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

Memorandum submitted by BP


    — 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).


  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.


  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.


  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.


  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.


  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.


  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

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2010
Prepared 6 January 2011