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Summary
For many years the United States employed a prescriptive regulatory
system for the offshore oil and gas industry in which operators were
required to demonstrate conformance with established regulations.
In the aftermath of the April 2010 Macondo well blowout and explo -
sion, the federal government and the offshore oil and gas industry have
been undergoing major changes, including the issuance of regulations
requiring operators of offshore oil and gas facilities to adopt and imple-
ment comprehensive Safety and Environmental Management Systems
(SEMS) programs.
SEMS is a safety management system (SMS) aimed at shifting from
a completely prescriptive regulatory approach to one that is proactive,
risk based, and goal oriented in an attempt to improve safety and reduce
the likelihood that events similar to the Macondo incident will reoccur.
Although the new regulations had been voluntary for many years and a
subset of these components had been proposed in rulemaking before
the Macondo well accident, it was not until this major accident that
comprehensive changes were made. The Committee on the Effectiveness
of Safety and Environmental Management Systems for Outer Continental
Shelf Oil and Gas Operations (the committee), which conducted the
present study, was charged with recommending a method of assessing
the effectiveness of operators’ SEMS programs on any given offshore
drilling or production facility.
Safety professionals have understood for decades that to increase safety
in complex industrial installations, organizations must manage safety
with the same principles of planning, organization, implementation,
and investigation that they use to carry out any other business function.
In 1992 the federal government promulgated a process safety management
1
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2 Evaluating the Effectiveness of Offshore Safety and Environmental Management Systems
(PSM) regulatory approach for installations that handle highly hazardous
chemicals. PSM specified the elements that must be included in a plan
to manage safety. A similar risk management approach was mandated
for facilities handling certain chemicals regulated under the Clean Air
Act Amendments of 1996. In parallel, the American Petroleum Institute
(API) developed Recommended Practice (RP) 75, Recommended Practice
for Development of a Safety and Environmental Management Program for
Offshore Operations and Facilities (API 1993, 2004).
The federal government initially encouraged the offshore oil and gas
industry to adopt API RP 75 voluntarily and from 1994 to 1998 used a
self-report survey to monitor the level of adoption of each element. After
reviewing the analysis and comments received in response to a 2006
advance notice of proposed rulemaking to make portions of API RP 75
mandatory, the Minerals Management Service (MMS) proposed to
require each offshore lessee–operator to develop, implement, maintain,
and operate a SEMS program that contained four elements of API RP 75:
hazards analysis, management of change, operating procedures, and
mechanical integrity. The Offshore Operators Committee and others
recommended, however, that if a SEMS rule were to become mandatory,
it should include all of the elements of a safety and environmental
management program (SEMP) discussed in API RP 75, and not just the
four listed for the proposed rule. MMS was preparing a rule to require
the implementation of all of the SEMP elements in API RP 75 when
the occurrence of the Macondo well blowout delayed publication of the
new rule. The final SEMS rule was promulgated in the Federal Register on
October 15, 2010 (BOEMRE 2010) and became effective on November 15,
2011 (30 CFR 250, Subpart S).
Mandating SEMS programs and ensuring their effectiveness is a step
toward improving governmental oversight of the offshore oil and gas
industry and industry implementation of reforms to reduce the risk of
accidents and to improve safety, which is needed according to some of
the investigations of the Macondo well blowout (e.g., NAE-NRC 2011;
National Commission on the BP Deepwater Horizon Oil Spill and Offshore
Drilling 2011). The committee agrees with these conclusions.
The 1990 Marine Board study Alternatives for Inspecting Outer Con-
tinental Shelf Operations made the crucial point that the emphasis that
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Summary 3
regulators and the industry had placed on compliance with very spe-
cific regulations and rigid checklists to ensure compliance was not the
best way to change attitudes toward safety (NRC 1990). In enterprises
that are subject to checklist-style compliance inspections by government
authorities, passing the inspection comes to be seen as equaling safety. This
compliance mentality does not necessarily correlate with an increase in
the level of safety attitudes and actions on the part of the companies and
individuals involved in the actual operations.
Instillation of an appropriate culture of safety in an operation requires
mechanisms that
• Establish structure and control by specifying what is needed for safe
operation and checking to see that these specifications are being
followed, and
• Build competency by developing individual knowledge and skill.
In addition to these mechanisms, there must be actions that establish
norms and motivations that encourage those who are making deci-
sions to constantly want to think about safety and behave in ways that
maximize safety. Thus, whereas having an adequately functioning
SEMS-type program is necessary to develop an appropriate culture
of safety, SEMS by itself is not sufficient. To be successful, the tenets of
SEMS must be fully acknowledged and accepted by workers, motivated
from the top, and supported throughout the organization and must
drive workers’ actions; only then can an effective culture of safety be
established and grow.
The committee believes that the approach ultimately taken by the
Bureau of Safety and Environmental Enforcement (BSEE) to evaluate
the effectiveness of SEMS can have a positive impact on norms and
motivations and move both BSEE and the industry away from a compli-
ance mentality to one that encourages an ever-evolving and -improving
culture of safety in offshore operations. To encourage a culture of safety
in which individuals know the safety aspects of their actions and are
motivated to think about safety, the agency will need to adopt and evolve
an evaluation system for SEMS that emphasizes the assessment of
attitudes and actions rather than documentation and paperwork. All of
the elements of SEMS must be addressed, but it is more important that
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4 Evaluating the Effectiveness of Offshore Safety and Environmental Management Systems
those who are actually doing the work understand and practice these
elements than that these elements be documented. BSEE should look
beyond its predecessor agencies’ historical role of assuring compliance
with prescriptive regulations and seize the current opportunity to redefine
its role, at least partially, to one of encouraging an atmosphere that helps
the industry migrate from a compliance mentality to a culture of safety
that includes compliance. Furthermore, an organization’s SEMS program
must incorporate a dynamic process that evolves with time; thus, to be
effective, the procedures, inspections, and audits employed by BSEE to
verify the effectiveness of an operator’s SEMS program should also be
dynamic. Likewise, inspection and audit criteria will need to be dynamic
so that they do not become outdated as new technologies are employed
and new environments explored.
The purpose of this report is to define the broad outlines of a holistic
approach BSEE can take to evaluate the effectiveness of operators’ SEMS
programs. It is not possible, however, for a regulator to create a culture
of safety in an organization by inspection or audit; that culture needs to
come from within the organization. The regulator’s role is to regulate in
a manner that helps the organization be safe.
SEMS, by definition, is a program for managing the overall safety and
environmental aspects of an offshore oil and gas operation. Unfortunately,
no single, existing set of statistics can measure the effectiveness of SEMS
on an offshore installation. Certainly there are statistics such as fatality
rates, injury rates, and lost-time incidents that correlate with the level of
what is often referred to as “personal safety” or “worker safety” incidents.
It is much harder, if not impossible, to identify similar statistics that cor-
relate with what the Occupational Safety and Health Administration calls
“process safety” and what the National Academy of Engineering and
National Research Council Committee for the Analysis of Causes of the
Deepwater Horizon Explosion, Fire, and Oil Spill to Identify Measures to
Prevent Similar Accidents in the Future (NAE-NRC 2011) calls “system
safety” (i.e., the possibility of the occurrence of a very low-probability, very
high-consequence event such as the Macondo well blowout). Ensuring the
effectiveness of SEMS for both worker safety and system safety will depend
on a thorough commitment by industry and government application of
best practices applied by other effective regulators.
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Summary 5
In recommending a holistic approach to evaluating the effectiveness
of SEMS programs, the committee discussed in detail SEMS’ role in
helping to develop a culture of safety, looked at the pros and cons of
various methods of assessing the effectiveness of a SEMS program, and
investigated existing approaches for assessing the SMS programs of
various U.S. and international regulatory agencies whose safety mandates
are similar to that of BSEE. The committee received presentations from,
and conducted follow-up inquiries with, the Occupational Safety and
Health Administration and the Mine Safety and Health Administration
of the U.S. Department of Labor, the U.S. Coast Guard, and the California
State Lands Commission (CSLC) as well as with the United Kingdom Health
and Safety Executive and Petroleum Safety Authority (PSA) Norway.
It seems clear from the experiences of other regulatory agencies,
especially CSLC and PSA Norway, that other organizations with many
years of experience in overseeing SEMS-like programs have migrated
toward a system that
• Audits operations with a qualified team of auditors,
• Assesses through discussions with personnel at different levels of the
operation the way in which the elements of the SMS are actually being
used,
• Feeds the results back to the top management of the operating com-
panies, and
• Expects continuous improvement and monitors for it.
These agencies have found that engagement with the industry is more
productive than punishment, although they maintain the threat of
punishment if needed.
Recommended AppRoAch
On the basis of the information obtained from presentations to the
committee, site visits, published regulations, notices of proposed rule-
making, API-recommended practices, and previously published reports,
the committee recommends that BSee take a holistic approach to
evaluating the effectiveness of SemS programs. This approach should,
at a minimum, include inspections, audits (operator and BSee), key
performance indicators, and a whistleblower program.
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6 Evaluating the Effectiveness of Offshore Safety and Environmental Management Systems
Inspections
BSEE should continue its current program of ensuring compliance with
specific regulations. The routine presence of competent BSEE inspectors
on an offshore operator’s facility should be used to verify that the industry
is generally complying with SEMS. Without proper training, however,
BSEE inspectors will have a tendency to issue incidents of noncompliance
(INCs) for deviations of documentation from a checklist, and such
deviations may or may not be important in meeting the intent of SEMS.
In turn, the issuing of INCs may focus operator attention on compliance
in the way documentation is written rather than on establishing a culture
that actually promotes safety. Therefore, BSEE should train inspectors to
employ other options in addition to issuing citations. BSEE inspectors
should look beyond the written regulation to identify operators in marginal
compliance and guide them into a more complete state of compliance.
In doing so, BSEE inspectors could help focus BSEE-initiated SEMS
audits (see below).
Making judgments about organizational safety culture and SEMS
compliance will require training inspectors and scheduling of inspections
to allow inspectors to spend more time offshore interacting with operat-
ing staff and observing day-to-day operations. The necessary resources
could come from other sources, including the use of operator-provided
transportation and accommodations or from an increase in inspection
fees. Other regulatory organizations use operator-furnished transporta-
tion and accommodations with no adverse effect on the integrity of the
process. BSEE should consider doing the same to increase the quality
of its inspections and to reduce expenditures. In addition to providing
a financial benefit, the use of operator-furnished transportation and
accommodations will help achieve the goal of greater informal interaction
between inspectors and operating staff and will aid inspectors in making a
better evaluation of the level of safety that exists.
Audits
Operator Audits
It is critical that SEMS programs be audited. The frequency of the audits
should be risk based. Annual audits may be necessary for very large
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Summary 7
installations, while other, noncritical installations may not require specific
audits beyond normal inspection observations. Audits should be carried
out by the operator’s internal qualified, independent team wherever
possible. Operator responsibility for audits will help prevent the devel-
opment of a compliance mentality. Smaller operations that may find it
necessary to use third-party auditors should include on the audit team
at least one operator employee who is not directly involved in the day-
to-day operations of the installation being audited. In cases in which
meeting this requirement is not possible (e.g., very small operators with
only a handful of employees) it may be necessary for the chief executive
officer of the company to participate as a member of the audit team.
Nevertheless, BSEE should approve all audit plans to ensure adequate
frequency of auditing and the quality of the proposed audit team. BSEE
should also receive a copy of each audit and follow-up report.
A truly independent internal audit team is preferred to an external,
third-party team. Use of a well-documented internal team would help to
ensure a quality audit that also encourages an appropriate culture of safety.
BSEE, in consultation with the industry and, potentially, the Center for
Offshore Safety, should develop an approach to certify auditors, develop
audit standards, and establish the process by which audits themselves
are conducted.
BSEE Audits
BSEE should perform complete or partial audits of SEMS programs when
justified by reports from inspectors, reviews of operators’ audit reports,
incidents, or events. BSEE is responsible for verifying that quality audits
are carried out and acted on appropriately. Because of the compre-
hensive nature of the SEMS requirements, BSEE’s oversight of internal
and third-party audits needs to include a range of techniques, each of
which focuses on a different aspect of an operation’s safety system. BSEE
can use reports from its compliance inspectors and its reviews of audit
reports to identify the need for specific BSEE-conducted targeted or spot
audits, or complete audits, to determine whether an operator’s SEMS
program is improving safety. Interviews, demonstrations, and observa-
tions, rather than checklists, are necessary to make such a determination.
To perform these audits and review operator audit plans and internal
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8 Evaluating the Effectiveness of Offshore Safety and Environmental Management Systems
audits, BSEE needs a cadre of trained auditors who will be able to spend
sufficient time on location to conduct the appropriate audits. Hiring and
training additional personnel will most likely be necessary.
Key performance Indicators
Over time and in consultation with other national and international
regulatory bodies that collect similar data, BSEE should also develop
key performance indicators or other indicators that could be useful
in providing a measure of the effectiveness of an operator’s or offshore
installation’s SEMS program and culture of safety. BSEE can collect and
evaluate data from operations within and across platforms to identify
specific problems and trends in operations at a particular facility and
across the industry. This information is also needed to evaluate the SEMS
audit approach and to identify opportunities for improvement. Because
BSEE will review all audit and follow-up reports in addition to having
access to inspections and its own audits, the agency will be in the best
position to disseminate findings and best practices of a general interest.
Whistleblower program
BSEE should establish a whistleblower program to help monitor the
culture of safety that actually exists at each installation and to help
uncover any improprieties in its own operations. Workers must have
a way to anonymously report not only dangerous deviations in norms
and motivations that may not be obvious to BSEE inspectors or even
to internal auditors, but also unprofessional conduct by BSEE’s own
staff. Care should be taken in devising this program to make sure that
it does not become a tool for disgruntled employees seeking to punish
perceived wrongs.
concludIng commenTS
In the immediate aftermath of the Deepwater Horizon blowout, the
U.S. Department of the Interior initiated a major restructuring (and
separation of conflicting responsibilities) of the former MMS, as well
as sweeping reforms in regulatory oversight of the offshore oil and gas
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Summary 9
industry. These changes have begun to change the industry’s approach
to safety management and will, it is believed, reduce risk and result in
positive changes in the industry’s culture of safety.
The committee examined the new regulations that were promulgated
in October 2010 and went into effect November 15, 2011. By early
September 2011, during the writing of this report, BSEE published in the
Federal Register a notice of proposed changes in SEMS (BOEMRE 2011).
All but one of these proposed changes are consistent with the findings
of this report. The one change that is not requires that SEMS audits
be performed by independent third parties. This committee concludes
that complete, or even heavy, reliance on third-party auditors may have
the effect of contributing to a compliance mentality and be counter-
productive to establishing a culture of safety. The comment period for
the notice of proposed rulemaking was closed on November 14, 2011.
Because the committee’s report was not completed by that date and a
final rule had not been issued as of the date of issuance of this report, the
committee did not specifically address the proposed rule in detail in this
report and did not make a formal comment to the proposed rule during
the comment period.
RefeRenceS
Abbreviations
API American Petroleum Institute
BOEMRE Bureau of Ocean Energy Management, Regulation, and Enforcement
NAE-NRC National Academy of Engineering–National Research Council
NRC National Research Council
API. 1993. Recommended Practice for Development of a Safety and Environmental
Management Program for Offshore Operations and Facilities, 1st ed. API RP 75. API,
Washington, D.C.
API. 2004. Recommended Practice for Development of a Safety and Environmental
Management Program for Offshore Operations and Facilities, 3rd ed. API RP 75. API,
Washington, D.C.
BOEMRE. 2010. Oil and Gas and Sulphur Operations in the Outer Continental Shelf—
Safety and Environmental Management Systems. Federal Register, Vol. 75, No. 199,
Fri., Oct. 15, 2010, pp. 63610–63654.
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10 Evaluating the Effectiveness of Offshore Safety and Environmental Management Systems
BOEMRE. 2011. Oil and Gas and Sulphur Operations in the Outer Continental Shelf—
Revisions to Safety and Environmental Management Systems. Federal Register, Vol. 76,
No. 178, Wed., Sept. 14, 2011, pp. 56683–56694.
NAE-NRC. 2011. Macondo Well–Deepwater Horizon Blowout: Lessons for Improving
Offshore Drilling Safety. National Academies Press, Washington, D.C.
National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling.
2011. Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling. Report
to the President. http://www.oilspillcommission.gov/sites/default/files/documents/
DEEPWATER_ReporttothePresident_FINAL.pdf.
NRC. 1990. Alternatives for Inspecting Outer Continental Shelf Operations. National
Academies Press, Washington, D.C.
