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Contingency Oil Rig and Disaster Recovery Operations

Contingency Oil Rig and Disaster Recovery Operations 6- 15- 2010

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Contingency Oil Rig and Disaster Recovery Operations

  • May 4, 2011
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By Dr. Joseph S. Maresca

Future Planning for the Monitoring of National and Transnational Oil Platform Operations    6-15- 2010

This article describes the Contingency Planning, Disaster Recovery Planning, sample Offshore Regulations and IT auditing which may be helpful for measuring benchmarks which relate to Offshore Installations and potentially BP offshore operations in the Gulf and elsewhere. 

The Contingency Plan is developed so that operations can be recovered in a consistent and orderly fashion. The plan should provide the methodology to ensure that the requisite personnel, facilities, data files, backup computers, supplies and suppliers can be accessed on an "as needed" basis. Sample steps are as follows.

(1) Does the installation or offshore operations platform  have a contingency plan which is current, updated and has been tested?

(2) Have copies of the contingency plan been distributed to the offshore installation manager, engineering, dynamic positioning operators, mates, crane operators, cargo operators, fire coordinators, coxwains who maintain the lifeboats, production techs who run the plant, scaffolders, heliport operators who run missions between the dock and the offshore oil rig, maintenance techs who manage instrumentation, mechanical and electrical systems, outside vendor support, outside supplier support, offsite records, insurers and all applicable governmental agencies.

(3) The plan should provide for operational priorities, backup production, suppliers and backup suppliers. For instance, unusual levels of gas detected by the offshore oil rig sensors and software should represent a high level priority.  Adverse weather warnings; such as oncoming hurricanes or earthquake activity along the New Madrid fault line are additional top level emergencies for oil platforms like the Gulf offshore.

(4) The plan should include a list of facility personnel responsible for coordinating the plan.  i.e.  Offshore Installations Manager, Offshore Operations Engineer or authorized designates The details of the plan should include the names and contact information for installation personnel, the responsibilities of key facility personnel and contact numbers for operations technicians, programmers and security.

(5) A team should be in charge of coordinating staff at a specific coordination site.  i.e. nearby platform, the local port, artificial man-made island Team leaders and alternates should be designated. Hardware and software configurations for the offshore oil installation platform and operations should be set forth. A disaster inspection team should be designated and dispatched to the emergency site.

(6) The installation should have a checklist of materials and supplies with backup suppliers needed in an emergency. Daily rig operations consist of well control, casing/cementing, pipe tallies, hole cleaning, mixing drilling fluids, determining pump liner requirements, directional drilling and various sundry activities.

(7) There should be an alternate processing or communications site with redundant file or tridundant capability for vital applications processing.  i.e. gas sensing software  An alternate site could be an artificial man-made island, adjacent oil platform or facility onshore with heliport capability.  Workers will travel to an oil platform by helicopter. They may be required to wear immersion suits and  life jackets. The crew will also receive a safety briefing before each flight, similar to consumer air flights.

(8)  The data processing and engineering operating manuals, project books and systems programming documentation should be readily accessible with offsite copies available. Some or all of this documentation may be accessible at the company website or by mobile phone.

(9) Copies of backup site agreements and vendors should be readily accessible and the documentation should be updated periodically to reflect changes. Testing of the backup site should be done periodically.

(10) Facilities for the boarding and transportation of installation personnel should be designated previously.

(11) There should be mutual assistance agreements or compacts with other firms in the industry.

(12) The plan should include a list of service bureaus who could assist with recovery in an emergency.

(13) Has the Contingency Plan incorporated applicable safety regulations. i.e.  Typical UK safety regulations are provided by way of example.

(14) Has the relevant legal counsel reviewed the Contingency Plan, Disaster Recovery Plan and the rights, duties, liabilities and recourse of the company to its strategic constituencies including foreign governments, where appropriate. Generally, the international law governing sea rights is set forth below: 

Waters under the sovereign jurisdiction of a nation or state, include the marginal sea and inland waters. The concept originated in the 17th-century . Though the doctrine that the sea must be free to all was upheld, a nation's jurisdiction over its coastal waters was also recognized over the last 300 years. Nations subscribing to the Law of the Sea observe a territorial limit of 12 nautical mi from the shore. Territorial rights include the airspace above those waters and the seabed beneath.

In the BP case, the original incident occurred 38 miles off the shores of the USA. Since the incident happened beyond the 12 mile limit, a question arises as to what law applies and which court or courts have jurisdiction.

UK Offshore Safety Regulations

There are 4 sets of UK regulations which are applicable to this particular sector and BP when operating in the UK. They are: 

a) The Offshore Installation (Safety Case) Regulations 1992 -  all mobile and fixed offshore installations which operate in UK waters must have a safety case which requires that all safety critical elements on installations must be approved by the Health and Safety Executive 

b) The Offshore Installations (Prevention of Fire and Explosion and Emergency Response) Regulations 1995 -These regulations are aimed at protecting offshore workers from fire and explosions . In addition, proper procedures are to be in place to provide a rapid response from emergency services should a fire or explosion occur.

c) The Offshore Installation and Pipeline Works (Management and Administration) Regulations 1995 - is aimed at the safe management of offshore installations, generally.

d) The Offshore Installations and Wells (Design and Construction, etc) Regulations 1996 - are concerned with the safety of offshore and onshore wells, the integrity of installations and the overall safety of the offshore working environment. Source: UK Offshore Regulations

An offshore operations platform generally consists of a considerable team of experts in the art of oil well engineering operations and continuing maintenance. i.e.

The  OIM (offshore installation manager)  is the ultimate authority during his/her shift and makes the essential decisions regarding the operation of the platform. There may be a hierarchy of team leaders to facilitate continuous operations.

The offshore operations engineer (OOE) is the senior technical authority on the platform. Operations coordinators manage crew changes.

Dynamic positioning operators assist with navigation, ship or vessel maneuvering (MODU), station keeping, fire and gas systems escalation in the event of  incidents. A hierarchy of "mates" meet staffing requirements of flag state, operate fast rescue craft, cargo operations and fire coordination. Crane operators run cranes for lifting cargo around the platform. Scaffolders manage scaffold building when workers are required to work at heights. Coxwains maintain the lifeboats. The catering crew handle cooking and laundry. Production techs run the production plant. Helicopter pilots navigate between the platform and the shore during crew relief or changes. Maintenance technicians manage instrumentation, electrical and mechanical systems and processes.

This offshore operations platform should require the deployment of a Disaster Recovery Plan in order to empower the staff  the moment critical problems begin to escalate. At a minimum, the Disaster Recovery Plan should provide for de-commissioning the platform based upon a hierarchy of known emergency conditions in the oil industry, as well as pre-defined criteria of the Minerals Management Service , the Department of  Energy and relevant Gulf  State authorities. There may be times when empty oil transporters will be required to store oil recovered/reprocessed  from a substantial oil leak. 

Disaster recovery planning for records and information should anticipate ways of preventing or mitigating the loss of vital records and continuous operations. This step may be done by maintaining data redundancy in the installation. The plan should anticipate what preparatory steps are necessary to mitigate loss and return to normal operations. The necessary systems, processes and equipment should be set forth to ensure business continuity.

A substantial loss of an oil offshore platform due to a major hurricane, tsunami or earthquake incident will require considerable de-commissioning of operations utilizing multi-level shut-off capabilities, sensors , systems and manned/unmanned underwater vehicles. 

The recovery includes the implementation of short-term activities which restore vital records and continuous operations on the oil rig platform. This phase includes damage assessment , stabilization and salvage assessment, restoration of records, information and equipment, and continuation of operations. 

The prevention/mitigation phase involves: establishing a vital records program, completing risk management processes, and developing a disaster prevention and recovery plan.

The primary phases are:

1. The development, deployment and rehearsal of the disaster recovery plan and sequential steps necessary to return to normal operations.

2. Empowering teams of people to respond to the disaster in order to mitigate damage to property , loss of  life and the major disruption of ongoing operations.

3. Establish control over the emergency leading to a rational return to normal operations.

4. Ask how did the disaster happen , what lessons can be learned for the future and update the disaster recovery plan accordingly.

The New Madrid earthquake fault is proximate to Louisville, which follows near the Mississippi River and the Kentucky border, Missouri, Illinois, Tennessee, Arkansas and Mississippi. 

Three powerful earthquakes shook the region near New Madrid, Mo., in the winter of 1811 for 54 days into 1812.

The quakes caused extensive landslides and disrupted river commerce. No major quake activity has been problematic since in this area.

The practice of rig mechanics consists of analysis of forces on the rig floor and the wellbore (MOHR, tension, compression, shear), mechanical advantage, management of a complex system of levers, gears and pulleys, fluid mechanics and management of hydrostatic pressure, buoyuancy turbulance and friction. Daily rig operations consist of well control, casing/cementing, pipe tallies, hole cleaning, mixing drilling fluids, determining pump liner requirements, directional drilling and various sundry activities. 

The Minerals Management Service is in existence to manage the ocean energy and mineral resources on the Outer Continental Shelf. Sometimes, uncontrolled pressure emanates from the well. This pressure can precipitate large accidents. The prevention of these accidents is a regulatory issue according to Frederic Hauge, a head of Bellona, one of the leading environmental groups in Norway. 

From a technological vantagepoint, the issue involves an orderly anticipation of uncontrolled pressure via preventive maintenance and more advanced de-commissioning techniques to mitigate these events in a real time environment. Preventive maintenance can happen by reference to an assessment of the MBTF or Mean Time Between Failures of key equipment.  Another possibility for anticipating uncontrolled pressure is by running the offshore oil rig equipment well below 100% capacity. The practice of increasing productivity to make up for lost productivity should not be allowed in practice or , if ever allowed, the monitoring and ongoing maintenance should be considerable.

The optimum operating level, utilization and capacity for offshore oil platforms represent considerable judgments by the Offshore Installations Manager, Offshore Operations Engineer, senior management, the Department of Engineering and relevant governmental agencies and regulatory requirements. 

Artificial intelligence "Advice Giving" systems have the capability to aggregate the advice of experts on a centralized knowledge base maintained by a knowledge engineer.  The knowledge engineer liaisons with a community of experts and centralizes their advice on a knowledge base. In this case, the advice and judgments of a community of Offshore Installations Managers, Offshore Operations Engineers and other experts would be polled by the knowledge engineer. Their advice and judgments would be maintained on an artificial intelligence "Advice Giving" system. 

Organizationally, the Audit Committee of the Board of Directors oversees the financial and IT auditors, the public accounting firm and the internal auditors of the energy service company. The Committee is composed of independent members from a plethora of industries, as well as some representatives from the energy industrial sector. The Audit Committee of the Board of Directors is an independent entity which operates outside of the traditional hierarchical organization. This Committee reviews audit results and makes hiring decisions with respect to both internal and external financial and IT auditors.  The IT auditors have the responsibility for reviewing the data center installations, contingency planning and disaster recovery plans.

The United States District Court in Middle District Tennessee opined on the need for an independentBoard of Directors in a landmark pension case. This ruling is important because audit resources are approved bythe Audit Committee of the Board of Directors .  Independent audits and recommendations for corrective action flow from the firm internal, external auditors, financial and IT auditors.  Details follow:

The United States District Court, Middle District Tenn. made some very important observations on strengthening corporate governance. These recommendations have very important ramifications for all corporate entities.  Readers should pay close attention to what the Court said about independence and auditing.  The details of the case and the recommendations are listed below:

Columbia/HCA Derivative Litigation (McCall v. Scott)

Court:    United States District Court, Middle District of Tennessee

Case Number:      97-cv-838

Judge:    Hon. Thomas A. Higgins

Case Contacts:    Max W. Berger, Avi Josefson

This is a derivative action filed on behalf of Columbia/HCA Healthcare Corporation (now known as HCA Inc.) against certain former senior executives and current and former members of HCA's Board of Directors seeking to cause HCA to reform its corporate governance processes, and to hold the defendants responsible for directing or enabling HCA to commit the largest healthcare fraud in U.S. history. The firm represents the New York State Common Retirement Fund, the California Public Employees' Retirement System ("CalPERS"), the New York City Pension Funds, the New York State Teachers' Retirement System and the Los Angeles County  Employees' Retirement Association ("LACERA"). 

Although the district court initially dismissed the action, the United States Court of Appeals for the Sixth Circuit reversed that dismissal and upheld the complaint in substantial part, and remanded the case back to the district court. 

On February 4, 2003, New York State Comptroller, the sole trustee of the New York State Common Retirement Fund, announced that the parties had agreed in principle to settle the action, subject to approval of the district court.  As part of the settlement, HCA will adopt a corporate governance plan that goes well beyond the requirements both of the Sarbanes-Oxley Act and of the rules that the New York Stock Exchange has proposed to the SEC, and also enhances the corporate governance structure presently in place at HCA.  HCA also will receive $14 million.  Under the sweeping governance plan,the HCA Board of Directors will be substantially independent, and will have increased power and responsibility to oversee fair and accurate financial reporting. 

Some of the more significant provisions are:

o Two-thirds of the Board of Directors must be independent.  In addition to not having been employed by the Corporation in the last five years, an independent director must not have performed any significant consulting work for HCA within the last five years.  Independent Directors may retain legal counsel and other consultants to advise them. The entire Board, or appropriate committees consisting entirely of independent directors, will monitor internal control and corporate compliance. 

o HCA's Audit Committee will be comprised solely of independent directors and have at least two members with accounting or financial experience.  The Audit Committee must also meet with management and the external auditors prior to the filing of each annual report and quarterly report.

o The external auditing firm must be rotated every seven years unless the Audit Committee affirmatively determines that rotation is not in the Company's best interests.  This determination must be made every three years.

o Candidates for election or re-election to the Company's Board are restricted in the number of other company boards on which may serve.

o Specific internal control and corporate compliance responsibilities, including specific procedures in the event the Board becomes aware of any material departure from corporate compliance programs or internal control programs, or of material violations of established corporate policies or legal and regulatory requirements.

o Shareholders must be given the opportunity to vote on the issuance of any equity compensation to any executive who, at the time of such issuance, is one of the Company's five highest paid executives, unless the equity compensation is issued pursuant to a plan previously approved by the Company's shareholders.

o Heightened Core Competencies, which must be considered in connection with election and the re-election of directors.

There is no waiting period for the implementation of the enhanced provisions; they become effective immediately upon the Effective Date of the settlement.

In granting final approval of the settlement on June 3, 2003, the Honorable Senior Judge Thomas A. Higgins of the District Court said that the settlement "confers an exceptional benefit upon the company and the shareholders by way of thecorporate governance plan."

Oil Spill 2010: Disaster Recovery Plan Needed

Oil Spill 2010: Planning For Hurricanes, Tsunamis, Cleanup

Oil Spill 2010: Clean Up And Recovery Patented Ideas

Joseph S. Maresca Ph.D., CPA, CISA, MBA: His significant writings include over 10 copyrights in the name of the author (Joseph S. Maresca) and a patent in the earthquake sciences. He holds membership in the prestigious Delta Mu Delta National Honor Society and Sigma Beta Delta International Honor Society.  In addition, he blogs and reviews many books for Basil & Spice. Visit the Joseph S. Maresca Writer's Page.

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