This week’s Pipeliners Podcast episode features Steve Allen of Energy Worldnet (EWN) discussing Pipeline Safety Management Systems (Pipeline SMS) from the perspective of utilizing contractors and providing training to ensure safety.
In this episode, you will learn about improving the safety culture in the oil and gas industry, how construction quality management differs from an operator perspective and vendor perspective, the need for caution when thinking about Pipeline SMS as a form of rulemaking, and the challenges that contractors face following safety standards.
Contractors & Pipeline SMS: Show Notes, Links, and Insider Terms
- Steve Allen is the Executive Director of Pipeline Safety for Energy Worldnet (EWN). Connect with Steve on LinkedIn.
- Pipeline SMS (Pipeline Safety Management Systems) or PSMS is an industry-wide focus to improve pipeline safety, driving toward zero incidents.
- The Plan Do Check Act Cycle (Deming Method) is embedded in Pipeline SMS as a continuous quality improvement model consisting of a logical sequence of four repetitive steps for continuous improvement and learning.
- API (American Petroleum Institute) is the only national trade association representing all facets of the oil and natural gas industry, which supports 10.3 million U.S. jobs and nearly 8 percent of the U.S. economy.
- API 1173 established the framework for operators to implement Pipeline Safety Management Systems (SMS). A significant part of this recommended practice is a training and competency aspect.
- API 1177 provides a framework for a quality management system (QMS) for onshore pipeline construction.
- Construction Quality Management is the policies, processes, and procedures put in place (typically by management) to improve an organization’s ability to deliver quality to its customers – whether those customers are clients/owners, contractors, or subcontractors – on a consistent and constantly improving basis.
- QA/QC is a combination of quality assurance, the processes used to measure and assure the quality of a product, and quality control.
- Quality Assurance (QA) refers to the implementation of proactive processes that aim to prevent defects.
- Quality Control (QC) refers to the process of inspecting the product to identify and correct defects.
- Distribution Contractors Association (DCA) serves as a link between its members, government agencies, organized labor, and other industry organizations in the area of distribution.
- The DCA Template is comprised of API 1177, API 1173, and the AGA whitepaper, “Contractor Construction Quality Management Guide” (November 2016).
- OQ Standard was put in place by pipeline operators to document that certain employees have been adequately trained to recognize and react to abnormal operating conditions that may occur while performing specific tasks.
- NAPSR (National Association of Pipeline Safety Representatives) is a non-profit organization of state pipeline safety regulatory personnel who serve to promote pipeline safety in the United States.
- PHMSA (Pipeline and Hazardous Materials Safety Administration) ensures the safe transportation of energy and hazardous materials.
- NTSB (National Transportation Safety Board) is a U.S. government agency responsible for the safe transportation through Aviation, Highway, Marine, Railroad, and Pipeline. The entity investigates incidents and accidents involving transportation and also makes recommendations for safety improvements.
- San Bruno Incident or PG&E Incident in September 2010 refers to a ruptured pipeline operated by the Pacific Gas & Electric Company. The rupture created a crater near San Bruno, California, caused an explosion after natural gas was released and ignited, and resulted in fires causing loss to life and property. [Read the full NTSB Accident Report.]
- The Merrimack Valley gas explosion in Massachusetts in September 2018 was the result of excessive pressure build-up in a natural gas pipeline owned by Columbia Gas that led to a series of explosions and fires. [Read the preliminary NTSB Accident Report]
Contractors & Pipeline SMS: Full Episode Transcript
Russel Treat: Welcome to the Pipeliners Podcast, episode 127, sponsored by Energy Worldnet, a worldwide service provider to the oil and gas industry, making the world a safer place by providing pipeline operators and contractors innovative technology for operator qualification, safety training, content authoring, and guidance as pipeliners operate in compliance with PHMSA, OSHA, and other regulatory requirements. To find out more about Energy Worldnet, visit energyworldnet.com.
Announcer: The Pipeliners Podcast, where professionals, Bubba geeks, and industry insiders share their knowledge and experience about technology, projects, and pipeline operations. Now, your host, Russel Treat.
Russel: Thanks for listening to the Pipeliners Podcast. I appreciate you taking the time, and to show that appreciation, we give away a customized YETI tumbler to one listener each episode. This week, our winner is Ariel Golshan with National Grid. To learn how you can win this signature prize pack, stick around to the end of the episode.
This week, Steve Allen returns to the Pipeliners Podcast to talk about contractors and pipeline safety management.
Russel: Steve, welcome back to the Pipeliners Podcast.
Steve Allen: Thank you, Russel. I’m glad to be here.
Russel: So we’re going to continue our conversation on pipeline safety management. I know you’re doing some interesting work around pipeline safety management and pipeline contractors.
Maybe a good place to start is just talk a little bit about what you’re doing and what you’re learning.
Steve: Okay. Well, go back to 1173. It requires that operators engage their contractors with various aspects related to safety, but they really don’t get so much into quality management systems and a contractor actually having an SMS program other than that related to OSHA or personal safety related items.
I had this vision to try to work with a local contractor who’s a very large local contractor — actually a national contractor and an international contractor — who I’ve known for decades.
They were willing to engage me in a pilot program in developing some audit protocols related to some of the subsets of the “should” and “shall” statements with 1173, and then also looking at some of the “should” or “shall” statements or the concepts that were developed in a couple of other documents, one being RP 1177, construction quality management systems.
The other was a whitepaper that the American Gas Association put out back in late 2016 on contractor construction quality management.
So those three documents — the AGA whitepaper, RP 1177, and RP 1173 — you put them in a blender and mix them up and pour it out, and you’ve got all sorts of really good material.
In my opinion, if an operator has a contractor that really puts their money where their mouth is and really drinks the Kool-Aid, so to speak, on those three documents then you’ve got something.
Frankly, the operators, like I said to begin with, 1173 says that they do need to engage your contractors. But I think that there’s so much more that could be done over and above what that RP calls for and that’s what I’m working on.
Russel: So, 1173 is pipeline safety management systems. What is 1177?
Steve: It is an American Petroleum Institute recommended practice. Actually they say it’s for steel pipeline construction quality management systems, but really it can be applied to just about any construction.
It was an RP that came out subsequent to 1173. In fact, I think it might have even been late 2016 or maybe even ’17. I’d have to look it up.
Russel: So it’s relatively new.
Steve: Yeah, it is.
Russel: I was just going to ask, what construction quality management?
Steve: Okay. Well, if you think about it, a pipeline’s safety characteristics start long before it is put in the ground. You have various aspects like design. You have construction practices. You have quality assurance for the materials from the manufacturer.
You have various quality practices employed on the job site, like loading and unloading pipe, how you storage of pipe, ditching, field bending of steel pipe, welding. Actually I was reading off of a list here from 1177.
There’s a whole host of activities related to quality construction management that if a contractor has controls in place to address each one of those activities, you’re going to end up with a much higher quality pipeline. And higher quality pipelines, if they’re built properly and with quality in mind, chances are they’re going to be safer and safer for a longer period of time.
Russel: I think in addition to safety, you’re also talking about a lower life cycle cost. If I buy the right materials and I put them in the right way, I’m not going to have to spend money to correct mistakes, and I should be able to operate it at a lower cost of operation without any impact on safety.
Steve: Right. Absolutely. For example, on a steel pipeline, you have all the coating on there. You go through and you do the jeeping process to make sure that you don’t have any nicks in the coding and whatnot.
Every one of those little bitty nicks is going to result in a holiday sometime down the road. So if you really have a control or process in place to make sure that that is done really, really well, there’s a good chance that you’re going to avoid those leaks later on.
Russel: Oh yeah, no doubt. I know that you’re a big advocate of safety culture. I think a lot of times when we as an industry talk about safety culture, we’re thinking about the operators, but I would assume that applies to the contractors as well, right?
Steve: Absolutely. In fact, and I don’t know if I mentioned this on a previous podcast, but I’ve been at conferences where I’ve asked for a show of hands, and I’ve been at other conferences where a large operator would step up.
The suggestion is that in today’s business model, especially for larger operators, contractor partners or contract partners can represent anywhere from 50 to 80 percent of their workforce. This isn’t just for new construction. Contractors are out there doing operation and maintenance activities as well.
If you exclude that large chunk of your workforce from practicing safety culture and embracing safety culture, you really miss something. I wrote an article a while back, I put it out on LinkedIn, where it talks about your contract partners basically being your boots on the ground. I mean, they’re at the frontline.
If they’re trained properly and they buy into the whole concept of “see something, say something,” then that gets reported back to the operator.
If there’s a genuine risk that’s identified, many operators will update their risk register based on input from the contractors, and before you know it, this is one unified team to try to help improve safety through positive safety culture.
Russel: How would safety culture, and for that matter, construction quality management differ from an operator perspective and a vendor perspective?
Steve: From an operator perspective, I don’t really see that there would be a big difference. From a vendor perspective, the ultimate product or service that a vendor offers, if they understood the elements of 1173 and they appreciated quality management systems and QA/QC practices then yeah, I can see how it’s important for the vendors as well to be on board with a positive safety culture.
But comparing contractor partner safety culture versus an operator, I think they’re one and the same, or they should be one and the same.
Russel: That’s an interesting clarification, because I would agree with you that they should be the same. But I do know that if I’m a contractor and I’m working with multiple pipeline operators, every operator has their own unique details in how they implement standards and practices.
Russel: As a contractor, oftentimes, I’m moving my crews and they’re working for more than one operator. So I would think that just in general that for a contractor, at the culture level, there may be no difference. But when you start getting into the actual quality management program itself, there’s a lot more complexity in that on the contractor side than on the operator.
Steve: Yeah, I agree. Now that’s a great setup here because there is something else, another document out there that has become adopted I guess by big chunks of the construction and contractor industry. It’s the Distribution Contractors Association. They have this pipeline construction safety management system template that they have out there.
In essence, they’ve taken elements of those other three documents that I mentioned earlier 1173, 1177, and then the AGA construction quality management whitepaper — and they’ve combined them into a document that is specific for distribution construction companies.
I hate to use the word “portability,” but from the standpoint that you have pipeline contractors across the country, they’ve all subscribed to this DCA template, I think that that will go a long, long way towards the fact that all operators don’t have exactly the same PSMS or same PSMS programs or requirements, and neither will contractors. But to the extent that contractors have adopted this sort of a standard, I think it’ll go a long, long way.
Russel: So what’s the challenge for a contractor to get a standard like this adopted?
Steve: Well, I remember when I first started talking about this a few years ago with some contractors, and the response from those contractors was really kind of interesting to me. It was, “Well, our clients, the operators, they aren’t asking for this yet. They’re not requesting this. And as such, we’re not going to necessarily pursue this in any great detail.”
So that was kind of a barrier to acceptance, I think. Well, I think now we’re seeing more and more operators out there that are engaging. They’re reaching out to the contractors to get them to the table as part of positive safety culture, as far as risk management, continuous improvement, things of that nature.
So other obstacles — it’s going to take time, it’s going to take effort. Any time you have something like that come up, there’s going to be some dollars and cents associated with it, but I think that operators would probably be more than willing to pay for that.
Russel: Yeah. So you recently put an article out on your LinkedIn feed about this very subject and talked a little bit about what we’re talking about now.
One of the things, as I’m looking at that article that comes up for me is the training and orientation on these policies and practices. That seems to me to be a fairly big part of these programs because that’s got to happen broader than just the people who are working on the job site.
Steve: That’s right. Without trying to get into too much detail or going down a rabbit hole, I know there are efforts out there across the country to try to come up with some standard training in OQ standards or practices for contractors, so that a contractor, if they have 10 different operator clients, they don’t have to have 10 different training programs and tests for a given covered task.
Again, I really don’t like the word “portability,” but I can’t think of another good word to use, but suffice it to say, I think that ultimately, we’re going to see that. I know that there are some pilots going on with NAPSR states and AGA and operators along this line. I’m pretty sure that NAPSR has bought into it, or at least many of the NAPSR members have, as well as PHMSA.
I mean, I think it’s kind of one of those things like motherhood and apple pie. How can you really argue against something like that?
Russel: Well, that’s true.
Russel: I think it’s going to create an opportunity. I think somebody in the vendor community is going to figure this out, like you find in the safety programs in the companies that help large operators manage safety programs across their contractors and all of that.
There’s really a need to unify that training and credentialing and all of that. It just can get really complicated really quick if you’re not doing that.
Steve: Yeah. Again, to go back to what I was saying earlier, to try to find a common ground for some of that training, it’s the same sort of concept like the DCA template on construction safety management systems.
If you have a relative standard, or a standard that most of the construction partners have bought into and are applying, then that provides a certain amount of certainty for an operator using a contract partner to know what they’re doing and compare apples to apples.
Russel: How much difference is there between these three documents that you’re mentioning — the AGA whitepaper, the API standard, and the DCA standard?
Steve: Like I was saying, the DCA template is comprised of the three other documents. Basically, those three other documents — 1177, 1173, and the AGA whitepaper — informed the content of the DCA template.
1173, as we all know, came out because of an NTSB recommendation to form a group of stakeholders to develop safety management systems for pipeline operators. Subsequent to that, actually it went back aways.
I can’t remember who actually did the work, but PHMSA contracted with an organization to do a study on quality construction management systems or management practices because they were seeing lots of problems in the field on new construction.
That entity — and I hate to guess who it was, I just can’t remember — they had a very, very good, solid report that they came up with, which was really the foundation for our RP 1177, and I think 1177 may even mention that study. But it also ties directly back to 1173. It recognizes the Plan Do Check Act continuous improvement aspects of SMS and it calls for that in 1177.
Now on the AGA whitepaper, this was prior to 1177, they went through and broke it down into a handful of categories. I think I mentioned that in that article that I put on LinkedIn, but they talk about project initiation, preparation documentation, inspection, performance measurement, things of that nature. They provide a lot of detail, a lot of what I would call “should” or “shall” statements.
So it’s a very, very good document. They all complement each other, in my opinion.
Russel: So, Steve, in your opinion, what role does PHMSA and the state regulators have around this subject of safety culture, and in particular, contractors and their safety culture and safety management systems?
Steve: Well, as we all know, SMS is a voluntary practice, at least for now it is. Everybody says we’re one San Bruno away from this being incorporated by reference, perhaps.
I think we’re probably at least one more reauthorization away from this ever becoming incorporated by reference. Even at that, if Congress says go forth and do this, it takes a good long while for any of those rules to be promulgated. In the meantime, PHMSA has been very outspoken about SMS, and operators need to get on board with this.
The AGA board last year had a resolution stating that their members need to adopt SMS within three years. The APGA did something similar the previous year.
As far as PHMSA and NAPSR looking at the contractor community, I don’t think there’s been an awful lot of discussion about that yet. I think everybody recognizes that 1173 calls for operators to engage their contractors, but I’m not hearing a whole lot of talk about 1177 or hearing a lot of talk about the DCA pipeline construction safety management system document.
I think that if PHMSA and NAPSR members were to embrace that, at least start giving it some air time, that would be good because they’re going to reach operators.
And operators are going to hear this and they’re going to go, “Okay, well that’s probably a good idea. I need to maybe do something more intentional with my contractors. Have them participate in gap analysis of the appropriate ‘should’ and ‘shall’ statements. Engage them with risk management, and so on and so forth.”
So I think it’s important for the regulators to engage on this as well. I just haven’t seen a lot of it yet as it relates to contractors. With that being said, on the heels of Merrimack Valley and some of the NTSB recommendations on management of change and things of that nature, I think we’re going to start to have that dialogue. At least I hope so, and I’d like to be right in the middle of that dialogue if I could.
Russel: I might have a little bit of a different take on this. I’ll share it with you and just let you comment on it.
Steve: All right.
Russel: From a regulator perspective, I don’t know that the regulator has authority to regulate contractors.
Steve: No, they don’t.
Russel: Yeah, so they don’t. They’re going to regulate the operators. When you start talking about safety management systems in particular versus rulemaking, I think that safety management systems are something different than technical standards, so I am not a fan of safety management systems being mandated, per se.
Steve: Nor am I.
Russel: On the other hand, I think that when you look at this more globally, there’s multiple wheels in the cog of this industry — one wheel is rulemaking, which moves slowly and should be setting minimum standards and providing guidance.
Then on the extreme opposite end of that, you’ve got R&D looking for things that are going to be game-changers in the way pipelines operate and do so safely.
Between all that, you’ve got standards which are trying to say, how do we take this technology and implement it in a way that’s using best practices and all of that. There’s kind of a continuum around all those things.
My take is that contractors are going to be brought in. I also think the big thing that needs to shift is that — I don’t know, this may be a radical idea. But I think that pipelines, in general, don’t think of their vendors as partners the way that some other kinds of industries think of their vendors as partners. I’ll use airlines as an example.
Southwest Airlines or American Airlines or Delta Airlines, or anybody who’s flying, Boeing Aircraft, that is a strategic relationship they have with Boeing because their future is bound up in that technology and how well it works and operates.
Steve: Yeah, that’s a good point.
Russel: I think there’s going to be a need for, not all vendors, but key vendors to be identified as these are strategic vendors because they go to how we operate, and we need to manage our relationship with them as part of our overall safety management program.
Steve: I want to chime in on something else. Yeah, you have regulations, you have a rulemaking process, but there’s something else in there — enforcement and the relationships that the state regulator might have with their operators and what PHMSA would have with the interstate operators.
There are ways to influence behavior by an operator without enforcement actions or without saying, “Okay, here’s this regulation. You have to do it this way.”
Well, we don’t want a safety management system, a 1173 incorporated by reference. We don’t want this to be a mandate. But I think that regulators can play a big role in helping to persuade operators to engage their contractors more.
When I was running the state of Indiana’s pipeline safety program, there was nothing that said that I had to issue a fine or a penalty. I mean, we got an awful lot of stuff done just because of relationships that we had with our operators.
Steve: We’d have good discussions. “Hey, you might want to consider doing this.” They’d say, “Yeah, that’s a good idea. I think we will do that.” I just wanted to clarify maybe that point.
Russel: No, I think that’s perfect. There’s also a distinction between telling somebody what to do and telling somebody the outcome that’s required.
Russel: I think one of the things that is universally true and everybody is embracing is this idea that we need to move the industry to zero incidents.
Russel: The challenge is we don’t yet know how to get there.
Russel: We’re all trying to discover that together, and ultimately, that’s going to take a collaboration.
Steve: Agreed. I guess the whole point of this particular episode is getting operators and contractors collaborating and working together and communicating, and all of them pulling in the same direction. So if we can get the regulators on board with helping that as well, that’s not a bad thing.
Russel: I absolutely agree. Well, hey, Steve, thanks for coming back. You’re starting to become a regular. I’m going to have to get you a t-shirt or something to wear around, so you can show it off.
Steve: Well, I can tell you I appreciate the opportunities to come and opine on such lofty issues and matters.
Russel: Okay, quit using those big, fancy words — your old, state regulator, big, fancy words on me.
Steve: It’s only five letters, man, come on. It’s not that big of a word.
Russel: Yeah, all right, man.
Steve: I appreciate it.
Russel: Good to have you on.
Steve: All right, thank you.
Russel: I hope you enjoyed this week’s episode of the Pipeliners Podcast and our conversation with Steve Allen.
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Thanks for listening. I’ll talk to you next week.
Transcription by CastingWords