Orders and Decision on Coercive Fine for Seadrill

Source: www.gulfoilandgas.com 3/10/2021, Location: Europe

The Petroleum Safety Authority Norway (PSA) has given Seadrill Europe Management (Seadrill) two orders and a decision on a coercive fine after serious breaches of the regulations.

These breaches have been identified by the PSA through its audit activities with Seadrill and its West Mira mobile drilling facility.

On that basis, Seadrill has now been given two orders. The first is directed specifically at West Mira, while the other covers conditions affecting all Seadrill’s facilities on the Norwegian continental shelf (NCS).

In addition, the PSA has decided to impose a coercive fine on Seadrill.

Coercive fine
The coercive fine is intended to ensure that the company complies with the first part of order 1, which requires it to ”review safety-critical installations, systems and equipment on West Mira and implement the necessary corrective or compensatory measures to ensure that installations, systems and equipment are capable of performing their required functions so that prudent operation can be maintained on West Mira.”

The deadline for compliance with this part of the order is 12 March. Should Seadrill fail to meet this deadline, it will be subject to a fine of NOK 50 000 per day until the order has been complied with.

Background
An acknowledgement of compliance (AoC) was issued by the PSA to West Mira on 30 October 2019.

When the PSA issues an AoC, it is expressing confidence that petroleum operations can be conducted by a mobile facility in compliance with the regulations. An AoC decision is based on information provided by the applicant in a dedicated application. This document must cover both technical conditions on the facility and the company’s organisation and systems for safety management.

Since the AoC was issued, a number of serious incidents have occurred on the facility, with either serious consequences or a high potential for these. The PSA investigated the incident involving the unintentional disconnection of the lower marine riser package, and this led to an order being issued.

The PSA has also held a number of meetings with Seadrill, where it has expressed its concern over observations made in audits and investigations concerning the capacity and competence of the company’s organisation and risk understanding on the facility.

In addition, the PSA has conducted audits and investigations of other facilities operated by Seadrill which could have contributed to experience transfer and been relevant for the operation of West Mira.

The PSA conducted an audit of electrical installations and technical safety on West Mira during week 7 of 2021 in collaboration with the Norwegian Maritime Authority (NMA) and the Directorate for Civil Protection and Emergency Planning (DSB). This exposed new serious nonconformities and also revealed that previously identified nonconformities had not been followed up in accordance with the company’s response to the PSA.

Reference is made by the PSA to the guidelines for section 25 of the framework regulations on applications for an AoC for certain offshore mobile facilities.

Further use of an Acknowledgement of Compliance is contingent on maintaining and following up the basis, prerequisites and other conditions given in the acknowledgement.

Based on its observations since the AoC was issued, the PSA is uncertain whether the preconditions for issuing an AoC to West Mira are still present.

The PSA also refers to section 25, paragraph 1, second sentence of the activities regulations on use of facilities.

The use shall at all times be in accordance with the facility's technical condition and the assumptions for use that form the basis for prudent activities.

Serious breaches of the regulations have been identified, and Seadrill has been given the following two orders.

Order 1
Pursuant to sections 69 and 10 of the framework regulations on administrative decisions and on prudent activities respectively, Seadrill Europe Management AS (Seadrill) is ordered to do as follows.

1. Review safety-critical installations, systems and equipment on West Mira and implement the necessary corrective or compensatory measures to ensure that installations, systems and equipment are capable of performing their required functions so that prudent operation can be maintained on West Mira. See sections 45, 25 and 26 of the activities regulations on maintenance, on use of facilities and on safety systems respectively, and section 22, paragraphs 2 and 3 of the management regulations on handling of nonconformities.

A brief description of the process for identifying necessary measures, an overview of measure initiated, and a confirmation with grounds that safe operation is being maintained on West Mira must be submitted to us no later than 12 March 2021.

2. Implement the necessary measures by 1 June 2021 so that all nonconformities related to safety-critical installations, systems and equipment on West Mira are corrected. See sections 45, 25 and 26 of the activities regulations on maintenance, on use of facilities and on safety systems respectively, and section 22, paragraph 2 of the management regulations on handling of nonconformities. We must be informed should permanent solutions not be in place by the deadline, and compensatory measures will still be required.

A plan for the way part 2 of order 1 will be implemented must be submitted to us by 16 April 2021. We must be notified when the order has been complied with.

Order 2
Pursuant to section 69 of the framework regulations on administrative decisions, Seadrill Europe Management AS (Seadrill) is ordered to do as follows.

1. Ensure that all nonconformities from the petroleum regulations which we have identified on your facilities since 1 January 2017 are corrected in line with the company’s responses to us. See section 22 of the management regulations on handling of nonconformities. Deadline 1 August 2021.

2. Identify and implement operational or organisational measures which ensure safe operation of all the company’s facilities in Norway with an AoC, including ensuring that new faults or deficiencies are continuously identified and corrected. As part of this work, risk understanding and organisational capacity and robustness must be assessed. See section 6 of the management regulations on management of health, safety and the environment. Deadline 1 October 2021.

A plan for the way order 2 will be implemented must be submitted to us by 30 April 2021. We must be notified when the order has been complied with.

Decision on a coercive fine
We refer to the notice of two orders and the notice of a coercive fine of 1 March 2021.

If section 1 of order 1 is not corrected by 12 March 2021, a coercive fine of NOK 50 000 per day will come into effect from 13 March until the order has been implemented. The order to pay a coercive fine is regarded as grounds for enforcement of distraint. See section 7.2 of the Enforcement Act, and payment of the fine can be enforced immediately by the State Agency for the Recovery of Fines, Damages and Costs (SI). The decision on a coercive fine has been taken pursuant to section 10-16, paragraph 1 of the Petroleum Act.

See also the letter from the PSA to Seadrill (below) with a more detailed justification of its assessment.


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