Oil and gas exploration and production activities have increased tremendously as petroleum has become the backbone of the world’s economy. The industry has expanded significantly throughout the world.
As the oil and gas industry enlarges throughout the world, its impacts on lives and environment have been appalling. Numerous spills, fires, toxic emissions, blowouts and personnel injuries have been recorded in recent times in the oil industry. The most recent one is the Macondo disaster with its tragic loss of life, devastating impact on the Gulf Coast and financial loss to the companies involved.
Culpable companies have lost billions of dollars due to lawsuits, compensations and oil spill clean-ups. This has led to some oil companies collapsing and others suffering credibility loss in the industry.
Concerns about how HSE flaws are killing people, damaging properties, polluting the environment and killing businesses have been raised by stakeholders, workers and the general public.
New reforms have been made with regulators making HSE a business case for companies more especially small-to medium- sized companies. Managers of these small to medium companies must have a company policy of achieving environmental and business goals through HSE. Legislation should be made with full compliance by both employers and employees.
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There should be performance monitoring and continual improvement in these policies.” However, the success of whichever process or system in place still hinges on the attitudes and behaviours of people in the company”[Health safety Executive, 2011].
This report elaborates on the need to incorporate HSE into business and describes how good HSE management system could be implemented by small- to medium- sized oil businesses.
The major aim of employing HSE in business is to take advanced precautions against workplace accidents, environmental impacts as well as financial losses due to accidents and environmental pollutions.
A company’s attitude towards HSE affects the workforce, surrounding environment and business productivity.
The decision to integrate HSE into business is a high level policy direction of a company. Many businesses adopted this tool and have made tremendous gains. It is on this premises that this report seeks to highlight the need for small- to medium- size oil companies to inccorparate HSE into business irrespective of the cost. The report also describes how HSE management systems could be implemented.
Small-to medium-sized companies should not see spending money on HSE as expensive add on to company’s budget but a profitable investment.
These companies should forecast the benefits that could be reaped in future. This analysis will give an opportunity to compare the financial costs involved in the implementation of HSE management systems and benefits reaped after implementation.
The method of HSE implementation should be understandable and practical to all the people that are affected by these systems. An important necessity is that, the management systems at all levels must be clearly defined in a written document that is available to all.
Small to medium size Oil Companies should integrate HSE into business as bottom-line of business success. Managers must first consider the economic influence that accidents and environmental pollutions have on the business before taking this decision.
2.1 Costs versus Benefit
Managers have to analyse how much it will cost the business to introduce HSE management system and the cost of accident or environmental pollution if it occurred.
The cost of implementing HSE management systems could be high. Indeed running a good HSE systems come with higher costs. These costs should be seen as investment but not liabilities because the business turns to gain greatly if the objectives of running such systems are achieved.
Cost and benefit analysis on the implementation of HSE management systems will always prove that “safety is good business” [Offshore Contractors Association, 2003]
2.2 Objectives of HSE in Business
HSE is incorporated into business with the aim of:
- A safer working environment
- Improved morale and motivation amongst workers
- A healthier working environment
- Increased performance levels
- Avoiding civil claims, court fines and litigations
- Reducing insurance cost
- Reducing sickness and accidents
- Reducing impacts to the environment.
- Improving public image
- Increasing growth
- Conforming to standards and regulations in the industry.
2.3 Health, Safety and Environment Management System
HSE Management systems ensure that HSE issues are systematically identified, controlled and monitored within the business.
Proper HSE management require an HSE policy statement, stating the company’s commitment to the health and safety of workers as well the environment. Management must demonstrate high commitment to this framework, setting HSE in perspective with business objectives.
The policy statement should serve as the foundation for the implementation of the HSE management system. It should be the basis of any HSE decisions and actions.
Employers and employees must understand this framework and what is require of them in order to realise the business targets. To make the HSE policy effective, management and employees must be committed to it. The policy statement should outline the obligations and answerability of management and supervisors as well as employees. The policy must be subjected to continual review.
HSE program has to be developed to meet the objectives and commitments of the HSE policy.
2.5 Hazards Identification and Risk Assessment
To ensure that HSE becomes a business culture, management must develop structures and systems which are intended to control risk based on hazard identification and risk assessment.
Anything or practices that have the potential to harm life, health, environment and properties should be identified. Some hazards are easily identifiable because they are common to the industry where as others are not.
Managers must involve the employees in the hazards identification because they are the people which are affected directly by these hazards. They should enquire from them which of the machines, equipment, procedures and practices endanger their lives. They should also consult environmental specialists to know which of their actions and operations pose dangers to the environment.
Managers should check through workplace accident records to find out which of the company’s operations have been causing injuries and fatalities over the years.
Identified hazards must be assessed to know the seriousness of each one of them and measures to control these hazards should be decided. Controlling the risks associated with these identified hazards, reduce ill health and accidents at the work place.
Managers and employees should continually look for hazards at the workplace because some hazards are only discovered with time such as sicknesses caused by long- term exposure to certain radiations and chemicals. The hazards discovered must be ranked as being High, Medium or Low to know the best action to take in each case.
2.6 Risk Management and Implementation
Measures have to be adopted to get rid of hazards or minimize them. For example if risk involves hazardous chemicals, it should be replaced with an alternative chemical less harmful. In other cases, the use of alternative work methods, design improvements, change of process can eliminate the risk.
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Management should involve employees in the entire process of risk management. They should ask workers of any possible solution before it is implemented. They should check that, the measures taking do not cause any new unforeseen hazards.
2.7 Measuring performance
The degree of success of the HSE management systems should be established. Management should evaluate the systems to know if the objectives of implementation is being realised. Performance measuring would help management to collect and analyse information about flaws in the HSE management systems.
Injuries and accidents should be investigated thoroughly to know their cause. Measures should be made to prevent such accidents and injuries from occurring again.
Management should make sure there is regular check on safety equipment to make sure all these are functioning well. If a flaw is detected in any of the safety equipment, it should be repaired or replaced with a new one.
2.8 Reviewing performance and auditing
Auditing gives management the opportunity to collect information on the efficiency, effectiveness and reliability of the HSE management system. Auditing enable management to ensure that company’s policy is being carried out and the desired impact is being made.
There should be regular auditing to assess the systems to know the level of success chalk with the implementation of the system. Any poor practise uncovered should be dealt with.
3.0 Justification/Benefits of HSE
It really makes a good business sense to invest in HSE initiatives because the returns are enormous. HSE initiatives protect business from financial losses linked to safety and environmental problems. Lawsuits or fines emanating from accidents are avoided. Such cost can impose an enormous burden on the business.
For example, HSE mismanagement led to the death of 15 workers and 108 people in the march 2005, Texas City refinery blast. The CBS’s,2007 investigation report highlighted safety culture, regulatory oversight, process safety metrics and human factor as the main cause of the disaster. The report also states that” Cost cutting and failure to invest in the 1990s by Amoco and then BP left the Texas City refinery vulnerable to a catastrophe” [National Wildlife Federation’s report, 2010]
Many businesses which suffer major accidents struggle to remain in business and usually end up collapsing or trading their assets off. The Texas Refinery after the blast struggled to come back to operation due to huge financial burden on the company. Eventually, the refinery was sold to Marathon Petroleum Corporation in October 2012.
Safety and health of workers yield quality output which translates to higher productivity and profit because lost work time due to sick leaves, absenteeism is significantly reduced.
HSE in business increases morale of workers because if workers do not encounter frequent accidents at workplace, it motivates them to give their best output. Contrary, they will adopt a lukewarm attitude towards work if injuries are common in their working environment. Most workers would move to other companies because they feel unsafe. Company may lose competent workers and will impact negatively on productivity.
There is also a reputation gain associated with good HSE records leading to business growth. A good reputation invites and retains clients. It makes a company enjoy repeat business from existing clients and also win new contracts ahead of their competitors.
Small to medium sized oil companies in their attempt to grow business to a larger one should make Health, Safety and Environment initiatives, the prime item on their list of initiatives to achieve business goals.
They should be concerned with the health and safety of workforce as well as the impacts the business makes on the environment, because the occurrence of a major accident would be detrimental.
The financial consequences of an accident coupled with the associated business disruption could force a heavy burden on the company. Some larger companies have suffered this in the past and could not survive.
If any smaller company thinks, integrating and managing HSE systems in business is expensive, let them try accidents.
Small to medium sized oil companies should know that prevention of accidents and pollutions is not only better but cheaper than cure.
WORD COUNT: 1,820
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