Managing operational risks along the oil supply chain

Abstract

Operational risk in the oil industry may lead to environmental disasters and to heavy loss of human lives. However, the relationship between operational risk and oil supply chain management is poorly studied. This article proposes a model (derived from the Eni's supply chain) to analyse and to assess the operational risk at the drilling, primary transport and refining stage of the oil supply chain. For the drilling stage, the model suggests three sub-methods, one for each period of the plant life cycle (design, construction and production). For the primary transport stage, two different risk management processes are proposed: the former one allows the risks resulting from processes, procedures and physical components (other than oil-pipelines) to be identified, assessed and controlled, whereas the latter one allows risks arising from the pipeline breakdowns to be faced. Finally, for the refining stage, a preliminary phase is recommended to prioritise each equipment of the refinery, and several techniques and tools are suggested.

Keywords:

• supply chain
• operational risk
• oil industry

Acknowledgements

The authors wish to acknowledge Dr E. Pizzurno of Eni Corporate University for his contribution and Fondazione Cariplo for the financial support. The authors also express their gratitude to the anonymous referees and to the Editor of Production Planning & Control for their suggestions.

Notes

Notes

1. DPCM 31.3.89, i.e. Prime Minister Decree dated 31 March 1989

2. See: http://www.aiche.org/ccps

3. See Det Norske Veritas (DNV) and the related website: http://www.dnv.com/services/software

4. See Pipeline Systems Incorporated (PSI) and the website: http://www.pipesys.com/app_simulator.html