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Analysis

The Evolution of SSPA

Wed, 01/22/2014 - 10:01

The standards and expectations of the Mexican oil and gas industry in terms of security, workplace safety, and environmental protection have been influenced by a variety of factors, over which both public regulators and private players wield a considerable amount of influence. As the Energy Reform increases the amount of private operators and service providers across the value chain, the process of mutual impact and feedback will probably accelerate and become more dynamic. At the center of this process is PEMEX’s Security, Health, and Environmental Protection (SSPA) system, which governs its specific internal policies and guidelines that seek to decrease the number and severity of working incidents and environmental disasters such as spills or fires. PEMEX’s SSPA guidelines have received acclaim for being in line with or even above global standards, especially when it comes to demands from suppliers and contractors. PEMEX is also known to be disciplined and stringent in their application, although certain areas of improvement have remained unattended to for an extended period of time. The results that could be attributed to the SSPA guidelines are notable, according to PEMEX’s 2014-2018 business plan. It states that personnel accidents have been reduced by 42% since the implementation of the SSPA program. However, the SSPA system is about to take on a new role with the creation and the implementation of additional regulatory bodies and security operators as prescribed by the Energy Reform, such as ANSIPA or CENAGAS. Although the SSPA system will now become an internal framework exclusive to PEMEX, it is not unreasonable to expect it to have an influence on ANSIPA’s guidelines and institutional design as a future regulator of national and foreign private operators, to say nothing of CENAGAS’ internal security measures meant to prevent pipeline leaks and spills.

The SSPA system is composed of three subsystems: the Process Security Administration Subsystem (SASP), the Workplace Health Administration Subsystem (SAST), and the Environmental Administration Subsystem (SAA). All three subsystems are based on the same twelve principles, known as International Best Practices (MPIs). All of the activities based on the implementation of the SSPA system from training through auditing and verification operations are documented by the Industrial Security and Environmental Protection Information System. Its objective is not only to store all the information related to these areas but also to process and cross-reference it in order to analyze the operational status and environmental impact of different projects.

The evolution of PEMEX’s SSPA system stretches back to before its design and rollout in 2006 and its full implementation in 2010. Some of the first major evidence that PEMEX urgently needed safety and environmental standards aligned with international best practices came in 1979 with the Ixtoc-1 blowout in 1979. While this has now been surpassed by the Macondo blowout of 2010, it used to be the largest oil spill in the Gulf of Mexico. This was followed by the 1992 Guadalajara explosions and the 1996 explosion at the Reforma gas processing facility in Chiapas. However, the tipping point came in 2004 with the Nanchital spill and the controversy that surrounded its clean-up process. That year saw both PEMEX’s accident frequency index and the accident gravity index reach decade-long highs that alerted the company to the need for a new operational framework built around the prioritization of workplace security and the reduction and eventual mitigation of environmental impact. This gave rise to the birth of the SSPA system in 2006. From 2006 to 2010, this initial design of the SSPA system consolidated itself into the creation and implementation of all three aforementioned subsystems across all of PEMEX’s subsidiaries. This quick and agile progression yielded dramatic results: PEMEX’s accident frequency index and accident gravity index began a steady and accentuated decrease after 2004, reaching its lowest point ever in 2010. Unfortunately, between 2010 and 2012, both those indexes increased again, although it is exceedingly unlikely that they will rise again to 2004 levels. This is especially true since the operational independence granted to PEMEX by the Energy Reform will allow it to respond much more quickly to its operations’ security and environmental protection needs. The introduction of new operators into the Mexican oil and gas industries will also generate new incentives to incorporate more internationally competitive standards.