1. Operational Risks in Today’s Oil
and Gas Industry
Maria Saraceni
Barrister, Francis Burt Chambers
February 2013
UNCLASSIFIED

2. Risk Overview
• Geopolitical / terrorism / insurgent attacks
• Geographic
• Geological
• Asset Management
• Information Technology overload
• Price / Cost
• Shareholder expectations
• Supply & demand
• Ageing Infrastructure
• Environmental
• Transparency Issues ( bribery, corruption)
• Operational hazards (blowouts, spills, personal injury, etc.)
• Relationships with stakeholders (investors, shareholders, governments, regulators, unions,
workforce, media, etc.)
• Adverse weather conditions
• Regulatory complexity
• Workforce
UNCLASSIFIED

3. OSH Risks
• “ There is a need for a shared commitment by
governments, regulators and industry to take
meaningful steps to avoid incidents like Montara and
Macondo in the future, and that this objective can only
be achieved if they work together to promote ongoing
improvement in skills development, competence and a
culture of compliance. The recent international
offshore petroleum regulators and operators summit
also reaffirmed the critical role of an independent,
well-resourced regulator to challenge industry to be
rigorous in its operations, practices and prevention and
mitigation techniques.”
Jane Cutler, NOPSEMA , March 2012
UNCLASSIFIED

4. OS & H
UNCLASSIFIED

5. OSH Aspects of Risk
• Improve overall risk perception
• Develop pro-active safety performance lead indicators
• More effective emergency management
• Consistent regulatory framework
• Asset integrity
• Process Safety
• Competency levels
• Contractor engagement
• Effectiveness of Safety Case Regime
UNCLASSIFIED

6. OSH aspects of risk (cont)
• Occupational health (shift-work arrangements and health
effects, fatigue, stress, psychological well-being, physical
stressors, exposure to flammable / poisonous chemicals e.g.
Benzene, food quality, adequacy of accommodation, etc)
• Occupational safety (identifying hazards; assessing risks and
making changes)
• Drug & alcohol testing
• Manage process safety as an integrated and comprehensive
system
• Process safety knowledge and expertise
• Process safety culture
• Safety culture
• Safety leadership / senior management commitment
UNCLASSIFIED

7. OS & H
“… it’s obvious how Chevron has lost months and billions of dollars.
On any normal project, workers pick up their safety glasses from the site store.
There is usually a choice and workers take the best fit. Not on the Chevron
project. The geniuses in the HSE department have decided workers are unable to
make complex decisions about which safety glasses fit them. A “safety glasses
technician” spends several minutes with each worker discussing the intricacies
of various brands of glasses and which would best fit the particular shape of
head owned by that particular worker.
It sounds like a Monty Python movie, but this is resource construction, the
Chevron way...”
Chris Cain, WA Branch Secretary
Feb. 13, 2013
Maritime Union of Australia
UNCLASSIFIED

8. Workforce Risks
“The lack of hair” in management boards of…oil and gas
companies highlights the coming labour shortage in the sector.”
Y. Hussain, 11 Dec 2012, Canada
ILO Tripartite Declaration of Principles concerning
Multinational Enterprises and Social Policy (MNE
Declaration) has 5 areas:
- General policies
- Employment
- Training
- Conditions of work and life
- Industrial relations
UNCLASSIFIED

9. Workforce Aspects of Risk
• High performance work practices including empowering
employees with higher task autonomy
• Reducing job titles and layers of management
• Implementing extensive training programs
• Higher employee selectivity
• Performance-based pay
• Implementing profit sharing.
• Inadequate regional infrastructure (inc. airports) in WA
• Increased demand for temporary accommodation
• Diversity (women, indigenous , youth etc.)
• Flexibility
UNCLASSIFIED

10. Workforce Aspects of Risk (cont)
• Skills shortages
• Job security
• Outsourcing / contract labour
• Poaching of competitors employees
• Insufficient trained personnel
• Lack of skilled engineers & technologists
• Work / life balance
• Ageing workforce
• Working conditions (remuneration, pay equality ,fringe
benefits ,working hours, annual leave)
• Long distance commuting workers
• Shift-work arrangements
UNCLASSIFIED

11. Workforce Aspects of Risk (cont)
• Workforce involvement
• Employee / employer relations
• Demographic Transformation ( from Baby Boomers to Gen-Y)
• Employee migration (FIFO)
• Substitution of technology for labour
• Immigration policy
UNCLASSIFIED

12. Workforce Aspects of Risk (cont)
“There may be no other industry today that demands a more
diverse set of human, political, mechanical and technological
capabilities than the oil and gas exploration and production
industry…(A)s the environment grows more diverse and
unforgiving and the challenge is more complex, skilled human
resources are ageing and growing scarce.’
Meeting the Challenges of Today’s Oil and Gas exploration and production industry: IBM
Consulting Services, 2004
UNCLASSIFIED

13. UNCLASSIFIED

14. Industrial Relations Aspects of Risks
• Unionisation
• Collective / green-field agreements
• Permissible matters in collective agreements
• Industrial action
• Dispute resolution
• Contract labour
• Union right of entry
UNCLASSIFIED

15. Industrial Relations Aspects of Risk (cont)
UNCLASSIFIED

16. Questions?
Maria Saraceni
Barrister
Francis Burt Chambers
mariasaraceni@francisburt.com.au
0412 500 583
UNCLASSIFIED