The Application of Major HSE Guidelines Into the Business Operations of Oil and Gas Companies - Essay Example

Health, Safety and Environment (HSE) Understanding the Role of HSE in the Oil and Gas Industry Year Level, Section, Date Submitted In this paper, we examine the application of HSE in the oil and gas industry. As such, we begin the discussion with an overview of HSE both as a business principle and as a business strategy. Then, we look closely into HSE management systems by understanding some of its major standards and frameworks. We intend to enrich this part with a study of some cases of human accidents during business operations. Through this investigation, we aim to evaluate current HSE-related practices and recommend concrete plans for improvement. A. Overview of HSE Health, Safety, and Environment (HSE) in the oil and gas industry focuses on the development, implementation, evaluation, and improvement of HSE management systems. As Higgins and Associates (n.d.) define it, HSE focuses on, firstly, ensuring that business facilities are in compliance with health and safety standards; secondly, that all employees—from top management to contractual staff members—are actively promoting safety techniques and standards in their own departments within the company; and lastly, that the company builds strong relationship with external stakeholders such as state and federal agencies in order to manage the environmental, social, and cultural impacts of business operations. These definitions were also implicated by Fluor (2011) and FMC Technologies (2012) in their construction of primary business practices. As such, BMS Consultancy (2009) reiterates that, firstly, maintaining health and safety standards in business facilities in oil and gas companies involves the inspection of refinery, depot, and gasoline station facilities, and testing of chemicals that come from refinery operations for toxicity and explosion capacities. Secondly, promoting safety techniques and standards among the employees, according to E&P Forum (1994), this includes the management of safety accidents in all major and minor facilities (from refineries to retail stations), the management of physical and psychological health hazards relating to chemicals and blood borne pathogens, and the strengthening of emergency plans. Lastly, strong coordination with external stakeholders is targeted toward reinforcing the emergency response program of the company on oil spills, gas leakages, and fire situations. In this light, as Offshore Technology (2011) asserts, the adoption of HSE as a business principle is in line with the need for oil and gas companies to provide safe and reliable energy supply to the constantly evolving economic and geo-political landscape of nations. The vitality of their role in furthering the prosperity of nations has led to the use of HSE as a sustainable and effective business strategy. Therefore, as McCrossin (2002) underscores, HSE is applied in all business operations of oil and gas companies which include exploration and procurement of crude oil, natural gas processing, refining of crude oil into various petroleum products, pipeline transportation of petroleum liquids, marine transportation of products to depots, and distribution and marketing of fuels and lubricants. B. HSE Standards and Frameworks Since HSE is regarded as a business strategy in oil and gas companies, it is important to examine it as an overarching managerial system for major business operations. For this matter, we plan to take a close look at the basic frameworks of HSE in major global oil companies. 1. HSE in ExxonMobil ExxonMobil (n.d.) announces that management of safety, security, and health among the primary and secondary business units of ExxonMobil is implemented primarily through its OIMS Framework, which stands for Operations Integrity Management System. The inception of this framework was essentially influenced by the Valdez Oil Spill. Furthermore, ExxonMobil (n.d.) in its web article entitled “Operations Integrity Management System” notes that the framework establishes common worldwide expectations for addressing safety, security, health, environmental, and social risk in all facets of business operations through the 11 Elements of OIMS Framework. Such elements include: (1) ‘management leadership, commitment and accountability’ that identifies top management personnel as leaders in demonstrating the much-needed commitment to safety and operational integrity; (2) ‘risk assessment and management’ that designs and implements steps to mitigate potential hazards to personnel, facilities, the public and the environment; (3) ‘facilities design and construction’ which stresses that the construction of ExxonMobil’s facilities and equipment are in accordance to industry specifications, and that emergency, operations, and maintenance procedures are in place and are adequate; (4) ‘operations and maintenance’ which ensures that all equipment used in operations are properly tested, maintained, and inspected on a highly structured basis; (5) ‘incident investigation and analysis’ which allows the company to investigate and document incidents to make sure that such events do not happen again; and (6) ‘community awareness and emergency preparedness’ emphasizes on the creation of all appropriate steps to protect not only the company’s assets but most importantly the community where it operates. It is important to note that the formation of the OIMS Framework, as highlighted in another web entry entitled How We Operate, links back to ExxonMobil’s mission of reducing environmental impacts and resource utilization in the manufacture, distribution, use, and disposition of its major petroleum products. 2. HSE in BP Group BP Group (n.d.) believes that the commitment to providing both its internal and external stakeholders with a safe and secure working environment does not only depend on technically sound plant and equipment, but also on competent employees and active promotion of the HSE culture. In this regard, it can be said that central to BP Group’s operations is the management of the environmental and health impacts of its operations through the responsible use of natural resources and reduction of waste emissions. Similar to ExxonMobil’s OIMS Framework, BP Group adopts its own version of HSE framework entitled ‘getting HSSE right’ (gHSSEr). This provides the basis for development of HSE management systems on all business facilities. As stated by Coleman (2005), gHSSEr allows line managers to: (1) focus on critical HSE needs; (2) forecast and allocate resources; (3) set directions for HSE activities; and (4) deliver improved HSE performance. This guides in the fostering of a culture that puts premium on the protection of environment and internal employees. As such, BP Group leads, firstly, in the development of concrete plans to battle climate change; and secondly, in the improvement of energy efficiency and reduction of chemical emissions. BP Group (2005) believes that mitigating the environmental impacts of its primary business operations hinges on the creation and enhancement of emission trading systems through close partnership with key industry partners, academic institutions, and government agencies. 3. HSE in Royal Dutch Shell HSE in Royal Dutch Shell is viewed in relation to delivering business performance. As such, Shell (2010) aims to help meet the energy needs of society in ways that are economically, environmentally, and socially responsible. Managing the impact of Shell’s operations and projects on the environment and on society entails the upholding of a comprehensive set of business principles and rigorous standards. HSE is epitomized in Shell’s Goal Zero campaign which highlights the company’s focus on ensuring zero major casualties in all of its operations. In achieving Goal Zero, Shell (2011) provides 12 Life Saving Rules which bank on common do’s and don’ts when working. With all of these information in mind, it is worth noting that the centrality of HSE in all the major business operations of oil and gas companies arose as a need to not only to deliver business targets but to also maintain positive corporate identity and culture. In this sense, although it is easy to observe the different versions of HSE guidelines and policies in each company, it is worth noting that such standards conform to more general principles such as Hazard Identification Studies (HAZID) and Hazard and Operatability (HAZOP). Thus, the emphasis on hazard awareness in refinery and depot activities, as well as the upholding of a more responsible outlook toward safety and security can be linked back to HAZID and HAZOP. To concretize this assertion, we take a brief look at the principles of each. Bureau Veritas (n.d.) defines Hazard Identification Studies (HAZID) as a tool in locating potential areas for fatal and non-fatal injuries in existing site infrastructures, weather conditions, and geotechnical facilities. As such, HAZID is intended to help in the seamless execution of HSE deliveries through the integration of design and client personnel engineering disciplines and project management. As further noted by Gumilar (2009), HAZID is usually carried out by a team of competent engineers from a mixture of disciplines in order to check activities that can result in a hazard. As such, Gumilar (2009) defines hazard as any operation that could cause an event (release of toxic, flammable or explosive chemicals, and gases) that can harm either a personnel or the environment. Therefore, HAZID stresses on the identification all forms of hazards that could directly and indirectly affect the safe operation of a facility (Prism Consultants, 2010). On the other hand, Product Quality Research Institute (n.d.) defines Hazard Operatability (HAZOP) as a structured and systematic technique for system examination and risk management. According to the same author, HAZOP is often used as a technique for identifying potential hazards in a system and identifying operability problems that are likely to lead non-conforming products. Essentially, HAZOP is based on a theory that assumes that risk events are caused by deviations from design or operating intentions. This, as Rausand (2005) highlights, is based on the fact that HAZOP was initially developed to analyze chemical process systems. As AcuTech (n.d.) further discusses, HAZOP concentrates on identifying both hazards as well as operability problems. However, it is important to note that HAZOP deals more with operability problems that can create negative environmental and business impacts. Despite these principles, it is worth noting that the industry of oil and gas still ranks as one of the top incident-prone industries. As such, let us revisit some cases of safety accidents in oil and gas companies to pinpoint the causes as well as to recommend possible ways through which HSE frameworks can be revised. C. Accidents in Oil and Gas Companies 1. Overview of Fatal and Non-fatal Work Injuries According to Bureau of Labor and Statistics (2010), 120 fatal work injuries occurred in the refinery facilities of oil and gas companies in 2008. With this figure, the three most frequent fatal events in 2008 were transportation incidents (41 percent); contact with refinery objects and equipment (25 percent); and fires and explosions (15 percent). Under the transportation incidents, 75 percent involved highway incidents. On the other hand, under the fatalities associated with fires and explosions, 21 deaths were attributed to refinery explosions and depot crises. In this light, men were accounted for all these fatal work injuries. As further highlighted by the Bureau of Labor and Statistics (2010), the workers age 25 to 34 incurred the most fatal injuries, and majority of which were white non-Hispanic at 75 percent, while17 percent were Latinos. On the other hand, the number of recordable cases of non-fatal injuries and illnesses ranged between 2,400 in 2003 to 4,200 in 2007. This figure is higher than the 4.2 per 100 full-time workers in other industries. Men usually suffer from non-fatal injuries which are comprised of being struck by external objects (32 percent) or being hit by facility equipment (21 percent). Such observations on human casualties being caused primarily by being struck by facility equipment and external objects are also captured in the reports made by Health and Safety Executive (2011) and U.K. Offshore Oil and Gas Industry Association (2010). 2. Major Reasons Behind Injuries At this point, it is essential to delve further into the primary reasons behind the occurrence of such injuries. As stated by Lawyers and Settlements (n.d.) the major reasons why accidents happen in oil and gas facilities are carelessness or recklessness of the employees, delays in equipment maintenance or repair, failure in giving proper personnel training on proper working behavior and attitude, failure to effectively and efficiently communicate HSE guidelines, and improper placing of safety procedures. Injuries, therefore, can come in the forms of drilling accidents, pipeline transportation accidents, and storage problems that include chemical contamination. In addition to this, human casualties in major pipeline and refinery operations are attributed to their carelessness which, as often leads to major falls in oil. In this sense, failure to follow strict HSE guidelines such as wearing the proper work attire or conducting daily exercises before embarking on their activities often lead to fatal and non-fatal injuries. As reinforced by Lawyers and Settlements (n.d.), from 2000 to 2009, pipeline accidents accounted for 2554 significant accidents in the United States. Aside from this, drilling oil and gas well industries also have a rate of 4 cases of non-fatal injuries and illnesses per 100 equivalent full-time workers. Most of these illnesses are caused by toxic chemicals that are unconsciously taken in by the human body through physical contact or inhalation. As reported by BBC (2010), the Health and Safety Executive claims that need to actively promote HSE as a strong business culture among oil and gas companies through proper coordination among key business units and through the effective management of communication flow on risk assessment and safety procedures. 3. Improvements of HSE through the Years Since HSE is often adopted as part of the major business strategy of oil and gas companies, it is crucial to revisit some of the improvements made in terms of its planning and implementation. For this matter, we intend to discuss this part from a value-chain perspective. Firstly, at the refinery level, health and safety measures are top priorities in terms of the actual refinery process. As Shell (2010) highlighted, there is a need for proper coordination between the supply management team and the engineering team in ensuring that: firstly, that the mixing of crude oil with Shell’s additives is done accurately; secondly, that refinery equipment such as mixers and crude oil containers are in good working condition; and lastly, that Shell staff are properly trained on safety drills and on other standard operating procedures. This assertion is echoed in the report of BP Group (n.d.) in which it states that maintaining safe working conditions within their refinery and depot facilities hinges primarily on the proper training of its staff working responsibly not only for their safety but for the safety of other people as well. Secondly, the distribution part of the business is also subject to numerous HSE standards and guidelines. As a brief background, distribution for oil companies is comprised of two groups: barge ships and vessels and pipe lines. As further explained by Shell (2010), Barge ships are used when transporting the refined petroleum products to specific depots across islands while pipe lines are used to efficiently transport such petroleum products. In both of these mediums of transportation, HSE managers have developed strategies on how to cut down the costs of operation while at the same time ensure health and safety standards. The key to attaining these objectives, as ExxonMobil (n.d.) notes, lies on the proper coordination between the company’s contractual ‘road’ staff as well as its pipe engineers. From the perspective of petroleum transportation via barge ships, some of the ways to comply with HSE guidelines include enhancing the navigation system and scheduling of transportation dates in relation to weather conditions. On the other hand, from the perspective of pipe lines, it is crucial for engineers to maintain proper condition not just of the pipes but also of other internal equipments. Timely check-up and maintenance procedures are executed in this regard. Lastly, the retail part of the business is also guided by strong HSE rules. Retail, in this sense, pertains to the gasoline stations. As such, retail territory managers must be in the forefront in advocating safe working conditions, as Shell (2010) reiterates. This is done by: (1) ensuring that the gasoline station is free from any form of security threats; (2) all equipments such as fuel pump and storage facilities are working properly; and (3) retail crew are trained properly. These standards can also be observed in ExxonMobil (n.d.) as the company puts premium on the reinforcement of site HSE reminders through external and internal campaigns. Such efforts are focused on preventing fire hazards and acts of robbery and theft. In these three aspects, it must be pointed out that the developments in the implementation and enhancement of HSE guidelines focus on how the vertical and horizontal integration among the key business units can be attained. For one, safety within the distribution part of the company must not only concern distribution but also the retail part as it affects its major operations. This observation is also true in the case of refinery operations in relation to distribution. Thus, it can be pointed out that the enhancements of HSE guidelines focus primarily on the efficient and effective communication such standards, and how to actually make them an essential facet of the company values. Conclusion Through our in-depth investigation of the application of major HSE guidelines into the business operations of oil and gas companies, it is important to note that since although the major casualties happen in the refinery facilities which come from improper handling of equipment, safety programs must also be further developed toward the clear and concise communication of responsible working behavior and attitude within the other business units of the company such as the distribution and retail parts. As such, top management must craft specific campaigns that are intended to develop strict HSE guidelines in the refinery business units. The crafting of specific policies, in this regard, must arrive as a collaborative effort between managers and engineers within the said area of oil and gas business. Bibliography AcuTech, n.d. The HAZOP Method. [online]. Process Risk Management. 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