01 October 2011

Deepwater Energy Risk: Protecting Business Performance...

The Operational Risk professionals are applying the use of effective software tools in the Energy Sector. After all, the core disciplines of OPS Risk lie with safety and security and the current reality of deepwater drilling beyond 8,000 feet of ocean is here now.

There are few organizations that understand the risks associated with drilling and capturing precious natural resources under these demanding conditions more than the Marine Well Containment Company, (MWCC) based in Houston, TX USA. This new and quickly expanding consortium of ten energy exploration companies have banded together to address the "All Hazards" requirements as a result of the Deepwater Horizon catastrophe. Never before, have so few private sector energy companies converged to take on readiness, and managing operational risks with so much capital and mission focus.

Simultaneously, others close to the maritime risk management industry such as Lloyds Register Group have embarked on the bold mission to assist organizations like MWCC in the future quest for our insatiable thirst for energy. They too, understand the necessity for mitigation and prevention of another Macondo incident where a blowout preventer failed:

ModuSpec BV and Scandpower AS, members of the Lloyd’s Register Group, are developing a new tool with origins from the nuclear power industry that may prove highly useful to subsea engineers, offshore drilling managers, and regulators.

Operational Risk Management (ORM) is the process that evaluates the likelihood of a casualty occurring while comparing it to its associated consequences. BOP Monitor, a new tool under development by Scandpower applies ORM principles in a highly specific manner to one of the most important, and highly complex systems on board a drilling rig, the blow out preventer.

Last year’s Deepwater Horizon disaster cast an enormous spotlight on blow out preventer technology because the one sitting atop the Macondo Well failed to accomplish its mission, and millions of gallons of oil spilled into the sea. A one-in-a-million chance? Perhaps. In the decades since subsea blowout preventers have been used, countless have worked as-designed mitigating the disastrous consequences we all saw last summer. As the industry moves toward the arctic however, failure of these systems is absolutely not an option and risk management is of utmost importance to operators and coastal states.

The combination of MWCC and Lloyds Register to address the challenges ahead in deepwater drilling is a natural, in the Gulf of Mexico and beyond. Perhaps even more so, is the division Lloyds Register Quality Assurance (LRQA) who are experts in Business Assurance and protecting business performance. They are the people who go beyond the words in a regulation or international standard to apply a holistic and multi-faceted approach to your business achieving higher performance. MWCC will need that business assurance and performance management going forward if they are to work in concert with the United States regulatory agencies such as Bureau of Ocean Energy Management, Regulation Enforcement (BOEMRE).

All of the plans and processes will not be enough for those operators who are drilling in deepwater. This is exactly why exercising and testing those people, plans and processes will be a verified requirement:

Tracking and verification of exercise requirements for spill responders is an BOEMRE function that ensures that all responders have the required experience and expertise to respond to an offshore facility spill. Operators are required to conduct annual Spill Management Team “table top” exercises. These drills are required to test the Spill Management Team’s organization, communication, and decision-making in managing a response. The operator is also required to conduct an annual deployment exercise of the equipment staged at onshore locations identified in their plan. Each type of equipment staged onshore must be deployed and operated every 3 years. The operator is required to exercise their entire response plan every 3 years. Another exercise that tests the ability of the operator to communicate information in a timely manner is the required annual notification exercise required for every facility that is manned on a 24-hour basis. The operator must notify BOEMRE at least 30 days prior to these drills occurring. This notice provides an opportunity for BOEMRE to witness the exercise or to request changes in the frequency or location of the exercise, equipment to be deployed and operated, or deployment procedures or strategies. BOEMRE can also evaluate the results of these exercises and advise the owner/operator of any needed changes in response equipment, procedures or strategies.

The operational risk readiness factor is at the core of all of the exploration companies as it pertains to the Safety and Environmental Management Systems (SEMS). All of the MWCC consortium companies will already be well versed in "Operating Integrity Management Systems" yet, as all ten come together to work on a combined solution, a baseline of standards and guidelines will be paramount to their inevitable success.

Remember, all of this focus is on the prevention of another "All Hazards" incident. Much of which stems from the lack of confidence in equipment or procedures being replicated by humans, at just the right moment and if an emergency condition presents itself. That is why testing and exercising the multi-facets of the entire spectrum of threats is necessary, beyond those related just to the equipment integrity or failure:

More specifically, the goal of an offshore energy exploration and production safety regime must ensure that:

• Life, environment and property are protected in an effective, consistent, transparent and predictable way; both for those directly affected and involved in offshore operations.

• Risks are properly evaluated and all prevention and mitigation measures are identified;

• Control measures are implemented and maintained by all parties in accordance with mandatory risk assessments as well as what is prescribed by regulation;

• Conditions of safeguards, facilities, procedures, personnel and organizations are continuously monitored throughout the lifetime for proper functioning and compliance with all regulatory requirements and to assure that risks do not increase;

• Technical innovation and efficiency improvements can be implemented safely and responsibly.

And then there is the kind of risk, that many are still not thinking about in the Gulf of Mexico. The risk that exists in other offshore drilling regions of the globe today:

Gunmen attack ExxonMobil supply vessel kidnapping one, wounding another

By Dorothy Davis

Industry sources have reported that gunmen have attacked a ship supplying an ExxonMobil (NYSE:XOM) oil rig off the coast of Nigeria, kidnapping one crew member and injuring another.

Nigel Cookey-Gam, a spokesman for the ExxonMobil subsidiary Mobil Producing Nigeria (MPN) told The Associated Press that the kidnapping happened early Friday (09/30) off the coast of Nigeria's Akwa Ibom state.

"Mobil Producing Nigeria, operator of the joint venture with the Nigerian National Petroleum Corporation, confirms that in the early hours of Friday, some armed men attacked a supply vessel near one of our platforms, offshore Akwa Ibom State," Cookey-Gam offered in the official statement. “The incident has been reported to security and relevant government agencies”

According to ExxonMobil, MPN is the second largest oil producer in Nigeria having begun production of crude oil in February 1970 from the Idoho field, located off the coast of Akwa Ibom State.

Violence and extortion driven kidnappings have been prevalent in Nigeria’s oil and gas -rich southern delta since 2006 when militants kicked-off a series of attacks targeting oil companies. In 2009 a government amnesty program offering Niger Delta rebels an unconditional pardon and cash payments brought about a short period of reprieve, but has not been successful in quelling the targeted violence in mostly impoverished the region.

Deepwater Energy Risk in the next decade will be expanding off the coast of Brazil and in the Arctic:

In a warming and changing Arctic, China is stepping up its activities in the Arctic Ocean Basin. While China’s interests and policy objectives in the Arctic Ocean Basin remain unclear, Beijing is increasingly active and vocal on the international stage on issues that concern the region. To that end, China is actively seeking to develop relationships with Arctic states and participate in Arctic multilateral organizations such as the Arctic Council. The region includes a rich basket of natural resources: The U.S. Geological Survey estimates that 25 percent of the world’s undiscovered hydrocarbon resources are found in the Arctic region along with 9 percent of the world's coal along with other economically critical minerals. There is presently scarce open source information on China's Arctic policy and very few public pronouncements on the Arctic by Chinese officials.

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