Impact Case: Robust risk regulation in the petroleum industry

Over the last 15 years, research by the Department of Safety, Economics and Planning (ISØP) at The University of Stavanger has enhanced knowledge about risk management and risk regulation among policymakers and risk authorities in the Norwegian petroleum sector.

Published 02. May. 2023. Updated on 25. Mar. 2024

Ole Andreas Hegland Engen (UiS) dicusses the projects' impact with Torleif Husebø (Petroleum Safety Authority Norway)

By means of numerous teachings, customized lectures, and policy papers, this research stream has facilitated the assessment and further development of the risk regulatory regime in the Norwegian petroleum sector. In addition, the wide variety of dissemination activities has raised awareness of the other relevant safety domains about the well-functioning of this regime and that the regulatory system in the petroleum sector may act as a best practice in the development of equivalent regimes in other sectors.

Underpinning research

Supported by a series of national and international grants, research at ISØP has made significant contributions to understanding the emergence, meaning, practice and effectiveness of the risk regulatory regime in the petroleum sector in Norway. The main idea of this research stream is centered upon balancing trust and authority/power in regulatory regimes and what mechanisms are/should be in play for this balance to work properly.

By combining technological, organizational, legal and historical perspectives, their research has developed an assessment of “robustness” of regulatory regimes by conducting a comparative study in the global petroleum sector. Accordingly, they define a robust regulatory regime as the one that has survived for a considerable period with its principles intact, but with adaptation in its detail to changing situations and priorities, including the capacity to keep pace with new technologies and emerging risks and the different frames and focusses of the different actors, so that none of them mobilizes to disrupt the regime. As such, the Norwegian regime has proven to fulfill most of the criteria of a robust regulation with its focus on the tripartite collaboration (regulators, companies and employee unions), and enforced self-regulation or internal control principles [1].

Preben Lindøe, Ole Andreas Engen and their colleagues went on to take the importance of balancing power and trust further by indicating that holding common interests in preserving a functional regime is not adequate, and there must be a mechanism of handling conflicts of interest without crumbling the trust and the balance of power among each of the actors in the tripartite collaboration [2]. This novel theoretical insight was explored through several research based on tens of interviews, panel discussions and workshops. The engagement of representatives from all the relevant actors in these studies has also revealed the weaknesses of the Norwegian regulatory regime; considering the fact that the regime’s functional nature provides autonomy for the employers’ side, the general dilemma of functional regulation arises. They address the question of how to make the industry responsible, while at the same time ensuring that the industry always selects best practices within the given leeway [3]. In this regard, institutions, i.e. fixed meeting places in the tripartite collaboration such as the Security and Regulatory fora, are important instruments for ensuring such an orientation.

In parallel, a series of case study research projects by ISØP examined the sociotechnical aspect of regulatory regimes across a range of regulatory domains in different countries. For example, their research comparing regulatory regimes in Finland, France and Norway identified a few recommendations to improve the regulation towards taking better into account the interaction between people and technology. A notable recommendation is promotion of safety culture with focus on an organization’s functions and capabilities that are relevant in maintaining and enhancing the organization’s potential for safe operation. They argue that, when truly internalized, safety culture thinking contributes to the common understanding of safety as a primary value that cannot be overridden by production pressures [4]. They have also introduced the notion of “risk ownership” in this context and propose a variety of conditions that affect the functionality of risk management within a sociotechnical perspective, most notably how risk owners make sense of their area of responsibility and of their role and what they choose to do and ignore in a way that, in sum, serves the prevention of major accidents [5].

References to the research

[1] Lindøe, P., Baram, M., & Renn, O. (2013). Risk Governance of Offshore Oil and Gas Operations. New York: Cambridge University Press.

[2] Engen, O., Lindøe, P., & Hansen, K. (2017). Power, trust and robustness - the politicization of HSE in the Norwegian petroleum regime. Policy and Practice in Health and Safety, 15(2), 145-159.

[3] Engen, O. A. (2020). Consensus and conflicts: Tripartite model and standardization in the Norwegian petroleum industry. In Juhl, & Olsen, O. E. (2019). Standardization and Risk Governance: A Multi-Disciplinary Approach (1st ed., Vol. 1). Taylor & Francis.

[4] Ylönen, M., Engen, O. A., Le Coze, J-C. et. al. (2017). Sociotechnical safety assessment within three risk regulation regimes: SAFERA STARS Final report. VTT Technical Research Centre of Finland. VTT Technology No. 295 https://publications.vtt.fi/pdf/technology/2017/T295.pdf

[5] Årstad, I., & Engen, O. (2018). Preventing major accidents: Conditions for a functional risk ownership. Safety Science, 106, 57-65.

Details of the impact

ISØP researchers have been contributing to major analyses of the Norwegian safety regime that led to better understanding about its effectiveness and improvement possibilities. Most notably, Engen led two government-appointed committees that, with strong participation from all actors in the tripartite collaboration, carried out a broad review of HSE conditions and regulation in the petroleum sector in 2013 and 2017. The later formed the basis for the White Paper no. 12 to the Norwegian Parliament on HSE in the petroleum industry which was approved by the parliament in 2018 [A]. It concluded that the present regime is robust, functions well and should be retained, though some improvements still need to be made, specially when it comes to the regulator’s expectations and its consistency of supervisory and regulatory practices towards all companies independent of their size and political power. ISØP’s evidence-based research throughout these years has had a substantial impact on the regulatory regime in the Norwegian petroleum sector by persuading Petroleum Safety Authority Norway (PSA) to maintain and strengthen its use of trust-based regulatory practices. As such, ISØP’s work has not only raised the awareness about the regulatory climate (attitudes of employees and employers) and culture (their underlying beliefs and convictions), but also confirmed that there is no need for altering current regulatory regime. Nevertheless, they proposed measures and actions in which the risk-basis of the regime and settlement of conflict situations could be improved. Their recommendations gained support amongst actors representing the tripartite collaboration [B].

An outstanding feature of ISØP’s research on risk regulatory is its focus on tight collaboration with risk authorities, oil and gas companies as well as the employee unions in Norway, which has paved the way for the mutual knowledge transfer between the researchers and these various target groups for the Norwegian risk regulatory regime. This has been achieved not only through the involvement of these actors in research projects, but also mainly by means of educational programs and dissemination activities including continuing education at UiS for PSA and representatives in the two aforementioned tripartite fora.

The results from this research have inspired other countries to “look to Norway” in development and implementation of their risk regulatory regimes in the petroleum sector. One of the most prominent examples is the great interest from regulatory actors in United States around the Norwegian offshore regime that was discussed in a book that came out as a result of a project on the topic [1]. The interest arose after the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, when the American regime was subjected to strong criticism, and one looked at the Norwegian experience to make the regime more robust. In the book, ISØP researchers together with their colleagues in US have discussed how the Norwegian petroleum regulatory regime was changed from a detail-regulated regime where the authorities formulated the requirements to a risk- and purpose-based regime where the industry was made responsible for its own safety.

Another key area of impact for ISØP’s work on risk regulation is the transferability of its results to other industrial sectors and safety domains. During the impact period, several people from for example the Norwegian Labor Inspection Authority (Arbeidstilsynet) and Norwegian Directorate for Civil Protection (Direktoratet for samfunnssikkerhet og beredskap) have approached ISØP for assistance in developing tailor-made dissemination and training activities for their organizations [C]. In light of these effects on wider industrial community, one can demonstrate both the reach and significance of the impacts of ISØP’s work. Also, from an academic point of view, the project has contributed substantially to an under-developed field of research. There are many individual studies that include risk analysis, safety regulations, safety culture, etc., but this work is among the first that explicitly link policy, management and risk behavior. The unique approach in conducting comparative studies across different sectors and countries do also provide valuable insights about the strengths and weaknesses of different risk regulatory regimes. arguments for continuing to support such studies.