Around this point last year, with the oil price crash and global pandemic in full swing, ModuSpec experienced the start of the market recovery with numerous rig reactivation projects on the horizon and clients excited to talk about getting back to operations after a painful 12 months.
We have seen a marked difference in our clients’ position on assurance requirements, beyond the nuts and bolts of a drilling rig or a vessel. Previously, our offer to review the contractor management systems was an ‘optional’ scope of work and the value of undertaking such was not always seen.
With the transition of personnel forced by the downturn and pandemic, our clients are now equally (and sometimes more) interested in knowing that the processes that drive operations are still relevant and practiced by competent people.
It is no longer seen as an ‘optional’ scope - rather now a requirement.
We’d like to share our own thoughts on the shift in the market, beyond the obvious rise and fall of activity. At ModuSpec, over the past 18 months as the market has recovered, we have completed numerous reviews of contractor management systems and drilled down into the competency of the assigned crew. In terms of defining competency, generally we are looking to be assured on four aspects: information, instruction, supervision and training.
Here are some insights behind the trends and things you may wish to consider ahead of your next rig or vessel campaign.
Contractors – suffering market effects
Many drilling or vessel contractors have repositioned themselves in the market. There have been mergers and acquisitions resulting in a changing rig/vessel count which affects resourcing requirements and makes for a very fluid/transitional workforce. This type of turbulence often outpaces a contractor’s management system and can result in personnel holding critical job functions without the expected competence, and without suitable supervision.
We find that contractors can be stuck between a rock and a hard place to solve this, with short commitments from operators. Essentially if there are gaps, they are risk assessed and mitigating measures put in place, such as additional supervision on the project, additional resources and further training.
Regulators – keen interest
In regions such as the UKCS and Norway, the regulators generally have a long-standing interest in the ability of a duty holder to ensure that its supply chain has robust management systems in place and competent people. It is the cornerstone of risk management and delivering safe operations.
From our experience, the Department for Business, Energy & Industrial Strategy (BEIS), the Health & Safety Executive (HSE) in the United Kingdom and Petroleum Safety Authorities (PSA) in Norway are keen to understand that contractors are following their management systems, and that crews are aware of and implement the processes and procedures from a corporate and local perspective. In the United Kingdom Continental Shelf (UKCS) we see the Offshore Major Accident Regulator (OMAR) ensuring legislative compliance (MAR 1995, DRC 1996 etc.).
The PSA has made ‘Capacity and Competence’ Main issue 2022: Capacity and competence – the key to safety (ptil.no) its key theme for 2022. They make the statement, “Conditions related to this aspect have also been contributory factors in a number of serious incidents over the past couple of years. The availability of well-qualified personnel is a particular challenge among suppliers”. The PSA asks the Norwegian industry to pay special attention to capacity within a company and competency during 2022.
Where our clients are operating internationally within less regulated regions, their expectation is that their contractors will mirror a ‘North Sea standard’ approach to their management systems, including competency.
Where the region does not meet client expectations, we have the breadth and depth of knowledge to identify the relevant international best practice that will reduce the risk of an unplanned event to ALARP. This is often done by benchmarking against the likes of Offshore Energy United Kingdom (OEUK), Step Change in Safety, DROPS, International Association of Drilling Contractors (IADC) etc.
In 2021, a greater proportion of the projects we have undertaken have been out with the North Sea in areas such as West Africa, Mexico, onshore Egypt etc.
Multiple rig start-ups – did you get the last rig or vessel?
We have been involved where a contractor has multiple start-up projects ongoing and invariably is also recruiting in the market. One trend we’ve noticed is the ability of the contractor to manage the assignment of crew across the rigs/vessels starting up as well as the mix between permanent staff and agency.
Since the market returned, we have commonly seen crew returning to the rig or vessel that they most recently worked on – but there is also a trend of agency staff only being onboard for one or two rotations.
The challenge is the length of contracts in the market. They generally are still too short, and the contractors cannot offer staff positions to the entire crew without a longer order book of contracts. It’s a demand and supply issue and rightly causes concern within our clients who want to know what the competence level will be on their rig for their specific contract.
If you are taking the first rig/vessel to start-up, will you get the crew which has worked with the contractor before? If you are taking the last rig/vessel to start-up, will you get a high percentage of agency staff? The crux of the issue is having continuity of competent crew onboard in a market of short contracts and crew being shared across a fleet.
Agency crew – issue with familiarisation and safety culture
On the back of the last point, agency crew in our experience with the right recruitment and onboarding process does not necessarily mean less competency in terms their specific job role (knowledge, skills, tasks), but we do see that they will not likely be fully familiar with the processes and procedures of that rig/vessel.
It is common for us to see contractors try their best to make agency staff familiar with their management systems, however given the short nature of contracts, it remains a risk to the operation and mitigating measures need to be in place. This also reveals the underlying issue with safety culture which manifests itself in the difficulty of integrating transitional crews.
We have seen a variety of contractors share rig crews between non-operational and operational rigs as a way of reducing the risk of new agency crews and familiarisation, a way of trying to manufacture continuity and foster familiarisation.
Rig redeployments – maintaining compliance
A number of rigs are being redeployed between local regions and internationally. It has been a challenge for contractors to mobilise a rig/vessel away from their primary operating region and to obtain short contracts, sometimes on different continents. To be able to return to their primary operating area, they must continue to meet compliance in terms of a number of the health, safety and environmental practices as well as crew training and development.
Whilst your rig or vessel can have all the nuts and bolts of the equipment in order, the industry as it stands today currently has an issue with supply and demand, generally affecting rig utilisation meaning that the aforementioned trends will continue to be an issue as the market builds. At ModuSpec, we see that assurance of contractor management systems will remain a critical element to consider for your future rig or vessel operation, even after the supply and demand issues are balanced.