Oilfield Fatalities – Is The Government Focused on The Right Problem?

There are too many deaths in the oil and gas industry and companies need to correct that.  This blog posting is not about whether there is a problem.  It is about whether we are using the right tools to solve it.   In fact, the question is whether the simplest improvement is staring us in the face.

OSHA has targeted oil and gas with a number of enforcement measures and now NIOSH, which is a part of the Centers for Disease Control, has launched a long-term study of oilfield fatalities and propose solutions.  The ten-year project is outlined in a 30-plus page draft strategic  plan and it involves four steps.NOISH plan

The numbers are striking.   NIOSH says the oil and gas industry suffered 1,189 worker fatalities over a 10-year period.  The fatality rate for the sector is  25 fatalities per 100,000 workers, compared with a rate of 3.5 for all U.S. occupations.  NIOSH had to do some number crunching to determine industry-wide fatality figures because oil and gas includes so many different types of jobs, like drilling, production, construction and well servicing.

One thing that is striking about their analysis is the causes of death.   The number one cause was found to be transportation-related incidents, especially motor vehicle crashes.  Transportation made up about 40 percent of the total fatalities.  The next highest category was contact injuries, which caused 26% of the fatalities.

This raises two questions, are we addressing the right safety problem in oil and gas and do we really need to take 10 years to solve it?

On the first question,  the number one cause of death is transportation incidents, so why isn’t that our number one prevention focus?  Fix the transportation-related risk and the industry fatality rate falls from 25 to 15.   It is not an easy problem to fix, but it will never be fixed if we don’t address it. That means contractors need to implement vehicle safety training, enforce policies and recognize that the job includes driving to and from the job site.  It also means that operators need to take an active interest in their contractor’s transportation planning.

As to the second question, (why should it take 10 years to come up with solutions?), one comment to the agency is kind of funny.  NIOSH had asked for public comments on its plan.  Take a look at what one person submitted.  Doesn’t this sum up the way a lot of people feel about government studies?

NIOSH comment

 

 

Reading OSHA’s Future – What To Expect From Obama’s Final Year

OSHA ReflectionThe countdown to the next Presidential election is on and the Obama Administration has some political calculations to make concerning OSHA.  The agency can try to push through an aggressive menu of safety regulations and, if a Democrat wins the election, the next President may continue OSHA’s approach.  However, if the agency pushes too hard and a Republican wins, the next President may roll back the OSHA initiatives.

So it is worth taking a look at what is on OSHA’s agenda and what may happen in the next 12 months before the election.   The National Safety Conference has a very good analysis of the potential regulatory and non-regulatory initiatives that OSHA could push for.   You can find that article here.

One change that is not really covered by the article is the proposal to change Process Safety Management (PSM).  The Administration tried to address a number of different safety concerns, including the fertilizer explosion in West, Texas, high profile chemical plant incidents and the disturbingly high number of oilfield incidents through a multi-agency task force.  One of the primary recommendations of that group was to strengthen and expand the PSM rule.   However, the Administration has been slow to start the regulatory process that would drive those changes, so this may be one “bucket list” item where the Administration will run out of time before there is action.

One of the other calculations that the Administration must make is whether there will be opposition to its OSHA agenda in Congress.   Congressional pressure has slowed some proposals, like the silica rule.  However, the fractured state of the Republican majority, especially in the House may limit the effectiveness of any opposition and embolden the Administration to be more aggressive in the next year.

Court Rules That BSEE Can Fine Contractors

BSEE logoBSEE can write Incidents of Noncompliance that penalize contractors working on offshore oil and gas projects, according to a ruling from Department of the Interior’s Board of Land Appeals Judge Christina Kalavritinos.   This is one of the most controversial issues facing offshore contractors and the ruling opens them up to heavy fines or potentially being blocked from working offshore if they violate BSEE regulations.

As background, the Incident of Noncompliance, or INC, process is BSEE’s chief tool for citing companies that break safety or environmental rules on the U.S. Outer Continental Shelf.  In the past, BSEE only wrote INCs on oil and gas companies, even if the contractor was really responsible for the violations.  That changed with the Macondo disaster, when BSEE cited one of the contractors involved in that incident.   The agency later released an Interim Policy in August of 2012 warning  that it would be citing contractors with cause (the term used in the offshore world is “INCing them”) and giving guidance to BSEE investigators on how to cite contractors.

Many in industry questioned whether BSEE had the right to INC contractors, since the regulations were so clearly tied to the leasing process, which involves operators, not contractors.   Others warned that the potential for being cited changed the risk potential for contractors and would create insurance and other problems.   On the other hand, many supported the change because it would hold contractors accountable when they commit violations.

Judge Kalavritinos reviewed the history and legislative intent behind the penalty regulations and determined that, in effect, the government has always had the ability to INC contractors, even if it has not used that power in the past.  In making the ruling, she set a three part test:

In order to establish that a contractor violated 30 C.F.R. § 250.107(a), BSEE
must demonstrate only that, in accordance with § 250.146(c), the contractor was
“the person actually performing the activity” that violated § 250.107(a); the activity
being performed constituted, in accordance with § 250.107(a), “operations” under
the lease; and the contractor failed to perform such operations, in accordance with
§ 250.107(a), “in a safe and workmanlike manner[.]” Here, BSEE properly concluded
that Island was actually performing the activity, which violated § 250.107(a), and
which constituted operations under the Lease, and failed to perform them in a safe and
workmanlike manner, thus violating § 250.107(a).

Meaning, if the contractor is doing a job that is part of the operations at the lease site and the work is not done in a “safe and workmanlike manner,” BSEE can INC the contractor.   The law firm Phelps Dunbar has provided a very good analysis of the ruling, as well as posting the original decision itself.

What does this decision mean?  First, a caveat.  This is the first ruling on an emerging issue (what lawyers call a case of first impression).  It may be appealed.  A different judge looking at a different case may have a different opinion.

However, it stands to alter the risk and liability balance offshore.   Contractors performing work need to know that they may face penalties if they break the rules and those penalties can be quite high.  One contractor was fined $430,000 in 2014.    This could change the way underwriters view policies and it may alter the liability under contracts between operators and contractors.   Phelps Dunbar also points out that this could affect marine companies that used to only be regulated by the Coast Guard, because it means BSEE may also take an active interest in their compliance.


This ruling makes it even more important that offshore contractors implement the right policies, training and skills and knowledge competency systems for their offshore work.   If you need help with any of your programs or would like a third party review of your safety systems, contact us at SEMS@lifelinestrategies.com or (985) 789-0577.


 

Video: Heavy Truck + Rickety Bridge = Predictable Outcome

Don’t know the story behind this video or even where it comes from, but the lesson on risk assessment is too good to ignore.

The time to identify risks is before the project is launched and before an operation starts.   Common sense right?  But how many times do we wait until are in the middle of something to really identify what can wrong?    The message from this video is that you can’t want until you are on the bridge to figure out if it is safe to cross.

https://www.youtube.com/watch?v=lfKKlLiw1OU

While we are on the subject of trucks falling through things, a second video, this one of a bus falling into a sinkhole in Brazil is also too good to pass up.

 

 

White House Weighs New OSHA Reporting Rules

OSHA ReflectionEarly this month, OSHA sent its new rules on incident reporting to the White House Office of Management and Budget. OSHA has been working on modernizing the reporting requirements for five years and this is the last step before a final rule is published.  The draft rule is titled “Improve Tracking of Workplace Injuries and Illnesses” and one key goal is to update the reporting process to put it on line and to make individual information available to the public.

If the final rule looks anything like the proposal OSHA put out two years ago, this will dramatically change the way the safety record of an individual company is considered and shines a very public light on companies that have incidents.  It is not hard to imagine that this will be of great interest to employees, unions and customers.

OSHA has a webpage devoted to the change.   The ever informative website SafetyNewsAlert.com has a good overview of the reporting changes, at least as they were proposed.

Under the guidelines for developing new regulations, once a proposal has been sent to the White House for review, the reviewers have 90 days to finalize it.  However, the deadline often slips and is frequently guided by political calculations.  That said, if the Administration wants to finalize the regulations quickly, they could be out at the start of the new year.

Great Video Tool to Explain Offshore Operations

There is an incredible video online that gives non-industry people a real feel for offshore life.  It comes courtesy of European energy company Edison. It uses 360 degree video to show the company’s Vega A platform off the coast of Sicily.  The video technology allows the viewer to pan up and down and around in a 360 degree circle.  It starts with the view from a helicopter landing on the platform, tours the facility and even goes underwater with scuba divers to give the view from below.

The company has also  posted a second video that uses animation graphics to explain how the offshore platform works and the different processes that take place on the facility.

I know from personal experience how difficult it is to explain the complexity of offshore operations to people who aren’t in the industry.  This is a fantastic education tool!

BSEE Considers Risk-based Inspection Program

Logo & SEMSSmaller oil and gas companies operating in U.S. offshore waters need to pay close attention to the message that is coming out of Washington these days.   That message is that the government expects them to maintain high safety standards and focus on preventing incidents, regardless of their size or any unique types of hazards they may face on their facilities.  Now it looks like companies may face targeted inspections.

Here’s why. The government’s challenge in enforcing offshore safety and environmental laws is finding a way to even a very uneven playing field.  Offshore oil and gas operations are a world of contrasts.  Shelf and deepwater.  Drilling, production and decommissioning.  Old and new facilities. Large operators and small operators.  Each different type of operation has its own hazards and risks.

Yet BSEE must push for the safest and most environmentally sound approach for the entire industry.  The deepwater Macondo incident and the regulations that follow highlight the problem.   Macondo was a large-scale disaster, both in loss of life and environmental harm.  The goal of the post-Macondo initiatives was to prevent that kind of accident from happening again.   There may be little chance that a smaller facility could have an incident on a Macondo scale, may they do have more, smaller-scale incidents.

How can the agency address both large-scale and smaller-scale incidents?  Officials with the agency appear to be wrestling with just that problem.    Last month, BSEE Director Brian Salerno wrote in an online blog that there is a discrepancy in offshore safety.   The Center for Offshore Safety has released its second annual safety report and it shows that COS members did not experience any fatalities or and one loss of well control in 2013 and 2014.    However, Salerno points out that the overall safety statistics for the U.S. Outer Continental Shelf showed three fatalities and eight well control incidents in 2013 alone.  The Director also points out that in 2013, COS members reported 23 lifting incidents versus 197 for all operators.  He concludes that “The disparity in numbers demonstrates that the COS membership is comprised of companies that have made a real commitment to safety. It makes sense that their performance in preventing such incidents would exceed industry norms.”

He is not saying that other operators do not share the same commitment to safety, but it is implied.   COS’s members are generally deepwater operators who have larger and newer projects.  Many of them have sold off the shelf projects which carry the headaches of older, smaller and lower profit-margin shelf projects.  Who bought them? Generally the operators who are not members of COS.    Those operators need to pay close attention to the words of Director Salerno.  BSEE is holding them to the same standard as the largest, most financially sound operators.

But COS members also need to be careful about not resting on their safety record.  As we have seen deepwater incidents carry the potential for enormous consequences.

Where does BSEE go next?  The agency is sending signals that it wants to shift to a risk-based inspection program.  One of the bullet points raised by BSEE officials at the September COS forum was the potential to use “SEMS Maturity as a factor in the Risk Based Inspection program.”   That means BSEE could factor plan sophistication into its decisions on who to inspect and how often.   It could look at previous incidents, equipment maintenance or other factors and target companies that don’t have what Director Salerno calls “a real commitment to safety.”

This is not the time for either large or small operators to be complacent about their approach to safety.

OSHA: Commit The Crime, Do The Time.

OSHA_logo_blackDoes anyone doubt that safety violations are considered crimes and that safety incidents could put company officials in jail?  Just last week the former head of coal company, Massey Energy went on trial accused of breaking mine safety rules.  A terrible explosion at a Massey mine five years ago killed 29 miners.  This summer, Bumble Bee and two of its managers entered guilty pleas after being charged in the death of a worker at a California plant.

OSHA has made it very clear recently that it intends to pursue criminal charges against executives for safety violations and that it wants to increase the penalties.   Here are some of the most important keys to the OSHA effort:

Justice Department crackdown on corporate wrongdoing – The so-called Yates Memo, written by Deputy Attorney General Sally Quillian Yates, is not an OSHA document, but it outlines the Justice Department’s intentions to seek criminal penalties against company executives for corporate misdeeds.   It is listed here because OSHA and EPA regulations fall under this guidance.   One point that jumps out from the memo is the section on how investigations should be pursued:

Both criminal and civil attorneys should focus on individual wrongdoing from the very
beginning of any investigation of corporate misconduct…by focusing on individuals from the very beginning of an investigation, we maximize the chances that the final resolution of an investigation uncovering the misconduct will include civil or criminal charges against not just the corporation but against culpable individuals as well.

The message on safety is that, no matter how far the corporate offices are from the job site, no executive should feel that he or she is shielded from the repercussions of an OSHA violation.

OSHA outreach to U.S. and state prosecutors – Individual agencies like OSHA don’t have the power to decide who will be criminally charged and who won’t.   That decision rests for the Justice Department at the Federal level or state attorneys generals where state laws may apply.   Attorney Howard Mavity of the Fisher & Phillips law firm is a keen observer of OSHA trends.  He has written in his blog that the Region IV OSHA Administrator announced that he had met with all of the U.S. attorneys in his region “to encourage increased criminal prosecution related to OSHA violations and fatalities” and that he now plans to meet with state Attorneys General for the same purpose.   Why is this important?  First because it emphasizes to prosecutors that they have another tool on their Swiss Army Knife of charges they can bring against executives and second because state prosecutors may have a lower bar to successfully bring a case.

OSHA wants to increase  penalties – In testimony before Congress this month, OSHA administrator David Michaels made a strong pitch for increasing civil and criminal penalties.  Senate bill S. 1112,  Protecting America’s Workers Act (PAWA), raises penalties to roughly the same level at EPA penalties.   While it may be unlikely to pass the Republican-controlled Congress, Michaels says “OSHA’s current penalties are not strong enough to provide adequate incentives.”

As the Justice Department has made clear, ignorance of the law is not a defense and “Indifference to general safety or to a specific hazard can also be evidence of intentional disregard of or plain indifference to the requirements of the law. ”   

In other word, executives cannot turn a blind eye to hazards or safety requirements without putting themselves in
OSHA’s scope.