Repost from Health & Safety Executive (HSE), Great Britain
[Editor: CONTEXT – I received this in an email from Fred Millar, independent consultant and expert on chemical safety and railroad transportation. Fred’s email comment puts the British commentary in a “North American oil-train” perspective: “Impact of falling oil prices may be quite small re volumes of Crude By Rail shipments, some informed observers have noted. But this UK HSE message highlights a likely, less visible but no less ominous impact: dangerous lowering of safety standards in the oil industry [and by implication in the newly important “pipeline on rails” railroads carrying crude oil and other hazmat]. If this impact had not been seen previously at significant levels by safety agencies, there would be no need for such blunt alarums, of course.” – RS]
No CompromiseBy Judith Hackitt, HSE Chair, 2/6/15
The impacts of falling oil prices is having a wide ranging effect in the UK – from the lower cost of filling up the car to people’s livelihoods being under threat.
It is inevitable companies seek to adapt to rapidly changing circumstances and the decisions they are being forced to make are tough ones. It’s actually a stress test of leadership and senior management.
Part of that test is whether company decision makers have all the relevant information to make informed decisions.
How can they?
At the very least they have to make assumptions about what the future will look like. In this case, how long oil prices will stay at these levels? What decisions are competitor companies and industries taking? After all, they need to be making the right decisions for the company in the short term and for the mid to long term.
We’ve been here before, of course, in the 1990s when oil prices dropped and assumptions were made about the long term life of North Sea assets that proved to be wide of the mark. So this is a time when corporate memory really counts.
On that occasion the assumption was made that North Sea production would be wound down in the medium term and assets could afford to be neglected because they would soon be out of service. As prices rose again, the assets were called upon to continue to produce and many are now operating well beyond their original life expectancy. Doing that has required huge effort by the North Sea Oil and Gas industry to bring those neglected assets back up to the required standard.
Those who have led this effort to improve asset integrity deserve to be praised, but their voices need to continue to be heard as we go through this next difficult phase for the industry.
Cutting costs where there seems to be least tangible day-to-day effect is obviously tempting but leaders and senior managers need to pass the stress test on knowing where health and safety – and particularly process safety and asset integrity – sits in this mix.
Asset integrity must not suffer from short term expediency over where the axe falls. Leadership is critical to avoid wrong assumptions being made about the lifespan of assets, assumptions we know from previous experience can take years to reverse.
Current news headlines may be disconcerting, but I want all industries dealing with process safety to avoid inadvertently writing tomorrow’s headlines today.
Safety must not be compromised, even in tough times.