Managing Risk in Russia’s Oil and Gas Industry

Phil Murray, CEO, Petrotechnics

Managing operational risk and delivering on production targets in the oil and gas industry are often seen as being at odds with one another. As stakeholder expectation of performance continues to rise, operational risk management is now ensconced as a board level challenge. The key to managing these expectations is to demonstrate good governance and the ability to deliver performance in a responsible and sustainable manner.

As operators in the Russian market drive to increase performance, while leveraging new and often unconventional fields, the challenge of getting the balance right between the level of operational risk and delivering performance targets is increasing. Traditionally, operators respond to the challenges posed by risk management with better rulebooks, new ‘leading’ or ‘lagging’ indicators, improved best practices and more robust procedures. While these efforts are part of the solution, more often than not there is very little decrease in the number of high potential incidents (HiPo’s) and accidents.  Furthermore they fail to address a key area of operational risk that is at the heart of the challenge.

The Biggest Operational Risk

In any organization in hazardous industries there are three primary elements; the plant, the people and the interaction between the two. This interaction represents millions of man hours per year for the typical organization, with thousands of people every day routinely intervening in plant operations to do repair and maintenance work. This often results in the introduction of new hazards, inhibiting safety systems, isolating parts of the plant and interfering with standard operating procedures. It is a key area of operating risk.

It’s therefore not surprising that the interaction between people and the plant represents:

• The leading cause of high potential incidents (HiPo’s)
• Second leading cause of fatalities
• Significant contributing factor in process safety incidents

Organizations typically have rigorous corporate processes for the plant and for the people as individual entities. These are supported by systems that generate data, which in turn provide performance indicators and close the assurance loop (Fig 2). In this way, companies can be confident they have the operational assurance that their policies are being followed and they have the means and the data by which to measure status and progress.

However, when thousands of people interact with the plant every day to do repair or maintenance work, there are limited systems and often only paper-based processes. As a result there is little or no useful data; no metrics and no consistent feedback mechanism to provide governance and assurance the strategic intent of policies and procedures are in operational practice. Similarly there is little or no insight into the operational productivity that occurs when people interact with the plant.

With little or no feedback on performance, organizations are left with a critical gap in terms of assurance. This impacts upon operational performance in a number of key areas:

• Limited understanding of the relationship between delivering performance and operational risk
• Difficulties in improving operational performance in a consistent manner
• Poor work plan accuracy & attainment
• Non-productive time for staff & contractors
• Unplanned shutdowns and operational inefficiencies

Without feedback data on how work is actually carried out, how can we, as an industry, measure or even consistently improve operational performance and reduce risk?

Closing the Critical Gap in Operational Assurance

Petrotechnics’ Proscient, an enterprise Operational Performance and Predictive Risk software platform, closes the operational assurance loop for the interaction of people with the plant. It provides senior management in the oil and gas industry with the ability to reduce risk, optimize performance, drive continuous improvement and move beyond compliance across their global frontline operations. By intelligently embedding corporate, regional and local policies and processes, Proscient ensures they are consistently delivered in frontline practice. The risk controls, work processes, best practices and guidance can take shape outside of the ‘rule book’ and become an integral part of routine operations. Organizations can deploy a common baseline across operations ensuring all work is performed in the same manner. For example, a corporate policy on work involving breaking containment can be enforced at the local business level based on corporate standards to ensure internal and external compliance.

Proscient generates data from routine work processes that can be used to develop metrics to measure performance in a consistent manner across the organization. Data such as type, volume and interaction of work, along with the associated human factors, are routinely captured as part of routine work processes. Common metrics can then be established across an organization or venture to provide an indication of the operational risk associated with the work being performed. Not only does this deliver meaningful insight into frontline operations, but the clarity and confidence that the data provides also empowers improved decision making at an enterprise, regional or local level.

In closing this critical gap, organizations are able to demonstrate good governance and have the tools that can drive continuous improvement. They can then demonstrate best efforts to meet rising stakeholder expectations and improve operational performance.

How Technology Has Improved Operations in Russia’s Energy Sector

A major oil & gas project under a Russian consortium, faced with the challenge of improving operational efficiencies and risk management, turned to Petrotechnics to drive the promotion and implementation of best practice across a diverse set of assets, to ensure work could be carried out in a uniform manner.

There was a widely recognized need to implement a single, standardized business process from the outset, spanning a number of offshore platforms, onshore and offshore pipelines, an onshore processing facility, a liquefied natural gas (LNG) plant and an oil export terminal. The solution had to be capable of transcending cultural and language differences, including Russian, Korean and Turkish. The harsh, sub-arctic facilities in the Russian Far East, where personnel have to deal with the possibility of seismic activity and extreme temperatures, were also a vital consideration.

The introduction of Petrotechnics solution ensured that processes and procedures were taken out of the ’rulebook’, converting policy into practice. Petrotechnics’ system ensured that permits, risk assessments and isolation control processes complied with both local legislation and corporate guidelines. It was introduced to all phases of the project life cycle, from the construction and commissioning phase through to the hand-over and into operations and maintenance. In addition, the consortium has recognized a tangible return on investment with improvements to process effectiveness and underlying competence. The system was also a catalyst for change in Russian regulation for permit and risk assessment processes.

Operational Performance and Predictive Risk

Senior management can use Petrotechnics’ Proscient platform to help demonstrate good governance and improve their ability to deliver performance in a responsible and sustainable manner. Proscient can ensure the strategic and operational intent of corporate policies and procedures can be delivered consistently in operational practice. With the data automatically captured as a part of these work processes, the real-time visibility of information and meaningful insight in the context of business performance and operational risk provides the right people in the organization with the necessary operational intelligence to monitor, mitigate or act.

For the first time, operational leaders can start to understand the relationship between performance and risk and proactively manage the organization to a less risky and more optimized performance. Proscient delivers peace of mind and reduces uncertainty in the riskiest part of operations.