The
Committee consisted of the following
Members:
Chair:
Mrs
Anne Main
†
Anderson,
Mr David (Blaydon)
(Lab)
†
Connarty,
Michael (Linlithgow and East Falkirk)
(Lab)
Donaldson,
Mr Jeffrey M. (Lagan Valley)
(DUP)
†
Gardiner,
Barry (Brent North)
(Lab)
†
Gummer,
Ben (Ipswich) (Con)
†
Hendry,
Charles (Minister of State, Department of Energy and Climate
Change)
†
Irranca-Davies,
Huw (Ogmore) (Lab)
†
McCann,
Mr Michael (East Kilbride, Strathaven and Lesmahagow)
(Lab)
†
Menzies,
Mark (Fylde) (Con)
†
Phillips,
Stephen (Sleaford and North Hykeham)
(Con)
†
Sandys,
Laura (South Thanet)
(Con)
†
Vara,
Mr Shailesh (North West Cambridgeshire)
(Con)
†
Williams,
Roger (Brecon and Radnorshire)
(LD)
Alison Groves, Committee
Clerk
† attended the
Committee
The following also attended,
pursuant to Standing Order No.
119(6):
McDonnell,
John (Hayes and Harlington)
(Lab)
Smith,
Sir Robert (West Aberdeenshire and Kincardine)
(LD)
European
Committee
A
Tuesday
22 March
2011
[Mrs
Anne Main
in the
Chair]
Offshore
Oil and
Gas
4.30
pm
The
Chair:
Does a member of the European Scrutiny Committee
wish to make a brief explanatory
statement?
Stephen
Phillips (Sleaford and North Hykeham) (Con):
May I say
what a pleasure it is to serve under your chairmanship, Mrs
Main?
It
might assist the Committee were I to take a few moments to explain the
background to the relevant document and the reason why the European
Scrutiny Committee recommended it for
debate.
The
document seeks to draw the first lessons for the EU from the damage
caused by the oil leak at the Deepwater Horizon drilling rig last year.
In particular, it observes that, although a number of European
countries have introduced strict safety requirements in recent years, a
fresh look needs to be taken at them, given also that exploration is
now being carried out in more challenging environments. It goes on to
identify a number of areas where it is necessary to maintain
appropriate safety and environmental standards, and it sets out ways in
which that can be
achieved.
The
Commission says that improved safety cannot be achieved by
self-regulation and that steps are needed to ensure that industry
complies with clear and robust rules in the future. It notes that the
situation is currently determined largely by national regimes and that
they vary, thereby slowing down a co-ordinated response. It therefore
proposes to work towards a single new piece of specific legislation to
govern offshore oil and gas activities, including licensing, liability
regimes, industry responsibility and enhanced public oversight. It also
examines the measures that might be taken pending the outcome of the
Deepwater Horizon investigation, as well as issues arising from
offshore safety outside the European Union’s
waters.
The
Government have correctly pointed out that oil and gas are still major
UK resources and that the UK has considerable experience in this area,
including the lessons learned from the Piper Alpha incident, resulting
in a robust, proven national regime. Consequently, the Government are
not convinced that there would be added value from another layer of
regulation, particularly if that were to raise subsidiarity
issues.
As
the document deals with a subject that has substantial, political,
economic and environmental ramifications and could raise subsidiarity
issues, the European Scrutiny Committee took the view that it should be
debated by the
Committee.
The
Chair:
I call the Minister to make an opening
statement.
4.32
pm
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
It is indeed a privilege to serve under your
chairmanship, Mrs Main. I think that this is the first time that I have
had the pleasure of doing so, and I am delighted to welcome you to your
new
role.
The
Deepwater Horizon accident was a most serious and tragic event. Eleven
people died and an estimated 4.9 million barrels of oil were released
to the ocean before the leak was halted. There have been huge
consequences for the gulf of Mexico, for those who live and work there
and for the oil and gas industry
worldwide.
The
European Commission acknowledges that a number of European countries
already have strict safety requirements and regulatory regimes.
However, the experience of the Deepwater Horizon incident, along with
the increasing tendency for exploration to be carried out in more
challenging environments, requires a reassessment of whether the
current regulatory framework and practices in Europe are
adequate.
The
communication proposes ways in which the risk of such an event
occurring in the EU can be minimised. Initially, the Commission was
minded to propose a moratorium on deep-water drilling, which we lobbied
hard against, and I am pleased that the communication leaves any
decision on the suspension of offshore drilling operations to member
states.
The
UK has a robust regulatory regime, with a clear allocation of
responsibilities for safety and environmental protection and for
responding to any incident. The UK is one of the first areas worldwide
in which offshore exploration and production took off, and we now have
over four decades of experience. More than 10,000 wells have been
drilled in UK waters, including more than 300 in water depths of over
300 metres. Our regulatory system has been developed to meet the
evolving challenges. In particular, following the Piper Alpha disaster,
safety regulation was brought under the Health and Safety Executive
umbrella, to get the benefit of its expertise in regulating major
hazards.
The
UK’s high standards have been acknowledged by both the Select
Committee on Energy and Climate Change in its report on the
implications of the gulf of Mexico oil spill and in the report of the
US national commission on the BP Deepwater Horizon oil spill and
offshore drilling, where it is recommended that the US safety
regulations be expanded to be at least as stringent as those in the UK.
In particular, the American report recommends the development of a
risk-based performance approach similar
to
the
safety-case approach in the North sea. It also recommends the
development of plans and procedures for responding to a spill of
national significance, which is an approach already reflected in our UK
national contingency plan and recognises the need for adequate
environmental assessment, which is covered in the UK by a
comprehensive suite of measures, including strategic environmental
assessment and project-specific environmental impact assessment and
habitats directive assessments.
We are not
complacent, however, and in light of the emerging information from the
many investigations into the disaster, we have taken action to enhance,
where we have considered it appropriate, what is already one of
the most robust environmental and safety regimes in the world. That
involves increasing the number of offshore
environmental inspectors to allow environmental inspections to increase
from 60 pre-Macondo to 150 annually, once all new inspectors are in
place and fully trained. Companies have been required to update their
oil pollution emergency plans to address the possibility of an
uncontrolled blow-out. Consents for new drilling operations in deep
water now require detailed descriptions of the arrangements for
co-ordination between the various companies involved in the work and
are subject to individual inspection before drilling
commences.
We
are also working with the industry in OSPRAG—the Oil Spill
Prevention and Response Advisory Group—to develop new technical
solutions, which could be deployed to bring any uncontrolled blow-out
under control as rapidly as possible. OPOL—the Offshore
Pollution Liability Association—liability pool, which is unique
to North sea operations, has increased its cover from $125 million to
$250 million. OSPRAG is further reviewing the implications of Macondo
for the scale of liability cover that would now be appropriate to
conditions on the UK continental
shelf.
We
are currently considering the detail of both the Select Committee
report and the report from the US Administration to determine the
implications for the UK industry. Our own UK review has now begun. It
will take into account the findings of those documents and report later
this year.
The
communication points to a number of areas where the Commission might
make legislative or other proposals, including the licensing regime for
oil and gas in member states, the extension of the environmental
liabilities directive and the evaluation of the performance of national
regulators. Although the Commission’s paper contains a number of
welcome suggestions, such as the sharing of information and the desire
to level up standards in some member states to ensure best practice, we
need to guard against the risk of another layer of regulation that
might not add value and could diminish the effectiveness of our own
robust, proven national regime should that layer be less stringent than
our existing
regime.
At
this stage, the communication does not propose any specific legislative
change. Proposals are likely in mid to late 2011 and a public
consultation by the EC seeking views on what those proposals should be
commenced last week. Given the UK’s substantial experience and
the development of a proven and robust environmental and safety regime,
I believe that we can provide a strong contribution to the
Commission’s work.
We have been
working, and will continue to do so, with European counterparts and the
Commission to ensure that high standards of health and safety and of
environmental protection are maintained across Europe in respect of oil
and gas operations. In doing so, we will ensure that any subsidiarity
issue is carefully scrutinised and that full justification is provided
for any new legislative instrument from Europe. On that basis, I urge
all members of the Committee to support the motion in due
course.
The
Chair:
We now have until 5.30 to question the Minister. I
remind Members that questions should be brief and that it is open to my
discretion to allow Members to ask related supplementary
questions.
Huw
Irranca-Davies (Ogmore) (Lab):
It is a pleasure to serve
under your stewardship, Mrs Main. May I ask the Minister about the
people who work on our deep-sea oil and gas rigs and
installations—an issue that he has not touched on, perhaps
because there is such depth in the proposals? One of the
recommendations is that the EU should review directive 92/91/EEC on the
minimum protection of workers in mineral extraction industries. That
review would touch on the possible psychological effects of isolation
on rigs. Another recommendation is that member states should also
review and update as necessary the safety and health documents that
apply to their workers. That seems quite a sensible approach, but I
wonder whether the Minister will comment on those
suggestions.
Charles
Hendry:
I am grateful to the hon. Gentleman for raising
that issue. We certainly accept that the directive should be reviewed
after the Deepwater Horizon investigations have been completed. Our
initial understanding, though, is that we would be concerned if work
were undertaken on psychological issues at the expense of other work
that we would consider every bit as
important—for example, on well integrity co-operation, safety
culture and asset integrity. The Health and Safety Executive already
requires a review of the safety case at least every five years, and it
will consider the findings of the review, which will require the duty
holder to act on the review’s findings. So we would need to
clarify what is meant by establishing
“a clearly
defined upgrade
programme”
and
what value that would add to the
process.
Sir
Robert Smith (West Aberdeenshire and Kincardine) (LD):
Will the Minister clarify whether the EU recognises that one of the key
lessons from the gulf is that existing safety procedures and devices
must be operated and maintained properly, so that we do not need to
deal with a
blow-out?
Charles
Hendry:
My hon. Friend makes an important point. The
Commission had undertaken a process: having started with a fairly
strong recommendation that we should consider a moratorium, it has used
an evidence-based approach to recognise the quality of the safety
regime that already applies to our side and, similarly, to the
Norwegian side of the North sea. We therefore believe that it is much
better to focus on preventing spills from happening, rather than on
dealing with them afterwards, which is inevitably challenging at the
depths that we are often talking about. A great deal of work has been
done in the United Kingdom to ensure that we prevent such spills. We
are pleased with the engagement that we have had with the Commission to
try to ensure that it learns from the successful process that we have
implemented.
Michael
Connarty (Linlithgow and East Falkirk) (Lab):
Will the
Minister comment on the fact that this appears to be the beginning of a
direction of travel for the Commission back to the energy clause in the
Lisbon treaty that we got taken out? The Commission tried to insert an
energy clause that would have given it control over the way that we
treat our resources, and it was rejected. I am
concerned that the Minister has not tabled a robust
motion; it does not refer to resisting that direction of
travel.
Charles
Hendry:
Perhaps I can reassure the hon. Gentleman that
subsidiarity clearly applies: energy policy is a matter set by nation
states. Therefore, in our discussions with the Commission to date, we
have reminded it that there are benefits to setting European standards,
but that that should involve co-ordinating work to establish best
practice. Given that we believe that we have something approaching a
gold standard in our North sea safety regime, it would be a matter of
profound concern to us if common standards were to diminish that. When
trying to find common standards, it is sometimes easy to end up with
the lowest common denominator, rather than the highest achievable
level. We are in no doubt whatever about the limitations on the
Commission’s powers to act in this area. We believe that one of
the reasons why we have such tight regimes and such high safety
standards in the North sea is that national Governments have a clear
vested interested in driving up those
standards.
Michael
Connarty:
Do we have the competence? Clearly, the European
Commission has shown that it aims to claim competence in areas where we
have competence at the moment. If it sees this as a market matter, will
it therefore claim competence, or does it accept that we have
competence in this matter? We might wish to work alongside other
countries and the Commission, or is it trying to move in the direction
of stealing the competence from us? The terminology that it has used is
deeply concerning. It talks of legislation. Does that mean further
directives, which might end up with the European Court of Justice? Will
we lose our
competence?
Charles
Hendry:
Perhaps I can try to reassure the hon. Gentleman
further. We are in no doubt that such legislation should be left to
member states. We have argued for that position. The Commission can
certainly bring benefits in spreading good practice and ensuring that
people understand what needs to be done, but given that a small number
of EU member states are active in the North sea—others are
active in the Mediterranean—the expertise in dealing with these
matters rests with the member states’ Governments, and we have
made it clear that that is the right level at which to address them. We
believe that the Commission can provide some additional support, but
primacy in determining such legislative issues rests with member
states.
Michael
Connarty:
The Minister has referred to expertise and
knowledge, but he has not said where the Government stand on the
question of competence. Can he assure the Committee that the Government
will not give up the UK’s competence in this area in any way to
the EU by passing or supporting directives that would give the European
Commission the right to go the European Court of Justice and overrule
our decisions on these
matters?
Charles
Hendry:
In which case, yes, I can give the hon. Gentleman
that assurance and I apologise if I was not clear enough before. We
believe that this is a matter for nation state Governments and that
absolutely remains our position.
Huw
Irranca-Davies:
I compliment my hon. Friend on his
doggedness in pursuing the Minister, in a very nice way, to get that
clarification. One of the things that we cannot escape and which is
difficult in terms of Cabinet responsibility relates to environmental
issues, particularly the water framework directive. I understand that
it is difficult, but the Commissioner makes clear his observation that
the impact of installations on the environment does not currently have
adequate safeguards. What are the Minister’s views on that? What
message will he take to the Commissioners in arguing that case? We must
ensure that we comply with the water framework directive, and there is
some risk of spillages whether small or large, so how do we satisfy our
environmental concerns at the same time as dealing with our energy
security
issues?
Charles
Hendry:
There is already very stringent environmental
legislation in place. The UK already applies the strategic
environmental assessment, an environmental impact assessment, the
habitats directive and the birds directive. They provide a robust
framework. On top of that, we have our own standards. One of the most
important aspects to bear in mind is the separation of powers. The
Health and Safety Executive drives forward on the health and safety
side, so there is no compromising there. My inspectors reporting to
DECC deal with the environmental side so they can focus purely on the
environmental consequences without being diverted in other
directions.
Huw
Irranca-Davies:
I thank the Minister for that response.
Reassuringly for my hon. Friend the Member for Linlithgow and East
Falkirk, he has said clearly that competence lies with the UK as an
entity to apply its own environmental safeguards, in compliance with
European directives. We have the competence to do it. Is he confident
that the regulatory structure in the UK, as a member state, is adequate
to ensure that in an accidental spillage from an installation we could
not only measure the effect on the immediate environment and the rescue
operation but the impact on biodiversity, special conservation areas
and marine protected areas? Are adequate safeguards in place in the UK
now?
Charles
Hendry:
Further to the hon. Gentleman’s initial
point, there is no direct connection between this communication and the
water framework directive. The powers that we have are very stringent
indeed. We can look not just at the immediate consequences of a spill
in relation to the area where it happened but at what would happen in
coastal and sensitive areas. That can already be done. We have the
powers already and we exercise them. We have the Secretary of
State’s representative who deals with an issue when an emergency
arises. I am satisfied from our investigations that we have very
substantial powers to look at the wider
ramifications.
Huw
Irranca-Davies:
Thank you, Mrs Main, for your generosity
in allowing me one final supplementary question.
On
installations, particularly those in very challenging environments such
as deep sea and west of Shetland, is DECC, as a matter of course,
ensuring that environmental considerations in the consenting regime are
far more than in a typical––not that there is an
average––historical drilling operation in the North sea?
Are additional
environmental safeguards being imposed as a matter of course in respect
of drilling operations in more sensitive
areas?
Charles
Hendry:
I can give the hon. Gentleman a very clear answer:
yes, we are satisfied that that is the case. One reason for increasing
the number of inspectors is so that we can carry out more regular
inspections. That applies to mobile rigs as well, so there is a much
tighter approach. We have already learned some of the lessons from the
gulf of Mexico. We already had some of the tightest regulations in this
respect but have tightened them further.
Sir
Robert Smith:
While Norway is not in the EU, a large chunk
of the North sea is obviously in Norwegian waters, and Norway works
closely with the EU. What dialogue has there been with the Norwegians
on the impact of trying to change the safety regime in the North
sea?
Charles
Hendry:
We have very close working relations with the
Norwegians. I discussed this matter with my Norwegian counterpart in
Stavanger at the Offshore Northern Seas conference last August and
there have been various meetings in London. The Norwegians often sit in
at European Ministers’ meetings on relevant issues such as this
and specifically when we were focusing on the lessons we needed to
learn from the gulf of Mexico. Work is ongoing between our officials to
ensure that we address this comprehensively. We have been keen to have
very high standards on both sides of the divide. It would not be
appropriate to have different standards, and I am satisfied that the
quality of the Norwegian standards is similar to those we already
have.
Michael
Connarty:
Can the Minister explain what the Commission
means when it talks of
amending
“the
Environmental Liability Directive to broaden its scope to all marine
waters as defined in the Marine Strategy Framework
Directive”?
What
exactly is the Commission looking for? What are we being asked to see,
once again, as the direction of travel, since we have not yet arrived
at legislation? I have several questions on similar statements it has
made about what it wants to
do.
Charles
Hendry:
We have indicated that we are willing to look at
whether further measures are necessary. We have carried out our own
initial investigation, we have a review to see whether there is
anything we need to learn, particularly from the US presidential
commission report but also taking into account anything that comes
through from the European level, and we are working very closely with
the industry. We remain open-minded. If we believe that additional
measures are necessary to maintain the position of being one of the
tightest regimes in the world, we will not hesitate to put them in
place. I emphasise that this an area of very close co-operation with
the industry, which, through OSPRAG, has been doing important work to
develop capping and containment devices. We are looking at how that
work can be taken forward. We accept that this is inevitably an
evolving process and that we cannot reach the point
where we can say, “That is everything we are ever going to
need.” We will constantly look to ensure that we can hold our
heads up high and say that we have a very strong and robust
regime.
Huw
Irranca-Davies:
What improvements does the Minister think
the UK oil and gas industry needs to
make?
Charles
Hendry:
The industry has been extremely helpful in trying
to address this issue. It understands, first and foremost, that it has
been put in the dock globally as a result of what happened in the Gulf
of Mexico and it wants to learn those lessons fast. That is why OSPRAG
has been such an important part of the process. After the terrible
helicopter tragedy in the North sea, it was the industry itself that
then came up with the tightest rules possible for helicopter safety and
travel. It decided that it needed to look at where the rules had not
been as strong as necessary and it responded very constructively and
positively. Its work on capping and containment devices is important
too. Our working relations with the industry are extremely close. We
need to understand what it can bring additionally to this but it
understands that if our independent review identifies areas where we
wish to take things further, we will not hesitate to do so. It is an
area of genuine joint co-operation.
Huw
Irranca-Davies:
May I ask one final, final question, Mrs
Main? Does the Minister agree that the biggest learning experience that
the UK oil and gas industry, good as it is in many respects, could have
would be to be proactive and forward-thinking in anticipating what I
referred to in a previous debate with him as Rumsfeld’s known
unknowns and unknown knowns? Perhaps we should not go down that line.
There are foreseeable eventualities. Historically, for all its good
points, while the oil and gas industry has been good at learning by
mistakes and hard experience, it has not been good at preparation and
planning. That is one of the biggest improvements the industry could
make, and it is starting to make
it.
Charles
Hendry:
I am glad the hon. Gentleman added the final
sentence to that question, because I think the industry has been trying
to make big strides in this way. The emergency plans that we require it
to put in place have been tightened, and it now has to do more to show
what it would do in the event of an emergency, and it has been very
willing to take those extra
steps.
In
the course of the process of granting licences, we also have various
stop positions. For example, various things have to be provided by
those applying for the licence, even though they may not ultimately be
the same people who do the drilling or development work. Right the way
through the process, there are stop points where we need to be
satisfied that the right work has been
done.
At
the end of the day, Government must take the lead on these issues. We
are there to protect the public interest and the national interest, and
we have sought, through that spirit of partnership, to ensure that
there is a close working relationship that looks ahead and determines
what we can learn from what happens elsewhere in the world. I draw the
hon. Gentleman’s attention
back to the fact that British companies involved in the North sea and
the UK continental shelf more generally have an immense amount of
experience in this work. Within the North sea and the UKCS, 300 deep
drilling exercises have been carried out, so they
have a strong understanding of the
challenges.
The
deep-water sub-sea industry in the United Kingdom is absolutely
world-beating, and many of the international contracts come back to
British companies with expertise in the sector. They have really
stepped up to the plate with the contribution that they can make and
their determination to pre-empt rather than respond to a crisis. It is
our job to push and harry and always raise the level of ambition, but
from working with them as a Minister for nearly a year, I have found a
real readiness to respond to that, and to deal with an issue before it
becomes a
crisis.
Michael
Connarty:
My question is similar to the
previous one. Can the Minister elaborate on
the appropriateness of what we understand will be in the new
guidance document about
“the
applicability of the Waste Framework Directive to oil
spills”?
What exactly is the
relevance to oil spills, and what discussion has gone on to give us any
comfort that that is the correct directive to use in this
case?
Charles
Hendry:
I am glad that the hon. Gentleman asked a slightly
longer question than he might originally have been planning, as it gave
me the chance to get some inspiration for my answer. The issue here is
that oil is categorised technically as waste. It is that categorisation
that brings it within the directive, and that is why it is relevant in
this
case.
Michael
Connarty:
I have one final question. I find that answer a
bit absurd: oil is very expensive waste to stick in your petrol tank if
it is waste. Is coal also waste? Is
gas?
The
Chair:
The hon. Gentleman is digressing somewhat, and I
would appreciate it if he kept his remarks to the matter in
hand.
Michael
Connarty:
I am just fascinated by this.
My question
is this. Once again, the European Union is recommending the
establishment of a joint facility. The history of joint facilities is
that they often end up in countries where the Commission thinks it owes
somebody—a country—a headquarters. For example, it
headquarters something in Crete that has absolutely no relevance to
Crete. Since the UK both has the technology and has challenges that are
very similar to those in the deep water in the gulf of Mexico, is the
Minister active in pressing that, should we ever have such a combined
facility for the EU, it should be based in UK
waters?
Charles
Hendry:
Perhaps, first, I should clarify my earlier
answer. Spilled oil is considered to be waste. Otherwise the hon.
Gentleman might think we had a new energy-from-waste strategy. I hope
that will provide greater clarity. I cannot, however, give him guidance
on whether spilled coal also counts as waste.
On where the
facility would be based, we need at this stage to be persuaded about
the role that it would play, how it would work, and how it would tie in
with member states’ Governments. I totally understand that
sometimes these facilities are popped in countries where one cannot
immediately see the relevance, and perhaps sometimes one thinks it
might be the Buggins’ turn principle—someone has not had
something for a while, so let us give them this important
facility.
We want to
ensure that the work that we do in the United Kingdom is robust and
heading in the right direction, as I believe it is. That is our
priority. If there are things that we can learn on a pan-European
basis, of course we will do so, but nothing should be done in that
institution that undermines the work that should be done at nation
state level. If it can add something, we would of course push for it to
be brought to where there is already a great centre of excellence and
expertise, but our priority is to ensure that the work we are already
doing in the United Kingdom is at the level that it should
be.
The
Chair:
If no more Members wish to ask questions to the
Minister, we will now proceed to debate the
motion.
Motion
made, and Question
proposed,
That
the Committee takes note of European Union Document No. 14768/10,
relating to a Commission Communication on Facing the challenge of the
safety of offshore oil and gas activities and Addendum 1; agrees that
the UK has a proven, robust offshore environmental and safety regime,
and supports the Government's intention to work closely with the
Commission and EU Member States to ensure that high standards of health
and safety and high levels of protection for the environment are
maintained across Europe in respect of oil and gas
operations.— (Mr
Hendry.)
5
pm
Huw
Irranca-Davies:
It is good to consider the substantive
motion, and I am grateful to the Minister for moving it
formally.
At the
outset, there is a consensus on the need progressively to wean
ourselves off oil, to use that horrible phrase. That is a progressive
aim, but we must follow it with clear ambition and a long-term vision,
because we are not alone in finding ourselves held hostage to the
vagaries of international oil prices. In turn, that affects national
and international growth and competitiveness, and individuals who find
the price of items in their day-to-day shopping basket, as well as
their heating and petrol bills, out of their control. They look to the
Government to help in the short term, and we will see what can be done
in the Budget, but in the long term we must rebalance our demands from
fossil sources of fuel towards renewables. Our climate change ambitions
depend on that. In doing that, we also recognise that the energy
security of the UK, not forgetting the significant income to the
Treasury, as well as thousands of jobs, is aided by maximising the
output of oil and gas from our indigenous production. It would be
futile to restrict the supply from our own oil and gas production if
that were simply to result in substitution with additional imports. In
respect of UK and European energy security, we surely have an
obligation to ensure the optimal exploitation of our oil and gas
reserves, but that can
happen only if the most stringent safety and environmental safeguards
are upheld in UK territories and waters, and across the
world.
I will not
rehearse the hard-learnt lessons of the Macondo incident—the
loss of life and its devastating impact on livelihoods, the environment
and regional economies. We have rightly discussed it in Committee, on
the Floor of the House and in the other place on numerous occasions.
Just like Banquo’s ghost, it is a presence at our every
discussion of the topic. We are indebted to the Energy and Climate
Change Committee for its excellent recent report on UK deep-water
drilling. Its recommendations assist our deliberations today, and help
to inform our debate. At the outset, it would be wise to start from the
premise that we cannot rule out any risk, but we must reduce the risk
to an acceptable level.
Before us
today we have the Commission’s communication on facing the
challenge of the safety of offshore oil and gas activities, and the
addendum. Although the Commission accepts that a number of examples of
best practice are already in place in parts of the industry in member
states—as the Minister has said, much of that best practice is
within the UK—the Commission understandably wants to see that
applied across the board to
“ a uniform high
level of
safety”.
We
would not disagree with that. We also agree that that would not just be
right for EU members, but, if we got it right, that would have a
knock-on effect across international waters where many of the same
operators work.
What is the
best way to achieve that end, with minimum duplication and without
unnecessary costs and administrative burdens? Which of the
Commission’s proposals does the Minister believe offer added
value, and which offer added cost and bureaucracy? To pick up what my
hon. Friend the Member for Linlithgow and East Falkirk said, how much
centralised European intervention is needed? Where exactly will that be
applied to ensure best practice? How will the benefits of member state
competence, the national best practice and expertise to which the
Minister referred, which has built up cumulatively, together with
licensing and regulation that is responsive to local and national
conditions, and the broad principle of subsidiarity be maintained? That
must be considered against the backdrop of the UK being the largest
offshore oil and gas producer in the EU and having the greatest
expertise not only in the industry but as a licenser and regulator. We
have something significant to contribute. We have not only a vested
interest, but a great deal of expert knowledge in the Government and
the industry. I hope that the Minister is making that point with all
due strength to the
Commission.
One
proposal involves overhauling all existing legislation in order to
bring forward a specific new piece of overarching legislation at EU
level. In the light of that, my question to the Minister is threefold.
Is that major task necessary, in the light of the well established
national and international legislation that underpins best practice, or
is there a better way to ensure uniformly high standards—by
ensuring compliance with the existing framework, with some adjustments
and improvements? What assessment has the Commission made of the
downside of its proposal, including the risks of jeopardising the
established best
practice under the current legislative regime? Stripping out complexity
and irrelevance from legislation or improving it is one thing. Tearing
it up and starting again risks losing the improvements accumulated over
many years—the hard lessons that we talked
about.
The
explicit aims of the Commission’s proposals include industry
benefits through simplification and levelling of the playing field,
giving legal certainty and satisfying the needs of “better
regulation”. Will the Minister comment on that and whether he
supports the overall aim as well as the Commission’s proposals
for a single unifying piece of legislation? This is the “one
ring to bind them all” scenario, and we all know the problems
that that
caused.
My
understanding, which I would be happy for the Minister to correct, is
that the industry fear, which it has articulated to me, of a
centralised, dominating EU approach superseding or eliminating the
case-by-case approach is misplaced, as the Commission has made explicit
its wish to make binding the presentation of a full safety case and
associated health and safety documentation and so on. It seems to me
that that is part and parcel of the proposals. We might have issues
with the necessity for overarching legislation—for a clean sweep
of the legislation—but embedded within this seems to be the
principle of the site-specific, case-by-case approach that we have had
in the UK for some time. Otherwise, it would philosophically fly in the
face of the Cullen report following the Piper Alpha disaster in 1988.
That put in place a regulatory approach based on a case-by-case method
for the operation of every installation. Cullen recognised that a much
more prescriptive, top-down approach, either at EU or national level,
might give legislators confidence that they had done a good job, but it
risked taking away the imperative for individual operators on
individual sites to ensure that they were doing the very best job on
safety, right down to the individual
level.
A
prescriptive approach, no matter how well worked out and no matter how
much detail is provided, risks allowing operators to shelter under the
excuse that “We did what was required—no more, no
less” when something goes wrong. It fails to recognise the stark
differences between operations and the need to apply the highest
standards on a case-by-case basis, with no hiding place. If there is a
need somewhere to tighten procedures, I will understand that, but
perhaps the Commission is looking through the wrong end of the
telescope. Will the Minister, as well as responding to the point about
overarching legislation, respond to industry fears that the
case-by-case approach is in jeopardy? I do not think that it is, but if
it were, I would be
concerned.
The
Commission’s suggestion that relevant guidelines be introduced
is quite helpful, as long as the guidelines form part of a member
state’s enforceable and properly enforced regulatory framework.
With that approach, we can take the very best practice and roll it out
across member states, respecting subsidiarity but also respecting and
working with the accumulated knowledge in the best of the member
states’ governance and industry. Will the Minister advise the
Committee on what progress he is making in ensuring that the UK best
practice underpins that guidance? If we do have the best practice in
the EU, let us ensure that we build on it, rather than reinventing the
wheel, because we do not want any
unnecessary upheaval or duplication for the biggest oil and
gas-producing member state with some of the highest
standards.
One
aspect that the Commission might be wise to examine, as part of the
proposed reforms, is the explicit separation of the safety and the
licensing aspects of the regulatory regime across member states. Rather
than destroying the expertise that already exists in some member
states, including the UK, and replicating it in a new body at an EU
level, why not ensure that every member state separates the economic
and safety functions of licensing and introduces reforms in
consultation with other member states and industry to improve those
established
functions?
As
the Minister will know, the Energy and Climate Change Committee
believes that the offshore oil and gas industry is, as I said in a
question, good at responding to disasters, rather than at anticipating
and planning for
“high
consequence, low probability”
events. Understandably,
we have a heightened awareness of such issues following Macondo and
other incidents, but also because of some of the challenging conditions
in which UK operators drill.
The
Government’s response to the Committee gave reassurance because
of the safety-case approach that I described earlier, but also because
of the oil pollution emergency plans and the reference to the
spill-response toolkit, which, as the Minister said, came out of the
OSPRAG review group. However, may I ask the Minister specifically for
an update on the development and availability of the new capping
device, which has been developed under the OSPRAG technical review? Is
it suitable for the most challenging deep sea operations? How will it
be made available at short notice right across our oil and gas
fields?
Welcome
though that innovation is, the fact that it evolved only in response to
the Macondo incident is, as the Committee highlighted, symptomatic of a
response-led approach in the industry, rather than of a
forward-thinking, proactive and planned approach. I would therefore
welcome the Minister’s comments on whether we have reached a
point where the culture in the industry, good though it is in many
respects, is becoming forward-looking, with the industry anticipating
and planning for the worst-case eventualities—those with a low
probability of happening, but whose consequences will be
massive.
Time
allowing, will the Minister give the Committee an update on the
national contingency plan exercise scheduled for May 2011 and the
related deployment exercises for the new device? Those will see best
practice in operation if they work, and we should be sharing such
things once we have tested them adequately.
The
Commission’s paper suggests a need for an amendment to the
environmental liability directive, including the consideration of
mandatory financial security—something that UK oil and gas
operators take issue with, based on the rationale that it does not take
into account different risk levels, geological conditions, reservoir
conditions and so on. Will the Minister expand further on his views on
that proposal in the Commission’s papers? Equally, will he
address the Committee’s view that the Offshore Pollution
Liability Association limit of $250 million is inadequate, because it
covers only
direct damage and because the definition of that is unclear?
Furthermore, membership of OPOL is voluntary, although the Department
of Energy and Climate Change, in effect, mandates it to happen. In
short, these arrangements allow operators too many get-out-of-jail-free
cards, especially in terms of the possible impacts of a spill on the
environment.
In
response to the Committee, the Government stated
that
“raising
the universal limit further to address the few higher-risk (but low
probability) wells would unnecessarily burden and could even jeopardise
normal UKCS operations.”
That worries me
slightly, as it seems to retreat from the first principle of safety
being paramount. In response to the Committee, the Minister added that
he could
“see the case
for potentially high impact wells in the West of Shetland to have an
additional ‘top up’ cover in addition to OPOL. DECC
already has the power to request such a top up under existing
regulations.”
This
is a question of best practice, so has it been done? Will it be done as
a matter of course? Will the Minister tell us the additional top-up
levels that are being requested on each well? What criteria will he use
to decide which wells require a top-up and which do not? How will he
ensure, on this case-by-case basis, that the bare economics do not
trump safety?
All that
comes before we turn to environmental considerations. The Minister
stated in response to the Select Committee—this is directly
relevant to our debate and to the Commission’s
proposals—that
“the issue of
compensation for damage to eco-systems is a very complex issue that
requires careful
consideration.”
I
think that we would agree. He then
said:
“An
attempt to address damage to biodiversity has been made through the EU
Environmental Liability
Directive.”
Are
we to assume that the Minister is indeed supportive of the
Commission’s proposals to amend the environmental liability
directive so as to include the impact of oil and gas drilling on the
environment to all marine waters, as defined in the marine strategy
framework, and the inclusion of specific guidance in the waste
framework directive?
The
Government’s aspiration to be the greenest Government ever will
be tested against their commitment and delivery on several critical
green directives, including whether they are divorced from the marine
strategy framework directive. I therefore ask the Minister for a
detailed response—he could reply in writing—on how, in
the light of those considerations, the Government will address the
threat of environmental
pollution.
I
could go on, Mrs Main, but the look on your face suggests that I should
not. I shall not detain the Committee overnight, but I have only
scratched the surface of the Commission’s extensive proposals. I
urge the Minister—I know that he will do so—to work with
the oil and gas industry in making his case to the Commission, but not
to work exclusively for them. The duties of Her Majesty’s
Government involve providing the optimal framework for exploiting our
natural resources of oil and gas, but equally for meeting our
obligations to safety and the natural environment.
There are
improvements to be made. Too often in the past, improvements were made
at a cost and hard lessons had to be learned. We have improved. I
look
forward to the Minister’s response and to
finding out about when he has disagreed with the industry and the
Commissioner in discharging his responsibilities, as well as when he
has praised
them.
5.17
pm
Michael
Connarty:
First, I record my non-financial interest in
this matter. I represent the town of Grangemouth, where
Scotland’s only refinery is sited. In that environment, many
people are offshore workers; they work onshore or offshore, depending
on where the best rates of pay are to be found. Sadly, they have been
affected by the tragedies that occur again and again in the North sea,
many of them losing their lives not from oil spills but from bad safety
practices.
I am also the
secretary of the all-party group on the offshore oil and gas industry.
I have been involved in that organisation for 18 years, ever since I
became a Member. One of the Grampian Members, the hon. Member for West
Aberdeenshire and Kincardine (Sir Robert Smith), is also a member of
the all-party group, and I thought that he might have stayed and
spoken.
I
have made many offshore visits, sometimes to scenes of tragedy. The
Piper Alpha was mentioned in the note from the Committee. Sadly, we
have had too many experiences in this country of failures in safety and
technology that cost lives. They were not all on the scale of the gulf
of Mexico, but they were equally tragic for those involved. Piper Alpha
was a terrible tragedy, and many of the families of those
involved—including the fathers, but particularly the
mothers—have gone to their own deaths not having had a
satisfactory answer from the industry or the Government that enough had
been done to let them put the matter to rest. However, we have learned
many lessons.
There was the
Torrey Canyon spill and there have been many smaller spills,
particularly in the difficult passages around the north of Scotland
where bulk oil was carried, and we have had lots of debates recently
about ship-to-ship transfers of oil in the Forth estuary and the
south-east of England, which pose their own danger to the environment,
if not for those who work there. We have had deaths on rigs, including
the terrible deaths on the Shell rig, with workers on the platform
legs, and mention has been made of helicopter deaths. We have learned
from our mistakes for many reasons, but the human element is always
tragic.
The
European Scrutiny Committee was concerned by the European
Commission’s attempt to put in the constitution and to force
into the Lisbon treaty an energy clause giving the EU competence over
our ability to exploit our resources and that of the UK industry to act
independently. We must strongly resist anything that threatens that,
but the motion is weak because it does not put down any red lines. The
European Scrutiny Committee believes that the Minister can win with
quite a bit of strength in his arm and his arguments, but it will not
allow anything to threaten existing subsidiarity
arrangements.
If the energy
clause had been included in the Lisbon treaty, we could not have signed
the tax deal with Norway whereby it raises tax on oil from its sector
of the North sea but sends oil down pipelines to look after our energy
needs. If our competence had passed to the EU, that deal would not have
been possible, and it must be recalled that in the short term 60% of
our gas needs will be met from the Norwegian fields.
Proportionality
was mentioned. We might overcome the subsidiarity element only to find
that what the European Commission is doing is not proportionate to
needs or to its statements on safety. History shows that when the
Commission gets a toehold it then gets two handholds and another
toehold, eventually climbing up to a higher level of power. It did that
in a specific case on pollution in the North sea. The Commission made
us pass a criminal
law—
The
Chair:
Order. I hope that the hon. Gentleman is not going
to go too far down this
route.
Michael
Connarty:
Not too far, although this matter is very
important. The document, which was included in the European Scrutiny
Committee’s statement, is quite clear about a proposal to work
towards a single new piece of specific legislation governing offshore
oil and gas activities, including licensing, liability regimes,
industry responsibility and enhanced public oversight. That is quite a
bit more than would be proportionate, and we should resist fairly hard
and say, “We’re quite capable of doing this ourselves. We
have a good arrangement in our industry. We have the ability to
transfer skills and work co-operatively with other EU countries, but
we’ll not do anything that will give the Commission a joint
competence.” If we did so, it could go to the European Court of
Justice and claim to represent our competence. That is happening in
case after case and it was the purpose of the Lisbon treaty. We will be
outvoted under qualified majority voting in the Councils of Europe, and
that will become the normal method of legislating. This must not be
stage 1 of an approach to an energy control system by the European
Commission. Although the Minister has not commented on that, that is
the danger, which is why the European Scrutiny Committee called for
this
debate.
It
is said, in another obvious statement, that self-regulation is not
enough. What is meant by that? If the intention is that companies
should not regulate their own fields, I agree, but if the intention is
that countries cannot have the competence to regulate themselves we are
in danger, because it is being said that country by country regulation
is not
enough.
Following
Piper Alpha, worker safety representatives built into the first stages
of every project their experience of what happens when things go wrong
on a platform or in the field. The massive spills in the gulf began
with a danger to human life, and in Piper Alpha people lost their lives
when safety systems fell apart. Those who work in the field, those who
invest in it and those who are responsible for its infrastructure must
be the beginning and the end of the Government’s approach to
what is in the interests of the
UK.
My
final point is that there is a real danger that an overarching rule
that governs all might be sited in a country that has a powerful
interest in what happens in the fields around the North sea or most of
Europe. It is an irony of the EU that most of the votes in the fishing
industry lie with countries that do not have any fish, because that is
in the competence of the Commission. We must not move away from a
situation in which people who have an interest in safety and the
effects of spills on this coast have the say, because they can out-vote
people in the European Council.
Will the
Minister assure the Committee that he is listening to the concerns in
the debate? Will he assure us that, although it is not written in the
document, there will be no question of our giving away competence to
the EU in any of those matters?
5.26
pm
John
McDonnell (Hayes and Harlington) (Lab):
I am not a member
of the Committee, but am exercising my right as an individual Member of
Parliament to raise issues of relevance and concern. I refer to my
entry in the Register of Members’ Financial Interests—I
convene the cross-party group that meets to discuss issues in the
transport sector with the National Union of Rail, Maritime and
Transport Workers, which also organises many workers in the offshore
industry.
Picking up
some of the issues raised by my hon. Friend the Member for Linlithgow
and East Falkirk about safety, the motion before us relies on the
argument that the UK has a proven and robust offshore environmental and
safety regime. The Government submitted evidence to the Select
Committee on Energy and Climate Change inquiry into UK deepwater
drilling and the implications of the gulf of Mexico oil
spill:
“The
UK offshore oil and gas industry…has a somewhat different safety
culture than that in the Gulf of Mexico. Here, there is greater
workforce engagement in safety issues, which is supported by regulatory
requirements.”
That
is true, and that situation arose, as my hon. Friend has said, as a
result of the tragedy of Piper Alpha, after which the Offshore
Installations (Safety Representatives and Safety Committees)
Regulations 1989 SI 971 were introduced. Those regulations governed the
powers of safety representatives in the industry itself and were a
major advance. As my hon. Friend has said, although concerns have
subsequently been expressed about overall safety, those regulations
were the first step in ensuring the full involvement of safety
representatives in discussion about the development of the
industry.
In the 20
years since those regulations, ample evidence has shown the need to
complete their vision, specifically on the enhancement of the powers of
elected safety representatives. If the Government and we are to rely on
the argument that our existing regulations are sufficiently
robust—which is as a result of the involvement of members of the
work force and safety representatives—it is critical to review
them regularly. Such reviews would ensure the full involvement of
safety representatives in the security and safety of the industry as of
right.
In July 2008,
after a parliamentary debate, the then Secretary of State for Work and
Pensions commissioned the Health and Safety Executive to conduct a
review of the industry’s progress on the safety of
installations. “Key Programme 3—Asset Integrity: A review
of industry’s progress” was published in July 2009. A
significant section of that report considered work force involvement,
on which the Government have relied in their evidence to the Select
Committee and in some of the proposals with regard to the rejection of
the EU directive today.
The report
emphasised the need for greater work force involvement and, to that
end, the HSE began an inspection programme to look specifically at how
the industry complied with SI 971—the post-Piper regulations.
Interestingly, it found that there had not been such an inspection in
the previous 20 years, and almost 80% of installations that were
inspected would have to be improved to meet the regulations.
Since then, Government have engaged in an exercise
with work force involvement, including a work force involvement group.
The view has come forward that there needs to be greater emphasis on
the training of safety representatives and greater involvement. When
the Committee looked at the issues overall, it pointed out some of the
problems that still exist on worker involvement.
Recommendation
10 of the Committee emphasised the concerns that it had about bullying
and harassment on rigs, particularly with regard to whistleblowing on
safety issues. Although I appreciate that the motion before us relies
on the argument that we have a more robust regime and that argument
itself relies upon a robustness based upon the full engagement of the
work force, an issue still has to be addressed, as the Committee
pointed out. That is in terms of not only harassment and bullying, but
a review of a recognition of the rights of health and safety
representatives in the industry. Many who work in the industry point to
the Norwegian model, which is based on more of a right to
representation. In fact, there is an election on every installation of
a full-time safety representative to be involved in all safety
decisions. Safety representatives are involved not only on the shop
floor on the individual installations, but all the way up to the boards
of the companies themselves.
Ben
Gummer (Ipswich) (Con):
Is the hon. Gentleman aware of the
significant legal case that has been going through the Norwegian
supreme court recently on the failure of health and safety legislation
to protect deep-sea divers in the Norwegian
oilfields?
John
McDonnell:
I am aware of that. I hope that the hon.
Gentleman will elaborate a little, so that other hon. Members will be
aware of it. There are issues in the Norwegian regime that need to be
addressed. Nevertheless, our trade unions want the recognition that the
Norwegian regime gives to the rights of safety representatives to be
replicated in this country. Doing so would enhance our health and
safety
regime.
These
matters need further consideration. I would welcome the Minister
meeting trade union representatives to discuss further some of the
problems in our regime, in particular the issue of harassment and
bullying raised by the Select Committee, and to review other regimes.
In that way, we can reassure ourselves, as well as the Commission, that
we have a robust regime that will stand the test of time and is based
on the full involvement of the work force in securing
safety.
5.31
pm
Charles
Hendry:
We have had a fascinating and expert debate. I am
grateful to all Members who have taken part for their understanding of
the issues that they brought to our attention this afternoon. That is
one of the most important things about how these Committees work; they
enable people with substantial understanding, whether or not they were
selected to be on the Committee, to contribute to our deliberations. I
join the hon. Member for Ogmore in paying tribute to the Select
Committee on Energy and Climate Change for its work, and its thorough
investigation and helpful report.
The hon.
Member for Ogmore began by talking about the need to move away from
hydrocarbons to a low-carbon economy. We agree with him in that
respect, and he and I would be as one in recognising that there is a
physical limit to the process. We also recognise
that for some decades to come oil and gas will be integral to our
energy reserves and resources. It will be important to maximise the
returns that we can get from the North sea and the UK continental shelf
more generally. There could be more than 20 billion barrels of oil
equivalent left, which is worth £2 trillion to the British
economy at current prices. This is not academic, but goes to the heart
of the future prosperity of our country. We are grateful for the hon.
Gentleman’s support on our
policies.
The
hon. Gentleman rightly said that one cannot eliminate risk completely.
One can have an approach that minimises risk and puts in place measures
to respond quickly when something goes wrong, but inevitably, given the
sort of work involved in drilling for new resources, there is an
element of risk. However, I must say that I have never been anywhere
where the safety standards are higher or the full involvement of the
entire work force in enforcing the standards is greater than on an
offshore oil or gas rig.
The hon.
Gentleman asked where we believe the Commission’s proposals can
add value or may have added costs. On costs, I would be concerned if we
were to have an additional layer of regulations over and above anything
else. It could be a distraction to businesses that have put in place
strong policies to address such issues, if they find that they are
required to do extra. I would also be concerned if the proposals made
it more difficult for smaller players, which are still
multi-billion-pound companies, to play a role in the North sea. Their
current role in significantly depleted oil and gas fields and their
approach to ensure that we optimise resource return are important parts
of the approach here.
I also want
to ensure that the proposals do not look to harmonise existing
standards when they perhaps should be focusing on where the standards
are needed in the first place. We are concerned that that could
occasionally undermine the gold standard approach that we have aspired
to and largely have in place in the North sea. It would be worrying if
anything happened to make that more difficult. However, if we can learn
from the ideas of others and the expertise of other countries, it is
absolutely right that we do so.
The hon.
Gentleman asked about the overall aim. In our discussions with the
Commission, we are looking at what we can do better, what we can
understand from the expertise of other countries and the industry, and
how we can improve still further. We will never be complacent, just as
I know that he would never be complacent, in such matters. If there are
things that we can learn about how we can tighten that further, we will
do
so.
The
hon. Gentleman asks whether the case-by-case approach could be in
jeopardy. There is a close working relationship; our officials work
actively with those in the European Commission. Inevitably,
when the Commission looks at those who have the most understanding of
such issues, it looks at the countries that are already involved, and I
pay tribute to my officials for the expertise that they bring to that
process. We believe that the gold standard perspective is the right way
forward. It should not be more prescriptive, and that is our
understanding of the direction of travel.
The hon.
Gentleman rightly draws attention to the separation of the health and
safety and environmental sides from licensing. That is one of the most
important lessons that I think the Americans have learnt. They are now
looking at the regime that we have put in place in the United Kingdom
over many years following Piper Alpha, where there is no direct benefit
to the licensing department, preventing people from cutting corners
because that is done totally independently. That is one of the reasons
why the standards in the United Kingdom have been so strong, and we
would certainly not be prepared to compromise on that. It would be
worth while for countries to look at that approach.
The
hon. Gentleman asked about the timing of a cap becoming available and
where it would be located. There are two separate initiatives. The
first is the OSPRAG development, which we hope will be in place by
mid-2011 and will be situated probably somewhere such as Aberdeen.
There is a separate Chevron development for a cap for its Lagavulin
field, which the company says is deployable within nine days. We
recognise that wherever the cap is located, there would be some
inevitable time delay. However, we also recognise the nature of those
technologies and the speed with which they move forward. I think the
industry itself recognises that more of that should have been done
historically, but the speed with which it has been developing capping
devices in a little over a year since the Macondo incident shows its
determination to address that effectively.
The
hon. Gentleman asked about the national contingency plan exercise. It
is an extremely important development. It was due to be held in 2013
but it has been brought forward to this May, enabling us to ensure that
the emergency plans are properly tested and that we can see whether
there are areas where further measures may be needed.
The
hon. Gentleman asked how OPOL would be taken forward. The OPOL regime
is unique to the North sea, and it already provides compensation on the
basis of strict liability. Unlike the US, there is no limit on
companies’ individual liability for clean-up and compensation.
Operators on the UKCS maintain insurance or make other provisions to
cover drilling and other operational risks, together with the legal
liabilities associated with clean-up or other remediation. As I said in
my opening remarks, the level of liability has been increased to $250
million, and additional assurance is required on top of that. In
addition, OPOL members collectively provide a back-up mechanism in the
form of a guarantee that, in the event of an operator default, they
will meet claims for clean-up and associated damages up to the same
financial limits. It is worth noting that there has been no call on
OPOL during its more than 30 years of operation in the
UKCS.
Huw
Irranca-Davies:
I thank the Minister for the detail of his
answers. I assume from what he is saying that there is no eventuality
in which the burden of the clean-up operation—no matter how
large—will fall on the UK taxpayer. My interpretation of his
explanation is that, under both the OPOL provisions and the top-up, the
wider umbrella of operators will—in any foreseeable
eventuality—carry the cost of a complete clean-up, including all
environmental aspects of it. Am I correct in that
reading?
Charles
Hendry:
The hon. Gentleman is absolutely correct that
there is no limit on the individual liability of the operating
companies. It is also our expectation that the levels of those
liabilities are likely to have been reduced as a result of the
development of capping and containment devices. The problem in the gulf
of Mexico was that the oil leak was not stopped and brought under
control for many weeks, but the possibility of that happening in the
United Kingdom has been significantly diminished by the development of
such capping devices. There is absolutely no limit on the liabilities
of the companies
involved.
Stephen
Phillips:
Picking up on the question raised by the hon.
Member for Ogmore, one circumstance in which the taxpayer might end up
being responsible, if there was a very large spill, is the insolvency
of any of the companies and the exhaustion of such insurance coverage
as is
carried.
Charles
Hendry:
That is the purpose of the OPOL scheme. I am
grateful for the chance to reassure my hon. Friend that OPOL is there
in the event of a company failure, as the other members of the OPOL
scheme would come forward to make up for that. They do not have
unlimited liability, but we already have a tighter regime in place than
ones planned for elsewhere—for example, in the United States.
Inevitably, in such an area, unforeseen situations can arise. The
conditions in the North sea and west of Shetland—the nature of
the waves and how they would break oil spills—also has to be
taken into account. Whereas some of the most important tourism and
fisheries or seafood areas in the United States were affected, that
would not be the case in the north of Scotland. Nevertheless, we
considered the nature of OPOL and we decided that it was appropriate to
increase the level of liabilities. I hope that having unlimited
liability for individual companies will provide additional
assurances.
Huw
Irranca-Davies:
My apologies for going backwards in time
through the Minister’s remarks. He referred to the deployment of
new capping devices—the OSPRAG one will be available from
mid-2011, and the Chevron one will be deployable anywhere in the fields
within nine days—but it strikes me that a nine-day deployment
for a catastrophic, large-volume spillage of the type that we have seen
would make quite an impact on the environment. The two devices will be
available for the North sea and west of Shetland, and everywhere in
between, but are the Minister’s officials analysing how long it
will take for the devices to get there and to be successful in the
worst-case
scenario?
Charles
Hendry:
The Chevron facility is specifically intended for
its Lagavulin field, and it believes that that can be deployed within
nine days. For what happens elsewhere, clearly it would depend on where
the cap would be located. What is also evident is the extent to which
the industry wishes to work together. It is not that one company has a
resource of which it says, “I simply won’t let you use it
if there is a problem.” There is a real intention that it should
be shared so, given a problem elsewhere, others will come in support.
The issue with Macondo was that it flowed for three months, so being
able to stop something in just over a week
shows the ability to intervene at an early stage—the catastrophic
consequences that we saw in the gulf of Mexico would be significantly
constrained.
Yes,
at an official level, including ministerial involvement, we are looking
to ensure that our response is adequate and at whether more needs to be
done.
Huw
Irranca-Davies:
The Minister was leading into my next
question. Does he see the necessity for the additional capping devices
to be available for deployment in the near
future?
Charles
Hendry:
We now have two containment devices based in the
United Kingdom, and we are developing two capping devices, which is a
massive improvement on where we had been historically. As I said, we
will not compromise on safety. Given any reason to believe that we need
more, we will look to going further forward, but we are not looking at
every individual company having to have its own capping and containment
devices, because the likelihood of more than one ever being used at one
time is obviously, we hope, incredibly small. However, we are not
complacent, and if any relevant evidence emerges we will look at the
issue
further.
The
hon. Gentleman asked whether we had areas of disagreement with the
industry. In most such areas, we have set the challenges and targets
and made sure that we work together constructively towards them. OSPRAG
has been a good example of the industry taking a lead in such respects.
We do not have issues on which the industry wishes to compromise on
safety. The lessons of the gulf of Mexico in particular have shown the
industry generally what catastrophic damage to its global reputation
can happen in the event of safety not being given the seriousness
required.
I
am keen to develop an even closer relationship with the industry, in
working to shared objectives. Our restructuring at PILOT, which has
been the main body for discussion with the industry and which is
clearly focused on issues affecting the industry, in particular how we
optimise return from the North sea, shows our determination to work
with the industry. At the end of the day, however, we set the legal
requirements, so we must have a physical limit on how closely we can
work together in order to respect such a
relationship.
The
hon. Member for Linlithgow and East Falkirk asked where we were on the
more general approach to the European Union and its powers. I hope that
I can reassure him. In article 194, the Lisbon treaty specifically
upholds a member state’s right to determine the conditions for
exploiting its energy resources. The United Kingdom welcomes the
Commission’s confirmation that any suspension of activities
would be at the discretion of member states, as is appropriate under
subsidiarity. We have no intention of moving at all from that
position.
We
are completely clear about the importance of the issue, and about the
United Kingdom being served well by tough domestic regulations rather
than by international regulations. I am more than happy to work towards
international regulations, if they are to approach the high standards
that we already have, but I am not prepared to countenance
international regulations that would diminish our standards. I hope I
have provided the hon. Gentleman with the clear assurance for which he
was asking.
The hon.
Member for Linlithgow and East Falkirk asked about the meaning of
self-regulation. It refers to the companies and not to the nation
states involved in the area. There is some lack of clarity in the
documentation as to the role of self-regulation or new regulation, but
we are clear that the issue will not in any way hinder our ability to
do what we believe to be right in that
respect.
The
hon. Member for Hayes and Harlington (John McDonnell), who I am glad
has taken part in our discussion this afternoon, focused on the safety
culture. I am more than happy to meet the trade unions about
that—I have already met them, and have been in Aberdeen for
meetings. If there are issues that he thinks it would be helpful to
discuss, I will most certainly be keen to do so. He asked in particular
about S.I. 971 and the workforce involvement group, which is part of
the offshore advisory committee. We have just finished a review of S.I.
971 and expect a report in late spring, when we will see whether any
changes are necessary. We will not hesitate to take further action, if
needed.
The
Select Committee, in its report, looked at the issue of whistleblowing,
which we are keen for the Health and Safety Executive to take forward.
If there are areas where people are nervous about raising the alarm,
they should feel in no doubt about the need to do
so.
I
was very struck by one of the safety films by Apache which I saw before
going offshore. In it, the chairman of Apache said, “You have an
obligation. If you think that anything is not being done as safely as
it should be, you must raise the alarm.” The message from the
top of that company could not have been clearer—he expected
everyone to be part of the process and that
they should not fear or hesitate to express concerns if things were not
being done as appropriately as they should be
done.
I
hope that has reassured those who have contributed to the debate. If
anyone made a point that I have not picked up on, I hope that I may
write in due course to provide any additional clarification. We have
had a useful discussion about many of the issues, and once again I am
grateful to the people who have served on the Committee for the
expertise and understanding that they have brought to it. We can hold
our heads up high in this area, saying that Britain under the previous
Administration and through the work we are doing has set globally high
standards. We will not compromise on them. We are always keen to learn
how we can do things better, and in that respect we will co-operate
actively with the Commission on ensuring that the world more generally
can learn from our expertise in this
country.
I
hope that the Committee will support the motion that accompanied the
document.
Question
put and agreed
to.
Resolved,
That
the Committee takes note of European Union Document No. 14768/10,
relating to a Commission Communication on Facing the challenge of the
safety of offshore oil and gas activities and Addendum 1; agrees that
the UK has a proven, robust offshore environmental and safety regime,
and supports the Government's intention to work closely with the
Commission and EU Member States to ensure that high standards of health
and safety and high levels of protection for the environment are
maintained across Europe in respect of oil and gas
operations.
5.51
pm
Committee
rose.