Risktec Solutions

Fundamentals of Asset Integrity Risk Management

Module 6 - Frequently asked questions

Advanced Process Safety Module 1, Issue 1.0, Slide 1 2011 Risktec Solutions Limited
 Summary

That we know, understand and communicate.....

What our risks are
What controls are required
Whether these are suitable and sufficient
Have implemented practicable improvements
Have mechanisms to assure asset integrity
Proactively measure these mechanisms
Monitor and review

Advanced Process Safety Module 1, Issue 1.0, Slide 2 2011 Risktec Solutions Limited
 Frequently asked questions

1. What are the biggest challenges in getting asset

integrity risk management right?
2. How can companies justify the time and
expense required?
3. Can risk ever be reduced to zero?
4. ALARP
5. Where can I find more information?

Advanced Process Safety Module 1, Issue 1.0, Slide 3 2011 Risktec Solutions Limited
 1. What are the biggest challenges in
getting asset integrity risk management
right?

Advanced Process Safety Module 1, Issue 1.0, Slide 4 2011 Risktec Solutions Limited
 Leadership

Impact on process safety of long-term strategy and

decision-making by senior and executive mangers
depends on their understanding and awareness of
major hazard risks posed by their operations
There is a need to set better leading indicators for
integrity, e.g. backlog (ensure all maintenance is
completed before due date or report total hours
outstanding), Verifier anomalies
Complexity of many maintenance systems and
quality of maintenance data is hindering ability of
management to gain a clear understanding of state
of plant and equipment

Issues are well known and are capable of

being addressed by improved leadership at
senior level

Advanced Process Safety Module 1, Issue 1.0, Slide 5 2011 Risktec Solutions Limited
 Understanding the major hazard control
loop

SCEs are the barriers to prevent major accident

events
SCEs are developed by analysing major hazard
scenarios, identifying important controls and
developing performance standards
Performance is assured via maintenance,
inspection and testing, and formally verified
(often independently)

Needs to be understood at
all levels of organisation

Advanced Process Safety Module 1, Issue 1.0, Slide 6 2011 Risktec Solutions Limited
 Ageing assets and life extension

Many platforms in UK North Sea are

approaching or have exceeded their design life
High oil and gas price has seen economic life
expectancy of many installations extended by
between 10 and 25 years
Integrity management of ageing installations
depends crucially on knowing equipment
condition and associated degradation processes,
as well as identifying obsolescent systems or
components
Expect much greater attention from regulators
Arguably the single biggest challenge
facing operators across the globe

Advanced Process Safety Module 1, Issue 1.0, Slide 7 2011 Risktec Solutions Limited
 Skills shortage

Worldwide problem across all industries

Perception that oil industry is hire and fire?
Competency assurance of personnel becomes
critical
Need to improve learning and communication
between assets and between companies

Essential that industry works

cooperatively to assure the skills,
training and competencies required.

Advanced Process Safety Module 1, Issue 1.0, Slide 8 2011 Risktec Solutions Limited
 2. How can companies justify the
time and expense required?

"If you think safety is expensive, try having an accident

Sir Stelios Haji-Ioannou of easyJet

Asset Integrity Risk Management Module 6, Slide 9 2012 Risktec Solutions Limited
 The cost of minor accidents

Minor accidents:
Construction 8.5% of contract price
Transport 37% of profits or 1.8% of operating
costs
North Sea oil production 3.8 million/yr or 14%
of potential output (or shutting down the platform
for one day a week)
Costs include:
Financial Costs - additional costs actually incurred to
achieve desired output
Opportunity Costs - costs of labour paid for no work or
production
Ref: The Cost of Accidents at Work, UK HSE HSG96

Asset Integrity Risk Management Module 6, Slide 10 2012 Risktec Solutions Limited
 The cost of major accidents

Major accidents e.g. Piper Alpha:

Physical damage $680m (50%)
Business interruption $275m (20%)
Fatalities / injuries $160m (12%)
Wreck removal $100m (7%)
Re-drilling $87m (6%)
Well control $34m (2%)
Pipeline removal / re-routing $30m (2%)
Seepage / pollution $4m (0.3%)
Ref: I.Chem. E. Symposium series No.122

Total cost $1,370,000,000

Asset Integrity Risk Management Module 6, Slide 11 2012 Risktec Solutions Limited
 The accident iceberg

INSURED COSTS
Injury, ill health, property damage &
business interruption
1 Employers, 3rd party & corporate liability

UNINSURED COSTS
Product and material damage
Plant and building damage
Tool and equipment damage
8 - 36 Legal costs
Expenditure on emergency supplies
Clearing site
Production delays
Overtime working and temporary labour
Investigation time
Supervisors time diverted
Clerical effort
Fines
Loss of expertise / experience
Ref: The Cost of Accidents at Work, UK HSE HSG96
Some can be insured against
Asset Integrity Risk Management Module 6, Slide 12 but at significant extra cost
2012 Risktec Solutions Limited
 The cost of accidents

Direct costs, e.g: Indirect costs:

Clean-up costs Lost production
Sick pay Loss of corporate
Replacement of damaged reputation
equipment Loss of market share
Legal fees Fall in share price

Man-made disasters such as Piper Alpha and Bhopal appear to affect

shareholder value in rather complex ways
Sedgwick 2002.

Asset Integrity Risk Management Module 6, Slide 13 2012 Risktec Solutions Limited
 3. Can asset integrity risk ever be
reduced to zero?

Asset Integrity Risk Management Module 6, Slide 14 2012 Risktec Solutions Limited
 Zero risk is often set as a goal, but is it
realistic to achieve?

Basic idea behind the ALARP principle is that:

whilst the reduction of risk may always be desirable,
the achievement of the reduction may be unwarranted
Design process seeks to remove risks as far as
possible, e.g. inherent safety
The earlier risks are identified, the easier they are to
manage
Whilst potentially hazardous materials or processes
remain, there will always be some level of residual
risk
The challenge is to strike a balance between the cost
of risk controls and the remaining residual risk

Asset Integrity Risk Management Module 6, Slide 15 2012 Risktec Solutions Limited
 The right amount of control

Total cost

Cost of Cost of risk

losses reduction

Unstructured Optimum Complex

Ill-defined balance for risk Unworkable
Superficial control Theoretical

Asset Integrity Risk Management Module 6, Slide 16 2012 Risktec Solutions Limited
 Applying asset integrity risk management

Select technology, process,

Concept Design location, manning levels

Inherently Safer Design

Intensification
Substitution
Residual Risk Attenuation
Simplification

Risk Reduction Measures

Prevention
Detailed Design Control
Mitigation

Reliability & Availability

Passive Layers of
Residual Risk Active Protection
Administrative

Manage Asset Integrity and

Operation
Change

Asset Integrity Risk Management Module 6, Slide 17 2012 Risktec Solutions Limited
 4. As Low As Reasonably
Practicable

Asset Integrity Risk Management Module 6, Slide 18 2012 Risktec Solutions Limited
 ALARP Misconceptions

If risks are Tolerable, they are ALARP

Ensuring that risks are reduced to ALARP means
raising standards continually
If some companies have adopted a high
standard of risk control, that standard is ALARP
Ensuring risks are reduced to ALARP means we
can insist on all possible risk controls
Ensuring that risks are reduced to ALARP means
there will be no accidents or ill-health

Asset Integrity Risk Management Module 6, Slide 19 2012 Risktec Solutions Limited
 5. Where can I find more
information?

Asset Integrity Risk Management Module 6, Slide 20 2012 Risktec Solutions Limited
 Further reading

OGP Asset OGP Human HSE BSi, Asset CCPS Process

integrity the factors a Developing Management, Safety Leading
key to means of process safety PAS 55:2008 and Lagging
managing improving HSE indicators, 2006 Metrices, 2008
major incident performance
risks, 2008

Asset Integrity Risk Management Module 6, Slide 21 2012 Risktec Solutions Limited
 Contact details

Tel: +44 (0) 1925 611200

Email: andy.lidstone@risktec.co.uk
Web: www.risktec.co.uk

Asset Integrity Risk Management Module 6, Slide 22 2012 Risktec Solutions Limited