Legal Risks Management for Energy Company Assignment

Assignment Task

Question 1. Briefing to the Board of Directors on Risk, HSE Management, Legislation and Responsibilities.

Preamble

You have seen how there can be a range of pressures on senior management in the energy sector that can conspire to make them focus on money at the expense of safety. This is not new. Indeed after the London Underground King’s Cross Fire in 1987 the Inquiry discovered that across the whole organisation there wasn’t anybody in a senior position responsible for health and safety. In those days corporate manslaughter legislation had no teeth and the difficulty of identifying an individual who could be held responsible as “the controlling mind” was not easy.

The Corporate Manslaughter and Corporate Homicide Act (2007) went some way to redressing the balance, and the potential sentences for both organisations and senior managers/directors were substantially increased in the 2016 Sentencing Guidelines for Health & Safety & Corporate Manslaughter, and the 2018 Sentencing Guidelines for Manslaughter. See for example Breakell and Miles (2018). A very large firm can face fines of £10 million or above, and individual directors 2 years imprisonment or even longer if convicted of gross negligence manslaughter.

All Boards of Directors should therefore be aware of their responsibilities under the law, and since individuals can be prosecuted they should take this seriously. But as Haynes (2018) has shown it isn’t just Health and Safety risks that they need to consider, there are a great variety of things that can go wrong and in an unfamiliar setting these need to be understood.

This exercise is deliberately open-ended and allows you to demonstrate your own understanding for what has been taught, supported by good research. It would be well worth checking the reputable search engines and directories that are available to you as UEA students.

The scenario suggests that you are preparing resources for somebody else to use. This should force you to provide enough information that allows this person to understand what they are presenting.

The Scenario

ABCEng is a European-based integrated energy company. Until recently, their operations in UK comprised 3 gas-powered electricity generators. However, they are seriously considering acquiring some gas production assets; which naturally they will use to supply gas to their own facilities. The specific assets comprise a gas field which has been producing for 20 years from one manned compression platform called the Swordfish platform, and three Normally Unattended Installations. There are also two smaller fields in the area, which could be developed using sub- sea development or minimum facilities monopods tied back to the compression platform. A 24” main gas pipeline runs from the compression platform 35km to an onshore gas processing facility operated by a different company. The pipeline operates in a dry state; i.e. dehydration of the gas stream takes place offshore. It was subject to an intelligent pigging operation last year, and found to be in a satisfactory condition for at least another ten years of operation.

The HSE manager for ABCEng (UK) PLC is concerned that her fellow directors on the UK subsidiary board of directors do not fully appreciate their responsibilities and accountability under UK law, particularly in relation to the management of Major Accident Hazards. She has

commissioned you to prepare a high-impact, informative and persuasive briefing paper, which she can use at a forthcoming Board Meeting. Her overall objective is to persuade the directors that they will need to undergo a specific two-day training programme, covering both their legal HSE duties under UK law and their key role in the successful management of HSE; and in particular process safety and the management of Major Accident Hazards. She sees this as essential before they make a final decision about acquiring the assets but anticipates resistance from the Board. She also hopes that this will help them be better prepared for the “data room” exercise.

Please prepare the briefing paper for her review / comment.

Some suggested steps

To help prepare for work on the deliverables you might complete the following:

1. Study the session materials on Business Risk on Blackboard and study this
2. Research the relevant
3. Consider the risks associated with the new areas of expertise they are moving in
4. Identify a number of major areas of concern. Think creatively about good ways of emphasising to the Board some of the consequences of being poorly informed and present these arguments on your briefing paper.

Question 2. Caisson Question

Preamble:

It has been declared in the data room that on the Swordfish platform the principal firewater caisson (C10) is in need of repair to assure the continuing operation of the field. The Swordfish platform comprises a 4-legged structure installed in 72m water depth in 1992. See elevation drawing comprising Figure 1. Caisson C10 is located vertically above the 24” main gas export line which traverses the seabed.

The current life of field (LoF) is 2025 (Scenario A) after which production would cease and the platform ultimately removed. However there is the potential for developing the two smaller fields tied back to Swordfish that would extend the LoF to 2035 (Scenario B).

Deliverables:

1. Complete research into the various remedial options that might be available to mitigate or prevent the caisson from hitting and damaging the gas export Study all the data provided (Tables 1, 2 & 3) and the glossary provided earlier in the course. Produce a list of the various options, including summary statements for each option, and cite all your sources in a List of References using an accepted style (maximum 1000 words).
2. Present your findings for each LoF scenario to the Board of Directors in a short technical note (maximum 1000 words). State the present risk value for the caisson (using the risk matrix in Figure 2 or appropriate equivalent), the principal failure mode, detailed repair costs to enable production to 2025 and to 2035 and the resultant risk value after mitigation in each case. Economically you do not want to spend more than you need, which is often described as reducing the risk as low as reasonably practicable (ALARP)

Table 1. Supplemental Data:

Table 2. Cost Factors:

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