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

Memorandum submitted by the Chamber of Shipping

The Chamber of Shipping is the trade association for the UK shipping industry, representing over 930 ships of 25 million gross tons. British shipping in 2009 had a turnover of £11.6 billion and export services earnings of £9.3 billion or 6%. It provides directly some 42,000 British jobs at sea and ashore and (when indirect effects are taken into account), supports about 150,000 British jobs in total.

The Chamber has an active committee of 20 companies representing the UK-based fleet of offshore support vessels (OSVs). While OSVs provide a supporting (rather than direct intervention) role to the offshore oil and gas industry, these ships work in close proximity to offshore installations and are instrumental in providing assistance in incidents such as that which occurred on the Deepwater Horizon, from both a safety and environmental perspective. The UK's OSV sector's substantial fleet has a wealth of experience operating in the North Sea environment and would readily engage with operations west of Shetland. We are concerned about the low numbers of UK-flagged ships which are available to conduct clean-up work if an oil spill does occur. Discussions took place with the Maritime and Coastguard Agency during 2004 which had the objective of revising that organisation's Oil Recovery Guidelines governing ships equipped to deal with the aftermath of oil spills. Unfortunately at that time, there was no agreement on a number of prescriptive requirements, which were difficult for the industry to comply with and which we did not consider offered clear benefits. In practical terms, we believe that this has resulted in an under-representation of oil recovery capability in the UK-flagged fleet. Meanwhile, other nations' regulations in this regard are more pragmatic (eg in the Netherlands and Norway), while still ensuring equivalent levels of safety and effectiveness. It is our view that some of the existing regulations should be revisited, with the aim of redressing this disadvantage for the national fleet.

The sector is also alert to the extent to which volatility in the market suppresses rates for OSVs during lean times for oil and gas demand, as recently witnessed, to the point of operations becoming barely economical. While we appreciate that this is a product of the market, we fear that the severe driving-down of operating margins at such times can potentially reduce available operators' funds to spend on training and safety initiatives including the promotion of safe practices.

We support the planned development and exploitation of the west of Shetland resource, but wish briefly to draw the Committee's attention to these limitations relating to the UK's national capability to support the offshore oil and gas industry. The Chamber of Shipping, is currently reviewing our position on the Oil Recovery Guidelines, with the intention of reopening this debate with the MCA. Any measures which can be taken to ensure the continuation of a healthy, safe and competitive OSV sector under the UK flag - which is able both to support routine oil and gas production and to respond to any incidents which might to occur despite the good safety record of installations on the UK's continental shelf - would be of great benefit in ensuring that operations west of Shetland are conducted in a responsible and environmentally sound manner.

September 2010

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