The Petroleum Safety Framework – what does it mean for you?
30 May 2013
Author: Sheenagh Rooney, director of energy safety in the Commission for Energy Regulation
In recent years, the regulation of oil and gas safety has been an area of international focus and concern to policy makers, the industry and the general public following seminal petroleum incidents such as the Gulf of Mexico ‘Deepwater Horizon’ tragedy. Internationally, safety regulatory regimes are being re-examined and strengthened in light of the lessons learned from these major petroleum incidents.
This is particularly evident in the proposed European Directive on the Safety of Offshore Oil and Gas. Nationally, there has also been much public and media attention on the ongoing development and safety of Ireland’s oil and gas industry, allied to increased industry interest in exploration opportunities both offshore and onshore in Ireland.
Within this context, the Commission for Energy Regulation (CER), Ireland’s independent energy regulator, was conferred with the responsibility for the safety regulation of oil and gas (petroleum) activities and associated infrastructure in Ireland under the Petroleum (Exploration and Extraction) Safety Act, 2010. The Act requires the CER to “establish and implement a risk-based Petroleum Safety Framework”.
The Petroleum Safety Framework (referred to as the Framework) can be understood as the entire system that the CER will use to regulate the safety of petroleum activities carried out by oil and gas companies (or petroleum undertakings under the Act) in Ireland. The CER’s strategic vision for the Framework is ‘a safe petroleum exploration and extraction industry in Ireland’, and the CER’s mission is to ‘independently regulate petroleum exploration and extraction activities to protect life’.
Since the passing of the Act over three years ago, the CER has engaged in an extensive consultative process in designing the Framework. This consultation process is now nearing conclusion, with the new regulatory system to begin operation in November this year. An overview of the components of the Framework, which will be overseen by the CER from then, is illustrated in Figure 1. In this article, the key components of the Framework, the Permissioning System/ALARP Demonstration and the Compliance Assurance/Enforcement System, are briefly outlined.
CORE ELEMENTS OF PETROLEUM SAFETY FRAMEWORK
The Act places the regulation of the safety of petroleum activities carried out by petroleum undertakings within a criminal framework. It does this through creating obligations/duties upon petroleum undertakings, contravention of which can give rise to criminal prosecution, leading to fines and potentially imprisonment. These obligations include an overarching duty, called the General Duty, on petroleum undertakings to ensure that:
(a) any petroleum activity is carried on in such a manner as to reduce any risk to safety to a level that is As Low As is Reasonably Practicable (ALARP); and
(b) any petroleum infrastructure is designed, constructed, installed, maintained, modified, operated and decommissioned in such a manner as to reduce any risk to safety to a level that is ALARP.
Allied to this overarching General Duty are a number of specific obligations/duties, including:
- The requirement to submit, for the approval of the CER, a safety case with respect to certain classes of petroleum activities;
- A prohibition on carrying on designated petroleum activities unless a safety permit issued by the CER is in force in respect of the activity concerned; and
- the duty to conform with the approved safety case.
These obligations underpin the key component of the Framework: the permissioning system, which is based upon a safety case regime. Under the permissioning system, a petroleum undertaking cannot carry on any of the following three classes of designated petroleum activities: (i) well work (i.e. drilling of wells) (ii) production or (iii) decommissioning unless:
- It has submitted a safety case to the CER for that activity;
- The CER has approved that safety case; and
- A safety permit has been issued by the CER following approval of the safety case.
The safety case is fundamental to the operation of the Framework, as it is the means through which the petroleum undertaking must demonstrate to the CER that it:
- Is complying with its General Duty;
- Has the ability to properly assess and effectively control risks that may arise from the carrying on of the designated petroleum activity to a level that is ALARP;
- Having identified all hazards and assessed the risks presented by those hazards, has taken such measures as are adequate to ensure that its safety management system is capable of reducing the risks to a level that is ALARP;
- Has evaluated all petroleum incident risks and emergency measures are in place in the event of such petroleum incident arising; and
- Has adequate arrangements for monitoring, audit and for the making of reports on safety performance and compliance have been established.
The obligation on petroleum undertakings to reduce all risks to safety to a level that is ALARP is based on the principle that those who create and have control over risks have responsibility for their management and must actively assess them to ensure that sufficient risk reduction measures are implemented such that the residual risk is ALARP.
A core principle of risk-based hazard management is that whilst risks cannot always be completely eliminated, it should be possible to reduce them to a level that is ALARP, where they are tolerable to society because all reasonably practicable risk reduction measures have been implemented. The management of hazards such that the risk is ALARP needs to be demonstrated, and in industries where there is a possibility of major accident hazards, such as the oil and gas industry, the mechanism for demonstration is through a safety case.
COMPLIANCE ASSURANCE SYSTEM AND ENFORCEMENT
The assessment of the safety case by the CER is critical to the integrity of the permissioning system. For a safety case to be approved by the CER, and a safety permit issued, the safety case must demonstrate that the petroleum undertakings is capable of:
- Implementing the safety management system described in the safety case; and
- Carrying on the designated petroleum activity in compliance with its General Duty.
Once the safety case is approved, and a safety permit is issued, the petroleum undertaking has a duty to operate in accordance with its approved safety case and any conditions associated with the safety permit. The CER will subsequently monitor and enforce compliance by petroleum undertakings with their obligations through a compliance assurance system. As part of the compliance assurance system, petroleum undertakings will be required to:
- Prepare, operate and maintain a verification scheme to provide an independent review that determined performance standards for safety critical elements are being met, I.e. such parts of an installation the purpose of which is to prevent or limit the effect of a major accident, or the failure of which could cause or contribute to a major accident;
- Routinely report a suite of key safety performance indicators; and
- Carry out an independent review of its safety case at least every five years or as directed by the CER.
The CER will implement a rigorous audit and inspection system to allow it to assess ongoing compliance by petroleum undertakings with the requirements of the Act, its safety case and safety permit. The audit and inspections will be (i) risk based (ii) structured around the contents of the safety case and safety permit and carried out throughout the lifecycle of a petroleum infrastructure development.
Where a petroleum undertaking is found to be non-compliant, the CER has the power to take enforcement actions such as:
- The power to seek improvements from a petroleum undertaking;
- The power to issue enforcement notices (Improvement and Prohibition); and,
- The power to investigate incidents and the power to revoke safety permits.
These powers are progressive in nature and are designed to facilitate interaction and co-operation with the petroleum undertaking, in the first instance, and to encourage compliance. In the event of non compliance, or inadequate compliance, by the petroleum undertaking the CER is provided with powers that escalate in terms of seriousness. In circumstances where there is an immediate and substantial risk to human life, the CER also has the power to suspend the operation of petroleum activities with immediate effect.
REMAINING ELEMENTS OF THE FRAMEWORK
Allied to the core components described above, the Framework includes:
- an Incident Investigation System where petroleum undertakings are obliged to report petroleum incidents to the CER which may subsequently investigated to identify the cause of the incident, potential non-compliances with the Framework and recommend any lessons which can be learnt.
- a Safety Reporting and Published Safety Information System to provide assurance to the public and industry regarding the operation of the Framework.
- Agreed Interfaces, Co-operation and Co-ordination Agreements with other Regulatory Authorities to provide assurance that duplication of regulatory activities with other statutory agencies is minimised and that the discharge of safety regulatory responsibilities is co-ordinated such that the safety of the public continues to be protected; and
- A Continuous Improvement System where the Framework is subject to continuous review and improvement based on an analysis of the safety performance of petroleum undertakings complemented by input from other regulatory authorities nationally and internationally.
The successful operation of each of the components of the Framework by the CER from November 2013 will enable Ireland to state that the safety regulation of its onshore and offshore petroleum industry is consistent with best international regulatory practice, incorporating lessons learned from recent major incidents whilst also being workable and relevant to the Irish context.
The existence of such a regulatory regime will also help to foster the safe development of the sector in Ireland into the future and engender confidence and assurance amongst the public that the safety regulation of the industry is to the highest international standards and is in line with the public interest. The CER looks forward to carrying out its important new role.
Further detail on the remaining components of the Framework are available on the CER website at www.cer.ie.
Sheenagh Rooney is a director with the Commission for Energy Regulation (CER), with responsibility for the Energy Safety Division. She is responsible for the implementation and operation of the CER’s statutory functions in electricity, petroleum and gas, and LPG safety. These safety functions currently encompass the upstream petroleum safety, downstream natural gas and LPG industry (including transmission, distribution and storage), and include the registration and oversight of electrical contractors and gas installers by bodies designated for this purpose by the CER. Prior to joining the CER Energy Safety Division, within CER, Rooney was responsible for managing various aspects of CER economic regulatory functions, in particular overseeing the design and operation of the wholesale energy market in Ireland. She has also worked for a number of years within the private sector as a consultant economist. Rooney has a degree in economics and law from NUI Galway with a master’s in economics.