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PSA head Magne Ognedal: principal signals for 2011

A number of serious accidents and near misses in the petroleum industry have boosted interest in safety and risk reduction efforts.

“The position is challenging for both oil companies and suppliers,” says Magne Ognedal, director-general of the PSA.

At an information meeting in Stavanger on 10 February, he raised some of the key challenges facing the petroleum industry in 2011.

See the interview with Mr Ognedal on web TV: “Clear expectations for the industry in 2011” (In Norwegian)

The meeting was held to sum up the year 2010 from a safety perspective, and to present the PSA’s main priorities for 2011.

In addition, the PSA unveiled the latest edition of Safety – Status and Signals, its annual report in a magazine format.

One for all and all for one
Another serious petroleum accident in Norway or internationally will hit not only the company concerned but also the whole industry’s reputation, says PSA directorgeneral Magne Ognedal. “Players must accept and display greater responsibility than in the past.”

The Deepwater Horizon rig exploded in the US sector of the Gulf of Mexico on 20 April last year. It took more than three months before operator BP succeeded in capping the subsequent blowout.

As a result, 2010 will always be remembered as the “Deepwater year”. This incident has yielded new content for and awareness of the major accident concept.

“Very great attention is being paid worldwide to safety in the petroleum sector after the US disaster,” observes Mr Ognedal.

“That’s positive in many ways, because it can help to sharpen and enhance safety for people, the environment and material assets.”

He notes that the position is very challenging for both oil companies and the supplies industry, pointing out that each player is and must be responsible for safety in their own operations.

“However, a climate has now been created in the petroleum sector where a company unleashing a serious incident will hurt not only itself and operations in one country, but also a whole industry – collectively and internationally. The players will have to relate to this in the future.”

The most interesting question in this context is how they are to tackle that position, Mr Ognedal points out.
“Prevention, learning, expertise and continuous improvement – these four areas contain some of the most important keys for avoiding major accidents.”

Prevention is fundamental to good safety, he notes. “This concept embraces all systems and mechanisms required to maintain good control and avoid accidents.

“Understanding risk is central here. We must all recognise fi rst and foremost that the petroleum industry involves risk – just like any other activity.”

However, accepting risk does not mean accepting accidents, he emphasises. “Quite the contrary. But we must constantly remind ourselves that accidents have happened – and can happen again.

“The risk of a major accident is present, in Norway and in all other nations with an oil and gas industry. This means that incidents will occur.

“Risk must accordingly be managed, with clear management responsibility, at every level and in every company which participates in the industry.”

Preventive measures can be a challenge, Mr Ognedal concedes, because they require that action is taken – often at a cost – without a disaster or other accident having occurred.

“However, history off ers many examples where extensive measures are adopted after disasters. Companies in the petroleum business should consciously ask whether it would not be far better to have an established system which means that preventive measures based on learning, new technology and so forth are implemented, in order to be able to prevent accidents and disasters.”

Operators in Norway have an independent duty to work responsibly, Mr Ognedal notes. That assumes not least a commitment to learning.

“I take it for granted that company managements and all players in the business keep continuously updated about incidents in Norway, the major accident on Australia’s Montara field in 2009, Deepwater Horizon and so forth – and ensure that the key lessons are incorporated in their own organisation,” he says.

But how, he asks, should one learn from accidents or apply such knowledge to reduce the probability that new incidents will occur?

“One thing’s certain, though – unless government, companies and the unions all sit down and study, assess and analyse the reasons for a disaster, we have no chance of learning anything.”

However, theoretical understanding is not enough, Mr Ognedal maintains. Lessons must be incorporated in management’s focus on and understanding of risk, in governing documents, training, routines, procedures and compliance.

“They must remain with the companies through restructurings, changes of ownership and mergers, and must be incorporated in regulations and government follow-up,” he notes.

A project team has been set up by the PSA to help it learn from and see connections between Deepwater Horizon, the Montara event and other relevant incidents. Its overall goal has been to assess experience gained from and investigations conducted into major accidents so that relevant measures can be instituted and contribute to progress and improvement on the NCS.

“Because it’s indisputable that a major accident can also occur here, even though safety in Norway must generally be regarded as good,” Mr Ognedal observes.

The companies need expertise and the ability to manage such knowledge in order to operate safely, he adds.

“Statoil has pursued major reorganisations in Norway in recent years after its merger with Hydro Oil & Energy, and has had to deal with the impact of many experienced employees retiring early.

“The PSA assumes that the company is managing this process in a good way, but it’s worth underlining once again the need to plug knowledge gaps and ensure a well-functioning organisation with competent personnel at every level.”

He points out that good safety calls for ability and experience, close collaboration and the involvement of the necessary expertise throughout, both on land and off shore.

“That’s particularly important in connection with drilling and well operations, including on the exploration side. Managing demanding drilling work in a good and safe way is a company responsibility.

Prestige or lines on an organisation chart must carry insignifi cant weight in such a context.”

Continous improvement
This is a fundamental principle for the petroleum industry, Mr Ognedal emphasises. The companies undertake to apply the best available technology, best practice and new knowledge.

“Although the principle of continuous improvement is well known and fi rmly established in the business, this doesn’t mean it always gets observed.

“Given the challenges facing the industry, it’s necessary to remember that running a company in accordance with the continuous improvement principle is a management responsibility.

“We must all continuously secure information and knowledge about conditions relevant to the industry of which we’re a part.

“On the basis of what we then know – at any given time and in every context – we must then drive developments forward so that the petroleum industry becomes ever safer and more robust.

“It must be regarded as a failure when a company repeats a mistake which could have been avoided by giving priority to learning from errors and experience of its own and of others.” Magne Ognedal, director-general of the PSA.

This article (except the introduction) was published in the publication "Safety - status and signals 2010-2011"