University of Stavanger

MOM 490

“Marine Operations”

Project Report

“Qualitative risk acceptance criteria applied to underwater

Equipment installation in Nigeria”

16.12.2011

(CONFIDENTIAL INFORMATION FROM SHELL NIGERIA)

Nwokocha Chigozie Cyril

Student number: 210630

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ABSTRACT

The use of risk acceptance criteria as a yardstick for operations in various oil regions of the

world has been welcomed by some experts while some have argued its continued usage.

This report evaluates the qualitative risk acceptance criteria that are applied to underwater

equipment installation in Nigeria. Evaluation of these criteria is very important because

Nigeria is an important player when it comes to oil and gas and anything that affects

operation in Nigeria will definitely affect the global oil supply and thus the price of oil in the

world market. There have been several attacks by militants on several offshore installations in

Nigeria and this has led to occasional shutdown of facilities. These attacks have affected the

risk acceptance criteria when it comes to personnel and assets in Offshore Nigeria. This

report will help in showing the risk acceptance criteria adopted by the oil and gas operators in

Nigeria but more especially the criteria that are applied to the installation of subsea

equipment.

In this report, I will identify the potential risk associated with underwater equipment

installation in Nigeria and make use of different risk parameters to show the acceptance

criteria. Some of the tools which I will consider are FAR, Risk Matrix, ALARP and so on.

I will try to use my results/findings to propose some risk reducing measures that will help to

meet the acceptance criteria set up by the authority. I will also use my result to compare what

is obtainable in other oil and gas countries.

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Table of content

Abstract ………………………………………………………………………………………………………………………………………2

Table of Content ……………………………………………………………………………………………………………………………..3

Chapter 1 - Introduction ……………………………………………………………………………………………………………………………5 - Definition of terms ………………………………………………………………………………………………………………….5 - Overview of Nigeria Offshore Industry…………………………………………………………………………………….6

Chapter 2 - What is risk analysis? ……………………………………………………………………………………………………………10 - Dimensions of risk…………………………………………………………………………………………………………………11 - Risk Management …………………………………………………………………………………………………………………11 - Methodologies for risk analysis ……………………………………………………………………………………………11 - Qualitative vs Quantitative risk analysis…………………………………………………………………………………14

Chapter 3 Parameters for risk acceptance criteria……………………………………………………………………………………………16

- PLL ……………………………………………………………………………………………………………………………………..…16 - FAR and AIR……………………………………………………………………………………………………………..……………16 - F-N Curve………………………………………………………………………………………………………………………………17 - RISK Matrix……………………………………………………………………………………………………………………………18 - ALARP……………………………………………………………………………………………………………………………………19

Chapter 4 - Underwater equipment installation in Nigeria………………………………………………………………………21 - Overview of HSE issues in Nigeria offshore industry……………………………………..………………………21 - Risk Acceptance Criteria for personnel………………………………………………………….………………………24 - Risk Acceptance Criteria for asset……………………………………………………………….…………………………24 - Risk Acceptance Criteria for the environment………………………………………….……………………………25 - Additional concerns ………………………………………………………………………………..……………………………26 - Conclusion and recommendation …………………………………………………………………………………………26

Reference ……………………………………………………………………………………………………………………………………….28 Appendix A -FPSO Offshore Nigeria…………………………………………………………………………………………….……30 Appendix B -Job Hazard Analysis from Shell Nigeria…………………………………………………………………………32

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FIGURES

Figure 1: Oil Fields Offshore Nigeria…………………………………………………………8

Figure 2: Fault Tree Diagram for failure of braking system…………………………………13

Figure 3: Event Tree Diagram………………………………………………………….……14

Figure 4: F-N Curve…………………………………………………………………….……17

Figure 5: ALARP Diagram………………………………………………………………..…20

Tables

Table 1: Main categories of risk analysis method………………………………………………………………………10

Table 2: 5 x 5 Risk Matrix……………………………………………………………………………………………………………18

Table 3: Risk categories…………………………………………………………………………………………………………….…18

Table 4 : Environmental Risk Acceptance criteria ………………………………………………………………..….25

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CHAPTER 1

Introduction

As the world population continues to increase, the demand for energy and basically, oil and

its derivatives is also on the increase. Because of the decrease in world oil reserves in the

conventional onshore fields, the quest for more crude oil to satisfy the energy-hungry, and

ever increasing world population, has driven many companies into harsh and challenging

environment like the north sea, gulf of Mexico, the arctic , the gulf of guinea and so on.

Most of the present day oil and gas discoveries are found in these harsh environment and

getting these oil and gas deposits from there location can be quite challenging. Present day

advances in science and technology has proved that the location of the oil and gas does not

actually matter, provided that the right equipments and personnel are employed.

Due to the fact that most oil and gas deposits are offshore, the risk in getting them has

increased tremendously. In recent years, health, safety and environment (HSE) issues were

not taken seriously until some fatal disasters were recorded like the Piper Alpha, Alexander

kielland, Macondo blowout and so on. These disasters have prompted regulatory authorities

and operating companies to modify their safety rules so that such disaster will never happen

again or to reduce the consequence of such disaster.

The increased risk and safety concern especially offshore has made the regulatory bodies to

adopt strict risk acceptance criteria for operations in offshore oil and gas installations.

This project will focus of the qualitative risk acceptance criteria for underwater equipment

installation in offshore Nigeria.

Definition of terms

There are some technical terms which one will come across as one reads through this project.

Below are the meaning of some abbreviations and the definition of some concepts.

Risk- According to international standard (ISO, 2002), “Risk is a combination of the

probability of an event and its consequences”. [1, p15]

Risk management – “Is defined as all measures and activities carried out to manage risk”. [2, 6]

Risk analysis – “systematic use of information to identify initiating events, causes and

consequences of these initiating events, and express risk” [2, p184]

HAZID- Hazard identification studies

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HAZOP- Hazard operability studies

QRA – Quantitative risk assessment

JHA – Job hazard analysis

FMEA – failure mode and effect analysis

FMECA – failure mode, effect and criticality analysis

FAR- fatal accident rate

AIR – average individual risk

ALARP – As low as reasonably practicable

OPL – Oil prospecting Licence

EIA – Environmental Impact Assessment

Overview of Nigeria Offshore industry

“Oil exploration in Nigeria began as far back as 1908 with the enactment of the Mineral oil

ordinance” [3, p2]

The first attempt was by Nigerian Bitumen Company, but this was terminated by the First

World War. The second attempt was by Shell D’Arcy (forerunner of Shell Petroleum

Development Company of Nigeria) in 1937. This attempt was equally terminated by the

Second World War in 1939. The first commercial discovery of oil and gas in Nigeria was

made by Shell in 1956 at the Oloibiri field, east of the Niger Delta.

Shell retained the sole right for the exploration and production of crude oil in Nigeria until

1961, when Nigeria admitted more E & P companies like Gulf oil (Chevron), Mobil

Production Nigeria, Amoseas (Texaco), Sunray-Tenneco, Occidental, Agip and Safrap (ELF).

At this period, all the operations were limited only to land and shallow offshore Nigeria.

Below is a summary of the history of oil industry in Nigeria at the early stage of the industry:

SUMMARY OF THE HISTORY OF OIL INDUSTRY ACTIVITY IN THE NIGER

DELTA AND ITS SURROUNDINGS, 1908-1966

1908-1914 Shallow drilling by Nigerian Bitumen

Corporation down dip from heavy oil

seeps in outcrops of the Cretaceous

sands.

1937-1940 Reconnaissance work by Shell and BP

geological team.

1946-1951 Intensive geological, geophysical surveys

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by Shell-BP prior to first deep test.

1951 Shell-BP’s first deep test, dry.

1952-1955 Shell-BP drilled Cretaceous prospects

along the frame of the Niger Delta with disappointing results

1953 First oil show in the Tertiary Niger Delta

in Shell-BP's Akata-1 well

1956 First commercial oil discovery by Shell-

BP in the Tertiary (Oloibiri).

1956-1961 Extensive regional exploration activity in

the Tertiary Niger Delta Oil Province by Shell-BP.

1961-1962 Offshore: licences granted to Gulf, Shell-

BP, Amoseas, Mobil.

Onshore: Shell-BP selected Oil Mining

Leases and surrendered some 23,884

square miles of former prospecting

licences ; Gulf, SAFRAP, AGIP, Tenneco

were granted licences in these areas

1962-1966 Offshore: regional exploration phase; 1963

first oil discovery offshore by Amoseas

(Kulama); Gulf developed Okan field

which produced 48,000 b/d at end 1965 and

carried out appraisal drilling in the Delta

South field. Amoseas carried out appraisal

drilling in the Pennington field. Other discoveries

made by Mobil, Shell-BP and Gulf.

Onshore: Shell-BP increased production

from 47,000 b/d in 1961 to 300,000 b/d by

end 1965 and carried out an intensive, detailed

exploration campaign. SAFRAP developed their discovery at Obagi;

AGIP, Tenneco and Gulf appraised various discoveries. Phillips

joined Search for oil [4, p6 and p7]

“The potential for the Nigerian deepwater was not recognised until the 1970’s. Anticipating

that reserves offshore west Africa would at least be similar to those across the Atlantic in

Brazilian Campos and Santos basins, for instance, Government opened up the Nigeria

deepwater area for competitive bidding for oil prospecting licences (OPL). The first

competitive bidding rounds were announced in October 1990 and this led to the award of 18

deepwater blocks” [3, p2]

The government in 1993 also gave discretionary awards apart from the first competitive

bidding rounds for OPL which was between 1990 and 1991.

Because the focus of exploration and field development by the oil and gas companies in

Nigeria is shifting from onshore to offshore, deepwater operations are indispensible to the

future of Nigeria oil and gas industry and to the economy of Nigeria in general because oil

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export makes up a large portion of the government’s revenue. There are a number of

challenges facing the Nigerian offshore oil and gas industry, these among others include –

distance from supply base, water depth, lack of 3D seismic, lack of well data etc.

In spite of the numerous challenges in the Nigeria offshore oil and gas industry, many giant

discoveries have progressed into major development projects requiring advanced

technologies to handle them and creating thousands of jobs for Nigerians. Some of these

discoveries are listed below –

“ExxonMobil’s Erha field (est. reserves 0.5bn barrels),

Shell’s Bonga field (est. reserves 0.7bn)

ChevronTexaco’s Agbami field (est. 1bn barrels).

Total’s Akpo – 1 field (re-estimated to 1bn barrels of oil & 4 tcf gas)

Joint Development Zone between Sao Tome & Principe and Nigeria (est. reserves of

11bn & 3mbpd production)”. [5,p2]

FIGURE 1 – OIL FIELDS OFFSHORE NIGERIA [6]

With the increase in social and environmental challenges facing land, swamp, and shallow-

water operations, it is highly likely that production activities in some the finds listed above

will all reach full throttle within the next 5 years [5, p2]

Most of the offshore/deepwater projects in Nigeria utilize floating production storage and

offloading (FPSO) with subsea wells because of the lack of infrastructure in the Nigeria

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deepwater. The first deepwater discovery in Nigeria was the Bonga field and extensive

feasibility studies were carried out during the development phase of the field.

Within 1995 –2002, a world class Oil and Gas basin has been established in the Nigeria

deepwater, in a high-tech environment, with multi-billion dollar funding requirements. The

basin holds the key to the future growth aspirations of the nation’s reserve base and

production (4 million bbl/d, 40 Billion bbl Reserves). Geological and Commercial risks

remain. Government and industry recognize these risks and are working together to manage

them. Exploration will reveal more reserves in more places. There will be success and there

will be disappointment. The industry’s capabilities will evolve further and we will acquire the

ability to move into deeper water. Safety and environmental expectations will rise and the

business environment will be increasingly competitive. The key challenge will be to convert

deepwater oil and gas resources into optimum value for all stakeholders and to ensure that the

needs and aspirations of all those involved in deep water opportunities, and of those affected

by deep water opportunities, are met equitably. The future looks bright in the deepwater of

Nigeria for the oil and gas industry, Government, and all stakeholders and this must be

viewed by all from both local and global perspectives [3, p10]

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CHAPTER 2

What is Risk Analysis?

This is the means through which risk can be described. It is usually carried out in order to

establish a risk picture, compare alternatives in terms of risk, identify critical factors with

respect to risk and also demonstrate the effect of various measures on risk [2, p5]

Risk analysis can be performed at different phases in the life cycle of a system. These phases

include planning or early phase, detailed planning phase, construction phase, transportation,

installation, operation and decommissioning phases.

In majority of the cases, companies perform risk analysis in order to satisfy regulatory

requirements but this should not be the main reason for such analysis. The main purpose of

conducting risk analysis should be to support decision-making in the face of uncertainties.

Risk analysis helps companies in finding the right balance between safety and the cost of

safety.

According to Aven, T. 2008, there are three main categories of risk analysis methods:

simplified risk analysis, standard risk analysis and model-based risk analysis. These are

described in the table below -

Table 1 – Main categories of risk analysis methods [2, p4]

Main category Type of Description

analysis

Simplified risk Qualitative Simplified risk analysis is an informal procedure Analysis that establishes the risk picture using Brainstorming sessions and group discussions. The risk might be presented on a coarse scale e.g. low, moderate or large, making no use of formalised risk analysis methods. Standard risk Qualitative or Standard risk analysis is a more formalised procedure Analysis quantitative in which recognised risk analysis methods are used, Such as HAZOP and coarse risk analysis, to name a few. Risk matrices are often used to present the results. Model-based risk Primarily Model-based risk analysis makes use of techniques Analysis quantitative such as event tree analysis and fault tree analysis to Calculate risk

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Dimensions of risk

This refers to various aspects of a system that can be affected by an accident or exposed to

risk. The consequences of an accident maybe related to personnel, the environment, assets as

well as production capacity. The above aspects are regarded as the dimensions of risk

because they can be affected when we have an accident. The different dimensions and their

categories are as follows:

- Personnel risk

Fatality

Impairment risk

- Environmental risk

- Asset risk

Material damage risk

Production delay risk [1, p16]

Risk Management

This refers to all measures that are carved out to manage risk. Risk management deal with

balancing the conflicts inherent in exploring opportunities on the one hand and avoiding

losses, accidents and disasters on the other [7, 2007).

According to [2, p6]: Risk management is divided into three (3) main categories, which are –

1) Strategic risk

2) Financial risk

3) Operational risk

(1) Strategic risk comprises factors that are related to long –term strategy of the company.

(2) Financial risk relates to the company financial situation and it may be outside the

company´s control.

(3) Operational risk relates to the normal operating situation in the company.

Methodologies for risk analysis

There are different methods used in risk analysis and the method that is chosen for a

particular situation depends on the reason why the risk analysis is being carried out. Risk

analysis methodology/technique chosen can be qualitative or quantitative. Some of the

methodologies for risk analysis are as follows:

a) Coarse Risk Analysis

This is also known as preliminary risk analysis. This analysis is usually by dividing

the analysis subject into units and then performing the risk analysis for each of the

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units. This analysis is usually done by a team of 3 – 10 persons. The main aim of the

preliminary risk analysis is to establish a crude risk analysis. Because the Preliminary

risk analysis identifies the casual picture, other methods can be used to assess the

situation in detail.

b) Job Safety Analysis (JSA)

This is also known as Job Hazard Analysis (JHA) or Job Risk Assessment (JRA). It

is a risk analysis methodology which is used in identifying hazards that are associated

with a task/job that is to be performed. JSA is a qualitative risk analysis method and it

is check-list based.

A sample of the JHA is presented later in the project and in Appendix A.

c) FMEA/FMECA – Failure Mode and effect (Critical) Analysis

This is a risk analysis method developed in the 1950s and it’s a simple method which

shows you possible failures that can happen to a unit of a system and it predicts the

failure effect on the entire system.

FMEA shows how significant the failure of a component can be, to the overall

performance of the system. It is used in analyzing the failure of a technical system. If

the critical nature of the failures is described the method is known as FMECA –

Failure modes effect and critical analysis. This method systematically reveals the

important failure of a system and so it can be used in evaluating how reliable the

system is. It can also be used as precursor for more detailed quantitative analysis. In

FMEA, technical failures are analyzed while the human failures are overlooked and

this method is not suitable for a system that has much redundancy.

d) HAZOP – Hazard Operability

This is a qualitative risk analysis method which is used in identifying the possible

hazards in a processing unit. HAZOP can be used in many industries although it was

originally developed for chemical processing industries. This method analyses the risk

potentials of a possible deviation from original/design specifications of a system. This

method is carried out by a group of personnel with a HAZOP leader. The method

makes use of the work sheet to document deviations, causes of the deviations,

consequences and recommendations/decisions.

e) SWIFT

Structured What-if technique (SWIFT) is a risk analysis method in which there is

systematic use of “what-if” in order to identify deviations from normal condition.

This method makes use of a checklist like HAZOP but it is a bit more flexible and can

easily be adapted to the application. This is carried out by a team and it helps in

identifying possible problems so that risk-reducing measures can be implemented

accordingly.

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f) Fault Tree Analysis

This is one of the most used risk analysis method and it has found application in many

industries. Fault tree is a logical diagram which shows the relation between system

failure and failure of the individual component of the system.

The unwanted event constitutes the top event of the tree while the various component

failures constitute the basic events of the tree.

The fault tree comprises of graphical symbols showing the basic events of the system

and the relation between them and the state of the system. A fault tree can also be

represented by a reliability block diagram if consists only “And” and “Or” gates.

A simple fault tree is shown in the figure below by using the braking system of a car:

FIGURE 2 – FAULT TREE DIAGRAM FOR FAILURE OF BRAKING SYSTEM [8]

g) SAFOP

This is a modified version of HAZOP technique and it is used to analyze work

processes and procedures in order to identify and evaluate risk factors. SAFOP is a

powerful tool for risk assessment of new (planned) or changed operations and is

applicable for all activities where a procedure will be used, such as process

interventions, material handling, crane operations, maintenance, marine activities.[1,

p165]

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h) Event Tree Analysis (ETA)

This analysis is used in studying the different scenarios which initiating events can

produce. If used qualitatively, ETA provides a picture of the possible scenarios but if

used quantitatively, probabilities are assigned to various events and their

consequences.

A simple event tree is shown below:

FIGURE 3- EVENT TREE DIAGRAM [9]

Other risk analysis methods are Bayesian network, Monte Carlo Simulation, Bow-tie

analysis, etc.

Qualitative and Quantitative Risk Analysis

There are two broad categories to which most of the risk analysis methods fall – qualitative

risk analysis or quantitative risk analysis.

“Quantitative risk analysis is designed so that the security measures can be implemented, and

this will allow the cost envelope to be implemented as well. There is yet a third method for

risk analysis which is used and this is referred to as being the hybrid method, since it borrows

characteristics from both the quantitative and qualitative risk analysis methods. Of the three

approaches, the qualitative analysis is the most simple to use, and is therefore used the most

often.

Qualitative analysis is useful because it allows one to quickly identify potential risks, as well

as assets and resources which are vulnerable to these risks. Not only does qualitative analysis

15

showcase the safety measures that have already been utilized, it will show those which could

be useful if they are implemented.

The goal of qualitative risk analysis is to gain a level of risk protection which is acceptable,

and one which will increase awareness among the necessary members of the organization.

This analysis will often make use of calculations which are fairly basic, and it is often not

necessary to know the value of all the assets in question.

While quantitative analysis does many of the same things which can be found with qualitative

analysis, it is also capable of identifying the envelopes for which both safeguards and losses

can be found. It is based on a process which is highly subjective, and it uses metrics which

require it to have a high level of effort put into it.

At the same time, quantitative analysis is capable of presenting data in a manner which is

friendly for management, and which expresses percentages, values, as well as probabilities.

Now that we've gone over the two primary tools which are used for risk analysis, it is next

important to learn a little bit about the methodology which is associated with them.”[10]

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CHAPTER 3

PARAMETERS FOR RISK ACCEPTANCE CRITERIA

There are different risk acceptance criteria which are used in various industries. The RAC

that is chosen may also depend on the provision of the laws governing the industries. Some of

the risk acceptance criteria which are used in the oil and gas are as follows:

a) PLL

b) AIR and FAR

c) F-N Curve

d) Risk Matrix

e) ALARP

a) PLL (Potential Loss of Life)

This is the number of fatalities experienced in a period, for instance in a year. In some

situations, PLL can be used as a decision-making aid because it is not usually

common to define an acceptance limit for it.

Because PLL expresses absolute level of Fatalities, it is easy for non-experts to

understand.

It is not easy to express PLL in physical terms, because the values are usually less

than 1.

“PLL =0.1 does not imply that 10% of a person is dead! Such a value may be

illustrated by expressing it as 10% probability of one fatality, although this is slightly

imprecise; because there is also a small probability of more than one fatality.” [1, 70]

The PLL value will often favor the development concept that has the lowest manning

level resulting from the lower number of individual exposed to risk. This underlines

the fact that one way to reduce societal risk is to limit the number of personnel

exposed to risk.

b) FAR and AIR

FAR is known as fatal accident rate while AIR is the average individual risk.

FAR value is the number of fatalities in a group per 100 million exposed hours. 108

AIR value is the average number of fatalities per exposed individual. FAR and AIR

can be expressed mathematically by the expression below:

17

FAR and AIR values can be calculated as average values for entire personnel on an

installation or personnel on specific area on the installation. The exposed hours can be

hours on duty or total hours on the installations.

c) F-N Curve

This is used in expressing group risk. Since the most common measure of risk is risk

to individuals, the society is interested on the effects of accidents on the society.

Group risk is used to express the risk on society or affected members of a society.

Although acceptance criteria are usually expressed for individual risk, it is sometimes

necessary to express an acceptance criterion for group risk.

The F-N curve expresses the frequency of accidents with N-fatalities or more and

below is an example.

The frequency here is thus cumulative frequency.

FIGURE 4 - F-N CURVE [11]

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d) Risk Matrix

This is a qualitative risk evaluation tool which can be used to show consequences and

probability of occurrence of an accident. It can be used to show risk level that is

negligible, manageable or intolerable. It can be used to define the ALARP region

where risk reducing measures are needed before an operation can take place. In order

to capture all the risk aspects in a given situation, it is advisable to make use of 5 * 5

risk matrix. An example of this is shown in table 2 below with explanation of the risk

levels shown in table 3.

Table 2- 5*5 Risk matrix [12]

Table 3- Risk categories [12]

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e) ALARP

This is a concept which stipulates that risk should be reduced to a level that is “As

low as reasonably practicable”. This concept provides the framework for finding a

balance between safety and the level of investment needed for the actualization of the

safety goals. It is not easy to specify an acceptable level of risk due to the subjective

nature of risk which makes it hard to do so; however, this concept of ALARP can be

used for setting a value for acceptable risk. ALARP principle also stipulates that the

cost, effort and time needed to reduce risk should not be grossly disproportionate

when compared to the safety level that is being achieved.

“When a risk is not well understood it should be analysed and assessed in detail

before making the ALARP judgment. If the risks are still not well understood a more

precautionary approach should be adopted when judging what risk reduction measures

are reasonably practicable. The lack of evidence about the effects of a hazard is not a

justification for taking no action to reduce risk. In general, hazards which have a high

consequence should be scrutinized more carefully than those that have a low

consequence”. [13]

ALARP can be used as a qualitative measure of risk and the guidance below can be used in

this regard -

“Use of best available technology capable of being installed, operated and maintained in

the work environment by the people prepared to work in that environment;

Use of the best operations and maintenance management systems relevant to safety;

Maintenance of the equipment and management systems to a high standard;

Exposure of employees to a low level of risk”. [13]

The figure below shows the different aspects in the ALARP principle.

“Intolerable Region

Adverse risks are intolerable whatever benefits the activity may bring and risk

reduction measures are essential whatever the cost.

ALARP or Tolerable Region

Risks are "As Low As Reasonable Practicable", i.e. while risks may be significant,

they are tolerable in light of the potential benefits

Broadly Acceptable Region

Positive or negative risks are negligible, or so small that no risk treatment measures

are needed”. [14]

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FIGURE 5 – ALARP DIAGRAM [14]

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CHAPTER 4

Underwater equipment installation in Offshore Nigeria

Offshore Nigeria is an important aspect of the Nigerian oil and gas industry. There have

series of discoveries, both in the shallow water and deep water off the coast of Niger Delta

which is the main oil and gas region in Nigeria. The developments that are going on presently

are immense and it is an important industry for the region as well as the country as a whole.

Some of the fields that are either in development phase or in production are –

- Erha

- Agbami

- Egina

- Bonga

- Akpo

- Oyo

- Aparo

- Nsiko etc.

Most of the oil fields offshore Nigeria that is in the production phase has a great deal of

subsea development. Due to the metocean condition, offshore Nigeria, majority of the

fields make use of FPSO (Floating Production Storage and Offloading) that is shaped like a

barge. The subsea installations are tied back to the FPSO. Because of the swells which are

predominant in this region, the choice of vessel for any marine operation must put the swell

period and height into consideration. Underwater equipment installation in Nigeria is

usually performed with crane vessels and in some cases, the equipment may be transported

on a barge, but the choice of any of this should be such that it will not hit resonance with

the swells. Other operations involved in are sea fastening, transportation, cutting of the sea

fastening, lifting, installation, piling and so on. During underwater equipment installation,

there may be need for using professional divers and ROV (remote operated vehicle). Some

of the vessels operating offshore Nigeria is shown in Appendix A.

OVERVIEW OF HSE ISSUES IN NIGERIA OIL AND GAS INDUSTRY

“Since crude oil was first discovered in commercial quantities in the Country, in 1956,

Nigerian oil and gas exploration and production activities have steadily increased as

petroleum assumed strategic importance in the nation's economy. However, just as occurs

in many parts of the world, crude oil and gas are found and produced in Nigeria sometimes

in very hostile and unfavourable environments. The search for oil and gas takes explorers

to the hot regions of the Northern parts of the country, the swap jungle location of the

Niger Delta, as well as offshore locations in the Atlantic Ocean. Each terrain, whether land,

swamp or offshore, in deep or shallow waters, present unique health, safety and

environmental implications and challenges to the operators, as well as, to the Government

regulators.

22

It is the responsibility of the ministry of petroleum resources through its various agencies

to monitor all activities and operations regarding oil and gas in Nigeria, from the upstream

to the downstream sector of the industry. The department is charged with the duties of

setting standards and guidelines for safe, efficient and effective control, of all operations.

The discharge of these responsibilities involves monitoring of operations at drilling sites,

production platforms and flow stations, crude oil export terminals, refineries, process

plants, storage depots, pump stations, petrol filling stations, and any other locations where

petroleum or petroleum products are either stored or sold and all pipelines carrying such

substances(crude oil, natural gas, and petroleum products)” [15]

There are laws and regulations governing operations by the companies in the oil sector of

Nigerian economy. Most of these laws are amended regularly in order to meet up with the

international standard in the industry.

Some of the principal laws (decree) and regulations related to the activities in the oil and

gas industry in Nigeria are as follows:

1) “The Mineral oils (safety) Regulations, 1963

2) Oil pipelines Act 1965

3) Petroleum Regulations, 1967

4) Oil Terminal Dues Decree, 1968

5) Oil in Navigable Water Decree, 1968

6) Petroleum (Drilling and Production) Regulations, 1969

7) Petroleum Decree (51) 1969

8) Offshore Oil Revenue Decree, 1971

9) Petroleum (Amendment) Decree, 1973

10) Petroleum (Drilling & Production- Amendment) Regulations 1973

11) Petroleum (Refining) Regulations, 1974

12) Petroleum (Amendment) Decree, 1977

13) Petroleum (Drilling & Production- Amendment) Regulations 1979

14) Associated Gas Re-injection Decree, 1978 and its 1984 Amendment

15) Crude Oil (Transport and Shipment) Regulations, 1984

16) Petroleum (Drilling & Production- Amendment) Regulations 1988

17) Federal Environmental Protection Agency Decree, 1988” [15]

Emergence of the deep water developments in Nigeria has caused some changes or

additions in the existing regulatory requirements. The changes or additions can also be

as a result of conformance to international standards. The additional applicable to the

offshore industry in Nigeria are as follows:

- “Procedure Guide for the Construction and Maintenance of Fixed Offshore Platform.

March, 1992

- Statutory Procedure Guide for Compliance with the Technical Safety Control (TSC)

Requirement of Facility Development and/or Modification Projects. June, 2000 Draft

23

- Procedure Guide for the design and Construction of Oil and Gas Surface Production

Facilities. June, 2001

For the environment, the principal regulations governing it are Environmental

Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN), which

were initially issued in 1991” [16] and it has undergone series of Amendment since

then.

In my research during this project, I discovered that it is the companies that set their

own risk acceptance criteria for operations in the offshore oil and gas industry in

Nigeria. Nigeria is yet to have a reliable and well-informed safety regime like what is

obtainable in Norway and the UK. Although Nigeria lacks a good safety program

managed by the government, the risk acceptance criteria set by the operating

companies are always of international standard because majority of the operating

companies in Nigeria are multinationals and they tend to adopt measures which they

use in other parts of the world. The major HSE problem in Nigeria is pollution caused

by oil spill. While some of the oil spills are caused by faulty equipment, some are also

caused by the Nigerian citizens in their quest to get a share of the oil wealth. This

problem is primarily caused by the high unemployment level and poverty in the oil and

gas region of the country.

Identification of potential risk, causes and consequences in underwater equipment

installation

Before operations are performed offshore, risk analysis should be carried out in order to

identify potential hazards or risks associated with the planned operation. Identification of the

risk helps in putting risk reducing measures in place to eliminate or reduce the risk. The

hazards or potential risks are identified by using the HAZID or HAZOP technique.

In Nigeria, however, the client demands that the company (contractor) which is supposed to

do the operation, in this case, underwater equipment installation, should carry out a job

hazard analysis (JHA) or safe job analysis (SJA) or job risk analysis (JRA) before the

operation will be performed. Safety representative from the client company usually check the

JHA or SJA or JRA of the contractor to see if the risk acceptance criteria is met. If the level

of risk identified is too high, the operation may be cancelled or another contractor may be

brought in to do the job. Samples of JHA from Shell contractors in Nigeria can be found in

appendix B at the end of the project. The potential risks, their causes and consequences can

be related to all marine operations including transport, sea fastening, lifting, installation,

piling and so on.

24

METOCEAN CRITERIA

The gulf of guinea in West Africa is an important region for oil and gas business in the world

and it has a peculiar environment which is not so common in some other regions of the world.

The storm condition offshore Nigeria tends to be milder than what is obtainable in the North

Sea or in the Gulf of Mexico. The normal wave conditions are characterized by bi-modal

spectrum. The waves in the gulf of guinea tend to have long periods and they are extremely

directional. The currents generated by the swells in this region are more complicated than the

winds and waves and this is caused by the lack of, or limited design references.

Most the lift operations and installations offshore Nigeria, are governed by metocean limits of

wave height and the response of the lift vessel to periodic swells. Therefore, for lifting and

installation of underwater equipment, the following should be analysed- current direction,

swell direction and the tidal range. The significant wave height offshore Nigeria is

approximately 9.8ft and the optimal installation window in Nigeria is between November and

March, though during January and February, operations can be performed 50% of the time.

RISK ACCEPTANCE CRITERIA FOR PERSONNEL

In the petroleum industry, there are different parameters used to show the risk acceptance

criteria for personnel involved in the operations.

In Nigeria, the directorate for petroleum resources, which is an agency of the ministry for

petroleum resources, mandated that the operating company should carry out their activities in

such a manner, that risk is reduced for the workers. Some of the parameters used by

companies to show the risk acceptance criteria for personnel are- PLL, FAR, AIR, F-N curve,

and the risk matrix.

Due to lack of standardized risk acceptance criteria, the acceptance criteria for personnel

working in offshore Nigeria may vary from company to company. Because some of the

operators on Nigeria waters are multinationals, they tend to adopt risk acceptance criteria of

their company and this is usually accepted by the authorities in Nigeria.

For instance, in Agbami field, where STATOIL is a partner, the risk acceptance criterion for

some of the operations was FAR less than 5.

RISK ACCEPTANCE CRITERIA FOR ASSET

In accordance with the provisions of the mineral ordinance by the ministry of petroleum

resources, it is the duty of the operating companies to protect their asset, so they have to set

the acceptance criteria themselves.

25

Due to the lack of standard risk acceptance criteria for the assets in installation operation,

offshore Nigeria, the companies involved in the operations should set the risk acceptance

criteria for their asset. If the risk of a heavy financial loss is very high, the operations are

usually stopped or risk reducing measures are adopted to reduce the consequence of such

risk.

According to Vinnem J.E. [1] there are two aspects considered in risk acceptance criteria for

assets, these are- material damage risk and production delay risk. When these are converted

to monetary terms, the production delay is usually of more significance than the material

damage.

RISK ACCEPTANCE CRITERIA FOR ENVIRONMENT

By the provisions of the Department of petroleum resources 1991 guidelines, it is mandatory

that an environmental permit be obtained before certain operations can start, anywhere in

Nigeria. In 1988, by decree 58, FEPA (Federal environmental protection agency) was

established and this has helped in giving proper direction to environmental regulations in

Nigeria.

For any operation offshore Nigeria, an Environmental Impact assessment (EIA) must be

performed. Before performing a full EIA, the very first step is to perform the Initial

Environmental Evaluation (IEE) which is the first phase in the Nigerian environmental

regulation.

In Nigeria, the environmental risk analysis is used to identify environmental effects,

probability and consequences of accidental oil spill at sea or coast line. It is necessary to have

risk acceptance criteria when assessing environmental risk because this helps in checking

whether the environmental risk is acceptable or not.

With respect to the Agbami field offshore Nigeria, the environmental risk acceptance criteria

used for the operations are :

Damage Description Probability Category

Minor Recovery time 1month – 1 year 1,0*10-3

Moderate Recovery time 1 – 3 years 2,5*10-4

Significant Recovery time 3 – 10 years 1,0*10-4

Serious Recovery time above 10 years 5,0*10-5

[17]

Although Environmental Guidelines and Standards for the Petroleum Industry in Nigeria

(EGASPIN) stipulate guidelines with respect to the environment, it does not however specify

the risk acceptance criteria for the environment.

26

Additional Concerns

In addition to the operational risks involved in the offshore oil and gas industry in Nigeria, there are

other serious concerns for the operating companies and their personnel working offshore. Some of

these additional concerns are insecurity, corruption, kidnapping, armed robbery, bunkering, and

insurgency.

According to Bergen Risk Solutions April 2011, “Overall, the security situation in the Niger Delta has

improved since the commencement of the amnesty negotiation in August 2009. Attacks on shipping

and offshore assets continue, especially in the central and eastern Niger Delta and off the Bakassi

Peninsula”. The Nigerian government is aware of the maritime security challenges and they

have deployed the Nigeria Navy to help in protection of offshore assets and personnel.

“Long term drivers of insecurity include legitimate political grievances and personal greed

caused by: discrimination against Niger Delta indigenes by major employers, general

unemployment, corruption, poverty, pollution, lack of electricity and clean water, land

ownership and destruction of traditional livelihood. Small arms proliferation and trade in

stolen oil are significant risk drivers with the latter involving numerous and powerful

stakeholders” [18,p.6].

Kidnapping of foreign expatriates as well as locals is another serious concern in the Niger

Delta region of Nigeria. This act is performed by militants or armed gangs in order to get

ransom from the oil companies. According to Reuters news on 17th

February 2011,”The

average time in captivity is less than 30 days and ransoms vary from $10,000-$2 million.

Kidnapping of foreigners and locals continues to be a problem in Nigeria, particularly in the

Niger Delta with the threat from both militants and armed gangs. Ransoms for foreign

nationals range from $28,000-$204,000, with ransom payments for Nigerians generally less

than $100,000. Time spent in captivity is varied, with the longest period some 465 days”.

[19]

These additional risks should be considered when doing risk analysis for operations offshore

Nigeria and Bergen Risk Solution is doing a good work in this regard by publishing report on

Nigerian Maritime Security every quarter of the year.

Conclusion and Recommendation

The petroleum industry is the main source of revenue for the Nigeria economy. This

important industry is faced with many problems and most of these problems are predominant

in the Niger Delta region of the country where most of the oil and gas fields are located.

The Nigerian government, through the ministry of petroleum resources and its agencies, has

put in place legislations and guidelines to regulate all activities in the oil and gas sector, both

in upstream and downstream sector.

From my research in this project, I have, however, discovered that the legislation by the

Nigerian authority is not strict and up-to-date with what is obtainable in other regions of the

world where offshore activities are going on. Lack of well-trained safety personnel is a

problem as well as lack of a vibrant and reliable safety agency in Nigerian petroleum sector.

27

Corruption in the government is also an issue and all these problems need to be addressed if

the oil and gas industry should measure up to that of other countries like Norway.

Other additional concerns which I discussed briefly above should also be addressed by the

government in other to attract potential investors to the Nigeria oil market.

Finally, according to Aven T. and Vinnem J. E. “Care should be shown when using pre-

determined risk acceptance criteria in order to obtain good arrangements, plans, and

measures. Pre-defined criteria driving the decisions should in general be replaced by a risk

management approach highlighting risk characterization and evaluation, and a drive for risk

reductions and a proper balance between burdens and benefits”.[20, p.24]

28

REFERENCES

1. Jan Erik Vinnem, “Offshore Risk Assessment, principles, modelling and applications of QRA

studies”, Springer, 1999

2. Aven, T. “Risk Analysis, Assessing uncertainties beyond expected values and probabilities”,

Wiley ,2008

3. Mac Ofurhie, “Nigeria deep offshore: appraisal of activities from 1991 to 2001 and future

challenges”, 17th World Petroleum Congress, September 1 - 5, 2002, p2

4. E. A. Cordry and E. J Frankl, “The Niger Delta Oil Province: Recent Developments Onshore

and Offshore”, 7th World Petroleum Congress, April 2 - 9, 1967 , Mexico City, Mexico,

World Petroleum Congress, p6 and p7

5. Dele Olaoye, “Competence for Managing HSE in Deep Offshore Operations - Relevance

Requisite for Indigenous Contractors”, Nigeria Annual International Conference and

Exhibition, 1-3 August 2005, Abuja, Nigeria, Society of Petroleum Engineers 2005,p.2

6. http://www.downstreamtoday.com/News/ArticlePrint.aspx?aid=3289&AspxAutoDetectCooki

eSupport=1 assessed on 10-12-2011

7. Aven T and Vinnem J.E, “Risk Management, with applications from offshore oil and gas

industry”, Springer Verlag, New York

8. http://www.eetimes.com/design/embedded/4006464/Architecture-of-safety-critical-systems

assessed on 15-12-2011

9. Mohanad El-Harbawi et al (2004) "Using geographic information systems in assessment of

major hazards of liquefied petroleum gas", Disaster Prevention and Management, Vol. 13 Iss:

2, pp.117 – 129

10. http://www.exforsys.com/career-center/risk-management/qualitative-risk-analysis-

methodology.html assessed on 15-12-2011

11. Sutton Ian. , Risk Analysis and Risk Matrices in the Process Industries: Understanding risk

[Internet]. Version 1. suttonbooks. 2010 May 23. Available from:

http://suttonbooks.wordpress.com/article/risk-analysis-and-risk-matrices-in-the-

2vu500dgllb4m-9/. assessed on 15-12-2011

12. DNV-RP-F116 -Integrity Management of Submarine Pipeline Systems, “Sec.4. Risk

Assessment and Integrity Management (IM) Planning” October 2009

13. Sutton Ian. ALARP (As Low as Reasonably Practicable) Risk: Determining acceptable risk

for industrial facilities [Internet]. Version 1. suttonbooks. 2011 Nov 20. Available from:

http://suttonbooks.wordpress.com/article/alarp-as-low-as-reasonably-practicable-

2vu500dgllb4m-10/. Assessed on 15-12-2011

14. http://www.modulus.com.au/cgi-

bin/riskmanagement/riskmanagement_help.pl?action=EVALUATE assessed on 15-14-2011

15. Oyekan, A.J, “The Nigerian Experience in Health, Safety, and Environmental Matters During

Oil and Gas Exploration and Production Operations”, SPE Health, Safety and Environment in

Oil and Gas Exploration and Production Conference, 11-14 November 1991, The Hague,

Netherlands

29

16. Iain J. Haughie, “Application of Risk-Based Design Relative to Health, Environment, and

Safety”, Offshore Technology Conference, 3 May-6 May 2004, Houston, Texas

17. Berger, Fredrik, “Environmental Risk Management and Preparations for the First Deep Water

Well in Nigeria”, SPE Health, Safety and Environment in Oil and Gas Exploration and

Production Conference, 9-12 June 1996, New Orleans, Louisiana

18. Bergen Risk Solutions, “Maritime Security. In Nigeria”. Quarterly Review. No. 16. April

2011

19. http://af.reuters.com/article/drcNews/idAFLDE71F20C20110217?pageNumber=2&virtualBa

ndChannel=0 assessed on 15-12-2011

20. Aven T and Vinnem J.E, Reliability Engineering and system safety (2005) 15-24

21. http://www.offshore-technology.com/features/feature1975/feature1975-2.html assessed on

15-12-2011

22. http://www.technip.com/en/media-center/photo-library assessed on 15-12-2011

23. http://www.transerve.com.sg/news/News_List.aspx assessed on 15-12-2011

24. http://www.intecsea.com/project_experience/project/default.asp?project_id=106 assessed on

15-12-2011

25. Confidential information from Shell Nigeria 2011

30

APPENDIX A- Vessels Offshore Nigeria

FPSO on Bonga field [21]

FPSO on Akpo field [22]

31

FPSO on Erha field [23]

FPSO on Agbami field [24]

32

APPENDIX B – JOB HAZARD ANALYSIS (From Shell Nigeria) [25]

33

JHA for Underwater Inspection

34

35