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International Association of Oil & Gas Producers

Report in brief

Preventing major incidents by focusing on process safety


Introducing a new OGP recommended practice on KPIs
Consistent with the principle that you can only manage what you measure, OGP has long established Key Performance
Indicators (KPIs) for personal safety and has reported annual trends in upstream safety data since 1985. These have
provided the industry with benchmarks to help drive improved performance. The result: dramatic reductions in the numbers of
occupational injury and fatalities in the workplace.
But there is room for improvement. In recent years, the upstream industry has suffered a number of blows to its reputation for
safe operations. The Macondo deepwater blow-out in 2010 tragically resulted in 11 deaths, many injuries, rig destruction and
a massive release of crude oil into the Gulf of Mexico environment for 87 days. A year before, in Australia, the Montara oil
field blow-out released oil for 74 days to the Timor Sea.
In downstream operations, two major explosions in 2005, at Texas City refinery in the US and Buncefield terminal in the UK,
triggered substantial efforts to improve process safety practices. Better safety KPIs tightened focus on prevention of flammable
hydrocarbon gas and fluid release Loss of Primary Containment (LOPC) the primary initiating event for most major
incidents in the petroleum industry.
Because of mitigating safety control barriers, most LOPC events do not result in harmful incidents. But recent history shows
that over-reliance on post-event barriers is mistaken. That is why OGPs new KPI framework aims to strengthen the operational
barriers designed to prevent and eliminate unintended or unplanned hydrocarbon releases.
This briefing document highlights the key elements of the KPI framework, which are fully detailed within OGP Report 456:
Process Safety Recommended Practice on Key Performance Indicators.

Why report process


safety KPIs?

Preventing major incidents

Improving reliability

Major process incidents are relatively


infrequent events. Therefore, companies
cannot afford to rely on lessons from
these alone. To prevent major incidents,
it is necessary to analyse data from
less severe events and shortfalls in
management system performance to
strengthen safety barriers.

Actions to prevent major incidents go


hand-in-hand with making operations
more reliable and understanding that
this can have a direct impact on financial
performance.

Avoiding complacency
KPIs are a constant reminder of the need
to learn from near misses and less severe
incidents and their need to continuously
improve process safety.

Communicating performance
KPIs provide reassuring evidence of
management focus, transparency and
progress all of which can support
safety culture and improved behaviours.

Four-tier KPI framework


For consistency within the KPI framework,
Report 456 defines the terms, highlighted
below. This includes definitions for
process safety and asset integrity but
treats these terms as synonymous for
KPI purposes. Internally, companies
may choose to use different terminology
aligned with their management systems.

on
lati

ion
t
n
e

rs
Leading indicators
maintain barrier strength, i.e. activities
to maintain risk control systems

sca

Hydrocarbons or
other dangerous
material

Pre

ie
arr

rs

ie
arr

LOPC event
Figure 1 KPIs applied to the Swiss cheese model

Lagging indicators
measure barrier defects (holes),
events and consequences

Major incident
or other consequence

The framework focuses on Loss of


Primary Containment (LOPC) of
hydrocarbons as the primary type of
unplanned event which has the potential
to cause an incident. An incident is
an event that has escalated to result in
harmful or damaging consequences,
such as injuries. Major incidents are
those that result in fatalities and/or
extensive damage.

Such a proactive approach, using both


lagging and leading KPIs, is described
by the four-tier framework shown in
Figure 2.

indi

Tier 1

cato
rs

LOPC events of
greater consequence

ging

Tier 2
ding

LOPC events of
lesser consequence

Lea

Tier 4
Operating discipline & management system performance indicators

Figure 2 process safety indicator pyramid (from API RP 754)

rs

Challenges to safety systems

cato

Tier 3

indi

To help eliminate major incidents, the


industry needs more than lagging KPIs.
Such indicators, while useful, can only
count how many injuries and other
consequences have already occurred.
Instead, greater emphasis should be on

This process starts with recording all


unintended LOPC events spills and
gas releases even those that caused
no harm. These no harm near misses
can involve large spills or gas releases
which have been safely contained or
flared but nevertheless could have
high potential to cause a major incident
in other circumstances. Every LOPC is
a potential fire or explosion and is an
indicator that at least one barrier has
failed. Leading and lagging KPIs are
then established for the barriers with
proven weaknesses to provide the
basis for stronger controls with

minimum defects. This is analogous to


ensuring that the holes in the cheese
slices shrink or disappear, greatly
reducing the liklihood of their alignment.

Lag

Major incidents rarely result from a single


cause. Instead, they are associated
with multiple failures that coincide and
collectively result in an exceptional
event with severe consequences. This
relationship between sequential failures
of risk control barriers is illustrated in
Figure 1 by the Swiss cheese model.
To prevent LOPC events or mitigate their
consequences, we need to assess how
good these barriers are and strengthen
whichever appear weak.

leading KPIs that are forward-looking


and proactive.

Tiers 1 and 2

Tiers 3 and 4

At the top of the triangle, Tiers 1 and 2


represent mainly lagging KPIs. OGP has
introduced a KPI for corporate annual
reporting, called a Process Safety
Event (PSE) at both Tier 1 and Tier 2.
The American Petroleum Institute (API)
introduced these KPIs in April 2010
following input from other organisations,
including OGP. Companies around the
world are now adopting these PSE KPIs
globally, internationally and nationally
both upstream and downstream.

Similar to Tiers 1 and 2, Tier 3


KPIs record unintended events and
conditions but of much less or no
actual consequence. In contrast, Tier
4 KPIs monitor the positive results of
systems intended to prevent Tier 1 to 3
events occurring. Since severe events
are relatively infrequent, Tier 1 and Tier
2 KPIs will not yield sufficient data for
statistical analysis particularly when
applied at facility level rather than
corporate level. Therefore, it is essential
to implement Tier 3 and Tier 4 KPIs since
these are, by definition, more frequent
and so provide a richer source of data.

For Tier 1, companies report their most


severe LOPCs, which have consequences
of greater magnitude than those in
Tier 2. As shown in Table 1, a PSE is
recordable if the LOPC release resulted
in actual consequences, such as harm
to a member of the workforce or costly
damage to equipment, or if the size
and type of material released exceeds
thresholds quantities. Many companies
are already collecting this data.
At the start of 2011, OGP received a
good response to its first request for
2010 Tier 1 and 2 PSE data. Both KPIs
will be requested annually, however the
preliminary data years will be used for
internal validation of the KPIs until data is
assessed to be reliable for benchmarking
and external publication.

Tier 3 KPIs typically record a near


miss that has challenged the safety
system by getting through at least
one barrier (the holes). Typically, a
company could record minor LOPCs
(below Tier 1 or 2), safety valve
reliefs, vessel corrosion, alarm faults
and other unintended precursor or
failure events using a range of Tier
3 KPIs.

It is good practice to match Tier 3 and


Tier 4 indicators for a single barrier and
so correlate whether the companys
actions are reducing defects (examples
are provided in Report 456). For
example, a company could correlate
a leading Tier 4 KPI to monitor the
frequency of completed tests on a
facilitys alarm system linked with a
more lagging Tier 3 KPI which monitors
the number of alarm system failures.
This is an example of dual assurance,
a methodology advanced by the UK
Health and Safety Executive to assess
and improve critical process safety
barriers.

Tier 4 KPIs assess the systematic


activities of the company to maintain
and improve its risk control barriers.
By measuring the cheese instead
of the holes, such KPIs, for example
based on maintenance, testing,
operating procedures or training,
monitor a management systems
success in achieving safe and reliable
operations.

Table 1 Summary definitions for process safety events (see Report 456 for details)
A Tier 1 or Tier 2 PSE is recordable when the event results in one or more of the three outcomes listed below

LOPC events that, in any one hour period, result in the release of a material equal to or greater than the Tier 1 or Tier 2 PSE threshold quantities for substances as listed in OGP
Report 456, e.g. a 500kg outdoor release of flammable gas (methane, etc.) or low flash point liquid (LNG, etc.) would be recorded as Tier 1, whereas a 50kg release of the same
material would be recorded as Tier 2.
or

2
Irrespective of the size or type of material released,
LOPC events that result in one or more of the
consequences listed for Tier 1 or for Tier 2.

Tier 1
Employee or contractor fatality or Lost Work Day Case
Third party fatality or hospital admission
Community evacuation or shelter-in-place
Fire or explosion resulting in direct cost $25,000

Tier 2
Employee or contractor Restricted Work Day Case
or Medical Treatment Case
Fire or explosion resulting in direct cost $2,500

or
Discharges to atmosphere from a pressure relief device or a correctly functioning destructive device (e.g. flare or scrubber) may be Tier 3 events but are not considered recordable at
Tier 1 or 2 unless the events result in the release of a material equal to or greater than the Tier 1 or Tier 2 PSE threshold quantities (as described in outcome 1 above) together with
any of these four consequences:
liquid carryover
on-site shelter in place
discharge to a potentially hazardous location
public protective measures

www.ogp.org.uk

Implementation
Companies should not collect data
just to keep score. Instead, they should
fully integrate a regular process for
KPI selection and review into their
management system. By doing this,
companies will steadily improve their
barrier strength. OGP recommends a
six-step process (see Report 456).
It is often best to consolidate Tier 1
and Tier 2 KPIs at company level for
corporate reporting. This enables internal
and external reviews and supports the
OGP benchmarking process.
Tier 3 and Tier 4 KPIs are more
appropriate for monitoring facility
performance. Some, however, may
be consolidated at corporate level
to test management system controls
implemented across the whole company.
Data collection, communication and
review are important final steps. If the
data are reliable and communicated
well, these highlight relevant trends
and changes to promote management
action. Graphical output supported
by interpretative text and dashboard
concepts can be effective.
The final step is to put the data to work
and strengthen the risk control barriers
in the management system. This should
be part of the continuous improvement
cycle. Typically, a full annual review
of the resulting actions from previous
performance analysis and KPI
effectiveness will take into account other
inputs. These can include audit findings,
incident lessons learned, plant reliability
records, benchmarks and industry best
practices.

Step 1

Ensure management ownership and establish implementation team

Step 2
Establish industry Tier 1 and Tier 2 KPIs to assess company performance

Step 3

Confirm critical process and integrity barriers to prevent major incidents

Step 4
Select Tier 3 and Tier 4 KPIs to monitor critical barriers at facilities

Step 5

Collect quality data, analyse performance and use to set improvement actions

Step 6
Regularly review critical barriers, actions, performance and KPI effectiveness

Further information
Report 456, Process Safety
Recommended Practice on Key
Performance Indicators, can be
downloaded from the publications
section of the OGP website,
(http://www.ogp.org.uk).

About OGP

GP represents the upstream oil & gas industry before international organisations including the International Maritime Organisation, the United
Nations Environment Programme (UNEP), Regional Seas Conventions and other groups under the UN umbrella. At the regional level, OGP is the
industry representative to the European Commission and Parliament and the OSPAR Commission for the North East Atlantic. Equally important is OGPs
role in promulgating best practices, particularly in the areas of health, safety, the environment and social responsibility.
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