University of Stavanger

MOM 490
Marine Operations

Project Report
Qualitative risk acceptance criteria applied to underwater
Equipment installation in Nigeria
16.12.2011
(CONFIDENTIAL INFORMATION FROM SHELL NIGERIA)

Nwokocha Chigozie Cyril

Student number: 210630

ABSTRACT

The use of risk acceptance criteria as a yardstick for operations in various oil regions of the
world has been welcomed by some experts while some have argued its continued usage.
This report evaluates the qualitative risk acceptance criteria that are applied to underwater
equipment installation in Nigeria. Evaluation of these criteria is very important because
Nigeria is an important player when it comes to oil and gas and anything that affects
operation in Nigeria will definitely affect the global oil supply and thus the price of oil in the
world market. There have been several attacks by militants on several offshore installations in
Nigeria and this has led to occasional shutdown of facilities. These attacks have affected the
risk acceptance criteria when it comes to personnel and assets in Offshore Nigeria. This
report will help in showing the risk acceptance criteria adopted by the oil and gas operators in
Nigeria but more especially the criteria that are applied to the installation of subsea
equipment.
In this report, I will identify the potential risk associated with underwater equipment
installation in Nigeria and make use of different risk parameters to show the acceptance
criteria. Some of the tools which I will consider are FAR, Risk Matrix, ALARP and so on.
I will try to use my results/findings to propose some risk reducing measures that will help to
meet the acceptance criteria set up by the authority. I will also use my result to compare what
is obtainable in other oil and gas countries.

Table of content
Abstract 2
Table of Content ..3

Chapter 1
-

Introduction 5
Definition of terms .5
Overview of Nigeria Offshore Industry.6

Chapter 2
-

What is risk analysis? 10

Dimensions of risk11
Risk Management 11
Methodologies for risk analysis 11
Qualitative vs Quantitative risk analysis14

Chapter 3
Parameters for risk acceptance criteria16
- PLL ..16
- FAR and AIR..16
- F-N Curve17
- RISK Matrix18
- ALARP19

Chapter 4
-

Underwater equipment installation in Nigeria21

Overview of HSE issues in Nigeria offshore industry..21
Risk Acceptance Criteria for personnel.24
Risk Acceptance Criteria for asset.24
Risk Acceptance Criteria for the environment.25
Additional concerns ..26
Conclusion and recommendation 26

Reference .28
Appendix A -FPSO Offshore Nigeria.30
Appendix B -Job Hazard Analysis from Shell Nigeria32

FIGURES
Figure 1: Oil Fields Offshore Nigeria8
Figure 2: Fault Tree Diagram for failure of braking system13
Figure 3: Event Tree Diagram.14
Figure 4: F-N Curve.17
Figure 5: ALARP Diagram..20

Tables
Table 1: Main categories of risk analysis method10
Table 2: 5 x 5 Risk Matrix18
Table 3: Risk categories.18
Table 4 : Environmental Risk Acceptance criteria ...25

CHAPTER 1
Introduction
As the world population continues to increase, the demand for energy and basically, oil and
its derivatives is also on the increase. Because of the decrease in world oil reserves in the
conventional onshore fields, the quest for more crude oil to satisfy the energy-hungry, and
ever increasing world population, has driven many companies into harsh and challenging
environment like the north sea, gulf of Mexico, the arctic , the gulf of guinea and so on.
Most of the present day oil and gas discoveries are found in these harsh environment and
getting these oil and gas deposits from there location can be quite challenging. Present day
advances in science and technology has proved that the location of the oil and gas does not
actually matter, provided that the right equipments and personnel are employed.
Due to the fact that most oil and gas deposits are offshore, the risk in getting them has
increased tremendously. In recent years, health, safety and environment (HSE) issues were
not taken seriously until some fatal disasters were recorded like the Piper Alpha, Alexander
kielland, Macondo blowout and so on. These disasters have prompted regulatory authorities
and operating companies to modify their safety rules so that such disaster will never happen
again or to reduce the consequence of such disaster.
The increased risk and safety concern especially offshore has made the regulatory bodies to
adopt strict risk acceptance criteria for operations in offshore oil and gas installations.
This project will focus of the qualitative risk acceptance criteria for underwater equipment
installation in offshore Nigeria.

Definition of terms
There are some technical terms which one will come across as one reads through this project.
Below are the meaning of some abbreviations and the definition of some concepts.
Risk- According to international standard (ISO, 2002), Risk is a combination of the
probability of an event and its consequences. [1, p15]
Risk management Is defined as all measures and activities carried out to manage risk. [2, 6]

Risk analysis systematic use of information to identify initiating events, causes and
consequences of these initiating events, and express risk [2, p184]
HAZID- Hazard identification studies
5

HAZOP- Hazard operability studies

QRA Quantitative risk assessment
JHA Job hazard analysis
FMEA failure mode and effect analysis
FMECA failure mode, effect and criticality analysis
FAR- fatal accident rate
AIR average individual risk
ALARP As low as reasonably practicable
OPL Oil prospecting Licence
EIA Environmental Impact Assessment

Overview of Nigeria Offshore industry

Oil exploration in Nigeria began as far back as 1908 with the enactment of the Mineral oil
ordinance [3, p2]
The first attempt was by Nigerian Bitumen Company, but this was terminated by the First
World War. The second attempt was by Shell DArcy (forerunner of Shell Petroleum
Development Company of Nigeria) in 1937. This attempt was equally terminated by the
Second World War in 1939. The first commercial discovery of oil and gas in Nigeria was
made by Shell in 1956 at the Oloibiri field, east of the Niger Delta.
Shell retained the sole right for the exploration and production of crude oil in Nigeria until
1961, when Nigeria admitted more E & P companies like Gulf oil (Chevron), Mobil
Production Nigeria, Amoseas (Texaco), Sunray-Tenneco, Occidental, Agip and Safrap (ELF).
At this period, all the operations were limited only to land and shallow offshore Nigeria.
Below is a summary of the history of oil industry in Nigeria at the early stage of the industry:
SUMMARY OF THE HISTORY OF OIL INDUSTRY ACTIVITY IN THE NIGER
DELTA AND ITS SURROUNDINGS, 1908-1966

1908-1914

1937-1940
1946-1951

Shallow drilling by Nigerian Bitumen

Corporation down dip from heavy oil
seeps in outcrops of the Cretaceous
sands.
Reconnaissance work by Shell and BP
geological team.
Intensive geological, geophysical surveys
6

1951
1952-1955
1953
1956
1956-1961
1961-1962

1962-1966

by Shell-BP prior to first deep test.

Shell-BPs first deep test, dry.
Shell-BP drilled Cretaceous prospects
along the frame of the Niger Delta with disappointing results
First oil show in the Tertiary Niger Delta
in Shell-BP's Akata-1 well
First commercial oil discovery by ShellBP in the Tertiary (Oloibiri).
Extensive regional exploration activity in
the Tertiary Niger Delta Oil Province by Shell-BP.
Offshore: licences granted to Gulf, ShellBP, Amoseas, Mobil.
Onshore: Shell-BP selected Oil Mining
Leases and surrendered some 23,884
square miles of former prospecting
licences ; Gulf, SAFRAP, AGIP, Tenneco
were granted licences in these areas
Offshore: regional exploration phase; 1963
first oil discovery offshore by Amoseas
(Kulama); Gulf developed Okan field
which produced 48,000 b/d at end 1965 and
carried out appraisal drilling in the Delta
South field. Amoseas carried out appraisal
drilling in the Pennington field. Other discoveries
made by Mobil, Shell-BP and Gulf.
Onshore: Shell-BP increased production
from 47,000 b/d in 1961 to 300,000 b/d by
end 1965 and carried out an intensive, detailed
exploration campaign. SAFRAP developed their discovery at Obagi;
AGIP, Tenneco and Gulf appraised various discoveries. Phillips
joined Search for oil [4, p6 and p7]

The potential for the Nigerian deepwater was not recognised until the 1970s. Anticipating
that reserves offshore west Africa would at least be similar to those across the Atlantic in
Brazilian Campos and Santos basins, for instance, Government opened up the Nigeria
deepwater area for competitive bidding for oil prospecting licences (OPL). The first
competitive bidding rounds were announced in October 1990 and this led to the award of 18
deepwater blocks [3, p2]
The government in 1993 also gave discretionary awards apart from the first competitive
bidding rounds for OPL which was between 1990 and 1991.
Because the focus of exploration and field development by the oil and gas companies in
Nigeria is shifting from onshore to offshore, deepwater operations are indispensible to the
future of Nigeria oil and gas industry and to the economy of Nigeria in general because oil
7

export makes up a large portion of the governments revenue. There are a number of
challenges facing the Nigerian offshore oil and gas industry, these among others include
distance from supply base, water depth, lack of 3D seismic, lack of well data etc.
In spite of the numerous challenges in the Nigeria offshore oil and gas industry, many giant
discoveries have progressed into major development projects requiring advanced
technologies to handle them and creating thousands of jobs for Nigerians. Some of these
discoveries are listed below

ExxonMobils Erha field (est. reserves 0.5bn barrels),

Shells Bonga field (est. reserves 0.7bn)
ChevronTexacos Agbami field (est. 1bn barrels).
Totals Akpo 1 field (re-estimated to 1bn barrels of oil & 4 tcf gas)
Joint Development Zone between Sao Tome & Principe and Nigeria (est. reserves of
11bn & 3mbpd production). [5,p2]

FIGURE 1 OIL FIELDS OFFSHORE NIGERIA [6]

With the increase in social and environmental challenges facing land, swamp, and shallowwater operations, it is highly likely that production activities in some the finds listed above
will all reach full throttle within the next 5 years [5, p2]
Most of the offshore/deepwater projects in Nigeria utilize floating production storage and
offloading (FPSO) with subsea wells because of the lack of infrastructure in the Nigeria

deepwater. The first deepwater discovery in Nigeria was the Bonga field and extensive
feasibility studies were carried out during the development phase of the field.
Within 1995 2002, a world class Oil and Gas basin has been established in the Nigeria
deepwater, in a high-tech environment, with multi-billion dollar funding requirements. The
basin holds the key to the future growth aspirations of the nations reserve base and
production (4 million bbl/d, 40 Billion bbl Reserves). Geological and Commercial risks
remain. Government and industry recognize these risks and are working together to manage
them. Exploration will reveal more reserves in more places. There will be success and there
will be disappointment. The industrys capabilities will evolve further and we will acquire the
ability to move into deeper water. Safety and environmental expectations will rise and the
business environment will be increasingly competitive. The key challenge will be to convert
deepwater oil and gas resources into optimum value for all stakeholders and to ensure that the
needs and aspirations of all those involved in deep water opportunities, and of those affected
by deep water opportunities, are met equitably. The future looks bright in the deepwater of
Nigeria for the oil and gas industry, Government, and all stakeholders and this must be
viewed by all from both local and global perspectives [3, p10]

CHAPTER 2
What is Risk Analysis?
This is the means through which risk can be described. It is usually carried out in order to
establish a risk picture, compare alternatives in terms of risk, identify critical factors with
respect to risk and also demonstrate the effect of various measures on risk [2, p5]
Risk analysis can be performed at different phases in the life cycle of a system. These phases
include planning or early phase, detailed planning phase, construction phase, transportation,
installation, operation and decommissioning phases.
In majority of the cases, companies perform risk analysis in order to satisfy regulatory
requirements but this should not be the main reason for such analysis. The main purpose of
conducting risk analysis should be to support decision-making in the face of uncertainties.
Risk analysis helps companies in finding the right balance between safety and the cost of
safety.
According to Aven, T. 2008, there are three main categories of risk analysis methods:
simplified risk analysis, standard risk analysis and model-based risk analysis. These are
described in the table below -

Table 1 Main categories of risk analysis methods [2, p4]

Main category

Type of
analysis

Description

Simplified risk
Analysis

Qualitative

Simplified risk analysis is an informal procedure

that establishes the risk picture using Brainstorming
sessions and group discussions. The risk might be
presented on a coarse scale e.g. low, moderate or
large, making no use of formalised risk analysis
methods.

Standard risk
Analysis

Qualitative or
quantitative

Model-based risk
Analysis

Primarily
quantitative

Standard risk analysis is a more formalised procedure

in which recognised risk analysis methods are used,
Such as HAZOP and coarse risk analysis, to name a
few. Risk matrices are often used to present the
results.
Model-based risk analysis makes use of techniques
such as event tree analysis and fault tree analysis to
Calculate risk

10

Dimensions of risk
This refers to various aspects of a system that can be affected by an accident or exposed to
risk. The consequences of an accident maybe related to personnel, the environment, assets as
well as production capacity. The above aspects are regarded as the dimensions of risk
because they can be affected when we have an accident. The different dimensions and their
categories are as follows:
-

Personnel risk
Fatality
Impairment risk

Environmental risk

Asset risk
Material damage risk
Production delay risk [1, p16]

Risk Management
This refers to all measures that are carved out to manage risk. Risk management deal with
balancing the conflicts inherent in exploring opportunities on the one hand and avoiding
losses, accidents and disasters on the other [7, 2007).
According to [2, p6]: Risk management is divided into three (3) main categories, which are
1) Strategic risk
2) Financial risk
3) Operational risk
(1) Strategic risk comprises factors that are related to long term strategy of the company.
(2) Financial risk relates to the company financial situation and it may be outside the
companys control.
(3) Operational risk relates to the normal operating situation in the company.

Methodologies for risk analysis

There are different methods used in risk analysis and the method that is chosen for a
particular situation depends on the reason why the risk analysis is being carried out. Risk
analysis methodology/technique chosen can be qualitative or quantitative. Some of the
methodologies for risk analysis are as follows:
a) Coarse Risk Analysis

This is also known as preliminary risk analysis. This analysis is usually by dividing
the analysis subject into units and then performing the risk analysis for each of the
11

units. This analysis is usually done by a team of 3 10 persons. The main aim of the
preliminary risk analysis is to establish a crude risk analysis. Because the Preliminary
risk analysis identifies the casual picture, other methods can be used to assess the
situation in detail.
b) Job Safety Analysis (JSA)

This is also known as Job Hazard Analysis (JHA) or Job Risk Assessment (JRA). It
is a risk analysis methodology which is used in identifying hazards that are associated
with a task/job that is to be performed. JSA is a qualitative risk analysis method and it
is check-list based.
A sample of the JHA is presented later in the project and in Appendix A.
c) FMEA/FMECA Failure Mode and effect (Critical) Analysis

This is a risk analysis method developed in the 1950s and its a simple method which
shows you possible failures that can happen to a unit of a system and it predicts the
failure effect on the entire system.
FMEA shows how significant the failure of a component can be, to the overall
performance of the system. It is used in analyzing the failure of a technical system. If
the critical nature of the failures is described the method is known as FMECA
Failure modes effect and critical analysis. This method systematically reveals the
important failure of a system and so it can be used in evaluating how reliable the
system is. It can also be used as precursor for more detailed quantitative analysis. In
FMEA, technical failures are analyzed while the human failures are overlooked and
this method is not suitable for a system that has much redundancy.
d) HAZOP Hazard Operability

This is a qualitative risk analysis method which is used in identifying the possible
hazards in a processing unit. HAZOP can be used in many industries although it was
originally developed for chemical processing industries. This method analyses the risk
potentials of a possible deviation from original/design specifications of a system. This
method is carried out by a group of personnel with a HAZOP leader. The method
makes use of the work sheet to document deviations, causes of the deviations,
consequences and recommendations/decisions.
e) SWIFT

Structured What-if technique (SWIFT) is a risk analysis method in which there is

systematic use of what-if in order to identify deviations from normal condition.
This method makes use of a checklist like HAZOP but it is a bit more flexible and can
easily be adapted to the application. This is carried out by a team and it helps in
identifying possible problems so that risk-reducing measures can be implemented
accordingly.

12

f) Fault Tree Analysis

This is one of the most used risk analysis method and it has found application in many
industries. Fault tree is a logical diagram which shows the relation between system
failure and failure of the individual component of the system.
The unwanted event constitutes the top event of the tree while the various component
failures constitute the basic events of the tree.
The fault tree comprises of graphical symbols showing the basic events of the system
and the relation between them and the state of the system. A fault tree can also be
represented by a reliability block diagram if consists only And and Or gates.
A simple fault tree is shown in the figure below by using the braking system of a car:

FIGURE 2 FAULT TREE DIAGRAM FOR FAILURE OF BRAKING SYSTEM [8]

g) SAFOP

This is a modified version of HAZOP technique and it is used to analyze work

processes and procedures in order to identify and evaluate risk factors. SAFOP is a
powerful tool for risk assessment of new (planned) or changed operations and is
applicable for all activities where a procedure will be used, such as process
interventions, material handling, crane operations, maintenance, marine activities.[1,
p165]

13

h) Event Tree Analysis (ETA)

This analysis is used in studying the different scenarios which initiating events can
produce. If used qualitatively, ETA provides a picture of the possible scenarios but if
used quantitatively, probabilities are assigned to various events and their
consequences.
A simple event tree is shown below:

FIGURE 3- EVENT TREE DIAGRAM [9]

Other risk analysis methods are Bayesian network, Monte Carlo Simulation, Bow-tie
analysis, etc.

Qualitative and Quantitative Risk Analysis

There are two broad categories to which most of the risk analysis methods fall qualitative
risk analysis or quantitative risk analysis.
Quantitative risk analysis is designed so that the security measures can be implemented, and
this will allow the cost envelope to be implemented as well. There is yet a third method for
risk analysis which is used and this is referred to as being the hybrid method, since it borrows
characteristics from both the quantitative and qualitative risk analysis methods. Of the three
approaches, the qualitative analysis is the most simple to use, and is therefore used the most
often.
Qualitative analysis is useful because it allows one to quickly identify potential risks, as well
as assets and resources which are vulnerable to these risks. Not only does qualitative analysis
14

showcase the safety measures that have already been utilized, it will show those which could
be useful if they are implemented.
The goal of qualitative risk analysis is to gain a level of risk protection which is acceptable,
and one which will increase awareness among the necessary members of the organization.
This analysis will often make use of calculations which are fairly basic, and it is often not
necessary to know the value of all the assets in question.
While quantitative analysis does many of the same things which can be found with qualitative
analysis, it is also capable of identifying the envelopes for which both safeguards and losses
can be found. It is based on a process which is highly subjective, and it uses metrics which
require it to have a high level of effort put into it.
At the same time, quantitative analysis is capable of presenting data in a manner which is
friendly for management, and which expresses percentages, values, as well as probabilities.
Now that we've gone over the two primary tools which are used for risk analysis, it is next
important to learn a little bit about the methodology which is associated with them.[10]

15

CHAPTER 3
PARAMETERS FOR RISK ACCEPTANCE CRITERIA
There are different risk acceptance criteria which are used in various industries. The RAC
that is chosen may also depend on the provision of the laws governing the industries. Some of
the risk acceptance criteria which are used in the oil and gas are as follows:
a)
b)
c)
d)
e)

PLL
AIR and FAR
F-N Curve
Risk Matrix
ALARP

a) PLL (Potential Loss of Life)

This is the number of fatalities experienced in a period, for instance in a year. In some
situations, PLL can be used as a decision-making aid because it is not usually
common to define an acceptance limit for it.
Because PLL expresses absolute level of Fatalities, it is easy for non-experts to
understand.
It is not easy to express PLL in physical terms, because the values are usually less
than 1.
PLL =0.1 does not imply that 10% of a person is dead! Such a value may be
illustrated by expressing it as 10% probability of one fatality, although this is slightly
imprecise; because there is also a small probability of more than one fatality. [1, 70]
The PLL value will often favor the development concept that has the lowest manning
level resulting from the lower number of individual exposed to risk. This underlines
the fact that one way to reduce societal risk is to limit the number of personnel
exposed to risk.
b) FAR and AIR

FAR is known as fatal accident rate while AIR is the average individual risk.
FAR value is the number of fatalities in a group per 100 million exposed hours. 108
AIR value is the average number of fatalities per exposed individual. FAR and AIR
can be expressed mathematically by the expression below:

16

FAR and AIR values can be calculated as average values for entire personnel on an
installation or personnel on specific area on the installation. The exposed hours can be
hours on duty or total hours on the installations.

c) F-N Curve
This is used in expressing group risk. Since the most common measure of risk is risk
to individuals, the society is interested on the effects of accidents on the society.
Group risk is used to express the risk on society or affected members of a society.
Although acceptance criteria are usually expressed for individual risk, it is sometimes
necessary to express an acceptance criterion for group risk.
The F-N curve expresses the frequency of accidents with N-fatalities or more and
below is an example.
The frequency here is thus cumulative frequency.

FIGURE 4 - F-N CURVE [11]

17

d) Risk Matrix
This is a qualitative risk evaluation tool which can be used to show consequences and
probability of occurrence of an accident. It can be used to show risk level that is
negligible, manageable or intolerable. It can be used to define the ALARP region
where risk reducing measures are needed before an operation can take place. In order
to capture all the risk aspects in a given situation, it is advisable to make use of 5 * 5
risk matrix. An example of this is shown in table 2 below with explanation of the risk
levels shown in table 3.

Table 2- 5*5 Risk matrix [12]

Table 3- Risk categories [12]

18

e) ALARP
This is a concept which stipulates that risk should be reduced to a level that is As
low as reasonably practicable. This concept provides the framework for finding a
balance between safety and the level of investment needed for the actualization of the
safety goals. It is not easy to specify an acceptable level of risk due to the subjective
nature of risk which makes it hard to do so; however, this concept of ALARP can be
used for setting a value for acceptable risk. ALARP principle also stipulates that the
cost, effort and time needed to reduce risk should not be grossly disproportionate
when compared to the safety level that is being achieved.
When a risk is not well understood it should be analysed and assessed in detail
before making the ALARP judgment. If the risks are still not well understood a more
precautionary approach should be adopted when judging what risk reduction measures
are reasonably practicable. The lack of evidence about the effects of a hazard is not a
justification for taking no action to reduce risk. In general, hazards which have a high
consequence should be scrutinized more carefully than those that have a low
consequence. [13]

ALARP can be used as a qualitative measure of risk and the guidance below can be used in
this regard

Use of best available technology capable of being installed, operated and maintained in
the work environment by the people prepared to work in that environment;
Use of the best operations and maintenance management systems relevant to safety;
Maintenance of the equipment and management systems to a high standard;
Exposure of employees to a low level of risk. [13]

The figure below shows the different aspects in the ALARP principle.
Intolerable Region
Adverse risks are intolerable whatever benefits the activity may bring and risk
reduction measures are essential whatever the cost.
ALARP or Tolerable Region
Risks are "As Low As Reasonable Practicable", i.e. while risks may be significant,
they are tolerable in light of the potential benefits
Broadly Acceptable Region
Positive or negative risks are negligible, or so small that no risk treatment measures
are needed. [14]

19

FIGURE 5 ALARP DIAGRAM [14]

20

CHAPTER 4
Underwater equipment installation in Offshore Nigeria
Offshore Nigeria is an important aspect of the Nigerian oil and gas industry. There have
series of discoveries, both in the shallow water and deep water off the coast of Niger Delta
which is the main oil and gas region in Nigeria. The developments that are going on presently
are immense and it is an important industry for the region as well as the country as a whole.
Some of the fields that are either in development phase or in production are
-

Erha
Agbami
Egina
Bonga
Akpo
Oyo
Aparo
Nsiko etc.

Most of the oil fields offshore Nigeria that is in the production phase has a great deal of
subsea development. Due to the metocean condition, offshore Nigeria, majority of the
fields make use of FPSO (Floating Production Storage and Offloading) that is shaped like a
barge. The subsea installations are tied back to the FPSO. Because of the swells which are
predominant in this region, the choice of vessel for any marine operation must put the swell
period and height into consideration. Underwater equipment installation in Nigeria is
usually performed with crane vessels and in some cases, the equipment may be transported
on a barge, but the choice of any of this should be such that it will not hit resonance with
the swells. Other operations involved in are sea fastening, transportation, cutting of the sea
fastening, lifting, installation, piling and so on. During underwater equipment installation,
there may be need for using professional divers and ROV (remote operated vehicle). Some
of the vessels operating offshore Nigeria is shown in Appendix A.

OVERVIEW OF HSE ISSUES IN NIGERIA OIL AND GAS INDUSTRY

Since crude oil was first discovered in commercial quantities in the Country, in 1956,
Nigerian oil and gas exploration and production activities have steadily increased as
petroleum assumed strategic importance in the nation's economy. However, just as occurs
in many parts of the world, crude oil and gas are found and produced in Nigeria sometimes
in very hostile and unfavourable environments. The search for oil and gas takes explorers
to the hot regions of the Northern parts of the country, the swap jungle location of the
Niger Delta, as well as offshore locations in the Atlantic Ocean. Each terrain, whether land,
swamp or offshore, in deep or shallow waters, present unique health, safety and
environmental implications and challenges to the operators, as well as, to the Government
regulators.
21

It is the responsibility of the ministry of petroleum resources through its various agencies
to monitor all activities and operations regarding oil and gas in Nigeria, from the upstream
to the downstream sector of the industry. The department is charged with the duties of
setting standards and guidelines for safe, efficient and effective control, of all operations.
The discharge of these responsibilities involves monitoring of operations at drilling sites,
production platforms and flow stations, crude oil export terminals, refineries, process
plants, storage depots, pump stations, petrol filling stations, and any other locations where
petroleum or petroleum products are either stored or sold and all pipelines carrying such
substances(crude oil, natural gas, and petroleum products) [15]

There are laws and regulations governing operations by the companies in the oil sector of
Nigerian economy. Most of these laws are amended regularly in order to meet up with the
international standard in the industry.
Some of the principal laws (decree) and regulations related to the activities in the oil and
gas industry in Nigeria are as follows:
1) The Mineral oils (safety) Regulations, 1963
2) Oil pipelines Act 1965
3) Petroleum Regulations, 1967
4) Oil Terminal Dues Decree, 1968
5) Oil in Navigable Water Decree, 1968
6) Petroleum (Drilling and Production) Regulations, 1969
7) Petroleum Decree (51) 1969
8) Offshore Oil Revenue Decree, 1971
9) Petroleum (Amendment) Decree, 1973
10) Petroleum (Drilling & Production- Amendment) Regulations 1973
11) Petroleum (Refining) Regulations, 1974
12) Petroleum (Amendment) Decree, 1977
13) Petroleum (Drilling & Production- Amendment) Regulations 1979
14) Associated Gas Re-injection Decree, 1978 and its 1984 Amendment
15) Crude Oil (Transport and Shipment) Regulations, 1984
16) Petroleum (Drilling & Production- Amendment) Regulations 1988
17) Federal Environmental Protection Agency Decree, 1988 [15]

Emergence of the deep water developments in Nigeria has caused some changes or
additions in the existing regulatory requirements. The changes or additions can also be
as a result of conformance to international standards. The additional applicable to the
offshore industry in Nigeria are as follows:
Procedure Guide for the Construction and Maintenance of Fixed Offshore Platform.
March, 1992
Statutory Procedure Guide for Compliance with the Technical Safety Control (TSC)
Requirement of Facility Development and/or Modification Projects. June, 2000 Draft
22

Procedure Guide for the design and Construction of Oil and Gas Surface Production
Facilities. June, 2001
For the environment, the principal regulations governing it are Environmental
Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN), which
were initially issued in 1991 [16] and it has undergone series of Amendment since
then.

In my research during this project, I discovered that it is the companies that set their
own risk acceptance criteria for operations in the offshore oil and gas industry in
Nigeria. Nigeria is yet to have a reliable and well-informed safety regime like what is
obtainable in Norway and the UK. Although Nigeria lacks a good safety program
managed by the government, the risk acceptance criteria set by the operating
companies are always of international standard because majority of the operating
companies in Nigeria are multinationals and they tend to adopt measures which they
use in other parts of the world. The major HSE problem in Nigeria is pollution caused
by oil spill. While some of the oil spills are caused by faulty equipment, some are also
caused by the Nigerian citizens in their quest to get a share of the oil wealth. This
problem is primarily caused by the high unemployment level and poverty in the oil and
gas region of the country.
Identification of potential risk, causes and consequences in underwater equipment
installation
Before operations are performed offshore, risk analysis should be carried out in order to
identify potential hazards or risks associated with the planned operation. Identification of the
risk helps in putting risk reducing measures in place to eliminate or reduce the risk. The
hazards or potential risks are identified by using the HAZID or HAZOP technique.
In Nigeria, however, the client demands that the company (contractor) which is supposed to
do the operation, in this case, underwater equipment installation, should carry out a job
hazard analysis (JHA) or safe job analysis (SJA) or job risk analysis (JRA) before the
operation will be performed. Safety representative from the client company usually check the
JHA or SJA or JRA of the contractor to see if the risk acceptance criteria is met. If the level
of risk identified is too high, the operation may be cancelled or another contractor may be
brought in to do the job. Samples of JHA from Shell contractors in Nigeria can be found in
appendix B at the end of the project. The potential risks, their causes and consequences can
be related to all marine operations including transport, sea fastening, lifting, installation,
piling and so on.

23

METOCEAN CRITERIA
The gulf of guinea in West Africa is an important region for oil and gas business in the world
and it has a peculiar environment which is not so common in some other regions of the world.
The storm condition offshore Nigeria tends to be milder than what is obtainable in the North
Sea or in the Gulf of Mexico. The normal wave conditions are characterized by bi-modal
spectrum. The waves in the gulf of guinea tend to have long periods and they are extremely
directional. The currents generated by the swells in this region are more complicated than the
winds and waves and this is caused by the lack of, or limited design references.
Most the lift operations and installations offshore Nigeria, are governed by metocean limits of
wave height and the response of the lift vessel to periodic swells. Therefore, for lifting and
installation of underwater equipment, the following should be analysed- current direction,
swell direction and the tidal range. The significant wave height offshore Nigeria is
approximately 9.8ft and the optimal installation window in Nigeria is between November and
March, though during January and February, operations can be performed 50% of the time.

RISK ACCEPTANCE CRITERIA FOR PERSONNEL

In the petroleum industry, there are different parameters used to show the risk acceptance
criteria for personnel involved in the operations.
In Nigeria, the directorate for petroleum resources, which is an agency of the ministry for
petroleum resources, mandated that the operating company should carry out their activities in
such a manner, that risk is reduced for the workers. Some of the parameters used by
companies to show the risk acceptance criteria for personnel are- PLL, FAR, AIR, F-N curve,
and the risk matrix.
Due to lack of standardized risk acceptance criteria, the acceptance criteria for personnel
working in offshore Nigeria may vary from company to company. Because some of the
operators on Nigeria waters are multinationals, they tend to adopt risk acceptance criteria of
their company and this is usually accepted by the authorities in Nigeria.
For instance, in Agbami field, where STATOIL is a partner, the risk acceptance criterion for
some of the operations was FAR less than 5.

RISK ACCEPTANCE CRITERIA FOR ASSET

In accordance with the provisions of the mineral ordinance by the ministry of petroleum
resources, it is the duty of the operating companies to protect their asset, so they have to set
the acceptance criteria themselves.

24

Due to the lack of standard risk acceptance criteria for the assets in installation operation,
offshore Nigeria, the companies involved in the operations should set the risk acceptance
criteria for their asset. If the risk of a heavy financial loss is very high, the operations are
usually stopped or risk reducing measures are adopted to reduce the consequence of such
risk.
According to Vinnem J.E. [1] there are two aspects considered in risk acceptance criteria for
assets, these are- material damage risk and production delay risk. When these are converted
to monetary terms, the production delay is usually of more significance than the material
damage.

RISK ACCEPTANCE CRITERIA FOR ENVIRONMENT

By the provisions of the Department of petroleum resources 1991 guidelines, it is mandatory
that an environmental permit be obtained before certain operations can start, anywhere in
Nigeria. In 1988, by decree 58, FEPA (Federal environmental protection agency) was
established and this has helped in giving proper direction to environmental regulations in
Nigeria.
For any operation offshore Nigeria, an Environmental Impact assessment (EIA) must be
performed. Before performing a full EIA, the very first step is to perform the Initial
Environmental Evaluation (IEE) which is the first phase in the Nigerian environmental
regulation.
In Nigeria, the environmental risk analysis is used to identify environmental effects,
probability and consequences of accidental oil spill at sea or coast line. It is necessary to have
risk acceptance criteria when assessing environmental risk because this helps in checking
whether the environmental risk is acceptable or not.
With respect to the Agbami field offshore Nigeria, the environmental risk acceptance criteria
used for the operations are :
Damage

Description

Probability Category

Minor

Recovery time 1month 1 year

1,0*10-3

Moderate

Recovery time 1 3 years

2,5*10-4

Significant

Recovery time 3 10 years

1,0*10-4

Serious

Recovery time above 10 years

5,0*10-5

[17]

Although Environmental Guidelines and Standards for the Petroleum Industry in Nigeria
(EGASPIN) stipulate guidelines with respect to the environment, it does not however specify
the risk acceptance criteria for the environment.
25

Additional Concerns
In addition to the operational risks involved in the offshore oil and gas industry in Nigeria, there are
other serious concerns for the operating companies and their personnel working offshore. Some of
these additional concerns are insecurity, corruption, kidnapping, armed robbery, bunkering, and
insurgency.
According to Bergen Risk Solutions April 2011, Overall, the security situation in the Niger Delta has
improved since the commencement of the amnesty negotiation in August 2009. Attacks on shipping
and offshore assets continue, especially in the central and eastern Niger Delta and off the Bakassi
Peninsula. The Nigerian government is aware of the maritime security challenges and they

have deployed the Nigeria Navy to help in protection of offshore assets and personnel.
Long term drivers of insecurity include legitimate political grievances and personal greed
caused by: discrimination against Niger Delta indigenes by major employers, general
unemployment, corruption, poverty, pollution, lack of electricity and clean water, land
ownership and destruction of traditional livelihood. Small arms proliferation and trade in
stolen oil are significant risk drivers with the latter involving numerous and powerful
stakeholders [18,p.6].
Kidnapping of foreign expatriates as well as locals is another serious concern in the Niger
Delta region of Nigeria. This act is performed by militants or armed gangs in order to get
ransom from the oil companies. According to Reuters news on 17th February 2011,The
average time in captivity is less than 30 days and ransoms vary from $10,000-$2 million.
Kidnapping of foreigners and locals continues to be a problem in Nigeria, particularly in the
Niger Delta with the threat from both militants and armed gangs. Ransoms for foreign
nationals range from $28,000-$204,000, with ransom payments for Nigerians generally less
than $100,000. Time spent in captivity is varied, with the longest period some 465 days.
[19]
These additional risks should be considered when doing risk analysis for operations offshore
Nigeria and Bergen Risk Solution is doing a good work in this regard by publishing report on
Nigerian Maritime Security every quarter of the year.

Conclusion and Recommendation

The petroleum industry is the main source of revenue for the Nigeria economy. This
important industry is faced with many problems and most of these problems are predominant
in the Niger Delta region of the country where most of the oil and gas fields are located.
The Nigerian government, through the ministry of petroleum resources and its agencies, has
put in place legislations and guidelines to regulate all activities in the oil and gas sector, both
in upstream and downstream sector.
From my research in this project, I have, however, discovered that the legislation by the
Nigerian authority is not strict and up-to-date with what is obtainable in other regions of the
world where offshore activities are going on. Lack of well-trained safety personnel is a
problem as well as lack of a vibrant and reliable safety agency in Nigerian petroleum sector.

26

Corruption in the government is also an issue and all these problems need to be addressed if
the oil and gas industry should measure up to that of other countries like Norway.
Other additional concerns which I discussed briefly above should also be addressed by the
government in other to attract potential investors to the Nigeria oil market.
Finally, according to Aven T. and Vinnem J. E. Care should be shown when using predetermined risk acceptance criteria in order to obtain good arrangements, plans, and
measures. Pre-defined criteria driving the decisions should in general be replaced by a risk
management approach highlighting risk characterization and evaluation, and a drive for risk
reductions and a proper balance between burdens and benefits.[20, p.24]

27

REFERENCES
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2.
3.
4.

5.

Jan Erik Vinnem, Offshore Risk Assessment, principles, modelling and applications of QRA
studies, Springer, 1999
Aven, T. Risk Analysis, Assessing uncertainties beyond expected values and probabilities,
Wiley ,2008
Mac Ofurhie, Nigeria deep offshore: appraisal of activities from 1991 to 2001 and future
challenges, 17th World Petroleum Congress, September 1 - 5, 2002, p2
E. A. Cordry and E. J Frankl, The Niger Delta Oil Province: Recent Developments Onshore
and Offshore, 7th World Petroleum Congress, April 2 - 9, 1967 , Mexico City, Mexico,
World Petroleum Congress, p6 and p7
Dele Olaoye, Competence for Managing HSE in Deep Offshore Operations - Relevance
Requisite for Indigenous Contractors, Nigeria Annual International Conference and
Exhibition, 1-3 August 2005, Abuja, Nigeria, Society of Petroleum Engineers 2005,p.2

6.

http://www.downstreamtoday.com/News/ArticlePrint.aspx?aid=3289&AspxAutoDetectCooki
eSupport=1 assessed on 10-12-2011

7.

Aven T and Vinnem J.E, Risk Management, with applications from offshore oil and gas
industry, Springer Verlag, New York

8.

http://www.eetimes.com/design/embedded/4006464/Architecture-of-safety-critical-systems
assessed on 15-12-2011

9.

Mohanad El-Harbawi et al (2004) "Using geographic information systems in assessment of

major hazards of liquefied petroleum gas", Disaster Prevention and Management, Vol. 13 Iss:
2, pp.117 129

10. http://www.exforsys.com/career-center/risk-management/qualitative-risk-analysis-

methodology.html assessed on 15-12-2011

11. Sutton Ian. , Risk Analysis and Risk Matrices in the Process Industries: Understanding risk

[Internet]. Version 1. suttonbooks. 2010 May 23. Available from:

http://suttonbooks.wordpress.com/article/risk-analysis-and-risk-matrices-in-the2vu500dgllb4m-9/. assessed on 15-12-2011
12. DNV-RP-F116 -Integrity Management of Submarine Pipeline Systems, Sec.4. Risk

Assessment and Integrity Management (IM) Planning October 2009

13. Sutton Ian. ALARP (As Low as Reasonably Practicable) Risk: Determining acceptable risk

for industrial facilities [Internet]. Version 1. suttonbooks. 2011 Nov 20. Available from:
http://suttonbooks.wordpress.com/article/alarp-as-low-as-reasonably-practicable2vu500dgllb4m-10/. Assessed on 15-12-2011
14. http://www.modulus.com.au/cgibin/riskmanagement/riskmanagement_help.pl?action=EVALUATE assessed on 15-14-2011
15. Oyekan, A.J, The Nigerian Experience in Health, Safety, and Environmental Matters During

Oil and Gas Exploration and Production Operations, SPE Health, Safety and Environment in
Oil and Gas Exploration and Production Conference, 11-14 November 1991, The Hague,
Netherlands

28

16. Iain J. Haughie, Application of Risk-Based Design Relative to Health, Environment, and

Safety, Offshore Technology Conference, 3 May-6 May 2004, Houston, Texas

17. Berger, Fredrik, Environmental Risk Management and Preparations for the First Deep Water

Well in Nigeria, SPE Health, Safety and Environment in Oil and Gas Exploration and
Production Conference, 9-12 June 1996, New Orleans, Louisiana
18. Bergen Risk Solutions, Maritime Security. In Nigeria. Quarterly Review. No. 16. April

2011
19. http://af.reuters.com/article/drcNews/idAFLDE71F20C20110217?pageNumber=2&virtualBa

ndChannel=0 assessed on 15-12-2011

20. Aven T and Vinnem J.E, Reliability Engineering and system safety (2005) 15-24
21. http://www.offshore-technology.com/features/feature1975/feature1975-2.html assessed on

15-12-2011
22. http://www.technip.com/en/media-center/photo-library assessed on 15-12-2011
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15-12-2011
25. Confidential information from Shell Nigeria 2011

29

APPENDIX A- Vessels Offshore Nigeria

FPSO on Bonga field [21]

FPSO on Akpo field [22]

30

FPSO on Erha field [23]

FPSO on Agbami field [24]

31

APPENDIX B JOB HAZARD ANALYSIS (From Shell Nigeria) [25]

32

JHA for Underwater Inspection

33

34

35