EFFECT OF SAFETY MANAGEMENT ON ORGANIZATION EFFECTIVENESS OF OIL INDUSTRIES
CHAPTER ONEINTRODUCTION1.1 Background of the StudySafety management systems holistically deal with the organization’s safety activities, policies, responsibilities, practices, procedures, and resources to prevent accidents and ensure that risk is reduced as low as is reasonably practicable, which is normally carried out through Plan-Do-Check-Act business management system, and according to Health and Safety Executive(HSE2013) “A safety management system is a crucial mechanism in the delivery of safety” Bayuk (2018) explained Safety Management System as a part of business operation through which an organisation proactively manages safety that concentrates on controlling business processes, starting from the policy, organisation structure, organisation safety culture, training, communication, hazard identification, risk management, emergency response and incident investigation. It is a management approach through which a safety policy is established with objectives, set out a plan to achieve these objectives, work towards the objectives and continuously checking the outcomes against the plans, and most importantly, take appropriate corrective actions as a result of lessons learned from past experience.The Oil and Gas industry is a major contributor to the Nigeria economy. It accounts for about 90% of the federal government’s annuals revenue. This industry has dominated by foreign interests and major activities like exploration, drilling, production; well intervention and servicing provision remain primarily controlled by IOCs, NOCs, and local contractors. According to an IEA report on energy consumption in 2010, oil and gas provides the world’s population of about 6.9 billion people with 90% of their daily energy need. Despite the huge benefits this industry brings to society, it has been noted to be an industry characterised by complex exploration and production processes, which if not well managed, could lead to disasters. Considering the nature of the Oil and Gas industry and the complex processes involved in its operation, described it as a high risk industry.Exploration and production of oil and gas is technically challenging, involving different stages and processes. First, exploration companies have to tap into unseen pressurized underground resources to bring oil and gas to the surface. Extracted products are then transported to refineries over long distances, often via pressurized pipelines or large ocean tankers. The refining and transformation of these products through complicated chemical processes are then carried out under high temperature and pressure, hence making the process a very hazardous one. Complex processes at various stages in oil and gas production are usually managed by people and are highly subject to errors which could result in accidents or disaster. One of such disasters is the Piper Alpha 1988 disaster which resulted in the death of 167 men and marksthe turning point in oil and gas industry safety (OGP 2010). Accidents results in loss of life and negatively affect an organization’s value and the confidence of its employees, therefore, safety certainly is good business. Therefore, the issue of safety has been central to many studies carried out about oil and gas workplace environments.In the past, accidents in the oil and gas industry were commonly attributed to technological malfunctioning, while the human elements present in these accidents were usually ignored. With improvement in technology and subsequent reduction in technological failures, the role of human error especially in terms of safety performance has become more obvious. This shift in focus is driven by the awareness that organizational, managerial and human factors rather than purely technical failures are prime causes of accidents in industries. Skogdalen (2012) cited human error from poor safety performance to be the cause of most industrial accidents both past and present.Adoption of SMS is beneficial to industries since it is a basis for an industry to evaluate its safety performance and understand how to improve the safety performance. Several studies have been conducted regarding implementing and improving existing SMS. Bragatto et al. (2015) developed a new method based on the bowtie model to improve the practical implementation of SMS in small sized enterprises. Additionally, Demichela et al. (2004) found that risk analysis provides sizing criteria for the whole SMS and helps to define the objective the management system itself. Fernandez-Muniz et al. (2007) successfully developed a measurement scale to calculate the reliability and validity of SMS Santos-Reyes and Beard (2002) developed a systematic approach to assess the existing SMS which includes five interactive subsystem. The studies indicate that SMS is a solid foundation for an industry to track their safety performance. Currently, the oil and gas extraction industries are not covered by any regulation regarding SMS, thus it is necessary to develop a SMS for the industries or extend current management systems in United States (i.e., PSM and SEMS) to the industries. In order to improve safety performances of oil and gas extraction activities, American Petroleum Institute (API), International Association of Drilling Contractors (IADC), and American National Standards Institute/American Society of Safety Engineers (ANSI/ASSE) have published a series of industry practice documents regarding the safety hazards associated with oil and gas extraction activities. Currently, all aspects of oil and gas well drilling and servicing operations are governed by OSHA General Industry Standards, and site preparation activities are covered by OSHA Oil Standards (OSHA, 2017a). Special hazards existing in workplaces, which are not addressed by the aforementioned two standards, are covered by General Duty Clauses (OSHA, 2009). Hence the study aims at examining the effect of safety management on organization effectiveness of oil industries.1.2 Statement of the ProblemThe oil and gas sector is among one of many industries characterized with convergence of numerous hazardous exposures that can potentially cause serious catastrophes and workrelated accidents. Serious catastrophes ever recorded in the oil and gas sector that has claimed life and caused damages to properties include the Piper Alpha disaster in 1988, Montara blowout in 2010, and the Texas City refinery explosion in 2005. Currently, the oil and gas sector in Nigeria remains one of the most productive sectors and obviously falls within one of the riskiest industries in the world. According to Sutton, (2012), incidents such as hydrocarbon leakages, falling objects, fires, explosions, blowouts, and hydrogen sulphide emissions are likely exposures to workers in the sector. Safety knowledge is basically the degree of employees’ knowledge on organizational safety systems, practices, and procedures. According to Campbell et al. (2013) and Griffin and Neal (2010) individual performance at work is determined by their degree of knowledge, skills, and motivation; hence, employees practice safe behaviour in accordance with safety rules and procedures if they possess these three essentials. Improving employees’ safety knowledge also means that organizations must commit enough resources into frequent systematic and comprehensive safety and health training programs for all employees. Thus, from the first phase of the operational activities, consideration must be given to accidents prevention.1.3 Objectives of the StudyThe main objective of this study is to determine the effect safety management on organization effectiveness of oil industries. The specific objectives include;i. To evaluate the development of Safety Management Systemii. To determine the contribution of individual factors like human behaviour, knowledge, skill, competency etc. to drive the implementation of SMS in workplace at large Oil & Gas Installation in Nigeria.iii. To find out the safety procedure, regulations, policies and accident rate related to the oil and gas operators in Nigeria.1.4 Research Questionsi. What is the development of Safety Management System?ii. What is the contribution of individual factors like human behaviour, knowledge, skill, competency etc. to drive the implementation of SMS in workplace at large Oil & Gas Installation in Nigeria?iii. How does safety procedure, regulations, policies and accident rate relate to the oil and gas operators in Nigeria?1.5 Research HypothesesHypothesis IH0: There is no contribution of individual factors like human behaviour, knowledge, skill, competency on the effectiveness of an organization.Hi: There is a contribution of individual factors like human behaviour, knowledge, skill, competency on the effectiveness of an organization.Hypothesis IIH0: Safety procedure, regulations, policies and accident rate are not related to the oil and gas operators in NigeriaHi: Safety procedure, regulations, policies and accident rate related to the oil and gas operators in Nigeria1.6 Significance of the StudyThis research was carried out to add to the body of literature on the issue of employee involvement and the impact it has on the adoption and sustenance of a positive safety performance, and then recommend possible measures that can help in building a formidable safety performance in the oil and gas industry in Nigeria.Also, this study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.1.7 Scope of the StudyThis study is on the effect of safety management on organization effectiveness of oil industries.This research will assess accident rate, safety performance and compliance in three different sectors of oil and gas producing companies in Nigeria (indigenous, national and international oil and gas industries) and to know DPR standard of safety for the oil and gas company. 1.8 Limitations of the studyThe demanding schedule of respondents at work made it very difficult getting the respondents to participate in the survey. As a result, retrieving copies of questionnaire in timely fashion was very challenging. Also, the researcher is a student and therefore has limited time as well as resources in covering extensive literature available in conducting this research. Information provided by the researcher may not hold true for all businesses or organizations but is restricted to the selected organization used as a study in this research especially in the locality where this study is being conducted. Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.Finally, the researcher is restricted only to the evidence provided by the participants in the research and therefore cannot determine the reliability and accuracy of the information provided.1.9 Definition of TermsSAFETY MANAGEMENT: Safety management is managing business activities and applying principles, framework, processes to help prevent accidents, injuries and to minimise other risk.ORGANIZATION: An organization is a group of people who work together, like a neighborhood association, a charity, a union, or a corporation. Organization is also the act of forming or establishing something (like an organization). It can also refer to a system of arrangement or order, or a structure for classifying things.EFFECTIVENESS: power to be effective; the quality of being able to bring about an effect. Synonyms: effectiveness, effectuality, effectualnessOSHA: Occupational Safety and Health Act of 1970, Congress created the Occupational Safety and Health Administration (OSHA) to ensure safe and healthful working conditions for working men and women by setting and enforcing standards and by providing training, outreach, education and assistance.OGP: Conventional oil and gas refers to petroleum, or crude oil, and raw natural gas extracted from the ground by conventional means and methods.