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Copyright © 2015 The Rapid Response Institute LLC. All Right Reserved.
The Rapid Response Institute www.theRRInstitute.com
“Meeting the Challenges of a Volatile World”
Implementing a Systemic Culture of Safety:
Experiences from the Upstream Oil & Gas Sector
Scott M. Shemwell, D.B.A.
Disclaimer The views, opinions, positions or strategies expressed by the author and those referenced organizations and/or individuals are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of the conference organizer and affiliated organizations, sponsors, The Rapid Response Institute LLC, or any employee thereof. The author make no representations as to accuracy, completeness, suitability, or validity of any information contained herein and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its use. Moreover, the author does not endorse any of the organizations or products referenced in this discussion. Links to their web sites are provided only as a courtesy for those interested in additional information/research.
While much of the material has a USA focus, the same issues are being address globally!
Oil & Gas Value Chain
Upstream (E&P) Midstream Downstream
BP Macondo / aka Deepwater Horizon Incident
• April 20, 2010 o Game Changing Incident
o More than just another industrial accident
o Eleven deaths
o Lost of Transocean drilling rig ~$750 million asset
• Six Month “Deepwater” Drilling Moratorium o De facto ALL Gulf of Mexico shallow water drilling too
• Economic Impact – J.R. Mason
o Up to 19,000 jobs lost
o Wages lost ~ $1.1 billion
o ~ $500 million lost tax revenue
o At least one drilling company bankruptcy
o Environmental impact still unfolding
o + BP staggering costs!
• New / Onerous Regulatory Reform o Beginning with BOEMRE October 12, 2010
o Continuing on a Global Scale
Houston: We Have A Problem • Societal
o Legitimate Concerns o Not Just Poor Perception or
Misunderstanding o Not Just the USA
• Political o Both Sides of the Aisle o State & Local
• Engineering Process o Systemic & Complex o Extending Across Supply Chain
Risk Management
Now Bet-Your-Company!
Apollo 13 Damaged Service Module
What Are Operators Trying to Accomplish?
• Typical Statements
o Remote operations
o Run the field like a factory (Lean)
o Optimize Reservoir/Operations performance
o Make more money!
Crude Oil Spot Price vs. US Drilling Rig Count
(January - November 2008)
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$)
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Weekly All Countries Spot Price US Drilling Rig CountSource: Oil & Gas Journal and Baker Hughes
Crude Oil Spot Price vs. US Drilling Rig Count
(January - November 2008)
0
20
40
60
80
100
120
140
160
Sp
ot
Pri
ce (
US
$)
1550
1600
1650
1700
1750
1800
1850
1900
1950
2000
2050
2100
US
Dri
llin
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ig C
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Weekly All Countries Spot Price US Drilling Rig CountSource: Oil & Gas Journal and Baker Hughes
To Remain Profitable, Costs Must be Reduced
Faster than Production Declines
Production Decline Curve
Current Costs
Time
Opera
ting C
ost P
roductio
n R
ate
Current
Profit
Loss
Reduced Costs
Profit
Source: Strategic Decision Sciences
Production Decline Curve
Current Costs
Time
Opera
ting C
ost P
roductio
n R
ate
Current
Profit
Loss
Reduced Costs
Profit
Source: Strategic Decision Sciences
Create an Agile, Resilient, Sustainable Enterprise Maximize Shareholder Value
Market Realities
Reservoir Economics
The Economic Value Proposition Matrix® Model
Translate Technology to the
Language of Business
Buying Influences
• Economic • Technical • User • Coach
Source: Miller Heiman
Relevant Uses Include: • Investments in IT aka Digital Oilfield • Security Investment Value Analysis • Safety and Environmental Analysis
High Demand at current Crude Oil Price!
After 2010 In July 2010, Shell, Chevron, ConocoPhillips and ExxonMobil committed to
providing a new containment response capability for the U.S. Gulf of Mexico.
Systemic Risk Management • Systemic vs. Occupational Only
o Systemic • Man, Machine, Process, Environment
Interface
• Holistic - More than Fault Tree Analysis
• Linkages are Weak Points o Include Supply Chain Linkages
• The Best Perspective
o Occupational • Simplistic
• Slogans and OSHA “like” reporting
• Good not Great (or acceptable today)
• Systemic is ONLY Viable Approach o Real Time Systems (Smart Equipment)
o Appropriate Human Training
o Human Factors & Behavioral Economics
Safety & Environmental Management Systems
• Required for US Federal Waters Operations
• Soon Everywhere
• Integrating SEMS into Operations Management Systems (OMS)
• Independent Audit
High Reliability Management
Characteristics of a Robust Safety Culture
In a culture of safety, people are not merely encouraged to work toward change; they take action when it is needed. Inaction in the face of safety problems is taboo, and eventually the pressure comes from all directions — from peers as well as leaders. There is no room in a culture of safety for those who uselessly point fingers or say, "Safety is not my responsibility, so I’ll file a report and wash my hands of it."
-- Institute for Healthcare Improvement
• Leadership • Problem Identification and Resolution • Personal Accountability • Work Processes • Continuous Learning • An Environment for Raising Concerns • Effective Communications • Trust and Respect • Inquiring Attitude
-- James A. Watson First Annual COS Forum
Since Each Organization has a Culture of Safety, there are Thousands of Culture of Safety in the sector!
Technology Solutions Enabling Successful Cultures of Safety
Operations Management System • More than a Website or Policy • More than a Checklist • Seamless across the Supply
Chain • Standards & Regulations in the
Work Flow • Cloud-Mobility Enabled • Automatic Audit • Risk Mitigation • ISO/IEC 17021 – Conformity
Assessment
90% of field operations personnel are contractors
People Resist Change
Change Management • Defined Process
• Three Step o Initial
o Staged
o Sustained
• Specific to ME!
• Cross Culture Negotiations
• Resistance Management
• Online/Game Version Available Soon
Towards a Culture of Safety • Competency Assurance
o More than Just Training
o More than Record Keeping
o Organizational Commitment
o Demonstrable
• Change Management is a Proven “Iterative” Process o Awareness & Education o Pilot Projects o Wide-Spread Integration
• Good Practices Available o Inside industry o External
Implementation Guidelines Transformation Sustaining
Self Assessment Guide Quick Assessment anyone can conduct Ten Minutes or Less
COS Maturity Self Assessment • Online Global Survey
• February 2015
• n=197
• Oil & Gas Companies
• Engineering
• Service Companies
• Management
• Engineering
Even for those companies meeting the Level V Maturity, keep in mind that many of the
organizations in the supply chain and working next to you in the field may not be meeting
these criteria.
By the Scoring Definition, this may change the Maturity Level of the Actual Operation or
Project.
Other Technology Enabled Solutions • Near Miss Reporting—BSEE
• COS Initiatives o Activity SPI: a forward looking measure that
can give early indication of the performance of a barrier and can help explain why a desired result was achieved or not.
o Outcome SPI: a retrospective measure based on the result of an activity or incident
• Competency Assurance—IADC
• Comprehensive, Full Life-Cycle Contractor Management
Bowtie Model
Operational Excellence “No Compromise to Safety, Compliance or Operational Performance”
- International Oil Company
Cost Reduction Strategy, 2015
Today’s Major Critical Issues • Significant Crude Price Decline
o Severe Financial Crisis
o Large Reduction in Force
• Operational Excellence is a Focus o Pressure on Management and Technical Staff
o Layoff Results in loss of Key Industry Knowledge
o Merger & Acquisitions
• No Relief from Regulators or Public o Culture of Safety is Mandatory
o All Economic Participants ~4,500 companies
Some Key Trends • API RP-75 Recommended Practice for Development of a Safety and
Environmental Management Program for Offshore Operations and Facilities Update o Contractor Management o IT / Cybersecurity
• Operations Management Systems Emerging o Competency, Safety, Cost Reduction
• Technology Development Continues o Water Management
• Mergers & Acquisitions • Disruptive Big Data
o $115 million in 20 VC oil & gas deals in 2015
Oil and gas is one of the last giant industries yet to be fundamentally disrupted," said Reid Calhoon, RunTitle's chief executive officer.
This Has to Change! • Challenge to a New Generation
• Complex Energy Infrastructure Critical for the Global Economy
• Societal Intolerance
• License-to-Operate At Risk
• Cost of Failures are High & Real
• Not Just Oil
Additional Information
Definition of Culture (a Checklist) 1. Culture consists of ideals, values, and assumptions about life that guide specific behaviors. 2. Culture consists of those aspects of the environment that people make. 3. Culture is transmitted generation to generation, with the responsibility given to parents, teachers, religious leaders, and other
respected elders in a community. 4. The fact summarized in point number 3 means that there will be childhood experiences that many people in a community remember
happening to them. 5. Aspects of one's culture are not frequently discussed by adults. Since culture is widely shared and accepted, there is little reason to
discuss it frequently. 6. Culture can become clearest in well-meaning clashes. This term refers to interactions among people from very different
backgrounds. They may behave in proper ways according to their socialization, but there is a clash when the people from different cultures interact.
7. Culture allows people to "fill in the blanks" when presented with a basic sketch of familiar behaviors. 8. Cultural values remain despite compromises and slip-ups. Even though people can list exceptions, the cultural value is seen as the
constant that continues to guide specific behaviors. 9. There are emotional reactions when cultural values are violated or when a culture's expected behaviors are ignored. 10. There can be acceptance and rejection of a culture's values at different times in a person's life. Common examples involve rebellious
adolescents and young adults who accept a culture's expectations after having children of their own. 11. When changes in cultural values are contemplated, the reaction that "this will be difficult and time consuming" is likely. 12. When comparing proper and expected behavior across cultures, some observations are summarizable in sharp contrasts. Examples
are the treatment of time, the spatial orientation that people adopt, and the clarity (versus lack thereof) of the rules and norms of certain complex behaviors
Brislin, Richard. (1993). Understanding Culture's Influence on Behavior. Fort Worth: Harcourt Brace.
Codicil • Books available on Amazon • PennEnergy Governing Energy Blog • Take the Culture of Safety Self
Assessment • Monographs • See Our Website for Links www.theRRInstitute.com
The Rapid Response Institute • Scott M. Shemwell, D.B.A.
o Career in Upstream Energy Services and use of IT • COO of small public energy
services company • Former member of Halliburton
Energy Services Leadership Team • Former Oracle Executive
o Early in DOF o Technology Sales to Petroleum Industry
• 30 + Years • More than $1 Billion in Revenue
Generated o Author and Speaker on the global stage
• Enabling our clients to posture themselves in their market segments so that they can thrive in volatile markets and capitalize on uncertainty, not suffer because of it
• Organizational Agility, Resiliency, Sustainability
www.theRRInstitute.com www.OARS360.com
Contact • Scott M. Shemwell
• www.theRRInstitute.com
• +1.281.414.6958
