IBP1698_12 USE OF SAFETY CASE TO ACCOMPLISH WITH BRAZILIAN REGULATIONS FOR DRILLING UNITS Mariana Bardy1, Paula Dias

Silveira 2, Felipe Sodr3

Copyright 2012, Brazilian Petroleum, Gas and Biofuels Institute - IBP

This Technical Paper was prepared for presentation at the Rio Oi & Gas Expo and Conference 2012, held between September, 1720, 2012, in Rio de Janeiro. This Technical Paper was selected for presentation by the Technical Committee of the event according to the information contained in the final paper submitted by the author(s). The organizers are not supposed to translate or correct the submitted papers. The material as it is presented, does not necessarily represent Brazilian Petroleum, Gas and Biofuels Institute opinion, or that of its Members or Representatives. Authors consent to the publication of this Technical Paper in the Rio Oil & Gas Expo and Conference 2012 Proceedings.

Abstract
The growing operation of foreign oil and gas production and drilling units in Brazilian waters requires special attention to the Brazilian legislation requirements concerning health, safety and environment. Based on this aspect it is essential to an evaluation of Brazilian law applied, especially in relation to requirements established by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), through Resolution N. 43 establishing the Operational Safety Management System (SGSO Sistema de Gesto de Segurana Operacional), compared to international requirements and development of Safety Cases, which are grounded in brief guide for the IADC - International Association of Drilling Contractors called Health, Safety and Environment Case Guidelines for Mobile Offshore Drilling Units. This comparison allows us to assess whether the Safety Case can be used as a basis for compliance with the ANP requirements and whether there are additional requirements that must be in according to. Nevertheless, the development of a Safety Case is a good practice worldwide that must be reinforced in Brazil.

1. Introduction
Given the presence of a large number of foreign companies interested in drilling operations in Brazilian waters and the extensive requirements of Brazilian legislation concerning health, safety and environment, this work aims to verify the contents of the Safety Case proposed by IADC- International Association of Drilling Contractors, meets the requirements of Brazilian legislation, specifically the ANP for the drilling unit. The National Agency of Petroleum, Natural Gas and Biofuels (ANP) is the regulator of activities that integrate the industry of petroleum and natural gas and biofuels in Brazil. It aims to promote the regulation, contracting and monitoring of economic activities in the petroleum industry, in accordance with the legislation, the guidelines issued by the National Energy Policy Council - herewith and in accordance with the interests of the country. The development of Safety Cases is based on the guide IADC - International Association of Drilling Contractors called Health, Safety and Environment Case Guidelines for Mobile Offshore Drilling Units. This guide provides the minimum requirements for the development of a Safety Case According to the IADC, such as Description of the Unit, HSE management system, Risk Management, Emergency Response and Performance Monitoring. The ANP through Resolution No. 43 establishing an Operation Safety Management System (SGSO) for Drilling and Production Vessels of Oil and Natural Gas, aims the maintenance of safety in offshore facilities, in order to protect human life and the environment through the adoption of 17 management practices. The main objective of this paper is to compare the minimum content of a Safety Case developed using IADC Guidelines with the requirements of the ANP, and establish if the Safety Case can be used as a basis for meeting the requirements of SGSO of ANP and verify if additional items are needed for the latter based on their technical regulation.

______________________________ 1 Chemical and Safety Engineer - DNV Risk Advisory Rio Office 2 Chemical and Safety Engineer - DNV Risk Advisory Rio Office 3 Chemical and Safety Engineer - DNV Risk Advisory Rio Office

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2. General Aspects
2.1. Technical Regulation for Health, Safety and Environment Case Guidelines for Mobile Offshore Drilling Units IADC As a result of the initial work undertaken by IADC members in the North West Europe, The Health, Safety and Environment Case Guidelines for Mobile Offshore Drilling Units has been developed for Drilling Contractors, and their scope of operations. Although the Guideline is not compulsory, its use is recommended as a demonstration of good industry practice for Drilling Contractors. This project was initiated following requests by IADC members operating in diverse worldwide locations to improve the cooperation amongst Drilling Contractors, oil and gas producers and coastal state regulators to further promote the harmonization of requirements. This project has brought together IADC members, oil and gas producers and regulators to share a mutual commitment to harmonize and simplify requirements. The success of this industry alliance has contributed to this being a truly global effort. This document has several purposes, including assuring that the risks associated with hazards and sources of hazards have been assessed and that the controls are effective and verifying compliance with applicable regulatory and contractually agreed HSE requirements. The Guideline has been developed to address the requirements of the: European Extractive Industries Directive (EID) 92/91/EEC as incorporated into Danish, Dutch and German legislation and detailed in Appendix 4. European Framework Directive (FD) 89/391/EEC as incorporated into Danish, Dutch and German legislation and detailed in Appendix 4. UK & Norwegian regulatory requirements which, while being very similar to the EID requirements, have been derived from separate backgrounds and are also detailed in Appendix 4. Australian regulatory requirements for Safety Cases, as detailed in Appendix 4. IMOs International Safety Management (ISM) Code, as detailed in Appendix 4. OHSAS 18001- International occupational health and safety management system, as detailed in Appendix 4. These Guidelines contain several Parts, described below, which may be used to develop an effective HSE Case for HSE Management Assurance (See Figure 1):

Figure 1 Parts of the Guideline Part 2 - Drilling Contractors Management System describes the management system and presents HSE management objectives that must be met to demonstrate assurance that HSE risks are reduced to a tolerable level. Part 3 MODU/Rig Description and Supporting Information describes the equipment and systems necessary to meet the HSE management objectives. 2

Rio Oil & Gas Expo and Conference 2012 Part 4 Risk Management describes the Risk Management Process for assuring that the risks associated with a Drilling Operations are reduced to a level that is tolerable to the Drilling Contractor and other stakeholders. In addition, the Risk Management Process described has been developed to comply with requirements of: International Maritime Organization (IMO) International Safety Management Code (ISM). Part 5 Emergency Response describes the HSE management objectives for emergency response of incidents - to mitigate the consequences (severity) identified and the measures to recover. Part 6 Performance Monitoring describes arrangements for monitoring to ensure that the risk management measures identified are implemented, maintained and effective at the workplace.

2.2. Technical Regulation for Operational Safety Management System of offshore facilities for drilling and production of oil and natural gas from ANP Resolution No. 43 - SGSO/2007 The objective of this Technical Regulation is to establish requirements and guidelines for implementation of a Operational Safety Management System (SGSO Sistema de Gerenciamento da Segurana Operacional), aimed at the operational safety of offshore facilities for drilling and production of oil and natural gas, in order to protect humans life and the environment through the adoption of 17 management practices. The 17 Management Practices contained in this Technical Regulation are divided into three major groups, Management Practices (MP) on Leadership, Personnel and Management, Management Practices for the Facilities and Technology and Management Practices on Operational. The detail list is presented bellow on Table 1. Table 1 Management Practices of Operational Safety Management System (SGSO) Management Practices on Leadership, Personnel and Management MP1 - Safety Culture, Commitment and Managerial Responsibility - Values and Security Policy - Organizational Structure and Managerial Responsibility - Communication System - Provision and Resource Planning - Organizational Structure - Training

MP2 - Involvement of Staff MP3 - Staff Qualifications, Performance

Training

and

MP4 - Human Factors and Working Environment MP5 - Requirements for Contractors Selection, Control and Management

MP6 - Monitoring and Continuous Improvement of Performance MP7 - Audits

MP8 - Management Documentations

of

Information

and

MP9 - Incident Investigation

Management Practices for the Facilities and Technology

MP10 - Design, Construction, Installation and Deactivation MP11 - Critical Elements and Operational Safety

- Contractors Evaluation and selection requirements - Operator's Responsibilities - Contractors training requirements - Indicators and Targets for Safety Performance - Performance Monitoring - Audits Planning - Audits Execution - Audits Assessment - Responsibilities in the Management of Information - Access to Information - Investigation Procedures and Organization - Investigation Execution - Corrective Actions - Preventive Actions - Management and Organization - Safety in the Design, Construction, Installation and Deactivation phases - Critical Elements Identification of the Operational Safety - Control and Management of Critical Elements of the Operational Safety

Rio Oil & Gas Expo and Conference 2012 MP12 - Risk Analysis - Types of Risk Analysis - Risk Analysis Methodology - Execution of Risk Analysis Study - Prepare report on Risk Analysis Study - Results analysis and management - Planning, Inspection, Testing, Maintenance and Supply of Materials - Activities Control Requirements - Monitoring and Evaluation Results - Emergency Planning - Response to Major Emergencies - Resource Management Response - Communication System - Simulated Exercises - Review of Emergency Plan - Development and Control of Operating Procedures - Procedures for Starting and Deactivation - Simultaneous Operations - Change Types - Procedures for Control - Work Permission - Monitoring

MP13 Mechanical Integrity

MP14 - Planning and Management of Major Emergencies

Management Practices on Operational

MP15 Operational Procedures

MP16 Change Management MP17 - Safe Work Practices and Control Procedures in Special Activities 2.3. Comparison between IADC and ANP SGSO Requirements

The following table allows a direct comparison between the IADC and ANP requirements. Table 2. Comparison of approaches IADC - Health, Safety and Environment Case Guidelines for Mobile Offshore Drilling Units 1. DRILLING CONTRACTORS MANAGEMENT SYSTEM a) POLICIES AND OBJECTIVES b) ORGANISATION, RESPONSIBILITIES, AND RESOURCES - Organization: Organization Document Management Workforce Participation MODU or Rig Organization - Responsibilities: Senior Management Responsibility Line Management Responsibility Individual Responsibility Regulatory Requirements - Resources: HSE Resources HSE Committee Representation Shore-based and Office Support Clients / Clients Third Parties Catering and Accommodation Medical Support ANP SGSO Requirements Covered by: MP 1: Safety Culture, Commitment and Managerial Responsibility / Values and Security Policy Covered by: MP 1: Safety Culture, Commitment and Managerial Responsibility / Organizational Structure and Managerial Responsibility MP 2: Involvement of Staff MP 8: Informations Management and Documentations / Responsibilities in the Management of Information MP 1: Safety Culture, Commitment and Managerial Responsibility / Organizational Structure and Managerial Responsibility

MP 1: Safety Culture, Commitment and Managerial Responsibility / Provision and Resource Planning

Rio Oil & Gas Expo and Conference 2012 IADC - Health, Safety and Environment Case Guidelines for Mobile Offshore Drilling Units - Competence: Selection of Drilling Contractors Personnel Selection of Contractor Personnel Competence Assessment and records Training Induction Programmer c) STANDARDS AND PROCEDURES - Planning and Risk Management - Management of Change - Emergency Preparedness and Response - Permit to Work System - Safe Working Practices - Environmental Management / Protection - Occupational Health - HSE Procedures - HSE Communication - HSE Alerts and Bulletins - MODU/Rig Security - Engineering Management ANP SGSO Requirements MP 3: Staff Qualifications, Training and Performance / Organizational Structure and training MP5: Requirements for Contractors Selection, Control and Management / Contractors Evaluation and selection requirements / Operator's Responsibilities / Contractors training requirements Covered by: MP 12: Risk Analysis MP 16: Change Management MP 14: Planning and Management of Major Emergencies MP 17: Safe Work Practices and Control Procedures in Special Activities / Work Permission Other National Regulations Other National Regulations Other National Regulations MP 1: Safety Culture, Commitment and Managerial Responsibility/ Communication System MP 10: Design, Construction, Installation and Deactivation MP 17: Safe Work Practices and Control Procedures in Special Activities MP 15: Operational Procedures / Development and Control of Operating Procedures / Procedures for Starting and Deactivation / Simultaneous Operations

- Drilling and Well Control Operations Simultaneous and Combined Operations Bridging Documents Simultaneous and Combined Operations Risk Assessments - Marine Operations and Site Assessment Adverse Weather / Support Vessels / Site Assessment - Lifting Operations and Material Handling - Logistics Management Personnel Tracking / Helicopter Operations - Hazardous and Radioactive Substances - Procurement Management

- Maintenance Management - Contractor Management d) PERFORMANCE MONITORING - Periodic Monitoring

- Incident Reporting and Analysis - Behavior-Based Observation Systems - Environmental Monitoring and Measurement - Audit and Audit Compliance - Certification - Verification of HSE Critical Activities/Tasks and Equipment/Systems

MP 12: Risk Analysis MP 14: Planning and Management of Major Emergencies International Regulations International Regulations Other National Regulations Other National Regulations MP5: Requirements for Contractors Selection, Control and Management / Contractors Evaluation and selection requirements / Operator's Responsibilities / Contractors training requirements MP 13: Mechanical Integrity MP5: Requirements for Contractors Selection, Control and Management Covered by: MP 6: Monitoring and Continuous Improvement of Performance / Indicators and Targets for Safety Performance / Performance Monitoring MP 9: Incident Investigation / Investigation Execution MP 3: Staff Qualifications, Training and Performance / Organizational Structure / Training Other National Regulations MP 7: Audits MP 11: Operational Safety Critical Elements / Critical Elements Identification of the Operational Safety

Rio Oil & Gas Expo and Conference 2012 IADC - Health, Safety and Environment Case Guidelines for Mobile Offshore Drilling Units e) MANAGEMENT REVIEW AND IMPROVEMENT ANP SGSO Requirements MP 6: Monitoring and Continuous Improvement of Performance / Indicators and Targets for Safety Performance / Performance Monitoring Covered by: Part of Safety Operational Description of the Unit from ANP Regulation

2. MODU / RIG DESCRIPTION AND SUPPORTING INFORMATION a) GENERAL INFORMATION b) PRIMARY STRUCTURE c) DRILLING, COMPLETION AND WELL CONTROL d) PLANT AND UTILITIES e) FIRE AND EXPLOSION PROTECTION f) EVACUATION AND ESCAPE SYSTEMS g) ACCOMMODATION h) WELL TESTING i) DIVING SUPPORT (WHERE APPLICABLE) j) OTHER THIRD PARTY EQUIPMENT 3. RISK MANAGEMENT a) RISK ASSESSMENT - Risk Analysis/ Risk Evaluation b) RISK TREATMENT - Risk Avoidance / Risk Optimization / Risk Transfer / Risk Retention c) RISK ACCEPTANCE d) RISK COMMUNICATION 4. EMERGENCY RESPONSE a) EMERGENCY RESPONSE MANAGEMENT - Emergency Response Philosophy - Emergency Response Analysis and Plan b) COMMAND AND COMMUNICATION - Command During Emergencies - External Emergency Response Support - Communications c) TRAINING FOR EMERGENCIES - Emergency Response Training - Drills and Exercises - HSE Inductions d) TEMPORARY REFUGE ASSESSMENT - Temporary Refuge (TR) Concept and Description - Loss of the Temporary Refuge (TR) Integrity e) DETAILS OF EVACUATION AND ESCAPE EQUIPMENT - Evacuation and Escape Systems - Means of Recovery to a Place of Safety 5. PERFORMANCE MONITORING a) PERIODIC MONITORING - Incident Reporting and Analysis - Behavior-Based Observation Systems - Health/Environmental Monitoring and Measurement b) AUDIT AND AUDIT COMPLIANCE c) VERIFICATION OF HSE CRITICAL ACTIVITIES/TASKS AND EQUIPMENT/SYSTEMS d) CERTIFICATION

Covered by: MP 12: Risk Analysis.

Covered by: MP 14: Planning and Management of Major Emergencies Other National Regulations

Shall be identified on the layout according to ANP, it is not a mandatory requirement from ANP MP 14: Planning and Management of Major Emergencies

Covered by: MP 9: Incident Investigation / Investigation Execution MP 3: Staff Qualifications, Training and Performance / Organizational Structure and training Other National Regulations MP 7: Audits MP 11: Operational Safety Critical Elements / Critical Elements Identification of the Operational Safety Other National Regulations

SGSO - Operational Safety Management System / Sistema de Gerenciamento da Segurana Operacional (ANP Resolution No. 43) MP- Management Practice/Prtica de Gesto

Rio Oil & Gas Expo and Conference 2012 2.4. General Comments Analyzing the requirements presented on both IADC and ANP, some ANP SGSO requirements can be identified as not covered by IADC Guideline and shall be included, by foreign companies interested in drilling operations in Brazilian waters, in the their Operational Safety Management System. These items are presented below: Management Practices on Leadership, Personnel and Management: MP4: Human Factors and Working Environment, item 4.2; MP8: Informations Management and Documentations, Item 8.3; MP9: Incident Investigation, items 9.2 and 9.4 and 9.5. Management Practices for the Facilities and Technology MP11: Critical Elements and Operational Safety, item 11.3; MP13: Mechanical Integrity, items 13.2 and 13.3 and 13.4;

3. Other Brazilian Requirements

It is important to emphasize that there are other requirements from Brazilian legislation that must be adopted, such as standards from Brazilian Ministry of Labor, Brazilian Navy Directorate for Ports and Coasts, IBAMA (Brazilian Institute of Environment and Renewable Natural Resources) and National Council for the Environment (CONAMA). The Ministry of Labor (MTE) through supporting regulations, codes of practice and guidelines introduce prescriptive elements for the health and safety at work. The underlying principle is that every employer shall ensure so far as is reasonably practicable the health and safety at work of all employees and protect the environment. Among the laws established by Ministry of Labor, special attention shall be given to the following Standards: NR4 - Specialized Services in Safety Engineering and Occupational Medicine; NR5 - Internal Commission for Accidents Prevention; NR6 - Personal Protective Equipment; NR7 - Medical Control and Occupational Health Programs; NR8 Buildings; NR9 - Environmental Risks Prevention Program; NR10 - Safety in Installations and Electrical Systems; NR11 - Transport, Storage and Handling of Load and Materials; NR12 - Machines and Equipment; NR13 - Pressure Vessels; NR15 - Unhealthy Activities and Operations; NR16 - Hazardous Activities and Operations; NR17 - Ergonomics; NR18 - Work Environment and Conditions in the Construction Industry; NR23 - Fire Protection; NR24 - Comfort and Health Conditions in Workplaces; NR25 - Industrial Waste; NR26 - Safety Signs; NR30 - Regulation Standard of Health and Safety at Waterway Work; NR32 - Health and Safety at Work in Health Facilities; NR33 - Health and Safety at Work in Confined Spaces. NR34 Conditions and Work Environment for Construction and Repair Maritime Industry

The Brazilian Marine Authority (DPC, under the Ministry of Navy) main document establishes the conditions for foreign vessels operation in Brazil in the NORMAM 04/DPC 2003 (Norms of the Maritime Authorities) (in particular item 0119 - General Requirements and 0128 - Drilling, Production, Storage and Offloading Floating production units, drilling units, FPSO, PSO). This is the most important NORMAM for the foreign flag platform on Brazil. The NORMAM are issued and controlled by DPC. There are 24 norms approved by DPC. Although only 8 norms were identified as applicable to Offshore Drilling Units: NORMAM 01 - Ships Used for Open Sea Navigation; NORMAM 04 Standards of the Maritime Authority for the Operation of Foreign Ships in Waters under National Jurisdiction; NORMAM 05 Standards of the Maritime Authority for Material Homologation; NORMAM 08 Traffic and Permanence of Vessels in Brazilian Jurisdiction Waters; NORMAM 15 Maritime Authority Standards for Sub-aquatic Activities; NORMAM 17 Navigation Aids (DHN); NORMAM 20 Vessels Ballast Water Management. A technical survey will be done by the DPC, at all foreign units for exploration or production, with the 7

Rio Oil & Gas Expo and Conference 2012 objective of guaranteeing the operational safety, navigation, salvage, fire protection and pollution prevention. During this survey will be checked the material terms, equipage, crew (functions, skills, passports numbers and governments responsible for issuing them) and the documentation demanded by the applicable Brazilian legislation, requirements of the Rules of the Marine Authority - NORMAM, and of the National Civil Aviation Agency - ANAC (helideck), and by international conventions ratified by the Brazilian government. Regarding the environment, all operators need to comply with IBAMA (Environmental Authority under the Ministry of Environment) and CONAMA (National Council for the Environment) requirements to develop their activities. Resolution No 23 from December 7th 1994, from CONAMA, defines that drilling activities and production of oil and natural gas depends on environmental permit in the terms of the above mentioned Resolution. There are other Resolutions, such as CONAMA Resolution No 237, from December 19th, 1997 which defines that drilling activities and production of oil and natural gas depends on environmental permit approving its localization and conception, testifying its environmental viability and establishing conditional and basic requirements. Finally, beyond the national legislation, all foreign vessels aiming to obtain the clearance to operate in Brazilian waters ought to be classified and own certificates emitted in conformity with the conventions and international codes ratified by Brazil, issued by a Classification Society, with representation in the country, which is entitled to issue those certificates on behalf of the Brazilian government. For effect of these rules, the classified vessel is that which owns Class Certificates of Hull and Machines, without any condition of class that pledges the safety of the vessel. Based on those national requirements described above some items from IADC not covered in the ANP SGSO will be requested for those organisms. The list of those IADC requirements and Brazilian legislation is presented below.

4. Summary of Results
Considering all regulations analyzed during this process, we can summarize as follow: IADC requirements are fully covered by Brazilian regulations, either ANP, CONAMA, DPC, MTE or ANAC. Some Brazilian requirements are not included on any of IADC specification for the Safety Case, especially from ANP see item 2.4. Table 3 presents of summary of the IADC requirement and which Brazilian entity is responsible for looking into that particular issue. Table 3 Correlation between IADC Requirements and Entity Responsible in Brazil IADC - Health, Safety and Environment Case Guidelines for Mobile Offshore Drilling Units 1. Drilling Contractors Management System a) Policies and Objectives b) Organisation, Responsibilities and Resources c) Standards and Procedures d) Performance Monitoring 2. MODU / Rig Description and Supporting Information 3. Risk Management 4. Emergency Response a) Emergency Response Management b) Command and Communication c) Training for Emergencies d) Temporary Refuge Assessment e) Details of Evacuation and Escape Equipment 5. Performance Monitoring a) Periodic Monitoring b) Audit and Audit Compliance c) Verification of HSE Critical Activities/Tasks and Equipment/Systems d) Certification Brazilian Entity

ANP ANP ANP; CONAMA; MTE; ANAC CONAMA ANP ANP CONAMA CONAMA CONAMA Not Covered by Brazil ANP CONAMA ANP ANP DPC

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5. Conclusions
The IADC HSE Case Guideline provides the minimum requirements for the development of a Safety Case, such as Description of the Unit, HSE management system, Risk Management, Emergency Response and Performance Monitoring, being a good practice that must be reinforced with companies operating in Brazil. These requirements are according to ANP Resolution No. 43 and can be used as a basis for compliance with the ANP requirements. However, the safety case must be reviewed including additional requirements established in ANP Resolution No. 43 to guarantee its full compliance. It is important to emphasize that there are other requirements from Brazilian legislation that must be adopted such as standards from Brazilian Navy Directorate for Ports and Coasts (DPC), IBAMA (Brazilian Institute of Environment and Renewable Natural Resources), National Council for the Environment (CONAMA) and Brazilian Ministry of Labor. Some of these regulations are not included by IADC and shall be followed as well. Beyond that, all foreign vessels aiming to obtain the clearance to operate in Brazilian waters ought to be classified by a Classification Society and own certificates emitted in conformity with the conventions and international codes ratified by Brazil. The Guidelines from IADC and ANP Resolution No. 43 analysis show us that the Safety Case is an important resource that whether reviewed including additional requirements established in ANP Resolution No. 43 and Brazilian Legislation shall permit foreign vessels support implementation of ANP requirements to operate in Brazilian waters. It is important to mention that the Safety Case is a document, developed based on the conditions of operation and available documentation of the companys management system, but the company needs an additional effort to follow all procedures indicated on the Safety Case in order to achieve compliance with ANP Regulation No. 43.

6. References
ANP, Resolution 43, 06/12/2007 IADC, Health, Safety and Environment Case Guidelines for Mobile Offshore Drilling Units, Issue 3.2.1, 1 May 2009, Copyright 2009 IADC. CONAMA Resolution No 001 January 23th, 1986 CONAMA Resolution No 237 December 19th, 1997 CONAMA Resolution No 357 March 17th, 2005 CONAMA Resolution No 382 December 23th, 2006 CONAMA Resolution No 393 August 8th, 2007 CONAMA Resolution No 398 June 11th, 2008
Ministry of Labor Normas Regulamentadoras 04, 05, 06, 07, 08, 09, 10, 11, 12, 13, 15, 16, 17, 18, 23, 24, 25, 26, 30, 32, 33 and 34.