Safety and environmental stewardship have always been important priorities for the offshore oil and gas industry. In recent years, serious offshore incidents forced the industry to take a hard look at its processes and procedures for ensuring that every operation is conducted with the highest regard for human safety and protection of the sea, land, air, and animal life. While the majority of offshore operators and service companies implemented plans to continuously improve their corporate safety and environmental standards, offshore operators are now legally obligated to adhere to new regulations. In the US Gulf of Mexico (GOM), the US Bureau of Safety and Environmental Enforcement (BSEE) established Safety and Environmental Management Systems (SEMS) regulations, which companies operating oil and gas and sulfur leases in the Outer Continental Shelf (OCS) must meet with regularly audited safety and environmental programs.
From Recommendation to Requirement
The concept of SEMS was developed in response to the 1990 finding of the National Research Council’s Marine Board that the Bureau’s prescriptive approach to regulating offshore operations had forced the industry into a compliance mentality. Further, the Marine Board found that this compliance mentality was not conducive to effectively identifying all the potential operational risks or developing comprehensive accident mitigation. As a result, the Marine Board recommended, and the Bureau concurred, that a more systematic approach to managing offshore operations was needed.
In response to the Marine Board findings, the American Petroleum Institute (API), in cooperation with the bureau, developed Recommended Practice (RP) 75-Development of a Safety and Environmental Management Program for Outer Continental Shelf Operations and Facilities. The API also produced a companion document, RP-14J, for identifying safety hazards on offshore production facilities. API RP-75 was published in May 1993 and, in 1994, the bureau published a notice in the Federal Register that recognized implementation of RP-75 as meeting the spirit and intent of SEMS. RP-75 was updated in 1998 to focus more on contract operations, including operations on mobile offshore drilling units. This recommended practice was updated several times in the following decade; a third edition was published in May 2004, which was reaffirmed in May 2008.
The Deepwater Horizon accident in April 2010 dramatically changed the regulatory landscape, leading to BSEE’s implementation of the first mandatory SEMS rule for oil and gas operators in the OCS. Also known as the Workplace Safety Rule, it required all OCS lessees to have a well-documented SEMS program in place by 15 November, 2011. On 15 November, 2013 all operators with facilities in OCS waters of the GOM were required to have a SEMS audit. According to BSEE, 84 operators were subject to the November audit deadline, and 72 ended up completing the initial audit. The 12 operators that did not complete the audit were cited by BSEE for failure to demonstrate compliance with the SEMS requirements of the Workplace Safety Rule, 30 CFR Subpart S.
Of the 12 companies that had not satisfied the rule, five were notified by BSEE to halt operations because they failed to provide an audit plan and completed audit report. Those operators were given 3 days to reach a safe point in operations before ceasing activities. While most of the companies were conducting decommissioning activities, the elements of a SEMS program are applicable to all offshore operations.
The seven additional companies submitted audit plans but had not yet completed their SEMS audit. Those companies were directed by BSEE to immediately provide a copy of their SEMS program and have the company chief executive officer certify, under penalty of perjury, that the company implemented the SEMS program. Other enforcement measures such as civil penalties could be assessed if operators did not comply with the rules.
SEMS compliance calls for these programs to be monitored and, if necessary, updated annually through a comprehensive auditing process that includes submission of an audit plan, a thorough review of all aspects of the program and reporting of audit findings through a formal report to BSEE. In the first round of SEMS audits, companies had the option to conduct these audits internally with their own designated and qualified personnel. BSEE has now expanded the regulation under what is referred to as “SEMS II,” which is designed to enhance existing SEMS programs adding several additional requirements such as employee participation plans, reporting unsafe working conditions, and additional empowerment of field-level personnel with safety management decisions under Stop-Work Authority and Ultimate Work Authority. For conducting future SEMS audits, SEMS II also requires operators to hire an independent and third-party (I3P) audit firm that is accredited by an organization such as the Center for Offshore Safety. While the operator may use members of its own internal organization on the audit team, a representative of the third-party firm must, at a minimum, lead the audit. Operators now have a SEMS II compliance deadline of 5 June 2015.
Many operators are now in the process of evaluating each audit option—a third-party audit team leader supplemented with their own personnel or an audit team fully staffed with I3P personnel—to determine which route makes the most sense for their organization. To answer this question, operators need a solid understanding of what kind of information must be gathered, analyzed, and tracked in the audit and weigh that against the resources they have available to successfully complete the audit. The goal should be not merely passing the audit, but also improving the safety and environmental management system.
Availability of Internal Resources
Operators must assess whether they have adequate personnel to dedicate to the audit process. Operators will have to coordinate with their audit service provider to ensure that the entire audit team meets the guidelines set forth by BSEE that reference COS guidelines published on their website at centerforoffshoresafety.org. The center’s qualification guidelines for third-party SEMS auditors have now been incorporated into federal law under SEMS II. These guidelines call for an audit team consisting of a team leader and two additional members. More team members may be added if the size and scope of the client asset require it. Subject matter experts may be brought in to help assess specific technical processes. While some operators—particularly majors and larger producers—may have the necessary number of experienced personnel to fulfill these requirements, they tend to represent a minority share of facilities in the GOM.
The majority of facilities are owned and managed by smaller operators that may find it difficult to dedicate personnel to an auditing cycle. In these cases, it may be preferable to completely outsource the audit to an I3P with the necessary number of qualified personnel. Regardless of the option selected, no auditor on the team—either from inside the operator’s organization or from a third party—is allowed to have had any involvement in developing the management system within the past 2 years.
Expertise of Internal Resources
Operators must not only consider the number of personnel they have dedicated to the audit. Additional consideration must be given to the qualifications, experience, and skills of each team member such that they complement those of the I3P lead auditor. Also, the team, as a whole, must fulfill the qualification and experience requirements contained within the COS guidance documents. The original SEMS rule identified 13 program elements to be audited, including management commitment, safety and environmental information, hazards analysis, management of change, operating procedures, safe work practices, training, quality assurance of critical equipment, pre-startup reviews, emergency response and control, incident investigation, audit of management program elements, and documentation/record keeping.
At a minimum, each audit team member must meet a set of rigorous qualification requirements as defined by COS:
- Deemed qualified or competent as a safety and/or environmental management system auditor in accordance with the I3P’s documented process
- Has a minimum of 2 years of offshore or related oil and gas industry operations or safety and/or environmental management system audit experience within the previous 5 years
- Participated in at least three onsite management system audits in the past 3 years as an active member of the audit team, subject matter expert, observer, or as an active management representative
- Trained in the application of safety and/or environmental management system standards, management system auditing, and audit techniques
- Completed COS SEMS auditor training
In addition to this list, the lead auditor is required to meet additional, more stringent qualification and competency criteria. If any member of the audit team fails to meet one or more of these requirements, BSEE reserves the right to reject the audit plan submitted by the I3P.
If an operator decides to conduct the audit with minimal third-party involvement, they must ensure that their internal team is thoroughly equipped and well-versed in how to audit each program element. An accredited third party should not only be able to competently audit these elements, but also provide wider industry experience regarding how these elements are managed in other offshore assets. In addition, large outside auditing bodies must have auditor qualification and competence verification systems that have been in place for many years. These verification systems exist because of the auditing requirements of the International Organization for Standardization and Occupational Health and Safety Advisory Services.
Key Attributes of I3P Auditors
A third-party audit services provider should ensure that each SEMS auditor meets clearly defined prerequisites for education, work experience, training, appropriate knowledge, and skills to expertly conduct all functions of certification and auditing activity. This should be achieved through a rigorous screening and selection process that ensures auditors have the right profile of skills, knowledge, and qualifications to conduct audits in a consistent and thorough manner. The screening process at Bureau Veritas includes in-person interviews, technical reviews of each auditor candidate’s work history, competence reviews, verification of management system auditor training completion, and periodic witness audit monitoring.
Unbiased Identification of Potential Improvements
The primary goal of the audit process is to ensure the SEMS program keeps the operation running safely and sustainably. Therefore, the audit team must be committed to continuous improvement built on best practices. The team must be able to identify work functions that are out of date or falling behind with regard to standards requirements, and then provide detailed analysis of any system gaps. If done properly, this drives continual improvement in the asset’s operation and safety record. And if these procedural improvements are captured and shared with other assets as best practices, the operational and safety track record of the entire organization improves.
While a SEMS audit team with internal members may be able to drive sustained improvement through their detailed working knowledge of the management system, there is a risk of familiarity with the system leading to an underestimation of risk or lack of perception of gaps in the management system. Too much familiarity may also lead to communication problems in employee safety, as the operator’s personnel are typically so familiar with workplace risks that concern disappears. This can lead to a failure in noticing safety or environmental hazards in the field or in a management system. A fully independent third-party audit team, that regularly conducts audits from one operator to the next, may be in a better position to identify unsafe practices and then leverage their experience from other audits to communicate possible resolutions through industry best practices.
An operator’s auditing choice is also guided by changes to the regulatory process. The SEMS II regulations are still relatively new, but they will be updated to reflect changes in offshore technology and processes. While these changes tend to be gradual, the auditor must be aware and up-to-date on how regulatory revisions will impact an operation, and proactively communicate possible resolutions through industry best practices.
Finally, an operator must consider which auditing process will move them most efficiently from a “compliance mindset”—conducting the audit because they have to comply with regulations—to a “behavior mindset” in which all personnel perform their work with the goal of minimizing risk. This new mindset also empowers every worker to intervene when they see an unsafe work practice, without fear of reprimand from their superiors. At the end of the day, we as an industry are not meeting the intent of SEMS if we do not reduce both accidents and spills.
Regardless of which auditing path they choose, operators realize the importance of maintaining their SEMS programs to not only comply with regulations, but also to ensure the safety and long-term productivity of their assets. As operators have completed the first round of SEMS, it has become apparent there is a need for contractors and service companies to also undergo third-party SEMS audits. One of the primary goals of industry is to generate a standard that the industry can use where one COS SEMS audit, either on an operator or contractor, will be accepted throughout the industry and reduce the replication of audit. There is an opportunity to adopt common language and frameworks throughout the industry to drive improvements in safety management effectiveness. By carefully considering the factors presented above, every company working offshore can make the most informed auditing decision and help drive the industry toward new levels of safety and environmental sustainability.