REPORT MAY 456 2023

Process safety − Recommended practice on Key Performance Indicators

Acknowledgements This Report was prepared by the Process Safety Subcommittee, part of IOGP’s Safety Committee. IOGP is grateful to the American Petroleum Institute for their cooperation in producing this Report.

Front cover photography used with permission courtesy of © bashta/iStockphoto and © HHakim/iStockphoto

About The global oil and gas industry has expended considerable effort developing process safety procedures aimed at preventing major incidents. The upstream oil and gas industry, in response to major incidents, has developed improved process safety key performance indicators (KPIs) to learn from events with less serious outcomes and to manage system performance. Report 456 enables companies to establish effective leading and lagging indicators that assess the health of barriers that manage the risk of process safety events (PSEs), particularly those that could result in a major incident.

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REPORT MAY 456 2023

Process safety − Recommended practice on Key Performance Indicators

Revision history

VERSION DATE AMENDMENTS

3.0 May 2023 General update; see introduction for summary

2.0 November 2018 Substantial revision; see Foreword for summary

1.1 December 2016 Tables in Appendix B updated

1.0 November 2011 First release

Contents

Introduction 5

References 7

Part A - Establishing corporate and facility KPIs 8

Part B - Identifying Barriers and Selecting KPIs 13

Part C - Tier 1 and Tier 2 Indicators 16

Part D - IOGP data collection 26

Part E - Determining Tier 1 and 2 Process Safety Events 27

Part F - Examples of process safety event tier classification 34

Part G - Tier 3 and Tier 4 Indicators 53

Part H - Examples of leading process safety Key Performance Indicators 61

Part I - Learning from KPIs 68

Part J - Well Control Incidents 74

Glossary 78

Introduction

About the previous editions The global oil and gas industry has expended considerable effort developing process safety procedures aimed at preventing major incidents. The upstream oil industry, in response to major incidents, has developed improved process safety key performance indicators (KPIs) to learn from events with less serious outcomes and to manage system performance.

Recommendations that reinforced the need for improved KPIs were provided by organizations such as the UK Health & Safety Executive (UK HSE), the US Chemical Safety and Hazard Investigation Board (US CSB), and the independent Baker Panel report.

Significant efforts were made by the American Petroleum Industry (API), the Center for Chemical Process Safety (CCPS) and others to develop and publish guidance on KPIs for companies to manage process plant risks and prevent unintended releases of hazardous materials.

IOGP released the first edition of Report 456 in November 2011. Several previous documents have informed the development of this report’s previous version as well as its current, updated form. IOGP published Report 415 - Asset integrity – the key to managing major incident risks, in December 2008 to provide advice on how to implement an asset integrity management system for new and existing upstream assets. It included guidance on monitoring and review, including how to establish lagging and leading KPIs to strengthen barriers (risk controls), and reduce major incident risk. These KPIs can be analysed to improve preventive actions, such as management system revisions, procedural changes, training opportunities, and/or facility engineering improvements that aim to minimize and eliminate the potential for major incidents.

The American Petroleum Institute (API) published API Recommended Practice (RP) 754, Process Safety Performance Indicators for the Refining and Petrochemical Industries in April 2010. Report 456 supported API RP 754’s applicability for upstream activities and recommended this standard to oil and gas companies worldwide.

Report 456 enabled companies to establish effective leading and lagging indicators that assess the health of barriers that manage the risk of process safety events (PSEs), particularly those that could result in a major incident. It was also based on guidelines on indicators published by UK HSE, CCPS, and the Organisation for Economic Co-operation and Development (OECD).

A second edition of Report 456 was published in 2018 to reflect changes made in the second edition of API RP 754, published in 2016, to incorporate guidance from other IOGP publications, give more detailed definitions and examples, and simplify the overall presentation.

About this revision This third edition of Report 456 incorporates changes resulting from the latest edition of API RP 754. API published the third edition of API RP 754 in August 2021, proposing changes based on feedback from companies. Revisions in this third edition involve continuous improvement rather than fundamental modification.

This third revision of IOGP Report 456 maintains alignment with API RP 754 as per previous editions: • Given the localized effects of corrosive loss of primary containments (LOPCs) compared to flammables and toxics, reduction of the material hazard classification for corrosive agents to better align with the other hazard classes • Updated/new definitions of primary and secondary containment, direct cost, indoor release, and unsafe location, to provide additional clarity • Consistency with the language of API RP 754

This third edition of Report 456 also: • Updates and expands the list of process safety event tier classification examples • Provides greater clarity on the classification of process safety events that are well operations related, as well as the classification system for Well Control Incidents (WCIs), helping IOGP members to report these events more consistently and get the Wells community more engaged • Includes insights from the 2021 process safety leading indicators internal survey conducted among the IOGP Member Companies

References

“Reports and recommendations arising from the Competent Authority’s response to the Buncefield incident.” UK Health and Safety Executive (HSE), Buncefield response (hse.gov.uk) (Accessed 15 May 2023).

“BP Texas City Final Investigation Report”. US Chemical Safety and Hazard Investigation Board (US CSB), www.csb.gov/bp-america-refinery-explosion/ (Accessed 15 May 2023).

“The Report of the BP U.S. Refineries Independent Safety Review Panel”, 2007, www.csb.gov/assets/1/20/baker_panel_report1.pdf?13842 (Accessed 15 May 2023).

“Guidelines for Risk Based Process Safety.” Center for Chemical Process Safety (CCPS) - American Institution of Chemical Engineers, 2007, Guidelines for Risk Based Process Safety | AIChE (Accessed 15 May 2023).

IOGP Report 415 - Asset integrity – the key to managing major incident risks.

ANSI/API RP 754 - Process Safety Performance Indicators for the Refining and Petrochemical Industries. 3rd Edition. American Petroleum Institute, August 2021, https://www.api.org/oil-and-natural-gas/health-and-safety/refinery-and-plant-safety/process- safety/process-safety-standards/rp-754 (Accessed 15 May 2023).

“HSG254. Developing process safety indicators: A step-by-step guide for chemical and major hazard industries.” UK Health and Safety Executive (HSE), 2006, www.hse.gov.uk/pubns/books/hsg254.htm (Accessed 15 May 2023).

“Process Safety Leading and Lagging Metrics …You Don’t Improve What You Don’t Measure”. American Institute of Chemical Engineers (AIChE), 2011, CCPS_ProcessSafety2011.indd (aiche.org) (Accessed 15 May 2023).

“Process Safety Metrics Guide for Leading and Lagging Indicators”, version 4.1. Center for Chemical Process Safety (CCPS), June 2022, CCPS Process Safety Metrics - V4.1 2022.2 (aiche.org) (Accessed 15 May 2023).

Guidance on Safety Performance Indicators related to Chemical Accident Prevention, Preparedness and Response. Guidance for Industry. 2nd Edition. Paris, OECD Environment, Health and Safety Publications, 2008. Guidance on Safety Performance Indicators - OECD (Accessed 15 May 2023).

IOGP Report 544 - Standardization of barrier definitions

Part A - Establishing corporate and facility KPIs

Scope Part A provides background on why the industry has put significant effort into process safety indicators and articulates the value KPIs can have for companies.

Why use process safety KPIs?

Preventing major incidents Process safety failures can result in serious harm to people, the environment, property, reputation, and the financial stability of a company.

When process safety failures cause significant damage, companies naturally apply careful scrutiny to these events and their causes, seeking lessons that can be used to improve processes and training and prevent similar events from reoccurring. As these analyses are by nature retrospective and based on relatively infrequent events, companies cannot afford to rely on these lessons alone to prevent major incidents.

It is therefore necessary to broaden these analyses to learn from events with less serious outcomes and refine management system performance to strengthen the barriers that prevent major incidents.

Process safety KPIs generate a range of relevant data which can be analysed to improve preventive actions, such as management system revisions, procedural changes, training opportunities, or facility engineering improvements, that aim to eliminate or minimize the potential for major incidents.

Improving reliability The quality and productivity of a company’s operations are reflected in its future profitability. Actions to prevent major incidents go hand-in-hand with steps to make operations more reliable, feeding directly into financial performance.

Avoiding complacency The Baker Panel Report, the product of an independent investigatory panel commissioned to examine process safety cultures, said the following:

“The passing of time without a process accident is not necessarily an indication that all is well and may contribute to a dangerous and growing sense of complacency.”

Since major incidents are relatively rare events, it is easy to give priority to other lower consequence risks in the belief that “all is well”.

Process safety KPIs provide a constant reminder of asset and operations integrity, the attention needed on process safety management systems, and the warnings from less severe process safety events.

Communicating performance It is a constant challenge to communicate the importance of process safety to the workforce. KPIs provide reassuring evidence of management focus, transparency and progress which can, in turn, support process safety culture and behaviours.

The four-tier approach A combination of measures is needed to monitor barrier performance within a process safety management system.

In alignment with API RP 754, IOGP recommends the four-tier framework of process safety KPIs.

Figure A.1: Process safety indicator pyramid (from API RP 754): the triangle emphasizes that larger data sets are available from the KPIs at the lower tiers

Tiers 1 and 2 provide lagging indicators of process safety performance.

They cover major and less severe incidents. Loss of Primary Containment (LOPC) events are categorized as Tier 1 or 2, and typically indicate the failure of multiple barriers. Tier 1 covers incidents with greater consequence resulting from actual losses of containment. Tier 2 counts for process safety events represent LOPC events with a lesser consequence but may be predictive of future more significant incidents.

Tiers 3 and 4 provide leading indicators of process safety performance.

They are intended to be more specific to a company’s own management system and often will be specific to an activity or to an individual asset, facility, or plant.

Tier 3 KPIs are used to monitor the performance of the barriers that prevent Tier 1 and 2 LOPC events. Events where the LOPC was below the Tier 2 thresholds, or when no LOPC has occurred, are Tier 3 KPIs provided one or more key barriers, or supporting systems, failed or did not function as expected. These represent challenges to safety systems. Tier 3 KPIs can provide an opportunity to recognize weak points within the safety barriers.

Tier 4 KPIs are used to monitor the implementation (operating discipline) and effectiveness (performance) of the management system elements that support the performance of key barriers. Tier 4 KPIs can provide an opportunity to identify management system areas of improvement for an effective and safe asset operating model.

The continuous improvement cycle The concept of continuous improvement, whether at a corporate, business or facility level, is a fundamental process for any structured framework to address process safety.

There are many versions of the continuous improvement process including the ‘Plan−Do−Check− Act’ cycle, as applied within ISO guides and standards. This cycle places emphasis on improving the management system (including legal compliance, company standards, and local procedures) and minimising process safety risks by strengthening barriers that are implemented within operations.

The following three elements should underpin effective KPIs, particularly the more leading Tier 3 and 4 Indicators: 1) monitoring operational performance 2) internal and external reporting 3) reviewing outcomes to determine how to revise the management system and embed the continuous improvement.

Further guidance is provided in: • IOGP Report 510 and IOGP Report 511, which relate to the development of Operating Management Systems • IOGP Report 415, which describes how the Operating Management System is implemented to address process safety risks, barriers, and procedures for upstream operations.

Corporate versus facility KPIs Process Safety KPIs are established to meet the following primary needs: 1) Internal monitoring and review of performance related to the management system and other actions to strengthen process safety barriers and reduce incidents. 2) Providing transparent disclosure of performance to stakeholders such as employees, local communities, investors, governmental and non-governmental organizations, and the general public. There are many opportunities for companies to communicate and engage with their stakeholders, but one important channel is through regular (typically annual) reports – often called sustainability or corporate citizenship reports. IOGP, API, and Ipieca collaborated on the joint publication Oil and gas industry guidance on voluntary sustainability reporting, which detailed and endorsed a process safety KPI framework for both upstream and downstream reporting. 3) Supporting employee engagement and promoting process safety management leadership behaviours that encourage a culture where there is constant vigilance, mindfulness, and sensitivity to signals such as changes in operating discipline or workforce concern and attitude. 4) Assessing whether the measured performance on process safety meets or exceeds industry norms by benchmarking KPI data against industry averages and by sharing lessons learned with other companies. See Part D of this report, IOGP data collection.

Figure A.2: Hierarchy of asset integrity KPIs

Process safety KPIs to meet these needs will vary across a company’s organization from an individual facility up to the corporate level.

At the corporate level, data and other information should be selected carefully to be representative of the whole organization when compiled and consolidated to generate meaningful KPIs.

Tier 1 and 2 indicators are fully defined with the intent that these can be reported at the corporate level in both internal and external reports by any company. To achieve consistency and comparability, the indicator definitions have narrowly defined scopes and are threshold based. IOGP has retained consistency with API RP 754 to enable benchmarking.

Although some Tier 3 and 4 KPIs may be consolidated at a corporate level to test management systems implemented across the whole company, the greatest direct value of Tier 3 and 4 KPIs is generally at the local level because a company’s assets will vary in terms of activities, equipment, and processes. Typically, this would mean that different additional Tier 3 and 4 KPIs are employed for activities such as production, well or pipeline operations, either offshore or onshore, and the KPIs would be focused on specific key barriers critical to those operations. Thus, as illustrated by Figure A.2, it is important that additional data is collected at lower levels of the organization so that performance can be analysed to address specific process safety risks for groups of operations with similar activities, equipment and environments.

Companies that decide to aggregate data from Tier 3 and 4 indicators should take care to ensure that similar facilities or activities form the basis of the aggregation, otherwise comparisons can lead to erroneous judgements. IOGP does not currently benchmark Tier 3 and 4 indicators but encourages sharing of company experience and good practice using these two tiers. While not all Tier 3 and 4 indicators can be aggregated, there is considerable value at the corporate level, or between companies, in bringing together the insights gained from asset level analysis.

Further discussion on KPI analysis and learning is included in Part I, Learning from KPIs.

References [1] ‘BP Texas City Final Investigation Report’. US Chemical Safety and Hazard Investigation Board (US CSB), www.csb.gov/bp-america-refinery-explosion/ (Accessed 15 May 2023). [2] The Report of the BP U.S. Refineries Independent Safety Review Panel’, 2007, https://www.csb.gov/assets/1/20/baker_panel_report1.pdf?13842 (Accessed 15 May 2023) [3] ‘ANSI/API RP 754 - Process Safety Performance Indicators for the Refining and Petrochemical Industries. 3rd Edition’. American Petroleum Institute, August 2021, https://www.api.org/oil-and-natural-gas/health- and-safety/refinery-and-plant-safety/process-safety/process-safety-standards/rp-754 (Accessed 15 May 2023) [4] IOGP Report 510, June 2014 - Operating Management System Framework for controlling risk and delivering high performances in the oil and gas industry [5] IOGP Report 511, June 2014 - OMS in practice. A supplement to Report No. 510, Operating Management System Framework [6] IOGP Report 415, December 2018 -