What has safety got to do with business performance in the oil and gas industry?
Throughout my career I have heard doubts expressed about whether measures taken to provide for people’s safety were counterproductive to business performance. “Why do we need to do all this paperwork on permits and risk assessments? Aren’t we wasting time?”. “Well, we can check that over Simon, but it’s going to delay the project schedule”. “I’m confident we can continue to run the oil pumps with that minor leak”. "My job as an HSE Advisor is a real thankless task". And so on.
Of course, I have come to realize, in increasingly profound ways, that just the opposite is true. Good safety is good business
It’s most obvious when major accidents are considered: such events, typically precipitated caused by a wholly preventable chain of visible defects in the system, cause huge value loss in equipment damage and clean up, let alone loss of life and harm to the environment. In the oil and gas industry major accident cost starts in the range of tens of millions of dollars, and can quickly escalate into hundreds. We know that in particular, unusual, situations billions of dollars can be wasted and companies can face a catastrophic experience from which few emerge intact.
Even minor accidents can cause business loss, for example when the whole rig is shut in for days after a pipe-handling incident in the derrick, or when a leaking pump leads to a plant upset and shut in of a platform. Event at today’s oil prices a day’s downtime can be worth way in excess of $1 million worth of deferred revenue.
Drilling down into these more minor defects begins to reveal the possibility in the old adage, “safety is good business” [1].
Organizations that take care of their people, their assets, and their processes with the same mindful diligence to ensure that their operations are as good as they can be and are always getting better, win on all fronts.
A healthy paranoia in the culture that causes teams to always be on hunt for the next defect to eliminate not only is a prerequisite for high hazard operations like ours involving hydrocarbons, but can provide for superlative business performance [2]. Maintenance systems that are biased toward preventative and condition-based monitoring, predicting future defects before they appear, are far better than a defect-ridden plant with poor reliability and expensive corrective and especially breakdown maintenance jobs. Projects that focus on safe design and high quality, deeply planned execution not only produce defect-free and highly reliable facilities, but deliver predictably on schedule. Drilling teams that deliberately review and learn from each task, regardless of how well it apparently went, get better each time and always lead the pack in safety and productive time performance. All of these actions lead to lower cost of supply of our product as well as preventing harm to our people and damage to the environment.
It's concerning to hear comments recently about "safety being too expensive". For me comments like: "we need to focus more on performance, and less on safety" completely miss the point and hence the opportunity that an integral view of operational performance enables.
As I argued in a previous post, now, more than any time in the industry's history, does the profound capability of operational excellence needs to be embraced.
So the very same measures taken to provide for people’s safety therefore can lead to business excellence, reducing costs, improving reliability, making growth predictable. What makes this happen? Leaders who believe in and deeply understand operational excellence and inspire and motivate teams to be as good as they can be and getting better, who demand relentless defect elimination, who provide the tools and the education for their people to do this work well, and above all else put care and concern for people first.
[1] Many accredit Du Pont with the oft-used adage: Industrial Safety is Good Business: The DuPont Story, by William J. Mottel, Joseph F. Long, David E. Morrison, John Wiley & Sons, 1995. ISBN: 978-0-471-28628-8
[2] For more on “High Reliability Organizations” in other industries take a look at the excellent account by Karl Weick and Kathleen Sutcliffe, Managing the Unexpected. Resilient Performance in an Age of Uncertainty. John Wiley & Sons, 2007. ISBN 978-0-7879-9640-9.