UK Deepwater Drilling - Implications of the Gulf of Mexico Oil Spill - Energy and Climate Change Contents

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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