The Macondo spill last summer brought the offshore energy sector an avalanche of new regulations and requirements. But lost in the headlines and national attention has been one new initiative that will have an enormous impact on energy-related companies, especially the thousands of contractors who make offshore drilling and production possible.
Last November, the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) published a rulemaking that requires all offshore operators to have a safety and environmental management system. This approach, called SEMS, is based on recommended practices developed by API and found in its RP 75 document, but where RP 75 allowed companies to choose the elements of a safety management plan, the new regulations say all offshore operators must cover 13 areas in its SEMS plan:
BOEMRE says the SEMS plans must be in place by November 15th of this year and it must be audited within two years of being implemented.
This means the industry has just eight months to get into compliance with a very complex regulation. Compare that to the requirement for TWIC cards. The industry had 20 months to comply and companies still had a hard time meeting the deadlines.
Needless to say the operators are scrambling to address this new SEMS rule. BOEMRE estimates it will cost the operators more than $92 million to implement and maintain their SEMS programs. Unfortunately, the agency didn't even try to estimate what it would cost contractors who work on offshore facilities to meet the requirement. Depending on what the operators put in their plans, the cost to contractors may be enormous and if they don't work aggressively to meet the new deadlines, they run the risk of losing work when the November 15th deadline hits.
So it is worth taking a close look at how the contractors will be impacted, especially in three areas:
Hazard Analysis – All of the operators must perform a hazards analysis on all of their facilities, identifying any safety or environmental risks, determining how to avoid them and what training is required for personnel working on the facility. Contractors must make sure their safety programs address potential hazards and supply those plans to the operator they work for.
Training – Operators must make sure that all contractor personnel have the skills and knowledge to do their jobs in a "safe and environmentally sound manner" and to do their assigned jobs. Most experts believe those are two separate categories – what a worker needs to know to work on the facility and what a worker needs to know to do his or her specific job, such as welding or electrical work. Personnel will also need to go through periodic refresher training and drills under the SEMS rules. How important is this? At a March 15th public meeting, BOEMRE officials stressed that hazard analysis and training must be completed before operators can consider their SEMS program complete.
Recordkeeping – Operators will be responsible for making sure their contractors meet the SEMs requirements. That means that in order to pass their audits, operators may need to be able to document each contractor's safety plans and each of the contractor employee's training, refresher courses and drills.
Hazard Analysis, training and recordkeeping are commonplace offshore and are already a part of the industry's approach to safety. That is one reason that the number of offshore incidents has declined so steadily over the past few years. But the SEMS regulations remove much flexibility companies had and bring with them the potential for fines, Incidents of Noncompliance and even the potential for shutting down operations.
As a result operators and contractors alike need to make sure that they don't just meet the November deadline, but that they make sure they implement the right programs and systems. Part of that effort involves trying to reach common approaches to training and recordkeeping. There are very good reasons for doing this.
Have you ever heard the story about the man with two watches? He could never be sure what time it was. Without industry consensus, it will be hard to figure out what is truly safe. Imagine if more than 100 offshore operators all set different training requirements for contractor personnel? How will the agency judge one operator's program without a common approach?
From the contractor's standpoint it could be a nightmare - training, retraining and training their personnel again to meet each operator's unique program. Experts will tell you that if a worker is taught multiple, conflicting safety rules, the resulting confusion can increase the potential for accidents. It is like asking a quarterback to learn two different team's plays and keep them straight during a game.
Recordkeeping presents a similar problem. Multiple databases raise costs for operators and contractors alike. They also make it much more difficult for auditors and the agency to make sense of the information.
The good news is that the operators and many of the contractors are working on common approaches to many of the elements of SEMS. If they are successful it will make it much easier for the industry to meet the November 15 deadline and will increase safety at offshore facilities. After all, that is the ultimate goal for BOEMRE, the operators and contractors alike.
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