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Prelude: A year of working dangerously

Prelude: A year of working dangerously

Mark Tilly: Journalist: 05 February 2021

Mark Tilly

“…unions allege a culture of silence that keeps many other incidents unreported thanks to employees’ fear of reprisals.: One complainant filed in April, 2020 said they had been “intimidated and pressured by numerous phone calls and messages from representatives of the Shell company…”

SHELL’s floating LNG facility made headlines last year for all the wrong reasons, after a spate of technical issues forced the multi-billion dollar facility to halt production and cease sending cargoes for almost a year just months after it finally started up.

The 488-metre long facility was supposed to be an engineering marvel moored far off the coast of Western Australia, spruiked by executives overseas and even by its local project runners at academic conferences in Perth before operations began.

However its late start up, subsequent shutdown, multiple issues and failure to, as yet, ever run at nameplate capacity were in many ways caused by the sheer weight of hope and need to get the project off the ground, no matter what, according to industry consensus. The Prelude was hamstrung by Shell’s own high hopes, but it has been the workers and not the barge itself who have suffered.

The shutdown in February 2020 and the multiple reports of workers’ growing frustration onboard the facility are just one part of the story; reports filed to the industry’s offshore regulator from June 30 2019 to June 30 2020, obtained by Energy News under Freedom of Information laws, show a slew of accidents, dangerous occurrences, and malfunctioning equipment on Prelude.

Meanwhile unions allege a culture of silence that keeps many other incidents unreported thanks to employees’ fear of reprisals. Lack of worker training among those aboard the complex vessel is also an issue, and one brought up by unions publicly in the past.

The reports were filed to the National Offshore Petroleum Safety Environment Management Authority (NOPSEMA) which oversees operations in Commonwealth waters.

Many of the issues have been in the public domain since the February shut down, including workers being forced to use cardboard potties, and a worker losing most of  a finger,  but now Energy News can reveal further details previously unknown.

In July 2019 the LNG train was restarting after a shutdown, and the change in process conditions caused ice from the flare boom to melt in some places and then break off, the report said.

Lumps of ice weighing up to three kilograms fell from heights of up to 21m onto an unbarricaded walkway that workers had been on moments before.

The incident report said “a robust engineered solution of ice fall protection is being worked to reduce the risk of damage to personnel and assets.”

However less than a month later an eight kilogram piece of ice fell from an LPG loading arm and hit a crew member wearing a hard hat. They were unharmed, save for a stiff neck, but NOPSEMA noted the incident was “quite serious” with a “high potential dangerous occurrence” and that a similar incident had occurred in July 2018.

However, it did not recommend conducting a Major Investigation. NOPSEMA told Energy News these  are generally associated with worker fatalities, serious injuries or loss of well control.

When asked if it would not be more prudent to conduct a Major Investigation before a fatality occurs rather than after, NOPSEMA said using its range of enforcement tools was sufficient to bring companies into line, noting that disregarding it would have significant consequences for an operator.

“Near misses, such as the incidents that occurred on Prelude are investigated and are often further examined through follow-up inspections that may then lead to further levels of investigation, and potential enforcement,” the regulator said.

The report said awareness training around falling ice had been increased as a result of the accident, including in offshore inductions for workers arriving on the facility and information was included in daily newsletters.

It is well known that working on offshore oil and gas facilities is an inherently high-risk profession, but the documents also show that some workers  are not given the proper training to work on the Prelude.

In February 2020, a worker was medevaced after experiencing heat stress while carrying out maintenance on high-pressure steam pipework. The document notes a heat stress management plan was in place, including 30 minute job rotations, and regular breaks were taken in air-conditioned environments. However the report stated the medevaced worker had not received heat stress awareness training.

Another incident occurred in September 2019 when several workers were operating a manifold loading arm – used to connect LNG pipes to oil tankers for shipment – when one of the arms suddenly moved back into its original position at  a speed of around 10 kilometers per hour. The report notes a worker could have been crushed to death had they been standing a few metres closer.

The report states that the primary cause of the incident was “non-compliance with the procedure”, meaning workers did not follow protocols, adding that they were not as aware of the risks involved in the operation as they should have been.

“Articulation of the risk to personnel could be more explicit in framing the risks and controls,” the report said.

The documents also reveal a rift between workers onboard and upper management on workplace conditions, which Energy News has previously reported has led to protected action by workers.

A heavily redacted safety complaint made by a worker in July 2019 claimed widespread forgery of rope access documents meant to certify workers’ competency to carry out work in high-up and dangerous settings.

The complainant said there was  “systemic forgery of rope access verification of competency (VOC) and value copying rope access equipment risk assessments for rope access workers working within the offshore division”.

“The values were flippantly added to the original register with disregard to safety and quality…it was very obvious that the VOC did not happen” the complainant stated.

The complainant, whose identity was redacted, said when reported to upper management, their response “seemed to be a smear campaign”, after which the complainant resigned.

Again, despite NOPSEMA noting the “potential serious consequences” if the allegations were correct, the duty inspector did not recommend conducting a Major Investigation, saying it “does not meet MI threshold based on information received”.

NOPSEMA told Energy News that it met with the complainant and held meetings with Shell and the complainant was satisfied with NOPSEMA’s action and the outcome of the inspection.

“All NOPSEMA investigations ensure full accountability of OHS management matters, and many NOPSEMA investigations result in compliance and enforcement action,” the regulator said.

These are the incidents that have made it from staff and through the chain of command to the environmental and safety regulator.

Union group the Offshore Alliance, a coalition of the Australian Workers Union and the Maritime Union of Australia,  however said there is an inherent culture, not just on the Prelude, but on many offshore facilities to cover up when incidents occur.

“Workers are reluctant to speak up about what actually goes on simply because of fear of retribution,” Offshore Alliance spokesman Ross Kumeroa said.

He suggested a practice of the majors squeezing contractors to deliver on time and within budget even if it meant their needing to pressure their own workforce.

Kumeroa noted Shell and other majors hire workers through labour firms that have become increasingly casualised over the past decade, with workers not wanting to rock the boat out of fear of losing their jobs.

He said NOPSEMA was limited in its powers to investigate when workers were unwilling to report incidents in the first place.

“No one outside of the workers and the company gets to see the underlying issues, we only get reports from reluctant workers, who are fearful and frightened of losing their jobs, for raising genuine safety matters,” he said.

The Offshore Alliance said the multiple enterprise bargaining agreements it was negotiating with majors like Shell were the best way to ensure that worker safety can begin to improve, and the culture of silence lifted.

“You’ve got to empower workers, you take them on a journey of fixing up their conditions and shifting attitudes,” Kumeroa said.

“Fix up some of the stuff on the industrial side, and you might get a shift in attitude around safety.”

While he said workers had previously been willing to put up with the tough conditions thanks to their hefty pay packets, Shell’s treatment of FIFO workers during the COVID-19 pandemic was enough for them to make complaints to NOPSEMA.

One complainant filed in April, 2020 said they had been “intimidated and pressured by numerous phone calls and messages from representatives of the Shell company to leave my home and temporarily relocate to Western Australia”.

This was at the height of the pandemic when multiple companies were trying to get their workforces to permanently move West to ease worries around ever-changing border restrictions.

“I have a genuine concern for myself and my fellow colleagues that the Shell company is putting the Prelude asset before the holistic genuine health and safety of offshore employees,” they wrote.

Following a review of the industry’s response to COVID, NOPSEMA acknowledged “the substantial efforts of industry, health and safety representatives, and the workforce to ensure the wellbeing of the workforce is maintained”.

The reports to NOPSEMA also reveal a raft of faulty equipment and poor construction quality onboard the facility. Shell has never publicly revealed the cost of Prelude but it is estimated to be in the realm of US$12-17 billion.

The Offshore Alliance said some technical issues on oil and gas facilities stem from large portions of them being built offshore in countries such as Singapore and South Korea before being towed back to Australian waters.

The quality of construction can vary depending on the shipyard, who operates it, the labour used and how much companies push to get projects complete by certain timelines fearing costs blow outs.

Much of Prelude was built in South Korea’s major shipyards by Samsung before being towed to Commonwealth waters in 2017.

“They’re building components outside Australia with cheaper labour, then it comes back and the jigsaw pieces don’t fit back together,” Kumeroa said.

“It’s easy for them to waste billions of dollars on faulty equipment, but it’s the local workers forced to fix their mistakes who pay the price of it.”

In March, 2020, strong winds brought down a 1.8kg weather shield, installed to a line-of-sight gas detector on the aft corner of C-Deck, falling 20 metres to the deck below. The report filed to NOPSEMA said the cause was “substandard construction” and corrosion, saying the units were fabricated at the construction yard using mild steel sheets that were not suited to a marine environment; rather than the vendor-recommended material.

On various occasions technical issues or diesel generator failures would trip the facility’s power, setting off the vessel’s emergency response plan leading to the facility’s entire crew to be mustered, sometimes multiple times in a 24-hour period.

In March last year, 1200 litres of lube oil leaked from an emergency diesel generator. The leak was noticed earlier, but the decision was made to continue to run the generator as otherwise the general alarm would have tripped, according to the incident report.

A month later workers discovered that a marine boiler’s manhole cover hatch had become warped, and the welds in the corner of the framing for the cover were cracked. The report made to NOPSEMA said it suspected a fire in the boiler had caused the damage.

Some of the other issues were much more mundane, such as in January, 2020 when one of the facility’s washing machines caught fire and was quickly put out, however no fixed fire detection in the space was activated, according to FOI documents.

Prelude is not the only flagship LNG facility that has had  substandard offshore construction being blamed for technical malfunctions.

Last year Shell wrote down the value of the Prelude by some A$1.9 billion over successive quarters as the oil price fell, and its relatively higher cost LNG became less economic. Its latest writedown of both Prelude and its QCLNG facility came to US$9.2 billion.

One Goldman Sachs guesstimate puts Prelude LNG at an eye-watering cost of US$20 per thousand cubic feet.

Many commentators have written at length that Prelude’s investors, Inpex and Kogas,  are unlikely to see a return on their investment, deeming it to be a massively expensive, failed-experiment.

“As an idea, FLNG is a good one, but like so many good ideas it has struggled in the execution phase and while Prelude’s struggle has not killed the concept of big-barge FLNG it has certainly set the concept back by a few decades,” Energy News‘ Slugcatcher columnist wrote earlier this month when Prelude finally resumed production.

NOPSEMA said it was closely monitoring the vessel now production has resumed, completing an inspection of the facility in December.

“That inspection was comprehensive, and NOPSEMA continues to closely monitor compliance of inspection recommendations,” it told Energy News.

“NOPSEMA expects Shell to comply with its safety case, the legislation and to ensure the protection of the workforce and the environment.”

Shell could only provide a limited response, as it was in a media blackout phase before it announces its annual results later this month.

“Safety is a core value in Shell. Even one safety incident is one too many and all incidents are taken extremely seriously,” a Shell spokesperson said.

“Incidents are thoroughly investigated so that root causes can be identified and addressed as a matter of priority.”

In the lobby of Shell’s headquarters in Perth, there is a giant Lego replica model of Prelude, complete with helicopter and landing pad and, fittingly, there is a sign beside it which reads “please do not touch, the model is fragile”.

The documents obtained by Energy News are available on NOPSEMA’s website and can be found here.

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