Risk Management and Well Being in the Energy Industry

The pandemic and the additional safety-related protocols and procedures it brought to the energy industry have highlighted the importance of risk management and well-being, but these aspects have always been a crucial integral part of operations and workers’ safety in the sector.

Risk preparedness, assessment, and management have always been on the forefront of industry operators to ensure safe and reliable operations even at times of high uncertainty such as those the oil and gas sector had to undergo in most of 2020 and 2021.   

Companies have added to their risk management strategies COVID protocol safety measures such as social distancing and changes in offshore platform roster rotations to minimise risks of outbreaks.  

In addition, the well-being of employees in the industry has expanded to include mental health and increased diversity and inclusion in the workforce.

Risk Management

Risk management issues in recent years have grown beyond the risk of hazards or safety breaches and prevention of incidents.  

Exploration and production (E&P) companies, as well as the supply chain, now have to account for risks related to the long-term demand for oil and gas. Many supply chain firms have started to diversify into businesses linked with low-carbon energy sources, providing services and skills expertise to players in the renewables sector, hydrogen, or carbon capture, storage, and utilisation (CCSU).

For oil and gas companies, risk management now includes being proactive to reposition themselves in the energy transition. Some of the largest European energy firms, including bp, Shell, TotalEnergies, Equinor, and Eni, are investing growing amounts of cash in low-carbon energy sources, aiming to slash emissions and remain attractive investment cases in the future. Oil and gas operations remain their “cash engines” for increased investment in renewables, transport electrification, biofuels, hydrogen, or CCSU.

Specifically in the UK Continental Shelf, companies have had to manage pressure on balance sheets, as well as the challenges associated with ensuring safe offshore operations and risks to investments due to the pandemic, the offshore industry body OGUK said in its Business Outlook 2021 earlier this year. During the early days of the pandemic and the first lockdowns globally and in the UK, companies responded to the oil and gas price collapses and reduced offshore personnel levels by around one-fifth to help manage COVID-19 exposure risk, OGUK estimated.   

“Companies continue to face a range of pressures such as investor confidence, rebuilding balance sheets, challenges in safely increasing offshore personnel levels, changes to regulatory and policy frameworks and work to incorporate net-zero considerations into projects,” OGUK’s Business Outlook reads.   

A total of £11.6 billion was spent on the development and operation of UKCS oil and gas resources and infrastructure last year, down by 23 compared to the £15 billion spent in 2019 and the lowest total expenditure in real terms since 2004, as E&P companies reduced activity and investment in response to COVID-19 safety and operational requirements and sought to conserve cash in unprecedented market conditions. Although total expenditure remains constrained in 2021, OGUK anticipates a slight increase is possible, with spend expected to be between £11.4 billion and £12.4 billion.   

By June 2021, the number of personnel working in the UK offshore sector had returned to levels not seen since the beginning of the first national lockdown in March 2020, OGUK estimated. For the week ending 13 June 2021, the average number of workers offshore was 11,238, an increase on 10 March 2020 when there were 11,183 personnel on board installations and 4,037 more than the height of the first lockdown in April 2020. 

“While we welcome this milestone, the safety of our workforce offshore remains our top priority. We encourage those returning to work offshore to maintain those barriers which have been put in place, to protect the safety of themselves and their colleagues. As well as this, we also encourage all members of the workforce to take the vaccine, when offered,” OGUK Health, Safety and Environment Director Trevor Stapleton said in June 2021.

Workers’ Safety

Apart from the economic and financial risks related to the energy transition and long-term demand for fossil fuels, the industry continues to work to keep workers safe in the exceptional circumstances that the COVID pandemic has posed over the past year and a half.

OGUK and Step Change in Safety said in June they had launched an information campaign to maximise COVID-19 safety offshore. OGUK and Step Change in Safety designed and launched a series of posters and social media visuals as they believe that these consistent, industry-wide messages will not only reduce complacency, but will inform those who may not have been offshore since the pandemic started, to help reduce Covid (and other infectious diseases) transmission offshore.

Commenting, Step Change in Safety Head of Communications Kirstin Gove said: “The COVID-19 pandemic has had an impact on the way that we all work and has made us reassess how we protect people to help minimise them contracting similar viruses in the future.”

“As we move forward in these unprecedented times, we will continue to share examples of how different organisations are reminding colleagues of the guidelines so that, as an industry, we can continue to work together to protect our workforce,” Gove added.

OGUK’s Pandemic Steering Group worked with key stakeholders to put in place the necessary COVID barriers to enable people to return to work safely, the industry association said in its Workforce & Employment Insight 2021 in August 2021. These included the introduction of pre-mobilisation temperature checks and testing, snoods for offshore travel, COVID-secure medevac capabilities, and safe passage arrangements to allow offshore workers to travel to heliports.

Well Being

Workplace safety and measures to minimise the possibility of COVID spreading are just a part of the well-being of employees in the industry. The sector is increasingly working to include in well-being fair work principles, mental health, emotions, inclusiveness, diversity, and prospects for employment in the energy transition.    

“Recognising when workers feel, and believe, they are being treated fairly provides a greater benefit to all stakeholders and supports greater job satisfaction, safer working environments, improved performance and productivity, increased engagement, healthier lifestyles, and improved wellbeing,” OGUK said in its workforce report.  
 
Fawaz Bitar, Chair at the International Association of Oil and Gas Producers, said at the OGUK HSE Conference 2021 in March:

“Mental health and well-being are perhaps becoming the number one threat to companies enjoying the benefits of a thriving workforce. This may not have been an industry priority in the past but has now been brought to the fore during the pandemic. Leaders have cited numerous examples: employee burn-out, relentless organisational change and a culture to be constantly ‘switched-on’ are just some of the problems noticed around the industry.

“We must value our people, help them develop the skills they need, empower them and then let them unleash their potential,”

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