Staying safe from the cuts

Everyone agrees that cost savings on the NCS must not be made at the expense of safety. But that poses the question of how much is good enough.

| Astri Sivertsen, Photo: Morten Berentsen

“It’s difficult to quantify something which hasn’t happened,” Magne Ognedal responds when confronted with claims that Norway’s offshore safety regime is too expensive.

How much an accident would cost is what the former long-serving safety director at the NPD and subsequent head of the Petroleum Safety Authority Norway (PSA) wants to know.

The bill for the Deepwater Horizon disaster in the Gulf of Mexico, for example, already exceeds USD 50 billion (NOK 400 billion) even before the compensation settlements are complete.

“Investing a dollar to avoid losing more than USD 50 billion – that’s what this is all about,” he says.

Ognedal has experienced several oil price downturns. Every time one happens, the companies launch what he calls “the traditional measures”.

These include cutting exploration activities and maintenance work – but reducing the latter presents a challenge to health, safety and the environment (HSE).

Ognedal also adds that Norway has seen nothing to match the serious delays to maintenance work observed on the UK continental shelf, where platforms have had to shut down as a result.

While holding a key role in offshore safety regulation, he was constantly confronted with claims that the Norwegian regime was too demanding and expensive.

“At least four commissions of inquiry have studied this issue,” he observes. “They tried to identify particularly expensive requirements, assessed our rules against their British counterparts and so forth.

“Nothing specific has emerged from this work. It’s clear that safety costs. But the main question, of course, is whether these costs are acceptable.

“The answer is that we’ve managed to maintain the high level of safety that we’ve be able to achieve, and thereby avoided costly accidents and disasters.”


Knut Thorvaldsen in the Norwegian Oil and Gas Association.

Lower bills.
Knut Thorvaldsen in the Norwegian Oil and Gas Association for employers sees great willingness to cut costs, both in the industry and with government.
(Photo: Astri Sivertsen)




“The level of costs,” is Knut Thorvaldsen’s blunt response when asked to identify the biggest challenge facing Norway’s petroleum industry.

As deputy director general of the Norwegian Oil and Gas Association, which organises 54 oil companies and 61 suppliers, he is very familiar with the reports mentioned by Ognedal.

But the big problem in his view has been the unwillingness to implement the measures proposed in these studies. “We don’t need more reports. What we need now is specific action.”

Thorvaldsen says the oil industry is dependent on the trust of its own employees and society as a whole to stay in business and to secure new areas in which to operate.

“An accident will naturally affect the company concerned, but would also be a setback for the whole sector,” he admits.

He adds that a company may not be interested in helping its competitors to achieve the best possible financial or exploration results, but collaborating to ensure optimum safety is in everyone’s interest.

Thorvaldsen refers to the PSA’s 2014 report on trends in risk level in the petroleum activity (RNNP), which documented the lowest level of major accident risk since it began to be measured.

Moreover, the last fatal accident on the NCS occurred in 2009. And a further sign of a positive trend is the decline in the number of personal injuries.

The industry has long recognised that its level of costs is too high, and Thorvaldsen points out that measures to rectify this had been initiated even before oil prices began to fall.

Meanwhile, the backlog of safety-critical maintenance is smaller than before. The companies ensure that such work gets done on time after setting strict priorities.

“Everyone appreciates that letting maintenance slide may yield a short-term cost saving but will be negative in the long run,” says Thorvaldsen.

Oil prices are what they are. According to Thorvaldsen, the companies prefer to concentrate on what they can do something about. Norwegian Oil and Gas is contributing in part through standardisation and reducing documentation in the industry.


But the government must accept its part of the job, he says, and not impose what he calls “unnecessarily expensive regulations” on the industry. Proposed new rules for lifeboats are an example.

According to the PSA, meeting these requirements would cost an NOK 8-19 billion. But the association puts the figure at NOK 60 billion – admittedly under an earlier draft of the regulations.

In its view, the safety gain is marginal while the bill would be huge, and Thorvaldsen challenges the government to base new or updated regulations on cost/benefit analyses.

He says that the Ministry of Labour and Social Affairs, which is currently considering the lifeboat issue, has shown an interest in getting the industry’s costs down.

Among other moves, it has dusted off the 2012 report of the official rig commission, chaired by Eivind Reiten, which looked at ways of improving the flow of such units over national boundaries.

Thorvaldsen regards this as positive: “There’s an acknowledgement that costs are too high, and the fall in oil prices has obviously reinforced this. I see a great willingness to look at costs, both in the companies and by government.”


Henrik Solvorn Fjeldsbø

Safety weakened.
Henrik Solvorn Fjeldsbø in the Norwegian Union of Industry and Energy Workers fears that cost-cutting will undermine safety and emergency response.
(Photo: Astri Sivertsen)



The risk of major accidents may have been at its lowest-ever in 2014, but this year got off to a worrying start with several serious incidents during the first quarter.

These could have led to major accidents and personal injuries, and the PSA initiated no less than six investigations – an unusually high figure for such a short space of time.

“This is probably the worst beginning to a year we’ve seen for a very long time,” says Henrik Solvorn Fjeldsbø, head of HSE at the Norwegian Union of Industry and Energy Workers (IE).

Part of the Norwegian Confederation of Trade Unions (LO), this organisation has about 17 000 of its 61 000 members working offshore.

“We’re obviously concerned,” says Fjeldsbø. “The question is whether this reflects changes in the industry or is simply a coincidence. It’s too early to draw any firm conclusions.”

The oil price slump means that the companies are cutting costs, and more than 25 000 jobs have disappeared in Norway’s oil and gas industry over the past 18 months.

That estimate comes from DnB Markets, and its analysts believe that the redundancies and layoffs are likely to continue for some time yet.

Fjeldsbø’s worry is that the cuts are too deep, and notes that the level of required safety and emergency response training is currently under revision.

The industry wants to cut the number of specialised course for personnel with response functions, company HSE staffs are being slimmed, and free time for safety delegates is being reduced.

“You lose the experience and expertise of those who know where the problems lie,” Fjeldsbø points out. “If this is allowed to continue, safety and emergency response will be undermined.”

Fewer employees and resources in general mean that personnel still in the companies get more to do and must cover a wider range of functions – while worrying that it could be their turn to go next.

Fjeldsbø cut his teeth in Norway’s aluminium industry, and has seen the effects of redundancy processes at close hand both on companies and on people afraid of losing their jobs.

“It has an effect on their mentality,” he observes, and adds that the IE has seen relations between employers and unions sour when cost cuts and restructuring are on the agenda.

He is constantly getting reports from safety delegates and union officials that they are being involved too late in the change processes, and that employees are only informed after decisions have been taken.

“Regulations in Norway’s petroleum industry are performance- based. That assumes good and close collaboration and dialogue between companies, unions and government. It’s very unfortunate when the balance of power is upset.”


A rope access technician at work on Oseberg East in the North Sea.

Airy workplace.
A rope access technician at work on Oseberg East in the North Sea.
(Photo: NTB Scanpix/Samfoto)




Norwegian Continental Shelf no.2-2015

Main page - Contents
Bente Nyland on the NCS: Glass is half-full
The interview: Petroleum minister calls on companies to invest
Thinking outside the box made Maria’s development possible
Special report: 50 years
Norway’s offshores sector safer than before Seeking to cut documentation
Eldar Myhre and son Aslak discuss what oil has done with Norway
NPD profile: Diskos database crucial for exploration success
Making huge volumes of offshore data available
Adding up to acclaim
Rockshot: Tight formations
Geology: Many benefits for society Find facts about the NCS