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January/February 2009 - By Andrew Singer

When Nexen Evacuated Its North Sea Platform

Nexen, Inc. plies its trade in some of the world’s wilder locales. The Canadian firm runs oil and gas operations—including offshore oil drilling platforms—in the North Sea, West Africa, the Middle East, the Gulf of Mexico, and the tar sands of Northeastern Alberta, among other places.

This presents certain challenges. In early 2007, Nexen began a new oil platform operation in the Buzzard Field in the North Sea. This was to be a “showcase” facility for the company, Canada’s fourth largest independent oil producer and explorer.

By November 2007, the facility was producing 200,000 barrels of oil a day. But then a huge storm struck the platform, damaging the upper section of one of its three power generation turbine exhaust stacks.

Nexen probably could have continued to run the operation with two turbines. The company was under pressure to keep the facility running. Analysts, among others, were watching closely how the energy concern—relatively small with about 4,500 employees world wide—was managing the North Sea project. “There was a real desire to run it continuously,” recalls Eric Miller, the company’s chief legal officer. Yet the damage had put worker safety at risk.

“Management in the UK just shut it down,” recalls Miller. “To step back and shut it down and evacuate the platform was not an easy decision.”

The incident reinforces one of the company’s key principles, however: “It is not business at any cost,” says Miller. Workers’ health and safety really do matter at the firm that was formed in 1971 and was originally known as Canadian Occidental Petroleum Ltd. (In the event, the platform was repaired fairly quickly.)

This incident, in Miller’s view, offers a clear example of how Nexen sets the “tone at the top” when it comes to health and safety issues—and ethics issues generally.

‘Live’ ethics training for all new hires

The Calgary-based firm has been a leader in the Canadian business ethics movement going back to 1997 when it helped to develop the government’s International Code of Ethics for Canadian Business. Among other things, Nexen mandates “live” integrity training for every person that it hires.

This can take some doing. It isn’t really practical for the company’s Integrity Coordinator to journey to Yemen to conduct a three-hour workshop each time the company hires new workers for its Block 51 oil fields there, after all.

Thus, the company has assigned 23 “Integrity Leaders” in seven countries in which it operates. These part-time ethics leaders conduct workshops for new employees and also provide a ‘face’ for the ethics program in some of the remoter sites.

 “Through the workshops we touch everyone,” says Morgan Hamel, Nexen’s Integrity Coordinator. The company is somewhat unique, at least in its industry and country, in that it does live training for the whole company—and not just computer-based training.

In September 2007, the company brought together its Integrity Leaders at its annual Integrity Leader Forum in Calgary. That meeting was also attended by the chairman of Nexen’s Board of Directors, as well as other senior managers. The following day Nexen flew all the Integrity Leaders to Los Angeles for the Ethics and Compliance Officer Association’s (ECOA) annual business and ethics conference.

About 30 Nexen people made the trip, including some senior people and subject-matter experts in areas like security. The Los Angeles conference provided these part-time Integrity Leaders with an opportunity to interact with people for whom ethics and compliance is a full-time vocation. That proved fruitful, says Hamel.

The ethics association wasn’t displeased either. “We became legends in the ECOA,” says Hamel.

Putting a face on integrity

In addition to conducting integrity education through the workshops that all employees must complete within three months of being hired, the Integrity Leaders serve at the ethics contact point oversees. “It puts a face on integrity within a given location,” says Hamel. If an employee doesn’t feel comfortable raising an ‘issue’ with a supervisor, that person can go to the integrity leader who is usually attuned to the local culture and the conflicts that can arise.

Integrity leaders are often operating executives, including in-country managers, as well as officers in functional areas, such as law, human resources (HR), and corporate social responsibility (CSR).

In 2000, in one of their first assignments, Nexen asked its Integrity Leaders to communicate the guidelines in the International Code of Ethics for Canadian Business throughout the organization. That code serves as a template for Canadian businesses to follow when conducting operations at home and abroad. It was developed at a time that Nexen was beginning to conduct more business outside of Canada, including places like Nigeria, where it was challenged to provide some ethical standards.

The workshops are often conducted by the integrity leader alone. In Yemen, where new hiring is not extensive, the integrity leader even conducts some sessions on a one-on-one basis. In London (United Kingdom), by comparison, a workshop might have 15 trainees per session.

The leaders can draw on the Integrity Resource Center, Hamel’s group that is based in Calgary. Hamel herself recently helped to facilitate five workshops in the UK and Norway. The company has hired many new people in those countries—the North Sea project is one of Nexen’s more recent ventures—and the integrity leader in the area, an attorney, “was swamped and needed support,” she recalls.

Sometimes there is dual participation. In a recent session in Alberta, the integrity leader operated in a secondary but vital role, adding “rich stories that fleshed out the content.” The leader spoke about cultural differences that often arise in the workplace. Although now based in Alberta, he had worked in Yemen and recounted a health and safety issue there. Some Moslem workers were taking breaks for prayers—which was permissible—but they were doing the praying in an unsafe location in the view of local managers.

What to do? The integrity leader asked the workers themselves to suggest a solution. In the end, the company built a new prayer area--in the shade, of an appropriate size, in a sheltered part of the work area.

 Hamel was asked how the company’s integrity managers are selected. When Nexen opened a new U.S. office recently, she contacted people who might know where to find good candidates. This could be the head of HR in the region, the country head, or someone else. Does that person have a reputation for integrity? Is his or her door open all the time?

The chief legal officer in the region needs to approve the selection, as does the country manager.
 

Training Integrity Leaders

For the third consecutive year Nexen brought together its Integrity Leaders in an Integrity Leader Forum in Calgary. This provides, among other things, an opportunity to review the materials used in the integrity workshops for new employees.

The workshops typically begin with a Powerpoint presentation that outlines for employees the company’s ‘culture of integrity.’ The second part of the workshop is built around an employee workbook with ethics case studies.

The leader’s version of the workbook includes in-depth answer keys that anticipate many questions that arise during training sessions. (If the Integrity Leaders are new and feel that they need more preparation, they can attend an actual workshop in Calgary led by Hamel or one of her associates.)

Also shown is a video that presents five actual cases from Nexen itself over the past few years.

One case dealt with an employee surfing the Internet for pornography. “We don’t want to encourage that at work,” says Hamel. It’s not professional. That ‘case’ spurred discussion about “acceptable” IT (information technology) use. 

A second video case presented a health and safety issue—not specifically identified—that arose in one of the company’s trailer camps connected to its oil sands project. The issue wasn’t handled correctly, in the employee’s view, and the employee called the company’s hotline. This case discussion focuses on hotline use.

A third case involved the falsification of business records. This occurred in the Middle East where human resources managers judged that certain employees were entitled to severance pay even though it was not part of their contracts. Their solution was to sign off the employees for time not worked.

A fourth case dealt with a drug and alcohol use incident on one of the company’s oil platforms. An individual called the hotline—anonymously—to report the drug and alcohol abuse. The outside contractor who manages the company’s hotline processed the report, and the issue was addressed. The company eventually got back to the reporting employee [through the contractor]—still without knowing that individual’s name—to tell that person what action had been taken. This case discussion emphasizes the wrongdoing can be reported, even anonymously.

The fifth case involved an environmental regulatory issue that arose on one of the company’s offshore oil platforms. The platforms are required to send in water samples for testing each month (presumably to prove that they are not polluting the sea); in this case, the platform was within the jurisdiction of the United States and the samples were being sent to the EPA for analysis.

In this instance, a former worker alleged that oil platform personnel had tampered with the water sample. This case was complicated by the fact that the reporting individual had been terminated from the company earlier for performance reasons. The tampering was reported to Nexen’s legal department. This prompted a large investigation, one in which the company hired an outside law firm as well as an environmental consultant. In the end they found no involvement by Nexen. This had been a “bad faith report,” apparently.

This last case typically provokes the most discussion at the integrity workshops, Hamel notes. There is something about the terminated individual’s motivation that seems to spur people’s imagination.
 

An Integrity Issues Committee

Hamel reports to Nexen’s Director of Global Business Practices who sits on the company’s Integrity Issues Committee along with Nexen’s chief compliance counsel, the vice president of human resources, and chief legal officer Miller. This group convenes when an incident is deemed of medium or high risk; it analyzes the incident from a risk perspective. Most incidents are investigated internally.

Investigations were recently split apart from the integrity group. They now come under the purview of the chief compliance counsel, who also handles hotline reports.

Hamel, who has been with the company for two years, is largely focused on communications issues, including the content of the workshops, the case studies, the ethics video, and maintaining the regular employee communications website, among other matters.

Through the case studies videos, she says, “I’ve seen the power of transparency.” The fact that the company is using cases that actually occurred within the organization appears to be something that attracts employees’ attention—and has been one of the keys in the program’s success, in her view.

When it comes to corporate integrity, tone at the top is critical, says Miller. As long as senior people are asking the tough questions and reinforcing the notion that management will protect people, the culture will evolve positively.

Nexen started with a strong health, safety and environmental ethic. Later, the ethics and CSR programs fell “easily in line,” Miller says. “The bedrock is that you run your operations right, that you do business the right way, and if you do, it’s easy to expand the knowledge base.” This might include the communication of more sophisticated notions, like the stakeholder concept of organizational ethics. “It all comes from doing the right thing.”

Andrew Singer is editor and publisher of Ethikos.
Reprinted from the January/February 2009 issue of Ethikos.
© 2009 Ethikos, Inc. All rights reserved.

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