SPE 94020

Managing Process Risk of Field Facilities

J.E. Johnstone, SPE, Contek Solutions LLC, and J.R. Jensen and R.P. Stegall, BP America Production Co.

Copyright 2005, Society of Petroleum Engineers Inc.

This paper was prepared for presentation at the 2005 SPE/EPA/DOE Exploration and Production Environmental Conference held in Galveston, Texas, U.S.A., 7 9 March 2005.

This paper was selected for presentation by an SPE Program Committee following review of information contained in a proposal submitted by the author(s). Contents of the paper, as presented, have not
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Abstract

Managing the risk of oil and gas field facilities is necessary to assure that operations do not pose a significant
hazard to the public or those individuals who operate and maintain them. This paper reviews the efforts of BP to
implement a company-wide program to manage the risk of oil and gas field facilities.

The growth of BP over the past few years has brought together properties from many different companies in
varied geographic locations. BP was challenged with having to safely operate thousands of wells, pipelines,
compressors and field separation facilities built to different standards, throughout several generations, in many
different states. A new approach was needed to provide assurance that these facilities were constructed and
operated safely.

The process to assure that facilities were constructed and operated in a safe manner was broken down into series
of steps. The first step was to define risk factors. These factors included rates, pressures, proximity to public
areas and the composition of produced fluids. After defining the risk factors, it was necessary to establish
design and operational requirements to mitigate the risk. These included use of safety devices, facility design,
hazard mitigation measures and management systems. Next, each facility had to be "graded" against the risk
factors to determine the relative risk of each facility. Equipment, operational or management system changes
had to be next determined for each facility, if necessary. Finally, modifications to the equipment or operating
systems to mitigate the risk were implemented.

This paper discusses each of these steps in detail, which BP employed to mitigate operational risk at its oil and
gas field facilities.

Introduction

Embarking on a program to examine every well, separator, tank and compressor to assure that it is being used in
a safe manner involves tremendous effort, time and cost. The first question that needs to be addressed is how a
company justifies such a program. After all, BPs producing operations in Texas and Oklahoma have not been
in the headlines or have been perceived by the public as being a major risk hazard. So why spend hundreds of
thousands of dollars to bring facilities up to a common standard? Will doing this improve BPs extremely good
operating record when it comes to catastrophic equipment failures that could harm the public or the
environment? The answer lies in BPs core values and policies.
2 SPE 94020

The goal of BPs Health and Environmental policy, which sets the foundation for Health, Safety, Security and
Environmental, (HSSE) practices is quite simple, No accidents, no harm to people, and no damage to the
environment. BP further states, as part of the policy in establishing the HSSE Management System framework
that BP will, Fully participate in hazard identification and risk assessments, Assurance Management System
Assessments and reporting of HSSE results.

Like many companies, BP has established a management system for implementing HSSE goals and policies.
One of the HSSE Management System Framework elements is:
Risk assessment and management
Management of risk is a continuous process and the cornerstone of all the HSSE
elements. We will regularly identify the hazards and assess the risks associated
with our activities. We will take appropriate action to manage the risks and hence
prevent or reduce the impact of potential accidents or incidents.

BP Americas Continental United States Operations

The operations under BP Americas control in the Continental United States are the result of several recent
mergers and acquisitions. Notably, the North American operations of Amoco, Arco and Vastar were merged in
the early 2000s. The properties that these companies owned also included several major acquisitions including
Maxus, Union of Texas and others. The result is that there are over 10,000 individual properties located in
North America that have been brought under common operatorship in only the last five years.

These 10,000 properties range from single well low-pressure sweet gas wells drilled 50 years ago, to highly a
complex modern sour gas treating plant processing 2 BCFD of gas. Geographically, they are located in the
Rocky Mountains, in the plains of Texas and Oklahoma or situated in the wetlands of Louisiana. Properties may
be found miles from the closest public road or in the playground of a school.

One can only imagine the diversity in the wells and facilities having been drilled or built by literally hundreds
of operating companies over the past 50 or more years. Each operator and generation of engineers built the
facilities to varying standards and operating conditions. All of these thousands of differing facilities have been
brought under the operatorship of one company.

Over time the operating risk of these wells and facilities has varied as conditions have changed. Roads, houses,
schools, and businesses have sprouted near some wells. Industry codes and standards have changed
dramatically. States, Counties, Parishes and local governments have developed new expectations and
regulations about how E&P activities should be operated.

Challenge to BPs Management

The conditions that BPs North American operations were faced with included:
A HSSE policy of no harm
Corporate policies of ongoing hazard evaluation and risk reduction
Thousands of facilities built by hundreds of companies to different codes, and standards.
Wells and facilities scattered throughout a wide geographic region with some being located miles
from the nearest person and others in the backyards of homes.

The challenge had been made. How did BP address this issue?
SPE 94020 3

A Plan is Established

The Onshore Business Unit took the initiative and developed a Hazard Evaluation Practice. The practice
established that:

Hazards associated with design, construction and operation must be identified and evaluated.
New facilities should have hazard evaluation throughout process
Existing facilities to be risk weighted to evaluate hazard

Two very important issues arose for the people responsible for existing operations. The first and last bullets
clearly apply to existing operations. The practice clearly requires that existing facilities must undergo a hazard
evaluation and that a risk weighting exercise had to be carried out to help evaluate the hazard.

Identifying Hazards

BP, consistent with their HSSE policy, decided to first focus primarily on hazards that could result in harm to
humans or the environment. Past incidents of harm were examined to determine the highest hazards posed by
oil and gas production. The review of past incidents showed that the primary hazards of oil and gas production
to the public and the environment were: fire, explosion, exposure to toxic (hydrogen sulfide) gas and liquid
discharges to surface waters.

Determining a Hazard Review Methodology

The policy stated that a hazard review had to be conducted, but what type? Safety professionals have
established a myriad of hazard analysis techniques including HAZOP, Fault Tree, Checklist, What If?, Event
Tree analysis, FMEA, probabilistic risk analysis and others. Each of these has its advantages and disadvantages
for each particular set of facilities. Some require a great deal of time; bringing in outside experts, gathering of
data, group meetings, computer simulations and other types of resources. So which one is best for looking at
thousands of existing wells and facilities?

First, it was determined that gas plants and other facilities subject to OSHAs Process Safety Integrity
Management regulations would not be a part of this study. These facilities already had a process in place to
meet the companys policies and had numerous process hazard evaluations and audits conducted over the years.

Conducting hazard evaluations and analysis on the huge number of individual well sites and pipelines was
something completely different than the traditional individualized process hazard analyses. To evaluate the
thousands of wells, pipelines and field facilities it was determined that the best method was to use a checklist
approach. Checklists are a proven method for determining hazards. It is a very uniform method that can be
applied to all facilities. The reliability of checklists is good, as checklists developed in the past have proven to
cover 99% of incidents that resulted in harm to humans or the environment. The checklist approach also allows
for a very timely analysis of the facilities.

The checklist was comprised of items determined from operating experience and historical information about
incidents that occurred in the past. However, the operating groups would be free to use a more rigorous method
for their facilities, if desired.

It was quickly realized that different checklist had to be developed for the different types of properties. A
checklist for a producing well would not necessarily be adequate to evaluate a compressor or pipeline system.
4 SPE 94020

Additionally, it was realized that some facilities were inherently elevated risk while others posed a somewhat
lower risk. Checklist were developed for wells, compressors and pipeline segments.

It was necessary to categorize facilities by the type of equipment in use, and secondly by the risk that each
facility posed to the public or the environment. Categorizing facilities into like groupings based on perceived
risk, allowed for a consistent approach, independent of locale or local perceptions. It allowed managing these on
a Business Unit basis.

Categorizing Facilities

The next step was to determine the categories of field facilities to be used in the analysis. Facilities included in
this review, consisted of gas and oil operations. Equipment associated with each well production may be as
simple as a single wellhead flowing into a sales line to highly complex gas plants. Categories were developed to
determine the relative risk consequence of each well and associated facilities.

Facilities associated with gas production included well site equipment (i.e.: wellhead, heaters, vessels,
compressors, dehydration units, tanks etc.), pipeline networks and gas plants. Facility associated with oil
production included well site equipment (wellhead, artificial lift equipment, etc.), gathering pipeline systems,
processing (separators, heater treaters, etc.), water disposal (tanks, pumps, meters, clarifiers etc.) and sales
(tanks, metering equipment, pumps, pipeline segments etc.).

The following categories were developed to assist in determining risk:

1. Pressure Systems (Surface equipment i.e. dehydration, separation, treating, sweetening and offsite
compression.)
2. Pipelines (off well site locations)
3. Wells and Well Sites (All equipment at the well site, including wellhead and artificial lift equipment)

Determining Relative Risk of each Facility

Several industry and regulatory standards were used to assist in the determination of setting up risk criteria
for facilities. These standards included:

1. OSHA 1910.119 Process Safety Management

OSHA has issued the Process Safety Management of Highly Hazardous Chemicals standard (1910.119),
which contains requirements for the management of hazards associated with processes using highly
hazardous chemicals. OSHA's standard emphasizes the management of hazards associated with highly
hazardous chemicals and establishes a comprehensive management program that integrates technologies,
procedures, and management practices. Generally, facilities must store or contain large quantities of
hazardous substances to be covered under PSM.

2. EPA Risk Management Planning

The rule, which built upon existing industry codes and standards, requires companies of all sizes that use
certain flammable and toxic substances to develop a Risk Management Program. The EPAs standard
includes a hazard assessment, implementation of a prevention program and development of an emergency
response plan if an incident should occur. Generally, oil and gas-producing facilities, which are subject to
OSHA Process Safety Management, are subject to the EPAs Risk Management Planning.
SPE 94020 5

3. DOT Pipeline Safety Regulations

The U.S. Department of Transportation (DOT) to develops and enforces minimum safety regulations for the
transportation of gases by pipeline. The gas pipeline safety regulations apply to natural gas systems and
operators of natural gas master meter systems. The pipeline safety regulations require operators of natural
gas systems to: deliver gas safely and reliably, provide training and written instruction for employees;
establish written procedures to minimize the hazards resulting from natural gas pipeline emergencies; and,
keep records of inspection. Additionally, operators of all natural gas systems, must test employees in safety-
sensitive positions for prohibited drugs and alcohol and provide an employee assistance program. Generally,
transmission lines from gas plants or lines specifically used to deliver pipeline quality fuel gas to facilities
are covered by the DOT pipeline safety regulations.

4. ASME 31.8 840.22 Pipeline Classification

The ASME in B31.8 840.22 has established a method to classify pipelines relating primarily to their
proximity to population in the vicinity of the pipeline. These classes are defined in B31.8 Clause 840.22 as
follows:

Class 1: Any one-mile section that has 10 or fewer building intended for human occupancy.
Class 2: Any one-mile section that has more than 10 but fewer than 46 buildings intended for
human occupancy.
Class 3: Any one-mile section that has 46 or more dwellings intended for human occupancy
except where a Location Class 4 prevails.
Class 4: Location Class 4 includes areas where multi-story buildings are prevalent, where traffic
is heavy or dense, and where there may be numerous other utilities underground.

4. ASME 31.8 Chapter IX and NACE Standard MR0175

Under these standards, a facility is considered sour if its gas contains hydrogen sulfide (H2S) at 65 psia (4.5
bar) or greater at a partial a partial pressure of 0.05 psia (3.5 bar) or greater. NACE MR0175 contains charts
and information for determining the partial pressure of H2S at varying pressures.

5. API Specification 6 Annex A

The API Specification 6 lists the hazard classes for different types of wells. These are:
PSL 1: Sweet production under 5000 psi. or NACE oil well with low H2S concentration under
5000 psi.
PSL 2: Sweet oil well between 5000 and 15000 psi., NACE oil well over 5000 psi, or NACE gas
well with low H2S concentration under 5000 psi.
PSL 3: Sweet gas well over 5000 psi., NACE gas well with low H2S concentration over 5000
psi., NACE oil well with high H2S concentration over 5000 psi., or sweet oil well over 15000
psi.
PSL 3 G: NACE gas well with high H2S concentration over 5000 psi., or a sweet gas well over
15000 psi., or any high H2S concentration well over 15000 psi.

The above standards addressed large facilities (OSHA PSM, EPA RMP), pipelines (DOT, ASME 31.8),
hydrogen sulfide (ASME 31.8 Chapter IX and NACE Standard MR0175) and wells (API Specification 6 Annex
A). However, these standards did not address specifically the hazards resulting the heat generated by a specific
fire or the radius of exposure in the event of a hydrogen sulfide leak. To address these two issues, the radiant
6 SPE 94020

heat exposure contours and hydrogen sulfide radius of exposure (using Texas Railroad Commission Rule 36
methodology) was used.

Risk Analysis

Risk is defined at the likelihood of an incident occurring and the severity of the consequences.

Below is a typical risk matrix used in the industry:

Consequence Probability
Harm to Once >25 Once every Once 3-12 Once 1-3
Harm to Env > Once yr
People yrs 12-25 yrs years years
Total
Fatalities Containment
Loss
Permanent > 1000 bbl
Disability spill HIGH
Hospital >100 bbl
Stay spill on site MEDIUM
Days Away <100 bbl
from Work spill on site

< 1bbl
First Aid contained LOW
spill
Table 1- Risk Analysis

The risk receptor is also critical to the analysis. This analysis focused primarily on the risk to the public and the
environment. The public can be defined as the proximity to a road, dwelling, business, or pubic facility. Risk to
the environment is focused on the spilling of hydrocarbon fluids outside of containment structures.

Relative Risk Criteria

The relative risk of each different type of facility for the service it was operating in was achieved by combining
the past history of events, risk matrices, and industry standards. Relative risk was divided into high, medium
and low categories.

The following categories were set for each of the different types of facilities.

Pressure Systems

High: Subject to OSHA PSM, EPA RMP or DOT regulations; public area within 5 kw/m2 radiant
heat contour.
Medium: Handling more than 500 BOPD; public area within 1.75 to 5 kw/m2 radiant heat contour.
Low: Handling less than 500 BOPD; public area outside the 1.75 kw/m2 radiant heat contour.

Pipelines

High: Subject to DOT regulations, Class 3 or 4 under ASME B 31.8 840.22 or Sour per ASME
31.8 Chapter IX; within mile of surface water
SPE 94020 7

Medium: Class 2 under ASME B 31.8 840.22; within mile of dry wash
Low: Class 1 under ASME B 31.8 840.22

Wells & Well Sites

High: Public site located within 5 kw/m2 radiant heat contour or if H2S> 100 ppm and the ROE
@100 PPM > 50 and includes any part of a public area except a paved road or ROE @ 500 PPM >
50 and includes a paved road or ROE @ 100 PPM > 3000. Non- hydrocarbon wells rated PSL-3 or
PSL 3-G under API Specification 6A
Medium: Public site located between the 1.75 kw/m2 and 5 kw/m2 heat contour or if the H2S is >50
PPM and the site is not a high consequence. Non hydrocarbon wells rated PSL-2 under API
Specification 6A.
Low: Public site is not subject to heat exposure greater than 1.75 kw/m2 and H2S is less than 50
PPM. Non-hydrocarbon wells rated PSL-1 under API Specification 6A

Development of the Collective Review Hazard Mitigation Requirements

A list of acceptable management systems and equipment requirements was next developed to mitigate possible
hazards.

BP gathered a team of operational, topic and subject experts who collectively identified potential hazards for
typical operation types. The next step was to develop responses to the identified potential hazards for each of
the consequence categories. This enabled the risk ranking (high, medium or low) to define the hazard response.
Use of this technique automatically defined acceptable responses such that if the responses were implemented
that the risks are deemed acceptable.

Options were still available if the local operating group determined that the automatic collective review
response was impractical. The risk could be mitigated in other ways or accepted at a defined level provided that
further reviews were conducted and management approvals were obtained.

The Collective Review Checklist

Table 2 shows a summary of the collective review checklist that was developed for wells and well sites. This
table provided direction for the field operations and engineering personnel to evaluate existing field facilities
and to determine a list of changes, if required.

The table is broken down into different hazards and the responses necessary mitigate the hazard for a well site.
8 SPE 94020

Table 2 - Well/ Wellsite Hazard Response

Hazard Response Low Med. High Hazard Response Low Med. High
Damage to equipment Management
Proper access X X X Written operating procedures X X X
Catwalks over piping X Operator training on procedures X X X
Operators knowledgeable about low
Signs X X X X X
temperature brittleness
Awareness X X X
Manage Encroachment X X X Corrosion
Gates & Locks X Inspect under insulation per Co. manuals X X X

Fire Pressure
Proper spacing of equipment X X X Lines
Test heater thermostats X X X -Well ESD for PSH on flowlines X
-Backflow preventors from gas gathering
Test glycol for corrosion potential X X
lines
Inspect fire tube every 5 years X -Sand probe ESD (if warranted) X
Inspect fire tubes when available X X X -Cathodic Protection (if warranted) X
Leak check fittings in enclosed areas X X X -Hydrotesting (if warranted) X
Bond/ ground trucks X X X Vessels
Blanket gas system on tanks X -ASME code stamped X X X
Ground tanks X X X -PSVs installed & properly sized X X X
No fiberglass tanks in hydrocarbon service X X X -Eliminate rupture discs X
-ESD well on LSH X
Spill
Dike all vessels X Maintenance
Dike SPCC vessels X X X Test vessel dump valves on vessels X X
Dedicated walkways X Test safety critical equipment X X X
Tanks: Use API-570 inspection program for lines X X X
-Proper pressure and vacuum reliefs X X X Inspect vessels and tanks per Co. manuals X X X
-Use API tanks X X X Test relief devices per Co. manuals X X X
-LSH level alarm and call out on tanks X X Annual visual corrosion inspection of lines X
-LSHH well shut down (if warranted) X Hydrotesting of lines (if warranted) X
-Proper load scheduling X X X
Hydrogen Sulfide
Safety Systems No copper or copper alloy materials X X X
Procedures to prevent bypassing X X X Wind indicators X X X
Energy isolation needs built into equipment X Follow local H2S requirements X X X
Follow local and TNRCC Rule 36
Energy isolation needs added as needed X X X
requirements
Electrical equipment suitable for area
X X X NACE MR 01-75 Materials X X X
classification
Use fail close dump valves on vessels X X Keep leak history X X X
Repair as needed X X X
Use ball checks on sight glasses X X X

Vents/ Stacks
Route to safe location X X X

High/Low Temperatures
Assure piping rated (high) X X X
Consider signs barriers on hot surfaces X X X
Prevent freezing from ambient temperatures X X X
SPE 94020 9

Texas Panhandle Experience

Implementation of a program that involved the risk ranking, evaluation and development of recommendations
for over 1700 different facilities in the panhandle portions of Texas is a formidable task. The program was
broken down into specific tasks, resources provided and personnel assigned.

The first step was to determine the relative risk ranking for each well/wellsite, pressure system or pipeline. This
was accomplished by using a spreadsheet that calculated the different radiant heat contour lines and hydrogen
sulfide exposure limits. Production or capacity data from each well, pressure system or pipeline was input into
the spreadsheet. The spreadsheet then determined the radiant heat contours and the radius of exposure for
hydrogen sulfide gas. Additionally, the user input the distance to the nearest public area and if a SPCC plan was
required. The relative risk level (high, medium or low) was then calculated by the spreadsheet.

A field review of all well/ wellsites, pressure systems and pipelines was conducted next. Technical
professionals were sent to each field location to conduct a:
Comparison of the on-site equipment with the collective review checklist,
Verification of nameplate data on tanks, vessels and pressure safety devices,
Development of a list of safety critical equipment requiring periodic maintenance.
Drawing a process flow diagram used to determine piping ratings etc.
Drawing a plot plan used to determine equipment layout, electrical classification boundaries and spill
containment

Additionally, the field review teams conducted interviews with operations and engineering personnel to
determine the status of various management system programs. These programs included operator training,
dealing with third party encroachment, maintenance, corrosion protection measures and safety systems.

Field data was then analyzed to determine corrective measures (if necessary). A database was employed to
record compliance with the collective review checklist, nameplate data (vessels, relief devices, tanks) and other
on-site observations. The database then generated several different reports containing:
Required facility modifications to meet the collective review requirements
Safety critical equipment list (to be included in scheduled maintenance activities),
Nameplate data (tanks, vessels and relief devices)

Additionally, calculations were made to assure that the relief valves were sized properly for the intended service
and that any secondary containment volume could handle the intended volume.

Field construction and maintenance crews made corrective measures to the sites. Generally, these activities
included upgrading facilities in accordance with the collective review checklist (berms, grounding equipment,
installing bonding for trucks, signs etc.). Safety Critical Equipment (i.e. relief valves, pressure sensors, level
sensors etc.) was added to the maintenance schedules. Operating practices such as implementation of API 570,
operator training, dealing with third party encroachment were also updated to meet the needs of the collective
review requirements.

Results

Results from program included:

Process established for assuring field installations meet minimum equipment and operating standards
Inspection of wells and field facilities by technical professionals whose goal was to improve operational
safety of each facility.
10 SPE 94020

Common items found to require changes included:

o Installation of warning signs
o Grounding of equipment
o Bonding/ grounding of truck loading areas
o Identification of third parties unnecessarily on-site
o Replacement of pressure vessels
o Replacement of tubing, fittings and piping
Development of process flow diagrams and plot plans for each well/ wellsite, pipeline and pressure
facility.
Implementation of more comprehensive maintenance practices.

Conclusions

One of the many concerns going into this project where the large number of wells, tank batteries, compressor
stations and other facilities that had to be included. Development of the collective review process to analyze
risk and determine mitigation measures was recognized early as the way handle the thousands of facilities
subject to this process. Use of automated spreadsheets, existing databases and new databases specific to the
needs of this program allowed for data to be gathered and analyzed providing individual results for each site.

Another concern was if a common set of standards to mitigate operating risk could be applied over a broad
range of facilities. Use of existing industry standards to quantify risk allowed for common ground between
diverse types of operations. BP also found that many of the mechanisms needed to implement the program (i.e.
maintenance programs, operator training etc.) were already being widely used within the company. These
factors enabled BP to develop a list of standards that could be implemented without drastic changes within the
organization.

A strong commitment from management was also key to the project. Management worked to assure that the
project would be accepted within the company and also assured that funding would be available.

Implementation of this program allowed BP to develop minimum safety standards for wells, wellsites, flowlines
and field facility sites. Different generations of facilities constructed by different operators can be brought into
conformance with a common standard.

The bottom line is that the overall safety and risk was improved of BPs operated facilities through the
implementation of this project. This project also set the standard for the installation and operation of new
facilities.