HSE Management Indicators in Nigeria s Oil and Gas Industry

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1 HSE Management Indicators in Nigeria s Oil and Gas Industry NL Dabup 194 and John Smallwood 195 Department of Construction Management, Nelson Mandela Metropolitan University, South Africa Abstract Multinational oil companies (MNOCs) operating in Nigeria have been severely criticised by both local and international pressure groups for engaging in unwholesome health, safety and environmental practices resulting in widespread ecological disturbances, including pollution from pipe-line leaks, blowouts, drilling fluids and refinery effluents. There has also been land alienation and disruption of the natural terrain during oil and gas operations. Subsequently, this has engendered strained relationships amongst industry stakeholders, resulting in an atmosphere of insecurity in the sector and the highlighting of health, safety and environmental (HSE) management issues. The study reported on is aimed at investigating and identifying the factors militating against adequate integration of effective HSE management practices in Nigeria s oil and gas industry and making recommendations on possible interventions. A questionnaire was designed to determine the importance, extent of integration and frequency of certain occurrences, aspects and parameters that influence HSE management. The survey sample population involved fourteen HSE managers of leading MNOCs in Nigeria. The findings suggest that a lack of any legal and regulatory framework for H&S, poor assessment of businesses environmental influences, lack of engagement with relevant stakeholders, lack of a skilled workforce, and inadequate training of the workforce are all factors which have, over the years, continued to militate against the achievement of adequate measures to address HSE challenges. Due to extreme pressure on the Nigerian oil and gas industry from stakeholders both locally and internationally, these factors continue not only to marginalise, but also hinder the implementation of adequate HSE management processes. There is also an urgent need for improved HSE management and ecologically friendly operations and activities in delivering on oil and gas projects. A holistic approach can be applied to address some of the challenges if a strategic approach to HSE management is adopted. Keywords Health, safety, environment (HSE); Nigeria; oil and gas industry. INTRODUCTION The exploration of crude oil reserves is often accompanied by ecological side effects, damage to land, oil spills, incidents of air pollution, water contamination and disasters, explosions and fires, which have been experienced and documented at various times and locations. In addition to these HSE challenges, in recent times attention has been drawn to the economic and social impact of operations, especially in isolated communities. Subsequently, regulations have been enacted to address these challenges, some imposed by the government and others by organisations. The approach to HSE by 194 pdlami@gmail.com 195 john.smallwood@nmmu.ac.za 694

2 organisations may entail ensuring compliance with legislation; consideration of the human resources aspects, or economic aspects as all accidents and ill health cost money. Those that effectively manage HSE are aware of the correlation between assessment and control of risks, general health and safety of employees and the very core of the business itself (HSE, 2006: 39). Possibly the most important quality of organisations that are good in managing HSE is their corporate culture and not solely their health and safety culture (Erickson, 2012: 1). Such organisations are good in engendering a successful structure to maximise the involvement of workers and groups while ensuring HSE objectives are regarded in the same way as other business objectives. The key outcome of a successful HSE management is that HSE performances meet both organisational and statutory requirements and demonstrate commitment to continuous improvement. LITERATURE REVIEW Traditionally, HSE laws and regulations did not exist or were not effectively enforced in African countries (Nwabaraocha, 2011: 1). Nwabaraocha reports that some of the factors that contribute to poor HSE management in Africa include: absence of legal and regulatory framework; differences in H&S culture and risk tolerance; non-existence of environmental or H&S monitoring and enforcement authorities, and lack of infrastructure. Added to these factors in Nigeria is defective technology;strained relationships between host communities and operators; and a dearth of effective enforcement, hence lack of compliance (Peel, 2009: 27; Ojakorotu and Whetho, 2008: 56; Azaiki, 2006: 226; Kupolokun, 2006: 16; Okonta and Douglas, 2003: 251). Successful HSE requires management support, but over and above this, support is the way in which employees are treated, or psychosocial factors which research has shown are the most predictive factors of effective H&S performance (Hughes and Ferret, 2007: 58 and Erickson, 2012: 1). Erickson further suggests that perceptions are a significant aspect of effective HSE management, how managers view their workers or how workers view their managers because it is vital in aligning the thought processes, ideas, beliefs, biases, miscommunication, and other elements that interfere with optimal H&S performance since perceptions are realities. In an organisation, people with different opinions and life experiences are going to have different perceptions. If people do not have similar perceptions, communication will be a major challenge. METHODOLOGY The functional managers of HSE units of five of the MNOCs were approached to participate in the survey; however, one declined citing security reasons. Four managers in Rivers State, a core oil producing state in Nigeria, were interviewed. Rivers State is host to the head offices of the majority of the MNOCs operating in Nigeria. During the course of face-to-face interviews with the managers, they identified key line managers within their departments to participate in the survey. The snowball sampling method was used to select the number of managers for the study. This resulted in the identification of twenty-five managers, whereafter the research instrument was forwarded to all twenty-five managers. The rationale behind the decision to use this sample size is based on May s (2006: 93) assertion that a large, poor quality sample, which does not reflect the population characteristics, will be less accurate than a smaller one that does. A total of 14 questionnaires were returned as at the time of the writing of this paper which represents a 56 percent response rate, which was deemed adequate for the purpose of data analysis. The questionnaire was distributed to managers with from below six to between seven to fifteen years work experience. This was done in order to get a balanced response between experienced and less experienced practising professionals. In order to compare 695

3 the competence levels of the younger and possibly less experienced with the more experienced professionals in the industry, the respondents were divided into under and above forty age groups to conduct an analysis based on competencies relating to age. A 5-point Likert type scale was used to determine organisational behaviour relative to magnitude, frequency and degree type questions, indicating an unsure position, in order to increase reliability. This is based on Church, Waclawski and Kraut (2001: 75) and Alwin s (2010: 426) assertions that a five category scale appears superior for unipolar assessments. Furthermore, given that respondents were required to respond to a 5-point Likert type scale, it was necessary to compute a measure of central tendency in the form of a mean score (MS) to evaluate the actual implication of varying percentage responses to the five points on the respective scales. Given that the difference between 5 and 1 on the scales is 4, and that there are 5 points on the scales, ranges were identified to enable interrogation of the MSs. As 4 divided by 5 is 0.8, the ranges are all 0.8 in extent. FINDINGS Table1 indicates the extent to which six practices have been successfully integrated into the project delivery process in terms of percentage responses on a scale of 1 (not at all) to 5 (extensively), and a MS ranging between 1.00 and It is notable that all the MSs are above the midpoint of 3.00, which indicates that in general the respondents perceive the practices to have been integrated. It is notable that risk management, an integral aspect of HSE management, is ranked sixth. However, the MS of the first ranked practice is > , and therefore the respondents perceive the level of integration to be between relatively extensively to extensively / extensively. Furthermore, the MSs for the second to sixth ranked practices are > , and therefore the respondents perceive the level of integration to be between moderately to relatively extensively / relatively extensively. Table 1. Extent of integration of practices into the project delivery process Practice Response ( percent) Unsure Not at all Slightly Moderately Relatively extensively HSE management Project management Concurrent engineering Cost effective management Technology management Risk management Extensively MS Rank Table 2 indicates the frequency at which three training courses have been conducted. It is notable that all the courses have MSs above the midpoint score of 3.00, which indicates that in general the respondents perceive the courses to have been conducted. It is notable that the MS of the first ranked course is > , and therefore the respondents perceive that HSE management course training has been conducted between often to always / always. Furthermore, given that the MSs for the second and third ranked courses are > , the respondents perceive the related training to have been conducted between sometimes and often / often. 696

4 Table 2. Frequency of training courses Course Unsure Never...Always MS Rank HSE management Good business practices Good public relations practices in dealing with communities Table 3 indicates the factors that undermine H&S performance on site. It is notable that four (80 percent) of the five factors have MSs above the midpoint score of 3.00, which indicates that in general the respondents perceive the factors to undermine H&S more to a major as opposed to a minor extent. It is notable that none of the factors have MS >, however, the top three have MSs > 3.4 which indicates that the respondents perceive the factors to undermine H&S between some extent to a near major / near major extent. The remaining two factors, which have MSs > , can be deemed to undermine H&S between a near minor to some extent / some extent. Table 3. Extent to which factors undermine H&S performance on-site Factor Unsure Minor.. Major MS Rank Lack of skilled workers Inadequate H&S training of workforce Over-reliance on subcontractors Lack of skilled supervisors Lack of time Table 4 indicates the importance of six parameters to organisations. It is notable that all the parameters have MSs above the midpoint score of 3.00, which indicates that in general the respondents perceive the parameters as important. However, given that the MSs for all six parameters are > 4.2 between more than important to very important / very important. Table 4. Importance of various parameters to organisations Parameter Unsure Not important...very important MS Rank Project health and safety Project cost Project schedule (time) Project quality Environment Community health and safety Table 5 indicates the importance of six business factors in terms of percentage responses. It is notable that all the MSs are > 3.00, which indicates that in general the respondents perceive all the business factors as important. It is notable that none of the business factors have mean scores > 4.2 however, the top five (83 percent) factors have MSs > , which indicates that respondents perceive the business factors to be between important to more than important / more than important. 697

5 Furthermore, ecological environment, which is ranked sixth has a MS > , which indicates that the respondents perceive it to be between less than important to important / important. It is notable that H&S and environment are ranked second and sixth respectively. Table 5. Importance of six business factors to organisations Business factor Unsure Not important Very important MS Rank Technology Health and safety Leadership Socio-culture Politics Ecological environment Table 6 indicates the importance of H&S and ecological management relative to two aspects of management, namely project and strategic management. It is notable that all the MSs are above the midpoint score of 3.00, which indicates that in general the respondents perceive the parameters as important to both project and strategic management. It is notable that none of the parameters has MSs > , however, all the parameters have MSs > 3.4 indicates the respondents perceive the parameters to be between important to more than important / more than important. Table 6. Importance of four parameters relative to two aspects of management Parameter Unsure Not important.very important MS Rank Project management: Cost Health and Safety Schedule Quality Strategic management: Cost Quality Ecological environment Schedule Table 7 indicates the extent to which actions / occurrences constitute barriers to oil and gas production. It is notable that five (62.5 percent) of the actions / occurrences have MSs > 4.2, which indicates that respondents perceive them to constitute between a near major to major / major barrier to the production of oil and gas. These include kidnapping of oil workers, major system failure, hostile takeover of gas plants and flow stations by communities, civil and political crisis and sabotage of pipelines. However, the bottom three ranked actions and occurrences have MSs > , which indicates that the respondents perceive them to constitute a barrier to the production of oil and gas between some extent to a near major / near major. Table 8 indicates the extent to which actions and occurrences contribute to oil spills on site. It is notable that six (66.7 percent) of the nine actions / occurrences have MSs, which indicates that respondents perceive these actions and occurrences to contribute more of a minor than a major extent to oil spills on site. It is notable that the top ranked action / occurrence has a MS 5.00, which indicates that they are perceived to contribute between a near major to major / major extent to oil spills on site. Given that the 698

6 second ranked action / occurrence has a MS is perceived to contribute between some extent to a near major / near major extent to oil spills on site. Table 7. Extent to which actions / occurrences constitute barriers to oil and gas production Action / Occurrence Unsure Minor Major MS Rank Kidnapping of oil workers Major system failure Hostile takeovers of flow stations and gas plants, by host communities Sabotage of pipelines Civil and political crises Major industrial accidents Oil bunkering activities Environmental destruction / degradation Table 8. Extent to which actions / occurrences contribute to oil spills on site Action / Occurrence Unsure Minor..Major MS Rank Sabotage of oil pipelines Oil bunkering activities Pipe corrosion Pipeline / flow line leakage Poor maintenance Material defects Natural disaster Discharge from transporting vessels / Tanker accidents Human error Table 9 indicates the extent to which challenges are prevalent on site. It is notable that five (71.4 percent) of the seven challenges their prevalence can be deemed to be minor as opposed to major. It is notable that the top evalence is perceived to be between some extent to a near major / near major extent. Given that their MSs are > , the prevalence of the second to fifth ranked challenges is perceived to be between a near minor to some extent / some extent. 699

7 Table 9. Extent to which challenges are prevalent on site Challenge Unsure Minor..Major MS Rank Gas flaring Oil spillage Lack of HSE knowledge on the part of site workers Lack of adequate HSE equipment / gear and apparel Human errors Machine failure Natural disasters Table 10 indicates the importance of approaches relative to host communities according to the two levels of management. It is notable that the MSs are all above the midpoint score of 3.00, which indicates that in general the respondents can be deemed to perceive the aspects as important, as opposed to not important. However, given that the MSs are > 4.2 the respondents perceive them to be between more than important to very important / very important. Table 10. Importance of approaches relative to host communities Approach Unsure Not important.very important MS Rank Host communities are treated as stakeholders during the project design stage Encourage dialogue with host communities on issues relative to H&S / environmental pollution Demonstrate a strong conviction on HSE as it relates to host communities CONCLUSIONS Based upon the extent of integration of various practices into the project delivery process, risk management is identified by the HSE managers as relatively lower than HSE management. It can be concluded that MNOCs do not perceive risk management as integral to the HSE management process. In identifying factors which undermine H&S performance on-site, lack of skilled workers was marginally identified above inadequate H&S training of workforce. Given that cost is identified as very important relative to project and strategic management, it can be concluded that MNOCs are focused on the bottom line of any business which is a return on investment. However, they should appreciate that cost is a function of, inter alia, quality, H&S, and the environment. Furthermore, technology is identified as marginally more important than H&S to organisations. Also, the environment is perceived as less important than the political and socio-cultural factors according to the HSE managers. This implies that MNOCs do not consider ecological concerns as a vital business factor. Consequently, it is important for MNOCs to review this practice and realise that the long-term cost of decades of unfriendly environmental practices will eventually affect their bottom line and overall business reputation particularly in cases of compensation and litigations. 700

8 Also, it can be concluded that sabotaged pipelines and oil theft are the two major causes identified as responsible for oil spillage as they rate marginally higher than pipeline corrosion, pipeline / flow line leakage and poor maintenance. According to the HSE managers, project H&S, cost, time, quality and the environment are identified as more important to the organisation than host community H&S. RECOMMENDATIONS It is recommended that an all-inclusive risk assessment process should be incorporated at the planning stage in a HSE management system. This is critical for eliminating hazards, reducing risk, or where applicable, lessening the severity of any potential threat or injury. Furthermore, MNOCs should hold contractors and service providers to the same standard as the organisation. Meanwhile, technology is rated high relative to business factors and it is recommended that MNOCs focus on investing in the future and in healthier and safer oil exploration and production processes. Particularly, gas plants should be redesigned to eradicate flaring and stakeholders should identify front end alternative gas utilization, considering that the top HSE challenge prevalent on site is gas flaring. Furthermore, it will take a collective effort of industry to address the challenges faced relative to the oil spill incidence. It is recommended that all industry stakeholders should collaborate and engage with host communities to address this menace. Finally, it is imperative for MNOCs to promote lasting improvement in the health of host communities in order to maintain a healthy workforce, seeing that their workers live and reside within some of these communities particularly during a project s life-cycle. Subsequently, MNOCs should understand that they can improve their corporate reputation through proactive focus on host community H&S. REFERENCES Alwin, D.F. (2010) How good is survey measurement? Assessing the reliability & validity of survey measurement (2 nd Edition). In: P, Marsden and J. Wright (ed). Handbook of survey research. Emerald Group Publishing Limited, Bradford. Azaiki, S. (2006) Oil politics and blood. Y-Books Publishers, Ibadan. Church, A.H., Waclawski, J. and Kraut, A.J. (2001) Designing and using organisational surveys: a seven-step process. John Wiley & Sons, New York. Erickson, J. (2011) Corporate culture: examining its effects on safety performance. Journal of American Society of Safety Engineers, 53(11), Health & Safety Executive (2006) Essentials of health and safety at work. HSE Books, London. Hughes, P. and Ferrett, E. (2007) Introduction to health and safety at work. (3rd Edition) Butterworth-Heinemann Inc, Oxford. Kupolokun, F. (2006) Forging ahead with transformation in NNPC. NNPC, Abuja. May, T. (2006) Social research: issues, methods and process. Open University Press, Berkshire. 701

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