Memorandum submitted by the UK Oil Spill
Prevention and Response Advisory Group (OSPRAG)
1. INTRODUCTION:
OSPRAG
1.1 The Oil Spill Prevention and Response
Advisory Group (OSPRAG) has been convened as a proactive initiative
to review oil spill prevention and response arrangements in the
UK and ensure they continue to be fit for purpose and enhanced
where appropriate. OSPRAG comprises senior representatives from
relevant UK regulators, the trade unions, the directorate and
individual members of Oil & Gas UK, including oil companies
and drilling contractors, and seeks to identify and address cross
industry issues arising from the Gulf of Mexico incident in the
UK continental shelf (UKCS).
1.2 OSPRAG has also established active liaison
with European, American and international regulatory, technical
and industry bodies and acts as a communications focal point for
sharing information across the UK offshore oil and gas industry.
2. EXECUTIVE
SUMMARY
2.1 The oil and gas industry has a long
history of safe drilling operations in the UK with 11,000 wells
drilled in total over the last 40 years (Source: DEAL).
2.2 The oil and gas industry on the UKCS
is controlled by a rigorous environmental and safety regulatory
regime, the latter being built upon the recommendations of the
Cullen Inquiry into the Piper Alpha incident in 1988.
2.3 The UK safety regime is fundamentally
different to that in the USA with a clear separation in regulatory
function between licensing (Department of Energy and Climate Change)
and safety (Health & Safety Executive). A goal setting rather
than prescriptive philosophy is delivered through the safety case
to ensure that major accident risks are evaluated and controlled.
Furthermore, the safety case regime obliges the UK industry to
review its existing arrangements in the light of new information
(eg the Macondo incident).
2.4 The offshore oil spill strategy is intended
to provide an effective response in the seas of the UKCS, utilising
the energetic nature of the UK marine environment together with
the application of chemicals to enhance this natural dispersion,
when necessary.
2.5 The Gulf of Mexico incident obliges
the industry to reconsider the worst case scenarios and demonstrate
to the satisfaction of all its stakeholders that it is competent
to drill all targeted reservoirs on the UKCS and has the capacity
to respond effectively to a loss of well control and to any resultant
oil spill. OSPRAG aims to fulfil this requirement.
2.6 It should be noted that whilst the primary
responsibility for oil spill response rests with the licensed
operator, the Maritime and Coastguard Agency (MCA), through the
Merchant Shipping Act (Section 293), has powers to assume control
of "at sea" counter pollution operations. The Offshore
Installations (Emergency Pollution Control) Regulations 2002 give
the Secretary of State for Energy and Climate Change the power
to intervene in an incident involving an offshore installation
where there is, or there may be, a risk of significant pollution.
These provisions are reflected in the National Contingency Plan
(NCP). MCA is taking an active role in OSPRAG to ensure that any
recommendations made are consistent with the NCP.
2.7 Work within OSPRAG is proceeding in
advance of the publication of the investigation into the Gulf
of Mexico incident but will ultimately be informed by the findings.
It is important that OSPRAG be given the space to deliver and
its recommendations not be pre-empted.
2.8 The remit of OSPRAG is to review and
make recommendations to support the provision of adequate response
mechanisms for the UKCS. However, it should be recognised that
some elements of the response could be developed as a result of
work undertaken by other international bodies and groups with
whom OSPRAG is in contact (see Section 3.6.4 below).
3. OSPRAG—IN
DETAIL
3.1 As the scale and potential ramifications
of the Gulf of Mexico incident became clear, Oil & Gas UK
initiated the establishment of OSPRAG, with the inaugural meeting
held on 2 June.
3.2 Building on a successful collaborative
model previously used by the UK industry to establish Step Change
in Safety and the Helicopter Task Group, the OSPRAG membership
consists of senior representatives from organisations with a legitimate
interest in the objectives of the group.
3.3 The membership currently consists of
Mark McAllister, Fairfield Energy Limited (Chair); Department
of Energy and Climate Change (DECC); Health & Safety Executive
(HSE); the Secretary of State's Representative for Maritime Salvage
and Intervention (SOSREP); Maritime and Coastguard Agency (MCA);
Unite; RMT; KCA Deutag Drilling Limited; Transocean Drilling UK
Ltd; International Association of Drilling Contractors (IADC);
Oil Spill Response (OSR); BG Group plc; BP Plc; Chevron Upstream
Europe; CNR International (UK) Limited; ConocoPhillips (UK) Limited;
ExxonMobil International Ltd; and Total E&P UK Limited. A
representative of the EU Energy Commission also attends as an
observer, while a similar invitation has been extended to the
Norwegian Ministry of Petroleum and Energy. The Oil & Gas
UK Chief Executive and Policy Directors provide support to the
group.
3.4 The agreed remit of OSPRAG is to:
— Review UKCS regulation and arrangements
for pollution prevention and response;
— Assess the adequacy of financial provisions
for UKCS response; and
— Monitor and review information from the
Deep Water Horizon incident and facilitate implementation of pertinent
recommendations.
3.5 OSPRAG meets every four weeks to oversee
and steer the work of four review groups established to undertake
the reviews and assessments, as well as act upon any recommendations
which may arise either from the Gulf of Mexico investigations
or the work of the review groups.
3.6 The four review groups meet frequently
to identify short and long term recommendations to be implemented
on a cross-industry basis. These are:
3.6.1 Technical—reviewing relevant aspects
of well design, examination and control in the context of preventing
loss of control. Representation is from DECC, HSE, Oil & Gas
UK, offshore operators, drilling contractors and offshore unions.
Sub groups are assessing:
— Well capping and containment;
— Well examination, verification and primary
well control;
— BOP inventory & recommendations for
improvements;
— Competency, behaviours and human factors;
and
The Technical Review Group is preparing a report
with final recommendations and a forward plan for implementation
for OSPRAG approval. This will include the proposals regarding
capping and containment options being developed by Wood Group
Kenny and is due at the beginning of October.
3.6.2 Oil Spill and Emergency Response—reviewing
spill response capability and industry co-ordination with National
Contingency Plan. Representation is from DECC, MCA, Oil &
Gas UK, offshore operators, drilling contractors, oil spill response
specialists and environmental agencies. Sub groups have been established
to undertake the work necessary to ensure that:
— Oil spill models are fit for purpose
for all release scenarios;
— Data for offshore and onshore sensitivities
are up to date and fit for purpose;
— Data resources are common and readily
accessible for use in contingency planning and during a response;
— Response resources are sufficient, maintained
and deliverable;
— Oil Pollution Emergency Plans are fit
for purpose for all operations; and
— A comprehensive response exercise is
held during 2011.
3.6.3 Indemnity and Insurance—reviewing
liability, indemnity and insurance provisions that would be invoked
in the event of a spill. Representation from DECC, MCA, Oil &
Gas UK, OPOL and offshore operators. The group is assessing:
— Financial and administrative arrangements
currently in place in the UK;
— Future requirements; and
— Adequacy of the OPOL financial responsibility
levels.
A recommendation by OSPRAG to raise the level
of the limit for third party costs from $120 million per incident
to $250 million has been approved by OPOL. This figure will be
reviewed in the light of the outcome of spill scenarios currently
being modelled. See Section 4.5.3 for further information about
OPOL.
3.6.4 European Issues—acts as an information
sharing and communications focal point, to ensure other relevant
bodies are well informed of the work of OSPRAG, and vice versa.
Representation is provided from HSE, Oil & Gas UK, international
oil and gas trade associations, national regulators and trade
associations from other European oil and gas provinces.
The group has the role of ensuring that:
— The work of OSPRAG is coordinated with
activities taking place elsewhere in the world; and
— Links with other European National Oil
Industry Associations (NOIAs) as well as OGP (International Association
of Oil & Gas Producers) through the Global Industry Response
Group, IPIECA (the global oil and gas association for environmental
and social issues) and the API (American Petroleum Institute)
are established and maintained.
3.7 As a direct result of the effective
regulatory regime there has been a marked improvement in the offshore
oil and gas industry's overall safety and environmental performance
over the past twenty years. Oil spills that do occur are small
and do not have a significant environmental impact. For example,
in 2008, from a total production of approximately 66,212,848 tonnes
of oil, 36 tonnes were spilled (Source: DECC).
3.8 However, we must always ensure we put
the safety of our employees first and minimise any adverse environmental
impacts of the industry's operations, so in light of the recent
Gulf of Mexico incident, it is only right that the UK offshore
sector take a fresh look at its practices in the UK for oil spill
prevention and response. The review being conducted under OSPRAG
will be comprehensive and will help ensure that the arrangements
in the UK continue to be fit for purpose.
4. What are the implications of the Gulf
of Mexico oil spill for deepwater drilling in the UK?
4.1 The robust regulatory regime in the
UK and the resultant industry performance indicate that risks
continue to be effectively managed.
4.2 However, the scale of the Gulf of Mexico
incident changed perceptions of risk which has resulted in greater
scrutiny of company internal procedures and of how the UK regulatory
regime is enforced (eg DECC has doubled the number of environmental
inspections offshore).
4.3 The Macondo incident has obliged the
UK oil and gas industry to review comprehensively the adequacy
of its prevention (primary and secondary well control) and response
arrangements, from well design through to oil spill cleanup, so
that they remain fit for purpose and operations to maximise recovery
of hydrocarbons from the UKCS can be safely pursued with minimum
adverse environmental impacts.
4.4 OSPRAG was established as a cross-industry
initiative to deliver this assessment, while absorbing and applying
relevant lessons learned from incidents elsewhere in the world.
4.5 OSPRAG's initial focus is on:
4.5.1 The Technical Review Group's work on primary
and secondary well control including competency/behaviours and
human factors, well examination, verification and blow out preventers.
This work concludes that there is a high degree of confidence
in the UK regulatory regime and that it drives the right safety
and environmental behaviours. Recommendations are being developed
to ensure the capture and transfer of best practice in these areas.
4.5.2 The potential design and delivery of a
capping and containment capability for the UKCS. The Technical
Review Group will make recommendations on this by the end of September
for approval in early October.
4.5.3 The ability of an operator to pay third
party response costs and compensation to those affected by an
oil spill. Companies in the UK are responsible for environmental
or other damage if their installations fail. There is no legislative
cap on a company's responsibility for clean-up and compensation.
However, if there is a default on payments, under a mutual agreement
established in 1975, administered by OPOL (Offshore Pollution
Liability Association Ltd), the rest of the industry will step
in to pay third-party costs up to a pre-determined limit. The
OPOL Board agreed mid-August to increase this limit to $250 million,
which is sufficient to cover the third party costs of an oil spill
in previously modelled spill scenarios. All operators on the UKCS
are members of OPOL.
OSPRAG's Indemnity and Insurance Review Group
is continuing work on two fronts. Currently under OPOL all operations
are seen to pose a similar risk but clearly the financial risk
of oil spill from a southern sector gas well is different to that
from a northern sector oil well. The review group will make recommendations
on any further changes once the implications have been properly
assessed.
4.5.4 The ability of the UK to respond to a sustained
oil release. The UK oil spill strategy is based on a tiered response:
— Tier 1: A small operational spill (<
100 tonnes) employing local resources during any clean up, provided
by the operator;
— Tier 2: A medium sized spill (~ 500 tonnes)
requiring regional assistance and resources, provided by a service
company; and
— Tier 3: A large spill (> 10,000 tonnes),
requiring national assistance and resources. The National Contingency
Plan will be activated in this case.
The industry sponsored provider of the Tier 3
response, Oil Spill Response, is based in Southampton and can
call on resources from other oil producing regions to supplement
UK equipment stockpiles. This resource can be supplemented by
nationally held equipment under the control of the MCA. An inventory
of all oil spill response equipment held in the UK by government
agencies and industry is being prepared, against which an assessment
of adequacy can be made. In addition, a comprehensive oil spill
exercise, led by MCA, is being planned for mid 2011 to test the
response provisions.
5. To what extent are UK safety and environmental
regulatory regimes fit for purpose?
5.1 Safety
5.1.1 OSPRAG believes that the UK regulatory
safety regime is robust and fit-for-purpose. The regime was built
upon the recommendations of the Cullen Inquiry into the Piper
Alpha incident in 1988 and as a result is fundamentally different
to that in the USA.
5.1.2 Firstly there is a clear separation
in regulatory function between licensing (DECC) and safety (HSE),
which allows the economic goal of maximising recovery of hydrocarbons
to remain distinct from the enforcement of safe operations.
5.1.3 Second, a goal setting rather than
prescriptive philosophy (as seen in the USA) is delivered through
the safety case to ensure that major accident risks are evaluated
and controlled and that precautions taken are tailored to the
actual risks. This also allows new technology which enhances safety
to be introduced as it becomes available without having to change
the law.
5.1.4 The safety case, accepted by the HSE,
is required for all installations before operating (including
drilling) on the UKCS. For the safety case to be accepted, it
needs to demonstrate that the company management system is adequate
to ensure legal compliance; that there are arrangements in place
for auditing the safety management system; that there has been
a detailed and systematic approach to the identification of all
hazards with the potential to cause a major accident, and that
all the major accident risks have been evaluated and measures
taken to control those risks to as low as reasonably practicable.
Furthermore, as new information or safety enhancing technology
becomes available, the UK industry is obliged under the safety
case regime to review existing arrangements so that risks remain
as low as reasonably practicable.
5.1.5 Specific safeguards for wells:
— Well notification system—in which
the HSE is advised at least 21 days in advance of drilling or
well intervention activities. This allows HSE specialist wells
inspectors to review the well design and execution plan, and require
amendments if necessary;
— The requirement for the design and construction
of a well to be examined by an independent and competent person
(an experienced drilling engineer, for example);
— Verification by an independent competent
person (Lloyds or DNV, for example) of the initial suitability
and continuing good repair and condition of safety-critical equipment
involved in drilling (blow-out preventers, for example);
— Weekly drilling reports sent by operators
to HSE, enabling HSE wells specialists to identify and respond
to changing risks;
— Requirements that workers involved in
well operations are suitably informed, instructed, trained and
supervised; and
— Specialist inspectors from HSE's Offshore
Division test the veracity of the information received through
their prioritised inspection and intervention programmes.
5.2 Environment
5.2.1 The UK offshore industry is subject
to stringent international, EU and UK environmental controls,
which lay down the requirements for consents, permits and environmental
reporting (as well as the limits for discharges and emissions),
inspection, investigation and enforcement. Central to this is
the requirement for all operators to have an independently verified
Environmental Management System in place, which ensures that appropriate
control measures are applied.
5.2.2 The regulations require every offshore
operation, including exploration drilling to have an Oil Pollution
Emergency Plan (OPEP), approved by DECC in consultation with specialist
advisers. These are: tailored to location and the environmental
and socioeconomic sensitivities within a potential impact area;
updated, as required; and exercised periodically. Specific spill
response is provided by specialist contractors from common resources,
supported by additional local resources where required. Response
personnel are appropriately trained through accredited courses.
5.2.3 These operations are subject to inspection
by DECC, which recently announced increased resourcing for this
area.
6. What are the hazards and risks of deepwater
drilling west of Shetland?
6.1 In large part, the hazards of drilling
west of Shetland are no different from elsewhere. Differences
when compared to the North Sea are primarily related to the challenges
of the area's physical environment, which is characterised by
heavy seas, fast and complex currents, severe weather, particularly
in winter, and deeper waters than are typically encountered elsewhere
on the UKCS.
6.2 The risks associated with these hazards
are however well understood and, with over 40 years of experience
in UK offshore operations, are well managed under a fit-for-purpose
regulatory regime and an effective safety culture with multiple
barriers in place.
6.3 In total, more than 400 wells have been
safely drilled west of Shetland over the last 30 years, while
the Foinaven and Schiehallion fields have been successfully producing
for over ten years and Clair for five years, without any significant
oil spill incident (Source: DEAL).
6.4 The industry has a good safety and environmental
record on its drilling operations in the region, reinforcing the
view that the processes, procedures and control practices employed
in the UK for deep water drilling and production are safe and
fit-for-purpose.
September 2010
Annex
OSPRAG PARTICIPANTS
The group is chaired by Mark McAllister, chief
executive of Fairfield Energy Limited. The following also participate
in OSPRAG.
INDUSTRY
— International Association of Drilling
Contractors (IADC).
— Oil Spill Response (OSR).
REGULATORS
— Department for Energy and Climate Change
(DECC).
— Health and Safety Executive (HSE).
— Maritime and Coastguard Agency (MCA).
— Secretary of State's Representative for
Maritime Salvage and Intervention (SOSREP).
TRADE UNIONS
In the course of the group's work, it liaises
with and consults other relevant bodies, some of which are listed
below.
— American Petroleum Institute (API) through
the Gulf of Mexico Joint Industry Task Force.
— International Association of Oil and
Gas Producers (OGP) through the Global Industry Response Group.
— IPIECA (the global oil and gas association
for environmental and social issues).
— European national trade associations:
OLF (Norway); Nogepa (the Netherlands), WEG (Germany); IOOA (Ireland);
the Danish Operators.
OSPRAG REVIEW GROUP
PARTICIPANTS
OSPRAG's work is carried out through four review
groups. Representatives from the following organisations participate
in the review groups.
TECHNICAL REVIEW
GROUP
— Talisman Energy (UK) Limited.
— Senergy Oil & Gas Limited.
— KCA Deutag Drilling Limited.
— Transocean Drilling UK Limited.
— Apache North Sea limited.
— ConocoPhillips (U.K.) Limited.
INDEMNITIES AND
INSURANCE REVIEW
GROUP
— Endeavour Energy UK Limited.
OIL SPILL
RESPONSE REVIEW
GROUP
— Transocean Drilling UK Limited.
— Fisheries Research Services (FRS) Marine
Laboratory.
— Talisman Energy (UK) Limited.
— CNR International (U.K.) Limited.
— Nexen Petroleum (U.K.).
— ExxonMobil International Ltd.
— Chevron Upstream Europe.
— Scottish Coastal Forum.
— ConocoPhillips (U.K.) Limited.
— Marathon Oil U.K. Limited.
EU ISSUES REVIEW
GROUP
— Apache North Sea limited.
— Nexen Petroleum (U.K.).
— ConocoPhillips (U.K.) Limited.
— Petro-Canada UK Limited.
— Chevron Upstream Europe.
— Norwegian Petroleum Directorate.
— Marathon Oil U.K. Limited.
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