PTIL/PSA

1

The Norwegian Context

PTIL/PSA

Some fast facts about Norway’s petroleum industry

Oil and gas is Norway’s largest industry today

Net cash flow from the petroleum industry is 26% of GNP (2012)

40 years of operations

78 producing oil & gas fields (2013)

More then 3000 wells for production or injection purposes (2010)

15140 km of subsea pipelines (2008)

Employment for 130.000 of 4,5 million population

Produces 20 times more than our domestic consumption

Exporting gas (liquefied) also to markets outside Europe

PTIL/PSA

03/01/2017

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Political commitment(Introduced in 2003 and repeated by every new government)

PTIL/PSA

N

P

D

National plans

Legal basis

Licensing

National plans

Legal basis

Licensing

National plans

Legal basis

Licensing

Separation of roles and responsibilities

National plans

Legal basis

Licensing

Detail regulations

Supervision

Advice (PSA)

Field development

Contracting

Operations

Marketing

Ministry of Labour and Social Affairs

Authority/

DirectorateOil companies

Resource management Safety management

Ministriel level

Ministry of Petroleum and Energy

PTIL/PSA

From joint

to

separate

administration

in 2004

Management of Oil and Gas in Norway

PTIL/PSA

PTIL/PSA

• Safety, Health and Environmental impacts- High risk potential

- Avoidance of big hazards/disasters

- High pressure and temperature acitvities (Reservoirs, wells, vessels, pipelines etc)

- Flammable products (Gas and fluids)

- Processing of oil and gas

- Handling of chemicals

- Corrosive environment (CO2 and H2S + water)

- Transport of oil and gas (pipelines, ships etc)

- Complicated, dynamic and high intensive technological development - Rapid technological changes

- High decree of interactions between different technical disciplines multi skilled experts

- Strong and important counterparts - Oil industry

- Labour unions

- Local communities issues

- NGO`s

- Balancing of different considerations- Maximization of productions versus high level of safety

- Use of chemicals to increase recovery and make transportation more efficient versus health and environmental impacts

Safety challenges in the Petroleum Sector

Important members of the tripartite collaboration

PTIL/PSABodø University College 12.01.09

A predictable licensing system

• The Norwegian system is a discretionary licensing system- Awards based on technical competence and geological understanding

- Composition of companies in the license- Licensees are awarded licence shares and thereby compelled to form a business partnership in a

licence – one is appointed as operator

- Work program

• No signature bonuses

• 29% corporation tax and 50% special petroleum tax

• Full consolidation of income and expenses

• All expenses are tax deductible

PTIL/PSA

1972 1979 1985 2004

Bravo

disaster

1977

Alexander

Kielland

disaster

1980

Resource mgmt and Safety

Separated reporting lines for Resource and HSE mgntSeparatedinstitutions

The Norwegian Context – Historical review

More than 200

fatalities

Less than 10

fatalities

The development of legislation and regulations in the

petroleum industry in Norway can be seen in two distinct

phases with the year -85 as the turning point

PTIL/PSA

1972 1979 1985

Bravodisaster1977

Alexander Kiellanddisaster1980

Resource mgmt and Safety

“The first period of offshore oil and gas in Norway”

1970 - 85

Separated reporting lines for Resource and HSE mgnt

• In the period 1970 - 1985 the petroleum authorities "borrowed" in regulations and instructions that originally were developed for other national industries

and• Imported principles and guidelines from international sources in

areas the petroleum authority didn’t have expertise and experience (use of third party verification consultancy)

• The regulations appeared to be fragmentary and complex with prescriptive requirements which was enforced and followed up by a number of government institutions within their respective areas of responsibility

PTIL/PSA

1972 1979 1985 2004

Bravodisaster1977

Alexander Kiellanddisaster1980

Resource mgmt and Safety

Separated reporting lines for Resource and HSE mgntSeparatedinstitutions

“The paradigm shift”

Chronicle of events – Major changes made in 1985

• First Petroleum Law

- Important elements from Safety regulations included in the law- Expanded definition and understanding of safety- See to it principle introduced- An emphasised responsibility put to the operator

• Major shift in the regulating approach regarding safety, health and

environment

- Risk and management based approach underscoring the importanceof continuous improvement

- New system of coordination between enforcing government agencies- Establishment of a new consent system- On-going systematic regulatory development

• Systematic involvement of stakeholders both in the two partite

and tripartite context

PTIL/PSA

PTIL/PSA

PTIL/PSA

1972 1979 1985 2004

Bravodisaster1977

Alexander Kiellanddisaster1980

Resource mgmt and Safety

Separated reporting lines for Resource and HSE mgntSeparatedinstitutions

Chronicle of events – Major changes made in 1985

More than 200

fatalitiesLess than 10

fatalities

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Ekofisk todayProduction:Oil - 360 000 bpd Gas - 350 mmcfdWater injection - 900 000 bpd

Offshore-employeeTotal of circa 900 working on site ConocoPhillips 350

Production fieldsEkofisk EldfiskEmblaTor

PTIL/PSA

1972 1979 1985 2004

Bravodisaster1977

Alexander Kiellanddisaster1980

Resource mgmt and Safety

Separated reporting lines for Resource and HSE mgntSeparatedinstitutions

Chronicle of events – Major changes made in 1985

More than 200

fatalitiesLess than 10

fatalities

PTIL/PSA

Industry response to the “see to it principle”

PTIL/PSA

New principle based framework introduced

PTIL/PSA

Legal level

Non legal

level

Law level

requirements

Could be:

Principle/performance based

Specific/

prescriptive

(Principle/performance based and specific/prescriptive)

Guidelines, standards and norms.

(Recognized standards should be used as

an alternative to guidelines)

Legal principles and structure in a

principle/performance based regulatory regime

Secondary level pinpoints and elaborates

regulatory requirements

or

PTIL/PSA

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HSE-regulations for the petroleum

activity from 2010

PTIL/PSA

Separate regulators approach versus multipurpose regulations with one agency appointed as coordinating body responsible for enforcement

Cross industry or Sector specific regulations?

HSE Regulations in the Norwegian Petroleum Industry

PTIL/PSA

Co-ordinated authorities in the petroleum activity

PTIL/PSA

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Co-ordinated authorities in the petroleum activity

MaritimeDirectorate

Civil AviationAuthority

Telecom.

Direct. ofCivil Prot. &

Em. Plan.

CoastDirectorate

MeteorologyInstitute

ElectricityBoard

Climate andPollutionAuthority

HealthDirectorate

RadiationProtectionAuthority

Emission

permits

Dutyholders

PTIL/PSA

A new consent system

PTIL/PSA

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A consent is ...

... a formalised expression of the PSA’s confidence in the

operator’s capability of carrying out the activity in

compliance with regulatory requirements

• Consents are activity oriented• Consent does not imply approval ofinstallations, equipment or methods

PTIL/PSA

Milestones for formal authority involvement

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PTIL/PSA

Work force participation and collaboration between the parts in working life are essential presumptions in the development of the HSE framework

Involvement of stakeholders - Stakeholder management

How to:

• Identify the most important stakeholders

• Develop a system of involvement and collaboration

Political commitment

PTIL/PSA

Work force participation and collaboration between the parts in working life are essential presumptions in the development of the HSE framework

Transparency, trust and dialogue between all involved parties are preconditions for safe activity

Stakeholder management

• Identify the most important stakeholders

• Development of a system of involvement and collaboration

Political commitment

The Tripartite System

Interaction

PTIL/PSA

The Tripartite System

Stakeholder management – Institutional arrangements

You need institutional arrangements to develop a collaborative culture between the stakeholders

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Regulatory

competence

Regulatory

ForumSafety Forum

Hosted by the PSA Norway- Four regular

meetings per year- Working groups

reporting to theforum

- Responsible for organizing an annual conference

All relevant stakeholders are

represented

Hosted by the PSA Norway- The Regulatory

Forum is anadvisory forum fordiscussions relatedto developmentof HSE-regulations.

All relevant stakeholders are

represented

"Working Together for Safety" is one of the most extensive collaboration projects initiated within health safety and the environment (HSE) in the oil and gas industry. Participants in the project are representing the associations and the labor unions The authority acts as an observer

A training program for the petroleum industry to increase knowledge about policies, laws and regulations.Organized and operatedby the industry themselves in collaboration with the research community The authority contributes with capacity

The tripartite context

PTIL/PSA

Supervisory strategy

PTIL/PSA

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PTIL/PSA

”Command and control” ”Principle based (self) regulation”

Regulative approach

PTIL/PSA

Regulators intervention - strategies

PTIL/PSA

The industry

PSANorway

Trends in risk level

Participants and contributors

HSEProfessional

group

Advisorygroup

Professional experts

Acting as a reference group:Employers, unions and government in the "tripartite context" Providing data,

information andknowledge

Responsible for the product

Safetyforum

Strategy issues,advise on furtherdevelopment,“tripartite context”

PTIL/PSA

Trends in risk level - Methodology

PTIL/PSA

Collecting data

PTIL/PSA

Use of information from RNNP

• It is perceived and commonly accepted throughout the industry that the data/information should be used where ever relevant

• Annual updated data and trends over time represents an important basis for decision-making for all stakeholders

• The results are being presented to the parties in working life (the tripartite system of stakeholders)

• For the government- Risk based – PSA Norway use the information to prioritise and signalize high risk areas and in intervention

planning

- RNNP-data forms an important basis for input to the ministry in a wide range of governmental matters (parliament reports, declarations aso)

- Input to the internal proceedings – risk based considerations

- Input to PSA Norway's contribution in international cooperation

PTIL/PSA

Order(Notice given3 weeks inadvance)

Suspend

operation

Legal prosecution

Expulsion

Dialoque and

interaction

without use of

formel means

PSA’s means of enforcement

PTIL/PSA

Chronicle of events – Recent changes

• 2001 Statoil partly privatised

• 2001 Petoro (State direct participation in Oil & Gas) established

• 2001 Land facilities included in the HSE regulation – PSA(NPD)

responsible authority

• 2004 Petroleum Safety Authority established as an independent

authority

• 2007 Statoil and Norsk Hydro merging into one company

• 2010 End of the dispute with Russia - Settlement of dividing line in

the Barents sea

PTIL/PSA

Petroleum Safety Authority Norway

What kind of competence and capacity do you

need to be “ a sufficient resourced” regulator?

PTIL/PSA

- The Petroleum Safety Authority Norway is divided into discipline areas with dedicated leaders for each area.

- Discipline leaders are responsible for personnel and development of competence.

Professional

competence

PTIL/PSA

- There are 6 main supervision groups, organized in relation to six groups of players.

- Each main group has a contact person who is the regular contact for their defined players.

- Each main group has a supervision coordinator who is responsible for products and formal decisions.

Supervision

PTIL/PSA

Regulatory development has the overall responsibility for regulations and agreements, including strategies for

formulating, preparation and principles for enforcement. Regulatory development is organized into three areas with

the following responsibilities:

Regulatory

development

and legal

affairs

PTIL/PSA

www.ptil.no

Laws and regulation on

web

Thank you!