Mission Critical Oil & Gas Operational Reliability & Safety: Learning from the Transformation of Commercial Nuclear Power Mary Jo Rogers, Ph.D. Partner, Strategic Talent Solutions March 8, 2011
U.S. Nuclear Industry Capacity Factor 1971 - 2009 100 90.5 90 80 70 60 50 Strategic Talent Solutions 40 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 Source: Energy Information Administration 2
U.S. Nuclear Production Costs C ents per kilowatt-hour 5 4 3 2.69 2.03 2 1 Strategic Talent Solutions 0 1995 1997 1999 2001 2003 2005 2007 2009 Total Production Costs = Operations/Maintenance Costs + Fuel Costs Source: Nuclear Energy Institute 3
U.S. Nuclear Industrial Safety Accident Rate 0.38 0.26 0.23 0.22 0.21 0.18 0.17 0.17 0.17 0.13 0.12 0.11 0.10 Strategic Talent Solutions 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 ISAR = Number of accidents resulting in lost work, restricted work, or fatalities per 200,000 worker hours. Source: World Association of Nuclear Operators 4
Admiral Hyman G. Rickover You have to learn from the mistakes of others. You won't live long enough to make them all yourself. Strategic Talent Solutions “Father of the Nuclear Navy” 1900 - 1986 5
Keys to the Nuclear Industry’s Transformation Leadership of change Self-regulation Evolution of safety culture Strategic Talent Solutions Transforming the role of first-line supervisors 6
Keys to the Nuclear Industry’s Transformation Leadership of change Self-regulation Evolution of safety culture Strategic Talent Solutions Transforming the role of first-line supervisors 7
Keys to the Nuclear Industry’s Transformation Leadership of change Self-regulation Evolution of safety culture Strategic Talent Solutions Transforming the role of first-line supervisors 8
INPO Four Cornerstones Assessment Analysis Strategic Talent Solutions Training Assistance 9
Keys to the Nuclear Industry’s Transformation Leadership of change Self-regulation Evolution of safety culture Transforming the role of first-line supervisors Strategic Talent Solutions 10
Nuclear Safety Culture The core values and behaviors resulting from a collective commitment by leaders and individuals to emphasize safety over competing goals to ensure protection of people and the environment. Strategic Talent Solutions 11
Improving Safety Culture • Leadership Commitment to High Standards for Safety • Identifying, Tracking and Responding to Precursors • Rigorous use of Human Error Prevention Tools • Regularly Assessing Safety Culture Strategic Talent Solutions • Building Self-Criticality and a Learning Organization 12
Keys to the Nuclear Industry’s Transformation Leadership of change Self-regulation Evolution of safety culture Strategic Talent Solutions Transforming the role of first-line supervisors 13
First-Line Supervisor Alignment • STS gathered data from 281 first-line supervisors and their managers. • Supervisors who felt they had effectively transitioned into the role of a member of the management team were considered more effective at performing their job. • Effective supervisors also perceived greater alignment with the organization in terms of: • Being treated as a core member of the management team Strategic Talent Solutions • Having sufficient time with their manager • Being told the reasons behind major decisions 14
Keys to the Nuclear Industry’s Transformation Leadership of change Self-regulation Evolution of safety culture Strategic Talent Solutions Transforming the role of first-line supervisors 15
Mary Jo Rogers, Ph.D. Partner, Strategic Talent Solutions 135 South LaSalle, Suite 3450 Strategic Talent Solutions Chicago, IL 60603 maryjo@strattalent.com Mobile: 312-203-1479 Office: 312-253-3642 16
! ! ! ! ! ! ! ! IHS CERA PRESENTATION Strategic Talent Solutions, 135 South LaSalle Street, Suite 3450, Chicago, IL 60603 312-253-3644 www.strattalent.com Mission Critical Oil & Gas Operational Reliability and Safety: Learning from the Transformation of Commercial Nuclear Power Mary Jo Rogers, Ph.D. Partner, Strategic Talent Solutions March 8, 2011 The political, economic and regulatory atmosphere facing the oil and gas industry is similar to that faced by the nuclear industry in the aftermath of the accidents at Three Mile Island (TMI) and Chernobyl in the 80’s. Despite intense regulatory oversight and public skepticism, nuclear performance improved substantially over the past 30 years. The nuclear industry completely transformed itself so that U.S. nuclear plants are the most productive, reliable and safest they have ever been. For example: • In the U.S. capacity factor has gone from 56% in 1983 to over 90% in 2009 and has averaged over 90% for the past 9 years. 1 • Nuclear electricity production costs dropped to 2.03 cents per kilowatt-hour in 2009. 2 • Nuclear power plants have become one of the safest industrial environments. Nuclear’s total industrial safety accident rate was 0.1 (industrial accidents per 200, 000 worker- hours) in 2009. 3 (You are now safer working at a nuclear site than at an elementary school.) 4 1
How did the nuclear power industry become safer, more reliable and more profitable while under such increased scrutiny and regulation post-TMI? What has nuclear done that is useful to the energy industry? “You have to learn from the mistakes of others. You won’t live long enough to make them all yourselves.” This advice is often attributed to Admiral Hyman G. Rickover, known as the father Strategic Talent Solutions, 135 South LaSalle Street, Suite 3450, Chicago, IL 60603 312-253-3644 www.strattalent.com of the nuclear navy. Commercial nuclear power took a lot from the nuclear navy. And so there are many lessons we can learn from commercial nuclear as it became so effective in an increasingly regulated environment. Our experience and lessons learned through our research program suggest that there are four keys to the nuclear industry’s transformation that can be useful to oil and gas: • Industry leadership of change • Self-regulation—and the Institute of Nuclear Power Operations (INPO) • The evolution of safety culture • Transforming the front-line supervisor Role of Industry Leadership Forming INPO. In 1979 after the partial core meltdown of Unit 2 at Three Mile Island, utility CEOs recognized that they were better positioned to address the regulatory and plant performance challenges together than they were individually. 5 Utility executives formed the Institute of Nuclear Power Operations (INPO), which was incorporated in 1979, even before the President’s commission released their final report on the TMI accident the end of that year. 6 The World Association of Nuclear Operators (WANO) was formed after Chernobyl in 1986. Through INPO, industry leaders took it upon themselves to start figuring out how self- regulation could work and how to address the commission’s recommendations. INPO has 2
changed over the years but it took the leadership of the executives at the time to pull together and hammer out the first iterations of the institute. Cooperation and Information Sharing. Industry leaders have continued to play a key role in improving reliability and safety, with ongoing executive support of INPO—and supporting industry cooperation and information sharing. The nuclear industry’s cooperative Strategic Talent Solutions, 135 South LaSalle Street, Suite 3450, Chicago, IL 60603 312-253-3644 www.strattalent.com approach to sharing information, best practices and even resources is a powerful factor in the industry’s sustained performance improvements. A good example of this is River Bend Station, located in St. Francisville, Louisiana and owned and operated by Entergy. In 2006 River Bend had a number of reactivity management issues, which means that they had to take power reductions and shutdowns to deal with problems that were going to impact the reactor fuel. One of their reactor operators called someone he had met at a committee meeting he attended, the Reactivity Control Review Committee (part of the BWR Owner’s Group). He called Ed McVey, the chairman of the committee and Exelon’s manager of reactor engineering oversight for the fleet. Note that Exelon and Entergy are competitors. Nonetheless, Ed spent a week with the River Bend operations department and gave them feedback and suggestions, which they implemented very successfully over the next year. Ed spending a week at River Bend to help them was fully supported all the way up his management chain. 7 Nuclear leaders have encouraged cooperation and support for information sharing and the work of INPO. Without chief executive support, INPO would have little influence. While fondness for INPO has ebbed and flowed over the years and industry leaders have challenged INPO to improve itself as well. Yet there is recognition that INPO has helped the industry improve significantly. Cooperation and information sharing are foundational to the effectiveness of INPO. 3
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