The Probability of an Offshore Accident

Risk is the product of frequency and consequence. Accordingly, high consequence events which occur infrequently may contribute as much risk as frequent events which have smaller consequences. Estimating the frequency with which events occur is as important to overall risk as accurately predicting the consequences. One way of estimating frequency is to look at historical records. The information presented below are an abstract from the “Safety of offshore oil & gas Impact Assessment Annex I” working paper from the European Commission, published in 2011 to accompany the proposal for a regulation of the European Parliament on safety of offshore oil and gas prospection, exploration and production activities.

2013.08.06 - The Probability of an Offshore Accident Figure 1

The OGP risk assessment data directory for major accidents was compiled to serve as an industry reference for quantitative risk assessments. It identifies 98 major accidents that have occurred in the North Sea in the years 1970-2007, including helicopter accidents. Whilst this gives an aggregated rate of 2.6 per year, it should be noted that there has been a steady and impressive reduction in the number of offshore accidents in the North Sea throughout this time period.

2013.08.06 - The Probability of an Offshore Accident Figure 2

Fatal, Major and Over-3-Day Injury Rates to Offshore Workers on the UK Continental Shelf, 1995/1996 – 2009/2010.

Assuming the major accident rate is now half what is was during the time period of the OGP report, and assuming that the average property damage cost of each major accident is €50 million, this gives an annual figure of €65 in major accident costs, not including costs related to oil spills or the loss of human life (the value of statistical life is put at €1-2 million by the European Commission and at £1.5 million by the UK HSE).

As previously mentioned, blowouts are the category of accident that have the greatest magnitude of potential loss in the offshore sector because of the large oil spills that may result from them. Historical records indicate that very large spills resulting from blowouts are comparatively rare.

The SINTEF Offshore Blowout Database includes 573 offshore blowouts/well releases that have occurred worldwide since 1955, suggesting that such incidents are not uncommon. SINTEF states that most blowouts occurring in the US Gulf of Mexico, Norway and the UK since 1 January 1980 have been included in the database. The database is an industry reference for blowout risk, its data serving as the basis for numerous notable benchmark studies for risk assessment.

According to this database, 64 well releases or blowouts occurred in UK and Norwegian waters between 1 January 1980 and 1 January 2008, i.e. on the average 2.3 per year. For comparison, in the same period 8,283 wells were drilled in the UK, including 1,690 exploration wells, 1,339 appraisal wells and 5,254 development wells. In Norway, 1,036 exploration wells and 2,801 development wells have been drilled in this period. A annual Scandpower report based on SINTEF data compares the risk of different offshore activities. The report reveals that, among the various phases of offshore operations, exploration drilling entails the highest risk of blowout. In case of deepwater, highpressure/ high-temperature (HPHT) wells, the blowout frequency is 1.9×10-3 per drilled well “for offshore operations of North Sea standard”. In case of deepwater, but “normal” wells, the frequency is only 3.1×10-4, i.e. one order of magnitude smaller. The reason the blowout frequency of HPHT wells is significantly higher is not believed to be the high pressure itself, but rather the small margin between pore pressure and fracture pressure in such wells. The probability of a blowout during other activities, like development drilling, completion or production is well below that of exploration drilling, typically in the order of 10-4 or 10-6 per operation or well year.

According to the UK Health and Safety executive, an individual risk of death of 10-3 per year has typically been used within the offshore industry as the maximum tolerable risk. For comparison, acceptable annual failure probabilities in the nuclear industry are typically in the order of or 10-6 or better.

An estimation on the frequency of operations that may result in a blowout in Europe can be made by looking at their respective frequencies per well year in the SINTEF database, and scaling these proportions by the number of active wells in Europe (see table below). This method assumes that:

  • The proportion of different operations per well year in the SINTEF database does not significantly differ from that in the North Sea at present.
  • That the sampling bias in this data is within acceptable tolerances.

2013.08.06 - The Probability of an Offshore Accident Figure 3

Annual Probability of at least 1 Blowout for Offshore Operations in Europe

The last column of the table above shows the annual probability of occurrence of at least one blowout because of any of the potential causes.

History tells us that only a fraction of blowouts have lasted long enough to result in major spills. More work needs to be done to quantify the probability of a massive spill given a blowout, however Det Norske Veritas has used the SINTEF database to calculate expected blowout duration figures for a hypothetical conventional well drilled in 337 metres of water in the Norwegian Sea using state-of-the-art technology and modern procedures. These figures reveal that should a blowout occur, there is a 56% chance of it lasting 2 days or less, and only a 15% chance of it lasting more than 2 weeks.

In summary, historical figures suggest that the recurrence rate for a major oil spill from an offshore blowout in Europe is more likely to be in the order of decades rather than centuries. Assuming a recurrence rate of 35 years and an average economic cost of €5 to €30 billion, this amounts to costs of €140 to 850 million per year. Add to this an annual figure of €65 million in property losses resulting from less costly, but more common, major accidents, and we can estimate a total annual figure of €205 to €915 million in direct, tangible costs for offshore accidents in Europe. These figures do not include indirect costs such as the effect on oil prices, the health of the oil industry, or security of energy supply. Although unquantifiable, these costs must also be factored into any cost benefit analysis of policies aimed at improving offshore safety, albeit qualitatively.

Although drilling expertise may be improving, the Norwegian and UK regulators have indicated that deeper wells are being planned in their waters, and that high temperature, high  ressure and more challenging wells will continue to be drilled. Operators are attempting increasingly technically ambitious operations, and they are expanding their operations to new, often environmentally sensitive areas (e.g. Arctic). Additionally, an increased number of smaller companies are entering the market as the major oil companies sell off older, non-cost effective  assets. These smaller companies aim to remain profitable by having a smaller cost base and extending production from these ageing installations and mature fields.

Additionally, the Scandpower probabilities have a great uncertainty in light of the small number of blowouts upon which they are based. This is to say that where incidents are infrequent, just one additional incident may significantly increase the statistical frequency. This uncertainty has not been quantified by Scandpower; however, some consider that well blowouts resulting in the uncontrolled release of hydrocarbons have happened too infrequently in Europe for a reliable analysis of the historic frequency to be carried out.

Moreover, there are limits as to what historical frequencies are able to reveal. Qualitative information can provide an early warning of an increase in risk so that relevant and effective preventive measures can be put in place in time. In connection with this, reported “nearmisses”, in which slightly changed circumstances could have developed into a major accident, suggest the risk of a blowout in Europe is not remote. Just one month after the Deepwater Horizon disaster, on 19 May 2010, well control was lost on the Gullfaks C installation in Norway; according to the Norwegian Petroleum Safety Authority (PSA): “Only chance averted a sub-surface blowout and/or explosion, and prevented the incident from developing into a major accident”. The PSA’s investigation of the incident identified serious deficiencies in the operator’s planning of the drilling and completion operation in this well. Management checks that activities were being conducted satisfactorily were also inadequate.

Closing this post one might ask “How dangerous is a particular drilling operation?”. According to insurers the risk factors for offshore operations include:

  • The worst case discharge rate from a well
  • The time it would take to drill a relief well
  • Water and drilling depth
  • Well temperature
  • Well angle
  • Well pressure

Additional information regarding the safety on offshore oil & gas platforms can be found in the link below where a series of documents are available as part of the EU work in developing “Offshore oil & gas platforms standards”.

Source: European Commission Offshore oil & gas platforms standards

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