1 Society of PetroleumEngineers I

SPE 24774 Risk Assessment Approach to Offshore Safety: Part A-Norwegian Regulatory Philosophy
H.T. Olstad, Norwegian Petroleum Directorate
Copyright 1992, Society of Petroleum Engineers Inc. This paper was prepared for presentation at the 67th Annual Technical Conference and Exhibition of the Society of Petroleum Engineers held in Washington, DC, October 4-7, 1992. This paper was selected for presentation by an SPE Program Committee following review of information contained in an abstract submitted by the author@). Contents of the paper, as presented, have not been reviewed by the Society of Petroleum Engineers and are subject to correction by the author@). The material, as presented, does not necessarily reflect any position of the Society of Petroleum Engineers, its officers, or members. Papers presented at SPE meetings are subject to publication review by Editorial Committees of the Society of Petroleum Engineers. Permissionto copy is restrictedto an abstract of not more h a 300 words. Illustrationsmay not be copied. The abstract should contain conspicuous acknowledgment of where and by whom the paper is presented. Write Librarian, SPE, P.O. Box 833836, Richardson, TX 75063-3636 U.S.A. Telex, 730989 SPEDAL.

Abstract The Norwegian Petroleum Directorate (NPD) has since the mid-seventies put increasing emphasis on the use of risk analysis techniques in the industry as one of the tools for enhancing safety in exploration and production activities offshore Norway. This approach now forms a cornerstone for updated offshore safety Regulations. In this paper, background internal control obligations of operators are reviewed along with safety supervisory activities of the NPD. The concepts of safety objectives and acceptance criteria as applied to offshore activities are presented. The subsequent use of risk analysis as a tool to highlight areas requiring further attention is discussed. Finally, the "performance-based" nature of the new detailed regulations in defining safety upgrade actions is also reviewed.

Background Petroleum activities on the Norwegian Continental Shelf have now lasted for more than 25 years. The first exploration drilling started in 1966 and the first oilfield was discovered in 1969. The NPD was established in 1973and located in Stavanger on the west coast of Norway. The NPD is the governmental body issuing regulations and taking care of the daily regulative and supervisory functions aimed at petroleum activities as far as management of petroleum resources, safety and working environment are concerned. This comprises safety for personnel, external environment and economy, as well as working environment in the broadest sense. The NPD had already requested in the late seventies that operating companies apply risk analysis techniques to new platform projects. In 1981, the Guidelines for Safety Evaluation of Platform Conceptual

RISK ASSESSMENT APPROACH TO OFFSHORE SAFETY: PART A: NORWEGIAN REGULATORY PHILOSOPHY Desi~n were ~ issued. These guidelines were only applicable for safety evaluation and analyses of a platform as completed in the operational phase, but the analysis technique proved to be very useful and the scope of application became more extencive. In 1990 a new regulation Regulation, conccrning implementation and use of risk analyses in the petroleum activities with guidelines, was issued. This regulation is applicable for planning, implementation, use and updating of risk analyses for all areas covered by the Petroleum Act. Control philosophy It is important at this stage to clarify the NPD's premises and principles on supcrvisory activities. It is a basic premise for the regulatory supervision of safety etc. in the petroleum activities, that anyone conducting or taking part in petroleum activities, has a duty to ensure that the Petroleum Act, regulations, and administrative decisions which regulate conditions related to the petroleum activities are complied with. The licensee has an overall responsibility for ensuring that anyone performing work for him complies with the provisions. This is what is called the licensees internal control duty. In practical terms this implies that the operator should have administrative systems to check that all activities are performed in accordance with regulatory and internal requirements. On new projects internal checks, design-reviews and approval procedures are applied as part of a quality assurance system. On production platforms and drilling rigs work permit procedures are part of the daily routines. It is also an expectation that an independant body, the QAdepartment, performs internal audits within the operators organization to

SPE 24774

monitor compliance with internal and regulatory requirements. Such audits are also performed towards suppliers and subcontractors. Within these premises, it is the main responsibility of the NPD to monitor that the Licensee's system of internal control functions in an effective and appropriate manner. This may be done through system audits and technical verifications to verify system functions. Legislation Intentions and principles are expressed through two direct legislative pillars and one in direct. The first pillar, the Working Environment Act, had its origin in traditional land based industry in Norway. This Act was in 1979 made applicable to the offshore petroleum activities on fixed installations. It will also be made applicable to mobile installations soon. The second pillar is the Petroleum Act and its supportive regulations. A third pillar, toward which the NPD only has a coordinative responsibility, is the Pollution Control Act. These three pillars are tied together with three integral regulations; the Internal Control Regulation, The Risk Analyses Regulation and the Emergency Preparedness Regulation. See attached illustration. Under the Petroleum Act there is a Safety 1subsequent regulaRegulation with 1 tions, in additions the Risk Analysis Regulation and the Emergency Preparedness Regulation. These regulations describe objectives and goals to be met, rather than being prescriptive as has been typical in the past.

SPE 24774 Risk Analysis Regulation

HARALD THV OLSTAD

expressed as frequence of occurance of accidents or as qualitative criteria on a defined scale. See attached example.

The intent of the Risk Analysis Regulation is to promote the use of risk analyses as tools to identify possible hazards and the needs for risk reducing measures. The regulation requires the operators to establish safety objectives for their total activities. The safety objective is meant to be ideal goals, which ensure a dynamic safety evolution and promotion. This new regulation also requires that the operating company itself shall define acceptance criteria for risks in its activities. The main difference between safety objectives and acceptance criteria is that the safety objective defines long or short term goals for safety, while the acceptance criteria define the limits of acceptability for the risks at a defined moment. The term acceptance criteria is here used in a narrow sense as it is limited to risk acceptance criteria. Risk is itself related to the term accident. One has an accident if an event leads to negative consequences for people, the environment or assets. Hence the concept of acceptance criteria relates to the probability that an accident leads to negative consequences for people, the environment or assets. It is important that acceptance criteria are defind for different types of a activities. For example concept safety evaluations, exploration or production activities, or a specific modification job. The acceptance criteria for these activities should reflect the companies philosophy and requirements for safety management and not be contradictory. The mode of expression of risk acceptance criteria may vary with the type of risk analysis which is performed. The acceptance criteria may for example be

There is a link between the Risk Analysis Regulation and the detailed regulations. The risk assessment shall tell you where special attention is required, while the detailed regulation with guidelines will tell you what action should be taken. In addition the detailed regulations have requirements that certain risk analyses shall be performed. Use of Results from Risk Analyses Risk analysis techniques are useful tools for enhancing safety in various areas, for example: -New platform concepts -Drilling operations -Platform modification The results from risk analyses are to be used in decision making processes. It is therefore important that user groups have confidence in the results. The new risk analyses regulation establishes a list of expectations regarding measures which contribute to the quality of risk analyses and risk assessments, for example: -Acceptance criteria must be defined before starting the risk analysis, so that the boundaries for using the results of the risk analysis are established beforehand. -The objectives of the analysis must be clearly stated. -The methods and the data which are used to analyse risks must be adapted to the objectives of the analysis. -The assumptions and simplifications which are used in the analysis must be listed clearly. Other expectations will be touched upon below.

RISK ASSESSMENT APPROACH TO OFFSHORE SAFETY: PART A: NORWEGIAN REGULATORY PHILOSOPHY The results from the risk analyses form the basis for deciding which accidental events are design accidental events for a particular activity. The results from the risk analysis are consequently used to select adequate technical and operational measures for the activity. Most people are not risk analyses specialists, though they have an important role in decision making processes. This is the case for the management and working environment commitees for example. This is the reason why it is expected that the results from risk analyses shall be presented in such a way that they can be understood by decision makers. It is also necessary that those decision makers receive the necessary training to be able to understand risk analyses' results. As was mentioned earlier, the Risk Analysis Regulation interacts with detailed regulations. Most detailed regulations have recently been revised. The new regulations contain functional requirements and goals rather than being prescriptive. These regulations are supported by guidelines. The guidelines describe methods of achieving the funtional requirements and goals. However, the operator is free to develop other methods of achieving the same safety levels as those described in the guidelines, as long as compliance with the required safety level can be documented. A risk analysis or assessment may be a useful tool in this regard. Issuing regulations sometimes causes the industry to implement measures which go beyond the intentions behind the regulations. It is therefore important to emphasize the pragmatic intentions of the new risk analyses regulation. They do not imply that all safety measures shall be decided upon on the basis of risk analysis.

SPE 24774

There is still the need for standardized solutions and good engineering practice. The associated presentation (part B) on risk assessments will illustrate the use of risk analysis as a tool in an up-grade action. In this case a planned modification did not meet a regulation requirement. The operator could, however, demonstrate that the safety level was maintained, - or even enhanced, and on that basis the deviation was accepted by the authorities.

Deviations from regulations

The authorities expect the operators internal control system to function in such a way that deviations from regulations do not occure. This is the ideal world. Thus the internal control system must also govern the operators handling of deviations. If the internal handling of a deviation concludes that the deviation is acceptable from a safety and working environment point of view, a request for dispensation should be submitted the authorities. The authorities will assess the request, in particular any effects on safety and working environment, and possible compensating measures. If the authorities agree with the operators conclusion, dispensation will be granted. Otherwise the operator has to fulfill the regulatory requirements. It is important to note that any deviation from the operators acceptance criteria for risk requires implementation of risk reducing measures. Bearing in mind the nature of the new "performance-based" regulations, a reduced number of requests for dispensation are expected as an effect.

SPE 24774 Summary and conclusions

HARALD THV OLSTAD supported by guidelines describing methods of achieving the functional requirements and goals. The new Risk Analysis Regulation requires the operators to establish both safety objectives and acceptance criteria for their operations. The Risk analysis Regulation interacts with the detailed regulations. The NPD is authorised to grant dispensations from regulatory requirements if the operator can prove that his solution represents an acceptable safety level. The risk analysis technique may be a useful tool in this respect. Finally; the use of risk analysis techniques do not imply that all safety measures shall be decided on the basis of risk analyses: There is still the need for good engineering pratice.

NPD and the Norwegian oil industry have about 15 years of experience with the use of risk analyses in offshore petroleum activities. The methods of applying risk analyses techniques have changed throughout the years, but the techniques have proved to be useful and have become an increasingly important tool in enhancing safety. The NPD's control philosophy is based on the operators internal control duty. NPDs main responsibility is to monitor that the operators' system of internal control functions in an effective and appropriate manner through various supervisory activities. NPD regulations have recently been revised and they are "performancebased", rather than prescriptive. They are References
1. Andresen, R G

"The Norwegian Authorities' expectations and activities relevant to the concept of TQM in offshore industry", presented at IBC conference in London 7th November 1991 "The Use of Risk Analyses in Petroleum Activities on Norwegian Continental Shelf", presented at IBC conference in Aberdeen 1st April 1992 "Risk Assessment Approach to Offshore Safety. Part B: The Valhafl Firewater System-A Case Study". Paper SPE 24775 presented at the 1992 SPE annual technical conference and exhibition, Washington D C , October 4-7.

2. Aarstad,I

3. Ciaraldi,S W

LEGISLATION

Figure 1
Acceptance Criteria in Risk Analysis

Consequence (Risk = Probability x Consequence) Abbreviations and Svmbols: N = Neghble L = Low M = Moderate H = High S = Severe C = Catastrophic
= Unacceptable = Acceptable after evaluatm = Acceptable

Integral regulations