Difficult times and straitened finances have determined the agenda for Norway’s petroleum sector in recent years. The industry is working tenaciously to adapt, both in operating an aging, maintenance-intensive NCS and in reorienting towards simpler and cheaper developments for the future, But what place does safety occupy when cost considerations dominate developments? Is Norway at a crossroads which challenges its ambition of continuous improvement and continued risk reductions on the NCS?
Is safety at a crossroads?
The oil and gas industry is under pressure – and that also applies to safety,” says Finn Carlsen, director of professional competence at the PSA. “These challenges will affect the sector both in 2016 and beyond.”
He points out that a large and growing part of Norway’s offshore sector has seen profits hit over time by the decline in production from old fields in combination with high costs.
“Global overproduction of petroleum, leading to persistently low oil prices, now presents a further challenge to the industry. This has a big impact on the NCS, which is to a great extent in a late-life phase.
“The sector is under pressure to keep production going as long as possible without compromising on the demand for prudent operation.”
Carlsen notes that roughly half the facilities on the NCS have exceeded their original design life – and have been given an extension by the PSA. About 20 more are due to reach that stage over the next six-seven years.
“Overall, this picture means preventive and corrective maintenance is increasing sharply. The companies must ensure that their facilities are in an acceptable condition and meet regulatory requirements throughout their working lives.
“That’s very labour- and cost-intensive, but it’s important to continuing prioritising modifications even when oil prices are depressed.”
He explains that the PSA devotes much time and resources to following up maintenance management by the companies, with the main emphasis on safety-critical work.
“This is pursued in part through our main priority on safe late life. In the overall picture, today’s challenge is to preserve the infrastructure on the NCS for the future.
“And that involves avoiding conditions of the kind we’ve seen on the UK continental shelf. Several fields there have had to shut down early because of inadequate maintenance and a failure to prioritise necessary modifications early enough.”
Carlsen points out that the industry is also under pressure in terms of future development costs, and says established boundaries are being challenged.
“This poses both opportunities and threats. We see companies turning to simpler facilities, such as multifunctional vessels or platforms without living quarters.
“Challenges are also being posed for the interface between petroleum and maritime regulations as players seek creative solutions they think will cost less.
“That’s not negative in itself, but raises issues which mean we must assess and reconsider interfaces and consequences. Some of these – such as regulation of simpler facilities – are already being addressed, and others will follow.”
Norway’s performance-based (functional) regulatory regime sets overall demands for the level of safety required, Carlsen says. The companies are largely allowed to determine how to reach it.
“In arriving at that how, purposeful efforts are needed to adapt Norway’s petroleum sector to the big challenges it will face in the future. At the same time, we must maintain the requirement for enhanced safety.
“Specifically, new solutions and simpler facilities will mean that the industry must develop concrete norms and standards tailored to the requirements involved.
“Standardisation is high on our strategic agenda, we participate actively in this work, and we follow it up through dialogue with the companies and the organisations.”
That includes emphasising how important it is that the companies give priority to work on common norms and standards even at a time of cuts and downsizing.
Carlsen stresses that efficiency improvements can also have positive effects for risk and safety. “People in the industry are exploring many possibilities and assessing the business in the light of new financial conditions.
“We also initiated a documentation project in 2015 with the aim of helping to reduce the need for documentation in this sector.
“Over time, we’ve seen many companies developing a culture where new documents and procedures are added to the existing load. This can become unmanageable and inappropriate.
“Our project is just one example of the way the industry can peel away unnecessary work processes and concentrate harder on managing major accident risk. Simplicity is often more robust than complexity.”
Developments and changes in Norway’s petroleum sector have occurred very rapidly, Carlsen observes, and says the pace has been worrying.
“We must ask whether things are moving so fast that the industry as a whole can’t keep up. Ensuring that you don’t lag behind presents a challenge.
“The companies are in a hurry to adjust to low oil prices, an aging NCS and stringent cost demands. Such pressures could create an expectation of rapid – perhaps too rapid – decisions from us.
“As a regulator, we must consciously refrain from making choices which later prove inadequate. That’s a dilemma we have to handle together with the companies.”
He points out that the directions chosen must be appropriate both in the near term and for the long run: “In other words, tomorrow will be shaped today.
“That’s a truth the whole industry must bear in mind at the present time. Taking short-term approaches will bring its own punishment.”
Carlsen says that tripartite collaboration between companies, unions and government will be extremely important in the time to come.
“The industry has a particular responsibility to contribute to such cooperation, and to use established arenas such as the Safety and Regulatory Fora for discussing and developing solutions.
“But the safety delegate service should be included and play an active role in these processes. And employee representatives in the companies have an important function.
“They can help to defend the most important values, and they can apply the emergency brake if they see the most fundamental consideration – major accident risk – coming under threat.”
He emphasises that mechanisms which can prevent major accidents in the industry must have the highest priority for all sides in the time to come.
“Times like the present put the industry to the test,” Carlsen says. “It must build on the experience and expertise developed jointly by all sides.
“In that way, Norway can shape a robust and long-term sector with an even higher level of safety than at present.”
He stresses that the PSA will not accept conditions where the petroleum industry fails to achieve continuous improvement.
“That means the level of risk must be getting steadily better, and that the companies must and will be able to deal with risk in their activities every single day.
“Norway will continue to develop an industry capable of learning and oriented towards avoiding major accidents. The ambition that the Norwegian petroleum sector should be the world leader for HSE also remains unchanged.
“These goals are independent of oil prices – and will remain in place regardless of the choices facing the industry over its future direction.”