Seadrill facing coercive fine as serious breaches of regulations come to light

Norwegian offshore safety watchdog, the Petroleum Safety Authority (PSA), has given Seadrill two orders and a decision on a coercive fine after serious breaches of the regulations have been found on one of its rigs.

These breaches have been identified by the PSA through its audit activities with Seadrill and its West Mira semi-submersible drilling rig.

On that basis, Seadrill has now been given two orders. The first is directed specifically at West Mira, while the other covers conditions affecting all Seadrill’s rigs on the Norwegian continental shelf (NCS).

In addition, the PSA has decided to impose a coercive fine on Seadrill.

An acknowledgement of compliance (AoC) was issued by the PSA to West Mira on 30 October 2019.

When the PSA issues an AoC, it is expressing confidence that petroleum operations can be conducted by a rig in compliance with the regulations.

An AoC decision is based on information provided by the applicant in a dedicated application. This document must cover both technical conditions on the facility and the company’s organisation and systems for safety management.

However, since the AoC was issued, a number of serious incidents have occurred on the rig, with either serious consequences or a high potential for these.

The PSA investigated the incident involving the unintentional disconnection of the lower marine riser package, and this led to an order being issued.

The PSA stated it has also held a number of meetings with Seadrill, where it has expressed its concern over observations made in audits and investigations concerning the capacity and competence of the company’s organisation and risk understanding on the rig.

In addition, the PSA has conducted audits and investigations of other rigs operated by Seadrill, which could have contributed to experience transfer and been relevant for the operation of West Mira.

The PSA conducted an audit of electrical installations and technical safety on West Mira during week 7 of 2021, which exposed new serious nonconformities.

The audit also revealed that previously identified nonconformities had not been followed up in accordance with the company’s response to the PSA.

Based on its observations since the AoC was issued, the PSA revealed it is uncertain whether the preconditions for issuing an AoC to West Mira are still present.

The safety authority stated that serious breaches of the regulations have been identified and Seadrill has been given the following two orders.

Under regulations, Seadrill was ordered to review safety-critical installations, systems and equipment on West Mira and implement the necessary corrective or compensatory measures to ensure that installations, systems and equipment are capable of performing their required functions so that prudent operation can be maintained on West Mira.

“A brief description of the process for identifying necessary measures, an overview of measure initiated, and a confirmation with grounds that safe operation is being maintained on West Mira must be submitted to us no later than 12 March 2021”, the PSA said.

Furthermore, Seadrill was ordered to implement the necessary measures by 1 June 2021 so that all nonconformities related to safety-critical installations, systems, and equipment on West Mira are corrected.

The PSA emphasised that it must be informed should permanent solutions not be in place by the deadline, and compensatory measures will still be required.

A plan for the way this part 2 of order 1 will be implemented must be submitted to the safety authority by 16 April 2021.

“We must be notified when the order has been complied with”, the PSA underlined.

As part of oder 2, Seadrill was ordered to ensure that all nonconformities from the petroleum regulations which it has identified on Seadrill rigs since 1 January 2017 are corrected in line with the company’s responses to the PSA.

In addition, Seadrill was ordered to identify and implement operational or organisational measures which ensure the safe operation of all the company’s rigs in Norway with an AoC, including ensuring that new faults or deficiencies are continuously identified and corrected.

As part of this work, risk understanding and organisational capacity and robustness must be assessed.

A plan for the way order 2 will be implemented must be submitted to the PSA by 30 April 2021.

As explained by the safety authority, the coercive fine is intended to ensure that the company complies with the first part of order 1, which requires it to ”review safety-critical installations, systems and equipment on West Mira and implement the necessary corrective or compensatory measures to ensure that installations, systems and equipment are capable of performing their required functions so that prudent operation can be maintained on West Mira”.

The deadline for compliance with this part of the order is 12 March. Should Seadrill fail to meet this deadline, it will be subject to a fine of NOK 50000 (about $5,902) per day until the order has been complied with.

According to the PSA, the order to pay a coercive fine is regarded as grounds for enforcement of distraint.

The safety authority has also sent a letter to Seadrill with a more detailed justification of its assessment.