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OFFSHORE RISK MANAGEMENT:

MYTHS, WORKER EXPERIENCES AND REALITY

Prof. Matthias Beck, Ph.D M.U.P M.Arch., Professor of Risk Management

Ms. Lynn T Drennan B.A. F.C.I.I. M.I.R.M., Head of Division

Division of Risk, Caledonian Business School

Glasgow Caledonian University

Cowcaddens Road

Glasgow G4 0BA

Tel. 0141-331-3159 Fax. 0141-331-3229

Email : ; ;

Paper presented at the Qualitative Evidence-based Practice Conference, Coventry University, May 15-17 2000.

OFFSHORE RISK MANAGEMENT:

MYTHS, WORKER EXPERIENCES AND REALITY

Abstract In July 1988 the fire and explosions on Occidental’s Piper Alpha platform, 120 miles north east of Aberdeen, resulted in the world’s worst offshore oil disaster. The Piper Alpha disaster claimed 167 lives. The occurrence of this event was not circumstantial. It was the outcome of an intrinsically flawed regulatory safety regime and an accompanying authoritarian labour relations regime, in which workers’ voices were ignored.

Reforms of the regulatory system of British offshore oil production were initiated in 1990, on the basis of the report of the public inquiry into the disaster, conducted by the Scottish High Court judge, Lord Cullen. This report emphasised the importance of workforce commitment to, and involvement in, safe operations. Cullen, moreover, stated that ‘the first-line supervisors are a key link in achieving that, as each is personally responsible for ensuring that all employees, whether the company’s own or contractors, are trained to and do work safely and that they not only know how to perform their jobs safely but are convinced that they have a responsibility to do so’.

In recent years, the Cullen report has been held up as a safety blueprint for the global oil industry. At the same time, there have been industry claims of a profound change in employer attitudes towards safety and labour relations practices in the offshore oil industry. This paper utilises testimonies from offshore workers to document patterns of distorted communication, which limit the possibility and efficacy of offshore risk management and, ultimately, the building of an appropriate offshore safety culture.

Introduction

Offshore oil and gas production commenced in the UK sector more than three decades ago. Throughout this time period, offshore workers have experienced some of the highest accident and fatality rates in UK industry, ranking only behind such industries as coal mining and forestry.

Over time, attitudes towards safety offshore have changed as have management approaches to the offshore work environment. In terms of workforce involvement, we can distinguish two periods. One, during which almost any form of workforce involvement was considered undesirable by management. The other, following Piper Alpha, in which a limited non-conflictual pattern of workforce involvement has been either tolerated or encouraged by industry.

The first section of this paper examines the early phase of oil exploration in the North Sea, which was characterised by a casual, top-down approach to safety management. The second section examines the post-Piper Alpha reconstruction of the offshore regulatory regime that was marked by the formal acceptance of modern risk management practices by the industry. We note that the industry’s adoption of the ‘language’ of risk management has created new obstacles to workplace communication. The main section of our paper discusses why feedback mechanisms, in which workers report problems and incidents to management, have remained flawed and ineffective.

1.Offshore Safety without Workforce Involvement

At its inception, the exploration of North Sea oil was part of an evolving strategy aimed at gaining independence from OPEC producers. With a leap in oil prices in the early 1970s, oil extraction had become economically feasible in the North Sea, even though the costs involved in exploiting these oil fields remained high. At the time, the scale of investment required was beyond the resources of either the British Government or UK private investors. North Sea oil exploration therefore required a strategic alliance with US capital. This alliance was conditioned on the importation of a US style production regime. Both Labour and Conservative governments enthusiastically endorsed what Carson was to call ‘the political economy of speed’, in which as much oil as possible was to be produced at the fastest possible rate (1982: 84).

Out on the platforms, attitudes to the safety and occupational welfare of employees were casual, as was the general view on existing UK safety regulations. The priority was to get the oil out of the sea bed. Money was no object, and the drilling companies’ and operators’ focused on quick production. To this end, a site-level management style was adopted which attached a great deal of authority and independence to line and platform managers. Such auditing and monitoring mechanisms as existed, were implemented only to the degree that they did not infringe on speedy production.

Workforce participation in safety matters, and even more so as collective bargaining partners, was unwelcome. An internal 1976 analysis by a union noted that oil companies, virtually without exception, employed a number of strategies aimed at obstructing the expansion of unions offshore. These included:

The insistence on full ballots, not only for collective bargaining rights but also for simple representational rights; company initiated anti-union propaganda being spread in the run up to the ballot; prolonged delays in holding ballots, and delays in affording rights where the ballot has been successful; the setting up of staff consultative machinery to undermine the activities of bona fide trade unions … more favourable conditions of service to non-unionised areas and asking prospective employees their attitudes to trade unions (ASTMS, 1976).

Even in the early days of offshore activities, UK trade unions voiced dissatisfaction with management-dominated consultative committees, and particularly their ineffectual role as concerns safety matters. This is not surprising, given the role assigned by the oil majors to these committees. An unpublished doctoral thesis by Thom cites an industry handbook which defined ‘consultation’ as ‘a process for communication between staff and management to enable the views of staff to be expressed, discussed and taken into account before management makes a decision on a matter’ (Thom, 1989: 101).

This casual attitude towards communication with the workforce can be illustrated by examples of management responses to workforce demands for change. In one instance, a consultant, hired by industry to investigate workforce dissatisfaction, depicted the employees’ desire for collective representation as a form of neurotic response. In reality it was largely driven by workforce concerns for greater occupational safety. The report, written by Robert de Board of Henley Management College, found that workers on the platform were suffering from ‘acute anxiety’. The workers were ‘looking for the feminine mothering side of human nature which is being deliberately excluded in the macho management style’. The consultant concluded that the wish for union representation was ‘a cry for help, "come and look after us"‘.

There is evidence that the employers’ casual attitudes towards the needs and fears of the workforce seriously undermined their own awareness of safety and related managerial deficiencies. In the authoritarian management culture offshore, the informed knowledge of the platform worker could not filter upwards to inform the risk perception and awareness of management. Perhaps even more importantly, the authoritarian management style adopted by the industry in the first decade of oil exploration and production, eroded the possibility of consensual co-operation between management and the workforce in the area of health and safety management.

These problems were compounded by the specific nature of offshore production. The North Sea production regime, established in the 1970s, included a dependent layer of specialised sub-contractors. Only a quarter to a third of the offshore workforce were direct employees of the oil companies. The majority of offshore employees were employed by contractors who provided services to their client oil companies. This production system further compounded the difficulties of risk management, which existed in this ‘frontier’ industry of authoritarian managers and distrustful workers. In more ways than one, the Piper Alpha disaster was an incident waiting to happen.

2.Piper Alpha and the Recognition of Workers’ Voices?

Survivors’ transcripts submitted to Lord Cullen’s public inquiry into the Piper Alpha disaster reveal the total breakdown of emergency procedures during that cataclysmic event. Communications were knocked out, sprinkler deluge systems failed to operate and support vessels could not perform rescue functions adequately. Management on pipeline linked platforms failed to shut down production and continued to feed the fires on Piper. Those responsible for emergency action proved totally unprepared for a major emergency of this sort. Those workers who survived only did so because they ignored the existing safety procedures. The narrative of these dramatic events and their consequences is documented elsewhere (Woolfson, Foster and Beck, 1996).

In his 800 page inquiry into the Piper Alpha disaster, Lord Cullen concentrated on the causes of the disaster and the measures that could be taken to prevent a recurrence of such incidents (Cullen, 1990). In this context he was eager to examine the issue of ‘workforce involvement’ in the safety process. Cullen suggested that

It is essential that the whole workforce is committed to and involved in safe operations. The first-line supervisors are a key link in achieving that, as each is personally responsible for ensuring that all employees, whether the company’s own or contractors, are trained to and do work safely and that they not only know how to perform their jobs safely but are convinced that they have a responsibility to do so. Possibly the most visible instrument for the involvement of the workforce in safety is a safety committee system’ (1990: 21.84).

Moreover, Cullen conceded that the issue of victimisation needed to be addressed and recommended that legal protection be made available to offshore safety representatives.

Cullen’s criticisms of the risk management procedures implemented by the operators of Piper Alpha, Armand Hammer’s Occidental Petroleum, were scathing. Cullen noted Occidental’s failure to operate a safe system of work despite a number of previous incidents on the platform.

Faced with this evidence, Lord Cullen’s report severely criticised the previous regulatory regime administered by the Department of Energy. Cullen noted that only five inspectors had been responsible for policing the entire North Sea. As a rule, an installation would be visited perhaps once every two years. More specifically, Cullen described the inspection of Piper Alpha in the weeks before the disaster as ‘superficial to the point of being of little use as a test of safety’ (1990: 15.48). The Department of Energy’s approach to offshore regulation, meanwhile, was described as being marked by ‘over-conservatism, insularity and a lack of ability to look at the regime and themselves in a critical way’ (1990: 22.20). For Cullen, and a number of experts, the time had come to look at ‘modern’ approaches to risk management.

2.1Risk Management Systems and Employee Feedback

Risk management can be described as a process consisting of well defined steps which, when taken in sequence, support better decision making by contributing to a greater insight into risks and their impacts (Standards Australia, 1999). Effective risk management techniques are aimed at improving safety through an integrated approach to identifying, analysing, and controlling risks.
For this process to be effective, each step necessitates the full involvement of the workforce, rather than a reliance on nominated personnel. This raises crucial issues about power relations and political processes, in the sense that risk identification and control cannot be left to those in positions of organisational responsibility and power (Waring, 1998). In the context of occupational health and safety, this process has often been tied to the notion of a safety culture, which is modelled in terms of a feedback process in which a continuous monitoring of safety outcomes determines the level of safety inputs.
SAFETY
INPUTS / SAFETY
OUTCOMES
Training / Equipment Failures
Job Tasks / Near-Misses
Administrative Controls / Incidents

Source: modified from Felknor et al., 2000

At the core of this model stands the notion that workers’ participation in the recording and monitoring of breaches of safety is essential in informing strategic decisions on health and safety matters, and indeed the management of the workplace in general. This focus on all safety outcomes including minor breaches, equipment failures, near-miss incidents etc. is related to two considerations. Firstly it is based on the assumption, that accurate information feedback on outcomes is necessary to determine appropriate strategic responses, irrespective of the short-term interests of the organisation. Secondly it is based on the assumption that ‘minor’ events are per se important because they can act as warnings or ‘prodromes’ of a future, more serious incident (Fink, 1986).

This idea is elaborated in Fink’s model. His analysis of the development of crisis situations commences with the recognition that, if prodromes are ignored or underestimated, this will eventually escalate to a full, acute crisis. According to Fink, the acute crisis stage, for example when a major fire or explosion occurs, normally only lasts for a matter of hours. This stage necessitates the involvement of a variety of emergency services. Once the immediate crisis is over, the real problems for the organisation, which Fink describes as the chronic crisis stage, begin. During the chronic crisis stage, the organisation is confronted with extensive media coverage, reputational damage, potential liabilities for deaths and injury and the prospect of fines, criminal charges or greater regulatory interference. This stage, accordingly, can last for many years. Crisis resolution must then be the ultimate aim of the organisation. However, while seeking the resolution to one crisis, the company must be careful not to ignore or underestimate new prodromes (Fink, 1986).

In the case of Piper Alpha, there is evidence that a great number of warning signals preceded the incident. All of these were ignored by the operators as well as the regulator. While the acute crisis itself lasted less than one day, its after effects are still felt today.

2.2 New Obstacles to Workforce Involvement

One of the long-term consequences of the crisis has been the adoption of a new regulatory framework, and the attempt to impose lessons learned elsewhere on the offshore industry. Despite the desire to introduce new thinking offshore, the Cullen report’s concept of risk management was relatively narrow. At the core of this approache stood the notion that safety risks had to be assessed within a comprehensive, largely quantitative, framework. The concept of ‘Formal Safety Assessment’ (FSA), advocated in the Cullen report, involved ‘the identification and assessment of hazards over the whole life cycle of a project’ through all its stages of development to final decommissioning and abandonment. Included in the concept of FSA were a number of analytical techniques of risk assessment. Formal Safety Assessment was to lead to the development of a ‘Safety Case’ for each installation. The Safety Case was meant to provide a systematic documented review of all hazards potentially existing on an installation, and the safety management systems put in place to deal with them

The new framework of risk assessment, endorsed by Cullen, proved not to be conducive to workforce involvement. In his report, Cullen endorsed the techniques of Quantitative Risk Assessment (QRA) which provide a sophisticated cost-benefit analysis based on statistical probabilities. He saw this as a useful way of enabling the limits of what is ‘reasonably practicable’ in terms of risk management offshore to be accurately assessed (1990: Ch. 17.61). As a methodology, QRA itself had been a matter of some controversy.

The seemingly ‘scientific’ nature of the ALARP (as low as reasonably practicable) calculations and QRA have made these judgements difficult for the workforce to challenge. Today, judgements of acceptable risk are almost exclusively managerially determined; a fact that is obscured by the guise of probabilistic theory. With the adoption of QRA and ALARP, the power to decide what constitutes acceptable risk has shifted upwards, and in the final event rests with management. Moore, a critic of QRA, has commented:

There exists no available economic or statistical techniques which can readily provide ‘quick fixes’ as far as improvements in health and safety at work are concerned. Safety is about effective workplace risk control and public accountability, not pliable mathematical exercises in statistics or economics (Moore, 1991: 13).

What the QRA approach has failed to recognise, is that in developing a safe working environment, it is not simply specialised quantitative ‘expertise’, exclusively concentrated in the hands (or heads) of management, but also what is described as ‘low level safety intelligence’ which counts (1991: 11). Hazards are often identified and controlled most effectively by those most immediately involved in the work-tasks, through a process of constant monitoring or ‘risk valuation from below’ (1991: 11).