Two approaches exist for regulating safe activity in this sector – prescriptive or performance-based. Norway has moved over time from the first of these to the second.
A prescriptive system is based on laws and regulations which set specific demands for structures, technical equipment and operations in order to prevent accidents and hazards.
The regulatory authorities thereby lay down the necessary requirements for safety, and monitor that the companies comply with these.
By contrast, performance-based regulation involves specifying the performance or function which is to be attained or maintained by the industry.
The regulatory role here involves defining the safety standards which companies must meet, and checking that they have the management systems which permit such compliance.
For their part, the companies are given a relatively high degree of freedom in selecting good solutions which fulfil the official requirements.
A trend has existed among safety regulators worldwide over the past 20-30 years to move their regimes towards a greater degree of performance-based regulation.
This is because the prescriptive approach has often turned out to encourage a passive attitude among the companies. They wait for the regulator to inspect, identify errors or deficiencies and explain how these are to be corrected.
As a result, the authorities become in some sense a guarantor that safety in the industry is adequate and take on a responsibility which should actually rest with the companies.
Norway’s offshore petroleum industry began well before a regulatory authority and safety regulations for this activity had been put in place.
The first exploration well on the Norwegian continental shelf (NCS) was drilled in 1966, but it was 1970 before a commission was appointed to propose appropriate safety rules for this activity.
When it was established in 1973, the Norwegian Petroleum Directorate (NPD) faced a challenge in keeping pace with the development of the country’s oil and gas sector.
The distinction between fixed installations and mobile units was not only technological but also had jurisdictional and regulatory significance.
Exploration in the early years was pursued by mobile units, either floaters or jack-up rigs, while production occurred from fixed installations supported by steel or concrete structures.
The mobile units were entered in a national ship register and subject to safety regulation by the maritime authorities in this “flag” state. But fixed installations were registered in the Norwegian petroleum registry and regulated by the coastal state – in other words, by the NPD.
This distinction meant that the regulatory regime on the NCS was originally split into two components.
Overarching safety regulations for exploration and drilling vessels were introduced in 1975, and administered by the Norwegian Maritime Directorate (NMD). The following year, regulations were similarly adopted for the production of underwater petroleum deposits. The NPD was charged with developing detailed rules and monitoring compliance.
It transpired that a number of the installations already built had safety deficiencies. That applied particularly to their electrical equipment and fire extinguishing systems.
Rectifying these defects was both expensive and time-consuming, which prompted the NPD to give priority from an early stage to making checks in the design and construction phase.
Monitoring also revealed uncertainty in the industry concerning the division of roles between the companies and the regulator over safety issues.
The NPD expected the companies to take responsibility for ensuring that their activities were acceptable, and to implement necessary safety measures without having to be told. For their part, the companies felt it was the regulator who should be making inspections, identifying non-conformances and issuing orders to correct deficiencies.
This passive role on the part of the companies meant that the NPD had to intensify its inspection activities and expand its staffing.
As mentioned above, increased involvement in day-to-day operations also amounted to a transfer of responsibility for safe operation from the licensees and operators to the authorities. The NPD’s personnel felt increasingly that they were being driven into ensuring a satisfactory level of safety for offshore personnel.
In the late 1970s, work accordingly began on developing an inspection philosophy better suited to the real division of responsibilities and duties between regulator and industry.
Guidelines on licensee self-regulation duly appeared in 1979. These emphasised that the independent obligation of the companies to comply with the regulations required an active approach.
This duty was to be fulfilled by adopting management tools in the companies which ensured systematic control of their own operations.
Introducing such management systems took time, and the guidelines were accordingly revised and expanded in 1981 through new provisions on internal control by licensees.
The NPD opted at this point to drop “self-regulation” as a term, because many had interpreted it to mean that the companies themselves should set safety standards for their operations.
It had also been taken to imply that the regulator would no longer be involved in ensuring compliance with regulatory provisions.
Guidelines on the safety assessment of platform concepts were also adopted in 1981. Developed over a number of years, these built on a growing interest in and understanding of managing overall risk in the industry. The introduction of the guidelines was not an immediate success, partly because of one criterion applied when approving development concepts.
This specified that the maximum acceptable risk of an accident occurring should not be greater than a statistical probability of 10-4.
As a result, discussions on the risk requirements for approving new developments on the NCS quickly developed into a pure number-crunching exercise.
That in turn meant it was easy for the statisticians to “document” that the various risks in such projects were within the acceptable limits.
Two disasters – the Bravo blowout in 1977 and the loss of the Alexander L Kielland in 1980 – had a big impact on the continued development of the regulatory regime on the NCS.
During a well workover on the Ekofisk 2/4 Bravo installation, the failure of a downhole safety valve led to the first oil blowout in the North Sea. A total of 9 000 tonnes of crude were spilled to the sea during the April week it took to bring this well back under control.
Following the Bravo incident, the NPD introduced a requirement that the blowout preventer (BOP) must always be in place on a well. It also demanded a safe job analysis of risky operations.
Another direct consequence of the blowout and the subsequent debate was the decision that the NPD would report in future to the Ministry of Labour and Local Government on safety matters.
This meant that the regulator reported to two separate ministries, with the Ministry of Petroleum and Energy remaining the responsible body for resource management.
The mobile accommodation rig (flotel) Alexander L Kielland overturned in the Ekofisk area of the North Sea during the night of 27 March 1980.
This disaster followed the failure of a weld on one of the braces holding the rig’s five flotation columns in place, which initiated a progressive collapse and the loss of a column. The unit immediately listed, its other columns and deck took in water, and the whole rig turned turtle in the space of 20 minutes.
A total of 123 people were killed, while 89 were rescued.
The Kielland disaster came to be hugely significant for the development of the regulatory regime on the NCS, and a commission of inquiry published its report in April 1981. This contained a number of critical findings in such areas as inspection routines, safety training and technical weaknesses in rescue equipment.
The most visible consequence of the accident was the introduction of new survival suits for use in the offshore industry.
An official commission had laboured since the early 1980s on framing a new Petroleum Activities Act for the Norwegian oil and gas business.
When this statute came into effect in 1985, three new key regulations were also introduced – including an overarching body of rules on safety in the petroleum activity.
Another set regulated the duty of licensees to implement internal control, and the third concerned the use of risk analyses. These legislative and regulatory changes built on the many good and bad experiences acquired by the authorities from 13 years of work on offshore regulation and control.
They also reflected the conclusions drawn and recommendations made as a result of investigations into incidents and accidents over the years.
The new Act and its regulations also ended the earlier division of regulatory responsibility between mobile units and fixed installations on the NCS, replacing it with an integrated system.
An important reason was the emergence of new types of production concepts, which included the gradual expansion of floating platforms on the NCS.
The Petroleum Activities Act specified that Norway’s regulatory responsibility would be confined to the function which support vessels performed in petroleum operations. In other words, the country would regulate the lifting function on a crane ship, for instance, or the production of pipelines on a laybarge.
The biggest change was nevertheless that the NPD became solely responsible for developing regulations and supervising safety and the working environment for the petroleum industry on the NCS.
This move primarily reflected the Kielland commission’s recommendations, which strongly emphasised the need to improve coordination of regulatory agencies by reducing their number.
Inspection activities had been shared during the early years between a number of government agencies, including the NMD, the Civil Aviation Authority, the Telecommunications Directorate and the Labour Inspection Authority. These bodies exercised their supervisory function on the basis of their own detailed regulations and existing inspection regimes, which built on differing control philosophies.
When responsibility was transferred to the NPD, it “inherited” in practice the detailed regulations of the other agencies. That greatly expanded its regulatory portfolio.
However, the NPD was not intended to acquire its own expertise in applying these regulations. Instead, it should reach agreement on help from the agencies which previously enforced them. The Norwegian Pollution Control Authority (SFT – now the Norwegian Climate and Pollution Agency – Klif) and the Directorate of Health remained independent regulators of the industry.
Their responsibilities did not directly concern safety and the working environment, and the job of coordinating all regulation of the petroleum activity on the NCS was assigned to the NPD.
Norway thereby acquired a completely new regulatory regime for ensuring that its petroleum industry was conducted in an acceptable manner.
New concepts were introduced, including a “compliance responsibility” for companies which required them to verify that their business was run acceptably and in line with the rules.
The NPD ceased to use the term “inspection” in preference for the idea of ”supervision”. And its “approvals” were replaced by “consents”.
These terminological changes were more significant than might be thought at first sight. The supervision concept, for instance, is not confined to mere monitoring.
It covers all activities which provide the necessary basis for determining whether the companies have accepted responsibility for complying with the regulations in every phase.
Supervision accordingly means not only audits, verification, investigations and consideration of consents, but also interaction with the industry in the form of studies, professional seminars and the development of regulations.
Similarly, the earlier approvals regime, which had the effect of turning the NPD into a virtual guarantor that company activities were acceptable, gave way to the concept of consent.
The latter allows the regulator to express confidence that the operator concerned will pursue its activities in line with the regulations and with the information in its consent application.
The NPD’s safety division set to work on shaping and describing the new supervision regime, and pursued a number of information activities to explain its details to the industry.
While the companies were being educated about the significance of the change, the extensive job of revising the NPD’s portfolio of regulations began.
Since 1985, the trend has been slowly but surely away from prescription and towards a regulatory approach based more on performance and risk management. This reorientation has been demanding for employees and the industry as well as the authorities. But adoption of the internal control principle is nevertheless regarded as a success.
It has permitted more flexible and efficient government regulation, and has also been introduced subsequently to land-based industry.
A series of extensive reforms has kept the regulations in step with the changes in regulatory approach. The latest came in 2002, when the NPD, the SFT and the Board of Health adopted four joint regulations on health, safety and the environment (HSE) for the petroleum sector.
Many of today’s regulatory requirements are couched in general terms, which primarily specify the conditions or functions which must be met.
Within this framework, the responsible company has substantial freedom to choose practical solutions. And the duty to ensure compliance with the requirements rests squarely with it.
To avoid misunderstandings about requirements for complying with the regulations, non-binding recommendations and guidelines have also been issued.
These make frequent reference to reputable Norwegian or international industrial standards for structures, equipment or procedures.
One benefit of this approach is that it eliminates the need for constant revisions to the regulations as technology progresses or operating mode change.
But the regulator’s specialists must keep abreast of and participate in developing and revising industry standards to ensure that they remain relevant and reflect best practice.
Supervision under this regime is directed particularly at checking whether the administrative management systems at the companies actually ensure acceptable operation.
This type of auditing activity is conducted by personnel with special expertise and experience.
The industry must demonstrate both a commitment to and expertise in complying with the frame conditions which govern its operations.
For its part, the regulator must be able to develop and enforce a suitable framework which specifies goals for safety and the working environment in general terms.
The requirements of a performance-based system can be easy to underestimate. It demands more of industry, employees and the regulator in terms of expertise, management and flexibility.
Successful adoption of such a regime depends on systematic efforts to develop its practical details, which must be supported by detailed analyses of existing conditions.
To achieve a good result, strategic and operational plans must be drawn up, selected development measures implemented, progress monitored and corrective action taken when problems arise.
Facilitating good employee participation in safety work is also important. Workers are uniquely positioned and informed to determine whether their company is able to operate acceptably.
The internal control system can only work as intended if it is operated in close collaboration and consultation with safety delegates, employees and the regulator.
The Petroleum Safety Authority Norway (PSA) was established as an independent government regulator on 1 January 2004. It comprised the former safety department of the NPD and continued its role.
Its authority was also extended to cover supervision of safety, emergency preparedness and the working environment for petroleum-related plants on land and associated pipeline systems.
Extensive work has since been pursued to harmonise regulations for offshore and land-based petroleum operations and to develop a regulatory regime which accords with the PSA’s enlarged role.
New and unified framework regulations for HSE in the petroleum industry are due to come into force on 1 January 2011.
They represent a new milestone in the work of establishing an integrated regulatory regime offshore and on land.
Supplementary regulations within this framework will be established jointly by the PSA, the Directorate of Health, the Board of Health, the Food Safety Authority and Klif.