The front line for competition in the energy industry is shifting to determining the appropriate level at which operational risks should be mitigated, as energy companies embark on more complex new projects at one end of the spectrum and cope with aging assets on the other.
Unfortunately, many oil and gas firms are ill‑equipped for this harsher operating environment.
An unintended consequence of the energy industry’s increased focus on process safety over the past decade has been for managers to equate operational risks solely with safety. Process safety has been separated from operational performance, with the former often managed by safety professionals and the latter by operational professionals. It’s time for a better approach.
To be sure, process safety (which we define as the means of operating high hazard equipment without a major incident) is a natural part of operational excellence. But operational risks range from staffing to maintenance regimes to supply chains. In order to take advantage of the full breadth of opportunities that exist to improve their operational performance, companies need to address risks that may fall short of being catastrophic that could still have potentially significant impact.