Memorandum submitted by BP
SUMMARY
— BP is determined to share the lessons
of the Deepwater Horizon accident widely. The incident
is still under investigation by numerous entities, including a
non-privileged investigation by BP. BP will provide the Committee
with a copy of that investigation report when it is published
(para. 3).
— The accident took place on 20 April 2010.
No oil leakage has been detected into the Gulf of Mexico since
15 July. No volumes of oily liquid have been recovered since 21
July and the last controlled burn operation occurred on 20 July
(para. 9).
— BP has made extensive reviews of its
drilling operations in light of the accident in the Gulf of Mexico
(para. 15).
— There are opportunities for the industry
to be better prepared than at present for a subsea disaster (paras.
18-19).
— The UK experience of a goal-setting approach
to regulation allows for a process of continuous improvement,
based on a growing body of information and knowledge (para. 23).
— Any moratorium on deepwater drilling
in the UKCS would have implications for both UK Security of Supply
and the long term future of the industry in the UK, and would
not necessarily reduce the risk of accidents if based exclusively
on water depth (para. 27).
— Lessons will be learnt from the tragic
accident in order to minimise the risk of a similar occurrence.
BP, along with the rest of the industry, is determined to continue
to carry out its essential public service in as safe and in as
responsible a way as possible (para. 28).
INTRODUCTION
1. The sinking of the Transocean drilling
rig Deepwater Horizon in the Gulf of Mexico, following
an explosion on 20 April, is one of the most tragic events in
the history of the oil industry. First and foremost, it resulted
in the death of eleven people employed on the rig. The accident
has also had major implications for the environment in the Gulf
of Mexico, for the prosperity and living standards of Gulf Coast
residents, and for the companies directly concerned as well as
of the oil industry as a whole.
2. In the wake of this accident, it is essential
that the lessons are learnt and that measures are implemented
to minimise the chances of such an accident happening again (although
the risk of accidents can never be eliminated entirely).
3. BP is determined to share the lessons
from the accident widely. However, there is still much that is
unknown, and numerous entities continue to investigate the incident,
including a BP investigation team, independent of management,
that is preparing a non-privileged report of the incident. BP
will provide the Committee with a copy of that report when it
is published.
4. In addition to BP's own internal, non-privileged
investigation, various committees in both houses of the United
States Congress and agencies and commissions of the U.S. Executive
Branch are also investigating the accident.
5. Both the Oil Spill Prevention and Response
Advisory Group (OSPRAG) and Oil and Gas UK are submitting written
evidence to this Inquiry. BP works closely with both bodies and
will seek to avoid duplication in this submission.
THE GULF
OF MEXICO
OIL SPILL
6. The original accident was described thus
by Transocean on 21 April 2010:
"Transocean Ltd. (NYSE: RIG) (SIX: RIGN)
today reported a fire onboard its semisubmersible drilling rig
Deepwater Horizon…The rig was located approximately 41 miles
offshore Louisiana on Mississippi Canyon block 252."
BP is the operator of the licence on which Transocean's
rig, the Deepwater Horizon, was drilling an exploration
well. The rig was evacuated on the night of 20 April, and on 22
April, BP issued the following statement:
BP today activated an extensive oil spill response
in the US Gulf of Mexico following the fire and subsequent sinking
of the Transocean Deepwater Horizon drilling rig 130 miles south-east
of New Orleans.
BP is assisting Transocean in an assessment of
the well and subsea blow out preventer with remotely operated
vehicles.
BP has also initiated a plan for the drilling
of a relief well, if required. A nearby drilling rig will be used
to drill the well. The rig is available to begin activity immediately.
7. On 24 April, search and rescue operations
for missing personnel ended, and BP issued the following statement:
BP today offered its deepest sympathy and condolences
to the families, friends and colleagues of those who have been
lost following the fire on the Deepwater Horizon oil rig in the
Gulf of Mexico this week.
Group Chief Executive Tony Hayward said: "We
owe a lot to everyone who works on offshore facilities around
the world and no words can express the sorrow and pain when such
a tragic incident happens."
"On behalf of all of us at BP, my deepest
sympathies go out to the families and friends who have suffered
such a terrible loss. Our thoughts also go out to their colleagues,
especially those who are recovering from their injuries,"
he said.
He added: "BP will be working closely with
Transocean and the authorities to find out exactly what happened
so lessons can be learnt to prevent something like this from happening
anywhere again."
8. From 24 April, huge effort has been given
to addressing as far as possible the human aspects of the tragedy,
to stopping the leak, and to minimising its environmental consequences.
This effort has involved capping the well in unprecedented circumstances,
including the deployment of resources, technology and skills on
a scale never witnessed before.
9. In early June, a customized containment
cap was fitted to the well from which oil was piped to the Discoverer
Enterprise. A second containment system was installed in mid-June,
and by early July these two systems were collecting or flaring
around 25,000 barrels of oil equivalent a day. On 12 July, a new
sealing cap was installed, and, on 15 July, a well integrity test
began in which the cap's three ram capping stack was closed, effectively
shutting in the well and all sub-sea containment systems. No oil
leakage has been detected into the Gulf of Mexico since 15 July.
Moreover, no volumes of oily liquid have been recovered since
21 July and the last controlled burn operation occurred on 20
July. Subsequently, BP commenced a "static kill" of
the well, and, on 5 August, completed cementing operations associated
with that procedure. Monitoring of the well has confirmed that
the static kill procedure was effective. Since then, work has
continued on a relief well which will intercept the Macondo well
annulus and result in the permanent sealing of the well.
THE IMPLICATIONS
OF THE
GULF OF
MEXICO OIL
SPILL FOR
DEEPWATER DRILLING
IN THE
UK
10. Clearly, lessons learnt from the Gulf
of Mexico accident must be reviewed in the context of the United
Kingdom Continental Shelf (UKCS). The oil and gas industry is
global, and many of the challenges faced, and technologies used,
are the same everywhere. But there are also some distinct differences.
For example, there are no deepwater HPHT wells in the North Sea
thereby obviating certain challenges that exist when drilling
deepwater wells with high pressures (>10,000psi). [Reservoirs
of greater than 10,000 psi and 150 deg C are typically classified
as High Pressure and High Temperature (HP/HT). The North Sea HP/HT
fields are generally located in the Central North Sea at water
depths of 100-150 metres].
11. The prime difference between the two
areas is the water depth in which drilling and development activity
take place. Gulf of Mexico water depths range from very shallow
(swamp barges) to over 3,000 metres, with a number of developments
in excess of 1,500 metres. In contrast, North Sea developments
take place in depths ranging from shallow (tens of metres in Southern
North Sea) to depths of 500 metres (WoS). Exploration drilling
also occurs in the Atlantic Margin WoS and the Norwegian Sea where
water depths greater than 1000 metres can be found.
12. Water depths bear on the types of drilling
rigs used. Because of its deeper waters, the Gulf of Mexico often
has more than twenty dynamically positioned (DP) drilling rigs
in operation (in contrast to the UKCS, where two is the current
maximum). Typically in the North Sea, anchored rigs are used but
are limited to depths up to 600 metres. In addition, for water
depths over 150 metres, Remotely Operated Vehicles (ROVs) are
used to interface with subsea equipment on the ocean floor.
13. In terms of weather, the North Sea is
generally exposed to more severe seas and stronger winds than
the average conditions experienced in the Gulf of Mexico. However,
the Gulf of Mexico experiences extreme weather, including hurricanes,
which require procedures that are unnecessary for the UKCS. The
Gulf of Mexico also experiences strong sub-sea currents in the
deepwater, known as Loop Currents, which affect both the positioning
of DP rigs and the design and fatigue strength of the risers.
14. Efforts in the UKCS are at present concentrated
upon prevention and damage limitation should a blowout occur.
OSPRAG will no doubt cover in detail the action that has already
been taken in respect of capability and equipment reviews; the
development of a generic subsea containment system; and the reforms
that may be necessary to the insurance and liability regime.
15. BP has made extensive reviews of its
drilling operations in light of the accident in the Gulf of Mexico.
A specific focus has been on blowout preventers (BOPs). All subsea
BOP stacks in use in BP operations have been evaluated to confirm
that they operate as designed and have not received modifications
that might compromise their operation. In the UKCS, this has included
physical recovery and inspection of two BOPs.
16. Turning specifically to WoS, the majority
of the risks encountered are similar to those encountered in other
UKCS offshore areas, while others—such as HP/HT wells—are
not encountered at all. WoS, however, weather conditions are more
severe and water depths are generally greater.
17. There are various factors which determine
the overall risk of drilling—water depth is one of these.
However, the serious attention paid to risk needs to be the same
in any water depth and, as argued below (para. 27), the specific
circumstances of any well are paramount. It is a legal requirement
to identify hazards, assess risk, and to mitigate risks through
using procedures, equipment or engineering to a level "As
Low As Reasonably Practical" (ALARP).
18. The longer-term implications of the
Gulf accident will only become apparent when the causes of the
accident are better understood. For example, the physical recovery
of the damaged BOP will be an important piece of evidence in understanding
the accident. Regardless, there are opportunities for the industry
to be better prepared than at present for a subsea disaster. Improvements
in this area will likely involve developing a similar capability
for dealing with large undersea spills as already exists for surface
spills, and important work in this area has already begun.
19. Other important lessons include:
— The need to share information across
the industry on its capacity to respond to an undersea accident;
— Application, where appropriate, of consistent
policies and equipment standards; and
— The need for active cross-industry engagement
with government and regulators in many areas, including with respect
to operational capability and competence and financial capacity.
THE UK SAFETY
AND ENVIRONMENTAL
REGULATORY REGIME
20. In the UKCS there are two main regulators:
the Health and Safety Executive (HSE), which regulates offshore
safety; and the Department of Energy and Climate Change (DECC),
which regulates the offshore environment for oil and gas activity.
21. In the UK, the design, construction
and maintenance of a well must be independently verified, and
it is the Well Examiner's role to examine all stages of a well's
planning, execution and operation throughout its life cycle.
22. In addition, the HSE Safety Case Regulations
(SCR) and related regulations require the identification and assessment
of the major accident hazards associated with an installation
and require measures to mitigate those hazards and to ensure the
rescue of personnel. Under the SCR, UK companies must manage wells
to avoid unplanned escapes of oil or any other well fluids. It
is an important principle that the risks of escape of hydrocarbons
and of personal injury must be demonstrably as low as reasonably
practical.
23. In essence, the UK regime involves goal-setting
based on an analysis of major hazards and risk assessment, with
the emphasis on prevention of accidents. By contrast, the US regime
identifies precisely what an operator is expected to do. Operators
in the UKCS are required to demonstrate the identification and
assessment of major accident hazards; they must also provide assurance
that necessary measures have been taken to minimise these risks
and to give precedence to the safety of personnel. This allows
for a process of continuous improvement, based on a growing body
of information and knowledge. This "goal-setting" approach
was largely developed in response to the Piper Alpha disaster
in the UKCS in 1988.
THE NEED
FOR DEEPWATER
DRILLING
24. Global definitions of "Deepwater"
differ, but at depths of over 600m Dynamically Positioned Rigs
are likely to be needed which carry a different risk profile.
Depths greater than 5,000ft/1500m are classified as ultra-deep
water. WoS drilling occurs across a range of water depths from
150m (BP's Clair field), through 400-500m (BP's Schiehallion and
Foinaven fields) to exploratory drilling at over 1,000-1,500m.
The Deepwater Horizon incident occurred at a water depth
of 5,000ft/1,500m.
25. The accident in the Gulf of Mexico has
raised questions over whether the world's need for new energy
resources justifies the risks of deepwater drilling. In this respect,
it is instructive to look at the history of offshore oil production
over the past decade, as illustrated by the following chart (source
PIRA).
World offshore production in 1990 at 17 million
barrels per day (mbd) represented some 25% of total global production
and took place almost exclusively in shallow water. Today, with
some 30% of total global production accounted for by offshore
activity (27 million barrels per day), deepwater production (>
1,000 feet) is much more significant and contributes some 7% of
the total. By 2020, this is expected to increase to over 9%. To
forego oil produced from deepwater would have global strategic
significance for energy supply.
26. The same can be said for the UK specifically,
where reserves of oil and gas amount to some 24 billion barrels,
but where some 25% of the UK's currently discovered oil and gas
reserves lies in the deeper waters to WoS. This same area also
has the greatest exploration potential, and very little of the
UK's deeper water potential has so far been discovered or licensed.
Delay in realising this potential would have implications for
the security of UK oil and gas supplies.
27. While a moratorium could threaten security
of supply and the long term future of the UK industry, it does
not follow that it would necessarily reduce the risk of accidents.
The special characteristics of deepwater drilling depend heavily
on the specific circumstances of each offshore well. Thus the
risk of a hydrocarbon release, and the appropriate risk mitigation
measures which accompany it, are not exclusively related to water
depth. In simple terms, a shallow water well near to shore may
carry as much risk as a deep water operation if it is not designed
and operated to appropriate standards. Given these considerations,
a blanket moratorium, based (for example) on water depth, cannot
be relied on to exclude those operations of greatest risk; this
type of risk reduction can only be achieved through comprehensive
risk assessment and design of mitigation measures on a case-by-case
basis.
CONCLUSIONS
28. Deepwater drilling is increasingly satisfying
a growing proportion of global energy demand. The UKCS is no exception.
The future potential of the North Sea to provide consumers with
the energy they need and want is dependent to an important extent
on current and future operations West of Shetlands. It is impossible
to eliminate risk from any aspect of North Sea operations, whether
in shallow or deep water. But the lessons to be learnt from the
tragic accident in the Gulf of Mexico will enable the industry
to reduce greatly these risks, and to help prevent a similar occurrence
happening elsewhere. In the UKCS, as outlined above, steps are
already being taken with precisely this objective. There can never
be grounds for complacency, and there is always room for improvement.
But BP, along with the rest of the industry, is determined to
continue to carry out its essential public service in as safe
and in as responsible a way as possible.
September 2010
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