Could This New Tech Improve Worker Safety in Oil and Gas?

This little known Australian company has developed a technology that could drastically increase the safety of workers in the oil and gas industry.

Jul 12, 2014 at 1:13PM

The oil and gas industry is notorious for being one of the more dangerous industries to work in. While it is far from the most dangerous, working in the gas and oil fields is much more dangerous than say, being an accountant. Fortunately, one company is working to improve the safety of the industry in a rather surprising way. That company is Australia's Optalert Ltd.

Drowsiness Leads to Accidents
Optalert seeks to reduce the number of worker injuries and fatalities through the use of specialized glasses that measure a worker's fatigue level. This may not sound important but it is as tired workers suffer from various problems including reduced cognitive ability and slowed reactions. In fact, drowsiness causes much of the same problems as alcohol consumption when operating heavy machinery and particularly when driving a truck. This is an especially notable problem in North America's shale oil extraction areas such as the Bakken shale where drivers frequently have to drive trucks over long distances.

Need for irregular shifts disrupts sleep patterns
One of the reasons for the industry's workers' issues with drowsiness is the long and sometimes irregular shifts that they have to work. Work hours in the industry often range from eight to twelve hours and the starting and ending times can sometime exhibit significant variation in hours, from workers being moved from day to night shifts or working irregular hours. This causes disruptions in these workers' regular sleep patterns which leads to drowsiness on the job. In fact, nearly 75% of shift workers in the industry report suffering from disturbed sleep. This leads to an increased frequency of accidents.

This problem has been becoming increasingly pronounced as North American oil production continues to grow. There were 112 worker fatalities in the oil and gas industries in 2011. This increased to 138 in 2012, a 23% increase year over year.

Companies implement safety programs
To combat this and to increase the safety of their workers, several companies have implemented fatigue management programs. Considering that up to 30% of accidents in the workplace are directly attributable to worker drowsiness, this is a logical place to begin. These fatigue management programs usually involve the imposition of guidelines related to the number of consecutive shifts that a worker can work as well as a minimum number of hours that need to be between shifts.

Other companies, such as ExxonMobil (NYSE:XOM) and Statoil (NYSE:STO) have implemented more comprehensive safety programs that have resulted in both companies seeing fewer accidents than the industry average.

ExxonMobil Accident Frequency (Number of Accidents per 200,000 Working Hours) Statoil Accident Frequency (No. of Accidents per Million Working Hours)
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Source: ExxonMobil, Statoil

But, what all of these safety programs are truly lacking is a way to measure a worker's drowsiness level in real time. That's where Optalert and its specialized glasses come in.

Optalert can measure drowsiness
Optalert was founded by Dr. Murray Johns, a world renowned expert on sleep, who developed a scale that can be used to measure drowsiness.

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Source: Rigzone

This scale measures an individual's drowsiness level and assigns a risk factor based on the increased likelihood of accidents based on the person's drowsiness level. The company's glasses themselves measure their wearer's drowsiness level using a variety of factors and determine where the wearer would fall on the Johns Drowsiness Scale. The glasses can then transmit this information to supervisors and foremen who could then presumably get the worker out of potentially dangerous situations should their fatigue level get too high. This would thus allow the using companies to reduce the numbers of accidents that occur on site.

Financial benefits from improving worker safety
In addition to the obvious humanitarian benefits of improving workplace safety, the oil and gas companies have financial reasons to do so. For example, a lower frequency of workplace accidents would likely translate into lower costs for workers' compensation insurance.

Unfortunately, Optalert is not a publicly traded company so it is not possible to take advantage of the company's growing potential at this time. It's certainly possible that it could IPO at some point, though, and it will be interesting to monitor the company's progress. 

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Daniel Gibbs has a long position in Statoil. His research firm, Powerhedge LLC, has a business relationship with a registered investment advisor whose clients may have positions in any of the stocks mentioned. Powerhedge LLC has no position in any stocks mentioned and is not a registered investment advisor. The Motley Fool recommends Statoil (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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