Valerus puts emphasis on Marcellus shale gas safety

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SMITHFIELD, Pa. -- The shale gas industry isn't often seen as a natural place to find pomp and circumstance, but six months of working at the Valerus gas processing firm will earn you a graduation cap of sorts.

Rookie employees at the Houston-based company start out wearing orange hard hats -- instead of the tried-and-true white model -- to signal to other workers that this colleague might need guidance. When the six months of training pass, there's a ceremony where white hard hats are donned -- with graduation tassels attached.

It's all part of a companywide restructuring of safety protocol that stretches from the top executive's office in Texas to facilities as far-flung as Bahrain and Bangkok and as nearby as Fayette County. Over the past 18 months, Valerus and its chief executive officer have introduced an emphasis on safety that not only boosts the midstream company's bottom line but also reshapes floor operations at its maintenance facility in Smithfield, Fayette County.

Energy firms are accustomed to working in dangerous areas -- Valerus had to evacuate employees from Libya when dictator Moammar Gadhafi's regime fell in 2011. As new technology unlocks previously untapped shale deposits across the country, companies like Valerus must emphasize safety or risk being labeled bad actors who can't be trusted with lucrative contracts.

But when Valerus CEO Peter Lane took the top job in August 2010 and hired Chris Parks as his director of health and safety, the increased focus turned to day-to-day precautions that can avoid injury and costly workers' compensation claims -- right down to those new hard hats.

There's a financial incentive to a safe workplace that goes beyond having to worry about missed time or litigation. Major contractors such as Chevron and Shell Oil Co. -- both Valerus clients -- inspect a subcontractor's safety record before hiring the firm, said Chris Scheve, regional vice president for the Northeast.

"Chevron can't catch you talking on the phone while driving," Mr. Scheve said.

Oftentimes, contractors must include subcontractors incidents in their own internal accident audits.

And since beginning the program, Valerus has negotiated a lower premium on workers' compensation insurance, Mr. Parks said. He spent two days going over safety procedures with the insurer to get the lower rate.

In the past 18 months, the company's measurement of recordable incidents to the Occupational Safety and Health Administration has fallen. OSHA tracks incidents in which an employee requires medical assistance, misses work or must be transferred to perform different tasks.

In 2010, the company's Total Recordable Incidents Rate was 1.6, and Mr. Parks wanted to get it down to 1.0. In January and February 2011, it was 1.28. By March, it was .80. And by the end of the year, the 2011 rating was .49.

The Valerus plant in Smithfield opened in 2011 and covers 21,500 square feet in the Fayette Business Park surrounded by Chestnut Ridge mountains. It repairs and maintains equipment used to extract natural gas throughout the Marcellus Shale region. The facility has 10 employees now, with plans to add staff as contracts come on board.

The maintenance facility has some office space but is dominated by large expanses where compressor stations and other gas infrastructure tools are treated, shipped and even painted. (On a recent day, green paint was spotted on the floor, left over from a session with "Chevron green.")

In March 2011, Mr. Lane ordered a stand-down day where all machines sat idle and employees only focused on safety training. The CEO dispatched his vice presidents and other highly ranked executives to lead the discussions.

Some workers might see those executives' faces again if there's a mishap.

Every month, Mr. Lane reviews finances with vice presidents and other executives who fly to headquarters in Texas to discuss company operations. Now, a safety report opens each of those meetings. If there's been an incident where a worker was hurt in the last 30 days, the direct supervisor at the offending operation is flown in to explain to the 20 or so executives what happened. Some might prefer to stay in Libya.

There are some carrots with that stick -- or, perhaps it'd be more accurate to say, steaks with that stick. Workplaces celebrating one year without recordable safety incidents are treated to steaks cooked up by Mr. Scheve and ice cream cakes.

He's due in Michigan to fire up the grill this month.

businessnews - marcellusshale

Erich Schwartzel: or 412-263-1455. First Published June 19, 2012 4:00 AM


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