Member Article

Oil industry liability issues

Spillages, accidents and incidents in the oil industry are inevitably followed by a whole raft of both formal and informal investigations often stretching on for years.

The findings of these inquests and enquiries into what happened in any particular case almost always then inform a raft of litigation where lawyers sit around tables and in court rooms looking at evidence and poring over potential evidence – often with one big question: “who is to blame?”

At the heart of every incident and accident there is always some element of “human error” but the person who made that error is not always out in the field, at the sharp end on board the rig or tanker watching the problem unfold.

Often the “error” that is uncovered was way back in the specification of the equipment that has now failed or contributed to the incident. A buyer weighing up the relative merits of individual pieces of equipment has as much responsibility for safety as anyone else involved in the complex world of oil exploration, extraction and delivery.

Paul Chapman, Managing Director of Litigation, at national law firm Clarke Willmott LLP, said: “If the unthinkable happens, it is about being in as strong a position as possible to withstand the inevitable further steps and questions.

“The best way of dealing with that is to think ahead and to know what you will be saying to justify your decision-making. Being able to show that you selected your equipment because of a specific thought process relating to information which you know matched the circumstances for which you were purchasing it undoubtedly will place you in a stronger position.

“There are always risks in litigation. The primary one is that a Court hears evidence within a limited window. The most compelling evidence is the contemporaneous material available at the time of the decision. Every engineer should be looking at evidence of an item in use in the field from manufacturers before making a decision on whether to purchase one item rather than another.”

Information about buying decisions can provide vital evidence in litigation and show that an organisation has done all it can to mitigate a spillage, accident or incident. When you are buying a vital piece of equipment that is supposed to do a tough job in a marine or other hostile environment then some actual proof it can do the job is vital. This is particularly important when commissioning safety critical equipment.

Having quality information on the capabilities of the item at the centre of an incident makes all the difference between an organisation being held liable for an incident or the liability being placed elsewhere. With almost all projects in the oil and gas sector being multi-agency the lawyers from each party involved require the best quality information on how every decision was made along the way.

For pieces of equipment there are often three types of information that can help to prove that the right kit was specified. These are performance evidence gained from bench testing; software simulation where computer modelling or other “virtual” test procedure has been carried out and finally operational information gained from the performance of the kit in the field in real life situations.

There is no doubt that the most powerful of these is field verified information. To be able to prove that under real-life stresses and strains out in the field the product specified was fit for purpose and did the job that is was acquired for is the best evidence that any lawyer can have at his or her fingertips when involved in contested matters after something has gone wrong.

Having such evidence shows that the organisation concerned has followed industry-standards and purchased tried and tested equipment.

Of course some technologies are completely new and have been recently developed so it is impossible to go back through years of practical evidence to show that it can do the job. In such cases simulation and modelling is the next best evidence, where the test rigs and simulators can be shown to give as realistic a work-out for the kit as possible.

Bench testing may also provide evidence before a tribunal, court or safety inquiry, especially if no other evidence is available but “Field Verified” evidence is stronger.

That is why companies like Gall Thomson are qualified to display the “Field Verified” mark for its Segmented Valve Marine Breakaway Coupling – demonstrating at least three service life cycles in operation – which means at least 12 years consistent in-field performance.

Identifying evidence of proven technology like this during the specifying process will minimise both risk of incident and a compromised position during any consequential litigation.

The Marine Breakaway Coupling is a device fitted to a flexible hose that can prevent spillages in the event of an emergency such as tanker drift during offshore crude oil transfer. In 2015 there were 14 known activations of Gall Thomson Segmented Valve Marine Breakaway Couplings. Each unit performed exactly as expected; protecting nine countries from major oil spills and preventing damage to offshore systems. This demonstrates the advantage to operators of adhering to Field Verified buying policies.

In a global industry best practice is always recommended and in most areas of the world a safety case is required - a safety case is a document that gives confidence to operators, owners, workers and the competent authority that the dutyholder has the ability and means to manage and control major accident hazards effectively.

Around the UK for instance safety cases are required for all installations operating, or to be operated, in external waters. It is an offence to operate an installation in external waters without a safety case that has been accepted by the competent authority.

Being able to show that the equipment used has been verified in the field can form a part of that case. These regulations were all updated as part of the Offshore |Installations (Safety Case) Regulations 2015, as part of the UK’s response to the ED Offshore Safety Directive, which was published in June 2013 to reduce the number of major accidents in the offshore oil and gas sector.

The Directive followed the Deepwater Horizon incident in the Gulf of Mexico in April 2010, an incident that sent the whole industry dashing to look at the regulatory framework and which must have given many engineers and equipment specifiers in the industry sleepless nights.

The strongest evidence in legal cases is where there is firm evidence that a product has been tested in the field alongside evidence that the business in question took note of any intelligence they gained and made any adjustments and changes necessary to their products.

This was posted in Bdaily's Members' News section by Clarke Willmott .