Offshoring risk

Exchange rate risk and the increase of salaries in low-cost countries 

The consequences of offshoring are related to the reduction of product manufacturing or service provision in the country of origin. As a result 

The growing aversion of customers to offshoring is particularly visible in times of crisis. Actions like buy American show that many American customers have become anxious about offshoring. 

The internationalisation of manufacturing operations connected with the use of external manufacturing resources located in other countries often requires the redesign of the supply chain. Such solutions translate into complexity of the international logistics systems. 

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Additional models and software are identified in A Guide to Quantitative Risk Assessment for Offshore Installations (Spouge, 1999) which address offshore risk analysis, explosion modeling, evacuation and rescue analysis, reliability analysis, accident databases, event tree analysis, and safety management. 

Risk acceptance criteria have been used in offshore risk analysis for many years. A common thinking has... 

Rued, W., Mosleh, A., Vinnem, J.E., Aven, T. 2009. On the use of the hybrid causal logic method in offshore risk analysis. Reliability Engineering and System Safety 94 445-455. Sklet, S., Aven, T., Hauge, S., Vinnem, J.E. 2005. Jjjjjjrgorat ing human and organisational factors in risk analysis for offshore installations. In Kolowrocki, K. ei.). Advances In Safety and Reliability 1839-1847. Leiden Balkema. (ESREL 2005). 

Roed, W., A. Mosleh, J.-E. Vinnem, andX. Aven (2009, February). On the use of the hybrid causal logic method in offshore risk analysis. 

One of the principle differences between the SEMS and Safety Case approaches to managing offshore risk concerns the use of Quantitative Risk Assessment (QRA), which is also called Probabilistic Risk Assessment or Analysis (PRA). QRA is commonly included in Safety Case analyses, although it is not a requirement. SEMS does not require a quantification of risk. 

In addition to a few conventional safety considerations (independence of SIS from BPCS, use of redundancy and fault tolerant design, etc., discussed at length in previous chapters) the following points are worth considering as safety issues related to offshore. Risks associated with typical BOP has been presented in Fig. XII/4.1.4-1. Depending on applicability, reader to decide the associated standard for reader s application. 

In the past, in contrast to the Public Liability policy, it was not usual to impose a limit of indemnity to the Employer s Liability policy. However, as from 1 January 1995 insurers have imposed a cap of 10 m per incident (a lower limit is usually provided for offshore risks). The Employer s Liability policy usually includes cover for all costs and expenses incurred with the insurance companies consent and extends to include the cost of representation of the Insured at proceedings in a Court of Summary Jurisdiction arising out of an alleged breach of statutory duty resulting in bodily injury or disease which may be the subject of indemnity under the policy. 

Ersdal, G. 2014. The Norwegian barrier regulation. Barrier management principles and application to marine system safety. Offshore Risk and Safety seminar, 2014. 

See Vinnem (2007) for details regarding risk assessment of offshore risk assessments. The results of the risk assessment are then conditional on these assumptions holding true, and do not reflect the possibility that, in reality, the conditions may deviate from what has been assumed. 

In any given risk assessment there will be a number of assumptions more or less explicitly stated. In this paper we first simplify and focus on a single assumption that may be formulated as X=x for some fixed value Later we will discuss the effect of several assumptions. Examples of assumptions made in offshore risk assessments are ... 

Vinnem, J.E. (2007). Offshore risk assessment principles, modelling and applications of QRA studies. Springer. 

Having defined and gathered data adequate for an initial reserves estimation, the next step is to look at the various options to develop the field. The objective of the feasibility study is to document various technical options, of which at least one should be economically viable. The study will contain the subsurface development options, the process design, equipment sizes, the proposed locations (e.g. offshore platforms), and the crude evacuation and export system. The cases considered will be accompanied by a cost estimate and planning schedule. Such a document gives a complete overview of all the requirements, opportunities, risks and constraints. 

Oil Industry Advisory Committee (1996) Management of Occupational Health Risks in the Offshore Oil and Gas Industry, HSE, Bootle. 

From a human reliability perspective, a number of interesting points arise from this example. A simple calculation shows that the frequency of a major release (3.2 x lO"" per year) is dominated by human errors. The major contribution to this frequency is the frequency of a spill during truck unloading (3 X10" per year). An examination of the fault tree for this event shows that this frequency is dominated by event B15 Insufficient volume in tank to imload truck, and B16 Failure of, or ignoring LIA-1. Of these events, B15 could be due to a prior human error, and B16 would be a combination of instrument failure and human error. (Note however, that we are not necessarily assigning the causes of the errors solely to the operator. The role of management influences on error will be discussed later.) Apart from the dominant sequence discussed above, human-caused failures are likely to occur throughout the fault tree. It is usually the case that human error dominates a risk assessment, if it is properly considered in the analysis. This is illustrated in Bellamy et al. (1986) with an example from the analysis of an offshore lifeboat system. 

Oil Pump Stations and Offshore Properties, Industrial Risk Insurance, Hartford, Conn. (See [19].)... 

It is common in many offshore areas to encounter a shallow gas hazard. Quite often, these hazards can be spotted on seismic, and a surface location is chosen to avoid the hazard. However, there is always a risk of encountering a shallow gas flow with insufficient casing in the well to allow a shut-in. In this instance a diverter system is called on as a safety measure. The ideal function of the diverter system is to allow the well to flow and subside by natural means. In many cases the diverter system simply provides enough time to evacuate the rig. 

An outline of the general design options for reduction of stress-corrosion cracking risk in marine and offshore installations can be summarised as follows ... 

Oil and Gas Production This sector is a major user of corrosion monitoring equipment, in particular for offshore fields where ramifications of corrosion and consequent maintenance are far more serious and costly compared with onshore production. Carbon steel is used for approximately 70-80 70 of production facilities. The development of a field is assessed on a defined corrosion risk which may not be correct, leading to serious corrosion. In addition, a reservoir may become more corrosive as the field is extracted owing to (a) increased water content, and (b) eventual souring of the field (hydrogen sulphide production). 

Controlling health risks from rosin (colophony) based solder fluxes How HSE assesses offshore safety cases WASP - Quality assmance for chemical analysis... 

Pula, R., Khan, F., Veitch, B., and Amyotte, P., 2005. Revised fire consequence models for offshore quantitative risk assessment. Journal of Loss Prevention in the Process Industries 18, 443-454. 

Crawley and Grant (1997) have developed a risk assessment tool for new offshore installations. They have examined typical leak frequencies of equipment items and the ignition probability of these leaks in four pressure bands. With this information it was possible to define leak size and frequency for any piece of equipment and the ignited leak frequency. In off-shore installations gas separation vessels were found to have ten times higher ignited event frequency than oil pumps. 

Crawley, F. K. Grant, M. M. 1997. Concept Risk Assessment of Offshore Hydrocarbon Production Installations. Trans IchemE, Vol. 75, Part B, pp. 157-163. 

Time of Day - personnel availability, visibility, etc., plays a key role in the activities of personnel during an incident. Periods of off-duty time for offshore or remote installations, shift changes and nighttime allow high density of personnel to develop on some occasions that can be vulnerable to a high fatality risk. Poor visibility also affects transportation operations. 

Sometimes it is easiest to prepare a general flowchart that identifies events which may occur at a facility during an incident. This flowchart can identify possible avenues the event may lead to and the protection measures available to mitigate and protect the facility. It will also highlight deficiencies. The use of a flowchart helps the understanding of events by personal unfamiliar with petroleum risk and safety measures. It portrays a step by step scenarios that is easy to follow or explain. Preparation of in-depth risk probability analysis can also use the flowchart as the basis of the event trees or failure modes and effects. Figure 3 provides a generic example of a typical hydrocarbon process facility Safety Flowchart. API Recommended Practice RP 14C provides an example of a Safety Flowchart for an offshore production facility. 

Generally offshore facilities and major process plants onshore represent considerable capital investment and have a high number of severe hazards associated with them (blowouts, ship collisions, line and vessel ruptures, etc.). They normally cannot be easily evaluated with a simple safety checklist approach. Some level of "quantifiable evaluation" reviews are usually prepared to demonstrate that the risk of these facilities is within public, national, industry and corporate expectations. 

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