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

Memorandum submitted by Chevron North Sea Limited

What are the hazards and risks of deepwater drilling to the West of Shetland?


  The following submission is offered to the House of Commons Select Committee on Energy and Climate Change as written evidence to the Inquiry on UK Deepwater Drilling, implications of the Gulf of Mexico oil spill, with particular reference to the question, what are the hazards and risks of deepwater drilling to the West of Shetland?

  The submission will provide general background on Chevron Corporation, our systems and processes for achieving Operational Excellence and our response to the Gulf of Mexico accident. It will also provide information on Chevron Upstream Europe's exploration activities with particular focus on the West of Shetland and on the issues associated with drilling in deep water in this environment and why we believe that we can continue to carry out our exploration and appraisal activities there safely and without environmental harm.


    — The Gulf of Mexico accident was tragic and we, along with the rest of industry, are committed to making sure an event like this never happens again.

    — We recognize and accept that we have an obligation to the UK public to ensure that vital energy resources are produced safely, reliably and without environmental harm.

    — We believe that the Deepwater Horizon accident represented a dramatic departure from the industry norm in deep water drilling.

    — Responsible drilling is an essential element of oil and gas exploration, appraisal and development and a moratorium on deep water drilling would have an unnecessary and lasting negative impact on the UK's ability to maximise the value of a vital national resource and on its economic contribution through inward investment, employment, exports and technology development.

    — Chevron's drilling policies and procedures are rigorous and our record is strong. We have successfully drilled 375 deep water wells globally since 1987 (including 75 in the Gulf of Mexico and 18 in the UK, West of Shetland) without a single serious well control event.

    — Chevron's commitment to safety and environmental protection is fundamental to the way we conduct our business worldwide—it is not just a priority, it is a value that never changes.

    — Chevron's Operational Excellence Management System governs how we systematically manage safety, health, environmental stewardship, reliability and efficiency across our daily operations around the world through stringent processes and procedures for risk management, emergency preparedness and compliance assurance.

    — We have confidence that our operations are safe and we can drill deep water wells in UK waters safely and without environmental harm, based on our global standards, our strong safety culture and performance, and our experience of working within the UK's robust regulatory environment.

    — Exploration drilling presents different challenges in different conditions—this is why Chevron has processes designed to analyse, quantify and mitigate risk, and why the risk-based, case by case approach taken by the regulators is effective.

    — Deep water exploration carries issues of not just water depth, but water temperature and met-ocean conditions which have an impact on supporting marine operations and rig selection.

    Chevron's exploration and drilling processes are designed to ensure that these issues are understood and properly managed.

    — Chevron provides its own, in-house well control training to ensure that everyone within our operations is proven competent against the same high standards. Our philosophy is that well control is at the very heart of well design.


  Chevron Corporation and its subsidiaries make up one of the world's largest integrated energy companies, conducting business worldwide and engaged in every aspect of the oil and gas industry, as well as chemicals manufacturing and sales, geothermal energy and power generation and investment in renewables and advanced technologies.

  Chevron is one of the leading leaseholders in the Gulf of Mexico, with mature deep water producing assets, new developments, projects progressing through development phases and new discoveries. Following the Macondo accident, Chevron played a leading role in the response, deploying technical experts to assist with containment efforts, and helped lead the Joint Industry Task Force, which made recommendations to raise industry drilling standards to an even higher level, many of which were already in use by Chevron.

  Chevron Upstream Europe is one of ten international Strategic Business Units and is headquartered in Aberdeen. It has exploration and production interests in the UK, Norway, Netherlands, Denmark, Greenland and Poland. In the UK, our upstream operating company is Chevron North Sea Limited.

  Chevron has been active in the UK upstream industry for over 40 years and has made very substantial investments in the UK since then. We have a strong portfolio West of Shetland, with interests in over 50 blocks, including the Rosebank discovery which is currently under appraisal. We are optimistic that this region can offer significant new opportunities for the industry and for the UK in terms of economic benefits and security of supply and can be explored and developed safely. We are currently planning a three well exploration drilling campaign in the region which we hope to commence this September and which will last approximately a year. This will be carried out with the Stena Carron, a dynamically-positioned, state of the art drillship commissioned in 2008 and specially designed for harsh environments and water depths up to 10,000 feet. It safely and successfully drilled four wells in water depths of over 3,400 feet West of Shetland between November 2008 and October 2009 and has just successfully drilled a Chevron well in the Orphan Basin, offshore Canada in a water depth over 8,500 feet.


  Chevron's commitment to safety is fundamental to the way we conduct our business worldwide—it is not just a priority, it is a value that never changes. We believe that our framework of safeguards is robust; it is focused on prevention and has helped us build our excellent record of safe operations but we realise that we must continually work to ensure that our processes and safeguards are fully utilized, updated and improved in the light of lessons learned, new challenges and new technologies.

  Chevron's Operational Excellence Management System governs how we systematically manage safety, health, environmental stewardship, reliability and efficiency across our daily operations around the world. This means we have strict processes and procedures for risk management, management of change, emergency preparedness and compliance assurance and internal audit processes that ensure that we are meeting our own high standards.

  Central to Chevron's Operational Excellence Management System are our Tenets of Operation and Stop Work Authority. Any employee or contractor involved in our operations has not only the right but the obligation to call a halt to work if he/she believes that there is risk to safety or the environment. There are many instances of our people being recognized by the company for exercising that authority. Our Tenets of Operation are the heart of a code of conduct used as a tool to guide daily decisions. They are based on two key principles—"Do it safely or not at all" and "There is always time to do it right" and are used throughout Chevron as the foundation for our operational excellence culture.

  Chevron is drilling in deep water basins all over the world and has successfully drilled 375 deep water wells globally since 1987 (including 75 in the Gulf of Mexico and 18 in the UK, West of Shetland) without a single serious well control event. We carried out internal reviews across our global operations of our drilling processes and well control contingency plans immediately after the Deepwater Horizon tragedy and this confirmed our confidence that our policies and procedures are rigorous and our control practices for deepwater wells are safe and environmentally sound. This included our UKCS drilling processes and procedures and though we have added some strengthening to these around training, verification and emergency response, we are confident that these are robust. Nonetheless, we operate in the belief that we can always learn and improve. There is a strong culture of industry co-operation in the UK, as well as continuing open dialogue with our regulators and we are confident that relevant lessons from the Gulf of Mexico will be applied.


  We are intensely focused on continuously assessing and mitigating risk to avoid accidents. In the UK, we operate within a framework of close and robust regulation by knowledgeable and independent technical experts, creating safety standards which are considered the highest in the world. In addition, the safety and environmental regulatory regime that was created following Lord Cullen's enquiry into the Piper Alpha tragedy is a goal-setting, non-prescriptive one, which places the responsibility for safe and environmentally sound operations squarely with the duty holder, where the operational knowledge and expertise lies, with the regulators having the powers to ensure that operators comply fully with regulations and the standards set by the operators themselves. This approach has been highly successful over the past 20 years.


  Chevron's drilling policies and procedures are rigorous. We require continuous training and the certifications necessary for qualified drilling personnel. Certification covers procedures to manage unusual circumstances and the means to verify that contractors involved in drilling wells possess the skills necessary to execute well control. Chevron provides its own, in-house well control training to ensure that everyone within our operations is proven competent against the same high standards. Our philosophy is that well control is at the very heart of well design.

  In the early stages of developing a well plan, Chevron's Exploration Review Team peer reviews each of our prospects to determine its size, geologic risk and overall drill-ability. From this data, we define our well objectives using our Value Based Well Objectives process, followed by a systematic assessment of all risks and appropriate mitigations using a Risk and Uncertainty Management Standard process. Together, these lead us to define the appropriate objectives for a given well.

  In addition to the external regulatory environment, Chevron's well planning worldwide is governed by our Operational Excellence Well Design and Construction Process which mandates a range of procedures and standards to identify, mitigate and manage risk; to ensure that well design and construction are fully compliant with legislation, the planning process is rigorous and operations are carried out safely and with care for the environment. These processes require input from internal and external stakeholders, including our service partners and drilling contractors, to ensure alignment amongst all parties. In addition, Chevron operates a Well Examination Scheme and a verification scheme, under which well designs are independently examined and verified by a qualified Well Examiner, who also independently monitors the actual construction of wells, and any necessary modifications, through a robust Management of Change process for modifications or deviations from design and the identification of any associated risk.

  During the planning phase of all our wells, we hold internal peer assists. This is a formal approach to review well design and execution of drilling, completion and abandonment carried out by subsurface, drilling and completion professionals not associated with the project to ensure objective review. Other operational preparations include management-led Incident Free Operations workshops attended by key onshore and offshore Chevron staff, service partners and the drilling contractor to ensure alignment of all parties around Chevron's core values of safety and environmental stewardship and setting out clear expectations around incident free operations, stakeholder engagement, communications and continuous improvement. It also ensures familiarisation with our Key Principles, our Tenets of Operation and Stop Work Authority.

  Similarly, all parties involved in drilling operations participate in a Drill the Well on Paper exercise which examines the plans and procedures in place, identifies and addresses possible gaps and, crucially, ensures that potential risks and uncertainties in each hole section have been properly addressed and that mitigation and contingency plans are robust.

  These examples are only part of an extensive suite of measures designed to ensure that all parties involved in drilling planning and operations are fully aligned; that there are clearly defined roles and responsibilities; that risks are identified and appropriate control or mitigation plans are in place; that people are trained and competent, and that Chevron's core values of safety and environmental protection and expectations around Incident Free Operations are understood and embraced.


  Exploration drilling presents different challenges in different circumstances and it is vital that the risks are analysed, quantified, fully understood and mitigated. Chevron's exploration and drilling processes are designed to ensure that the risks associated with deep water drilling are properly managed.

  Deep water exploration carries issues of not just water depth, but water temperature and met-ocean conditions which have an impact on supporting marine operations and rig selection. The hazards of deepwater drilling West of Shetland relate primarily to the area's severe physical environment and remoteness. The area encounters long Atlantic swells and heavy seas. Currents are complex and fast; depending upon the location, they can vary in direction and speed at different water depths. The weather, especially during winter months, can be severe and lead to the temporary suspension of operations. There is a risk that methane hydrates (molecules of natural gas trapped in "cages" of ice) might form during certain operations, which could block pipe-work and processing equipment, possibly creating a hazardous condition, requiring careful planning and contingencies to be put in place, including the injection of inhibitors to prevent or slow the rate of hydrate formation.

  Primary well control is at the heart of well design and has the single aim of ensuring that hydrocarbons are prevented from entering the well in an uncontrolled manner during drilling, completion or abandonment. Robust planning, design and execution of the well are essential for maintaining primary well control and secondary well contingencies must be in place to contain pressure in the well in the event of an influx of hydrocarbons into the wellbore.

  The gases and fluids in a hydrocarbon reservoir can be under considerable pressure and have potential to be released into the wellbore if precautions are not taken. In all drilling operations a drilling fluid (known as mud) is pumped into the wellbore to maintain downward pressure in the well to counterbalance the upward pressure from the reservoir and to prevent "kicks" (unexpected influx of reservoir fluids). Well pressure is constantly monitored and the drilling fluids' properties adjusted to maintain stable pressure in the borehole.

  Should a kick occur, the driller will operate secondary well control equipment in the form of the blow out preventer (BOP). Chevron's policy is that the driller will immediately close the BOP whenever a positive indication of a kick is noted, without reference to higher authority. The BOP is an arrangement of special valves designed to monitor, control and, ultimately, seal off the well to bring a kick under control and prevent it from developing into a blowout. The BOP utilises a system of rams (opposing pistons which move horizontally across the top of the well) and annular preventers to close off the well and prevent reservoir fluids from escaping. A number of different types of BOPs can be used together in a configuration known as a BOP stack—thus providing multiple, redundant barriers. The specification for the BOP stack is part of the well design and reflects the expected reservoir pressure and fluid type. Operating the BOP is part of the normal procedure for bringing the well back under control in the event that a kick has occurred.

  Water depth (distance between the BOP and drilling rig) influences the selection of BOP control options which can be electrical or hydraulic signals, or a mixture of the two. Acoustic or ROV-deployed activation can also be used for emergency purposes. All BOPs have a fail-safe mechanism to close the well if control and power are severed. BOPs are classed as safety-critical equipment and UK regulations require that they are regularly inspected, tested, maintained and independently verified as fit-for-purpose.

  The selection of the right drilling rig is essential. Chevron has contracted the Stena Carron, a state of the art drillship specifically designed for year round drilling in harsh met-ocean conditions at water depths up to 10,000 feet. It is a dynamically positioned (DP) vessel that uses sophisticated systems to maintain position and heading without the use of anchors. This offers significant advantages over anchored rigs in terms of efficiency, greater ability to sustain safe operations in bad weather and in reducing risks associated with anchor handling in deep water. The Carron's blowout preventer system has seven elements—two annular preventers and five rams—that can secure the well depending on the nature of the situation. If a situation should arise that requires the vessel to move off location, this can be done quickly and safely by activating the Emergency Disconnect System. Two of the rams are shear rams capable of shearing the tubulars used during the drilling operation.

  In the event of a sustained blowout the primary response is to drill a relief well to intersect the blowout wellbore and to pump in mud to kill it. This is still an option but the Gulf of Mexico incident has highlighted the potential for alternative capping and containment options which are currently under review by the OSPRAG Technical Review Group. Chevron has experts participating in this UK industry effort and is also one of the four companies who have committed to design, build and deploy a new containment system for the Gulf of Mexico. We have also taken steps to have a tertiary well capping mechanism available for our 2010-11 West of Shetland campaign.


  In addition and complementary to the regulatory requirements for environmental impact assessment and the production of comprehensive environmental statements and oil pollution emergency plans, Chevron has developed a number of processes within its Operational Excellence Management System for environmental stewardship, which requires that all health, safety and environmental risks are identified and assessed. These include our Environmental, Health and Social Impact Assessment process (ESHIA) which is applicable to all seismic, exploration and major capital project activities.


  The Lagavulin prospect lies some 160 miles North of Shetland in a water depth of just over 5,000 feet. Chevron and its co-venturers plan to drill an exploration well in the prospect, with an expected start date in September and up to six months' duration. An Environmental Statement for the well was prepared in accordance with UK regulation and has been in the public domain since March 2010.

  Chevron is employing numerous procedures, practices and control measures to minimise the risk of major spill incidents during drilling operations, viz:

    — Rig selection—the well will be drilled with the Stena Carron (see description in section 7, above);

    — Well design—this has been subject to all the processes described above, including a second peer review by experienced drilling staff from our Gulf of Mexico Deep Water business unit, and has also been independently reviewed by the Well Examiner and an expert member of the Gulf of Mexico deep water team, and a review by the UK HSE-OSD wells team;

    — Blowout preventer operation assurance—the Stena Carron's BOP stack and associated well control equipment are all rated to 15,000 psi working pressure, against a maximum anticipated wellhead pressure of +/-9,650psi; inspection and verification of the BOP equipment will be carried out before it is run on the well and in addition to the regular testing regime, the back-up ROV-deployed control systems will also be tested;

    — Competence and awareness assurance of supervisory drilling personnel—the senior Drill Site Managers assigned to the well have been with the Carron since it came to Chevron and all have over 20 years' experience, including deep water operations; all will be certified in accordance with Chevron's well control policy and will carry out drills with the Stena crew according to our well control policy to ensure competency; additionally, a member of the Chevron Global Well Control team will provide additional deep water control training to the rig crews and support the DSMs with competency assurance;

    — Drilling mud—water based mud will be utilized throughout the drilling operation; this has advantages for early kick detection and also offers environmental benefits; the mud will also contain chemical inhibitors to protect against the formation of hydrates; and

    — Audit/inspection—Chevron will undertake an internal safety and environmental audit of the Stena Carron prior to it drilling the potential reservoir sections at Lagavulin.

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