What difference has the Cullen Report made? Empirical analysis of offshore safety regulations in the United Kingdom's oil and gas industry

Abstract

Anecdotal evidence from the United Kingdom's offshore oil and gas industry indicates that risk-based safety regulations, introduced in the aftermath of the 1988 Piper Alpha disaster which killed 167 offshore workers, have improved safety outcomes such as reducing fatalities and dangerous occurrences. However, the empirical dimensions of this supposed improved safety record in the literature is scanty. This paper explores the relationship between the safety regulatory regime and safety outcomes in the UK offshore oil and gas industry from 1995 to 2011 using multivariate regression analysis based on the generalized linear modelling framework. We assess the trend and impact of the regulatory changes implemented through the safety case regulations on major hazard risk indicators such as hydrocarbon releases controlling for technical factors such as type of offshore facility, facility location, water depth, production levels, and external factors such as oil prices, acting as a measure of the prevailing macroeconomic activity level. The results show a statistically significant industry-wide decline in hydrocarbon releases between 1995 and 2011 (average marginal effects), after controlling for location, water depth, installation type, installation age and other factors. This reflects both the commitment of operating companies and the regulator to reducing major accident hazards in line with the principles underlying the safety case regime. Other offshore jurisdictions could focus major accident reduction efforts predicated on goal-setting safety case principles which identify key safety-critical elements of an oil and gas installation and put in place risk-based mitigation measures.