Means-, Management- or Performance-Based Regulation
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1 Means-, Management- or Performance-Based Regulation NAS_SSM survey_4 jan 2017
2 Content 1. Oil and gas in The Netherlands 2. Organisation / Legislation 3. SSM s mission / vision / supervision / plan 4. Bowtie / barrier concept / undesirable events / standards / inspections / trends 2 NAS_SSM survey_4jan2017
3 3 80 km
4 O&G in the Netherlands number of wells in use / abandoned > 3600 / > 2700 total gas production total oil production 760,000 boe/d 28,000 bo/d number of operators / contractors 12 / > 600 estimated total number of staff > 15,000 fte's (E&P and Suppliers) number of offshore platforms > 150 number of onshore installations > 600 natural gas revenues Billion 14 (2012) 6.7 (2016) (% total State revenues) (9.5 % 6 %) population / land area 17 million / 34,000 km² 4 NAS_SSM survey_4jan2017
5 5 NAS_SSM survey_4jan2017
6 Content 1. Oil and gas in The Netherlands 2. Organisation / Legislation 3. SSM s mission / vision / supervision / plan 4. Bowtie / barrier concept / undesirable events / standards / inspections / trends 6 NAS_SSM survey_4jan2017
7 Positioning SSM has several customers / minister of Economic Affairs is 'owner' of SSM; customers / ministers also responsible for supervision; SSM develops a yearly plan with a 2 year look ahead; ministers are authorised to make changes, but these should be made transparent; SSM makes an annual report containing progress on implementation of the yearly plan; these documents are presented to the Parliament; SSM formulates its own opinion on a matter (e.g. incident investigation); a minister may comment upon, but cannot change SSM s report; SSM determines whether matters will be disclosed (interest of whom it concerns will be weighed). 7 NAS_SSM survey_4jan2017
8 Organisation SSM Inspector General (IG) Director IG s Office Director Engineering & Gas Distribution Director Subsurface & Wells Director Regulatory Policies & Advice Heads Managers Managers Advisors - Information Management - Facilities & Management Support (legal support / communication) - Engineering - Operations - Gas Distribution - Subsurface - Wells (HSE aspects / optimal use of mineral resources / risk assessment / strategic policy & review / soil movements etc.) 8 NAS_SSM survey_4jan2017
9 Dutch legislation on Mining activities 1810 / Napoleon / Mining Law & SSM / Integral Supervision -Mining Act -Mining Decree -Mining Regulation -Environmental protection Act (wet Milieubeheer) -General provisions of environmental legislation (WABO permits) -Occupational health and safety Act -Health and safety decree -Health and safety regulation -Other: working hours Act / gas distribution Act / etc. 9 NAS_SSM survey_4jan2017
10 Piper-Alpha 1988 safety case regime >>> risk assessment + scenario s + PDCA-loop Macondo 2010 Directive 2013/30/EC >>> additional requirements: Independent Verification SECE s Well Examination Effectiveness of oil spill response etc. Dutch Safety Board report Earthquake risks in Groningen : o regulator independency o irreversible onus o participation licensing o revocation reasons 10 NAS_SSM survey_4jan2017
11 Dutch Legislation on Mining Activities Dutch Mining Act: All exploration activities for gas and oil in the Netherlands must begin with an exploration license (provided in Mining Act); an exploration license for a specific area will be granted exclusively to one company; the license will be granted by the minister of economic affairs. a license can only be refused if: - the applying company doesn't have the financial or technical capabilities, or - in case of more applicants - the manner in which the applying company intends to carry out the activities is not adequate enough, or - the applying company has demonstrated a lack of efficiency and responsibility in previous mining activities, under a previous license. 11 NAS_SSM survey_4jan2017
12 Dutch Legislation on Mining Activities Before producing minerals the holder of a license shall submit a production plan to the minister of economic affairs, who needs to approve this plan. The approval of a production plan is a Decree. Anyone can bring in their points of view and possibly lodge an appeal. As of 1 st of January 2017, the Minister must officially seek approval from city councils c.q. provinces The holder of an exploration or production license must take all steps that can reasonably be required of him to prevent that: - adverse consequences for the environment are caused; - damage as a result of soil movement is caused; - (external) safety is jeopardized; - the interest of a systematic management of resources is jeopardized. 12 NAS_SSM survey_4jan2017
13 Dutch Legislation on Mining Activities Dutch Mining Decree: is giving provisions for the manner exploration and production must be carried out: - the work plan; - OSD (Offshore Safety Directive) requirements (also applied onshore) - the measuring of soil movement; - the supplying of data; - environmental provisions, prohibition of (oil) spills; - spatial provisions, e.g. safe distance to buildings/platforms, roads and railways; - pipelines and cables; - termination of mining activities. 13 NAS_SSM survey_4jan2017
14 Dutch Legislation on Mining Activities Dutch Mining Regulation: gives detailed provisions about: - the way a mining company can apply for a license; - the content of work plans; - the use of explosives; - technical regulations for mining installations offshore; - technical regulations for drilling; - the obligation to report on a daily basis to SSM during drilling operations - regulations for the use, repairing and abandonment of wells (e.g. barrier philosophy, setting of abandonment plugs, surface and subsurface safety-valves); - regulations for the use of chemical substances; - data-management; 14 NAS_SSM survey_4jan2017
15 Dutch Legislation on Mining Activities Juristriction and competency can: - visit and enter all mining locations, onshore and offshore; - inspect all activities, documents, buildings and persons; - ask all relevant information; - apply instruments for administrative enforcement; - demand cooperation from Mining Companies - has a supervisory role under administrative and criminal law. 15 NAS_SSM survey_4jan2017
16 Dutch Legislation on Mining Activities Instruments for administrative enforcement: - formal (official) warning; - penalties/fines (offences of the Health and safetyregulations) (LOD: Last Onder Dwangsom) - penalty on a time-basis (imposed in case of non-compliance); - administrative coercion (a potential penalty to stimulate compliance within a time frame / Bestuursdwang); - (temporarily) stopping an activity or shutdown the location/installation. Under criminal law: Reporting the offence by writing an official document to the prosecutor (with description of the situation, examination etc.). The prosecutor can start a legal proceeding by the court. Offender can be sentenced to pay a high fine or send to prison. 16 NAS_SSM survey_4jan2017
17 Content 1. Oil and gas in The Netherlands 2. Organisation / Mining processes 3. SSM s mission / vision / supervision / plan 4. Bowtie / barrier concept / undesirable events / standards / inspections / trends 17 NAS_SSM survey_4jan2017
18 Change of mission statement To ensure that mining and the transport of gas are executed in a socially responsible manner 2017 To safeguard the public interest in the extraction and transport of minerals. Citizens must be able to trust that SSM stands for their safety and that of the environment. Furthermore SSM ensures by its actions that the supervised companies take responsibility for staff and the environment. 18 NAS_SSM survey_4jan2017
19 Independent position clear responsibilities: e.g. independent enforcement without previous approval of Minister. high quality expertise o authoritative judgment o recognised by all stakeholders (e.g. politics, knowledge centres, operators) access to knowledge: outsourcing studies and review by SSM o National research program on impacts of mining activities o Review of earthquake proof gas pipelines o Review of potential dispersion of oil from underground storage to drinking water reservoirs o Developing geohydrological check protocol when drilling wells o Lifecycle review mining installations mandate for own communication 19 NAS_SSM survey_4jan2017
20 Improvement of Supervision (1 of 2) 1. risk analysis (including assessment) o now: primarily based on expert judgement & (worldwide) incidents o to be improved: scientifically based advices 2. risk management o now: system supervision based on trust, soft interventions / fragmentary organised within the sectors, not as an integral approach o to be improved: existing knowledge / account assessment / strategic managing of sectors 3. risk communication o o now: left mainly with the Ministry to be improved: realistic imaging / undisputed expertise and judgment / direct external communication 20 NAS_SSM survey_4jan2017
21 Improvement of Supervision (2 of 2) SSM key values of Supervision Effect of Supervision Quality Cooperation Focus Professional risk assessment More risk-based (account assessment) regulatory regime arrangements based on sector review 21 NAS_SSM survey_4jan2017
22 Supervisory Arrangement Performance data per Operator Current Status and Developments of a Sector Account Analysis per Company (installation) Regulatory Regime Arrangement Supervisory Arrangement (Sector & Company / including Intervention protocol) 22 NAS_SSM survey_4jan2017
23 Regulatory Regime Approaches we have a mix of types of Regulatory Regime approaches an operator can initiate a performance-based action, based on a means-based regulatory regime approach, by e.g. introducing KPI s. Means-Based installation of a BOP & X-mastree reporting of events installation of a helideck exploration and exploitation permit Performance-Based oil in water overboard < 30 ppm ALARP major gas release / Zero tolerance backlog SECE s < 5 % Management-Based independent verification scheme permit to work system technical competency Operator equipment shall be maintained Operators perform Internal Audits Meta-Performance minimum reserved for calamities 23 NAS_SSM survey_4jan2017
24 Culture Ladder GENERATIVE PROACTIVE CALCULATIVE REACTIVE PATHOLOGICAL Chronic unease there is always a possibility for an incident Safety seen as a profit centre New ideas are welcomed Resources are available to fix things before an accident Management is open but still obsessed with statistics Procedures are owned by the workforce We cracked it! Lots of audits HSE advisers chasing statistics We are serious, but why don t they do what they re told? Endless discussions to re-classify accidents You have to consider the conditions under which we are working The lawyers/regulator said it was OK Of course we have accidents, it s a dangerous business Fire the operator who had the accident 24 NAS_SSM survey_4jan2017
25 (possible) Consequences Intervention matrix significant imminent irreversible important limited virtually nil proactive indifferent calculative criminal +++ Behavior Offender NAS_SSM survey_4jan2017
26 (OGC-X) OGC-3 OGC-5 OGC-1 26 NAS_SSM survey_4jan2017 NAS_SSM survey_4jan2017
27 Focus 2017 Annual Plan (1 of 2) Choices and Focus with scarce resources Integrated (umbrella) projects (risk based ranking) o Seismicity & Subsidence caused by subsurface activities o Subsurface storage (e.g. waterinjection nearby salt caverns) o Salt industry (e.g. integrity salt caverns) o Integrity Infrastructure (related theme inspections, e.g. well integrity overview, integrity pipelines, lifetime extension, safety culture, ) o Abandonment wells and installations p.s. in principle maximum one year per project 27 NAS_SSM survey_4jan2017
28 Focus 2017 Annual Plan (2 of 2) SSM internal quality projects o Reorganisation; competence and capacity o Transparency roles & responsibility; policy makers and regulator o Regulatory regime arrangements per (sub) sector o Escalation & Intervention tools; the Teeth of the Regulator o External publication of inspection results (transparency of the regulator) o Education & training/competence assurance plan o New data management system and management 28 NAS_SSM survey_4jan2017
29 Content 1. Oil and gas in The Netherlands 2. Organisation / Mining processes 3. SSM s mission / vision / supervision / plan 4. Bowtie / barrier concept / undesirable events / standards / inspections / trends 29 NAS_SSM survey_4jan2017
30 Bowtie-model Management System 30 NAS_SSM survey_4jan2017
31 Hierarchy of standards National legislative regime Standard developing organisations Laws Regulations Guidelines, Notices Internat. standards Regional standards National standards Regulatory and enforcing authorities e.g. ISO, IEC, IMO e.g. CEN (Europe) e.g. ANSI/API (US), BS, NORSOK, DIN (Germany) or NEN (NL) Trade associations Companies Industry standards Recommended good practices Guidelines Group specifications Company specifications (Project specifications) IOGP, IADC, IMCA, API, Nogepa,, Oil & Gas UK, Norwegian Oil & Gas Association Multinationals Independents / business units Manufacturers/ contractors 31 NAS_SSM survey_4jan2017
32 Danish-Norwegian-UK references DK-UK, 13 NO-UK, 37 DK-NO, 15 UK, 236 All, 6 Denmark, 28 Norway, 130 DK+NO+UK reference 465 standard titles in total Only 6 common (all) references 32 NAS_SSM survey_4jan2017
33 number of incidents - HPHT wells - shale gas - life time extension - etc. technology and standards Future threats influencing HSE performance - ageing workforce - competency gap - contracting out - etc. HSE management systems time improved culture - operator change - overconfidence - safety perception - etc. 33 NAS_SSM survey_4jan2017
34 34 NAS_SSM survey_4jan2017
35 Gas Releases Means-Based Performance-Based reporting gas release Management-Based Meta-Performance minimise gas releases 35 NAS_SSM survey_4jan2017
36 Industry involvement IRF gas release criteria SSM stimulate industry to carry out a project industry project to reduce gas releases 36 NAS_SSM survey_4jan2017
37 Gas Releases 37 NAS_SSM survey_4jan2017
38 Questions / Discussion 38 NAS_SSM survey_4jan2017
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