Key Programme 3 Asset Integrity Programme

A report by the Offshore Division of HSE’s Hazardous Installations Directorate

1 of ## pages

Key Programme 3 Asset Integrity Programme

2 of 27 pages

Contents

Preface 4

Glossary 4

Part 1 Executive summary 5

Part 2 Introduction 8

Part 3 Analysis of results 10

3.1 Overview of findings 11 3.1.1 Maintenance management systems 11 3.1.2 Performance of the maintenance management system 12 3.1.3 Physical state of plant 14 3.1.4 Safety critical system testing 16

3.2 Overview of performance according to installation type 18 3.2.1 Mobiles 18 3.2.2 FPSOs 19 3.2.3 Fixed 20

3.3 Discussion of specific template element issues 20 3.3.1 Maintenance of SCEs/measuring compliance with performance standards 20 3.3.2 Backlog 21 3.3.3 Deferrals 23 3.3.4 Corrective maintenance 24

3.4 Supplementary factors affecting performance 24 3.4.1 Company performance and communication 24 3.4.2 Change management 25 3.4.3 Impact of project work on maintenance 26 3.4.4 Verification 26

Part 4 Underlying issues and consideration for improvement 27

Part 5 Good practice 30

Part 6 References 39

Appendix 1 Aims and objectives 41

Appendix 2 Inspection programme background 43

Appendix 3 Results 48

Preface

This report has been produced to communicate the results and conclusions of the Asset Integrity Key Programme carried out between 2004 and 2007 by the Health and Safety Executive’s Offshore Division.

The report is available on the HSE’s Offshore Oil and Gas website at http://www.hse.gov.uk/offshore/information.htm. The traffic light matrix associated with this report can be downloaded separately as an Excel file.

Glossary ALARP As low as reasonably practicable CAPEX Capital expenditure CEO Chief executive officer CRA Corrosion risk assessment ESDV Emergency shutdown valve FPSO Floating production storage and offloading FP Floating production HVAC Heating ventilation and air conditioning HSL Health and Safety Laboratory ICP Independent competent person IMT Inspection management teams IIWG Installation integrity work group IVB Independent verifying body KP3 Key Programme 3 KPI Key performance indicators MAH Major accident hazards MMS Maintenance management system NUI Normally unattended installation ORA Operational risk assessment OSD Offshore Division PS Performance standards QRA Quantified risk assessment RBI Risk based inspection RR Research report SPC Semi-permanent circular SCE Safety-critical element TA Technical authority TR Temporary refuge UKCS UK Continental Shelf UKOOA United Kingdom Offshore Operators Association (now known as Oil and Gas UK Ltd) WO Work order

1 Executive summary

The offshore oil and gas industry on the UK Continental Shelf (UKCS) is a mature production area. Much of the offshore infrastructure is at, or has exceeded, its intended design life. Between 2000 and 2004, HSE’s Offshore Division (OSD) ran a major programme KP1 aimed at reducing hydrocarbon releases and focusing on the integrity of process plant. This resulted in a considerable reduction in the number of major and significant hydrocarbon releases. During this time, however, OSD became increasingly concerned about an apparent general decline in the condition of fabric and plant on installations and responded with Key Programme 3 (KP3) directed more widely at asset integrity, and scheduled to run between 2004 and 2007.

Asset Integrity can be defined as the ability of an asset to perform its required function effectively and efficiently whilst protecting health, safety and the environment. Asset integrity management is the means of ensuring that the people, systems, processes and resources that deliver integrity are in place, in use and will perform when required over the whole lifecycle of the asset.

KP3 involved targeted inspections of nearly 100 offshore installations representing about 40 per cent of the total. These included all types including fixed, manned and normally unattended installations, floating production (FP), floating production storage and offloading (FPSO) vessels and mobile drilling rigs. It involved all of OSD’s Specialist and Inspection Management Team inspectors and all levels of management.

Essential for the integrity of any installation are the safety-critical elements (SCEs). These are the parts of an installation and its plant (including computer programmes) whose purpose is to prevent, control or mitigate major accident hazards (MAHs) and the failure of which could cause or contribute substantially to a major accident. KP3 focused primarily on the maintenance management of SCEs, ie the management systems and processes which should ensure that SCEs would be available when required.

The inspection programme was structured using a template containing 17 elements covering all aspects of maintenance management, and a number of SCE systems tests. An element covering ‘Physical State of Plant’, was also included allowing the inspection team’s judgement on the general state of the platform to be recorded. The performance, on inspection, of each template element was scored using a traffic light system (explained in Appendix A2.5) which enabled overall installation performance to be recorded on a matrix. This in turn enabled an overview of company and industry performance to be obtained and examples of good and bad practice clearly identified. It was encouraging to find a number of examples of good and best practice and these have been shared with the industry and have also been included in the report.

The template and traffic light system has since been adopted by other National Regulators. Independent Verification Bodies, employed to verify the performance of SCEs on the UKCS, have also adopted the template and carried out independent inspections on behalf of dutyholders.

In the light of the findings from KP3, asset integrity will continue to be one of OSD’s main priorities in 2008 and for the foreseeable future.

Main findings and lessons learned

The main findings and lessons learned from the Programme are:

Maintenance management systems

n The performance of management systems showed wide variations across the industry. n There were often considerable variations in performance between assets in the same company as well as between companies. n The state of the plant was often not understood because of the complexity of catagorising and recording equipment which was overdue for maintenance or found to be defective. n Significant improvement in maintenance systems could be achieved without major capital expenditure by better planning, improved training and clear statement of performance standards in testing and maintenance routines. n There is a poor understanding across the industry of potential impact of degraded, non-safety-critical plant and utility systems on safety-critical elements in the event of a major accident. n The role of asset integrity and concept of barriers in major hazard risk control is not well understood. n The use of operational risk assessments (ORAs) to compensate for degraded SCEs is often not well controlled. n The technical authority role needs to be strengthened in many companies. n The industry is not effectively sharing good and best practice. This is particularly evident in that companies were not learning the well-publicised lessons gained during the life of KP3. n Cross-organisational learning processes and mechanisms to secure corporate memory need to be improved. n Companies need to work better with verifiers using their collective skills and knowledge to aid improvement. n Companies need better key indicators of performance available at the most senior management levels to inform decision making and to focus resources. Many management monitoring systems tend to be overly biased to occupational risk data at the expense of major hazard precursors. n Many senior managers are not making adequate use of integrity management data and are not giving ongoing maintenance sufficient priority. n There is a need for a common understanding and definition of maintenance backlog and the use of deferrals. n Audit and review arrangements are not being used effectively to deliver organisational learning and continuous improvement. n The KP3 template provides companies with a framework for improvement.

Overall condition of the infrastructure

n There is wide variation in the condition of hardware integrity across the industry dependent on installation design, CAPEX costs and subsequent investment. n The main hydrocarbon boundary appears reasonably well controlled but supporting hydrocarbon infra structure such as valves, pipe supports continues to be in decline. n The jacket and primary structural integrity is reasonably well controlled. n In some companies the decline in integrity performance that started following the low oil price has not been effectively addressed and there appears to be an acceptance of this knowing that the assets are likely to be sold. This decline may hamper future field development and long-term sustainability. n Declining standards in hardware is having an adverse impact on morale in the workforce.

n Skills shortages, long lead times for delivery of materials and equipment, bed space and availability of accommodation vessels are limiting the industry’s ability to achieve rapid improvements. n With suitable prioritisation and leadership real improvements in the condition of the infrastructure can be achieved. n Insufficient full loop testing is carried out on Safety Critical Elements resulting in reduced levels of reliability of SCEs.

Findings on overall industry performance

In broad terms mobile rigs were found more likely to perform better than fixed installations. Meanwhile, fixed installations were found more likely to perform better than floating production assets.

The performance of installations in a number of elements of the maintenance management system was scored using a traffic light system.

The following aspects of the maintenance management system were found to be more likely to perform well:

n reporting to senior management; n key company specific indicators of maintenance effectiveness; n communications between onshore and offshore; n supervision (ie confirmation that maintenance tasks have been completed in accordance with the instructions on the work order, time spent on the plant by supervisors etc); n defined life repairs.

The following aspects were found to be more likely to perform badly:

n maintenance of SCEs; n backlog; n deferrals; n measuring compliance with performance standards; n corrective maintenance.

For more than 50 per cent of installations inspected the State of Plant element was considered to be poor. Companies often justified the situation with the claim that the plant, fabric and systems were non-safety-critical and a lower level of integrity was justified. This illustrates a lack of understanding in many parts of the industry that degraded non-safety-critical plant and utility systems can impact on safety critical elements in the event of a major accident reducing their performance.

The findings arising from the inspections of the specific safety-critical elements covered by the programme were more encouraging but TR HVAC, TR Doors and Deluge still gave significant cause for concern. These were key issues identified at the time of Piper Alpha.

Note: Where a ‘red traffic light’ was recorded which meant the inspector had identified a non-compliance with legislation, a major failing of a system (hardware or management) or partial failure with a history of failure then appropriate action was taken in line with HSE’s enforcement policy.

Underlying issues identified as contributing to poor performance

n Leadership

Senior management set priorities between investment in field development, asset maintenance and profit on the basis of health, safety and financial risks. The findings indicate that the priority given to asset maintenance in the past has been too low. Whilst most senior management currently get information on certain aspects of maintenance performance such as backogs and deferrals this provides only a limited picture on SCE status. To better understand the relative priorities senior managers must improve their understanding of the safety and business risks arising from continuing to operate with degraded SCEs and safety-related equipment. This may require a simplification of the reporting arrangements for backlogs, deferrals, corrective maintenance, SCE performance etc and a clear understanding of the key performance indicators associated with asset integrity.

n The engineering function

A key element in balancing priorities is to ensure that the engineering function has sufficient authority to put forward the case for major hazard control and act as a backstop against degraded SCEs and safety related equipment and structure. The influence of the engineering function has, in many companies, declined to a worrying level. This may be partly attributable to changes in the structure of companies.

n Learning

KP3 has demonstrated that there is considerable variation in the performance of management systems and delivery of appropriate standards, across the UKCS and often in the same company. A significant factor in this is an underlying weakness in many companies’ audit arrangements to ensure compliance with procedures. These are not being used effectively to share learning arising from the audits and to promote and learn best practise within the company and between companies. Improved arrangements for auditing and monitoring performance are needed in most companies.

Moreover, learning is not just achieved by identifying and sharing best practice, but also by having process to enable the learning to be embedded.

2 Introduction Background

The offshore oil and gas industry in the UK Continental Shelf (UKCS) is a mature production area. Much of the offshore infrastructure is at, or has exceeded, its intended design life. During the 1990s low oil prices and initiatives to reduce costs led to a reduction in the offshore workforce. This in turn led to reductions in levels of maintenance and, as a result, an overall decline in the integrity of fabric, structures, plant and systems. The harsh operating environment on the UKCS has exacerbated the rate of degradation.

In 2000 HSE’s Offshore Division launched a major programme KP1 aimed at reducing hydrocarbon releases and focusing in particular on process plant. This ran until 2004 and resulted in a considerable reduction in the number of major and significant hydrocarbon releases. During this time, however, the above factors, together with two fatalities in 2002 arising directly from integrity failure issues, served to reinforce concerns that the risk of major accidents on the UK continental

shelf appeared to be rising. HSE therefore decided to initiate Key Programme 3 (KP3), Asset Integrity Inspection, which formally commenced in 2004.

The decision was made to focus the programme on the effective management and maintenance of safety critical elements (SCEs). These are the parts of an installation and its plant (including computer programmes) the purpose of which are to prevent, control or mitigate major accident hazards (MAH) and the failure of which could cause or contribute substantially to a major accident. The relationship between major hazards, development of SCEs and their maintenance management is shown below.

Maintenance Management: - Availability - Reliability

Will SCEs work when required? Are they being Identify SCEs: maintained properly? Performance standards - Availability - Reliability Major hazard - Functionality analysis - Survivability Are they suitable?

The SCEs represent the barriers which prevent, control or mitigate the major accident scenarios. The maintenance management strategy must be developed to provide assurance that they will be available when required, they will operate with the required reliability and they be able, as necessary, to survive incidents against which they are designed to protect.

The full background to the programme and overall aims and objectives of KP3 are described in detail in the KP3 Handbook and summarised in Appendix 1 and 2. The Handbook3 gives a detailed account of the development of the programme. It can be found on the HSE’s offshore oil and gas website address under Programmes of Work at: http://www.hse.gov.uk/offshore/kp3handbook.pdf.

As part of the overall KP3 Programme, HSE inspectors carried out onshore and offshore visits to nearly 100 installations and over 33 dutyholders.

The approach taken in KP3 of a coordinated programme of inspections with a common template has provided significant benefits. These include consistency of approach, and the collation and analysis of all reports by a central management group, enabling identification of common areas of good and poor practice across the industry. The most significant outcome has been the ability to report on an industry wide basis. This has facilitated engagement and been very effective in raising the profile of integrity management across the industry.

The analysis and conclusions are described in Sections 3 and 4 with the description of results contained in Appendix 3. Section 3 describes specific areas where performance has been found to be poor and common themes which have led to poor performance. It also identifies practices adopted by dutyholders which led to good performance. Several examples of general good practice are also given which, if adopted more widely, would assist in improving overall industry performance.

This report has been placed on HSE’s offshore oil and gas website4 at: http://www.hse.gov.uk/offshore/.

The results

For each inspection, the individual elements of the inspection template were given a green amber or red traffic light (see Appendix 2). These traffic lights were then transferred to a matrix from which a picture of overall industry performance could be built up (See Appendix 2.8.). The internet version of this report will also include a downloadable version of the numbered traffic light matrix at: http://www.hse.gov.uk/offshore/information.htm.

Individual companies have been provided with the information to be able to identify their platforms on this matrix and carry out their own analyses as required.

More detail on the analysis of the KP3 inspection reports and traffic light distributions is being prepared in a Health and Safety Laboratory (HSL) report5. When completed, this report will be available under Research Reports (RR) on HSE’s website at: http://www.hse.gov.uk/research/rrhtm/index.htm.

Additional workstreams

In addition to the inspection activities parallel themes of work have been running as part of the overall programme. Improved communication and raised awareness of installation integrity issues was a key objective of the programme. This was achieved by participation in industry seminars and conferences and presentations to industry groups. These have included presentation to the UKOOA Asset Integrity Seminars in 2005 and 2006, regular presentations to the UKOOA Step Change Leadership Team, Process Managers Group and Installation Integrity Workgroup.

The latter group was set up by the industry as a direct result of KP3 and involved over 30 oil companies, contractor organisations and independent verification bodies. HSE took a full part in this workgroup. The group was set up to work at a tactical level to share information and develop tools.

The group developed the Asset Integrity Toolkit, which is a comprehensive guidance document describing industry good practice in SCE maintenance management. The toolkit also provides a basis for benchmarking performance in the future. The group also developed new Key Performance Indicators (KPI) in 20066. The three KPIs developed are now