Many attendees won’t have quite known what to expect at this year’s biannual Offshore Europe event in Aberdeen, UK. Given the harsh consequences of late that the depressed oil price has brought to the North Sea – including over 150,000 job losses – OE 2017 could very well have been a flop. Despite the state of the industry, the mood of the event was surprisingly positive as numbers exceeded expectations; with 40,000 attendees, Europe’s largest E&P event has retained its title through an incredibly insightful, engaging and busy four day program.
There was a keynote, technical session, exhibitor seminar or activity for everyone, no matter the type of stake you held in the industry – but transcending the diversity were five recurring themes that affect us all. Particularly, 5 recurring themes that affect EHS. Here are our main takeaways from Offshore Europe 2017.
1. There’s no place for complacency in the new oil and gas industry
“You can’t cross mountains with canoes.” – Robin Watson, CEO, Wood Group
The need to avoid complacency was introduced right from the get go at this year’s event. With CEOs from BP, Shell, Petrobras and Wood Group discussing the issue at the opening plenary, unwillingness to change continued to feature throughout the conference as a substantial challenge for the oil and gas industry. Referencing the first European inhabitants of America, Robin Watson of Wood Group described that although canoes worked perfectly in navigating the many intertwining rivers of the East, once the explorers hit the unexpected Rocky Mountains, they also hit a big problem: you can’t cross mountains with canoes. You can’t take on new challenges with old solutions.
Through innovation and “being smart”, the breakeven point for shale has fallen by a third from $81/barrel in 2014 to $54/barrel in 2017 – this kind of innovation is what the oil and gas industry needs to survive, by driving necessary change in order to diversify business and to ultimately grow with emerging markets, rather than resisting them. However, in such a high risk industry, it can be difficult to pursue change safely; discussing the future of E&P based on big data, Janeen Judah, President of the Society of Petroleum Engineers (SPE), compared innovation in oil and gas to that which we see coming from Silicon Valley – Elon Musk, for example, is not afraid to fail fast, but because failure can be so catastrophic in this sector Ragnhild Ulvik, VP of Innovation at StatOil, suggested that majors should be looking to fail on a small scale and then adapt successes gradually throughout operations. All in all, that “the future is not the same as the past” echoed throughout all conversations around complacency – which rings true for safety as well.
2. Automation will reduce risk but bring new EHS challenges
If there were one topic that stood out at OE ’17, it was automation, digitization and robotization (that’s a lot of –ations.) The fall in oil price was, as expected, a widely discussed issue which featured somewhat in every single keynote; it shocked the industry, and, to many, has exacerbated the need for automation in operations. Automation can not only cut costs but reduce risk, and as oil and gas is now expected to do more with less – another event catchphrase – it can positively assist in streamlining processes and promoting sustainability. The time an engineer spends manipulating data can be significantly reduced through smarter software, which Pro-Sapien is facilitating for EHS personnel. Site or rig inspections can be carried out by drone, demonstrated by exhibitors Texo Drone, with incredibly sensitive cameras picking up on details that the human eye may miss whilst removing personnel from the risks associated with inspecting hard-to-reach areas. Supply chain operations can be coordinated through speaking with management system technologies, as with VOR by Streamba, asking questions to get answers in a matter of seconds that otherwise might have taken someone hours to deliver.
Although the industry stands accused of being slow to adopt new technology, the innovation is there – Schlumberger is a shining example of an oil and gas company that is embracing it, with CIO Eric Abecassis showing a video at the event of the company’s inspections drone being flown manually (with a view to automated flying) over a hydraulic fracturing storage material site to identify risks and malfunctions, detecting the level of inventory that remains.
Simultaneously, automation and robotization brings a new set of equipment that workers will have to learn how to operate. We expect this to be a top challenge for EHS personnel in coming years, with the need for new training programs to address changing job functions and the preparation required to properly manage teething problems that emerge with the adoption of any significant operational change.
A substantial counter-problem to automation was largely avoided throughout the event, which applies to more than just the oil and gas industry: with automation comes job losses. Businesses are cutting costs and reducing risk, allowing the industry to survive, but workers are losing livelihoods in the process which is an unfortunate reality that the world will have to face up to in coming years as artificial intelligence gains pace. Perhaps too big an issue for an E&P focused event, but an issue nonetheless.
3. Don’t let human factors in safety get left behind
One of the most interesting topics for us was discussed by EHS and Risk managers from National Oilwell Varco (NOV), ConocoPhillips, and ENI UK alongside Step Change In Safety, a member-led organization which is dedicated to the UK oil and gas industry. The workforce is our primary safety asset and in a society now seemingly focused on technology and data, the ‘human factors’ in safety are often overlooked. As Emily Taylor from Step Change In Safety (SCIS) pointed out, human factors are often seen as “touchy-feely” concepts that are difficult to address in a somewhat “macho” industry such as oil and gas. David Smith of ENI UK listed human factors, or non-technical skills, as:
- Situation awareness
- Decision making
- Performance shaping factors (stress, fatigue, ergonomics, etc.)
Avoiding such conversations has led to the situation in which 48% of SCIS survey respondents report they have been asked to do something they don’t feel competent to do whilst at work. Inadequacy is a huge safety risk that must be addressed through meaningful communication between management and staff. ConocoPhillips is now adopting the SCIS steps program which aims to facilitate conversation to improve on the human factors that go into safety.
4. Fluctuating oil price impacts risk, so be ready for the upturn
After every dip in oil price in the past, there has been an upturn which has resulted in the recruitment of thousands of staff to support demand and refill positions that were lost during the downturn. Rapid onboarding poses a substantial threat to safety, pronounced in the oil and gas industry by complex multi-contractor environments combined with the prize itself being very dangerous. Tim Magill from NOV shared statistics demonstrating that new employees accounted for more accidents than any other group in 2014-15. We then saw new employees in 2016-17 rise by 97% after more than 100,000 job losses in previous years, resulting in a 30% increase in Total Recordable Injury Rate (TRIR) across the industry.
Oil price fluctuations = labor fluctuations = skill fluctuations = risk fluctuations
Training isn’t just a problem in oil and gas; it remains a top challenge for EHS professionals in general, as reported by ISHN’s State Of The EHS Nation annual survey.
At OE ’17, it was largely expected that the price of oil would rise and stagnate at $60/barrel – no matter whether $60/barrel or $100/barrel, the industry will face an adjustment period to the new equilibrium prompting changes in responsibility, job spec, equipment and process (especially with the adoption of robotics), all of which directly impact safety. The NOV philosophy of “Practice does not make perfect; perfect practice makes perfect” neatly summarizes the importance of rigorous training to ensure safe operations, which although linked to oil price are required regardless.
Interestingly, the need for training not just of new recruits but of all employees was highlighted by an audience member who discussed how his junior upstream business had invested heavily in training for newly onboarded staff, but subsequently saw that it was the longer serving staff members who experienced more incidents due to complacency.
5. Oil and gas organizations must improve their societal permission
Ragnhild Ulvik of StatOil, along with panel colleagues, was asked which company – in any industry – she thinks is “getting things right.” The reasoning behind Ulvik’s answer embodied an issue that didn’t quite make it into the headline of any keynotes, but that came up time and time again nonetheless. Answer: Apple. Why? Apple is close to their consumers, which is something oil and gas companies struggle with. This struggle to connect with the public was mentioned on Day 1 by Ben Van Bürden, CEO of Shell, when answering audience questions on the biggest threats to survival of oil and gas organizations. Bürden called this issue the ‘societal permit to operate’, which he explained is facilitated by understanding society and its members everyday problems – not always rational problems – and by getting onto the same wavelength to solve misinformation that has fueled a negative perception of the oil and gas industry.
The need for engagement with society was highlighted by audience member David White of SPE during keynote How are we going to embrace and deliver sustainability in the sector? in which a fellow attendee accused oil and gas majors of exploiting the Niger Delta and not caring for its people or environment – White suggested that it must be made clear that oil and gas benefits everyone, not just the companies profiting from it, quoting that “right now, 35% of the energy in this room has come from gas.” Through connecting with the public, the industry can improve its reputation by way of education and a two-way conversation.
Much more was discussed at Offshore Europe 2017, including the ability to look at other industries for inspiration, and decommissioning in the maturing North Sea oil basin. The event strongly demonstrated the industry’s commitment to health and safety, with around half of keynotes and workshops focusing heavily on this area. If anything, EHS professionals can take away knowledge of the challenges to come, with the ability plan effectively for the existential change the industry understands it needs. What is comforting to know is that, despite massively reduced profits and sequential job losses that the industry has suffered – which was apparent in the 35% reduction in attendance at OE ’17 – the oil and gas industry remains the biggest spender on EHS software, and budgets are growing.
If you have any questions or would like to learn more about how smarter EHS software can improve process at your company, speak to us today or download our whitepaper Streamlining EHS With SharePoint: Oil & Gas.
Offshore Europe will be returning to Aberdeen, UK in 2019 – find more information on the official website. We hope to see you there!
Streamlining EHS With SharePoint: Oil & Gas
Considering the new challenges that face the oil and gas industry - including sustainability, market pricing and demand volatility - is important in deciding how to move forward with your EHS management. The question is not whether EHS management is beneficial; it’s how to make it reliable, useful and enjoyable.