Good afternoon, I am pleased to have had the opportunity to join you today. I hope that many of you have already found useful points to take back to the day job – whether it is new information, examples of good practice, new contacts or better still all of the above. But the important thing is that you go back and DO, not just see today as an interesting diversion from the normal day job.
I worked directly in the major hazard industries for over 20 years. I know from first hand experience how important this stuff is. Without exception in this room today, if process safety is not on your Board strategic risk register – it should be.
There are still some businesses that don’t realise that process safety is part of what they do; for example not even recognising that warehousing and storage of dangerous substances is a process.
This is a special year for HSE – our 40th Anniversary. The enduring principle of health and safety law in Great Britain – that those who create risks are best placed to control them, and that they should do so in a proportionate and practical way still hold today and apply just as much to major hazards as to offices and shops. The focus is on outcomes that need to be achieved – the Act and regulations, including COMAH, are designed to enable activities to take place, not to stop them.
Last year the triennial review of HSE was published. The review did not question the fundamentals of HSE’s role or how it operates. But nonetheless we recognise that like every organisation we must always strive to do better. For this sector, much of that work has been encapsulated in the Focus on Enforcement programme but also in our careful consideration of how to implement Seveso III here in the UK. We have recognised that on this crowded island of ours it makes sense in some particular cases, to retain existing regulatory requirements even where the go beyond the requirements of the new Directive. You (and others) may call that gold plating, I can’t. It is being realistic and sensible about managing the risk in our particular operating environment.
But that’s enough about me and HSE; I want to focus on you. We’ve heard a lot today about what is going on and some of the progress that is being made in process Safety, but it’s also important to stand back and look at the broader context.
The Major Hazards industries have changed significantly in the last 20 years. Each sector has its own history, but there have been common themes of structural change, including:
The industry faces other challenges, such as development and supply demands in expanding areas. An ageing workforce and difficulties with retention are leading to a loss of skilled workers. It is important that sufficient process safety competence is maintained.
You'll perhaps be pleased to hear that I'm not going to talk yet again about Flixborough, Buncefield, Texas City and all those other well known cases. But I am going to talk about a much more recent case and one which is closer to home.
This is an example of a weak link in the industry, getting process safety badly wrong. Euticals Ltd was a pharmaceutical manufacturer in North Wales. During an inspection in November 2012, 130 tonnes of a production waste bi-product was found, IsoSorbide DiNitrate (ISDN). When dry, ISDN has explosive characteristics similar to TNT. The operator did not have hazardous substance consent for the storage and had no risk assessment for it.
The magnitude of the issue led to the Local Resilience Forum establishing a multi-agency Strategic Gold and Tactical Silver Commands to manage various challenges, with the assistance of the site operator and their consultants. A public information zone extended over 2 kilometres, with a possible impact on approximately 9000 residents, hundreds of local businesses, and the potential for environmental damage and pollution of air and watercourses. Closely monitored removal of the ISDN began and over 100 tonnes had been removed by June 2013. Note that even at this point, this was a process instigated and led, not by the company but by the regulators and other local public bodies.
However, in late July 2013, the site operator announced that the parent company had withdrawn finances and Euticals Ltd was to be liquidated two days later. The site was disclaimed as a ‘bad asset’. The parent company was not UK based and the potential for loss of reputation by liquidating the company during the clean-up process does not seem to have been a significant concern.
This left the Local Resilience Forum to overcome legal, financial and technical challenges to manage the rest of the removal, plus the additional work required to clean up and decontaminate what had become an abandoned site. Much has been done, but significant effort still remains. There is still a public information zone of over 1 kilometre around the site.
If I had stood here 3 years ago and described this scenario to you as even a possibility, I am sure you would have told me categorically that it could not happen, but it did.
Obvious questions arise about leadership and management of process safety, and of knowledge and competence. There is nothing wrong with overseas ownership, this is a global industry in a global economy, but in circumstances such as this it can clearly create new challenges.
Do not dismiss this as a one off. Think about what this has done to public and regulatory body confidence in your industry. It has very serious implications for the reputation of Responsible Care, not just nationally but globally. It is bound to lead to new lines of questioning when we visit your sites.
Learning and Leadership are implicit in all I am talking about today but it is worth highlighting their heightened importance when it comes to industry change. As well as learning to avoid repeating mistakes that are well documented, there is a need to learn how to avoid making new mistakes as businesses and processes change. Leadership is much more about constantly asking questions than being confident you have all the answers.
It is quite clear that industry performance in managing major accident risk requires improvement. Last year HSE investigated 115 incidents at major hazard sites, a significant number relating to loss of containment or other uncontrolled developments such as fires. Whilst these are by definition “new”; incidents over the last year, the causes are not new – making it clear that old lessons are not being learned and put into practice.
And the need to improve requires leadership
We need mindful leadership, not boxed-in thinking. Following most major incidents everyone says they want to learn about what happened, but this is often coupled with an underlying need to find a particular quirk/practice which existed in that organisation which makes it different from your own – and therefore enables a quick and often fallacious conclusion that what happened there, “couldn’t happen here”.
Here is another example of boxed in thinking: HSE recently served an enforcement notice on an operator in the North Sea because of their massive maintenance backlog. Maintenance backlog not safety critical backlog. Why? Because when we asked, they very clearly had not given any thought to the cumulative impact of this huge backlog on their overall safety integrity.
So, how do we address the challenges of process safety and in particular the leadership challenge? One thing I am quite sure about is that we don’t need new initiatives.
Earlier this week IChemE invited me to speak at a seminar on “High Reliability Organisations”. So I did my homework. I read up on High Reliability organisations. I talked to the experts in HSE and HSL about it. It’s interesting, but it not new and it’s not different. It isn’t a magic bullet. It’s process safety looked at from a very slightly different angle. We don’t need new initiatives and new labels to distract us, we need delivery on all of the things we all know need to be done and at a faster pace than has been achieved hitherto. I don’t mind what you call it – Process safety, Asset Integrity, HRO, ABC…. Just do it!
We have to move away from process safety being seen as a specialist subject, or a programme that’s added on or applies to some and not others. It’s integral, it applies to you all and some of you are living on borrowed time. We need to change the mindset at the very top of organisations, starting with the Boardrooms. Unless we do this, major incidents will continue to happen which will cause substantial levels of casualties to employees and members of the public, major environmental damage, loss of assets and the ability to produce – or hair raising incidents like the one at Euticals which thankfully did not cause harm to people but has done considerable collateral damage. Boards that do not focus on process safety have a very serious gap in their Corporate Risk register and are potentially taking a gamble with the survival of their business, possibly without even realising it.
By now, you will all be aware of the industry-wide Process Safety Leadership Principles, which advocate the use of performance indicators, publication of performance information and sharing of good practice across sectors. And last October the Competent Authority published its Performance and Recognition Framework that describes how it takes business performance into account when planning its interventions. The Framework encourages use of the Leadership Principles – this provides an even greater incentive for your organisation to be using them.
In setting these expectations we also recognise that real improvements will only be made if we move beyond simply addressing performance through technical solutions. Instead we need to develop a more holistic appreciation of business decision-making which impacts on the control of major hazard risks.
This first step is critical if the industry is serious about taking ownership of issues, generating solutions and seeing these applied across the sector.
There is little evidence that industry has taken the opportunity to share learning and good practice, with limited progress in reporting on sector performance – all of which are cornerstones of major hazard leadership.
The newly established COMAH Strategic Forum has a role to play here, and offers an excellent opportunity for industry and regulators to make much needed progress. Some of you (UKPIA members) have done a great job on performance reporting the time for the rest of you to step up to the plate is long overdue.
The next issue I want to highlight is - Dealing properly with ageing plant. Maintaining asset integrity is central to avoiding loss of containment and is at the heart of major accident prevention. Effective day-to-day management and the right long term investment decisions are essential. It is a long established and well-known issue, but it continues to be a major challenge.
When margins change suddenly, such as those affected by the recent drop in oil prices, businesses really must have effective health and safety leadership to ensure the right decisions are made to ensure asset integrity does not suffer. Assumptions made about the future lifespan of the assets are crucial and wrong assumptions are hard to reverse.
On the other side of the coin, growth in sectors such as offshore, biological agents and explosives is exposing new asset integrity challenges as new technologies are being introduced to allow increased production without affecting surrounding land use.
In addition to the interventions HSE makes it is vital that the industry itself takes the lead on process safety issues. There are some good examples of where this is already happening including:
Please ask yourselves whether you are an ‘intelligent customer’ when it comes to any asset integrity expertise you buy-in, if you do not have it in-house; you still need to understand what is required, and it is important to be able to challenge what a third party delivers for you.
The overall performance of the industry shows only small improvements on asset integrity year on year. More than two-thirds of sites are still not where we want them to be. Performance on Containment Integrity shows little improvement overall.
Significant improvement is still needed across the industry; I want you all to be part of ensuring that your organisations are doing their bit.
Finally, I want to return to some regulatory issues. Later this year the Control of Major Accidents Hazards Regulations (COMAH) 2015 come in to force, implementing the Seveso III Directive. It will maintain the essential elements of the previous regime, whilst introducing more modern requirements for provision of information to the public as well as aligning with new international classification directives. HSE has provided input to help government implement the land use planning elements of Seveso III.
One of the key drivers for Seveso III was the European Regulation on classification, labelling and packaging of substances and mixtures (CLP) coming fully into force on the 1st of June. The change to CLP may result in some sites not currently covered by COMAH coming into scope, and some existing establishments may drop out. There may also be some movement between the tiers. But the implementation of the new regulation is also an opportunity to raise the profile of process safety in your organisation.
COMAH site operators will have to provide information to the public in a permanently available and electronic form. This is an opportunity to ensure that the same information is widely understood throughout your own organisation – from top to bottom.
At the beginning of 2013 the Focus on Enforcement report on the COMAH Regulations was published. Since then HSE, the Environment Agency (EA) and industry have worked to deliver a number of improvements. For example:
This has been and long and packed day and I know many of you have long journeys to get back home, but please use those journeys to reflect on what you’ve heard today – from everyone, not just me. There is still a large part of the chemical industry in my blood – figuratively not literally, I hope. We, as regulators are here to help you to be successful, to enable growth and prosperity not to stifle it. Operating safely and sustainably is not about luck or taking chance, it’s about getting it right all of the time and for us, that means we sometimes have to tell you things you’d rather not hear. But the truth is you should be doing this for the sake of your business and its future prosperity, not because we tell you to do it – that’s what real leadership is all about.
Have a safe journey home and do something to make a difference in process safety – and do it tomorrow. Don’t put it off.