Environmental risk management in the oil and gas sector from the insurance perspective

Environmental risk assessment is becoming an increasingly important factor in the assessment process for new projects. The oil and gas industry is familiar with assessing and managing risks from a wide range of sources. In particular, risk assessment and management is fundamental to the evaluation and implementation of Safety cases. Risk assessment is essential in valuing exploration acreage. Various industry and government risk management standards and criteria have been developed for public and occupational health and safety.This paper examines the extension of these approaches to environmental risk management for the offshore oil and gas industry and proposes a conceptual management scheme.We regard risk as the probability of an event occurring and the consequences of that event. The risk is classified into four categories, namely:primary risk, which relates to the mechanical oilfield equipment;secondary risk, which relates to the natural transport processes. For example dispersion of oil in the water column and surrounding sea;the tertiary risk, which relates to the impact on some defined part of the physical, biological or social environment; andthe quaternary risk, which relates to the recovery of the environment from any impact.Generally the methods of quantitatively analysing primary and secondary risks are well known, while there remains considerable uncertainty surrounding the tertiary and quaternary risk and they are at best qualitative only. An example of the method is applied to coral reef and other sensitive areas which may be at risk from oil spills.This risk management scheme should assist both operators and regulators in considering complex environmental problems which have an inherent uncertainty. It also proves a systematic approach on which sound environmental decisions can be taken and further research and analysis based. Perceived risk is recognised, but the management of this particular issue is not dealt with.

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Safety & Environmental Risk Management: Borrowing from the Past to Enhance Knowledge for The Future

Risk and Financial Management ◽

10.30560/rfm.v1n1p64 ◽

2019 ◽

Vol 1 (1) ◽

pp. p64

Author(s):

Evangelia Fragouli ◽

Faye Nzioka ◽

Selma Manar

Keyword(s):

Risk Management ◽

Deep Water ◽

Environmental Risk ◽

Oil And Gas ◽

Oil And Gas Industry ◽

Management Policy ◽

Deep Uncertainty ◽

Gas Industry ◽

Environmental Risk Management ◽

Technology Industry

The oil and gas industry is facing more and more challenges in the latest decades. Indeed, as oil and gas became more difficult to be found, new areas are targeted, as deep water offshore or more hostile environments like Alaska. These involve high technology industry and imply deep uncertainty. Thus, the application of classical approaches of risk management is limited, as shown by major safety and environmental oil disasters like the Deep Water Horizon Accident. This paper analyses the later as a case study, to discuss the complexity of safety and environmental risk management in deep-water drilling. Given this complexity, the paper will also analyse how feedback from previous accidents can improve knowledge, and change the perception and thus the way safety and environmental risks are managed in deep-water drilling. The findings of the paper contribute to development of risk management policy and risk decision making.

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