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In a desire to reduce US dependence on foreign energy sources and in light of emergent supply opportunities such as the Marcellus shale play, domestic oil and gas exploration activity continues to accelerate. This phenomenon presents upstream and downstream players that operate commercial truck fleets with a golden opportunity to bring their driver and vehicle safety and compliance programs to the long-established high levels of their occupational and worksite safety compliance activities.
Traditionally, driver and vehicle safety has received little attention. This fact is understandable given that such efforts seldom yield immediate profitability and often account for only a small percentage of operating expenses. Today, however, an increasing number of upstream drilling, completions, and oilfield service companies as well as downstream product marketers have begun to see the value of proactive compliance with transportation laws and regulations, including those of the US Department of Transportation, Federal Motor Carrier Safety Administration (FMCSA), and state agencies. This new attitude among energy fleets results from their recognition that preventing transportation incidents, handling roadside inspections more efficiently, and passing onsite audits make good business sense.
In fact, exploration and production fleets average out-of-service violations at rates exceeding 40%. That number is significant when compared to the average of nearly 30% for all US trucking. Recently, federal and state agencies have taken notice and systematically are rolling out roadside crackdowns targeting oil, gas, and other energy-related fleet vehicles. Such programs have not only validated the industry’s statistically subpar performance, but they also have resulted in substantial fines and business interruptions. Perhaps worst of all, these outcomes have impaired the reputation and public perception of an industry already challenged on both fronts. Ultimately, this negative image has compromised employee retention, credit terms, stock performance, and profitability.
As in any industry, it is prudent for drillers, subcontractors, and product marketers to strive for maximum efficiency, which includes lowering their costs of fleet operation. To do so most effectively, however, they must be able to identify deficiencies in driver conduct and regulatory requirements, including driver performance tracking, training, motor vehicle records, drug and alcohol, and other driver qualification training and certification documents (i.e., expirables). Fleet owners must be capable of systematically developing and implementing policies and procedures that address such shortcomings. Collectively, these measures will allow for successful defense of litigation, passing of driver and vehicle audits, minimization of business disruptions, greater staff productivity, increased emphasis on strategic business priorities, and data-driven continuous improvement.
Mitigating transportation risks
The importance of driver and vehicle safety is relevant to any fleet engaged in energy product exploration and delivery, but the natural gas drilling environment is particularly at risk due to the nature of the work and the intensified regulatory attention it is attracting in burgeoning markets. In Pennsylvania’s Marcellus shale play, drilling activity is expected to triple over the next two years. Because each well drilled requires up to 1,350 motor vehicle trips, factors such as driver performance, excess vehicle weight, road safety hazards, and wear and tear on public roads compel drillers, completions companies, and service fleets to make certain that they are operating their vehicles as safely as possible at all times.
While a commitment to “zero incidents” might not be fully achievable, striving for it makes excellent business sense because it can reduce the cost of insurance premiums as well as lowering the probability of being fined for improper transport of materials, notably hydraulic fracturing water. The most frequent violations are defective brakes, improper log books, improper securing of loads, fraudulently performed vehicle inspections, permit abuse, and making multiple trips on single-trip permits.
Bringing drivers, vehicles into compliance
The key to making certain that drivers and vehicles are in compliance with applicable laws and regulations is to use technology for streamlining and regulating business processes related to driver and fleet management. Upstream and downstream fleets can know instantly whether they are meeting federal and state requirements or what adjustments they must make to do so. Such real-time access to safety and compliance information also enables fleets to adjust accident claims, conduct root-cause analyses, administer corrective action (e.g., training and discipline), and uncover performance trends.
Today, web-based “cloud” software makes collection and use of safety data more cost-effective and easier than ever. By not having to invest in an expensive solution that resides on the company’s enterprise system, drillers, completions fleets, and service companies can obtain a “single version” of the truth more quickly. This approach also allows for expeditious, scalable implementation suitable to contractors of all sizes and functions. The visibility can be extended to those fleets’ customers – the exploration and production firms – allowing those companies with truly “deep pockets” to maintain awareness of how their contractors are serving them.
Whether it is the fleet’s management or its customer’s management, giving leadership actionable insight to the business improves accountability, enhances productivity, identifies specific risk factors, and prevents problems from becoming unmanageable. Systematically documenting and executing disciplinary measures also helps the company defend litigation and pass safety audits conducted by government officials or independent parties. Managing expirables – driver training and certification activities and documents – lowers fleet operating costs, helps fleets become more data-driven, and promotes continuous improvement.
The Marcellus shale
The Marcellus shale play is an illustrative example of improved energy fleet operations though better driver and vehicle safety.
To put matters in context, the Pennsylvania Department of Environmental Protection issued more than 2,000 drilling permits from mid-2009 to mid-2010 and expects to issue as many as 5,200 by the end of 2010.
In 2Q 2010, Pennsylvania State Police and other state agencies performed more than 400 roadside inspections near drilling sites. Those activities led to more than 40% of the trucks stopped being placed out of service for driver non-compliance, such as driving with an expired license, having an invalid medical examiner certificate of waiver for record-of-duty status, and operating a vehicle for too many hours. Trucks also were taken off of the road for safety violations such as defective brakes, inaccurate log books, improper securing of loads, expired safety and emissions inspections, and fraudulently-performed vehicle inspections.
According to the FMCSA, the national average for driver and vehicle inspection failures is 24% to 30%. Thus, this wave of enforcement actions suggested the failure rate among vehicles involved in Marcellus shale drilling to be 33% to 50% above the national average.
From business and public safety perspectives, it is dangerous to have so many drivers and vehicles out of compliance with laws and regulations that are intended to protect companies and the general public. Although the US Environmental Protection Agency and the Pennsylvania Department of Labor do not keep statistics on injuries and fatalities associated with natural gas drilling, anecdotal evidence gleaned from news reports and interactions with industry professionals suggests that driver and vehicle safety are issues that drillers and service companies must address promptly to mitigate carelessness and dangerous vehicle operating conditions. The best way to achieve those goals is through training programs, improved scheduling, and a stronger employer commitment to transportation safety.
Not just a US problem
US agencies are not alone in their improved efforts regarding transportation safety and compliance. Similar increases in legislative and regulatory expectations, often accompanied by best practices recommendations, recently have emerged from agencies beyond the US border.
The Canadian Trucking Alliance and provincial trucking associations, the National Truck and Cargo Transport Association in Mexico (Cámara Nacional del Autotransporte de Carga), the International Road Transport Union in Europe, the Australia Trucking Association, the Japan Trucking Association, and the state-run China Road Transport Association all have signaled concerns about energy fleet safety as well as promulgated regulations that are similar to those in the US.
Such “universal” requirements create opportunities for companies with global operations to implement, manage, and measure driver and vehicle safety procedures that minimize the probability of incidents occurring.
Good safety practices mean good business
Actively managing safety and compliance processes, leveraging technology to regulate workflow, and using data to make decisions offer many competitive advantages to upstream energy fleets. The most significant of these benefits is improved control of insurance and operating costs. In today’s highly competitive business climate and intensely regulated environment, knowing the costs of driver and vehicle non-compliance with safety laws and regulations and taking measures to systematically address them is a necessity rather than a luxury. Putting mechanisms in place to enable the use of data in root-cause and predictive analyses will allow drillers, completions companies, oilfield service companies, and product marketers to prevent incidents, minimize regulatory disruptions, and build strong futures for themselves, their customers, and the communities in which they do business.
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