CUTTING COST WITHOUT COMPROMISING SAFETY

Text: Geir Kalleberg, VP Sales & Marketing, MINTRA GROUP

The low oil price has affected safety in the oil industry. Even though a higher oil price in the wake of OPEC’s production cuts will hopefully slow this trend, the industry will need to learn to do more than just cut costs to weather future price decreases.

Many of the cuts to a downsized oil industry have been made in HSE and HR divisions, which are responsible for safety training, disaster-management training and safety-critical competence. Both Norway´s Petroleum Safety Authority and Statoil’s own indicators reveal a rise in the number of serious incidents. The trade union SAFE is concerned, as is Norwegian Confederation of Trade Unions member Industri Energi. In 2016, Norwegian Minister of Labour and Social Inclusion Anniken Hauglie announced that the government would appoint a commission to examine safety in the oil industry in the wake of the current wave of cost cuts.

The Offshore Co-ordinating Group (OCG), consisting of UNITE, RMT, GMB, Nautilus International and BALPA, has expressed similar concerns, stating that “The implications of the current price of oil for the offshore workforce are profound … and there are growing fears over the impact of new working practices on the health and safety regime.” (State of the Industry Report 2016).

Caution is required in establishing causal relationships that are not properly documented, especially when it comes to people’s lives and well-being. At the same time, it cannot be denied that the low oil price has had consequences for investments in safety training in the oil sector. Each day brings new cuts to any training or activities that are not legally required or essential, and a desire for ‘best practice’ is being replaced by a satisfaction with ‘good enough.’

In the short term, cuts are an effective and viable measure in efforts to reduce costs. However, in the long term, this approach is unlikely to secure existing and new revenue flows or the industry’s skills levels and innovation requirements.

The alternative to cost-cutting is to think laterally; businesses need to reconsider their technology use, processes, the way activities are organised, and their collaboration with partners. In particular, knowledge management, HR and safety training offer major potential. This applies across the world, in the oil sector and the maritime sector generally, and specifically in Norway, where we have much to gain from adopting new technology and new solutions.

The traditional, often classroom-based, way of holding courses and performing certification is time-consuming and cost-intensive. However, not all training requires an instructor to be physically present with the learner: knowledge, training, certification and instructions on how to use equipment are well suited to eLearning.

A growing number of advanced HR solutions now cover everything from course administration and implementation to skills reporting for tenders or verifications. Functionality is available that checks course participants’ skills levels before they start a course, so that training is only provided when necessary. This makes it possible to focus more on verifying skills and less on certificates and diplomas.

To realize this potential, the oil industry and maritime sector must get used to the fact that the oil price will be low for some time to come. While OPEC’s production cuts have provided some breathing space, and boosted industry confidence, a strategy of sitting back and waiting for the price to continue an upward trend is neither sustainable nor future-proof. In these circumstances, ‘Good enough’ is neither good nor enough when it comes to safeguarding people’s lives, well-being and the multi-million-dollar installations where they work. Ultimately, there is no way to justify cutting costs when that saving threatens the accepted standards.

Geir Kalleberg, VP Sales & Marketing, Mintra Group

With his broad experience and knowledge from the IT industry, Geir is highly competent in areas such as IT strategy, cloud solutions, security and Big Data. Geir has previously held a number of senior management positions within the IT industry.