The Document 3 series Document 3:6 (2018–2019) 3:6 Document The Office of the Auditor General’s investigation of the PSA’s follow-up of health, safety and environment in the petroleum industry Document 3:6 (2018–2019) This document is available at www.riksrevisjonen.no ISBN 978-82-8229-454-6 Illustration: Flisa Trykkeri AS. Shutterstock and Eni Norge. The Document 3 series The Office of the Auditor General’s investigation of the PSA’s follow-up of health, safety and environment in the petroleum industry Document 3:6 (2018–2019) To the Storting The Office of the Auditor General hereby submits Document 3:6 (2018–2019) The Office of the Auditor General’s investigation of the PSA’s follow-up of health, safety and environment in the petroleum industry. Documents in this series have the following subdivision: • Summary of key findings, the Office of the Auditor General’s remarks, recommendations, follow-up by the ministry and the Office of the Auditor General’s closing remarks • Appendix 1: The Office of the Auditor General’s letter to the Minister • Appendix 2: Reply from the Minister • Appendix 3: Report on the administration audit department’s investigation and assessments The Office of the Auditor General uses the following terms for criticism, ranked according to highest severity: 1. Very serious is used to refer to circumstances where the consequences for society or the citizens concerned are very serious, e.g. risk to life or health. 2. Serious is used to refer to circumstances that could have major consequences for society or the citizens concerned, or where the sum of errors and deficiencies is so great collectively that the situation must be considered serious in itself. 3. Very reprehensible refers to circumstances that have less serious consequences, but which nevertheless concern matters of fundamental or major importance. 4. Reprehensible is used to characterise inadequate management where the consequences will not necessarily be serious. This could concern errors and deficiencies that have financial consequences, the infringement of regulations or matters that have been brought up previously but have still not been rectified. The Office of the Auditor General, 15 January 2019 For the Board of Auditors General Per-Kristian Foss Auditor General Contents 1 Key findings 8 2 The Office of the Auditor General’s comments 8 3 The Office of the Auditor General’s recommendations 14 4 Follow-up from the minister 15 5 The Office of the Auditor General’s closing remarks 16 Appendix 1: Letter from the Office of the Auditor General to the Minister 17 Appendix 2: The Minister’s reply 21 Appendix 3: Report 33 1 Introduction 44 2 Methodology and implementation 47 3 Audit criteria 52 4 The state of health, safety and environment on the Norwegian continental shelf 59 5 The PSA’s supervisory practices and authority 63 6 Goliat 91 7 The Songa Endurance incident 108 8 Nyhamna 121 9 Mongstad 127 10 Control of the PSA by the Ministry of Labour and Social Affairs 142 11 Assessments 148 12 References 155 13 Appendix 164 Ministry of Labour and Social Affairs The Office of the Auditor General’s investigation of the PSA’s follow-up of health, safety and environment in the petroleum industry The aim of the investigation was to assess whether the Petroleum Safety Authority’s supervisory practices protect health, safety and environment (HSE) in connection with petroleum activities in accordance with parliamentary decisions. The investigation primarily covers the period from 2013–2017. Petroleum activities entail a risk of accidents that could have significant consequences for people, the environment and material assets. These activities must therefore be carried out in a prudent manner and in accordance with the applicable regulations as stated in Section 10-1 of the Act 29 November 1996 no. 72 relating to petroleum activities (Petroleum Act). Authorities, industry players and the Standing Committee on Labour and Social Affairs have agreed that a central aim should be for Norwegian petroleum activities to be first class with regard to HSE, see Innst. 385 S (2017–2018) Innstilling fra arbeids- og sosialkomiteen om helse, miljø og sikkerhet i petroleumsvirksomheten (Norwegian only). The Ministry of Labour and Social Affairs has overarching responsibility for managing the working environment, safety and preparedness in connection with petroleum activities. The Petroleum Safety Authority (PSA) is subordinate to the Ministry of Labour and Social Affairs and is responsible for supervising technical and operational safety, including the working environment and preparedness for unwanted incidents. The licensees that complete petroleum activities are responsible for ensuring that their activities are carried out in a prudent manner at all times. The primary task of the PSA is, through supervision and other available tools, to influence, follow up and make it possible for licensees to fulfil this responsibility. There has been positive development in HSE in the Norwegian petroleum industry over many years. However, there were some negative developments in the years following the 2014 oil crisis. There have been several serious incidents and two deaths, and the number of personal injuries increased in 2017. Restructuring in the sector resulting from the oil crisis created challenges for the tripartite cooperation between employers, workers and authorities. On the part of the workers, it also raised questions as to whether the PSA has sufficient authority over the companies involved. The investigation covers the PSA’s supervision of the companies, use of sanctions, follow-up of events and reporting of concerns, granting of consent and acknowledgements of compliance (AoCs), and control of the PSA by the Ministry of Labour and Social Affairs. The investigation builds upon a broad overview of the PSA’s supervisory practices, based on case studies of four installations/onshore production facilities, interviews, documents, supervision data, incident reporting and reports of concern. The case studies examine the PSA’s follow-up of the Goliat production facility, the incident on the Songa Endurance drilling rig in autumn 2016, the incidents at the Mongstad onshore production facility in 2014 and 2016, and on the Nyhamna onshore Document 3:6 (2018–2019) 7 production facility. The four case studies were selected based on the associated risk and significance. The investigation was based on the following decisions and intentions of the Storting: • Report to the Storting 29 (2010–2011) Joint responsibility for a good and decent working life with Innst. 333 S (2011–2012) • Report to the Storting no. 12 (2005–2006) Helse, miljø og sikkerhet i petroleumsvirksomheten (Norwegian only) with Innst. S. nr. 197 (2005–2006) • Budsjettproposisjoner fra Arbeids- og sosialdepartementet med innstillinger for perioden 2016–2018 (Norwegian only) • Vedtak om opprettelse av Petroleumstilsynet (Norwegian only), see Crown Prince’s resolution of 19 December 2003. • Act 29 November 1996 no. 72 relating to petroleum activities (Petroleum Act) • Act relating to working environment, working hours and employment protection, etc. (Working Environment Act) The report was submitted to the Ministry of Labour and Social Affairs in conjunction with a letter dated 20 September 2018. The Ministry commented on the report in a letter dated 17 October 2018. The comments have largely been incorporated into the report and this document. The report, the letter of transmittal from the Board of Auditors General to the Ministry dated 14 November 2018 and the Minister’s reply dated 28 November 2018 are included as appendices. 1 Key findings • In the cases that have been investigated, the PSA’s supervisory practices had a limited impact on the companies’ follow-up of health, safety and environment issues. - Individual instances show that the PSA’s methods of supervision do not contribute to the detection of serious safety concerns. - The companies do not always rectify regulatory nonconformities following notification, and the PSA does not always perform sufficient follow-up to ensure that nonconformities are rectified. - The PSA is slow to implement strict sanctions when these are needed, and does not do a sufficiently thorough job of investigating whether the companies have complied with orders • In general, the PSA does a good job of following up incidents and reports of concern. • The PSA granted consent for the commissioning of Goliat, despite the fact that the safety of the platform had not yet been properly guaranteed. • The Ministry of Labour and Social Affairs does not obtain relevant information about the effectiveness of the PSA, nor does it investigate whether the PSA takes sufficient responsibility for cyber security. 8 Document 3:6 (2018–2019) 2 The Office of the Auditor General’s comments 2.1 The PSA’s supervisory practices had a limited impact on the companies’ follow-up of health, safety and environment. The PSA must lay the groundwork and follow up to ensure that petroleum industry players maintain a high standard of health, safety, environment and preparedness; see Crown Prince’s resolution of 19/12/2003. As with other sectors of industry, there are certain entities that are responsible for health, safety and environment. The PSA’s follow-up investigations must be system-oriented and risk-based, and must be performed in addition to each company’s own follow-up work. Implementing system- based supervision ensures that it is directed towards the relevant parts of the companies’ management systems and any subsequent verifications. Implementing risk-based supervision ensures that it is directed towards issues and activities in which HSE is most challenging and critical, and towards situations that could present a risk of unwanted incidents or conditions, and where the PSA’sefforts are likely to have the greatest effect.1 The supervisory activities are prioritised based on comprehensive assessments of where the risk is highest, and the method of supervision is adapted to the risk and the object of the audit.2 Overall, the authorities and industry players are of the opinion that the current HSE policy is robust and well-functioning, with a high level of safety.