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100 largest losses in the hydrocarbon industry

Are you “best in class” at process safety management?

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19/04/2022

What are the process safety goals at your company?

You might cite in your answer a lagging process safety performance indicator (PSPI), such as “x process safety incidents and high potential near misses per year,” where x will usually be zero or, in some cases, a number that is lower than your company’s own historic performance. Essentially, the goal is either perfection or, at the very least, improvement.

Although useful, lagging PSPIs can be a fairly limited way of measuring performance. Perhaps you could also answer the question in terms of a number of leading PSPIs, such as alarm rates, or the number of overdue critical inspection tasks. The associated targets for such leading indicators are commonly taken from a relevant industry standard (for example, EEMUA 191 – Alarm Systems for alarm rates) or may otherwise be a value that is better than historic performance, to drive a focus on continual improvement.

Assessing process safety management through leading and lagging PSPIs has undoubtedly played a key role in helping to prevent major process safety incidents over the years, and will continue to do so for many years to come.

The question that many energy companies have been asking themselves recently is: “As data becomes more readily available, is there another lens through which we can assess our own performance?” As a result, an increasing number are turning to “risk quality benchmarking.” This is the process of comparing one company’s performance to that of its peers, which provides an alternative to simply considering performance in absolute terms. The aim being to complement traditional PSPI stewardship, rather than replace it.

So perhaps a better question to ask is: “Is your company ‘best in class’ at process safety management?”

The benchmarking process

The first step in benchmarking is to establish a site’s risk quality against a defined set of criteria. A site should consider a wide range of different incident barriers — both preventative and mitigating — in order to give a thorough overview, and score each barrier, depending on how well developed it is.

Once a site’s performance is established, the next step is to decide on the most applicable peer group for comparison. Common considerations include:

  • Comparison with global peers or within a local geographic region.
  • Comparison with assets of any size or of a similar size only (for example, <100 KBD[1] refineries or >400 MMSCFD[2] gas processing plants).
  • For a company with its own portfolio of assets, a peer group consisting of the different company assets may prove to be the most useful.

The next step is to complete the data analysis to establish how a site compares to its peers. If the benchmarking process is completed over subsequent years, then it is possible to identify how a site has improved (or regressed) over time. Benchmarking performance is often demonstrated visually using a box and whisker diagram, as shown in (Figure 1).

 

Figure 1

A box and whisker diagram illustrating how a site’s relative performance has improved from 2015 - 2020[3]

The final step is to determine whether the relative performance observed is in line with the company’s aspirations, which will typically be a reflection of its process safety culture, and the realistic resources available to make improvements.

How benchmarking can help improve process safety performance

No company has unlimited time or money to improve its risk quality, and a key benefit of benchmarking is that it can help focus efforts where they will have the greatest impact. Benchmarking also helps to illustrate what is possible, and where the industry as a whole, is heading.

The following real life examples, using anonymized data from Marsh Specialty’s risk engineering database, demonstrate the different ways in which benchmarking has been used by energy companies to help improve their risk quality.

Identification of areas of relative weakness

Company A is major energy company based in Asia and its stated aim is to be “best in class” in all risk features. In late 2019, it completed the first step of the benchmarking process and scored each of its features on a scale from 0 – 4 (or qualitatively, “poor - excellent”). Management at Company A was pleased that for the corporate loss control policy topic (which includes the level of incorporation of process safety management within corporate health, safety, and environment (HSE) policies), the company rated as “very good” (see Figure 2).

 

Figure 2

Snapshot of Company A performance on a scale of “poor – excellent”.

Corporate loss control policy was scored as “very good”.

When the subsequent steps of the benchmarking process were completed, the management at Company A were surprised — and slightly disappointed — to see that their relative performance for the highlighted topic was only average (that is, the median) when compared to similar sized energy companies across the world (see Figure 3). The reason for this is because many companies have improved significantly in this area over the last decade, and many now have corporate loss control policies that go well beyond what might have been considered above average a number of years ago.

 

Figure 3

Illustration of Company A performance (orange circle) relative to peer group for selected topics.

For Company A, benchmarking highlighted that half of their peers outscored them in the topic of corporate loss control policy, revealing an area of relative weakness. As a result, Company A is in the process of reviewing and updating its corporate loss control policy, and associated auditing processes, to achieve their stated target of being best in class.

For companies that own multiple assets: identification of targeted opportunities for one asset to support improvement at another (peer assists)

Company B is a large energy company based in Europe, and in 2020 it completed a benchmarking exercise across its own set of assets. A primary objective of the benchmarking exercise was to develop a peer assist plan whereby the stronger assets would facilitate improvements at the weaker ones.

Figure 4, shows that Site 1 was relatively strong in the topic of ergonomics and operability (which includes clear labeling of piping and equipment in the field, and the quality of procedures available to operations) but was relatively weak in maintenance overview (which includes the integration of equipment criticalities within the site maintenance strategy). Site 2 showed the inverse of this performance, and Company B therefore arranged for a two-week peer assist where Site 2 helped Site 1 improve in the topic of maintenance overview. The process was then repeated to improve ergonomics and operability at Site 2.

From its corporate PSPI stewardship, Company B already had an idea of which sites were weaker in process safety management. Benchmarking helped reveal the underlying, specific areas of weakness within each asset. This additional level of detail supported the development of a targeted peer assist plan.

 

Figure 4

Snapshot of Company B benchmarking output.

Site 1 (blue circle) and Site 2 (orange circle) are both owned and operated by Company B.

Conclusion

Getting process safety right year on year can be challenging but it is of paramount importance given the potential cost to human life, and the environment, when we get it wrong. Risk quality benchmarking, as described in this article, can complement the ongoing process safety stewardship, and initiatives at a company, by giving a fresh perspective and framing process safety performance in relative, rather than absolute, terms. As the above examples demonstrate, benchmarking can help with the following:

  • Identification of areas of relative weakness compared to peers.
  • Identification of opportunities for peer assists within a larger company.

This article started by encouraging you to reflect on the process safety goals at your company, and whether your company is best in class at process safety management. If you are unsure of the answer, or if you know there is room for improvement, risk quality benchmarking might be a good next step to take.

[1] Thousand barrels per day.

[2] Million standard cubic feet per day.

[3] Source data for all box and whisker diagrams: Marsh client database

100 largest losses in the hydrocarbon industry

This edition also reflects on the past two years and provides insight to energy industry professionals on the range of losses that can occur, the diversity of potential root causes, the fallibility of prevention measures, and the scale of potential consequences.

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