In big oil and gas, who is protecting the little guy?

The tri-state area of western Pennsylvania, Ohio and West Virginia continues to be an active participant in energy exploration, dominated by the Marcellus Shale formation. While many embrace the opportunity, risks still come from government regulations, contracts, federal policy or inexperienced crews. Plus, small and midsize oil and gas companies, which support larger parent companies, may have difficulty managing these risks due to their limited resources.

Many health, safety, environment and regulatory managers know that with the limited resources their oil and gas companies have, especially with personnel, they need to lean on their insurance consultants. They are an extra set of eyes for safety and compliance.

Smart Business spoke with Taylor Troiano, area vice president at Arthur J. Gallagher & Co., about what’s going on in the industry.

What is the current safety climate for the energy sector?

When oil and gas exploded onto the scene several years ago, the industry was flooded with prospects, mostly enthusiastic workers seeking employment. The volatile mixture of innovations and inexperienced employees gave safety professionals and operation managers instant problems. While the potential risk of serious injury was real, fortunately very few experienced serious injury.

A company’s most valuable resource for a strong safety program is its employees. An engaged and active employee who believes in safety and risk management creates a safer environment for everyone.

Now, more than ever, it is imperative to have participation and involvement from employees, because an industry upturn could mean another rush of inexperienced workers returning or switching to oil and gas jobs. Many employers build that engagement with monthly safety meetings with a safety committee, which also takes advantage of the 5 percent discount on workers’ compenstation premiums from the state of Pennsylvania. But daily tailgate safety meetings can take that one step further. This is a great way to get employees together to discuss the challenges and risks they face in the field every day.

How do you think the national and local elections will impact the industry?

Employers and industry players have high expectations, and most are encouraged that local energy sources can continue to have a worldwide impact and strengthen our national economy. Positive changes seem realistic, but what the changes will be is yet to be seen.

What risks keep business leaders in oil and gas up at night?

Over the past 18 months, oil and gas companies have dealt with a downturn in the industry, which looks to be on the rise now. But, in this challenging environment, turnover has been a problem. When employers have new employees with less experience, that creates more exposure to safety issues. Companies have also had to ask employees to do more with less, which again, can increase their safety risk.

Many companies are restructuring their policies and personnel programs, while also offering more individual level training to maintain critical skills. One example could be adding a safety bonus for a limited amount of incident and accidents. It not only provides an incentive to help the business keep employees, it creates team unity.

What’s your takeaway about safety and compliance in oil and gas?

Health and safety is a critical area to differentiate in the oil and gas industry because it provides a competitive edge. Operators often use safety records to gauge their relationships with a company, but with so many service companies competing for business, it can be a management nightmare.

Several of the most progressive businesses are using ISNetworld and Avetta to track specific policies, safety records, Occupational Safety and Health Administration compliance, and Environmental Protection Agency and Department of Transportation requirements, but effectively maintaining them requires time, money and close attention. That’s where your risk manager can help.

Insights Insurance/Risk Management is brought to you by Arthur J. Gallagher & Co.