Memorandum submitted by Chevron North
Sea Limited
What are the hazards and risks of deepwater drilling
to the West of Shetland?
1. OVERVIEW
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.
2. EXECUTIVE
SUMMARY—KEY
MESSAGES
— 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.
3. CHEVRON
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.
4. OPERATIONAL
EXCELLENCE
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.
5. THE REGULATORY
FRAMEWORK
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.
6. WELL PLANNING
AND OPERATIONS
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.
7. DRILLING IN
DEEP WATER
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.
8. ENVIRONMENTAL
PROTECTION
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.
9. LAGAVULIN
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
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