Performance-Based Safety Regulation

Performance-Based Safety Regulation Peter Bjerager, DNV GL National Academy of Sciences, 15 April 2016 1 SAFER, SMARTER, GREENER

DNV GL in brief We classify, certify, verify and test against regulatory requirements, rules, standards and recommended practices as an independent party We develop new standards and recommended practices We qualify new technologies and operational concepts We give independent expert advice to enhance sustainable performance Founded 1864, 15.000 people in 100 countries, 2.000 in USA and Canada 2

DNV GL and Regulatory Regimes Prescriptive in the sense that the regulatory standards specify how the regulated entity must act or what it must do Performance-based in that regulatory standards require the achievement of a predefined outcome but leave the means of achievement to the regulated entity Management-based, whereby the regulated entity is required to engage in certain analyses, planning, and reporting activities, such as conducting annual risk analyses, but is not assessed according to a pre-defined performance outcome or test Self-regulation, whereby the regulated entity is expected to follow industry consensus standards and guidance, such as those of private standard-setting organizations 3

Most regulatory schemes are hybrid Performance-Based Safety Regulation Setting desired safety objectives Adaptive to specific asset and locations Safety Management System Defines processes and controls Drives continual improvement Prescriptive Requirements Where standardization is needed Standardization may improve reliability and reduce costs Company Requirements 4

Offshore Oil & Gas Regulation Norway 1980 Alexander Kielland Performance-based internal control and risk-based regime Mandatory prescriptive elements UK 1988 Piper Alpha 1992 Safety case regime (safety critical elements, performance standard, written schemes, external verification, safety management system) Denmark 2006 Move from prescriptive to goal-based including risk reduction Brazil 2007 Performance-based Operational Safety Regulation (SGSO) Australia 2009 OPPGS - Safety Case Regulation 5

Offshore Oil & Gas Regulation USA 2010 Macondo SEMS (API RP75) with 3 rd party certification and more Mexico 2013 Energy Reform Regulation under development ASEA has declared it will be goal-based regulation Canada - Legacy regulation is prescriptive - New drilling and production regulation is goal-based which is the direction EU Directive Goal-based regulation in Offshore Safety Directive Implementation 2016-2018 Applies also outside EU for EU-headquartered companies 6

Occupational health & safety improved by factor of 10 in 20 years 7

Major accidents 1974-2013 shows little sign of improvement Note API RP754 Measuring Process Safety is being adopted 8

Assets in multiple regulatory regimes Drilling (IADC) 2014 Model HSE Case is a goal-based safety system Operator driven through contracts Shipping Classification International Safety Management (ISM) Risk-based approaches Designs that cannot be handled by existing prescriptive requirements Developing rules using Formal Safety Assessment (FSA) Technology qualification Cross border pipelines Norway Denmark UK Germany Netherlands Belgium - France Russia Finland Estonia Sweden Denmark - Germany South East Asia USA - Canada 9

Example of cross border pipeline: North Stream From Russia through Baltic Sea to Germany 2x1200 km/750 miles 48 diameter Pass several territorial areas between Russia and Germany All countries acknowledged the ISO compliant DNV-OS-F101 except Germany DNV-OS-F101 is estimated to be applied to 65% of the offshore pipelines world wide 10

Advantages of Performance-Based Safety Regulation The operator acts clearly as the responsible Operator is in the best position to assess and mitigate the risks Specific for asset and location which vary greatly for offshore E&P Allows for innovation and technology development Allows for tailored solutions Allows for cost-effective solutions 11

Challenges related to Performance-Based Safety Regulation Transition from prescriptive to performance-based regime Competence of regulator and industry Can become too documentation heavy Benefits from collaborative regulative environment Litigation based on performance based regulation 12

Final remarks on Performance-Based Safety Regulation Performance-Based Safety Regulations with prescriptive regulations (may be selectable by user) Comprehensive Safety Management System preferably risk-based Safety culture programs seeking to achieve both occupational and process safety Dynamic barrier management underpinned by risk assessment Independent 3 rd party for verification and certification Performance monitoring and sharing safety metrics including leading and lagging process safety metrics Knowledge sharing across industry and countries 13