Definition Of Risk In Oil And Gas Industries?

Risk is the probability of something happening. It is DIFFERENT from 'exposure', which is the amount of financial assets 'at risk'

There are so many different types of risk it is not feasible to answer the question on this forum. I suggest you find and take a short course on risk management taught by insurance companies.

Risk is the probability of something happening. It is DIFFERENT from 'exposure', which is the amount of financial assets 'at risk'

Keith, my understanding was that risk equaled probability x consequences. In other words there is very little risk if there are no consequences to an action even if the probability or frequency of the action is high. Conversely if the consequence of an action is multiple fatalities then the risk is high even though the probability or frequency is low.

Would "exposure" form part of the "consequences" or is it totally different?

Don't want to star splitting infinitives and semantics. I used terms standard to insurance firms. For an event (singular), risk is the probability of the event happening. Consequences is HAZOP and SIL language and only PART of (financial) exposure.

As example:Situation is a pump handling flammable material at a temperature above the fluid autoignition temperature. The material will self ignite if it escapes. The RISK is a fire resulting from a leak-whether a seal failure or pipe breakage,etc. 'Exposure' is the potential economic impact from the worst case reasonable failure (I.e. catastrophic seal failure and resulting significant fire) damages this critical pump AND instrument & electrical cables and process piping exposed directly above the pump, causing $xxx in physical damages and YY times $XXX in lost profits during the repair & restart down time.

The initial failure (seal) cost is trivial, but MAY result in total economic loss thousands of times larger. There may be no creditable 'injury or loss of life' risk because the probability of a person being in the wrong place when the seal blows is vanishingly small. Thus evaluated risk of compensation cost for survivors or injured personnel exposure is small. The insurance company view is the EXPOSURE for repair and loss of profit is many many times the injury/death Exposure and would thus determine insurance cost.

The potential for very large negative economic impact and resulting costs of insurance coverages leads to safer designs-I.E. double mechanical seals, automatic fire suppression devices, leak detectors, locating such hazards where the collateral damage is reduced (out from under control systems, power and process fluid lines).

A company may have enough cash reserves that damage repair is easy to self-insure, but business interruption for months may permanently impair profitability (competitors get and keep the business.) The EXPOSURE is unbearable (causes death of the enterprise) so the Company either procures enough BI insurance and makes arrangements to buy replacement product during the outage, and/or modifies plant designs to reduce the likelihood of the extended outage to an acceptable level.

There are so many unique risks inherent in the production and processing of hydrocarbons and chemicals that it is not possible to 'a-priori' define them. Each situation must be carefully evaluated. The correct 'risk management' strategy will be different for different Owners of otherwise identical facilities. Some will incurr higher preventive maintenance and safety training costs to prevent incidents. Others will choose a philosophy of minimal maintenance and operating expenses to maximize current profits.

International Electrotechnical Commission standards related to risk assessment:

IEC 61508, IEC 60204-1 and IEC 62061.

Safety Integrity Level (SIL) concepts can be used to minimize "risk".

Working in the Oil and Gas Industry is risky. Period!

That's why I always carry a pack of matches in case the lights go out!

Well I spent some time on oil rig. One risk is natural gas blow out. Never seen one but heard tales of some violent enough to push the pipe out of the hole. Most of the rigs I was on drilled to about 7,000 to 8,000 feet. That would be a bit of pipe to get out of the way of as it impacts into the derrick over your head and come tumbling down.

Had good friend get caught in one. He got lucky it ignited just as he was shutting down the last motor. Blew him away from the rig. Still got burnt pretty bad.

There were a lot of old timer with burns from blow outs.

There is a risk of Poison Gases. The rigs have sensors and an alarm. Its just are you fast enough. Never know how fast and how much is going to come out. Had one of them scares. Never seen some of my buddies move so fast. False alarm though sensor went bad.

Watch one of my friends get picked up and thrown across the rig floor one night. Ruptured his spleen broke about 6 ribs a rib punctured a lung. That was due to some one installing a valve upside down.

Lots of things to go wrong on a rig and add human screw ups to it was a real experience.

Just started and we haven't even got the oil or gas out of the ground yet.

In the chemical industry there are several risk ranking methodologies that you use to rank the risk. They usually compare the severity of an incident (cost in dollars, env damage, injury, death internal, multiple public fatalities) against the freq or likelyhood (never hapened, happens every 10 years, happens every year, can happen any time).

A chart sets the rank.

See company called Modern Safety Management for an example of their chart.