hse9705

Petroleum Development Oman L.L.C.

UNRESTRICTED Doc. Id. : HSE/97/05September 1997 Author : Thomas Anwyl, TSE/53

Hazard Management in ContractsGuidelines

Authorised for Issue:

Signed: ........................................................ 30 September 1997A.M. Riyamy, TSEMCorporate Functional Discipline Head Safety and Environment

Keywords: Hazard, Risk, Contract Management Plan, HSE Assessment, HSE Specification, Hazard and Effects, HEMP

This document is the property of Petroleum Development Oman, LLC. Neither the whole nor any part of this document may be disclosed to others or reproduced, stored in a retrieval system, or transmitted in any form by any means (electronic, mechanical, reprographic recording or otherwise) without prior written consent of the owner.

CONTENTS

1 INTRODUCTION.............................................................................................................................. 2

1.1 Background............................................................................................................................................................. 2

1.2 Purpose.................................................................................................................................................................... 2

1.3 Distribution / Target Audience............................................................................................................................... 3

1.4 Document Structure................................................................................................................................................ 3

2 HAZARD MANAGEMENT IN CONTRACTS, GUIDELINES...................................................4

2.1 Scope........................................................................................................................................................................ 4

2.2 Related Standards................................................................................................................................................... 4

2.3 The Hazard and Effects Management Process.......................................................................................................52.3.1 Objective of HEMP........................................................................................................................................... 52.3.2 When to apply HEMP....................................................................................................................................... 52.3.3 HEMP explained............................................................................................................................................... 52.3.4 HSE Risk.......................................................................................................................................................... 9

2.4 HEMP in the Contract Management Plan............................................................................................................. 92.4.1 Contract Strategy............................................................................................................................................ 102.4.2 Contract Scope and Definition........................................................................................................................ 102.4.3 HSE Assessment............................................................................................................................................. 102.4.4 HSE Specification........................................................................................................................................... 102.4.5 Preliminary Contract HSE Plan....................................................................................................................... 102.4.6 HSE Performance Reports............................................................................................................................... 11

3 APPENDICES................................................................................................................................ 12

Appendix I Glossary of Terms, Definitions, AbbreviationsAppendix II Checklist for HEMP in the CMPAppendix III HEMP in detailAppendix IV Managing HSE RiskAppendix V Generic Hazard ListingAppendix VI HSE Cases currently active in PDOAppendix VII Templates for recording Hazards and EffectsAppendix VII User Feedback Sheet

Revision History

Description Revision number Date issuedOriginal procedure SRD/G/03 0 Mar-94Revised to incorporate EP-95 0300 1 Sept-97

Hazard Management in Contracts Guideline (HSE/97/05) revision 1, September 1997 Page 1 of 12

1 Introduction

1.1 Background

This document has developed from SRD/G/03 ‘Guidelines for Hazard Management’. The revision was required to reflect:

change from Safety Management Systems (SMS) to Health, Safety and Environment Management Systems (HSE-MS);

introduction of the Hazard and Effects Management Process (previously, the Hazard Management Process had been described) in to the HSE-MS;

increased emphasis on risk management within HSE-MS; progression of Company Safety Cases to HSE Cases describing only major hazards; introduction of EP 95-0000 series of documents which reflect ‘best practice’ in HSE

management; introduction of the Corporate Management Framework (CMF); introduction of a new document hierarchy into PDO.

1.2 Purpose

This guideline supports the procedure 'HSE Management of Contracts' HSE/97/02. It has been produced to record best practice and to give help and assistance on how the requirements of the procedure can be achieved. The guideline contain no mandatory requirements. This guideline:

describes the Hazard and Effects Management Process (HEMP); recommends when and how it is best practice to apply HEMP, related to the Contract

Management Plan (CMP); describes the HSE Risk Matrix and expands upon best practice for managing HSE risk; recommends when and how to use the HSE Case for managing risk in contracted activities; directs the reader to further information on structured tools for use in HEMP; provides a listing of some generic hazards to aid application of HEMP.

This guideline provides general guidance for all contracted activity within PDO’s operations. Because of this not all of the issues covered will be relevant for all contracts. Users should select those issues which are most appropriate to their needs and which are most relevant to their particular contract. The guidelines can not be definitive; the omission of an issue from a guideline should not be taken to imply that the issue is unimportant and can be neglected.

The guidance follows the chronological sequence of events in the Contract Management Plan. In particular it refers to:

Contract Strategy; Contract Scope definition; HSE Assessment; HSE Specification; Preliminary Contract HSE Plan; HSE Performance Reports.

The HSE Management of Contracts Flowchart from HSE/97/02 is repeated in Figure 1 with those areas that this document provides guidance upon, highlighted in red.


Figure 1. HSE Management of Contracts Flowchart

1.3 Distribution / Target Audience

The Target audience is Contract Owners, Holders and Company Site Representatives. In addition contractor management and in particular, Contract Manager, contractor Site Representative may benefit from exposure to these guidelines. A ‘User Feedback Sheet’ is provided in Appendix VIII for any reader who has comments on the guidance contained, or who identifies additional issues on which they consider guidance is necessary.

1.4 Document Structure

The document complies with the requirements of a Business Control Guideline as defined in PDO’s document control system. It contains three major sections:

Main Section

Content Purpose

Introduction

Background How the current document developed

Purpose What the current document is expected to achieveDistribution Who is expected to use the documentDocument Structure

Overview of contents

Guideline Scope The breadth of Company activities covered by the document

Related Standards Other PDO Business controls which should be referenced when using this guideline

Description The actual guidance provided by the document


Appendices

Detailed information that expands upon the guidance offered


2 HAZARD MANAGEMENT IN CONTRACTS, GUIDELINES

2.1 Scope

The procedure HSE/97/02 ‘HSE Management of Contracts’ requires hazard assessments to be performed by the Contract Holder when preparing the HSE Specification for the contract and by the contractor when preparing their Contract HSE Plan.

The Hazard and Effects Management Process (HEMP) is the method recommended for use in hazard assessment. Correctly applied it ensures hazards and their effects have been fully identified, assessed, controlled and recovered from in the event of loss of control. This guideline describes HEMP and how it can be applied in the HSE Management of Contracts. It then provides guidance on HSE risk and the recommended methods for managing HSE risk in contracted activities including the HSE Case.

It directs the reader to other documents which provide overviews on some of the tools and techniques that can be used to practice HEMP and provides a generic listing and brief description of some of the more common hazards found in Exploration and Production (E&P) operations.

2.2 Related Standards

Business control documentation supported by this guideline is listed below.

Management System Health, Safety and Environment Management System HSE/97/11Policy PDO HSE PolicyCode of Practice No HSE Code of Practice currently exists to support these

documentsProcedure HSE Management of Contracts Procedure HSE/97/02

Procedure for the Registration of Contractors FCS/PR1Contract Procedures FCS/PR2

Specification HSE Standards Manual, Chapter 2 HSE/96/01HSE Specification proforma (available from Unit Contract Sections)

Guidelines HSE Training Guide HSE/97/03Guidelines for Contractor HSE Pre-qualification HSE/97/04Guidelines for the Content and Assessment of Contract HSE Plans HSE/96/02Guidelines for the Monitoring of HSE in Contracts HSE/97/06

Reference documents used in the writing of this document and to be consulted if more information is required are listed below.

SIEP EP 95-0000 series HSE Management Systems EP 95-0100Management of Contractor HSE EP 95-0110Competence Assurance for HSE Critical Activities EP 95-0120Overview Hazard and Effects Management Process EP 95-0300Implementing and documenting an HSE Management System and HSE Cases

EP 95-0310

British Standards Institute Guide to Occupational health and safety management systems BS 8800E&P Forum Guidelines for the Development and Application of Health,

Safety and Environmental Management Systems6.36/210

Shell Health, Safety and Environment Committee

Risk Assessment Matrix March 1996


2.3 The Hazard and Effects Management Process

Definition of HEMP The Hazards and Effects Management Process (HEMP) is defined as;"The structured hazard analysis methodology involving hazard identification, assessment, control and recovery and comparison with screening and performance criteria." (Source EP 95-0300).

2.3.1 Objective of HEMP

To provide a structured approach towards the analysis of hazards throughout the life cycle of an asset.

This is achieved through use of structured tools and techniques that allow hazards to be identified, assessed, and when fully understood in both situation and context, to be controlled and if necessary recovered from if control is lost.

2.3.2 When to apply HEMP

HEMP should always be applied at the following times:

At the start of each life cycle phase for an asset; Prior to any major change (structural, operational, or maintenance) to an asset; Prior to the execution of an activity; Prior to the introduction of a new hazard to the operation; Prior to the start of any contracted operation.

Further triggers for the application of HEMP should be when:

hazards appear to pose a significant threat or; established controls are known to be inadequate to meet standards or; continuous improvement in HSE performance is required.

In relation to HSE Management of Contracts, when to use HEMP is described in detail in section 2.4.

Demonstration of HEMP in its most complex form is an HSE Case. This is required only when the risks from the hazard are assessed as being extreme. For all other levels of risk, HEMP is demonstrated through application of procedures, checklists and structured ways of working. At its simplest HEMP is no more than a site HSE discussion, commonly called a 'toolbox talk'.

2.3.3 HEMP explained

The HEMP process originally consisted of four steps, Identify, Assess, Control, Recover. These have now been expanded to five steps which better focus the process on the management of risk, rather than the management of the hazard in isolation. The five steps are summarised below:

1. Identification of Hazards and EffectsA systematic search for hazards and their effects, to include hazardous events, hazards, threats, escalation factors2. Evaluation of riskAssessment of hazard and effects to establish probability of occurrence and severity of exposure3. Recording of Hazards and EffectsFormal record of assessment using pre-defined forms4. Comparison with Objectives and Performance CriteriaGap analysis between assessed risk and acceptable risk (against PDO standards)5. Risk Reduction CriteriaDecision on best approach to reduce risk based upon cost benefit analysis

HEMP in general is explained in Table 1 and shown in Figure 2. For a more detailed explanation refer to Appendix III. A template for Contract Holders experienced in applying HEMP is provided in Appendix II.

Hazards, which have to be identified, assessed, controlled and recovered from, are the starting point for the HEMP process and can be identified and assessed in a number of ways. These are:


experience / judgement checklists standards structural review techniques

Structured ReviewTechniques

Standards

Checklists

Experience /Judgem ent

Identify Hazardsand Effects Evaluate Risks

Record Hazardsand Effects

Com pare withObjectives and

Perform ance Criteria

Establish RiskReductionMeasures

IDENTIFY

CONTROLRECOVER

ASSESS

HEM P

Figure 2. Approaches to hazard assessment which support HEMP

Experience / judgement

The knowledge of experienced staff provides a sound basis for hazard identification and assessment. They can draw on experience gained from different aspects of Company operations and the E&P business in general in different locations. Practical staff experience gained in the field and feedback from incidents, accidents and near misses is invaluable.

Checklists

These are a useful way of ensuring that known hazards and threats have all been identified and assessed. The use of checklists (such as provided in Appendix V) however, must not be allowed to limit the scope of review as the situation and context in which they were compiled may not be directly applicable to the situation currently under review. They are normally drawn up from standards and operational experience and focus on areas where the potential for mistakes is high or where problems have occurred in the past. Hazard Registers taken from the life cycle of previous developments are particularly useful as a basis for checklists.

Standards

These reflect collective knowledge and experience, accumulated on the basis of national or international operations. They generally focus on hazard assessment and control, since the hazard is inherent and recognisable. Standards usually contain information on hazards applicable to a particular type of operation. The designer of a pressure vessel relief system, for example, can use an ERD or ISO Standard to find detailed guidance on the relief cases that should be considered. In some cases compliance with prescriptive standards alone will reduce risk 'as low as reasonably practicable'. Similarly, the acceptability or otherwise of emissions or discharges to the environment, or release of agents harmful to health can be assessed by reference to environmental quality standards and occupational health exposure limits. Standards can provide guidance on all four steps of identify, assess, control and recovery. Where new or non-standard designs are concerned, especially ones containing configurations with multiple interfaces, it is unlikely that all the possible interactions can be identified using standards alone. In more complex facilities other hazard management tools will be required.

Structured review techniques


A range of structured review techniques to support all of the above are described in the EP 95-0000 series of documents. Some of these techniques were initially developed for use in safety management others have been specifically developed for environmental and occupational health management often using similar principles as for safety management. One example is HAZID (Hazard Identification) and another is HAZOP (Hazard and Operability Study). With interpretation, these techniques are also capable of addressing emissions, discharges, waste generation and occupational exposure to hazardous substances, etc. Many of these techniques also contain screening and acceptance criteria for Controls.


Table 1. The Hazard and Effects Management Process summarisedHEMP Stage Objective of Stage Result of HEMP Source of Information Tools & Techniques availableIdentification of hazards and effects

To identify, the hazardous events (consequences) to be avoided, to identify the hazards, threats and escalation factors which might contribute to that hazardous event.

List of potential hazardous eventsList of potential hazardsList of potential threatsList of potential Escalation Factors.

Individual knowledgeGroup knowledgeContractor knowledgeEstablished activity documentation (business reports, inspections, audits, incident investigations etc.)Specialist reports (HAZAN, HAZID, SAFOP etc.)Specialist tools (QRA, HAZID, etc.)HSE CasesTask Hazard Control SheetsGeneric hazard and effects listing (TSE/1)EP 95-0300

BrainstormingHazard Identification. HAZID (EP 95-0312)Health Risk Assessment. HRA (SHSEC Sept. 94)HRA and exposure evaluation for chemical agents (SHSEC 95)Human Factors (EP 95-0324)Environmental Assessment. EA (EP 95-0370)Soil and Groundwater Guides (EP 95-0385, 0386, 0387).Social Impact Assessment (EP 95-0371)Hazard and Operability Study. HAZOP (EP 95-0313)FIREPRAN (EP 95-0350)SAFOP (DEP)Job Hazard Analysis. (EP 95-0311)Tripod Beta (EP 95-0321)Tripod Delta (EP 95-0320)

Evaluation of risk To assess the risks to health, safety and environment from the identified hazardous events by consideration of;1. The likelihood of occurrence;2. The severity of exposure. Risks are to be assessed against established and demonstrably effective controls (barriers).

For each hazardous event, hazard, threat, escalation factor an evaluation of: The probability of

occurrence The severity of exposureList of appropriate standards which are in place and enforcedList of hazardous events for which standards are not in place or not acceptable.

HSE Risk MatrixIncident ReportsPDOTRACKHSE Info ToolQRA Datasheets (E&P Forum)Oman LegislationHSE Standard Manual (HSE/96/01)EP 95-0000 seriesInternational Standards (BSi, API, ISO etc.)

Most of the above techniques, plus:HSE Risk MatrixQuantitative Risk Assessment. QRA (EP 95-0352)Historical records (EP 95-1020, PDOTRACK, QRA Datasheets – E&P Forum)Consequence Analysis as in:Physical Effects Modelling (EP 95-0314)Environmental Dispersion Models (Monitoring air quality; EP 95-0376; Monitoring water quality; EP 95-0381)Oil Spill Trajectory ModelsRisk Assessment Models for Contaminated Soil (Environmental quality standards for soil and groundwater; EP 95-0385; Setting priorities for contaminated soil and groundwater; EP 95-0387)Groundwater models

Recording of hazards and effects

To record the results of the identification and evaluation stage for those hazardous events where risk is significant;, so that; 1. The information can be communicated to

others;2. A record exists when challenged by

inspection or audit.

Hazard RegistersActivity Specification SheetsTask Specification SheetsTask Hazard Control Sheets.

THESIS software (TSE/1)WHIMS (BOS/7)

THESIS softwareWHIMS softwareHSE-MSHSE CaseSpecifications

Comparison with Objectives and Performance Criteria

To establish the gap between the risk as evaluated in previous stages and acceptable risk as defined in Company standards.

A list of unacceptable risks ranked against severity of exposure and likelihood of occurrence.

HSE Risk Matrix

Risk Reduction Criteria

To reduce the residual risk to as low as reasonably practicable

New standards to be in place and enforced

HSE Risk MatrixHSE-MS (HSE/97/02)Guidelines (HSE/97/05)

HSE-MSEP 95-0100EP 95-0300


2.3.4 HSE Risk

To apply HEMP effectively, the HSE risk presented by the hazard and its effect must be known. Risk is a combination of two components, frequency and consequence. Risk management requires either a reduction in the frequency with which something occurs or a reduction in the consequence if it does occur. In PDO the tool against which risk is assessed is the HSE Risk Matrix shown in Figure 3.

Consequence Increasing ProbabilityA B C D E

Rating Assets People-Health

People-Safety

Environment

Never heard of in EP Industry

Incident heard of in EP Industry

Incident heard of in PDO

Incident happens <5

times per year in PDO

Incident happens >5

times per year in that location

0 No damage

No Injury No Injury No effect

1 Slight Damage

Slight Injury

Slight Injury

Slight effect

2 Minor Damage

Minor Injury

Minor Injury

Minor effect

3 Local Damage

Major Injury

Major Injury

Localised effect

4 Major Damage

Single Fatality

Single Fatality

Major effect

5 Extensive Damage

Multiple Fatality

Multiple Fatality

Massive effect

Figure 3. The Basic HSE Risk Matrix

The matrix plots frequency of occurrence along the top as five separate columns ranging from A to E. Consequence is plotted down the side of the matrix as six separate rows ranging from 0 to 5. The consequence descriptions are expanded upon further in HSE/97/01. Risk therefore plots within the matrix as a combination of probability and consequence. This is known as the risk classification. For example A1 is a lower risk classification than C3. Within Company operations levels of risk have been predefined and these are shown in Figure 4.

Consequence Increasing ProbabilityA B C D E

Rating Assets People-Health

People-Safety

Environment

Never heard of in EP Industry

Incident heard of in EP Industry

Incident heard of in PDO

Incident happens

several times per year in

PDO

Incident happens

several times per year in

that location0 No

damageNo Injury No Injury No effect

1 Slight Damage

Slight Injury

Slight Injury

Slight effect

2 Minor Damage

Minor Injury

Minor Injury

Minor effect

3 Local Damage

Major Injury

Major Injury

Localised effect

4 Major Damage

Single Fatality

Single Fatality

Major effect

5 Extensive Damage

Multiple Fatality

Multiple Fatality

Massive effect

Figure 4. The HSE Risk Matrix as defined by the HSE-MS.

Level of riskDiscretionaryLowMediumHighExtreme

All action to reduce risk should result in the risk classification decreasing either in consequence (e.g. C4 to C3) or in probability (e.g. C4 to B4). How much effort to expend will be based upon cost benefit analysis. . HSE risk is discussed in more detail in Appendix IV.

2.4 HEMP in the Contract Management Plan

The Contract Management Plan (CMP) is described fully in HSE/97/02. This section considers those major aspects of the CMP where HEMP must be effectively applied if the CMP is to achieve its objectives. For each aspect, which part of HEMP to consider is shown in bold type.

2.4.1 Contract Strategy

This is a preparatory step in which the approach to managing the contract is decided upon. The decision to be taken at this stage is who will be responsible for executing HEMP? If a ‘hands on’ approach is chosen, the responsibility for effective application of HEMP at all stages rests with the Contract Holder. If a ‘hands off’ approach is taken, the responsibility of the Contract Holder for executing HEMP ends after the HSE Specification is completed and then moves to the contractor. However, the Contract Holder still remains responsible for the effectiveness of the contractor application of HEMP at all stages.

2.4.2 Contract Scope and Definition

Major hazards should be identified and recorded for inclusion in the HSE assessment. During this phase, the Contract Holder should perform a preliminary identification of the hazards and effects, and record this in a note to file.

2.4.3 HSE Assessment

The HSE risk relating to the identified major hazards should be assessed and methods for reduction of that risk agreed. HEMP should focus on:

Identifying those hazards which can be eliminated from the workscope; Quantification of the residual HSE risk in the workscope after established standards have

been applied; Reduction in the residual risk to as low as reasonably practicable by introduction of risk

reduction measures; Specifying as a contractual requirement risk reduction methods as essential controls and

clarification of when these should be in place; Providing the contractor with the necessary information to get a full understanding of the

hazards involved in the workscope.

The following parties should contribute to the hazard assessment:

Contract Holder; The planned activity supervisor(s); An HSE adviser; A representative of the department that the asset holder for the area/facility in which the

contractor will be operating.

The aspects of HEMP to be considered are:Identification 1.Identification of hazards and effectsAssessment 2. Evaluation of risks

Assessment, Control 4. Comparison with objectives and performance criteriaControl, Recovery 5. Establishment of risk reduction measures

2.4.4 HSE Specification

The HSE specification is the result of the Contract Holder applying HEMP. It contains requirements identified during the HEMP process. To be effective it should relate to HSE Policy, HSE Objectives, HSE Targets and HSE Standards. Specified performance indicators should then be used to measure compliance to these standards. The aspect of HEMP to be considered is:

Control, Recovery 5. Establishment of risk reduction measures

2.4.5 Preliminary Contract HSE Plan

In response to the HSE Specification, the contractor should develop a Contract HSE Plan which details how the HSE risk should be minimised. It should cover the contract phases from mobilisation to demobilisation and clearly indicate the policy, procedures and standards to be adopted during each phase of the contract. The Contract HSE Plan should demonstrate the contractor’s understanding of the requirements stated in the HSE Specification and indicate how the contractor should achieve compliance.


The Contract Holder should at this stage be looking for evidence that the contractor using their specialist skills has applied HEMP independently of the requirements of the HSE Specification with the result that the Contract Holders application of HEMP has either been:

Confirmed and therefore endorsed as adequate in scope and content by the contractor; Challenged by the contractor, with alternatives and improvements proposed.

The HSE kick-off Meeting or an HSE Workshop can be used to establish the contractor’s understanding of the HSE Specification. If it is found that the contractor’s understanding and ability to apply HEMP is lacking then the effectiveness of the HSE pre-qualification should be reviewed. The aspects of HEMP to be considered are:

Identification By the contractor 1.Identification of hazards and effectsAssessment By the contractor 2. Evaluation of risksAssessment By the contractor 3. Recording of hazards and effectsAssessment, Control By the contractor 4. Comparison with objectives and performance criteriaControl, Recovery By the contractor 5. Establishment of risk reduction measures

2.4.6 HSE Performance Reports

The report contains only factual information on the HSE performance of the Company and contractor throughout the contract against the standards of the HSE Specification. HEMP itself is not applied at this stage but an observation upon how effective HEMP was, as a tool to manage HSE risk is justified. Comments might relate to:

What standards were found acceptable / unacceptable? What controls (barriers) were successful / unsuccessful and why? Was the Guidance provided on HEMP useful, if not, why?


3 Appendices

Appendix I Glossary of Terms, Definitions, Abbreviations

Appendix II Template for application of HEMP to the CMP

Appendix III HEMP in detail

Appendix IV Managing HSE Risk

Appendix V Generic Hazard Listing

Appendix VI HSE Cases currently active in PDO

Appendix VIITemplates for recording Hazards and Effects

Appendix VIII Use Feedback Sheet


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