National Academies Committee Performance-Based Regulation Oct 17, 2016 Washington, DC Elmer P. Danenberger III edanenberger@gmail.com Bud
80+ nations with offshore oil & gas programs Vision: Outstanding safety and environmental performance by the offshore industry worldwide
Regulation: What s Really Important Quality (not quantity) Regulations Regulators Communication Companies Stakeholders Challenge Operators Verify
Many years have passed since we had to admit that writing safe design and operations requirements into our detailed regulations was not the way to go. We realized that the maintenance of detailed regulatory requirements on how to construct safe installations or operate them properly was resource intensive, and that these requirements would sooner or later lag behind best industry practices. Such detailed requirements could even hamper technological development. So, since 1985 we have systematically worked on revising our detailed regulatory specifications. We introduced a new kind of regulatory portfolio with just a few regulations mainly stating what should be accounted for by the duty holders. Our statutory requirements today describe the goals that should be strived for not how to achieve them. Magne Ognedal Mr. Safety Director (Retired) Petroleum Safety Authority Norway
PSA does NOT: Assume the operator s responsibility for selecting solutions and measures Accept tasks that are industry s responsibility Request documentation except that which is necessary for case processing, follow-up, or monitoring
Many current safety regulations are unduly restrictive because they impose solutions rather than objectives. They also are out of date in relation to technological advances. Guidance notes lend themselves to interpretations that discourage alternatives. There is a danger, he said, that compliance takes precedence over wider safety considerations and that sound innovations are discouraged. Lord Cullen Piper Alpha Inquiry
The International Expert Meeting in Noordwijk, the Netherlands (1997) In many countries, the offshore industry is developing faster than the government's ability to regulate them, and that the traditional approach to regulation is inhibiting the industry's capacity for innovation and technological change. This is because regulators impose a prescriptive approach, telling the industry exactly what measures it must take and requiring little interpretation on the industry's part. Prescriptive regulations can foster a 'compliance mentality' within industry and discourage the development of new technologies and creative practical solutions. There is also a limit to the extent to which it is possible to add more and more specific prescriptions without this resulting in counterproductive regulatory overload. Under this approach governments also maintain a strict, regular and costly inspection service, which is resource intensive. In contrast, performance standards specify the outcomes to be achieved but not how to achieve them. For this reason, they can accommodate to changes in technology and the creation of new hazards. They also allow firms flexibility to select the least costly or least burdensome means of achieving compliance.
The International Expert Meeting in Noordwijk, the Netherlands (1997) On the other hand, because they are sometimes imprecise, performance standards are to that extent more difficult to enforce. The success of performance - based approaches depends on effective goal setting, with active communication and a sophisticated and multidisciplinary skills profile of both the operators and regulating authorities.
Increased Attention to Safety Culture Culture is the primary predictor of desired outcomes The main job of leaders is to foster culture Regulatory practices are influenced by and affect culture
Safety Culture Role of the Regulator It is not possible for a regulator to create a culture of safety in an organization by inspection or audit; that culture needs to come from within the organization. The regulator s role is to regulate in a manner that helps the organization be safe. 2012 National Academies report entitled Evaluating the Effectiveness of Offshore Safety and Environmental Management Systems
Safety Management Regime: Consistent with the direction of leading IRF programs (i.e. Norway, UK, the Netherlands, Australia) Tells companies what they have to achieve, not how they must achieve it Encourages innovation and technological advances Empowers safety leaders and develops a strong safety culture
Compliance Regime Safety Regime Regulator Control Operator Control Compliance Management Risk Management Highly Prescriptive Limited Prescription Regulator Directs Regulator Verifies
Safety Management Regime: Drilling Operator SEMS Bridging Document Contractor SEMS IADC HSE Case WOMP Emergency Response
Rulemaking Slow, cumbersome process Never complete Always out-of-date Difficult to change Overlapping agency responsibilities
Standards Challenges: International Consistency Timeliness Rigor It s a Small World
IOGP Report (2010): Regulators Use of Standards 1,348 references in total. From more than 60 organisations. Only 13% referenced by two or more regulators. Most regulators use undated references to standards. Referenced standards are voluntary in most regulatory regimes
Incorporating Standards: Lag and Confusion Standard Latest Version Regs Version RP 2A WSD (22 nd ed) 11/2014 10/2007 RP 2FPS 10/2011 3/2001 RP 2D 12/2014 5/2007 RP 14B 7/2012 10/2005 ANSI/ASME Boiler Code 2015 2005 S 53 11/2012 9/2004 (RP 53) Updated eff. 7/2016 RP 96 3/2013 Not referenced BUL 97 12/2013 Not referenced Spec 16A 11/2004 Not referenced added eff. 7/2016 Spec 16D 7/2004 Not referenced added eff. 7/2016 NACE MR 0175 2015 1/2003
Safety management systems call for continuous improvement in all facets of operations, including standards. Jan de Jong, Inspector General, SSM, the Netherlands
Regulatory regimes function most effectively when a single entity has broad safety and pollution prevention responsibility. Core responsibilities and objectives must be clearly identified. Gaps, overlap, and confusion are not in the interest of safety or regulatory efficiency. International Regulators Offshore Safety Conference, Vancouver, October 2010
UK Maitland Report December 2011 More formal mechanisms should be established to ensure seamless, strategic and coordinated working between the regulatory authorities. The Panel s preferred option is the creation of a joint Competent Authority, similar to that currently operating on the mainland. As a less satisfactory, but easier to implement, alternative, the new Memorandum of Understanding (MoU) recently agreed between HSE and DECC should be developed further in order to capture the key benefits of the Competent Authority model.
Deepwater (>1000 ) Production: 6 billion bbls and 17 Tcf of gas produced since 1979 One fatality (crane incident) No significant fires or explosions
The greatest danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it. Michelangelo