Risk management processes are fundamental to making decisions that improve the well construction process. Halliburton’s Hamayun Raja, Aijaz Rizvi and John Walters review the way risk management can be used in offshore projects to improve safety and on-target performance.Risk management is the process of identifying, assessing and prioritizing risk and the implementation of measures to eliminate, minimize and control the probability and impact of an event. This process is being used across many industries and can be effectively deployed in the oil & gas industry for identifying, assessing and controlling risks associated with well construction projects.
In all risk management processes, the probability and impact of risks and their associated potential severity must be analyzed. During the risk analysis period, six questions must be asked, and the answers will determine the quality of decisions:
The risk management process is essential to reducing the uncertainty associated with many projects because it enables the consideration of a range of possibilities rather than providing a single answer. As the oil & gas industry in general, and well construction industry in particular, better understand the risk management process, there is no doubt risk management will become one of the primary tools for improving the quality of project decisions.
Risk, control mechanisms
The multiple types of risk associated with well construction projects include financial, engineering design, environmental, cultural, geopolitical, market conditions, weather, logistics, vendor, earth or geology, skilled resources and equipment. Proper risk analysis for each of these factors determines the risk rating of the entire project.
The risk management process analyzes the possible outcomes of each factor and can help identify where contingency plans for undesirable scenarios should be developed. Throughout the process it is important to divide the risks into policy, strategic, and operational categories because the contingency plans for each category involve different types of mitigation plans.
The two types of risk control mechanisms for offshore well construction projects are proactive control and reactive recovery.
The proactive control addresses threats through effective risk mitigation. Activities include audits, safety case, equipment inspection, well integrity review, employee training (competency development), proper personnel assignment, and safety management system design. Reactive recovery is the consequence mitigation associated with a poorly controlled incident. These activities include relief wells, firefighting, blowout contingency plans and blowout control.
Historically, emphasis has been placed by regulatory agencies, operators and local governments alike on the response to emergency events, and one area that has been often overlooked is preventing an emergency from happening in the first place. Without management systems to address potential risks, operators put themselves at greater risk of incurring an event that could devastate their companies. The recognition of this fact has resulted in operators becoming more proactive in risk management; in the US there has been an upswing in operator acceptance of integrated risk management systems, which include the methods and processes used by organizations to manage risks and capitalize on opportunities that relate to their business objectives. These systems focus on prevention; they help operators determine what risk level is acceptable and identify potential hazards to their operations.
Integrated risk management systems are extremely important to the industry and are becoming an essential part of good business practice. For example, with current US government regulations, risk assessment is a significant aspect of interactions with regulatory authorities and can no longer be seen as a discipline exercised only by safety departments. Rather, it is the basis of critical and costly decisions, including engineering design and operational decisions. A balanced risk assessment that satisfies all stakeholders – for example, operating companies, services providers, state and federal regulatory agencies (safety and environmental), investors and nongovernmental organizations - is now an essential component of offshore industry projects.
Risk management
Three things are needed to achieve operational excellence: appropriate equipment, competent personnel, and an effective risk management system in place.
During the execution of risk management, hazards must be clearly understood, any deviations from the plan should be well understood and controlled, and risks should be mitigated to as low as reasonably possible. To help achieve this, safety and environmental systems should be audited to ensure that they align with government and corporate policy. For risk management systems that target risks related to earth, equipment and execution, dubbed E3, contingency and fallback plans for each step should be prepared.
By taking into account all uncertainties related to the well construction process, the E3 model provides a degree of assurance that assumptions are accurate or adjusted according to new conditions. The model makes sure that operators understand the technical risk exposure of the project.
Successful risk management must ensure the several misconceptions are addressed.
Risk management systems should integrate a defined level of acceptable risk in every policy, procedure, work instruction and guidance document through the use of electronic forms. (It is recommended that operators adopt a paperless approach to ensure the highest standard of document control is maintained.) These forms are used to capture data that verify compliance with system elements.
Where necessary, the system must be prescriptive, and where not feasible, the system must provide users with tools that allow them to identify hazards and to assess and mitigate associated risk. The system also should have an internal mechanism for audit, revision and continual improvement. Ultimately the goal is to provide a self-sustaining system that is user-friendly and with which people comply. Compliance automatically helps ensure any equipment used is appropriate, personnel and subcontractors are competent, and operations are aligned with applicable regulations, codes and standards.
Risk management is a continuous multi-step process that improves all phases of a project. Simultaneously, it serves as a process for raising the bar for operations and well management safety. Risk management and mitigation is directly related to on-target performance and sustainability through corporate social responsibility. It is impossible to achieve sustainability and operational excellence while tolerating high risk. OE
Hamayun Raja, Halliburton’s global technical advisor for technology, has a bachelor’s degree in mechanical engineering and an MSc in petroleum engineering from Technical University Denmark. He is certified by the Project Management Institute as a project management professional (PMP) and PMI risk management professional (PMI-RMP).
AiJaz ‘AJ’ Rizvi, technical engineering manager for Halliburton’s Digital Asset group, graduated with a Bachelor of Science in applied petroleum engineering from Southern Alberta Institute of Technology, earned a Bachelor of Science degree in geology and a Master of Science degree in petroleum geology from the University of Karachi, and is currently co-chair of the Real Time Optimization technical interest group at the Society of Petroleum Engineers.
John Walters, Halliburton’s global service quality manager for the Boots & Coots Risk Management Services group, has spent nearly two decades in the emergency management business. He is trained in emergency management and industrial firefighting, specializes in marine firefighting, and has worked as a consultant for multiple companies.
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