Cost Effective Risk Management on Aging Offshore Installations
Authors: Nummedal Thor A. , Hide Asbjorn , Heyerdahl Richard 
Published: December 2007

Abstract
In 1992 all operators on the Norwegian continental shelf were ordered by the Norwegian Petroleum Directorate (NPD) to document all non-conformances to the regulations for their platforms, evaluate the safety impact of the non-conformances and commit to corrective actions. None of Phillips Petroleum Company Norway's (PPCoN) 26 platforms of varying ages were designed to the 1992 NPD Regulations and the cost of simply correcting all the non-conformances was deemed prohibitive. PPCoN used an innovative approach to comply with the order at an acceptable cost while significantly reducing offshore risk levels. The methodology used combines the merits of qualitative and quantitative risk analysis to identify significant risk contributors and associated nonconformances. Risk analysis results were then used with safety acceptance criteria and cost-benefit analysis to identify risk reducing measures for implementation. In many cases it was found that regulatory non-conformances were not the major risk contributors and it was seen that the risk analysis approach including cost benefit analysis resulted in a focus on true risk contributors that facilitated significant safety improvement in a cost effective manner.

Introduction
Phillips Petroleum Company Norway (PPCoN) is the operator of 26 offshore installations in Norwegian sector of the North Sea. The Greater Ekofisk Area platforms have been designed, built and installed over a 15 year period (1973-1990) under a changing regulatory environment. In addition, major and minor upgrade and modification work has been conducted up through the years, often requiring adherence to the most recent regulatory requirements. In effect, different technical systems on the same platform often conform to different regulatory requirements. In view of the complex regulatory considerations resulting from the application of different versions of the regulations, the NPD order represented a significant challenge to PPCoN. After discussions PPCoN agreed with the NPD, that the basis for the review should be the 1992 regulations. As a consequence the term "non-conformance", as used in this paper, is not intended to represent a legal interpretation of the term as regulations in general are not considered retro-active.
It was soon concluded that the alternative of simply correcting all the non-conformances were prohibitive. The cost would be extremely high and from a cost-benefit perspective such a solution would not be justifiable. Based on a wish to focus on the real risk contributors, a project process evolved that utilized a risk analysis approach as the framework in complying with the order.
This paper describes how PPCoN complied with the NPD order by developing and employing an innovative risk analysis methodology. Initially, a summary of the Norwegian regulatory regime is provided including its considerations around the use of risk analysis. The steps in the project process are then described briefly to provide a basis for an overall understanding of the project. A specific focus has been given to the use of cost-benefit analysis within the project and this is described and discussed in detail in a separate chapter. The detailed activities and results for one platform are then provided in a case study to illustrate the application of the project process. Prior to the conclusions, some important experiences from the project execution have been included together with some perspectives on the future with respect to the application of risk analysis and cost-benefit analysis.
Risk Analysis within the Norwegian Regulatory Regime The NPD has been delegated authority to supervise petroleum activity on the Norwegian Continental Shelf. As a consequence, the NPD has implemented regulations and guidelines regarding requirements for all systems on offshore installations.
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