Memorandum submitted by TOTAL E&P
UK LIMITED
EXECUTIVE SUMMARY
Major incidents offshore are, thankfully, rare.
However, they are a stark reminder to the industry that a combination
of poor planning, decisions or competences can combine with disastrous
results. Following the Macondo blow-out in the Gulf of Mexico,
TOTAL E&P UK, like many others, has looked closely at its
own procedures, both within the company and in collaboration with
regional and national regulatory authorities. Audits of safety,
environmental and operating processes, competences and regulatory
requirements have been carried out. There is no doubt that the
whole industry has been severely challenged by the Macondo incident.
TOTAL E&P UK's corporate technical and management
procedures and the UKCS regulatory regime are robust for both
exploration and production operations, across all water depths
of the UKCS. Around the world drilling is now carried out in water
depths of up to 3,000 metres whilst, in the UKCS, water depths
do not come close to these levels. In addition, it should be noted
that water depth was not the determining factor in the causes
of the Macondo incident and that water depth is not considered
the most significant element in designing and drilling a subsea
well.
TOTAL E&P UK COMPANY
PROFILE
TOTAL E&P UK is one of the largest operators
on the UK Continental Shelf in terms of production and reserves,
with daily operated production in the region of 270,000 barrels
of oil equivalent per day. Some 70% of this production is gas.
TOTAL E&P UK owns and operates the Alwyn
North, Dunbar, Ellon, Grant, Nuggets, Forvie, Jura and Otter fields
in the Northern North Sea. Along with its partners, it also owns
and operates the Elgin, Franklin, West Franklin and Glenelg Fields
in the Central Graben Area of the Central North Sea.
In March 2010, TOTAL E&P UK received final
sanction to develop its Laggan and Tormore gas fields in the region
West of the Shetlands (WoS), in which the company has an 80% interest
(DONG Energy has 20%). Developing those fields and the associated
infrastructure will open up the whole of the WoS region and unlock
the UK's gas reserves currently stranded there. The development
of the fields has started with the construction of a new gas plant
in Sullom Voe on the Shetland Island, with offshore drilling of
the gas wells being planned for mid 2012 in a water depth of 630
metres.
Onshore, TOTAL E&P UK also operates the
St Fergus Gas Terminal on the northeast coast of Scotland, which
receives and processes up to 20% of the UK's natural gas requirements
from over 20 fields in the UK and Norway. In 2014 the gas production
coming from WoS will also be processed in the St Fergus terminal.
EVIDENCE ADDRESSING
THE FIVE
QUESTIONS POSED
Q1 What are the implications of the Gulf of
Mexico oil spill for deep water drilling in the UK?
1.1 A major offshore incident in the oil
and gas industry, whilst rare, is a reminder of the inherent risks
and the need to be totally rigorous in identifying potential dangers
and taking appropriate steps to eliminate or minimise risks to
staff and the environment. Twenty years ago exploration drilling
in up to 300m water depth was considered to be deep water. Global
experience acquired during those intervening years, plus very
significant advances in technology, now enable drilling to take
place in 3,000m of water whilst, in the UK, wells have been drilled
in water depths up to 1,800m. For this reason, drilling rigs are
designed and constructed specifically for the local environment,
with the appropriate technology and safety equipment to suit these
conditions (eg water depth, meteorological and oceanographic conditions),
in which they are expected to operate. The industry, however,
which has operated successfully for so many years in the UK, is
now challenged by the magnitude of the Macondo incident. Although
UK operators have built up a unique range of experience by working
in difficult conditions around the UKCS, the implications of the
Macondo incident are numerous.
1.2 For an operator like Total what are
the implications?
First, we immediately asked ourselves the question,
"Could this happen to us?" The answer to that is that
the risk is very low but it is not impossible. Despite our confidence
we have therefore taken immediate action to ensure this risk remains
As Low As Reasonably Practicable ("ALARP") across our
operations worldwide and particularly in the UK.
To this extent we have launched several actions
covering procedures, competence and emergency response:
(a) Immediate actions taken internally by Total
We immediately launched an audit on current
drilling operations with most emphasis on:
— The design and architecture of the wells—this
is key;
— The BOP equipment, its configuration,
maintenance and function tests;
— Well control training and exercises;
— Review of the functioning of our organization;
and
— Approval of, and thereafter adherence
to, the drilling programme.
(b) Longer term actions
In parallel, but with a deadline before the
end of 2010, various internal work groups have been set up in
Total's headquarters with focus on the following subjects:
— Re-evaluation of our drilling procedures,
of BOP equipment and training of personnel;
— Study and design of capture/containment
techniques in subsea wells;
— Re-evaluation of safety barriers in place
on our deepwater production installations; and
— Re-analysis of the methods and techniques
of anti-pollution treatment and control.
All this work will take into account the lessons
from the Macondo incident, its causes and also the measures taken
by BP to make good the damage.
(c) Follow up and active participation in industry
activities
In addition, TOTAL is actively participating
in industry-wide work on the same subjects within the framework
of national and international associations (OSPRAG, OGP, IPIECA,
API) as well as with the regulatory authorities of Norway and
the Netherlands. In particular, it should be mentioned that TOTAL
E&P UK is directly involved with our drilling experts in the
technical work groups of OSPRAG, which includes UK regulators,
and OGP in Europe.
It should be noted that the implications of
the Macondo incident are not limited to deep water activities.
All subsea operations require to be reviewed, both in light of
the information becoming available from the Gulf of Mexico and
from all the investigations being carried out in the industry.
Regarding TOTAL, our procedures are based on worldwide experience,
are under permanent review and are adjusted or modified as necessary
in light of new experiences and technologies. The TOTAL organisation
is relatively centralised; this not only encourages the growth
and sharing of knowledge but also a control of its global activities
to ensure that worldwide experience is incorporated in all operational
areas.
1.3 An important implication of the incident
is the necessity to reassess the competence of staff and contractors
and especially those holding key positions on drilling rigs. All
TOTAL's operational staff benefit from extensive training, certified
by independent organisations, including regular assessments on
the subject of well control. The performance of our subcontractors,
the principal drilling contractor and associated service companies,
are the subject of formal reviews. In addition to comprehensive
training programmes already in place, we are now in the process
of reinforcing our Competence Assessment Management System for
specific roles.
Before commitment, any drilling rig is fully
inspected and the main components, including safety equipment,
are tested. We ensure that staff and contractors are fully aware
of the importance of the strict rules and procedures and that
the supervisory staff and managers implement these strict processes.
1.4 Emergency response plans are an essential
element of every drilling or production programme. These are subject
to the same rigorous and detailed in-house analysis, as well design
and construction, and are fully exposed to regulatory inspection.
The Gulf of Mexico incident is a stark reminder of the need to
keep these plans updated as circumstances change, and keep staff
fully aware and prepared. In all cases a blow-out contingency
plan is developed and plans for emergency relief wells are defined
before drilling commences. However, improvements must be made
regarding well-capping methodology and equipment availability.
Within OSPRAG, with Oil Spill Response Ltd and the Maritime &
Coastguard Agency, we are reassessing how the existing responses
to pollution can be improved but it must be recognised this is
a difficult problem in the environmental conditions of the North
Sea. However, Environmental Statements remain vital to demonstrate
all risks are assessed and control plans are in place. In the
UK these are placed before the regulators and the public for scrutiny.
1.5 The points raised in the answers above
frequently refer to staff competence and awareness. This cannot
be over-emphasised since no amount of excellent procedures and
processes, top-rated equipment and safety systems, environmental
analysis and controls can be sufficient if they are not correctly
implemented. In TOTAL E&P UK any initiative targeting cost-savings
by shortcutting procedures is prohibited. This is clearly the
policy of most operators. In TOTAL, senior management regularly
visit all operational sites and offshore facilities to remind
staff and contractors of our policy and that their "going
home safe and well" at the end of a tour of duty is paramount.
Individual responsibility must be a habit and remains critical
to the ultimate success of any activity.
Q2 To what extent is the existing UK safety
and environmental regulatory regime fit for purpose?
2.1 The UK regulatory regime takes a risk-based
approach and is considered fully fit for purpose. It requires
that, prior to any activity, all elements of the work are reviewed
and every possible risk evaluated for potential impact with a
full programme of risk avoidance or reduction put in place. The
UK regulatory regime is one of the, if not the most, robust and
rigorous regimes in the world with a very positive dialogue and
level of challenge from the regulators and other organisations,
which adds considerably to the final operational programme placed
before the regulator for approval.
2.2 UK regulators have the benefit of experience
from every operator in the UKCS and so have a broad range of knowledge
to draw upon when assessing both Operational Plans, Safety Cases
and Environmental Statements. In addition to this robust process,
TOTAL is part of one of the largest, integrated oil and gas companies
in the world with significant experience of High Pressure High
Temperature and Deepwater Drilling Operations. Our own corporate
review procedures, before any application is made to the UK regulator,
require that the full technical work programme is thoroughly vetted
and passes the strict level of review, based on our global experience
and procedures.
2.3 As already pointed out to Lord Marland
as part of TOTAL E&P UK's response to the question of red
tape in DECC regulation, one concern is the significant pressure
on a small number of highly professional DECC staff. Already we
have seen slow responses on items of high importance and any reduction
in the existing staff or loss of expertise would, we believe,
result in inefficient operations and potential for error. We strongly
support the DECC units regulating oil and gas activities and would
be very concerned if there were any degradation in numbers or
experience.
Q3 What are the hazards and risks of deepwater
drilling to the West of Shetland?
3.1 The West of Shetland area is not considered
to be an especially deepwater area by global oil and gas operational
standards. Around 300 exploration and appraisal wells have already
been drilled in the area with no major problems. Hazards especially
associated with West of Shetland drilling relate primarily to
meteorological and oceanographic conditions. Wind, waves and currents
are more severe and often less predictable than encountered during
normal Gulf of Mexico activity and require a range of operational
decisions to be made regarding the drilling unit contracted. If
operations were to continue all year a Harsh Environment Unit
might be needed. This would include the option of both moored
and dynamic positioning systems. Due to significant water currents
at different depths, more care must be taken with riser design,
wellhead fatigue analysis and general load distribution. These
and many other aspects are major considerations in selecting a
suitable rig to operate WoS and are often more demanding criteria
than applied to normal UKCS activities. However, all of these
elements form part of the strict in-house planning process which
takes place prior to putting a programme to the regulator. The
number of wells drilled clearly demonstrates that the industry
does have the skills and technology required to operate safely
WoS.
3.2 The Macondo well was being drilled into
an overpressured reservoir in the Gulf of Mexico. In some parts
of the world, TOTAL conducts such High Pressure High Temperature
(HPHT) operations in relatively deep water. In the UK, TOTAL E&P
UK has extensive and successful HPHT operational experience from
the Elgin/Franklin and associated fields in the Central North
Sea, with wells drilled on dedicated fixed platforms. However,
the geological conditions WoS are very different and no significant
overpressure has been encountered by TOTAL E&P UK to date
in this part of the UKCS.
3.4 Some of the technical differences noted
between TOTAL E&P UK's WoS operations and that of BP in the
Gulf of Mexico include the following:
(1) Tormore and Laggan have hydrostatic pressure;
(2) We use conventional cement slurries;
(3) We centralise our casings properly;
(4) We perform cement bond logs;
(5) The wellhead system incorporates locking
mechanisms as standard;
(6) A detailed well control audit is performed;
(7) The secondary Blow-Out Preventer shut-off
mechanism is routinely tested; and
(8) We do not use auto-fill float equipment.
3.5 BP has already developed several oil
fields in the WoS region, including Foinaven and Schiehalion with
floating units and more recently the Clair Field in shallower
waters with a fixed platform. TOTAL E&P UK is in the process
of developing the Laggan and Tormore fields. These fields, located
in 630m water depth are gas fields and the drilling of 7 gas wells
is planned to be carried out from mid 2012. Laggan and Tormore
are very conventional gas reservoirs with no particular technical
difficulty anticipated.
Q4 Is deepwater oil and gas production necessary
during the UK's transition to a low carbon economy?
4.1 DECC figures show that 70% of primary
energy supply in 2020 will come from oil and gas.
4.2 TOTAL E&P UK have production profiles
for existing fields and current developments to at least 2030
on the UKCS. With additional exploration, particularly WoS where
new pipeline infrastructure offers a new incentive to exploration
drilling, this date could be pushed further out.
4.3 Maximising recovery from the UKCS reduces
our dependence on imports, which DECC's own publications confirm
will be scarcer but in demand beyond 2050 and consequently more
expensive. The UK cannot afford to waste a valuable resource that
can mitigate against delays in development of alternative energy
strategies. It can be assumed, from recent experience, that imports
of hydrocarbons will be both expensive and at the mercy of overseas
suppliers. Political and economic pressures on import prices are
unpredictable but can be avoided for as long as possible by maximising
indigenous hydrocarbon supplies, much of which will come from
the as yet undeveloped WoS area.
4.4 While oil is primarily for transport,
chemicals and special products, gas plays and will continue to
play a vital role in electricity and heat production for decades.
TOTAL E&P UK is already working to develop gas fields that
will produce approximately 1 trillion cubic feet of gas, and has
a range of additional exploration and appraisal plans for further
work over the next few years. The WoS area is crucial to maintain
gas supplies to the UK.
4.5 Maximising UKCS production through the
WoS exploration and developments also provides a major investment
opportunity for UK businesses, will maintain large numbers of
jobs with highly exportable skills, significant revenues for the
Treasury and ensures security of supply for the country.
Q5 To what extent would deepwater oil and
gas resources contribute to the UK's security of supply?
5.1 Production from the North Sea is in
decline. Significant discoveries will no doubt still be found
but these will be very much smaller than the billion-barrel fields
of the 1970s. The average size of UKCS discoveries in the last
10 years is only around 20 million barrels of oil equivalent and
many of them are gas discoveries. Despite this, the decline of
the UK gas production has been much quicker than the oil production,
and the UK "has moved from being a country self-sufficient
in gas to one increasingly dependent on supplies from elsewhere
in the world" (cf Jonathan Roger, Centrica—Profile;
Press & Journal). It should be remembered that the UK is the
biggest gas consumer in Europe. As a result, imports have reached
more than 50% of the country's needs, gas being imported through
pipelines from Europe or as liquefied natural gas by tankers from
the Middle East or elsewhere. The same scenario will soon happen
for oil. It is therefore now a vital political decision to let
dependency from foreign imports increase, or maximize domestic
production to reinforce security of supply. In that respect it
is relevant to remind that "the past winter was the harshest
for more than 30 years and gas demand reached record highs"
creating a situation of shortfalls.
5.2 The Southern, Central and Northern North
Sea areas make a vital contribution to the UK's hydrocarbon production.
All these areas are in water depths of less than 200m. Although
water depths are greater WoS, this is a very large area and with
developing technologies and rising product prices combining to
encourage drilling, more discoveries have been made and prospects
identified. As part of the current development of the Laggan-Tormore
area by TOTAL E&P UK, a new gas pipeline system is being built
that will connect these WoS discoveries to the UK mainland. This
new system has been oversized in the expectation that further
exploration and development will look to use the pipeline for
decades to come, including accumulations that in themselves could
never justify the cost of this new-build infrastructure.
5.3 Discoveries such as Tobermory, to the
north of Laggan-Tormore, hold the hope of further gas field developments
and new infrastructure, which could again open up new areas for
TOTAL E&P UK and third parties, which would further protect
the UK's security of supply.
5.4 Although there are various ranges published,
DECC estimates there could be as much as 36 billion barrels of
oil equivalent still recoverable from the UKCS, compared with
about 40 billion barrels oil equivalent already produced. This
estimate reflects the possibilities in new areas and new technologies.
Seventeen percent (17%) of the proven and probable reserves are
estimated to lie to the West of Shetland but, as shown above,
the availability of new gas-gathering pipelines is anticipated
to offer a significant incentive to further exploration and the
discovery of new reserves in the coming years, which are not included
in proven and probable reserve estimates.
September 2010
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