The Importance of Assurance Letters in the Upstream Oil and Gas Industry

Contractors are frequently called upon to provide assurance letters to their clients, particularly in the upstream oil and gas industry. These letters serve as a formal declaration of the contractor’s commitment to fulfilling the terms and conditions of their agreement, and are often required by the client as a means of demonstrating the contractor’s reliability and trustworthiness. The sample content provided below offers a glimpse into the typical language and assurances contained within such letters, and serves as a useful guide for contractors looking to draft their own assurance letters. So, the following sample content can be considered as a reference while preparing an assurance letter.

Leadership & Commitment

1. Does the senior management actively involved in the annual HSE planning through the senior manager’s commitment statements, physically involved in formal visits to work sites, and inspection and /or audit reports? is Evidence is available to demonstrate the senior manager’s involvement in HSE meetings and presiding over incident reviews?

2. Are there regularly planned HSE engagements including visits to the site by CEO, senior manager’s participation in HSE plan reviews, and participating in HSE workshops?

3. Is there evidence of regular senior management review of HSE performance including setting improvement objectives, and participating in event investigations e.g. Near Miss events

4. is there evidence that senior managers are considered to promote HSE as a value and employees regard the company as a pro-active HSE organization?

5. Is the senior management closely involved with the health and welfare of the individuals? There is evidence of camp and kitchen inspections to support this?

Risk Management

1. HSE Hazards & Effects Management Assessments have been performed in compliance with procedures, documented for each contract, approved by the respective Contract Holder, implemented at places of work, and undergo regular reviews.

2. Contract Specific HSE Management Plan has been developed for each contract. Annual plans describing the specific actions, programs, and procedures to manage the hazards associated with contract execution are in place and being implemented. The HSE monitoring plan for each contract is available and being implemented in coordination with the Contract Holder and the CSR

3. HSE Commencement Certificate has been issued for each contract and signed by the Contractor Manager and Company Contract Holder. Each item on the certificate was completed before the commencement of the contract and there is no pending action item to date, (even with Step Out approval).

4. Toolbox talks specifically about the individual tasks (smaller groups, beyond ‘gate meetings’) that are performed and address the controls of the potential hazards to be encountered in the execution of the tasks. There is a system that verifies the quality of the toolbox talks and is being implemented effectively.

Health & Safety Rules

1. The “Life-Saving rules” with their associated consequence management system have been communicated to the workforce and tested understanding by personnel and there is evidence of implementation and enforcement.

2. In addition to the adopted Life-Saving Rules, there are internal HSE rules which feature in the HSE induction of the company and are maintained to cater to other high HSE risk activities.

Road Safety

1. Requirements are being implemented and progress is reviewed regularly. There is a robust monitoring system that ensures compliance in all vehicle types in operation including passenger buses and heavy-duty vehicles that are used to transport company goods.

2. There is a system of monitoring the journey management processes to ensure rules are complied with, and assured and corrective actions are recorded and implemented.

3. There is a Commuting Policy that discourages the use of private vehicles and its requirements are being implemented. The assurance system for the policy’s effective implementation is in place and remedial actions are acted upon and recorded.

4. There are internally developed initiatives and controls that further enhance road safety management.

5. IVMS reports are regularly analyzed, findings discussed with drivers, and corrective actions are appropriately taken to ensure full compliance with procedures.

6. Confirm that the requirements of the Load Specification are complied with, that assurance takes place, and that remedial actions are acted upon and recorded.

Incident Management

1. There are competent HSE incident investigators and all high/medium potential HSE incidents including near misses and occupational health incidents are, investigated appropriately and learning points are disseminated to both management and the workforce.

2. There is a system of reviewing the applicability and implementation of the lateral learning and action items arising from incidents outside the company.

3. Suitable investigation tool(s) are being adopted and used for accurate identification of the critical factors, immediate causes, underlying causes, and latent (hidden) management system failures.

Staff Management

1. All personnel, including drivers, have completed the required HSE courses as per the agreed training matrix in the contract.

2. A behavioral-based safety program, that is a company approved, is fully implemented in accordance with the requirements

3. Competence Assessment and Assurance programs are in place and incorporate relevant HSE requirements including trained HSE Assessors. All HSE critical positions have been identified, assessed, and assured competent through a Company approved competence assessment program.

Performance Reporting and Execution

1. All high/medium potential HSE incidents including of occupational health and near misses, the monthly Health and Safety Statistics, and Environmental spills (however small) are reported appropriately and submitted as required.

2. Management has reviewed the findings and follow-up from HSE audits, incident investigations, and implementation of action items. There is a company action tracking system and no action items remain outstanding for more than 3 months after the date of the review.

Sub-Contractor Management

1. There is evidence that HSE pre-qualification assessment is applied to all sub-contractors, and as a minimum includes: HSE Risk Assessment of the sub-contract and assessment of the readiness of the subcontractor in managing HSE during the execution of the subcontract.

2. Monitoring of the HSE performance of the high/medium HSE risk subcontractors is being implemented in adequate depth and progress against improvement actions is tracked by senior managers at an agreed frequency.

3. The Contract terms and conditions, when dealing with subcontractors suppliers, or vendors, include provisions for encouraging good HSE performance and penalizing Subcontractors that do not comply with HSE Specifications. There is evidence of this in implementation.

Asset Integrity – Process Safety Management

1. There is an identified tracking system to manage the maintenance and operation of the assets. All HSE critical equipment/types of machinery (such as Process Containment, Ignition Control, Shutdown Systems equipment..etc) have been identified, are maintained against a Performance Standard and Technical Integrity is demonstrated

2. Ownership of all assets and equipment under operation (including of 3rd parties) has been determined and agreed upon. The roles and responsibilities for inspection and all types of maintenance are clearly known and implemented.

3. Are the employees performing critical activities have adequate competencies and skills to enable them to perform their jobs in a safe manner ( e.g. flange make-up, install Ex equipment, welding certificates, etc)

Health Management

1. Provision of and accessibility to appropriate well equipped medical clinics and medical emergency response has been established and is in conformance with requirements.

2. Medical emergency response is tested regularly

3. Medical examinations including Fitness to Work are carried out in accordance with medical examination standards and by the approved medical staff/clinics

4. Catering contractors and sub-contractors are HACCP certified (or company recognized equivalent) in each food production operation.

5. Camp facilities for permanent and mobile camps meet the company’s minimum requirements.

6. The company is operating a system that caters to the welfare of the staff ensuring their mental and physical relaxation and assisting in resolving personal issues that may affect their health and well-being.

Environment Management

1. The movement of hazardous waste from the site to the disposal area has an auditable chain of custody and the waste generator can provide the necessary evidence that the waste was properly disposed of.

2. Wastes are segregated at source and kept segregated until collected for disposal. The disposal process has been physically checked by the company in the last 12 months.

3. Chemical storage and handling are performed in accordance with the company’s requirements.

4. All applicable environmental permits (licenses) have been obtained and operations carried out within their respective license limitations. Permits may be required for (but are not limited to): Camps, borrow pits, Reverse osmosis Plants, Sewage treatment plants, waste disposal facilities, open ponds, Hazardous material storage, handling, and transfer.

5. Environmental Aspects and Impacts for the contract exist and are in line with company requirements (extracted from Risk Assessment)

Contract Management

1. Has the HSE Management plan been updated in the last 12 months?

2. Has the Risk Assessment been updated in the last 12 months?

3. The Monthly HSE meetings include an executive summary of all HSE aspects i.e. IVMS, days lost, etc

4. Does the Contractor Manager and the Contract Holder have an agreed HSE Monitoring plan?

5. The monitoring plan includes an audit of the Emergency planning arrangements

6. Does the monitoring plan include an audit of the welfare arrangements including food and accommodation and relaxation?

7. Does the monitoring plan include an audit of the work area to include all major tasks as stated in the Risk Assessment?

8. Does the monitoring plan include an audit of the supplied PPE to the work site or sites?

9. An audit of the HSE contract terms and conditions to ensure changes have been formerly noted and where necessary adopted e.g. training and working at height.

10. Does the Monitoring plan include a formal review of the Contract’s Key performance indicators?

Conclusion

In conclusion, assurance letters are an important tool for contractors in the upstream oil and gas industry to demonstrate their commitment to fulfilling the terms and conditions of their agreements with clients. By providing a clear and concise declaration of their intentions and abilities, contractors can help to build trust and establish themselves as reliable partners. The sample content provided offers a useful reference for contractors looking to draft their own assurance letters, and can help to ensure that these documents effectively convey the necessary assurances and commitments.