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Executive Summary
Oman Oil Refineries and Petroleum Industries Company (ORPIC) is one of the strategic governmental interests, responsible for the excavation and production of numerous gas and oil-related materials. The production values of ORPIC are estimated at 943,000 barrels a day in gas and 31.4 million tons of oil equivalent per year in gas (ORPIC 2019). At the same time, the companys excavation and rig maintenance division suffers from increased rates of accidents per 1,000 workers per year.
In order to improve the situation and achieve the goals of a 10% reduction in accident rate by the end of 2019, significant changes are required. Immediate solutions suggest an introduction to change management and the development of a safety culture among the workers. Long-term solutions include a paradigm shift from quantity to quality, significant upgrades to facilities and equipment, as well as investments to employee recruitment and retention.
Introduction
Oil and gas industry constitutes one of the major elements of Omans exports. Despite the countrys effort to diversify its economy, the use and production of natural resources remain one of its primary revenue streams, with daily production rated at 943,000 barrels a day and gas production at 31.4 million tons of oil equivalent per year (MtoE) (ORPIC 2019). While the country remains a relatively small exporter of gas when compared to other countries, with 70% of its excavated resources used to satisfy the domestic demand, the Omani oil sector is able to compete with the rest of the countries of the Gulf Cooperation Council (GCC) (ORPIC 2019).
Oman Oil Refineries and Petroleum Industries Company is one of Omans largest natural resource extraction companies. It possesses a full production cycle of operations ranging from oil and gas rigs to refineries as well as aromatics and polypropylene facilities located near Sohar and Muscat (Challenges facing ORPIC growth 2019). It allows ORPIC to provide a multitude of products, such as fuel and plastics, satisfying demand in Oman and other countries. The company was created as a result of a merge of large government-owned properties in 2011.
As it stands, it employs over 3000 employees and works with more than 500 private contractors. Some of the noteworthy properties owned by ORPIC include refineries in Muscat, Suhar, Jifnain, Raysut, as well as the new plastic plant in Liwa along with a gas reservoir in Farhoud (ORPIC 2019). The companys total refining capacity is estimated at 198,000 barrels per day. ORPIC is considered to be one of the fastest-growing businesses in the Middle East. One of the primary humanitarian concerns of the company lies in reducing its accident rates. According to the 2019 report, the number of non-lethal accidents in ORPIC was 27 per 1,000 employees, with the goal for 2019 to reduce that number by 10% (ORPIC 2019). The majority of work-related incidents happen in the high-risk area of operations, such as excavation and maintenance.
Problem Statement
Accidents in the workplace are a significant threat to ORPIC, as they cause injuries and potential loss of human life, financial expenditures and a loss of reputation. As seen from Graph 1, the frequency of injuries in the workplace have been on the low for the last year. If one compares the data available for the years 2013-2017 and the current metrics, it is safe to say that the rate plummeted dramatically.
Yet, the more detailed results for the current year show some instability and fluctuation. At present, the non-fatal accident rate is 27 per 1,000 workers, which is a significant number. Although it is impossible to rule out the probability of accident due to the human factors, the company must make an effort to minimise the potential for harm and death among its workers. The main goal regarding safety management now is to reduce the accident rate by at least 10% by the end of the year.
The motivation for this paper is the vast impact that work accidents have on the key business aspects. Firstly, handling accidents is costly; high-risk environment and poor safety management may lead to an otherwise unnecessary financial burden. Accidents are problematic in terms of time management: ideally, each accident needs to be investigated thoroughly to locate the root causes. There is the reputation aspect to the issue of increased accident rates: unfortunate incidents undermine ORPICs standing on the market and might break customers trust. Lastly, the problem of accidents in the workplace can be approached from the moral standpoint.
Therefore, the purpose of this paper stems from the complexity of the issue and its impact on the functioning of ORPIC. The present research seeks to analyse factors affecting safety issues in the ORPICs excavation and oil rig maintenance department and provide a potential solution to achieve the goals for 2019.
Research Design
The present research is an analysis of the existing, up-to-date data provided by ORPIC itself. The data used describes the most recent accidents with as much information as publicly available. This paper employs three theoretical frameworks for the evaluation of the main causes of accidents in the ORPICs excavation and oil rig maintenance department. These are Root Cause Analysis (RCA), Fishbone analysis framework, and McKinseys 7S model with the latter demonstrating potential issues in the organisational structure of the department. In the information dissemination section, it is possible to find the connections between different factors as well as detailed explanations of the accident-related processes.
Analysis
The tools selected to be used in the analysis and evaluation of the situation in ORPICs are Fishbone and McKinseys 7S method. Fishbone is an analytical tool typically utilised as a part of the Sigma Six evaluation. It helps visualise the causes and effects of various problems in order to identify its root causes (Desai, Desai & Ojode 2015). The diagram consists of the Head section, which illustrates the major problem (in this case, accidents in the excavation and oil rig maintenance department), whereas the bones of the diagram would illustrate major causes of incidents. Additional factors would be added to each bone in order to represent the symptoms of the larger problem. The instrument was chosen for its versatility and effectiveness in keeping the attention on systematic solutions rather than temporary measures.
McKinseys 7S model is another tool to be used in the evaluation and analysis of safety issues in the ORPICs excavation and oil rig maintenance department. It is an organisational analysis tool that could help evaluate the existing systems and the internal situation within an organisation (Stowell & Welch 2012). The purpose of 7S is to analyse all of the aspects of organisational performance, which include strategy, skills, style, systems, shared values, staff and structure, in order to understand how well these elements work on their own and in conjunction with one another. The knowledge provided by McKinseys model would be invaluable in the development of potential solutions to the problem of safety and accident prevention.
Organisation Structure, Life Values, and Root Cause Analysis
Root cause analysis is an excellent tool for pinpointing the deeper, hidden causes of undesired events. However, as much as this method presents a great number of advantages, it may be challenging to apply because it requires utmost honesty from people in the decision-making positions. On their official website, Orpic states four pillars on which it bases its identity in the business world:
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putting health, safety, and environment first;
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maximising the potential of each employee;
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capitalising on fidelity, integrity, and engagement; and
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serving Oman and the customer.
While this corporate philosophy makes sense at first glance, deeper analysis shows the lack of congruence between words and actions. Safety performance at Orpic is still at suboptimal level, and the company has yet to live up to the claims it is making for the public.
Root cause analysis allows to trace back accident causes, and one of the ways of doing it is asking why repeatedly until the true reasons reveal themselves. Below is the breakdown of a specific problems within the root cause analysis framework:
(0) Problem: the accident rate at Orpic is currently at 27 incidents per 1,000, which is far from satisfactory;
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Why? Because safety is apparently assigned low priority as compared to other values within the corporation;
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Why? Because of the flawed resolution of conflicting goals and the conflict between downstream vs. upstream efforts;
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Why? Because of ineffective organisational structure;
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Why? Because Orpic has an inefficient organisational structure in which one observes diffusion of responsibility and authority. At the same time, personnel suffers from their low-level status and lack of independence;
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Why? Because the organisation is characterised by a low level of connectivity between departments; between managers and their subordinates. Limited communication channels result in poor information flow, which impedes the improvement of safety management.
(0) Problem: the accident rate at Orpic is currently at 27 incidents per 1,000, which is far from satisfactory;
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Why? Because of ineffective Technical Activities;
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Why? Because Orpic seems to be failing to eliminate basic design flaws;
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Why? Because the company only makes superficial safety efforts;
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Why? Because it bases safeguards on false assumptions;
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Why? Because it is challenging for Orpic to exert effective risk control due to the complexity of the issue.
As seen from these two RCA breakdowns, there is more than one explanation to the same problem. Also it becomes apparent that in order to resolve the increased accident rate issue, the mobilisation of many different aspects is needed. The following sections address the problem in more detail and offer their conceptualisation of cause analysis.
Fishbone Analysis
As demonstrated in Figure 1, the major causes of accidents in ORPIC include personal employee mistakes, organisational inadequacy, inadequate work standards and force majeure events. Below is the breakdown of root causes of accidents in alignment with the Fishbone method:
Man
Statistically, most accidents in the department occur due to personal mistakes of the employees while on the job (ORPIC 2015). An employee might suffer from a lack of attention due to tiredness, extensive periods of labour, weather conditions or negligence, resulting in an accident. These types of accidents are almost always caused by human factors. These usually result in minor injuries and damage of the product or equipment.
Environment
Force majeure events typically result in the largest number of grievous injuries and deaths. These occur due to a combination of various factors inside and outside of the companys control. Large-scale fires, floods, explosions and other events that have the potential to lead to the mass loss of life are classified as force majeure events. The last known accident in ORPIC occurred in 2007, an explosion of stored fuel and chemicals causing the deaths of 28 employees (ORPIC 2015).
Method
Inadequate working standards are typically connected to large force-majeure events and smaller-scale accidents. Typically, they occur as a result of equipment mishandling, poor or inadequate standards of labour quality and safety, managerial negligence and outdated equipment. The latter is the most prominent issue for ORPIC. Aside from their new facility in Liwa, most of their refineries are over 20 years old (Kalyanam 2018).
Although they receive upgrades, the overall exhaustion of major system components and the outdated technology poses an increasingly significant threat to the employees. Lastly, there is organisational inadequacy, the effects of which are harder to estimate. Oil and gas industry require its employees to be supremely qualified and physically resistant to work in excavation and oil rig maintenance (Berkowitz, Bucheli, & Dumez 2017).
Due to these requirements, it is often hard to fill out vacancies, which results in increased workloads for the remaining staff. Alternatively, vacancies are filled with subpar candidates, which increases the probability of accidents. Additional issues arise from inadequate or outdated training methods. Hard-pressed to provide stable outputs, ORPIC seldom results to training employees on the job, which increases the probability of work-related injuries (ORPIC 2015).
Lastly, there are communication issues between line managers and middle-class managers responsible for operational safety. Typically, line managers discover potential issues with work safety first. However, instead of taking immediate decisions on the ground, they are required to relay the information to middle-managers, who then make the appropriate decisions and outline courses of action. As a result, valuable time is lost, during which the potential danger might escalate.
Material
The most relevant material type of threat in the context of oil and gas industry is hazardous waste. Hazardous waste is defined as discarded materials with properties that might turn them into a public health threat if not managed properly. Many oil and gas companies find themselves trapped in the so-called hazardous waste loop where their attempts at managing it in sustainable ways fail every year. Orpic has already been making efforts to address the issue of hazardous waste; however, the projects have only been limited to shorter periods of time and pilot in nature.
One example of such a project is a two-year pact that Orpic entered in 2017 together with Sultan Qaboos University (SQU) and the Japan Cooperation Centre Petroleum (JCCP) (Orpic in pact to treat hazardous refinery waste 2017). Orpic stated that if successful, the new hazardous waste management initiatives will open up new frontiers, not only for the company but also for the entire country. As one may imagine, realising the initiative will require making changes to other aspects outlined in the Fishbone diagram as well. Successful material management is likely to rely on man (training and education) and method (organisation structure), which indicates the complexity of the issue.
Machine
There is little known about the state of equipment at Orpic and whether it presents any threats to safety and health of the organisation. The available information hints at the fact that Orpic both makes advances and lags in certain aspects. For instance, JCCP (2018) reports delays in clearing machinery/ equipment at Sohar Port. At the same time, recently, Orpic completed the installation of Omans first hydrocracker, which is supposed to take the safety and efficiency of production to the next level (Brelsford 2015).
McKinseys 7S Framework
Now that the main causes of accidents in ORPIC have been identified, it is time to evaluate the organisational structure of the companys excavation and rig maintenance department in order to determine how it contributes to the issues outlined in the previous section.
McKinseys 7S framework, as illustrated in Figure 2, enables the analysis of ORPICs departments using hard and soft elements, which determine the functionality of the organisational cluster. These elements are as follows (Stevens 2016):
Hard Elements
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Strategy. ORPICs business strategy revolves around providing its customers with the best balance of quantity and quality (Stevens 2016). However, the latest events and the companys explosive growth rates show that the focus lies on increasing production outputs to satisfy the growing demand for petroleum products.
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Structure. The ORPICs excavation and rig maintenance department is a traditionally-organised hierarchical structure with a clear division of responsibilities and an established subordination system (Stevens 2016). Due to slowness in change adaptation, typical of oil and gas industry, ORPIC did not make significant changes to its structure in decades. The typical information and decision-making process is described as follows (Stevens 2016):
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Employee spots an issue;
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Line manager is informed. If the issue can be dealt with using their own resources it is dealt with. If not the middle manager is contacted, while all work goes on standby.
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Middle manager investigates the issue and allocates resources to fix the problem.
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Systems. The company has an integrated KPI system to tract worker and division progress. Some of the parameters relevant to excavation and maintenance include extracted barrels per day (bpd), accidents per quartal/year and budgetary expenditures (ORPIC 2015). Increased productivity, a lack of accidents and the ability to fit the budget are rewarded.
Soft Elements
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Skills. Departmental skills include the abilities to excavate and maintain gas and oil-rigging facilities, estimate potential issues with production and maintenance, evaluate the condition of the systems and provide damage control in the event of an accident (ORPIC 2015).
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Staff. The majority of employees is comprised of men aged 25-55 years old, with younger members occupying the lower bracket and performing hands-on labour, whereas older and distinguished employees often find themselves in the positions of leadership as line managers, middle managers and maintenance experts (Sumbal et al. 2017). All members of the workforce are expected to have an educational background in gas and petroleum-related disciplines, possess a high degree of functionality, punctuality and responsibility, while being capable of enduring the harsh conditions of employment (Sumbal et al. 2017).
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Style. There are high levels of disengagement in the lower tiers of the workforce. The most common complaints include high intensity of work, long shifts, uncomfortable weather conditions and outdated equipment. Line managers are often conflicting with both the employees and the middle managers due to not meeting the required production quotas (Berkowitz, Bucheli & Dumez 2017). Middle managers possess higher motivation and retention, but are often disconnected from the situation on the ground.
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Shared values. Based on the evaluation of the hard and soft elements presented above, it is possible to outline shared values of the organisation. It is a traditional top-down structure focused largely on increasing production values. The compensation system, although featuring several additional parameters, is largely focused on the short-term goals of receiving profit from higher quantities of delivered goods. The relationships between managers and employees revolve around completing the plan and maintaining budget parameters rather than ensuring the quality of life and labour.
Dissemination of Information
There is a connection between the existing rate of accidents and the overall organisational structure that the ORPICs excavation and rig maintenance department currently implements. As it was demonstrated in Figure 1, the major issues that lead to workplace accidents involve organisational inadequacy, poor work standards and force majeure events. The primary shared value of the department is economic efficiency, which is supported by the companys resource-based management strategy.
It focuses on maximising profits in the short-term perspective and ensuring immediate growth rather than focusing on the existing assets. As a result, fuel production is the primary factor that counts. Employee training, specialised retention strategies, tools and systems upgrades, as well as organisational changes and risk protection are considered to be expenses that lower the yearly bottom line.
A risk factor that should be analyzed separately is leadership at Orpic. As McKinseys 7s shows, shared values is an aspect that ties all the others together, and one cannot imagine the effective realisation of values without sufficient leadership. Unfortunately, Orpic has yet to reach the optimal level of leadership. As of now, this goal is out of real due to the inadequate organisation and management.
Even though, as a big corporation, the organisation has a comprehensive structure with distributed responsibilities (see Image 1 and 2), there is a lack of communication between the elements. Shared values cannot be efficiently communicated if different departments fail to share their concerns, ideas, and suggestions something that good leaders need to moderate, control, and regulate. All five major risk factors that affect the accident rate can, therefore, be attributed to the short-term resource-based approach to extracting profit.
Literature Review
Accident Analysis Frameworks
At present, there are multiple accident analysis frameworks each of which has its own vices and virtues. For this research report, root cause analysis has been conducted. Embrey and Henderson (2004) define root cause analysis as a process aimed at understanding the underlying causes of accidents. Not only are the root causes located during RCA, but also their practical implications are defined. Therefore, it is fair to say that RCA meets two targets at once:
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explaining the causal relationships between the events;
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providing recommendations to manage the identified risks.
Causes of accidents have already been discussed in this section, but this distinction needs to be made one more time. As Embrey and Henderson (2004) show there are two approaches toward causality of accidents in the workplace. The individual based approach views each accident as a separate incident that is caused by a particular characteristic of the system or a person within it. For example, if a worker fails to comply with safety rules and causes an accident at the factory, the individual based-approach will explain the incident by the said workers inattentiveness and negligence.
As much as this conclusion may be fair to some extent, it falls short of the comprehension of a larger picture. This is what the system-based approach helps with: it sees accidents as being interlocked and connected to each other. The system-based approach prompts safety managers to wonder as to what exactly allowed an accident to happen. In this case, a particular workers negligence can be seen not only as an individual but also a collective issue: it is possible that the safety culture in the workplace was not enough to compel him or her to adopt safer methods of labor (Antonsen 2017).
This distinction helps Embrey and Henderson (2004) outline the key problems with RCA that this research paper is hopefully devoid of:
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focus on the individual rather than systemic causes;
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focus on the accidents description as opposed to its causes;
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focusing on a single cause without taking into account all the possible causes.
Failing to address these three issues leads to inefficient safety strategies.
Another model that capitalises the connectivity and big thinking within an organisation is McKinseys 7s. This model was developed in the 1980s by McKinsey consultants and soon gained wide recognition by both academics and practitioners.
As of now, McKinseys 7s is one of the most popular strategic planning tools. What makes this model different and innovative is that it emphasises the essential role of human resources within an organisation (Soft S) as opposed to the traditional approach focusing on capital, infrastructure, and equipment. The goal of the model is to help to analyze seven elements of the company: Structure, Strategy, Skills, Staff, Style, Systems, and Shared values. The key point is that these elements are not isolated from each other. A change in one of them may have a network impact. 7s may be used together with the so-called fishbone or Ishikawa diagram. The latter aims at tracing back causes of undesired events, which facilitates locating connections.
Causes of Accidents
The key to efficient safety management is pinpointing the exact causes of accidents and addressing them in a timely manner. Bell and Healey (2006) provide a comprehensive systematic review of the existing research on the causes of accidents in different industries. Their work shows that there are a least a few categories of causes, each of which requires special investigation and management. The causes include but are not limited to:
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attitudinal and management factors. Bell and Healey (2006) cite an earlier publication by the University of Liverpool that shows exactly how poor management leads to the emergence of work hazards. Namely, attitudinal and management factors include maintenance errors, inadequate procedures, bad planning, and faulty risk assessment. Bell and Healey (2006) argue that accidents often stem from managers inability to control and monitor staff as well as educate and train them. On top of that, managers may often be aware of unsafe work conditions but decide to condone them;
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plant and process design. Bell and Healey (2006) show that in the nuclear, offshore, gas, and chemical industries, plants were often poorly designed to begin with, predisposing workers to experience frustration and make mistakes;
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communication issues. Another cause outlined by the researchers is breaks in communication and, therefore, low access to relevant information regarding safety;
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failure to investigate. Major hazards often stemmed from organisations inability to make the right conclusions and address risks;
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poor prioritisation. Several researchers cited by Bell and Healey (2006) pointed to managers failure to make safety one of the top priorities. Plants are often result-oriented, and in the pursuit of high performance, they may push workers past their threshold. Heavy workload may become another reason for creating dangerous situations.
What deserves special attention when it comes to safety management is the leverage of the human factor. Almost all works analyzed by Bell and Healey (2006) showed that the human error was one of the leading causes behind major accidents. The question arises as to exactly what in the human psyche makes people break rules and deviate from what they are prescribed to do. Probably the primary reason why the traditional safety management often fails to reach its goals is because it does not take into account the complexity of the human psyche. Previously, individuals in charge of safety management would rather operate on the premise that people are rational beings and tend to make rational choices.
However, today, a growing body of research reinforced by scientific advances in neurology and neuroscience shows this might not be the case. It appears that the primary source of motivation for humans lies in feelings and emotions as opposed to logical thoughts and ideas. This association between feelings and intention has the potential to shed light on the issue of workplace incidents and explain exactly why people often do not comply with the rules and act irrationally. DuPont (2015) claims that one may assume that when it comes to workplace situations, it might as well matter more how people feel about them and not how they think about them.
At present, neuroscience attributes humans overreliance on emotions to the vast amounts of information that people have to process on a daily basis. A workplace might be exactly the place where individuals have to deal with all kinds of data that needs to be filtered and prioritised in order to make decisions (Newell, Lagnado, & Shanks 2015). Humans monitor situations for potential risks or rewards, which is often rather emotion-based and might not make rational or logical sense. Some things go under the radar of humans attention and never trespass the threshold of their attention.
The question arises as to how people decide what deserves their focus and concentration and what does not. Arguably, if safety management will hinge on the premise of managing natural human patterns, it may as well ramp up its efficiency.
DuPont (2015) makes it a point to show that information about the environment is filtered based on the persons previous experiences. Putting the issue again in the context of the workplace, one may say that individuals conduct cost-benefit analysis intuitively in their heads before making a decision. For instance, a worker in the oil and gas industry is confronted with a choice to comply with a safety rule or to neglect it.
In this case, the benefit of non-compliance might be doing the task in a way that is going to be easier for the worker. On the other hand, the risks of non-compliant behavior might include a fine, a disruption to the work process, an actual injury, or other undesired consequences. According to DuPont (2015), workers tend to choose to be involved in a risky activity based on whether they could get away with non-complying in the past without facing any kind of punishment or repercussions.
What also influ
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