Transcript Managing Construction Risk

Cultivating Safety in the
Oil and Gas Industry
Craig A. Halpern, CSP, CPE, ARM
Risk Control Manager - IMA of Colorado
Rocky Mountain Chapter – ASSE – Oil & Gas PDC – March 26, 2008
Cross Roads of Accident Statistics
Is Occupational Safety Really Improving ?
2002
2003
2004
2005
2006
TCR - Total
Recordable Case
Rate
(100 employees)
5.3
5.0
4.8
4.6
4.4
TCR
Oil & Gas Industry
(Explor/Drill/Prod)
3.4
1.8
2.6
2.1
3.2
DART - Days Away,
Restricted, and
Transferred (DART)
(100 employees)
2.8
2.6
2.5
2.4
2.3
DART - Oil & Gas
Industry
(Explor/Drill/Prod)
2.2
0.8
1.2
1.2
1.9
Fatality Rates
The Oil & Gas Industry still has room for improvement
2003
2004
2005
2006
Occupational Fatality
Rate
(per 100,000
employees)
Fatality Rate
Oil & Gas Industry
(Explor/Drill/Prod)
Total Annual Fatalities
4.0
4.4
4.3
4.2
21.8
43.9
19.3
19.8
17
29
17
21
What the Newspaper’s Tell Us
High County News
“Fatalities in the energy fields: 2000-2006”
April 2, 2007 by Ray Ring
“At least 89 people died on the job in the Interior
West’s oil and gas industry from 2000 to 2006, in
a variety of accidents, including 90-foot falls,
massive explosions, poison gas inhalations and
crushings by safety harnesses.”
What the Newspaper’s Tell Us
High County News
“Fatalities in the energy fields: 2000-2006”
April 2, 2007 by Ray Ring
• “Ricky Erb, 19 11/27/06 Schneider Energy Services
Head injury, blown out of 5-foot hole when a reportedly 40-year-old pipeline
Pending ruptured. He and rest of crew were using a cutting tool to open the
pipeline, and they didn’t expect it to contain pressurized gas.
•
Jacob Farmer, 19 11/16/06 Leed Energy Services Inc.
Struck by falling pulley on a well-servicing rig. The victim’s father works in oil
and gas. Pending
•
Phillip Smith, 44 11/6/06 Easy Street Crane Service
Crushed by truck. Pending
What the Newspaper’s Tell Us
High County News
“Fatalities in the energy fields: 2000-2006”
April 2, 2007 by Ray Ring
•
Joshua Arvidson, 24 1/25/06 Calfrac Well Services Ltd.
Engulfed by 40,000 pounds of sand in a storage bin. $27,825
•
Zac Mitchek, 42 11/25/05 Patterson-UTI Drilling Co.
Electrocuted while doing maintenance on a light plant for a drill rig. $11,900
•
Larry Hill, 42 11/7/05 Union Drilling Inc.
Fell 55 feet from platform on drill-rig derrick while handling hoisted drill
pipes. OSHA said the company did not ensure that the worker was using
proper fall-protection gear. $19,990
What the Newspaper’s Tell Us
High County News
“Fatalities in the energy fields: 2000-2006”
April 2, 2007 by Ray Ring
•
David A. Vickers Jr. (age not provided) 6/27/06 MarMc Transportation Inc.
Run over by a forklift while working with a crew moving a drill rig; he was
resting in the shade of the forklift, and a truck driver (not the forklift driver)
hopped on it and drove forward. The company had just been cited by
Wyoming OSHD for inadequate forklift training. $1,800
•
Shane L. Judd, 41 6/9/06 DHS Drilling Company
Fell 90 feet from top of a rig’s derrick. He hadn’t hooked up his fallprotection device. Investigators noted the crew was pulling long work shifts,
drilling in the rain; the ambulance took 45 minutes to reach the remote site.
$3,150
What the Newspaper’s Tell Us
High County News
“Fatalities in the energy fields: 2000-2006”
April 2, 2007 by Ray Ring
•
Bobby Ray Owens, Jr., 52 11/11/06 Associated Pipeline Contractors
Driving a bulldozer, blading the right-of-way for a new transcontinental gas
pipeline, he hit a 36-inch pipeline, went up in a 300-foot fireball that shook
the ground and could be seen for miles. Pending
•
Steve Robinson, 35 6/1/06 High Desert Services Inc.
Slipped from a platform and got wedged between two 11-foot-tall water
tanks he was heating with a propane-fired service truck, suffered ”thermal
injuries” from being ”trapped against a heated metallic surface.” It happened
around sunset as he worked alone at a remote gas-well site; his body
wasn’t discovered until the next morning.
What the Newspaper’s Tell Us
High County News
“Fatalities in the energy fields: 2000-2006”
April 2, 2007 by Ray Ring
•
Charles Lindstrom, 57 8/17/06 Energy Systems Ind., Inc.
“Blunt-force trauma” while he worked alone on the repair of a pumping unit.
$750
•
Karl Heller, 31 4/5/06 Cyclone Drilling
Crushed by 3,400-pound tank that his crew was lifting with a 1.5-inchdiameter rope when the rope broke. OSHA noted most of the crew was
inexperienced and didn’t know the rope’s load rating; the company didn’t
have a procedure for training workers to stay clear of loads. $3,750
What the Newspaper’s Tell Us
High County News
“Fatalities in the energy fields: 2000-2006”
April 2, 2007 by Ray Ring
•
Jose E. Figueroa, 18 9/1/06 Grant Geophysical Corp.
Crushed in rollover of an ATV, while servicing seismic equipment exploring
for oil and gas. He was driving and overloaded the cargo rack. He was part
of a 45-person crew that spoke mostly Spanish, working for a Texas
subsidiary of a Canadian company; the OSHA investigator needed an
interpreter. $9,450
•
Kory Dawson, 35 4/13/06 Green Oil & Field Service Inc.
Struck, pinned to the ground and crushed by crank arm of oil-pumping rig
while his crew tried to repair a part on the rig. Victim died at the scene, but
the company reported it to OSHA a week later. $6,750
OSHA’s Response - LEP
• Local Emphasis Program for Oil & Gas
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–
–
–
Fatality Rate is 5 times the national average
Focus: Drilling and Servicing Companies (RigData)
Excludes employers with 10 or fewer employees
Counties: Weld, Garfield, Mesa, La Plata, Las
Animas, San Miguel
Contractual Relationships on
a Construction Site
Owner
General Contractor
Dirt Contractor
Underground
Utilities
Concrete Former
Steel Erector
Architect
Plumber
Electrician
Contractual
Relationships on a
Oil Well Site
Operator
Investors
Roustabout
(Site Prep)
Driller
Casing
Contractor
Drilling Consultant
Cementing
Crew
Wireline
Crew
Workover
Crew
Driller
Contractual
Relationships on a
Oil Well Site
Drilling
Consultant
Casing
Contractor
Cementing
Crew
Operator
Roustabout
Wireline
Crew
Investors
Work-over
Crew
Operators Use …
Master Service Agreements
•
•
•
•
Set expectations for each contractor
Specify minimum insurance requirements
Layout indemnification for liability
Typically includes mutual indemnity
verbiage where both the Operator and
Contractor hold each other harmless.
Drilling Contracts
• Agreement between the Driller
and the Operator only.
• Driller will indemnify the
Operator for the Driller’s actions
and the actions of its
employees and sub-contractors.
• Operator indemnifies the Driller
for the actions of subcontractors to the Operator.
Driller
Drilling
Consultant
Cementing
Crew
Data Logger
Operator
Casing
Contractor
Roustabout
Wireline
Crew
Work-over
Crew
Drilling Contracts
• Result:
• Operator required to pick up the
costs associated with injuries or
property damage the Driller
causes to other contractors.
OSHA’s Response - LEP
• Who is the real “Wildcard” ?
– New/Small Contractors
• Master Service Agreements are typically seen as the
extent of the Operator’s involvement in safety.
• OSHA’s experience tells them that Operators (Owners)
need to be involved in safety oversight?
– Not afraid to use the Multi-Employer Worksite rule to
get this done.
Multi-Employer Worksite
Operators are being expected to take a more active role
in safety oversight of contractors.
•
•
•
•
Exposing Employer
Creating Employer
Correcting Employer
Controlling Employer
– Operators have a contractual and financial incentive
to exercise oversight, and therefore exercise more
control than they realize.
Multi-Employer Worksite
$ 1 Million Fine for Pipeline Fire that Killed Five
OSHA: Conditions unsafe in pipeline near Georgetown
By Sara Burnett, Rocky Mountain News (Contact)
March 25, 2008
On Monday, the Occupational Safety and Health Administration said those conditions contributed to the Oct.
2 deaths of five men inside the penstock at Xcel's Cabin Creek hydroelectric power plant. The men, all
employees of California-based RPI Coating, died after an electrical spark ignited a fire, trapping them inside.
Four others escaped.
$845,100 fine levied
OSHA levied $845,100 in penalties against RPI, and $189,900 in penalties for Xcel "for alleged serious and
willful violations of federal workplace safety and health standards."
Xcel was issued two willful citations, for not taking precautions to protect its workers from hazards in the
tunnel and not ensuring proper rescue services were available.
What's next
The district attorney for the Fifth Judicial District will decide whether criminal charges should be filed based
on a report from the Clear Creek County Sheriff.
Top 10 OSHA Citations
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1910.23
1910.130
1910.147
1910.184
1910.212
1910.305
1910.1200
1910.151
1910.157
5(a)(1)
Floor Openings/Guardrails
PPE/Respiratory Protection/H2S
Lockout/Tagout
Slings/Hoisting Equipment
Machine Guarding
Electrical Wiring
HazCom
First Aid
Fire Extinguishers
Improper set up of Drilling Rig
or Workover Rig
If you don’t own a copy of
API Recommended Practice 54 or 74…get a copy!
Industry’s Response
• Pre-Qualify Contractors – (e.g. PEC’s SSQ)
– Trailing indicators = 40% weighting
• TCR (< 2.1 ?)
• DART Rate (< 1.2 ?)
• EMR < 1.0 & you’re better than the rest
– Safety Management Programs = 60% weighting
•
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Substance Abuse Program
Safety Program Review
Training Documentation
Mandatory JSA – Job Safety Analysis
Other Metrics to Consider
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WC Claims Cost per $ 100 payroll
Number of WC Claims per $ 1 million of payroll
Property Damage Costs
Preventable Accidents per 10 vehicles
• Although Important…these are all metrics which only
show how “bad” we are doing…hence the name
lagging indicators
Other Metrics to Consider
Internal Benchmarking based on Insurance Workers’ Compensation Costs
NCCI Code
WC Insurance Cost
(per $ 100 of payroll)
Target
(less than 65% loss ratio)
Loss Ratio = Losses/Premium
1320
Operators
Pumpers
$ 6.81
$ 4.43
6235
Drilling Crew
$ 24.57
$ 15.97
Where do we go from here ?
• Compliance will always be a tough sell to
management
• Citation avoidance is a function of luck
Where do we go from here ?
• There is no good way to quantify the
number of accidents and the cost of
accidents that were avoided by our safety
program
• There is no good way to quantify the
number of spills or permitting violations
that were avoided by our environmental
management program
Cultivating Safety Performance
through Accountability
“You can only manage what you can measure”
- Deming
Cultivating Safety Performance
through Accountability
Safety needs to have Corporate Goals just like
Operations and Finance
1. Figure out how to tie Safety Goals to Operational
Goals
2. Measure what matters most – Activities Drive Safety
3. Identify “Leading Indicators” and set goals
4. Develop and publish executive level exhibits regularly
5. Tie performance goals to performance reviews
• Major League Baseball Team
– Owner’s Expectations: Make Money or Win the World Series ?
General Manager Skipper
(Manager)
Player
- Revenue
- Cost Control
- Merchandise Sales
- Attendance Numbers
- Batting %
- RBIs
- ERA
- Saves
- Win/Loss %
- Making Playoffs
- Win World Series
- Recruiting
US Coast Guard’s Performance Management Plan
BEFORE
Safe Waterways
Increase compliance
10%
Fines/Incentives
AFTER
Mission
Outcome Goals
Strategy
Reduce Accidents/Deaths
Decrease Substance Abuse
and Increase Maritime Skill
Partner with Associations,
Community, & Not for Profit
# of Fines
Program Alignment
10% reduction in Accidents &
Deaths
Increase # Inspectors
and Training
Resource Alignment
75% reduction in Accidents &
Fatalities
Accountability on all Levels
• Employee Performance
reviews need to be tied to
metrics to truly drive
performance.
– Safety = 10 – 30% of
total
• For Executives, safety
needs to be at least equal
to production or financial
incentives.
Safety Goals/Activities
VP of Operations
District Manager
Drilling Manager
Lead Pumper
Tool Pusher
Rig Operator
Pumper
Rig Hand
Truck Driver
- Maximize
Revenue
- Control Costs
- Number of field
visits completed
- Number of safety
meetings attended
- Pre-Qualified
Contractors list updated
- Well down time %
- WC deductible costs
- Property damage
costs
- Average days to close
maintenance requests
- % Safety Training
completed
- Daily Safety Huddle
%
- Competent Person
Training Completed
- Number of JSAs
completed
- Number of Safety
Contracts
- Rig Inspection
score
- % modified duty
accommodated
- % safety meetings
attended
- Be ready to start
work
- Maintain safe
driving record
- Wear PPE
- Utilize designated
medical provider
- Keep worksite
orderly
Leading Indicators vs. Lagging
Lagging Indicators
– TCR
– DART
– EMod
– WC Costs
Leading Indicators
– Management
Commitment
– Supervisory
engagement
– Hazards eliminated
– Training/Education
– Behavior Observations
– Attitudes about Safety
– Process
Improvements
Leading Indicators in Energy Industry
Schlumberger
Goal:
Reduce Fatalities from driving
– Balancing workloads to
reduce fatigue
– Dispatch and schedule to
use safer highways
– Don’t expect the crew to
push home…get a room for
the night
– Training on tire blowouts
Leading Indicators in Energy Industry
ExxonMobil
Goal:
Meet Delivery on Offshore Platform
– Executive involvement in
walk around inspections
– Foreman involvement in
morning huddles
– Hazard Identification
– Observation & Coaching
– Housekeeping
– Training on Hazard
Identification
Leading Indicators in Energy Industry
Grant Prideco
Goal:
Develop ownership in a
consistent safety
management process
– Active Leadership by
Executives
– Location Management
Engaged and Responsible
for Safety Process
– Hazard Abatement
Closure Rate
– Order & Housekeeping
– % Safe
– Recognition
Leading Indicators in Energy Industry
Other Ideas
– Rig operator for workover company
shares in profitability of rig
– Incentive programs encourage
training attendance
– Imbed safety into task training
– Contractor Pre-Qualification
– Utilization of JSAs
– Safety should be 10-30% of total
performance review
Closing Thoughts
Approach Safety like a Doctor
1. Ask where it hurts
2. Measure a couple of items to confirm
3. Prescribe a course of action
4. Identify 2-3 measures and track and adjust
5. Celebrate the success
Select another target and start over again building on what
you have in place
Resources
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www.AESC.net
www.IADC.org
API/AESC – Safety Conference
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www.BalancedScoreCard.org
www.ASSE.org
American Strategic Management Institute
Resources (cont’d)
www.dbo2.com SafetyNet
www.clmi-training.com PerformTrax
[email protected]
(303) 615-7407