incentives for oil companies to take strong action as demanding customers.

“The reward for solving the challenge is large, but not without an even playing field that ensures the same disadvantages and advantages for all,” said Ramm.

“This means that the safety regulators will have to cooperate about creating this playing field. Since implementation will concern all levels, also tripartite cooperation will be more important.”

Read the whole speech:
Confronting safety paradoxes in the oil and gas industry in the wake of the Deepwater Horizon disaster