FITNESS‐FOR‐PURPOSE
ASSESSMENT GUIDELINE
Prepared under the Petroleum and Geothermal Energy Act 2000 (SA)
June 2012
Energy Resources Division
Resources and Energy Group
Department for Manufacturing, Innovation, Trade, Resources and Energy (DMITRE)
Level 6, 101 Grenfell Street, Adelaide
GPO Box 1264, Adelaide SA 5001
www.petroleum.dmitre.sa.gov.au
Phone:
Fax:
(International)
+61 8 8463 3204
(National)
(08) 8463 3204
(international)
+61 8 8463 3229
(National)
(08) 8463 3229
Contact
Michael Malavazos
Director Engineering Operations, Energy Resources Division
Phone: (08) 8463 3245, Email: michael.malavazos@sa.gov.au
Compiled by Michael Jarosz, Senior Engineer, Energy Resources Division, DMITRE
DMITRE | Fitness-for-Purpose Assessment Guideline
Introduction
The intent of this guideline is to aid DMITRE’s
Energy Resources Division in validating
licensees’ five yearly fitness-for-purpose (FFP)
assessments of their facilities, as required by
Regulation 30 of the Petroleum and
Geothermal Energy Act 2000 (the Act).
The aim of the FFP provisions is to ensure that
licensees exercise an adequate duty of care in
the design, construction, operation and
maintenance of their facilities, for the purpose
of satisfying the public health and safety,
environment and reliability of gas supply
requirements of the Act.
To facilitate the achievement of this objective, Regulation 30 of the Act specifically
requires FFP assessments to address three key areas:
1.
The physical condition/integrity of facility equipment and utilities
Regulations 30(3)(a), 30(3)(e), 30(6)(d)(i);
2.
The effectiveness of the facility’s management and maintenance systems
Regulations 30(3)(b), 30(6)(d)(ii);
3.
The management of risk to ensure safe and effective operation of the facility
Regulations 30(3)(d), 30(6)(c).
This guideline has been prepared to aid DMITRE in validating licensees’ FFP reports
in relation to these key areas.
Step 1
Review the FFP report and complete the Regulation 30 checklist in Attachment 1 to
ensure the requirements of the Act have been satisfied.
DMITRE Fitness-for-Purpose Assessment Guideline 1
Step 2
Complete the FFP Review checklist in Table 1 (page 3) which specifically addressed
the three key areas of:
1.
The physical condition/integrity of facility equipment and utilities;
2.
The effectiveness of the facility’s management and maintenance systems;
3.
The management of risk to ensure safe and effective operation of the facility.
Comments should consider the following:




Whether the report has sufficiently addressed the specified criteria (if
relevant).
Whether any clarification is required.
Whether further information required to confirm the licensee’s FFP
conclusion.
The type of validation activities to be undertaken by DMITRE to confirm the
licensee’s FFP conclusion.
When completing the checklist in Table 1 it is necessary to consider the risks
associated with the activities. It is Important to note that not all items in Table 1 may
be applicable to all operations and the reviewer should consider the risk profile of the
facility when determining requests for further information.
DMITRE’s requests for further information or validation activities may include the
following:



Requesting audit reports, risk assessment reports, integrity management
reports or any other reports that may be relevant.
Undertaking office and/or field based inspections.
Attending office and/or field based audits conducted by the licensee.
Additional Notes
DMITRE to focus the FFP review on the most serious risks (especially low probability
high consequence events) of operating the facility, and check that the licensee has
exercised adequate duty of care in:
o Effectively identifying and managing risks associated with conducting
regulated activities under the Act.
o Implementing effective preventative and mitigative risk management
measures.
DMITRE to focus on licensees providing an adequate demonstration that
serious risks associated with operating the facility are being managed to an
acceptable level.
DMITRE Fitness-for-Purpose Assessment Guideline 2
Table 1: FFP Review Checklist
Component
DMITRE Comment
Risk Assessment and Management
Major incident/process safety focus.
1.
1.1
Risk assessments and reviews
a) Was a comprehensive risk assessment of
the facility conducted at the design stage of
project development?
What is the frequency of risk assessments
and reviews?
b) What is the rationale of scheduling risk
assessments and reviews?
For example, are reviews initiated following
significant change with a maximum
allowable interval of 5 years?
c) Are risk assessment workshops
independently facilitated?
d) Who attended the risk assessment
workshops? Check whether DMITRE
attended the session?
Was the session attended by a suitable
cross-section of personnel consisting of
office based engineering personnel and field
staff representing all pertinent fields (e.g.
electrical, mechanical, etc)?
e) Have risk assessments been conducted in
accordance with a relevant industry
standard, such as AS2885 or AS/NZS ISO
31000?
f) What risk assessment method was used?
For example: Layer of Protection Analysis
(LOPA), Hazard and Operability Study
(HAZOP), Safety Management Study (SMS),
Quantitative Risk Assessment (QRA)?
Was the method appropriate to the
application?
g) Were the actions resulting from the
assessment:
o
Recorded?
o
Assigned to an individual?
DMITRE Fitness-for-Purpose Assessment Guideline 3
o
Risk ranked?
o
Satisfactorily addressed?
h) Is a summary of major risks provided in the
FFP report, including consequence and
likelihood?
Depending on the risk profile of the facility,
this may need to include a list of Major
Accident Events (MAEs).
i) What is the risk profile used by the licensee?
Review the licensee’s risk matrix and
ascertain what has been considered.
What constitutes an acceptable risk
according to the licensee?
j) For the most serious risks associated with
the operation of the facility, as identified by
the licensee, has an As Low As Reasonably
Practicable (ALARP) assessment been
conducted in order for the risk to be
accepted?
NOTE 1: The ALARP assessment must be
demonstrable.
Note 2: Intent of ALARP assessment is for
the licensee to justify the adequacy of risk
treatment measures implemented to accept
residual risk.
1.2
Risk Management
a) Are preventative control measures effective?
Check incident records, near misses,
physical integrity assessments (including
safety critical equipment such as
overpressure protection), management
system implementation and auditing (see
management system auditing).
If critical preventative risk control measures
are procedural (e.g. critical operating
procedures) the licensee should be
requested to explain how the effectiveness
of procedural measures is monitored.
b) Are mitigative risk control measures,
implemented to prevent escalation of an
incident and/or essential to reducing risk
level to ALARP effective? Examples of such
measures include gas detection alarms,
DMITRE Fitness-for-Purpose Assessment Guideline 4
vessel isolation and blowdown, and
emergency response procedures.
What validation techniques has the licensee
utilised to ensure that these measures are
effective and what were the results of
validation processes?
Examples of validation techniques include
inspection/testing of equipment and results,
third party verification of adequate system
design, regular emergency response drills.
c) Note the number and type of independent
barriers implemented to prevent serious
incidents, including MAEs.
1.3
Are major risks (high consequence)
communicated to employees, contractors
and visitors (induction, training modules,
etc)?
If so, how is this facilitated?
2.
Personal Safety
2.1
Job Hazard Analysis (JHA)
Are specific JHAs undertaken for the
particular task or are generic issued?
Are JHAs subject to auditing?
2.2
Permit to work (PTW) system implemented,
reviewed and audited?
When is a permit required?
2.3
Is there a Significant Hazard Risk Register
(SHRR) or similar?
Is the SHRR regularly reviewed and updated
if necessary?
Is a controlled and up to date version of the
SHRR readily available to staff?
Physical Integrity Assessment
3.
Are facilities/vessels maintained in
accordance with integrity management
plans (or similar)?
4.
What has been considered in the
formation of integrity management plans?
For example, is the integrity management
plan based on risk, a particular industry
standard or Original Equipment
DMITRE Fitness-for-Purpose Assessment Guideline 5
Manufacturer (OEM) specifications?
5.
Are integrity management plans regularly
reviewed?
Are integrity management plans based on
any critical assumptions?
If so, are regular reviews required and
conducted to validate the effectiveness of
integrity management and assumptions?
6.
Are integrity management plans effective
in mitigating identified integrity threats?
Have inspections and tests, as required
under the integrity management plan,
been undertaken?
What were the results of inspections and
tests, undertaken in accordance with
integrity management plan, used to
support the FFP conclusion?
Have any integrity issues been identified?
If so, how are these going to be rectified
and what assurance has been provided
for similar integrity problems not to occur
on similar equipment.
7.
Have critical operating parameters been
identified?
How are they monitored?
Have there been any excursions outside
of the operating envelope over the past 5
years? If so, have the consequences of
any excursions been adequately
assessed? How will future excursions be
prevented?
8.
Pipelines/flowlines specific:
8.1
Has an in line inspection (ILI) been carried
out on the pipeline?
If not, why not?
The licensee should demonstrate that the
risks to the integrity of the pipeline are
being managed to an acceptable level to
justify why an ILI is not required.
Management System Effectiveness
9.
Has the Management System been
documented?
DMITRE Fitness-for-Purpose Assessment Guideline 6
10.
Management System implementation:
10.1 Compliance Audits (audits undertaken to
ascertain whether activities have been
conducted with the documented
systems).
a) Have audits been conducted to confirm
that activities are being undertaken in
accordance with the documented
management system, including the
procedures and work instructions?
b) What is the frequency of audits?
What is the rationale for auditing
frequency?
c) What is the scope of the audits?
What is the rationale for scope?
Are all pertinent areas eventually
covered?
d) Are the audits undertaken by a person
independent to relevant area and/or third
party?
e) What were the results of the audits?
Did the licensee act to resolve the
underlying root causes of noncompliances?
An example of an underlying root cause is
inadequate supervision of people
undertaking an activity.
f) Were the remedial actions recorded,
assigned, risk ranked, and closed out?
g) Pipelines/flowlines specific
o
Have any Pipeline Management
System audits been undertaken?
o
Have there been any audits
conducted against the requirements
of AS2885?
h) Have any audits been conducted to
assess compliance with Statement of
Environmental Objectives (SEO)?
What were the results of these audits,
have any issues been identified?
DMITRE Fitness-for-Purpose Assessment Guideline 7
11.
Effectiveness
11.1 Results of compliance audits?
11.2 Are the objectives of the management
system defined?
Do the objectives of the management
system align with the SEO and other
regulatory objectives?
11.3 Are management systems achieving their
objectives, for example:
o
No/minimal incidents (check
DMITRE inspections records in
addition to incident reports).
o
Equipment is well maintained
according to inspection results.
o
Elimination/reduction of the
frequency and severity of loss of
containment events.
o
Increasing plant availability and
reducing unplanned maintenance
– see item 11.6
11.4 Consider following, 'key' management
system components (use selfassessment tool1 for additional guidance
on management system assessment):
a) Emergency Response
o
Is there a documented emergency
response plan/procedure?
o
Are emergency response drills
conducted regularly?
o
Is the licensee liaising (not applicable
to all licences) with the relevant
emergency services to ensure that
emergency response will be effective
if required?
b) Asset Integrity Management System
o
See “Physical Assessment” above.
c) Contractor Management
o
What is the pre-qualification process
for contractors?
1
Available on DMITRE website <www.dmitre.sa.gov.au> Go to Mineral and Energy Resources,
Petroleum, Legislation & Compliance, Activity Approval Process,.HSE Management Systems.
DMITRE Fitness-for-Purpose Assessment Guideline 8
o
How is contractor performance
monitored?
o
How are the contractor’s systems
bridged with the licensee’s to achieve
the licensee’s objectives (including
the objectives of the SEO)?
d) Management of Change
o
Is there a documented, auditable
management of change system that
assesses risk associated with change
and ensures all implications of any
change made to the facility,
documentation, legislation, etc are
assessed and managed?
e) Training and Competency
o
How are staff competencies identified,
recorded, monitored and reviewed?
o
Do employees have individual training
plans which are reviewed and up to
date?
o
Effective induction for employees,
contractors and visitors.
f) Communication and Supervision
o
Is there effective communication and
supervision of employees,
contractors, and visitors to ensure the
objectives of the management system
and the SEO are achieved?
g) Action Tracking System
o
How are actions recorded, monitored,
risk assessed and closed out?
h) Incident Investigation and Reporting
o
Do incident investigations involve root
cause analysis?
o
Are near misses being recorded,
investigated and closed out?
i) Document Control and Records
Management Systems.
o
Is there a clearly defined and
documented records management
system?
o
Are critical documents and records
DMITRE Fitness-for-Purpose Assessment Guideline 9
easily accessible to staff and
appropriately controlled?
o
How are critical documents, such as
Pipeline and Instrumentation
Diagrams (P&IDs), controlled,
reviewed and updated to ensure up to
date documents can be easily
accessed?
o
Possible overlap with management of
change.
j) Organisational Responsibilities
o
Are responsibilities and
accountabilities clearly defined and
documented at all levels within the
organisation?
11.5 Have audits been undertaken to ascertain
whether the management system is
achieving the desired objectives (i.e. is
the management system effective)?
Have any audits been undertaken to
assess compliance against relevant
industry standards (e.g. AS4801)?
What were the outcomes of such audits
and how have the recommendations been
addressed?
11.6 Processes other than auditing used to
monitor management system
effectiveness; for example:
o
Licensee’s self-assessment results
o
Monitoring and review of Key
Performance Indicators (KPIs) such
as (examples only):
o
Percentage of scheduled
maintenance completed within
nominated period
o
Percentage of action items
overdue compared to overall
list of action items
o
Percentage of time plant is in
production with safety critical
items (e.g. pressure vessels)
in a failed state as a results of
inspection or breakdown vs.
total production time
DMITRE Fitness-for-Purpose Assessment Guideline 10
Step 3
Before finalising the request for additional information from the licensee, DMITRE is
to consider the following:
o Previous FFP reports for the facility within the licence(s). If no previous FFP
reports are available for the particular facility, consider FFP reports for similar
facilities to help identify key threats and risk management strategies.
o Other relevant reports (as required), including:
o Licensee’s Annual Compliance Reports prepared under Regulation 33
of the Act.
o Environmental Impact Reports (EIR) prepared under Regulation 10 of
the Act.
o Statement of Environmental Objectives (SEO) prepared under
Regulation 12 of the Act.
o Emergency response drill reports submitted in accordance with
Regulation 31 of the Act.
o Incident reports submitted in accordance with Regulation 32 of the Act.
o Any risk assessment reports previously submitted to DMITRE.
o Activity Notifications submitted in accordance with Regulations 18 or 19
of the Act.
o Quarterly compliance meetings for:
o Audit schedules.
o Key integrity issues.
o Past Health, Safety and Environment Management System self-assessment
tool results submitted by the licensee and components of the management
system previously subjected to validation processes undertaken by DMITRE
to ensure:
o Information pertinent to a component of the management system
recently reviewed in detail is not requested.
o Any components of a management system previously identified as
requiring improvement have been addressed in the FFP report.
DMITRE Fitness-for-Purpose Assessment Guideline 11
ATTACHMENT 1 - FITNESS FOR PURPOSE REPORT CHECKLIST
Regulation 30 — Fitness for purpose assessments
Company
Licence
Date received
An assessment under this regulation must specifically address -
(a)
the physical condition of
each facility; and
(b)
the effectiveness of
management systems for the
operation and maintenance
of each facility; and
(c)
The potential for the
environment to affect the
safe and effective operation
of each facility,
(d)
The potential for serious
incidents to occur at each
facility, including potential for
hazardous materials at or
near to affect operation,
(e)
The adequacy and reliability
of utilities required to enable
effective operation at each
facility (so far as this may be
relevant).
30.(4)
For the purposes of section
86A(2) of the Act, the
following intervals are
prescribed:
(a)
the first assessment must be
carried out within.
(i)
in the case of a report that
relates to a production facility
or pipeline within 5 years
after commissioning; or
(ii)
in any other case within 5
years after the completion of
a statement of environmental
objectives under the Act, or
an environmental impact
statement or public
environmental report under
the Development Act 1993
(as the case may be); and
DMITRE Fitness-for-Purpose Assessment Guideline 12
No clarification
Clarification
Not applicable
30.(3)
Information missing
Comments
Regulation
each subsequent
assessment must be carried
out within 5 years after the
completion of the previous
assessment.
30.(5)
For the purposes of section
86A(4), a report must be
furnished to the Minister
within
2 months after the
completion of the
assessment.
Administrative penalty.
30.(6)
A report under Regulation 30.(5) must include, in relation to each facility to which the report relates:
(a)
A name and description of
the facility,
(b)
The date on which the
assessment occurred, or
was completed,
(c)
A summary of the
assessment of the risks
associated with the
operation of the facility,
(d)
A statement of the state of
the current and expected
(over an ensuing 5 year
period) fitness-for-purpose
of the facility, setting out the
grounds on which the
statement is made and
including:
(d)(i)
An assessment of the
physical condition of the
facility.
(d)(ii)
An assessment of the
effectiveness of the
management systems for
the operation and
management of the facility,
(d)(iii)
Information on any other
factor that may adversely
affect or compromise the
fitness-for-purpose of the
facility, such as those
mentioned in Regulation
30.(3):
30.(8)
Information provided in the report must:
(a)
Be balanced, objective and
concise,
DMITRE Fitness-for-Purpose Assessment Guideline 13
No clarification
Clarification
Not applicable
(b)
Information missing
Comments
Regulation
(b)
State any limitations that
apply, or should apply, to
the use of the information,
(c)
Identify any matter in
relation to which there is a
significant lack of relevant
information or a significant
degree of uncertainty,
(d)
So far as is relevant, identify
the sensitivity to change of
any assumption that has
been made and any
significant risks that may
arise if an assumption is
later found to be incorrect,
(e)
So far as is reasonably
practicable, be presented in
a way that allows a person
assessing the information to
understand how conclusions
have been reached.
8(a)
A report under this
regulation.
(a)
must be provided by the
licensee or a person
specifically authorised to
provide the report for the
purposes of this regulation;
and
(b)
must contain a declaration
signed or executed by the
person providing the report
that he or she has taken
reasonable steps to review
the report in order to ensure
the accuracy of the
information contained in the
report.
30.(9)
A licensee must promptly
carry out any remedial
action that is necessary or
appropriate in view of a
report under Regulation 30,
and must ensure that any
identified risks are
eliminated or reduced so far
as is reasonably practicable.
DMITRE Fitness-for-Purpose Assessment Guideline 14
No clarification
Clarification
Information missing
Comments
Not applicable
Regulation