Examination of Witnesses (Questions 1-88)
Paul King, Malcolm Webb and Mark McAllister
Q1 Chair: Good
morning and welcome to this first public evidence session that
this Committee has held during this Parliament. So we are very
pleased to see you and we have chosen to address what we believe
is a very topical issue. Can I say right at the outset that our
concerns are as indicated in the terms of reference for the inquiry?
They extend to safety, including of course particularly the safety
of people and also to the environment, and the consequences of
deepwater drilling for the environment. I believe you would like
to make a short opening statement.
Malcolm Webb: If
that's possible, Mr Chairman, I would, and I think Mr King would
as well.
Chair: The benefit of
it will vary inversely with its length.
Malcolm Webb: Thank
you. I take that on board. I will be brief. The Macondo well
incident was a dreadful event and first and foremost we think
of the 11 men who lost their lives, and the others who were injured,
some of them seriously, as a result of that catastrophic incident.
That blowout and the sustained flow of oil which resulted from
it was truly shocking and rightly caused the offshore and the
gas industry and its regulators around the world to reflect upon
the implications of this incident for their own operations. The
UK was no exception and, without prompting, the industry, together
with its regulators and trade unions, quickly came together to
take stock of our position and without seeking to pre-empt or
prejudge the lessons to be learned from Macondo set about a thorough
review of our practices and procedures, and looking to see what
enhancements could be made.
One result of this review is that we continue to
have faith in our regulatory systems and industry practices and,
surprisingly, we believe we have found opportunities for improvement
and are moving to implement these. However, these possible enhancements
are relatively marginal in nature and do not cause us to lose
faith in the strength and integrity of the regime we work in,
in all parts of the United Kingdom Continental Shelf (UKCS).
Much has been made of the fact that the Macondo well
was drilled in deep water and indeed some Governments have imposed
moratoriums on drilling in deeper waters. The UK Government have
so far, and in our view quite rightly, resisted the notion of
a drilling moratorium. Furthermore, most of these calls for drilling
moratoriums tend to focus on deeper water areas. In truth, there
is no reason for this concentration on deeper water save that
this recent and awful Macondo incident just happened to occur
in deeper waters.
The depth of water is not the critical element here.
Rather, what is critical are the practices and procedures employed
to drill the well and to regulate those who are doing that drilling.
In that regard policy and practice in the UK are substantially
different to those employed in the US Gulf of Mexico and there
is, in our opinion, no cause for public concern that the industry
standards and regulatory practices and procedures employed in
the UK are not fully fit for purpose. They are and they militate
strongly against the likelihood of anything like Macondo ever
happening here.
Q2 Chair: Right.
Does anyone else want to say anything at the start?
Paul King: Yes,
Mr Chairman, if it's all right. Thank you for inviting me here
today to represent Transocean and to assist the Committee in understanding
the readiness of the UKCS to handle any situations that occur
that are similar to the Macondo incident that happened in the
Gulf of Mexico. My name is Paul King. I am the Managing Director
for Transocean Drilling UK and I have been working for that company
for 35 years. I started out in the North Sea as a rig electronic
technician and am currently today responsible for the day-to-day
business of Transocean in the North Sea. Now, we at Transocean
continue to feel deeply the loss of the 11 industry colleagues
who lost their lives in Macondo, nine of whom were part of the
Transocean family, and I personally knew one of those who lost
his life there having worked with him in the Gulf of Mexico many
years ago. I would just like to point out at this time that Transocean
continues to look for the answers, along with the rest of the
industry, and we fully support Oil & Gas UK and the OSPRAG
committees in getting to the bottom of the issues that we are
facing today and in ensuring that the UKCS is safe to continue
drilling.
Q3 Chair: Right.
Thank you very much. Just picking up something that was said
just now, you said the depth is not critical but it is the case,
is it not, that if you are drilling in very deep waters then it
is more difficult and the hazards are greater? I appreciate it
depends on the procedures but the problems are more challenging
the deeper you are.
Malcolm Webb: You
are right, Mr Chairman. Water is a hazard that you have to plan
for and deep water brings some particular risks with it.
Q4 Chair: There
is a definition in America of "deepwater" and what they
call "ultra-deepwater". Does that definition apply
in the UK as well?
Malcolm Webb: No,
I do not think it does, really. I don't think there is an agreed
industry definition of what constitutes deepwater; indeed, I think
it is something of a moving feast. When we started in the North
Sea over 40 years ago, depths of 100 or 200 feet would have been
regarded as deepwater, and as our abilities and technologies have
moved forward so the definition of what is "deep" has
moved with it.
Q5 Chair: As a
matter of practice have we been drilling in UK waters at anything
like the depths that this was taking place in the Gulf?
Malcolm Webb: Yes,
Sir, we have in water depths. I think the deepest well so far
drilled in the UK Continental Shelf was at 6,000 feet of water,
and that was drilled some years ago.
Q6 Chair: Right,
and are there current plans to go on drilling at comparable depths
to the Deepwater Horizon?
Malcolm Webb: I
am not aware of all companies' plans but I think we can anticipate
that wells will be drilled at that depth in the UK Continental
Shelf, yes.
Chair: Okay.
Q7 Albert Owen:
Just to get my head around this, are we talking about actual exploration
or are we talking about drilling that has been capped and left
for a while and then you return to it? Have those sorts of exploratory
drilling been done in the past and you return into it to get the
oil out?
Malcolm Webb: You
can cap wells and go back into them at a later time; that is called
suspending the wells. That does happen. And the thing—
Q8 Albert Owen:
And has that happened in the UK around the Celtic Sea and in the
North Sea?
Malcolm Webb: It
can happen. There are suspended wells around the United Kingdom
Continental Shelf, yes, but I think in the Macondo incident it
was not a question of a re-entry into a suspended well; it was
the drilling of an exploration well.
Q9 Dr Lee: You
mentioned other countries that felt the need to issue moratoriums
on deepwater drilling. Norway is one of them.
Malcolm Webb: I
don't think so, Sir.
Dr Lee: It has suspended
until 2011.
Malcolm Webb:
I do not think it has called a moratorium on drilling, Sir. I
think what it has done is that it has suspended the granting of
new licences in northern deeper areas but that does not mean that
it has stopped deepwater drilling.
Q10 Dr Lee: Well,
it implies that it is awaiting developments and finding out what
happened in the Gulf of Mexico. My understanding is that they
are predominantly gas fields in Norway, yes? If that is the case,
why would it suspend issuing licences more than, say, the UK where
we are talking about oil? Why do you think it has made that decision?
Malcolm Webb: I
don't know. I am afraid you would have to ask them. My view
would be that there is no case, given the strength of the regulatory
regime that we have in here and the fact that we know the risks
that are involved in the drilling of these wells and have engineering
practices that can deal with them, that we should impose any blanket
moratorium on the drilling of wells in the UK Continental Shelf.
Q11 Dr Lee: Do
they have, like, different procedures about assessment of oil
spill plans?
Malcolm Webb: I
do not believe so. I am afraid I am not an expert on the Norwegian
regime but I think it has a number of elements that are similar
to our regime, to be distinguished from, for example, the more
prescriptive American regime.
Dr Lee: Okay.
Q12 Sir Robert Smith:
I should declare my interest to the Committee as a shareholder
in Shell and also as a vice-chair of the all-party group on the
offshore oil and gas industry. First of all in terms of depth,
at what depth does the intervention in the well at the seafloor
switch from divers to ROVs?
Malcolm Webb: Well,
others might be able to comment but I believe that is round about
500 feet, something like that.
Q13 Sir Robert Smith: Because
that seems to be more of a transition, in a way, in terms of operating
differently, than the American definition.
Malcolm Webb: It
brings in the need for a whole new range of technologies and approaches;
that is true, yes.
Q14 Sir Robert Smith:
You have already touched on the fact that you don't think that
there should be a moratorium. Can you understand how, to the
layman, it seems that when a disaster happens, you stop, obviously,
and then wait for the lessons?
Malcolm Webb: Yes,
I can, but just because an event has happened in another part
of the world doesn't mean to say that in a regime such as ours,
because that has happened, we should automatically stop doing
what we are doing, I believe, in an entirely safe and proper way.
Q15 Sir Robert Smith:
Yes, we will be touching more on how the regime works here in
the UK in more detail with other questions. Obviously, having
a constituency in the North East of Scotland, I am very aware
of the jobs and the revenue and the impact of the industry, but
I just wondered what would be the consequences on that side for
the community in terms of investment in the industry and continuing
production?
Malcolm Webb: I
think it would send a very negative message. I think it could
be quite serious. There is a need for substantial continued investment
in UK offshore areas. If we are to achieve what we need to achieve
to allow this country to keep a measure of energy security, my
industry is going to have to invest something like £60 billion
over the next 10 years or so. Those investment sums will be prejudiced
if people see that the UK regime is a stop/go, switch on/switch
off type of regime, particularly if there is no good reason for
that switching off and on.
Sir Robert Smith: Thanks.
Q16 Albert Owen:
You mentioned that depth wasn't an issue but regulation was.
Do you think it is time—the EU is calling for it—that
we regulate the regulators, that we do have a level playing field
across the world?
Malcolm Webb: I
find that a very strange concept—that we should put over
the level of our very expert professional regulators that we have
here, who have hard-won experience from the North Sea, what I
would have thought was bound to be a relatively less expert EU
umbrella. I have heard it said from the EU that we need to control
the controllers. Frankly, I think I am at a loss to understand
what added value there would be with a European level of regulation.
Q17 Albert Owen:
But what I find difficult is that we are talking about here an
accident that occurred predominantly in the Gulf of Mexico. Experienced
companies are drilling there. We are not talking about a new
country developing this now. We have got Norway wanting a moratorium,
and again it is an experienced country. So why does Britain feel
it has to be out of sync or worried about increased regulations?
Malcolm Webb: I
am sorry, you may say I am picking on this, but I still do not
believe that Norway has called for a moratorium.
Albert Owen: No, I am
asking a question.
Malcolm Webb: I
think it has put a limitation, it has slowed down the granting
of new licences but I do not think it has imposed a moratorium.
Q18 Albert Owen:
I understand the technical difference but it has done it for a
reason, hasn't it? You know, it is a first-rate country when
it comes to oil production.
Malcolm Webb: Yes.
Well, you would have to ask the Norwegian authorities why they
have decided to limit their licences. I am not aware of it.
Q19 Albert Owen:
It is our near neighbour. I am finding this difficult to understand.
It is our near neighbour and we work in co-operation with it
in the North Sea, I assume?
Malcolm Webb: Yes,
we do.
Q20 Albert Owen:
And it's taken this radical step to limit licences.
Malcolm Webb: I
am not sure how radical the step is, Sir, and, I repeat, I do
not believe it has imposed a moratorium. I come back to the point
that I do not think there is a case for a moratorium to be imposed
in this country bearing in mind the regulatory regime and the
industry practices that we adopt here, and there are critically
important differences, I believe, between the US system of administration,
for example, and the UK administration.
Q21 Albert Owen:
Okay, but talking about Europe, and that was the premise of my
question, surely we can contribute to the European level of regulation.
You know, the expertise that you talk about—over 40 years
of proven experience—could actually enhance the European
level.
Malcolm Webb: Well,
to be quite frank, the last thing I would wish to see is any diminution
in the resources available to the regulators here to support a
pan-European initiative. I would rather they were kept here in
the UK, continuing to do the excellent job they do here in the
UK.
Q22 Albert Owen:
Well, I am not suggesting that they go overseas. What I am suggesting
is that they share their expertise.
Malcolm Webb: They
could do.
Q23 Albert Owen:
Okay. With regards to the oil spill regulations at a European
level, that is mostly for shipping and tankers. Do you think there
is a scope to extend this to drilling?
Malcolm Webb: There
is clearly the scope to extend it to drilling. I think it does
not extend that far at the moment, but as far as the industry
is concerned that would not be an issue of primary concern for
us because as an industry we take the greatest steps to ensure
that if there is any spill of oil from any of our operations the
industry deals with that—deals with the clean-up, and deals
with the compensation for that—and the industry has an excellent
track record on that, and has furthermore set up bodies to support
it in that on a mutual co-operative basis here in the UK. So,
it is an interesting question but in some ways somewhat academic
as to the way that the industry does approach those issues here
in the UK.
Q24 Albert Owen:
I did not mean to be too academic. I meant, you know, to try
and direct the answer. What concerns me is that if there is a
spillage—we have seen spillages in the past—it does
affect innocent countries that, you know, are not involved in
the actual drilling.
Malcolm Webb: Yes.
Albert Owen: I am talking
about Europe now. If there is something on this scale that does
happen in Europe, it's not going to stop at international boundaries.
Malcolm Webb: No.
Albert Owen: So, that
is why I am asking whether the present regulation shouldn't go
beyond shipping, which is a moving object, to deal specifically
now with the experience in the Gulf of Mexico—to deal with
drilling and exploration.
Malcolm Webb: I
think that is something that could be looked at but I think the
other point you make is a very important point too. It is important
that the nations in Europe, and particularly those around the
North Sea, collaborate and co-operate together, and again there
is a good track record and good history on that in the UK.
Q25 Albert Owen:
I think you are moving towards what I asked in the first place,
and perhaps there is a move towards that. Do you feel that the
environmental liability directive would hold operators liable
for the damage they do in terms of biodiversity?
Malcolm Webb: I
am not sure, actually. I am not sure that I am expert on that.
I think our view is that it probably—it does not at the
moment, no.
Q26 Laura Sandys:
This just really follows on from my colleague's questions about
this international regulation. I mean, it is an international
business. We are seeing now that rigs are being moved from the
Gulf of Mexico to the Congo, to Egypt. When you start to look
at some sort of international framework, would that not then offer
in many ways a much stronger level playing field across the world
and ensure that there is some consistency? I mean, in the documents
that we have there is a very clear message from you that the regulatory
structure in the UK is excellent; it affects all aspects of safety.
Would we not see that as a benchmark to raise everyone else's
up to that level, rather than you saying in many ways that by
us spreading our expertise we are going to diminish our capability?
I just see that it is a global business, and that there are global
standards on environmental protection, and I wonder whether we
should use ourselves as a stronger model for that international
framework.
Malcolm Webb: I
would hope that other people can look at our model and learn from
it, and improve their practices and procedures in line with what
we are doing here in the UK, and if we can play a part in that
we would be very pleased to do so. I would still be slightly
concerned, on a precipitative move to the creation of some pan-European
regulatory authority, that we might see a dumbing down as opposed
to a raising up of standards.
Q27 Dan Byles:
I am particularly interested in the difference between the regulatory
system in the UK and in the US. Now, you have described the UK
regulation as being less prescriptive. My understanding is, in
effect, companies are required to be safe and are then inspected
rather than told specifically what to do. Can I ask how much
variation that leads to? Do individual companies, individual
wells, tend to operate on a case by case basis when it comes to
specifically what equipment is installed? I am thinking now of
BOPs, blind shear rams, this sort of thing.
Malcolm Webb: The
answer is yes, it is relatively case-specific, and that is one
of the billion factors behind it, really, so you will have different
requirements for different types of operation depending on the
type of operation. That does not mean to say, however, that we
have got lax standards. It means, actually, the safety case regime
in the UK—introduced after, of course, a seminal Cullen
report—is a goal-setting regime. It requires the operators
or the duty holders to make sure that they have reduced the risks
of their operations as low as is reasonably practicable (ALARP).
That is the obligation upon them and they have to take all necessary
steps to do that and import all appropriate techniques, and it
is a very dynamic system, therefore, as well.
Q28 Dan Byles:
Doesn't that make it harder for the actual regulators then to
come in, if there is not effectively a single standard in operation—if
a well operated by one company might have significantly different
equipment to a well operated by another? I mean, I think there
is going to be a lot of focus on things like the numbers of blind
shear rams that should be in place.
Malcolm Webb: Yes.
Q29 Dan Byles:
My understanding is that in the US for some time there has been
a suggestion there should be a minimum of two, but in the case
of Deepwater Horizon there was only one. That is a very prescriptive
issue, but it seems that in our system it is going to be much
harder for the regulators to decide what is the minimum gold standard
if we have a lot of variety on different wellheads.
Mark McAllister:
Sorry, but if I may interrupt, I think another key element in
this process is the use of independent verification of well design.
It is very important, because when we talk about a goal-setting
self-regulating system, it can sound terribly lax, except when
you think about it, what is happening is an operator is being
asked to consider all the risks, to demonstrate that they have
thought about all the risks in a mature and sensible way, and
have mitigated against them. So their design, their management
system, and all of their practices then go to an independent company
to be verified. Now, that is populated by seasoned drilling professionals,
who've got no commercial interest in the well itself but are looking
at that from a perspective of what is the water depth, what is
the reservoir depth, whether it is gas or oil, and what is the
pressure and temperature which it is producing. They can make
a very, very informed, experienced decision on whether that is
a good way of mitigating risk, and then the application goes to
the regulator. So, the regulator has got that independent assessment.
Q30 Dan Byles:
Interestingly, you have touched on what my next question was
going to be about: the independent and competent persons. I am
very curious to know who these independent competent persons are.
Are they other people from the industry, people from other companies?
Mark McAllister:
They are people in independent consultancies. So they are industry
professionals who may have worked in oil companies in their past.
They probably have; they probably trained in oil companies. They
generally tend to be more experienced professionals.
Dan Byles: So they are
from the industry?
Mark McAllister:
They are from the industry.
Dan Byles: So the independent
competent persons assessing parts of industry come from other
parts of the same industry, in effect?
Mark McAllister:
Well, yes, except of course that they are not working for the
oil companies. They are working for independent consultants whose
reputation and whose name is their only currency.
Q31 Laura Sandys:
Are they chosen by them?
Mark McAllister:
Sorry?
Laura Sandys: To add to
that, are those consultancies chosen by the oil companies—that
is, is it a client relationship?
Mark McAllister:
Yes, it is.
Laura Sandys: Right.
Q32 Tom Greatrex:
Mr. Webb, earlier on you described the UK regulations as fit for
purpose, and I think you said the regulators do an excellent job.
Does that mean your view is that the Deepwater Horizon would
have been allowed to operate, if those regulations were in place?
Malcolm Webb: As
we don't know what happened yet, and we do not fully see the picture
there, I think it is impossible to answer that question, Sir,
but do I believe that we operate in the UK under a superior regulatory
regime to that which is applying in the US? Yes, I do. We have
a regime where safety is divided from economic regulations, which
is not the case in the US. We have the whole safety case regime,
which obliges the operator and the owners of the vessels to make
sure that they are operating to a standard which reduces the risk
of the operation as low as reasonably practicable, and we do have
independent verification of well design. We also have independent
verification of safety critical equipment; and on top of that
we have the 115 expert inspectors within the highly professional
Health and Safety Executive, which also, after all of those other
checks have gone through, reviews all well proposals. So, I believe
we have got a very, very good system. It came out, of course,
of a dreadful occurrence here. This came out of the Piper Alpha
tragedy, when the seminal Cullen inquiry and the inquiry report
that came from that established this system, and I believe it
has served us exceptionally well over the last 20 years.
Q33 Tom Greatrex:
So the work of the Health and Safety Executive, when it is doing
its inspections, and the conclusions it comes to in its reports
is something the industry takes seriously?
Malcolm Webb: Absolutely.
We work very closely with the Health and Safety Executive. I
am delighted to say the Health and Safety Executive readily agreed
to join us in the OSPRAG work, along with the Department of Energy
and Climate Change and the Marine Coastguard Agency. We work
with them as well in the Step Change in Safety initiative, which
you may be aware of, along with the trade unions as well.
Q34 Tom Greatrex:
Perhaps then I could ask Mr King if he could give his reaction
to the bits from the health and safety report on, I believe, one
of your operations in the North Sea that say that there was evidence
of bullying, harassment, and intimidation of health and safety
representatives. Have you got any views on that point?
Paul King: Yes,
I have. I think the report needs to be viewed in its entirety.
There were some comments—anecdotal observations—made
from discussions with our personnel offshore that there were some
isolated cases of intimidation or bullying, which was news to
the management in town. We are a company that cares deeply about
the way our people work offshore, that they work safely, and about
the importance of providing an incident-free environment for them
to work in. We have several alternative ways for people to get
this message to us in shore-based management and to corporate
executives via an ombudsman line, which is manned by a third-party
company. Anybody who has anything that they are concerned about
can, in complete confidence, talk to someone and report it, and
move on from there.
Q35 Tom Greatrex:
Sorry, that sounds all very good theoretically but it seems to
jar with what the Health and Safety Executive found. Are you
telling me that there is not bullying and intimidation happening,
and if there is bullying and intimidation happening of Health
and Safety reps what are you doing about it?
Paul King: Well,
you know, I firmly believe that our company works safely and that
these are isolated cases. I would not let my son work for this
company if I did not believe it was a company that cared for its
people. As a result of receiving the report from the HSE and
discussing it with it, we put this out to our personnel offshore
throughout our division, and allowed them to review it. We then
brought 500 of about 1,200 personnel into town to discuss directly
with us the issues that were raised, and we could not at that
stage confirm that there was any indication of, you know, widespread
intimidation or bullying. We focus on the issues of fair play
and make sure that our people can work in an environment that
allows them to work safely. The feedback from our people during
those meetings was very positive. We reiterated quite clearly
that it is unacceptable for Transocean to condone any sort of
intimidation, bullying, or whatever issues that would affect the
way that they work. We continue to ensure this is unacceptable
with Transocean and we continue to enforce that.
Q36 Tom Greatrex:
Can I ask you, then, is it fair, this view that I have heard from
a number of different people who work offshore, which is that
the drillers are the part of the industry that takes health and
safety less seriously? Part of that is linked, or seems to be
linked, to the sense that you still operate NRB despite the agreement
that has been in place.
Paul King: I actually
find it quite offensive that people think that we take rules for
granted. We seriously care about the way our business is run.
We are a professional industry. We have learned from lessons
in the past. I can see through the 35 years that I have worked
in the industry the radical changes that have been made. If I
look at the conditions I worked under offshore in 1975 and compare
that to the way we operate today, there is no comparison whatsoever.
Q37 Tom Greatrex:
Do you operate NRB? Perhaps you could explain for the Committee
now.
Paul King: "Not
required back"? No, we do not. If we have a problem with
anybody on our rigs who is not performing from a safety perspective
or a competency perspective, we would talk with them offshore
before they leave the rig to advise them what our thoughts are
about their work and, if it is the case that we find their work
unacceptable, why they will not be coming back to the rig.
Tom Greatrex: So why do
you think it is, then, that the trade unions involved have said—
Chair: Can someone turn
that mobile phone off or leave the room, whoever it is?
Q38 Tom Greatrex:
Sorry, could you perhaps comment on why it is that the trade
unions that are involved have said that they are not prepared
to renegotiate the NRB because it is not being, as they say, observed
by all parts of the industry and particularly drillers? Is that
something that you are aware of?
Paul King: No,
it is not something that they have talked directly to me about.
Malcolm Webb: Can
I respond, if I might? I am slightly taken aback by that comment.
Oil and Gas UK has a guideline related to NRB which was agreed
with the trade unions and all members of the industry. We undertook
a review of that guideline. It was launched just over a year
ago. We undertook an independent review of that. We found that
there were certain improvements that could be made to the regime,
particularly around some of the education and spreading the message
around the industry, but also for providing within the contracts—the
relevant work contracts—that the NRB guideline should be
adhered to. That was readily agreed by the industry and agreed
by the unions, and in agreement with the unions we are in the
process of re-launching that guideline at the moment. So I don't
think actually at the moment we have a disconnect with the trade
unions on that point, Sir.
Q39 Sir Robert Smith:
When you say "the industry", does that include the drilling
contractors?
Malcolm Webb: It
does, Sir.
Q40 Sir Robert Smith:
Mr King, the report that we have seen parts of in the press was
not actually published by the HSE, but are you able to give us
a copy of it so that we can see it?
Paul King: Yes,
we certainly can. We have no problem with giving a copy of that
to the Committee.
Q41 Sir Robert Smith: Thank
you. That will be helpful. Just reinforcing, the bit that does
cause concern, though, is that if, when the HSE turns up, it sees
a sizeable number of people saying they feel there is a culture
of bullying, it is a worrying phenomenon. Surely the most crucial
thing for safety is that, no matter where you work in the organisation,
you have to have the confidence and the courage to know that if
you see something unsafe you can stop it or make sure it does
not escalate. Quite often it won't be a senior person that is
seeing the thing that is going wrong and someone in a more junior
role has to have that confidence.
Paul King: I think
the issue of time out for safety, which is, you know, an industry
standard that has been developed in the UKCS, is something that
we fully support. When you get the entire HSE report, you will
see the positive aspects of the report and the negative aspects
of the report, the negative being that there were some instances—and
I wouldn't say we are talking about a large amount of instances--of
bullying; I believe you will find that they are isolated cases.
But on the positive side the HSE recognises that Transocean fully
supports time out for safety. We continue to train our people
and ensure that they have no issues if they want to stop the job.
I think a lot of people look at time out for safety thinking that
we are going to shut the rig down every time someone calls a time
out, but more often than not it is part of the way we work offshore.
When guys come on their shift, they are advised on what operation
is going on on the rig, the weather conditions, the environment,
and what is liable to happen over the next 12 hours. They then
go off with their individual supervisors to discuss the next 12
hours' work that they have. It is important, and each of our
supervisors reiterates this at the start of the tariff, that if
there is anything that they do not understand then they call a
time out for safety. This is really so that they understand fully
the job that they are doing. Similarly, if a new person comes
to join the team they will take a time out so that he is brought
fully up to speed on what is going on. So, I think when you have
read the HSE report you will see that, yes, we do provide and
are driven towards providing a safe working environment for our
people.
Malcolm Webb: There
is indeed another report that we might draw to your attention.
You may recall the HSE undertook a major programme, KP3, a while
ago looking at asset integrity. In the context of that report,
it undertook an independent survey of the work force. There was
very good participation. I think they had about 5,000 respondents
on this, looking particularly at the issue of work force engagement
and ability to intervene on a safety matter. The results are
quite startling. They show the industry in an exceptionally good
light, in my view, with very, very high assurance amongst the
work force that they are free and able to intervene on issues
of safety, and without fear of retribution. I will be very happy
to let you see a copy of that report too, if you would like it.
Q42 Chair: There
are a lot of pressures, though, aren't there? I mean, there is
another report which I understand estimated the cost of stopping
operations to put up a blowout preventer, or make repairs, at
$700 a minute, so it is not just the bullying that might deter
someone. The financial incentives to cut corners are huge, aren't
they?
Malcolm Webb: Well,
as are the costs of getting it wrong.
Mark McAllister:
I think the other way of looking at that statistic is actually
the cost of poor planning and poor well design is great, and good
well design and good planning go with good safety. So, you know,
in such a capital-intensive business, actually getting it right
from the design phase is fundamental.
Q43 Chair: Well,
I am sure that is an approach which can well be adopted by senior
executives sitting in their office, but when you are out on a
well and you have got to make a minute-to-minute decision, the
financial pressures not to stop are nevertheless very considerable,
aren't they?
Mark McAllister:
That is why another important part of the regulatory regime that
Mr Webb has referred to on several occasions is the management
system—a transparent and clear chain of command—both
for the operating company and for the rig contractor, and the
interface between those, so that individuals are not put under
pressure actually to make million-dollar decisions without a clear
opportunity to reach up the chain and get endorsement for that.
Chair: Christopher, you
have been trying to come in for a while.
Q44 Christopher Pincher:
We have already asked my question, but just in relation to this
point, we are talking about making sure that safety is crucial.
How often do you think it is right that the BOP[1]
should be brought back from the seafloor for testing and checking?
Paul King: The
BOP is generally tested on the seabed during an operation. It
has to be tested every 14 days. Then it is fully function-tested,
and fully pressure-tested. There are some times when the operations
will be in such a condition that an exemption is requested. The
risk will be assessed on the rig; it will then be passed on to
the support team in town to analyse, and there will be discussion
with the client. We will then make a decision on whether an exemption
will be allowed for a certain amount of days until we are in a
position where we can test the BOP, or whether we will stop at
that time to test the BOP stack. But the BOP stack—blowout
preventer stack—is actually one of the pieces of equipment
that is tested more thoroughly than any other piece of equipment
that we have in our industry.
Q45 Laura Sandys:
Just going back to what Mr McAllister was talking about in the
sense of pre-planning and looking at drill design and the overall
well design, many scientists would say that actually we know less
about the bottom of the sea than we do about the moon and the
knowledge and understanding of the environment in which you are
operating is not as well understood as many other environments.
When you look at OSPRAG's remit and also its membership, there
seem to be no scientists involved. Obviously there are industry
scientists, but I refer to independent oceanographers, marine
engineers who are independent of the oil and gas sector, and a
true sort of desire to look into the future. You say that you
need to plan from the future. I see this group as being, first
of all, a little bit more of an analysis of a disaster of the
past, which is important to learn from, but this is an opportunity
for you actually to gather information for the future too, and
actually to use more independent assessment and also input. It
just seems like a quite closed sort of intimate shop.
Mark McAllister:
Okay, let me try and answer that by, first of all, talking a little
bit about the membership of OSPRAG and also its workflow and the
different things we are looking at so you can get an understanding
of how we are trying to attack these issues. OSPRAG is, I think,
quite typical of the way the industry in the North Sea works.
We did the same when there was the helicopter tragedy last year.
It is not just the oil companies and the contractors, but DECC,
the HSE, the Secretary of State's representative, the Maritime
and Coastguard Agency, and the trade unions all involved together,
so it is very much a communal activity to make sure that we have
the processes and the readiness for this.
Now, if you look at that chain of activity, the first
thing is to reduce as low as we possibly can the chances of an
event like this happening in the North Sea, and actually the expertise
for that does lie within the oil industry. Your 7,000 wells drilled
in the North Sea have been drilled by people in the oil industry.
The experience of dealing with different pressure regimes, different
geological formations, and different water depths, lies almost
entirely within the oil industry, so actually, on the primary,
important task of making sure it does not happen, we do have the
expertise within the industry to attack it.
The second element, then, is, if such an event were
to happen, how can we ensure that it is dealt with as quickly
as possible with the least oil spill possible? Actually, that
has been one of the key elements of the OSPRAG work so far, and
once again, largely the expertise does lie within the industry,
although we are looking outside, and a lot of it, you know, draws
on very much the experience of Macondo and some of the solutions
that BP has come up with to make sure those solutions are already
manufactured and readily available to the North Sea.
Now, the third element—and I think this is
where your point about external help is most pertinent—is
containing the oil during the period that you are trying to actually
cap the well, and how we deal with modelling of oil spills, environmental
impact, et cetera, and that is where we are reaching out beyond
the industry. The model is sitting in completely different organisations
not part of our organisation. Those have the most up-to-date and
pertinent models of, you know, the movement of oil in the sea,
for instance.
Q46 Laura Sandys:
In the wider sense, do you feel that you are putting enough investment
into understanding the environment in which you are working, because
it is a very complex and very lightly understood environment?
Maybe from an oil and gas perspective you have quite a lot of
experience, but it is still an environment that is not known and
not understood in quite the same way as other environments.
Mark McAllister:
In what context? When you just used the word "environment"
in that context, what are you talking about? If you are talking
about the drilling of wells, the environmental uncertainties are
around the key things that could cause the well not to perform
or to blow out and that is around geological horizons, it is around
pressure, whether it is oil or gas, and this expertise is almost
exclusively within the oil industry. If you are talking about
dealing with a spill and getting it contained, once again the
expertise sits within the oil industry. If you are then talking
about, as I say, the impact of this oil spreading in the sea,
then of course we are looking as widely as we can to get help
to make sure that we are modelling that correctly so our resources
are correct—are adequate.
Malcolm Webb: We
are not working alone on that. You have organisations such as
the Maritime and Coastguard Agency and the like who are also very
much focused on that and bringing their own scientific expertise
to bear.
Mark McAllister:
Yes.
Q47 Dr Lee: Does
OSPRAG ever plan to review oil spill response plans that have
been submitted before the Gulf of Mexico incident?
Mark McAllister:
Sorry, just restate the question.
Dr Lee: Well, the oil
spill review plans that have been submitted as part of an application
for the last period, are you seeking or looking to review them,
the ones that have been submitted prior to the Gulf of Mexico?
I say that, but I looked at the oil spill response plan for the
Gulf of Mexico and—I don't know—it is a weighty tome
so I can't say I have read it. I have reviewed it and there is
sort of evidence of a bit of a cut-and-paste job about it and
I just wonder whether OSPRAG might want to review plans that have
been submitted to date.
Mark McAllister:
Yes. Absolutely, as part of—
Q48 Dr Lee: I
mean specifically. I will give you one example. There is a map
in it and it has an icon for a walrus. I mean, you don't get walruses
in the Gulf of Mexico.
Mark McAllister:
We have seen these stories in the press, and I understand what
you are saying. Actually, that is one of the things about the
whole OSPRAG constituency because the constituency is the oil
industry—both producers and contractors—the regulator,
the trade unions, and the coastguard agency. So actually all of
us are looking and saying, "Well, what are the constituent
parts of an oil spill response plan?" First of all, prevention;
secondly, early containment and capping—what has been learned
from Macondo—and, thirdly, what happens to the oil when
it is released from a well. Now, this has been done together,
so, you know, if there was something as farcical as a walrus,
we are together in the same room. The entire industry, including
the regulator, is looking at, "Have we got the provisions?
Have we got the right plans?" You would not expect the oil
spill response plan to vary dramatically from one company to another,
because we are drawing on communal resources to a large degree.
Q49 Dr Lee: Yes,
the size of it has certainly differed. I have seen some at 60
pages and this one is almost 600. In terms of spill volumes, you
make a prediction, as I understand it—a credible spill volume
chart. Clearly, they underestimated how long it was going to take
to cap that well. Are we happy with the sort of projections for
a spill in West Shetland, for example? Particularly in view of
the fact the sea conditions would be much different.
Mark McAllister:
Much different; I agree with you entirely. That is why, with
a risk of repeating myself, I go to this chain: first, it is prevention;
secondly, it is actually not saying, "Did we get the spill
length wrong?" but "What have we learned in Macondo
to make the spill length as short as possible, and what resources
do we need to be able to cap any well?" So one of the elements
of one of the groups in OSPRAG is to look at the BOPs at work
in the North Sea and look at the variety of different connections
one would have into them to make sure that we can design equipment
that is available to the industry that can be collocated with
any of these blowout preventers on top of the wells. So that
is a key element. It is not a question of having underestimated.
Let's take that underestimation and say, "Okay, how do we
make sure that if such an event occurred we can deal with it as
quickly as possible?"
Q50 Dr Lee: Just
one final question. In the Gulf of Mexico, as I understand it,
BP was under licence. BP was spraying dispersant at source, which
had never been done before. In terms of permission for that,
the Americans take responsibility, I guess, for allowing that
to happen. The point is that we do not actually know what the
environmental impact of doing that is. It could be, for instance,
that oil is sitting 250 metres under the sea, couldn't it, as
we speak? So in view of that, do you think that sort of subsurface
dispersant would be used if it happened in West Shetland and,
going back to what you were saying earlier about the impact upon
neighbouring countries, would we have to tell the Danish with
regards to the Faroe islands or that sort of thing?
Mark McAllister:
There are no plans at the moment to use dispersants at source
within what we are looking at. However, the key thing here, going
back to your earlier question about expertise, is this is the
area where expertise is most needed because we have a very, very
different marine environment in terms of the waves, in terms of
natural dispersal of the oil. So, that is a key element of the
OSPRAG work—making sure that our modelling of the oil spills,
and our understanding of the use of dispersants, is as well informed
as possible, and that is probably the longest wavelength piece
of work that we will do within this whole process.
Q51 Dan Byles:
Thank you. Leaving aside whether the regulatory system itself
would require changing, do you think that the industry and regulators,
as a result of what has happened in the Gulf of Mexico, should
now reconsider some of your assumptions on what might be the minimum
acceptable safety standards of equipment at the bottom? I make
no apology for coming back to BOP stacks and blind shear rams
because it seems to me that it was a catastrophic equipment failure
in this area that was not anticipated that led to the problems
in the Gulf. You have already stated that we do not have minimum
required standards laid down by regulation for two blind shear
rams, for example, looked at on a case-by-case basis. Do you
now think it is necessary to go back and re-look at wellheads
that we believed were safe in the light of what has happened and
say, "Well, actually, maybe we are at risk in some of these
areas of a similar catastrophic equipment failure"?
Mark McAllister:
Certainly, what we have done as part of the OSPRAG work, and Mr
Webb has described the regime, is to make sure that actually that
regime is working and, working with the entire drilling management
community of all the operators in Aberdeen, to actually interrogate—to
ask, "How is this working for you and can we share best practice?"
It is obviously something you will see in our evidence throughout.
Sharing best practice is a key element in the industry.
Q52 Dan Byles:
But I am suggesting that what was previously considered best practice
might be reconsidered in the light of this.
Mark McAllister:
Yes, might be reconsidered, I agree with you, and that will be
part of the work—looking at what is best practice and whether
there need be any changes. I think where we are wary is making
global and universal changes that may not be appropriate from
situation to situation. I have seen it in the oil industry in
the past and I am sure it happens in other industries when regulators
react to one event by imposing some new standard which is thought
to improve the situation, and actually that becomes a key contributing
factor to the next incident that happens. Without being too sentimental
and just from a personal nature, my brother was one of the 96
who died at Hillsborough, which was a very, very different situation
but a key contributing factor were the fences that were put up
to keep the fans in, which was thought to make the place safer
and actually made it less safe. We have seen the same thing in
the oil industry. So, yes, we need to use everything that comes
out of Macondo to examine safety of equipment, our processes,
and our planning, but the kernel of what we have in the safety
case regime is, on a case-by-case basis, the expertise within
the industry, the expertise within the independent verifier, and
then the expertise within the regulator, making sure that we are
looking intelligently at every situation.
Malcolm Webb: If
I could add to that, I think that is absolutely right. That is
the brilliance of the safety case regime here. In response to
your question, "Will these issues be looked at?", yes,
you can be assured they will be looked at because of the goal-setting
nature of that, the players involved and what they have to do,
and it is very dynamic. This is an industry that does not have
to wait for a regulation or the government to legislate on something
for it to move forward. It will move forward under the ALARP
principle as and when it is needed to do so, or is appropriate
to do so, so it will happen.
Q53 Chair: Would
it be fair to sum up your views about the issue of changes to
the regulatory environment as, "No. 1: European Commission,
get lost," and "No. 2: no change required in the UK"?
Malcolm Webb: That
is a very blunt way of putting it, if I might say so.
Chair: Well, it is my
distillation of what you have said in the last 45 minutes.
Malcolm Webb: I
think it is difficult to see that the European Commission can
add much to the regulatory regime here in the United Kingdom.
We do believe that the basic structure here is a very, very strong
structure, is serving the country well, and should continue.
I might add as well, I do think it is vital for this regime to
work that it also has appropriate expertise within the regulators,
and that they have the resources to do their jobs, and I do hope
that the cuts we hear being talked about around Government don't
in any way impair the regulators' ability to regulate properly.
We need strong regulators as a part of this process. That is
very important to us.
Q54 Chair: And
that is what is emerging from the OSPRAG review at the moment,
is it, as well, that sort of general conclusion?
Mark McAllister:
It is not as coarsely put as that; we are talking about a basic
framework that is mature, that is intelligent, that stands us
in good stead, that needs to be stress-tested occasionally and
that we have made sure is actually working in practice the way
it is meant to.
Q55 Gemma Doyle:
Can I ask a bit more about the industry's response in the event
of a deepwater blowout? How would the response work? How would
it operate, and is that being re-examined at the moment in light
of what has happened? Do you envisage that there will be changes
to emergency plans?
Mark McAllister:
I am sure there will be changes and we are examining it. Once
again, without sounding like a broken record, our first priority
is around planning to minimise these things happening. The second
thing is, again, early containment. These wonderful bits of kit
that BP invented—this type of approach is to make sure that
if something did happen, we can have that available very, very
quickly. That is a major element of our work flow in OSPRAG,
so that is the key thing. Then the third thing is, as you say,
the response. At the moment the response through the use of booms
and of dispersants is through a communal approach through offshore
OSRL, and we are looking at their equipment, and whether it is
sufficient for the cases that we are designing for.
Q56 Gemma Doyle:
Would the response be significantly different from what we have
seen in the Gulf of Mexico because of the differences with the
North Sea?
Mark McAllister:
Now, you see, when we talk about the Gulf of Mexico of course
we are talking about one element of the Gulf of Mexico, which
is the ultra-deep water. Of course, in the North Sea we have
got everything, from 100-feet water depth gas wells in the southern
gas basin through 300 feet, including high pressure, high temperature
condensate wells, 500 feet and traditional black oil fields in
the North Sea, and then the deeper waters west of Shetland. So
part of the OSPRAG remit is actually to make sure that we are
looking for the appropriate response for each of these situations.
Malcolm Webb: I
do think one other slight difference would be the ability of the
Government to intervene as well. If you look at the powers of
SOSREP, they have extensive powers to act offshore in any instance
such as that, and act very swiftly as well if it is a Tier 3 incident.
Q57 Christopher Pincher:
At the risk of getting my question slightly out of kilter, you
have said the North Sea is different from the Gulf of Mexico and
that there is a huge variety of sorts of drilling going on. I
wonder if you could give us some more detail about the specific
challenges of drilling in deep water in the North Sea. For example,
you said earlier, Mr Webb, that below a certain depth you cannot
use divers; you need to use ROVs to, for example, seal a leak.
Now, in the Gulf of Mexico I think the ROV failed to fire the
blind shear ram. You also talk about different rock formations,
and the rock formations in deep water in the North Sea can be
more immature, so the rocks can fracture more easily, so you need
to put less pressure down to hold the fluids down. So, if the
wells are that much less controllable and more able to fracture,
what are the risks that you see drilling, and why don't you think
that a more determined regulatory framework around deepwater drilling
is appropriate?
Mark McAllister:
Let's start with the rocks. Immature, lower pressure, more friable
rocks are possible in all different parts of the North Sea. So
the central North Sea, for instance, almost has a number of different
industries within it. We have the giant Forties Field which is
up in the Paleocene, which is generally much softer rocks, and
different types of oil. We have got quite high pressure also
in the central North Sea. This is not in deep water at all, so
those hazards—
Q58 Christopher Pincher:
But it will be easier to cap those, surely, than deeper water
formation?
Mark McAllister:
Not necessarily, because obviously the ability to cap it is about,
first of all, is how much pressure and how much fluid is coming
out of the well. Actually, even if it were possible to use divers
to cap the well, because of the water depth it is unlikely that
we would want to use divers, in order not to risk their lives.
So, it is actually likely that even in shallow water depths we
would want to use ROVs in a situation such as this. So, as we
said at the beginning, we do not see the deep water necessarily
being a major element in this whole process. The real major elements
are: what happens below the seabed; what is the pressure regime;
what is the geological formation; and what depth we are drilling
to. You know, some of these wells in the Gulf of Mexico are drilled
to 25,000 feet below the seabed. That is 5 miles. That is like
drilling to the top of Mount Everest from the base, so it is a
long, long way. The traditional well in the North Sea is more
like 10,000 feet. It is a much shallower well; so you are in
a very different regime below the seabed. So we generally don't
see the deep water being a major contributory factor to this.
Malcolm Webb: I
come back to the point as well, again not wishing to sound like
another chipped record here, that the safety case regime is a
very purposeful, dynamic and demanding regime for this industry
to work in. So the idea that it is not demanding enough and it
is not rigorous enough for deepwater areas I cannot accept. I
think it is; it is already. We have got it.
Q59 Christopher Pincher:
But don't you accept, as Dan has said, that, for example, having
two blind shear rams in place reduces the risk considerably of
a flow which you cannot stop?
Malcolm Webb: You
have to examine each case on the particularities of the case in
point, and in some cases that might be true and in others it would
be a futile exercise.
Q60 Laura Sandys:
I always think that the insurance sector is quite an interesting
barometer of risk and assessment of risk. Would the industry
be able to give us an outline of what has changed, in terms of
insurance policy costs before the Gulf of Mexico and now? Obviously
it will be looking at not just the operational risk—I think
there is obviously the operational risk—but also the environmental
risk, and it must have also done quite a lot of rigorous assessments
of what the industry is capable of doing, how it can recover a
situation, and over what period of time.
Malcolm Webb: Speaking
personally, I can't. I do not have that information. My organisation
has not looked into it, but we could look into it if you would
like and come back to you on it.
Q61 Laura Sandys:
Is the insurance sector part of your group?
Mark McAllister:
It is in the sense that there is a collective approach to liabilities
through OPOL so every person who drills a well in the North Sea
has to demonstrate certain ability to deal with a situation such
as this. OPOL is the group, is the body, through which that is
regulated. So OPOL actually looks at the insurance that any company
has in place to make sure it is adequate, not just in terms of
value but in terms of, you know, the small print and the way that
works. If the third party liability under the OPOL scheme for
some reason does not materialise, and somebody defaults on that
payment, the entire industry has a collective responsibility to
meet those payments.
Q62 Laura Sandys:
Do you expect premiums to increase significantly as a result of
the Gulf of Mexico?
Malcolm Webb: I
am really not expert enough to comment on that. I would have
thought there could be some increase but whether it is considerable
or not, I do not know, and it is outside my area of expertise,
I am afraid. We could get back to you on that point, if you like,
but we would have to take advice. It is not within our area,
if you like.
Q63 Dr Lee: Along
the same issue, in the Gulf of Mexico, the liability was $75 million
US. Was that all right? It probably ran out after about two weeks?
I am just looking at the figures you have got. You are suggesting
you are going up to $250 million; when do you see that being the
case, or is that going to be retrospective? Is it going to cover
West Shetland?
Malcolm Webb: Yes,
it is.
Mark McAllister:
Yes, every well drilled from now on.
Q64 Dr Lee: And
I think that we are talking over $1 billion dollars already at
BP. The reality is if it was not so big an organisation, it would
have gone bust.
Mark McAllister:
Yes, and that is why again, you know, the chain is the design
and the regulation around the drilling of the wells to limit the
possibility of this happening. The second priority is the early
containment. You know, a lot of the costs for BP were because
it took time to design these. We can look at what it learned.
Some of the things we are looking at, as I have said before, are
finding and designing a piece of equipment that is able to go
on any of the BOPs that are already in the North Sea, so that
we can contain this in days and actually keep it within that limit.
Q65 Dr Lee: Yes,
it is somewhat surprising to me that you did not actually have
contingencies in place that you knew worked prior to this. You
know, what you are saying is, "Thank God we've had a spill
in the Gulf of Mexico because now we know how to deal with it."
If I adopted that approach in medicine, I would end up in court.
So it surprises me that you—not you personally—drilled
at that sort of depth and you did not actually know how to plug
a hole if it did occur, and that makes me sort of wonder. I have
been shown this grid—a high consequence probability grid—and
it looks as if this sort of low probability, high consequence
event is not really allowed for in the plans that I have seen.
Do you think we need something more specific, for instance, for
something as unlikely as we have seen in the Gulf of Mexico?
Do you think we need something more specific—a plan for
that type of incident?
Mark McAllister:
That is certainly a major element of the OSPRAG work—first
of all, planning for an incident such as that, but also actually
ensuring that an incident such as that does not happen. You know,
we can talk about the industry in general's readiness for incidents
such as this before Macondo. It is what it is, but actually as
an industry, you know, we are working flat out with the regulator,
with the coastguard agency, and with everybody else, to make sure
that we learn every lesson.
Q66 Dr Lee: But
you would agree, though, that it is somewhat surprising to a layman
that you have instituted as an industry drilling at such a depth
without actually knowing how you would deal with it if there was
a hole there?
Malcolm Webb:
I don't think that is quite true.
Dr Lee: You know, they
were sort of shoving old tyres down there and there was a sense
it was almost like, "Oh God, what can we do next?"
That is the impression the layman had, anyway.
Albert Owen: Absolutely.
Malcolm Webb: And
I can quite appreciate that, but what I would say is that the
industry was not wholly unprepared, and in the final analysis,
of course, we know what to do with a blown well in order to kill
it. You drill a relief well and you kill the well, and it is well
known how we deal with that. I think what we can also say is
that the technology is available to cap flowing wells as well.
What I think maybe we saw in Macondo was a lack of preparedness
in the industry to bring those solutions quickly into place.
The solutions are there but they weren't brought quickly into
place, and I think one of the works that OSPRAG is looking at—and
OSPRAG is not alone in this; the industry around the world is
looking at this as well—is how can we increase our industry
preparedness to do that, as Mark said, within a matter of days.
That is what we have got to do and it can be done. It is entirely
achievable. This is not new engineering. It is not new science
that is needed there. It is actually some good planning and procedures.
Q67 Chair: Were
Transocean actually operating the rig in Deepwater Horizon?
Paul King: We were
the drilling contractor; yes, we were.
Q68 Chair: How many rigs
have you got on the UK Continental Shelf?
Paul King: We have
16 currently operating.
Q69 Chair: At
what sort of depths, drilling in deep water?
Paul King: The
Paul B Lloyd is working for BP west of Shetlands at the moment
in up to 3,000 feet of water.
Q70 Chair: One
of the concerns I do not think we have mentioned so far is the
sometimes possible difficulties of communication amongst people
who are working on the rig. You have got a lot of different nationalities
represented there and there may be linguistic problems in communicating.
Is that an issue that you have thought about?
Paul King: In the
UK it is not as big an issue, or is not an issue that has raised
concerns, compared to operations in South America, where the ex
pat supervision does not necessarily speak Portuguese, but up
here the primary requirement is that everybody speaks English
and they can read English, and it is a predominantly UK workforce.
Q71 Chair: And
in the case of the Deepwater Horizon were there several different
languages?
Paul King: No,
they were all Americans. In the Gulf of Mexico it is a requirement
that they be Americans.
Q72 Chair: Did
the Deepwater Horizon rig have the same blowout preventer all
the time?
Paul King: As far
as I am aware that is the case but I am not an expert on the Deepwater
Horizon operation, since it operated in the Gulf of Mexico for
its entire life. I have not actually operated the rig.
Chair: No; sure. Okay.
Q73 Albert Owen: What
Mr Webb said there in response to Philip Lee I think was very
interesting in the sense that he said there is no new science
here. I know we have seen stories about tyres, but it is basically
using mud and sand to cap this well. You know, Mr King, you do
not really have to be an expert to think that that would be at
hand very quickly if there was a blowout of this nature. I think
the difficulty the public are finding here is that if it is not
new technology, are we ready for it? The simple process of getting
natural elements like sand and mud close by, so that this would
not happen again—is that in place close to your rigs in
the North Sea?
Paul King: From
the standpoint of being able to drill a relief well? Or—
Albert Owen: To prevent
a blowout from happening.
Paul King: You
are obviously ensuring that you don't get into an uncontrolled
well condition, and I think the intent and the requirement on
board is that you have what we term "kill mud" on board
and available to you.
Q74 Albert Owen:
What, sorry?
Paul King: Kill
mud. It is to kill the well, for example if you get a gas influx,
an influx into the well, so that is a requirement operationally
that the operator maintains throughout.
Q75 Albert Owen:
Sure, but what I don't understand is that was the early talk.
When this happened first there was talk about doing this—putting
sand, putting mud in—and all of a sudden a period of time
elapsed and then they came back to that theory and resolved it.
Mark McAllister:
That biggest issue is engaging with the metalwork that is on the
seabed. That is the biggest challenge that they had and I am sure
you will be talking to BP about this in a couple of weeks' time.
So plentiful supplies of the weighted mud and other materials
to kill a well is part of what is on the rig all the time, and
that is readily available to reinforce that. The issue is, having
lost control of this well, how do you re-engage with it? That
is why once again one of the key workflows of OSPRAG is, "Can
we design a simple piece of equipment that is available to the
entire industry and can, very, very quickly, engage with every
conceivable configuration on the seabed that we can think of?"
Q76 Christopher Pincher:
Just following up on that, you talked about using best technology.
As I understand it, you have hydraulic mechanisms to fire blind
shear rams but they are slower than electronic mechanisms. So
isn't it a simple thing to do to switch over to electronic mechanisms
to fire your rams more quickly, if you need to?
Paul King: There
are operating standards that require these rams or operations
sub-sea to be closed within a certain timeframe. In the shallow
waters the hydraulically operated functions meet that requirement,
and as you get into the deeper waters—obviously the time
it takes a hydraulic signal to go down 12,000 feet, 5,000 or 6,000
feet, is a lot longer—it delays the initiation of the function.
Therefore, the electronic multiplex, as we call it, systems are
there so that when the button is pushed on the surface, less than
two tenths of a second later the actual function is operating.
Q77 Christopher Pincher:
And they are available in all the deepwater wells off the UK?
Paul King: Well,
the multiplex systems are available actually for some of our shallow
water operations as well. They were the pre-requirement for deepwater
wells many years ago. They are used throughout our industry now.
Q78 Chair: Rigs
are leaving the Gulf of Mexico because of the US moratorium, is
that right? So if we had a moratorium here, presumably the same
thing would happen here as well. People would start looking for
work elsewhere.
Malcolm Webb: It
must be a risk.
Q79 Chair: But
if we don't have a moratorium here and the Americans extended
theirs, the opposite might apply. We might have more rigs operating
here.
Paul King: There
is a barrier to entry to the UKCS inasmuch as that a safety case
will have to be generated. It is a very thorough process that
rigs have to go through to be able to operate on the UKCS.
Q80 Chair: How
long does it take?
Paul King: A minimum
of three to six months.
Q81 Sir Robert Smith:
Isn't it slightly the reality that whether rigs are used in the
North Sea or not depends on the investment climate? Obviously,
I suppose if there is a surplus of rigs, the price might drop,
but the price took a long time to drop when the demand dropped
the last time. And also isn't the sort of history in the North
Sea that because of its maturity, as rigs leave, they just tend
not to come back?
Malcolm Webb: There
has been a tendency for that, but I think you are quite right
in your basic assumption that if we want to keep rigs drilling
here in the UKCS then what is needed most of all is the right
investment climate for that to happen.
Q82 Dr Lee: Just
a quick question. Does OSPRAG cover the Falklands?
Mark McAllister:
Not at the moment, no.
Q83 Dr Lee: But
is it under the same regulatory regime as UK Continental Shelf
- the Falkland Islands?
Malcolm Webb: No.
Mark McAllister:
No.
Q84 Dr Lee: It
is not. I just wondered in terms of access to facilities, if
you have a big spill, the Argentinians are not going to be terribly
helpful in this, not necessarily.
Malcolm Webb: You
caught me unawares with that. I am not—
Dr Lee: I just read an
article about the Falkland Islands and presumably it is UK territory.
Malcolm Webb: I
am afraid I parochially concern myself with the UK and not with
the Falkland Islands. I don't know if it is a different regime
and I am not quite sure what it is.
Dr Lee: Fine.
Q85 Sir Robert Smith:
I remember Piper Alpha; I remember hearing it on the news while
I was in my flat in Aberdeen and then hearing the helicopters
going out all night. Is it worth maybe highlighting a bit more
for the Committee what Lord Cullen did in response to Piper Alpha
and how that changed the culture so dramatically?
Malcolm Webb: Well,
it is thanks to him that we have this regime. That was where
we saw the recommendations that came out of Cullen which called
for the revision of responsibilities between the licensing regulation
and safety regulation, and it was from that that the whole concept
of the safety case came and the whole concept of independent verification
and inspection as well. So it was a seminal moment and I think
it has given the UK 20 years of safe operation. It was a tremendous
step forward and I might say in those 20 years there has been
nothing; there have been no blowouts in the UK. I know that is
not a guarantee, looking back to that, but we have not had a blowout.
We have not had any really uncontrolled escape of hydrocarbons
in the North Sea. Yes, there are spills that have occurred through
that period. I don't think in any one year the aggregate of spills
of oil from the whole of our installations operating in the North
Sea has reached three figures in tonnes. This is a very good record,
I think, and, furthermore, I think what Cullen also did was spawn
this new approach to safety and you see it exemplified in things
such as Step Change in Safety where the industry is coming together
and openly sharing difficult information about things that have
gone wrong and sharing that within our industry and with the regulators
too, as well. All of this is designed to inform the whole principle
of ALARP; that is what the whole industry is determined to move
forward to, and its regulators as well. So, yes, Piper Alpha
was a deeply shocking event for the industry but the good that
came out of it was the Cullen report and where it led us to after
that.
Q86 Chair: From
what you said, that Cullen report clearly shaped the regulatory
environment that has existed here for the last 20 years. Did
it have any influence on regulators in other parts of the world?
Malcolm Webb: I
am not aware so. This may be an uninformed comment, but if one
looks to the Gulf of Mexico and the US, it would seem that it
had little impact there because not many of the Cullen recommendations
seem to have been taken up in the United States of America.
Q87 Chair: Do
you find that surprising, given this is an international industry?
In fact Piper Alpha was operated by an American company, was
it not?
Malcolm Webb: It
was. It was Occidental. I go back to the point that was made
before: I think, as an industry, if we can do something better,
it is to make sure that we do not take maybe such an introverted
view of our operations. We probably could do more to share information
and expertise across international boundaries, and I think again,
coming out of this, there are signs that that is happening too.
In the United States there was a joint industry task group that
was formed, I think somewhat similar to OSPRAG, to look at issues,
but on top of that the Oil and Gas Producers, the international
operation, has set up a Global Industry Response Group which is
looking to make sure that it understands again the lessons from
Macondo and that those are shared on a pan-industry basis around
the globe. So the guys at OGP, I think, are looking to make just
that sort of difference as well.
Q88 Sir Robert Smith:
Does OPITO, the oil and gas academy, try and promote standards?
Malcolm Webb: Yes,
OPITO, which is our oil and gas academy in the UK here, has been
very instrumental in taking the safety culture from the UK and
exporting it around the world, as well as some of our best safety
practices, especially around the issue of emergency response and
emergency evacuation. The OPITO BOSIET, or basic offshore safety
induction training, and HUET, or helicopter evacuation training—which,
by the way, anybody going offshore in the UK must have been trained
in, along with further minimum industry training standards which
we have just agreed through Step Change—are standards that
are being exported and taken up readily around the globe and they
are being exported by OPITO, which is doing very good work in
an international arena too.
Chair: Right. Has any
colleague got any further points they wanted to raise? Okay.
Well, thank you very much for your time this morning. It has
been a very interesting and sometimes illuminating session, I
think, for us. So we are grateful to you for coming in and I
hope we shall produce a report sometime by the end of next month.
Malcolm Webb: Thank
you very much indeed.
Paul King: Thank
you.
Mark McAllister:
Thank you.
1 Note from the witness: "Blow Out Preventer" Back
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