Oil and Gas - Can Malaysian firms learn from recent oil spills?
Malaysia's oil and gas industry is expected to thrive in the coming years, with production levels likely to grow substantially.
With more oil being extracted, the chances of a major spill occurring are heightened. This is one of the biggest risks facing energy company managers in 2014 and it is important that firms learn from mistakes that were made in the past. An oil spill can have disastrous consequences for energy firms.
Most importantly, leaks often have a hugely negative impact on the environment and the cost of cleaning these up can be enormous. Businesses that have been held responsible for a spillage can also suffer significant reputational damage and this can be very difficult to put right. While some accidents are unfortunate, many are caused by mistakes that should have been avoided.
What can Malaysian oil and gas businesses do to steer clear of potentially costly spills?
Hire the right kind of people
In most cases, oil spills are caused by some form of human error or misjudgement. While everybody makes mistakes, companies will be keen to employ project managers and engineers who have a good track record within the industry.
As the demand for oil and gas rises in the coming years, it is inevitable that skills gaps will emerge. This means businesses will be competing against each other to attract the very best talent.
A recent report published by DNV GL - an organisation that carries out research to enable businesses to become safer and more sustainable - showed that a shortage of key skills will be one of the biggest challenges facing oil and gas corporations in 2014. Although 88 per cent of industry leaders are optimistic about the year ahead, many have stated that a dwindling pool of talented engineers remains one of their most pressing concerns.
Almost half (47 per cent) of the people who took part in the survey said skills shortages were a major issue. On a global scale, 38 per cent of executives said project manager roles were the most difficult to fill, while 24 per cent felt marine engineers were the hardest to find. A further 16 per cent confirmed that risk engineers - who have a major part to play in preventing oil spills - were in short supply.
In the Asia-Pacific region, as many as 42 per cent of company leaders revealed that project managers were most in demand. Elisabeth Torstad, Chief Executive Officer of DNV GL - Oil & Gas, believes businesses need to start thinking more long term.
"While technology can go some way to plugging the gap, it can't fully replace human intervention," she commented.
"The industry needs to take a longer-term view of building professional skills, rather than putting the brakes on nurturing talent when the oil price weakens.
"While we cannot fully [replicate] and replace the experience of retiring professionals in the sector, we can work smarter through structured approaches to managing industry knowledge and ensuring that the competence built is effectively transferred to younger generations."
Learn from the mistakes of others
There have been some high-profile oil spills in recent years and it is vital that project managers, engineers and safety specialists learn from these.
The most recent leak came in Trinidad, where a government-owned petroleum company spilled a total of 7,500 barrels of oil into the sea. Reports have confirmed that Petronin - the organisation responsible for the pollution - has been fined around $3 million for failings that resulted in the spillage. While this demonstrates the financial implications of an oil leak, the penalty in this case was relatively small when compared with previous examples.
BP received a record $4.5 billion fine for its role in the infamous Deepwater Horizon disaster of 2010. This was easily the worst offshore oil spill in US history and the company admitted to a number of criminal charges. In the aftermath of the incident, the oil and gas giant has spent billions of dollars on response activities.
The organisation has also conducted extensive research, in many cases alongside government bodies, in order to improve its understanding of the Gulf of Mexico. To help increase transparency, the company published new data online in 2013 and plans to add to this in the coming 12 months, enabling others to learn more about the region.
Laura Folse, BP's Executive Vice President for Response and Environmental Restoration, said: "Providing access to this significant body of scientific information will help enhance Gulf-related scientific research and improve the public's understanding of the condition of the Gulf of Mexico.
"Making the data and supporting information available in a usable format is part of BP's ongoing effort to keep the public informed about potential injuries to, and the recovery of, natural resources in the Gulf."
Project managers in Malaysia should familiarise themselves with what caused the Deepwater Horizon disaster and how BP set about rectifying the situation.
Stay up to date with legislative changes
Any project manager or engineer working in Malaysia's energy sector should be familiar with national policies, standards and guidelines.
The BP US spill inevitably led to increased scrutiny of oil and gas companies across the globe and governments were keen to introduce stronger laws to ensure businesses manage risks more effectively and operate in a safer manner. More emphasis has also been placed on the quality of response programmes following an oil leakage.
There have been some sizeable oil spills in Malaysia in the past, which is unsurprising given the growing industrialisation of the country and the fact some of its surrounding waters are used frequently by transporter ships. The Strait of Malacca, for example, is one of the busiest supertanker routes in the world, which means minor boat-related oil leaks are common.
According to the International Tanker Owners Pollution Federation, a National Contingency Plan to combat oil spills off the Strait of Malacca was first set up in 1975 and was amended in 1989 and 2000. This document outlines what should happen in the event of an oil leak and there are different plans depending on the scale of the problem. Companies must ensure they are aware of any amendments that are made to these plans.
In some instances, oil leaks occur when a corporation has become complacent. New technology is being developed all the time to help oil and gas firms ensure their platforms and pipelines are as secure as possible. Businesses that refuse to embrace new ways of working are most in danger of causing an environmental disaster.
Malaysian oil and gas companies are growing in confidence, with economists predicting a significant upturn in trade in the coming years. Some of the world's largest energy projects are based in Southeast Asia, so the region is susceptible to oil spillages.
Countries have been tightening their laws and policies surrounding oil spills since the massive BP spill in 2010 and this has put project managers and senior engineers under more pressure to ensure the very highest safety standards are being met.
This means firms need experienced professionals who have successfully overseen major energy projects in the past. As the DNV GL study suggested, this type of worker is becoming more difficult to find, so businesses need to do all they can to stand out from their competitors.
As the huge fines and reputational damage sustained by BP showed, a sizeable oil spill can be a serious setback and firms must ensure they have done everything within their power to prevent such accidents. Aside from hiring the most talented people, companies can do this by working more closely with government bodies and adopting new technology that enables them to reduce risk.