2 The HSE regime in the Norwegian petroleum industry

The petroleum activities are an industry that has the potential for major accidents. Therefore, the activities are subject to stringent requirements for control and safety. Permission to conduct petroleum activity is regulated in detail through a comprehensive licensing system. The licensing system ensures that only players with the resources and expertise to operate in accordance with the regulations are granted access to the Norwegian shelf. It follows from the Petroleum Act that the activity must take place in a manner that ensures that a high level of safety can be maintained and developed in line with the technological development. It is a key regulatory requirement that the players must further develop and improve the HSE level. The continuous improvement requirement is based e.g. on the expectation that new knowledge will constantly emerge as a consequence of technology development, knowledge production and experience all through the lifecycle of the activity.

The HSE regulations stipulate strict requirements for goal achievement, but also allow freedom as regards which solutions are selected. Responsibility for the safety level lies with the industry itself, and the authorities’ supervisory follow-up focuses on how the enterprises systematically follow up their own activities. Such an arrangement, where choices and decisions on a detailed level are made by the companies themselves, and the authorities’ supervision comes in addition to the companies’ follow-up, facilitates innovation and flexibility in the development and selection of good solutions. To ensure that this latitude is exploited in the best possible way, the key players must have mutual trust and respect for each other. The Ministry of Labour and Social Affairs and the Petroleum Safety Authority have regulatory responsibility for safety, preparedness, working environment and security in all phases of the petroleum activity. The Ministry of Petroleum and Energy and the Norwegian Petroleum Directorate have regulatory responsibility for resource management. There is a clear division of roles and responsibility between the Ministry of Labour and Social Affairs and the Ministry of Petroleum and Energy in the work to follow up the industry. Through the current licensing system, the authorities, with two different roles, contribute to ensuring that we have professional and competent players on the Norwegian shelf.

2.1 Regulations

The Petroleum Act sets the framework and the overarching safety requirements for the Norwegian petroleum activities. The Working Environment Act is the statutory basis for the general working environment requirements. More detailed regulations are found in the working environment regulations and in the special HSE regulations for the petroleum activities. The overall regulations for health, safety and the environment in the petroleum activities on land and on the shelf have been drawn up in close cooperation between the authorities and the parties in the industry.

2.1.1 The licensing system and the framework for the activity

The Norwegian petroleum activities are regulated through statutes and regulations which entail that all key activities in all phases of the petroleum activity require licences, consents and approvals from the authorities. The system helps to provide the authorities with good management and control over the petroleum activity, from exploration for petroleum deposits, through development and production to cessation of the activity.

Before licences can be awarded under the Petroleum Act, the Storting must open the area in question for petroleum activity. The Ministry of Petroleum and Energy conducts an impact assessment as a basis for the authorities’ decision for whether or not petroleum activity should be established in the relevant area. Commercial and environmental effects of the petroleum activity, pollution hazards and the economic and social impact of the petroleum activity are key assessments in this process. The question of opening new areas must be submitted to local authorities and key special interest organisations that must be presumed to have particular interest in the matter. The comprehensive management plans for each individual sea area must facilitate value creation while also maintaining the environmental values in the sea areas. The comprehensive management plans are submitted as separate reports to the Storting.

Access to petroleum resources on the Norwegian shelf requires a production licence. A production licence grants exclusive rights to the licensees for surveys, exploration drilling and production of petroleum deposits within the area covered by the licence. The award of production licences is made based on a specific set of criteria that are rooted in the EU’s licensing directive, including the applicant’s geological and technological capacity and financial strength1. The authorities’ experience with the applicants is a key element in the assessments. Emphasis is placed on awarding production licences to multiple licensees, so that they can share knowledge and follow up each other’s responsibilities. There are special requirements that apply to the composition of a production licence, with particular requirements for expertise and operational experience in connection with activity in the Barents Sea, in deep waters, or in fields with high pressure and/or high temperature. One of the licensees is designated to be the operator. The operator is responsible for daily management of the activity on behalf of the licensee group, and has the primary responsibility for ensuring that the activity takes place in a prudent manner, in accordance with the regulations. The other licensees have a duty to ensure that the operator complies with requirements, including requirements in the health, safety and environment legislation.

The Ministry of Petroleum and Energy is responsible for implementing licence awards. In this work, the Ministry of Petroleum and Energy procures expert safety assessments from the Ministry of Labour and Social Affairs. Production licences are awarded by the King in Council.

Ownership interests in production licences can be transferred between companies. Such transfers can alter the composition of the licensee group and require consent from the Ministry of Petroleum and Energy. This is also true for transfer of operatorship, and such applications for consent are submitted to the Ministry of Labour and Social Affairs for assessment.

If the licensees in a production licence agree to develop a petroleum deposit, they must submit a Plan for Development and Operation (PDO) to the authorities for approval. The plan must contain information on how the licensees will develop and operate the field. It may also be necessary to submit a Plan for Installation and Operation (PIO), see fact box 2.3. The Ministry of Petroleum and Energy coordinates the authorities’ processing of PDOs/PIOs and submits the plan to the Ministry of Labour and Social Affairs to obtain an assessment of whether the proposed development solution is considered to be suitable as regards safeguarding requirements related to health, safety and working environment. Based on the application and input from applicable authorities, the Ministry of Petroleum and Energy approves the application, with conditions, if relevant. Developments that have a total cost in excess of NOK 20 billion, or that have significant principle or social aspects, are submitted to the Storting prior to approval.

Before the licensees can start production of petroleum, they must secure consent to use facilities or onshore facilities from parties such as the Petroleum Safety Authority. Consent from the Petroleum Safety Authority is also required for a number of other activities in all phases of the petroleum activity, e.g. for exploration drilling and use of production facilities beyond the assumed lifetime.

Well in advance (two to five years) before use of a petroleum facility finally ceases, the licensees must submit a cessation plan. The plan must include a proposal for continued production or shutdown of production and disposal of the facility. If the facility will not be used for further production, the assumption is that it must be removed. Among other things, the cessation plan shall describe HSE factors associated with the actual removal operation on the field, and the measures that are implemented to ensure sound and prudent health, safety and environment conditions. The Ministry of Petroleum and Energy coordinates the processing of the cessation plan, and obtains statements from affected ministries before the proposed disposal resolution is submitted for processing in the Government and the Storting, if relevant.

2.1.2 Prudent activity requirement

It follows from the Petroleum Act that the petroleum activity shall take place in a prudent manner. The licensee’s organisation in Norway must have a structure and a size suitable to ensure that the licensee can make well-considered decisions regarding the activity at any given time. The Petroleum Act also stipulates that the petroleum activity shall take place in a manner that ensures that a high level of safety can be maintained and developed in line with the technological development, and that security measures to prevent deliberate attacks are initiated and maintained. The special HSE regulations for the petroleum activity also stipulate requirements for a high level of HSE, and that this level must be further developed.

The responsibility for following up the regulatory requirements is unequivocally placed with the industry. The players are obliged to establish the necessary management systems to ensure compliance with the regulations in all phases of the activity. This entails that the activity must be organised such that it is planned, executed and maintained in accordance with the authorities’ requirements. Follow-up by the authorities must come in addition to, and not as a replacement of, the players’ own follow-up.

In addition, the operator that manages daily operation of the activity on behalf of the licensees has a special obligation to ensure that all parties that perform work on its behalf comply with the regulations and conduct prudent activity (the duty of care). The operator’s management system must state how this duty of care is safeguarded. This responsibility entails that the operator must verify that the contractual partners are competent and qualified, both prior to and during contract signing, and in connection with execution of the activity. The operator must also follow up the contractual partners and verify that the facilities and equipment that are used and the work that is performed maintain a prudent standard. The other licensees must ensure that the operator fulfils its obligations. The licensees must follow up the operator in a systematic manner, and the licensees’ management systems shall state how the duty of care is safeguarded.

2.1.3 Development of the HSE regime

The current HSE regime was developed on the basis of experience gained since the beginning of the Norwegian petroleum activity. Various incidents and investigations, as well as extensive dialogue with the parties, have been important in this development. In particular, the Alexander Kielland accident on 27 March 1980 in which 123 people lost their lives, led to comprehensive changes in both the regulations and the supervision scheme in Norway. From regulations with detailed specification of requirements for structures, technical equipment and operations, the authorities developed regulations largely based on functional requirements that emphasise the players’ responsibility to set the criteria for, and follow up, their own activity. Supervision of the activity, which was initially characterised by extensive detailed verification on the part of the authorities, has gradually developed into a system that focuses on accountability for the players, and how the players systematically follow up their own activity. This type of approach on the part of the authorities is important in an industry characterised by a high level of expertise and very rapid technological development.

2.1.4 Function-based requirements and use of standards

The HSE regulations for the petroleum sector are mainly formulated as functional requirements. Functional requirements indicate which results must be achieved, without describing how. The objective of the function-based approach is e.g. to avoid detailed provisions and to focus on the player’s responsibility to find solutions, and through this, to facilitate flexibility in the selection of methods, approaches and technology development. Nevertheless, the regulations are more prescriptive in certain areas. Prescriptive provisions are mainly used to govern areas where a specific solution is desirable, or to eliminate any doubt regarding minimum requirements.

The guidelines to the HSE regulations refer e.g. to various industry standards as ways of fulfilling the regulatory requirements. The guidelines to the regulations are not legally binding, and the players can therefore choose other solutions. If the responsible player chooses to use the recommended solution, it can normally be assumed that the regulatory requirements have been satisfied. If other solutions are used, such as for example other standards or company-specific procedures, the player must be able to document that the selected solution fulfils the regulatory requirements. It is presumed that the regulations and the guidelines are viewed in context in order to achieve the best possible understanding of the desired level one seeks to achieve through the regulations.

Good interaction, dialogue and trust between the authorities and the companies are preconditions for ensuring that functional regulations can function in practice. This demands that the players fulfil their responsibility to develop good solutions.

The NORSOK2 standards are developed in cooperation between the players in the petroleum activities, and are jointly owned by Norwegian Oil and Gas Association, the Federation of Norwegian Industries and the Norwegian Shipowners’ Association. Roles and responsibilities are regulated through an owner and order agreement where Standards Norway manages the standards and conducts administration of the work on behalf of the owners. The petroleum industry has devoted significant resources to developing the NORSOK standards, and has contributed through participation in and management of international standardisation projects in, for example, CEN3 and ISO4. The Petroleum Safety Authority participates actively in the standardisation work, and is a driving force in clarifying the role of the standards in the petroleum regulations. The standardisation work is financed through a collaboration between the industry and the authorities.

2.2 The Petroleum Safety Authority’s supervision

2.2.1 The Petroleum Safety Authority

The Petroleum Safety Authority (PSA) is a professionally independent supervision and administrative body that reports to the Ministry of Labour and Social Affairs. The PSA is responsible for safety, the working environment, preparedness and security in the petroleum activities on the shelf and at eight onshore facilities. The PSA’s area of responsibility encompasses all phases of the activity, such as planning, engineering, construction, use and potential subsequent removal. The PSA also supervises the players’ management systems and preventive work aimed at deliberate attacks, as well as incidents and conditions that can lead to acute pollution. Undesirable incidents are prevented in the same way, regardless of whether they can lead to injury to people, acute pollution and/or loss of financial assets. Therefore, the safety work and accident prevention protect a number of different assets.

The supervision includes all activities that provide the PSA with a basis for assessing whether, and following up to ensure that, the companies conduct the activity in line with regulatory requirements. The most visible part of the supervision takes place on installations, onshore facilities or construction sites. However, the supervision also includes following up the industry in all phases of the activity, processing of applications and consents, data acquisition regarding accidents and incidents, investigations and processing of specific cases, as well as follow-up and possible use of formal sanctions. Each year, the PSA also conducts a number of activities targeting shared challenges in the industry. The primary purpose of such activities is to obtain a good basis of knowledge and an up-to-date risk picture of the safety and working environment challenges, to communicate new knowledge and to prepare audits of the respective players.

2.2.2 Audits at specific milestones

The Petroleum Safety Authority actively supervises the companies in connection with various milestones as regards safety and working environment, cf. Chapter 2.1. This follow-up creates predictability and lays the foundation for a trust-based relationship between the PSA and the industry.

In connection with prequalification applications, the PSA performs thorough assessments of the applicant’s HSE management system, HSE competence and HSE capacity. Prequalification forms the basis for the PSA’s subsequent supervision of the enterprise, including assessments of applications for production licences, approval of development plans and applications for consent.

In its assessment of applications for production licences, the Petroleum Safety Authority evaluates the applications in relation to the award criteria within the HSE area.

After awarding production licences, the PSA evaluates the companies applications for consent to conduct exploration drilling. In order to secure consent, the operator must document that the planned drilling activities can be carried out in accordance with the regulations. As part of this application, the operator must e.g. submit analyses and assessments of health, safety and environment for the activities. The mobile installation that the operator chooses to carry out the exploration activity must also have an Acknowledgement of Compliance from the Petroleum Safety Authority (see fact box 2.4).

For an application for approval of a PDO or PIO, the PSA assesses whether the planned solutions satisfy the requirements in the HSE regulations, and whether the operator has systems in place to manage the activity in line with the regulations. The PSA also supervises the companies’ systematic work to use new knowledge and technology, so the selected solutions yield the best possible results in a long-term perspective. The opportunity to exert influence is substantial in the planning phase. After the players have submitted the development plans, the possibility of major adjustments is limited, and more time-consuming. Therefore, audits of development projects are a prioritised activity for the PSA.

Before installations and facilities can be put to use, the operator must aqurre a new consent from the Petroleum Safety Authority. Consent is also required e.g. for major modifications, manned subsea operations, use of production facilities beyond the presumed lifetime and removal of facilities. The consent scheme contributes to ensuring that the PSA is involved in key decisions in the activity. Issuance of a consent is not an approval, but an expression of the authorities’ confidence that the operator can conduct the activity within the regulatory framework and in accordance with the information provided in the application for consent.

2.2.3 Supervision strategy and use of policy instruments

The Petroleum Safety Authority’s supervision of the activity is system-oriented and risk-based. System-based supervision targets the relevant parts of the companies’ management systems and any subsequent verifications. A risk-based supervision entails that the supervision targets players or facilities where the HSE conditions are the most challenging and critical, where there are factors that can result in increased risk of undesirable incidents or conditions, and where the Petroleum Safety Authority’s efforts will have the greatest effect. Correspondingly, areas and topics with the highest risk of undesirable incidents or conditions are also prioritised, i.e. serious consequences and/or a high degree of uncertainty.

High-risk groups have been an important focus area since 2007 as part of the PSA’s risk-based supervision. High-risk groups are groups of personnel in the petroleum industry that face special challenges in their working environment; for example, employees who work within insulation, scaffolding and surface treatment, catering, as well as certain groups within drilling and well activity.

Audits of individual players are just one part of the Petroleum Safety Authority’s overall supervision activities. Activities that are aimed at all or parts of the industry are also an important part of the supervision. Examples that can be mentioned here are audits of well control and hydrocarbon leaks. In these areas, a number of activities have been carried out aimed at all or parts of the industry, in addition to normal supervision tasks.

The Petroleum Safety Authority utilises different instruments in its supervision of the industry. The purpose of using policy instruments is primarily to influence the companies to initiate effective and long-term preventive measures or to handle acute hazard situations. Therefore, the most frequently used instruments are dialogue and interaction. The dialogue relates to how requirements are to be interpreted and complied with, as well as obtaining and exchanging knowledge and information. The PSA can send letters to the industry to provide information about audit experiences, research, etc. This can be used as an instrument to urge the industry to initiate activities or carry out HSE measures based on experience and new knowledge. The PSA can also utilise formal sanctions such as orders, when necessary. An order is considered to be a strong reaction from the PSA, and is an instrument that is rarely used. When special reasons so dictate, for example if hazard and accident situations should arise that threaten safety, the PSA can also use even stricter sanctions, such as halting the activity or imposing coercive fines to ensure that an order is carried out. In the event of serious and repeated breaches of the working environment regulations, the company can also be subject to administrative fines. So far, the PSA has not reported incidents to the police, but it does maintain close contact with the police, particularly in connection with serious incidents. It is not deemed necessary for the PSA to officially report incidents that the police are already investigating.

The Petroleum Safety Authority publishes all of its audit and investigation reports in an effort to achieve an open attitude and insight into the petroleum activities, and thus contribute to learning and improvement all across the industry. Therefore, all of the players in the activity, and the public sector in general, can obtain insight into how the companies comply with the regulations and how the supervisory authorities can monitor and follow this up.

Table 2.1 shows the number of audits and verifications carried out during the period 2012–2017. Variations in the number of audits and verifications conducted from one year to another are mainly due to variations in the scope and complexity of the individual audit and verification activities. The table also provides an overview of the PSA’s use of formal policy instruments during the period from 2012 to 2017. As can be seen, there is little use of formal policy instruments in relation to the individual player. Reference is also made to Chapter 5.2 regarding the authorities’ follow-up.

2.2.4 Investigation – follow-up and lessons learned after incidents and accidents

Investigation of undesirable incidents is an important part of the Petroleum Safety Authority’s risk-based supervision activity. Such investigations come in addition to the investigations the involved parties undertake on their own initiative. The objective is to clarify the causes, the course of events and actual and potential consequences, as well as to develop knowledge that can contribute to preventing similar incidents from recurring. The PSA itself builds up significant expertise and experience through investigations.

The number of investigations varies from year to year. The severity of the incident is the most important criteria for a decision to investigate. Learning potential is another important element in the assessment. In some situations, the resource situation in the PSA can also affect the selection of method and mandate for the investigation.

The following incident categories will normally qualify for implementing an investigation under the direction of the Petroleum Safety Authority:

• Major accident or near major accident

• Serious injury or fatality in connection with work accident

• Serious impairment or loss of safety functions and barriers that can endanger the integrity of the installation or the onshore facility

• Incidents which the police investigate and where the PSA assists the police

The industry players also carry out their own investigations and in-depth studies of incidents. Both the criteria and the process for investigation vary from player to player.

Consideration has been given to whether a permanent commission should be established for independent investigations of accidents and serious incidents in the petroleum sector. The Storting has considered the issue in connection with processing Storting reports on HSE in the petroleum activities5. The Petroleum Safety Authority’s investigations are an important part of the control and risk-based follow-up of the companies, and the agency’s strong role in connection with investigations has been regarded as important. At the same time, there may be a need in some cases for a review by an independent investigation commission, of not just the course of events, but also the regulations and the roles of both the operators and the authorities. To facilitate effective initiation of such ad hoc commissions, what was then the Ministry of Labour made an agreement in 2010 with the Accident Investigation Board in Norway regarding practical assistance if it becomes necessary to appoint an independent investigation commission in the petroleum sector. So far, this arrangement has not been used.

Through the established cooperation with other international HSE authorities, information is e.g. exchanged with the objective of sharing experience and learning. Follow-up of the Deepwater Horizon accident in the Gulf of Mexico in 2010 has contributed to learning across international borders, cf. Box 2.6.

2.2.5 Cooperation with other national authorities

The Petroleum Safety Authority is the coordinating agency for regulatory development and supervision of HSE in Norwegian petroleum activity. This coordination system was established in 1985 and further refined in connection with the establishment of the Petroleum Safety Authority in 2004. The system was then expanded to also include onshore facilities subject to the PSA’s jurisdiction.

The coordination system comprises authorities with an independent supervision responsibility for the petroleum activity, and applies to fields of responsibility that require cooperation on the part of the authorities, including regulatory development, follow-up of incidents and coordination of the supervision. The coordination system shall contribute to ensure comprehensive and coordinated supervision by the authorities, but does not intervene in the formal roles and responsibilities of the various authorities.

The coordination system has been discussed in a number of previous Storting reports. Storting Report 29 (2010–2011) Joint responsibility for good and decent working life, pointed out that there is still a potential for improving HSE cooperation between the authorities. The Petroleum Safety Authority’s experience is that the cooperation between the agencies largely functions well, and in accordance with the cooperation agreements.

The assistance system entails cooperation with other agencies that do not have independent authority in planning and carrying out supervision, but that do have special expertise in relevant fields.

The PSA has also entered into cooperation agreements with parties including the Norwegian Petroleum Directorate and the Police and prosecuting authorities.

2.2.6 International cooperation

Treaties and agreements have been entered into with the authorities in a number of countries in order to facilitate comprehensive follow-up and exchange of experience across shelf borders, for example as regards to cross-border pipelines and transboundary reservoirs. Several cooperation arenas have also been established, such as North Sea Offshore Authorities Forum (NSOAF) and International Regulators Forum (IRF). The Petroleum Safety Authority also has extensive bilateral cooperation with the HSE authorities for example in the United Kingdom, the Netherlands and Denmark. On 24 April 2015, the Arctic Council adopted a framework agreement on cooperation to prevent oil pollution from petroleum activity and maritime transport. The paramount objective of such cooperation is to improve safety on the various countries’ continental shelves through exchanging information and promoting a common understanding of health, safety and environment issues. The Arctic Offshore Regulators Forum (AORF) was founded as a consequence of this framework agreement.

2.3 Cooperation and participation

Participation and cooperation among the parties are key preconditions and important arenas for the HSE regime in the petroleum industry. The regime presumes mutual trust and respect among the key players. This applies both to employee participation at the company level, as well as in the various arenas for tripartite cooperation.

Pursuant to the Working Environment Act, employees have both a right and an obligation to participate in ensuring a sound and prudent working environment, and employers are obliged to facilitate such participation. The statute also stipulates requirements for safety work and employee representation in working environment committees. Company legislation stipulates more detailed requirements for employee representation in company boards.

Furthermore, both formal and informal arenas exist for two-party cooperation between the employees and their organisations on the one side, and the employers and their organisations on the other side. The collective wage agreements are the foundation for this two-party cooperation.

In addition to the established two-party cooperation, there is also broad tripartite cooperation between the parties and the authorities in the petroleum industry, in a number of different arenas.

2.3.1 Tripartite arenas

Safety Forum

The Safety Forum was established in the autumn of 2000 and is made up of representatives from the authorities, employers and employees. The Petroleum Safety Authority heads the Safety Forum and has the primary task of promoting work on safety and working environment in the Norwegian petroleum activities through:

• Being a forum for discussing and following up relevant safety and working environment issues

• Facilitating good cooperation between the industry parties and the authorities

• Being a reference group for projects that have been initiated or planned by the parties or the authorities

Through the work in the Safety Forum, key issues can be identified in a joint effort, and the parties can discuss how the issues can be resolved. The Forum is also used actively to share knowledge across the industry, and to discuss strategy and priorities in the HSE work. Everything that takes place in the Safety Forum is documented and made easily accessible for others who do not participate directly in the Forum. This contributes to open and binding processes. Several important processes for continuous improvement of HSE in the petroleum activities over the years have their roots in the Safety Forum.

Regulatory Forum

The Regulatory Forum was established in 1986 and is also led by the Petroleum Safety Authority. In the Forum, the parties have an opportunity to follow the regulatory work on an ongoing basis, and to express opinions on important proposals. This leads to a greater degree of ownership and consensus as regards to final proposals for development of the regulations. The Forum also helps to clarify differences and similarities between the activity onshore and offshore.

The Regulatory Forum shall facilitate:

• Information, discussion, advice and possible feedback on the work to develop and maintain the regulations for petroleum activity

• Information and discussion on the practical implementation and use of the HSE regulations

Working Together for Safety

Working Together for Safety was established in 2001 as an arena for cooperation where the industry parties participate and the Petroleum Safety Authority is an observer. Among other things, Working Together for Safety prepares training and information material in the form of safety films and specific recommendations for “best practice“ for the industry.

Sector board for petroleum industry standardisation

The sector board for petroleum standardisation is appointed by Standards Norway’s board, and is a link between Standards Norway and the owners and users of the petroleum standards. Important tasks for the sector board include contributing to user-controlled, effective standardisation work in accordance with Standards Norway’s goals, general plans and strategy.

Regulatory competence

Regulatory competence is a training programme for the petroleum industry. Regulatory competence offers its courses through BI Norwegian Business School, which is responsible for organising the educational aspect. Regulatory competence is currently an active tripartite collaboration that has adjusted its training programmes in line with ongoing regulatory development. To date, more than 15 000 people have completed training under the direction of Regulatory Competence.

Committee for helicopter safety on the Norwegian continental shelf

Helicopter transport is not petroleum activity per se, but has a close link as part of the overall activity on the shelf. The Committee for helicopter safety on the Norwegian continental shelf works to enhance helicopter safety offshore. The Committee is led by the Norwegian Civil Aviation Authority and is composed of representatives from the authorities, the helicopter operators, the oil industry, Avinor, the trade unions and others who are involved in offshore flights. The Committee makes recommendations and gives statements to other players, for example through joint consultation comments to the authorities.