When we talk to our clients and contacts in the oil and gas industry, the No. 1 topic of conversation is how hard it is to attract and retain employees in the suddenly recovering energy market. This is mostly what one would call a good problem, however frustrating. But there is a darker side to it. Energy service companies are hiring so many inexperienced workers so quickly that the risk of accidents is skyrocketing.
Even in slow times, safety has always been a concern in this rough-and-tumble industry. An analysis conducted by E&E News of data from 2015 and 2016 shows that there were 149 severe injuries per 100,000 people working in upstream oil and gas, one of the highest rates of any industry.
Not only is there the risk of significant property damage, human injury and even loss of life, there is also a real possibility that a serious accident can put a contractor out of business altogether.
Many well operators today simply won’t hire a contractor with a below-average safety record.
And master service agreements often require that accident rates stay below a set level.
What does all this mean for operators? Amid the heady rush of expanding to meet the new demand for oil field services, contractors must invest scarce time and resources to bolstering their training and compliance to keep their workers and their companies safe. Here are some key principles to keep in mind:
Foster a culture of safety—starting from the top. Are your managers, supervisors and employees fully and proactively engaged in the safety management system of your company? Are your safety policies and goals being utilized on the jobsite? From the CEO to the field operators, a strong culture of safety is the best way to minimize risk and increase safety performance. A key way to communicate the importance of safety is to make clear that every worker has the right to stop work if they suspect something is dangerous. It takes courage for the employee of a contractor to tell the well operator to wait while he calls the home office to check on a questionable procedure. But workers need to know they will get in more trouble with their boss if they violate safety rules than if they disobey the customer. All the better if such “whistle-blowing” comes with praise from high up.
Make sure someone is always thinking about lowering risks. Many companies who let their safety officers go in lean times are left today without anyone specifically dedicated to preventing accidents—just as risk is spiking up. Ideally, every operator would employ someone whose primary focus is safety. But there are ways to get the benefit of safety expertise without the expense of hiring a full-time person to do it. Many insurance companies, and some insurance brokers, have risk-reduction consultants who can identify vulnerabilities. Even better, there are companies that can provide part-time safety officers who can be a consistent part of the team one or two days each week.
Build a comprehensive process to train new employees. There’s been plenty of industry coverage on “the great crew change” and shortage of oil patch workers with experience. But it’s nonetheless true that operators should assume that the people they hire will need help and training to do their jobs safely. There are three phases to a well-designed employee onboarding process:
1) Formal Training. Often it’s worth it to pay to send the worker to an offsite training center.
2) Mentorship. The new employee spends several weeks shadowing a more experienced worker.
3) Competency testing. Don’t assume everybody will pick up everything they need. Create a way for trainees to demonstrate they have mastered essential skills. One of our clients built a simulated rig for these tests.
Embrace regulations. A diligent compliance program for government regulations can help build a culture of safety, especially when there are a lot of inexperienced workers on the site. We suggest building a process around all relevant rules from OSHA, the Department of Transportation, and even the commitments made in your master service agreements.
But solely following government regulations often doesn’t cover all precautions you need to be taking. Investigators looking into a January explosion at a well in Quinton, Oklahoma, noted that it was exempt from federal standards for handling hazardous chemicals. The accident killed five people, the worst fatality in the oil industry since the Deepwater Horizon spill. And while the total financial cost of the tragedy has yet to be determined, we have no doubt that if everything wasn’t done to maximize site safety, everyone involved wishes it was.
David House and Steven Langlinais work with energy companies in Crystal & Company’s Houston office.
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