Interview with Magne Ognedal, Director General, Petroleum Safety Authority – Norway
(Note to readers: This interview received much attention in the wake of the Macondo blowout in the Gulf of Mexico. Please note that the interview was conducted in January, 2010, three months prior to the blowout. With that in mind, I think you will find Magne’s comments to be particularly insightful. Magne’s comments and regulatory philosophy are perhaps even more relevant today than they were at the time of the interview.)
My experience is that you unfortunately often need a major accident or even a disaster to engender political support for streamlining regulatory regimes. Moreover, history shows that major accidents apparently must happen in your own jurisdiction to have such an effect on political support.
BOE: We’re honored that you have agreed to help us kickoff this offshore energy blog.
Magne, you are internationally recognized for your offshore safety and regulatory leadership. Tell us how you got your start. When did you first become interested in offshore oil and gas operations? What attracted you to a career with NPD (now PSA)? Were there any mentors who inspired you or helped guide your career?
Thanks Bud, let me first say that I’m very pleased to be featured in your blog’s maiden interview.
Well, when NPD started up in 1973 I was teaching at a ship automation school in Stavanger. A fellow student, who had just signed with the NPD, contacted me and recommended the agency as an excellent place to work. I must admit I was in doubt, since I imagined government offices to be gloomy workplaces covered with dust and what have you, and with mainly stiff-necked bureaucrats hanging around. So, I got an arrangement where I only worked a couple of days a week to try it out first. It turned out to be much more exciting and fun than I could ever imagine, and my employment soon became permanent. I have never regretted that choice!
We did not have mentors in those days, since the agency was only a year old and had a fairly young and inexperienced staff. My tasks and responsibilities were so interesting, and finding out for myself about how to adapt (without having a mentor) was quite challenging, inspiring and rewarding. I think I got a good start to my professional career.
BOE: For background purposes, can you tell us Norway’s current offshore oil and gas production? How many production facilities are there? Approximately how many personnel are on Norwegian offshore facilities at any given time?
In 2008 we produced oil and gas for a total production of saleable petroleum of 242.2 million scm oil equivalents (1.53 billion boe). The petroleum sector’s share of GDP was as high as 26%.
We have about 75 manned installations, but you should bear in mind that most of these are really huge facilities compared to what you find in many other provinces. Some could (manning-wise and support-wise) even match the number of inhabitants and services provided for onshore villages.
About 26,000 personnel work offshore, so approximately 8000-9000 are working on the Norwegian facilities at any given time.
BOE: PSA demands excellence from duty holders (operators) and holds them accountable. Is this accountability the core element of your regulatory philosophy? Can you briefly characterize your regulatory philosophy?
Interesting question, Bud, which touches upon basic principles for statutory regulation. Our regulatory philosophy is indeed firmly based on the legislated expectation that those who conduct petroleum activities are responsible for complying with the requirements of our acts and regulations. Furthermore, our regulations require that they employ a management system that systematically probes and ensures such compliance at any time. The approach to achieving this should be risk-based. So, ensuring compliance with rules and regulations is the operator’s job – not ours.
Now, if that worked to perfection there would probably not be a need for a regulator, but unfortunately this is not so. The role for us as a regulator is to challenge the companies across-the-board. But first and foremost, we must be able to rely on their competence and capacity to fully control all of their activities, and effectively prevent harm to personnel, environmental, and economic values. However, should we find that somebody has been trying to con us, we will definitely take strong action.
Being a regulator, our role is to assess that the management systems employed to ensure industry compliance programs are functioning as intended.
Well, this was perhaps not a brief elaboration, as you asked for, but it is important for me to get the message across: A regulator must have faith in the industry participants’ genuine eagerness and capacity to achieve compliance. If not, the regulatory system will fall apart as distrust otherwise might easily develop between the regulator and industry. This goes both ways, since a regulator should also be trusted by the industry to do the right things.
BOE: Norway does not require the submission of safety cases. Is that correct? Any comments on your thinking in that regard?
I have often had that particular question posed to me! Many that come to visit us in Stavanger seem to have the idea that if you do not have a Safety Case regime, then you are not up to scratch as an efficient, contemporary regulator.
It is true that we do not require the acceptance of a Safety Case in Norway. We have considered it, but we’ve concluded that the proper processing of a Safety Case by the regulator is a very resource demanding exercise, which we do not believe adds to safety. Depending on the volume of offshore development activities, a regulator may also find itself swamped with work on processing Safety Cases, which means it’s actually the industry activities that control how the regulator should use its resources. And, maybe most importantly: We believe that a regulator’s acceptance of a Safety Case inevitably transfers parts of the operator’s responsibility to ensure compliance with statutory requirements on to the regulator. Perhaps not really in a legal sense – but morally.
That said, we do require that operators do the same risk assessments and describe how they intend to control identified risks similarly to the way they would in a Safety Case regime. Their documented assessments and calculations – or parts of them – must be kept and handed over to us should we require it.
BOE: How do regulations and guidelines fit into your regime? When you have specific expectations (e.g. BOP pressure testing procedures and frequencies) do you incorporate them into your regulations? Are alternative procedures allowed if a company can demonstrate that there would be no increased safety risk? Where established procedure do not exist or are ineffective, are the companies responsible for selecting solutions that satisfy PSA?
Many years have passed since we had to admit that writing safe design and operations requirements into our detailed regulations was not the way to go. We realized that the maintenance of detailed regulatory requirements on how to construct safe installations or operate them properly was resource intensive, and that these requirements would sooner or later lag behind best industry practices. Such detailed requirements could even hamper technological development.
So, since 1985 we have systematically worked on revising our detailed regulatory specifications. We introduced a new kind of regulatory portfolio with just a few regulations mainly stating what should be accounted for by the duty holders. Our statutory requirements today describe the goals that should be strived for – not how to achieve them. Only where we find it essential will we specify detailed measures that need to be adhered to by duty holders. To provide predictability, our formal regulations are supported by guidelines that also make reference to industry standards.
Meanwhile, the industry has done a remarkable and admirable job of developing standards based on best practices. We oversee this development, and if we determine that a new industry standard is fully acceptable, we recommend it as a good tool for the industry to comply with our functional-oriented requirements.
Our approach to enforcing the regulatory requirements allows companies to select a solution as long as they can demonstrate its compliance with the goals of the regulations.
Needless to say, this has saved us a lot of resources in developing specific rules and regulations, and also provided for better predictability for all duty holders.
BOE: The recent safety record for facilities offshore Norway has been outstanding. From 2002 through 2007, there wasn’t a single fatality associated with offshore oil and gas operations in Norwegian waters. This is a remarkable achievement for any offshore region, particularly one with high activity levels and harsh conditions! To what do you attribute the success?
I think it has been primarily due to the industry’s own dedication and hard work to prevent accidents from happening. For a long time, they have had HSE high up on their agenda.
In this regard, they have obviously had good reasons for doing that. To adhere to regulatory requirements means they also avoid receiving orders from the regulator, which naturally could severely tarnish their standing. Also, duty holders wish to avoid accidents at all costs, because accidents are costly and often impact their corporate reputation. They might even be severely punished on the stock exchange. A good safety record will also be beneficial for the companies in terms of being awarded new prospecting areas.
But, also the regulatory authorities have been a driving force in this development by initiating efforts to advance technology, organizational issues and tripartite collaboration. In this connection, our own yearly survey of risk levels in the Norwegian petroleum activities has proven to be very valuable in that it identifies areas where there are negative trends. Such areas need to be addressed by those who are responsible for complying with regulations – and who actually own the problems. So, we regulators normally do not need to develop and introduce new rules to change risk level trends and achieve necessary improvements.
BOE: The MMS just started tracking natural cause fatalities at offshore facilities, and the number was higher than expected (10 in 2007, 11 in 2008). Does Norway track natural cause fatalities at your offshore facilities? Any numbers you can share?
No, we do not. We do occasionally receive reports on natural cause deaths or on personnel that have fallen seriously ill and therefore been taken to hospital onshore. However, we have no requirements that such incidents should be reported to us.
BOE: A related concern is medivac capabilities. Does Norway have any guidelines for ensuring prompt medical treatment for injured or ill offshore personnel?
We did a review a year or so ago and found there was a considerable higher frequency of medivacs for personnel that had fallen ill and were taken to shore for hospitalization than for work related injured ones. The industry has SAR helicopters stationed at certain installations to facilitate quick evacuation of injured or ill personnel. There is an industry guideline saying that injured or ill offshore personnel shall – if required – receive lifesaving treatment on board, and that the evacuation of a patient to a hospital onshore should not take longer than 3 hours.
BOE: Norway has done a good job of minimizing regulatory overlap and the associated confusion. To what do you attribute this success? The US and other countries have a myriad of agencies involved in regulating offshore facilities. Do you have any suggestions for engendering the political support needed to streamline regulatory regimes?
To start with your last question, Bud: My experience is that you unfortunately often need a major accident or even a disaster to engender political support for streamlining regulatory regimes. Moreover, history shows that major accidents apparently must happen in your own jurisdiction to have such an effect on political support.
Before 1985, we had 13 different agencies or authorities with self-contained powers and regulations to regulate parts of our offshore activities. Moreover, the Norwegian Maritime Directorate regulated the exploration activities, whereas the NPD regulated development and production activities.
Then we experienced two major accidents. First, we had the Ekofisk 2/4 Bravo blowout in 1977. Hydrocarbons were not ignited, but 9000 tons of oil escaped to sea before the well came under control. There were no fatalities nor any injuries. Then we had the Alexander L. Kielland capsizing in 1980, in which 123 people died.
The Commission investigating the latter disaster strongly criticized our confusing regulatory arrangement with many different regulators and recommended it to be revised. The involved ministries sat down to assess the situation and concluded that a dramatic change should be made. It resulted in a new regulatory regime with only 3 regulators: The NPD was to be responsible for safety in all petroleum activities, the State Pollution Control Agency for the protection of the environment and the Health Directorate for hygiene and health matters. NPD “inherited” all regulations of the former authorities and the first thing we had to do was to revise them and produce just one set of new, modern and goal-setting oriented regulations.
BOE: You have assisted many developing nations with their offshore safety programs. Any advice you would like to share with new offshore regulators?
Our approach to assisting developing countries has always been to only provide information on our experiences in the development of the Norwegian regulatory regime – what has worked well for us and what has not worked so well. We never recommend or suggest what type of regulatory regime they should choose or how they should run their safety programs in practice. It takes a long time to fully understand the local administrative or cultural specifics of a foreign country, so our policy has always been to leave such fundamental decisions for them to make. We might, however, suggest issues for them to consider. It is my view that all regulators engaged in assisting developing countries should apply the same approach.
BOE: You have also conducted reviews of several established regulatory programs. Any common weaknesses that you would like to highlight?
This is true, Bud, and I can assure you I have learned a lot about regulatory regimes and practices by carrying out such reviews, including picking up particulars that have been beneficial to advancing our own regulatory and operational systems. Such peer reviews have no doubt been resource demanding, but also very rewarding and useful to ourselves.
I would like to mention three common weaknesses that have often puzzled me:
Firstly, the unclear division of the roles of the regulator and the industry participants. Quite often, for example, I have observed that regulators tend to take on roles, which in my mind clearly rest solely with the companies.
Secondly, many sets of national acts and regulations appear to include requirements, which are confusingly spelled out, incomprehensible, inconsistent and incomplete. Often you’ll find there is a plethora of requirements that do not provide for – or even concern – safety at all.
Thirdly, for some reason, regulators often seem to become seriously bogged down in unimportant details in their daily work, whereas the bigger issues might be left unattended.
May I also add another comment I often have to make, which is based on observations particularly pertaining to the challenges of regulators trying to properly conduct their duties in a federation of states: “I am glad Norway is one Kingdom!”
BOE: Offshore regulatory regimes have been shaped by safety tragedies and major spills: the Santa Barbara blowout in the US and the Piper Alpha fire in the UK are 2 of the more prominent examples. Can you comment on the capsizing of the Alexander Kielland, and how that tragic incident influenced Norway’s regulatory regime?
I said something about that earlier, but let me elaborate: The Alexander L. Kielland, in which 123 good people perished, happened 30 years ago. Nobody in Norway was prepared for a tragedy of this magnitude. I can remember the whole country was in shock.
To us at the NPD, it was incomprehensible that such a tragedy could possibly occur. We made a pledge to do all we could do to prevent a catastrophe of such dimensions from ever happening again.
This pledge, has among other things, materialized in what I think today is an efficient regulatory regime. We have implemented an effective set of regulations, which among other things provide for a robust design of offshore installations with regard to minimizing major risks and which provide for proper barriers to prevent accidents from happening – or at least mitigate their severity. Along the road we have been greatly supported by our tripartite collaboration, which we have a tradition for mobilizing when developing a better Norway.
BOE: In 2004, Norway separated its safety and resource management functions. The UK had done this after Piper Alpha, and Australia recently established a separate offshore safety regulator. Can you comment on the pros and cons of being an independent offshore safety regulator?
This is a good example of the influence of the political system of a country on safety regulatory matters. Not that I disagree, but the change made to separate safety and petroleum administrative matters was probably also aimed at reducing political risk. We have had no problems relating to that fact. Our role and mandate has now become much clearer and we have been given all the necessary authority to fulfill our mission. However, it has placed a big responsibility on the PSA. We must ensure we make the right decisions and be able to defend them. For myself, I think our oversight of safety in the petroleum industry has become both better and stronger because of this change. But others shall have to judge that.
BOE: From the standpoint of offshore facility safety, what are the major technical or management challenges that most concern you at this time?
What currently concerns me the most is also reflected in PSA’s four priority areas for 2010, namely: that the management at all levels of the industry will keep working hard to reduce major accident risk, that the maintenance of technical and operational barriers is prudent, that the industry will work determinedly to prevent undesirable incidents which could cause acute emissions and discharges, and that the risk of injury or illness for particularly exposed groups of personnel will be markedly reduced.
BOE: Any regrets; things you think Norway or other offshore nations should have done differently from a regulatory perspective?
Looking back, which of course you should never really do, I think it would have been an advantage if Norway in its early years had fully realized it was to be a major oil and gas producer and what consequences that would have for the society.
In those early days, Norway was quite good at conducting analyses to assess what was needed to properly administer and use our enormous and valuable resources to the benefit of the society at large. But as I see it, we did not properly analyze what was required to develop our resources in a safe and environmentally prudent manner. These analyses could possibly have helped us identify who had the competency to do that. Unfortunately, such analyses came much later and in the wake of sad disasters.
From the early days, Norway’s petroleum conservation administration was therefore excellent, but we were not so good with regard to assessing how we should be regulating safety. The question is whether it had been possible to walk that different lane at all. As with many other retrospective exercises – I have to admit I simply don’t know.
BOE: You were one of the original members of the International Regulators Forum, which was founded in 1994. Can you comment on the benefits of cooperation among offshore safety regulators?
With pleasure, Bud! First of all, I have thoroughly appreciated the many annual meetings and making acquaintances with my good colleagues from various countries. Over the years, some of these resourceful persons have sadly resigned, but other eager members have joined. Our discussions and debates have always been informative and constructive, and they have certainly contributed to expanding my own knowledge and insight of systems for statutory regulation and current regulatory issues.
I think these acquaintances provide for the most beneficial aspect of being a member of the IRF: The single member can meet industry contacts that operate all over the world and still be fully updated on the regulatory specifics of other provinces. It gives you confidence as a regulator to know that we regulators actually do not conduct our business so much differently. I personally have appreciated IRF’s coordinated initiatives to meet with the industry’s big organizations such as OGP and IADC to debate issues of common interest. This has been most satisfying.
Furthermore, our discussions and debates have been useful in identifying common regulatory issues, which we together as a group of regulators can address to improve on. Our collaborative activities often bring about new ideas and provide useful lessons, other ways of thinking, and impulses to carry the members’ own agencies forward.
BOE: Your senior advisor, Odd Bjerre Finnestad, has been a leader in establishing an effective communication network among offshore regulators. He has proven to be a highly reliable contact for those interested in offshore safety issues. Can you comment on Odd’s contribution to international cooperation and safety achievement?
Well, you have already said a lot about Odd’s achievements in international cooperation, Bud. We at the PSA like to regard Odd as a kind of our own Secretary of Foreign Affairs: He always keeps us duly updated about what is going on in the world when it comes to regulatory matters and industry incidents. Due to his extensive network of global contacts we often get the news even before the world press learns about it.
Personally, I honestly don’t think the IRF would have come as far as it has today without Odd’s keen driving force. With his insight and experience of regulatory systems as such he has been of invaluable support to me during our peer reviews of fellow regulatory regimes.
I do hope Odd will keep on working with the PSA until he’s 101 – which he himself actually has threatened to do!
BOE: Thank you very much, Magne, for having been so candid in your answers and for your willingness to help us kick-off our blog. Anything else you would like to add?
You know Bud; I could probably go on for ages as long as somebody is willing to listen to me!
It’s been a pleasure talking to you!
[…] general of Norway’s P.S.A., Magne Ognedal, was asked about the creation of the P.S.A. in a recent interview with Elmer P. Danenberger — chief blogger at Bud’s Offshore Energy and as it happens, […]