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Energy Industry Risk Assessment: Current Practices and Elements

As the North American oil and gas infrastructure ages, changes made to facilities during their lifetime may not have been transferred to the official recorded drawings of the facilities. Government regulations have also changed during the life of the facilities, rendering some system components noncompliant.

This article explains asset integrity management systems (AIMS) studies as a means of ensuring the integrity of operating assets in oil and gas through the application of a consistent and systematic process of assessment and improvement.

Why Risk Assessments Are Necessary

On May 1, 2016, a wildfire began outside the city of Fort McMurray, Alberta, Canada, and swept through the community, forcing the largest wildfire evacuation in the history of North America. Upward of 88,000 people were forced from their homes. The wildfire destroyed approximately 2,400 homes and buildings. Another 2,000 residents in three communities were displaced after their homes were declared unsafe for reoccupation due to contamination.

The fire continued to spread across northern Alberta into Saskatchewan, consuming forested areas and impacting Athabasca’s oil sands operations. With an estimated damage cost of C$9.9 billion, it was the costliest disaster in Canadian history.

The fire spread across approximately 590,000 hectares (1,500,000 acres) before it was declared under control on July 5, 2016. It continued to smolder until it was fully extinguished on August 2, 2017. It is suspected that the wildfire was caused by humans in a remote area 15 kilometers (9.3 mi) from Fort McMurray, but no official cause has been determined to date.

Since the fire, process hazards associated with operations and facilities in oil and gas are being identified systematically; risks are assessed and managed in accordance with good risk management practices; facilities and operations have been reviewed to ensure compliance with applicable legislation, engineering codes and regulatory requirements; and process information (e.g., key drawings, data books, process flow diagrams, area classification drawings, calculations, etc.) have been made accurate and up-to-date.

Of particular interest are the older, existing facilities, which have continued to operate over an extended time period. (This article is not intended as a guide for the assessment of new facilities on the planning table.)

Forward-thinking companies have decided to review facilities, correct any deficiencies and record drawings to ensure these recorded drawings reflect the actual facility. They have also decided to perform a process hazards analysis (PHA) on the facilities to identify potential hazards and/or operability problems. The PHAs produce a list of recommendations that are required to be acted on to resolve the issues.

PHA studies indicate that significant deficiencies exist at older facilities and repairs and/or modifications are required. Significant costs are associated with the drawing updates, PHA processes and resolution of recommendations.

The Purpose of AIMS

Asset integrity management systems (AIMS) studies are being focused on major facilities. Facilities subject to AIMS projects typically include compressor stations, gas plants, batteries and others.

The AIMS studies are directed by the operations engineering group, which provides guidance to facilities and operations personnel as required, obtains the required levels of cost estimation for expenditure authorization, and ensures quality of asset review.

Engineering consultants may be engaged for the purpose of reviewing and developing process documentation (e.g., process flow diagrams, material and energy balances, as-built drawings, piping and instrumentation drawings, site plans, etc.) to ensure alignment with field conditions.

Consultants are typically used to lead and participate in hazard and operability studies (HAZOPs), verify engineering calculations, and control scheduling and execution of required modifications in association with operations personnel.

Lead operators, engineering, construction coordinators and area facilities engineers should participate in HAZOPs, ensuring completion of deficiency rectification actions as assigned and supporting the oil and gas AIMS manager in the purchasing of equipment for the construction management team.

Experimental Procedure Methods

Oil and gas companies should be committed to safeguarding all assets of the organization, maintaining the safety of operations and applying risk management throughout. In Alberta, there are requirements for complying with various engineering codes, occupational health and safety legislation, recommended practices, and standards. Assessments conducted as part of AIMS projects are useful for ensuring compliance.

The execution of AIMS studies should be a corporate responsibility and delegated to the applicable operations group. Associated responsibilities include scheduling and conducting HAZOPs, advising management on risk and tracking the resolution of recommendations.

HAZOPs are conducted by teams of qualified people that collectively possess process knowledge, subject matter expertise and relevant work experience. Membership on a HAZOP team normally includes a facilitator, engineers, operations staff, and engineering, procurement and construction management companies (EPCMs). Where appropriate, training is provided to ensure the competence of individual team members by the AIMS manager.

EPCM firms often support AIMS projects by providing the resources needed to complete specific tasks (e.g., field inspections, updating process and instrumentation diagrams (P&IDs), completing calculations, etc.). The qualifications of these firms and individuals are established to the satisfaction of the operating company when contracts are signed. The operations engineer and the oil and gas AIMs manager supervise the activities of the EPCMs.

The steps involved in implementing the AIMS work process include:

  • Identifying facilities to be evaluated under the AIMS work process;
  • Establishing an annual schedules for AIMS projects using risk-based criteria to prioritize sites (e.g., based on horsepower, materials handled, type of facility, setting, etc.);
  • Obtaining business unit (BU) leadership approval for annual schedules and budgets;
  • Individual AIMS projects:
    • Prepare/update as-built drawings for selected sites;
    • Prepare/update P&IDs, site plans and area classification drawings;
    • Verify the sizing of pressure safety valves (PSVs), control valves, vents and drains;
    • Verify material and energy balances;
    • Review shutdown keys;
    • Conduct HAZOPs;
    • Evaluate report findings, review recommendations and categorize them using the operating company risk matrix (i.e., impacts and likelihood);
    • Prepare and distribute HAZOP reports;
    • Discuss deficiency rectification actions required of the operating company and EPCM;
    • Sign off on action items after the operating company’s internal review;
    • Prepare rectification drawing package for tender to qualified contractors;
    • Obtain competitive pricing and select contractor to complete HAZOP recommendations;
    • Monitor and report the status of deficiency rectification actions to appropriate asset team leads;
    • Verify that deficiency rectification actions have been completed;
    • Modify drawings and documents as necessary to reflect as-built;
    • Return critical documents and drawings to the company’s document system.
  • Conducting an annual look back to review overall adequacy, suitability and effectiveness of the AIMS program with the oil and gas leadership team;
  • Updating AIMS schedules annually, and incorporating appropriate revalidation of location-specific HAZOPs every five to 10 years.


Personnel supervising and conducting AIMS studies and HAZOPs should be competent based on knowledge, education, training and relevant work experience. Where necessary and appropriate, specific training should be provided to ensure the competencies of individual team members.

Qualifications for EPCMs are evaluated for each AIMS project to ensure competence based on knowledge, education, training and relevant work experience. At a minimum, EPCMs should have documented environment, health and safety (EHS) training, general liability insurance, a quality assurance (QA) manual and an agreement with the owner company. The personnel from each EPCM must have adequate professional qualifications so that a meaningful and accountable review can take place. The senior process engineer should be a professional engineer with an appropriate engineering degree and at least 10 years working experience in the process engineering field. Other participants should have technical backgrounds in instrumentation and project management, with significant experience in their discipline.

Project Schedules

Schedules for conducting AIMS studies should be reviewed from a company-wide perspective. They should be prepared annually by the operations group responsible for the AIMS program, in conjunction with the particular area manager. Schedules should be prepared with consideration of several factors, including, but not limited to:

  • Risks associated with specific facilities (e.g., oil vs. gas, installed horsepower, setting, size of workforce, type of operations, etc.);
  • Length of time since previous assessment (revalidation of HAZOP);
  • Operations impact;
  • Approved capital maintenance budgets;
  • Availability of resources.

Schedules prepared by the AIMS manager are presented to the area leadership team for review and approval at an appropriate time for consideration during preparation of budgets

Documentation and Record Keeping Requirements

All phases of AIMS projects require adequate documentation. These studies are typically broken down into three phases:

Phase 1 – As-Built Drawings: Documentation of the as-built set of drawings is extremely important as it is the basis for the HAZOP. The as-built set of drawings represents the actual site conditions existing at the time of the HAZOP.

Phase 2 – Process Calculations and HAZOP: The engineering calculations for heat and material balance, control valves, and PSVs are essential in determining the safe operation of the facility. The HAZOP is a structured review of the operability of each major segment or node of the facility in question. All possible failure modes are reviewed and recommendations made for correction of those items that pose a major risk to the facility or safety of the operating staff or public.

Phase 3 – HAZOP Recommendations: Recommendations represent the output from the HAZOP and identify those items that may pose a risk to the operability and safety of the facility in question. They must be documented so that a structured follow-up can be done.

The status of individual deficiency rectification actions versus predefined project milestones is tracked on a weekly basis to ensure a timely completion of the rectification process.

Four copies of AIMS-related documents (e.g., HAZOP assessment reports) are required of each EPCM. These documents are distributed to the operations engineer; drawing control; the area facilities engineer; and field operations.

Upon project completion, documents and records related to the project are sent to the field location and uploaded into corporate document control, where they are maintained for the life of the facility. Documents and records are updated when appropriate.

Performance Measurement

The following indicators can be used to monitor the performance of the AIMS process:

  • Percent completion of AIMS studies in accordance with established schedules;
  • Establishment of rectification plans for extreme/high-risk deficiencies within six months;
  • Correction of extreme/high-risk deficiencies within one year;
  • Percent completion of deficiency rectification actions according to schedules established in location-specific HAZOPs;
  • Costs vs. budget.

Reviews should be conducted by the AIMS manager every five years to verify that the AIMS work process is being carried out as planned and is meeting desired performance objectives. Review reports should be provided to the operations engineering advisory team lead.

Updates on the performance of the AIMS work process and the status of its implementation should be provided annually to the leadership team. The focus of these discussions is to ensure the ongoing suitability, adequacy and effectiveness of the program.


A recent review of approximately 35 AIMS projects identified 800 items that required immediate attention and a further 800 items that could be handled on an as required basis. This could be considered typical of older facilities and indicates the necessity to review facilities on a regular schedule.

AIMS projects for gas compression sites up to a maximum size of 13,000 horsepower typically require expenditures in the order of several millions dollars over a 12 to 18 month period, from the initiation of the HAZOP through the completion of deficiency rectification. Large oil batteries may cost more. In practice, the resources required to complete each AIMS project varies based on a number of factors, including the size and complexity of the facility or operation, the nature and extent of the deficiencies found, and other factors.

Gobind Khiani

Gobind Khiani, MEng., PEng., is a Consulting Fellow in Piping/Pipelines with O&G, Pipelines and LNG (namely Enbridge Inc.). He has an Honorary Fellowship in the field of Mechanical Engineering and has shared his knowledge by publishing several technical articles. Currently, he is an active member of API, CNS, ASME, ISO and CSA.

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