In the face of decreasing profits, many oil and gas HSE departments will encounter challenging operational environments and cost cutting initiatives. However, these departments can minimize or eliminate noncompliance fines and reduce the costs of a disaster. Effective and exercised preparedness and response planning satisfies regulatory compliance requirements, decreases response costs, and fulfills a moral responsibility to protect employees, the community, and the environment.
As oil and gas companies’ budgets shrink and business protocols continue to require preparedness and response planning financial justification, the need to demonstrate the economic benefit of risk reduction costs to decision makers is increasing. However, while historical occurrences can present a general understanding of potential costs of disasters, unique circumstances continually change the landscape of the cost-benefit analysis of preparedness and response planning. Forward thinking risk analyses and associated costs justifications are often minimized and sidelined by profitable operational priorities. The uncertainty of circumstances surrounding an emergency or disaster including human error, equipment failure, climatology, population growth, and/or other external influences, coupled with a “it won’t happen to us” mentality lead to a notion of unjustifiable cost/benefit implementation.
However, the costs associated with regulatory noncompliance fines are often the catalyst for companies to prioritize preparedness and response planning. Fortunately, technological advancements have provided a simplified framework for addressing the administrative costs associated with maintaining compliant response plans. Confirming and updating regulatory compliance is simplified with an enterprise-wide, universally accessible response planning system. As a result, administration costs associated with mandated preparedness and response planning upkeep are reduced, justifying the cost of this new technology.
Implementing advanced software that enables companies to maintain the same or higher levels of compliance with less staff (such as TRP's SMARTPLAN™) is critical when budgets are reduced. Corporate emergency management and HSE budgets can be stretched if response planning software:
- Facilitates a reduction of dedicated staff
- Facilitates the ability to update corporate planning elements across locations, sites, geographies, without compromising site-specific details and response challenges
- Incorporates a simplified foundation to address plan related employee changes and facility acquisitions
- Allows for streamlined regulatory compliance audits and reduces non-compliance issues on a company-wide scale
- Automates regulatory governance with electronic submissions
In addition, an effectively exercised and accessible emergency response plan minimizes the duration of the incident and in turn minimizes associated costs and the impacts of an emergency on employees, the environment, and infrastructure.
In order for the oil and gas industry to continue to be one of the safest operating industrial sectors in the United States, the industry must continue to audit, test, and update preparedness endeavors and response capabilities. Supplying emergency management programs with advanced response planning technology will enable companies to meet key strategic and tactical preparedness objectives within the confines of a reduced budget. These key objectives include, but are not limited to:
- Facilitating compliance with Federal, State, and Local regulatory requirements, eliminating the threat of potential fines.
- Reducing property damage through expedited responses
- Enhancing the ability to recover from business interruption and loss (ex. damaged industrial, commercial, and retail facilities)
- Reducing indirect business interruption loss (ex. supply chain “ripple” effects)
- Reducing environmental damage (ex. wetlands, parks, wildlife)
- Enhancing a company’s image and credibility with employees, customers, suppliers and the community.
- Reducing other non-market damage (ex. historic sites, schools, neighborhoods)
- Minimizing societal losses (ex. casualties, injuries)
- Reducing need for emergency response (ex. ambulance service, fire protection).
- Reducing exposure to civil or criminal liability in the event of an incident.
- Potentially reducing insurance premiums (check with individual insurance providers for associated savings).
Regulatory compliance and response planning initiatives are often sacrificed in cost control activities. However, noncompliance fines or one ineffectively response to an emergency, disaster, or crisis situation can cost a company many times the cost of implementing and maintaining an effective program.