Memorandum submitted by the Department
of Energy and Climate Change,|
Health & Safety Executive, and
Maritime and Coastguard Agency
1. This Memorandum first sets out some general
information relevant to the Committee's inquiry, including regulatory
responsibilities within Government, and then responds to the specific
questions posed by the Committee in their call for evidence. There
are also some supporting documents attached including, at Annex
A, responses to a number of additional questions suggested by
the National Audit Office.
2. UK oil and gas production continues to
form a vital component within the UK's energy needs (supplying
over 60% of primary domestic energy demand in 2009). It contributes
significantly to our economy. The upstream sector attracts around
£12 billion annual expenditure by industry and provides around
£10 billion annually to the Treasury in taxation. The industry
supports around 350,000 UK jobs directly and indirectly (plus
another 100,000 involved in exporting goods/services).
3. From both an economic and security of
supply perspective, as we make the transition to a low carbon
economy, it is vital that the Government and industry work to
maximise economic recovery of the UK's indigenous hydrocarbon
resources as part of our energy security policy. Production is
declining but this is still a major UK resource and, although
some 40 billion barrels of oil equivalent (boe) have been produced
so far, there are perhaps 20 billion boe, maybe more, left to
produce. It is a key Government objective to encourage industry
to continue to invest in exploration, development and production
so that we can fully realise this potential. However it is absolutely
essential that, at the same time, such activities are carried
out safely, high standards of management are maintained, and environmental
impacts are minimised.
4. Our regulatory regime is already among
the most robust in the world and the industry's track record in
the North Sea is strong. But we must learn everything we can from
the Macondo well. Over the last four months we have been looking
very closely at all the information that has come out of the Gulf
of Mexico incident including the recent BP investigation report,
and determining how this relates to our own regime and will continue
doing so until the formal US investigations are completed in 2011.
5. During the period from 1964-2009, over
10,000 wells have been completed on the UK Continental Shelf (UKCS).
Although there have been a small number of incidents involving
shallow gas events,
or blow-outs, during the course of these drilling operations,
there has not been an oil blow-out or any significant spillage
of oil directly resulting from drilling operations.
6. There are two incidents that are exceptions
to that strong track record. First the Ocean Odyssey incident
which took place on the UKCS in 1988 which involved a blow-out
during exploration drilling. However this differed significantly
from the recent US blow-out in that the Ocean Odyssey rig was
drilling a high pressure well on a gas condensate field. The incident
also pre-dated the restructuring of the UK offshore safety regime
following Piper Alpha.
7. The Piper Alpha tragedy which also took
place in 1988 has been the most serious incident on the UKCS.
This was a gas explosion caused by leaking pipe-work that was
under maintenance, and exacerbated because there were inadequate
emergency shutdown facilities available to cut off production
from other fields. At the time both safety and operational issues
were dealt with by the then Department of Energy. After the incident,
although Lord Cullen concluded that there had not been a conflict
of interests within the Department, it was decided that the responsibility
for these should be split to implement new arrangements with a
clear separation of duties between those responsible for licensing
operations and those regulating safety matters.
8. Following Piper Alpha new tripartite
arrangements for offshore regulation were implemented.
9. Under these it is the responsibility
of the Health & Safety Executive (HSE), an executive non departmental
public body of the Department for Work and Pensions, to assess
and regulate the integrity and safety of offshore installations
in the UK via the Health and Safety at Work Etc Act 1974 and the
offshore specific suite of regulations.
10. The Department of Energy and Climate
Change's (DECC) Energy Development Unit is responsible for licensing
and regulating UK oil and gas activities, developing the environmental
regulatory framework for the UKCS, and for administering and ensuring
compliance with that regime in relation to offshore oil and gas
exploration and production and decommissioning, including the
approval of Oil Pollution Emergency Plans (OPEPs).
11. The Maritime and Coastguard Agency (MCA),
an Executive Agency of the Department for Transport is responsible,
if required, for deploying any counter pollution measures to minimise
a pollution incident.
12. In order to provide a coherent picture
to the Committee this Memorandum is being submitted jointly by
all three organisations.
13. A chart is also attached at Annex B
which shows the relationship between these three key regulatory
bodies and the allocation of roles, which ensure that all aspects
of the industry's activities are regulated holistically and in
a seamless fashion.
14. The Committee's questions are largely
focused on activities in deep water and it is probably helpful
to explain how this has been interpreted in this evidence. There
is no standard or uniform definition of "deep water"
in the industry or in use among regulators but, for the purposes
of this Memorandum, DECC, HSE and MCA are using the term "deep
water" as referring to activities taking place in water depths
of more than 300 metres. This accords with the commonly used concept
of "deep water drilling" as that which requires the
use of floating rigs, rather than fixed production platforms or
15. There are very few fixed platforms operating
around the world at a depth of 300 metres, and current technology
would almost always dictate that a floating drilling facility
is required for drilling activity at this depth and deeper. The
US Administration uses a similar concept to identify "deep
water drilling"; but it should be noted that water depths
have not been stipulated specifically in recent measures put forward
by the US Department of the Interior. A map showing the water
depths in the Northern North Sea and areas to the North and West
of Scotland is attached at Annex C to this Memorandum.
16. Clearly the Deepwater Horizon incident
in the US has served to focus great attention on how drilling
operations are regulated and controlled. Given the move into deeper
waters West of Shetland, there is every reason to increase our
regulatory vigilance. Notwithstanding the strengths of the existing
UK regime, the agencies are keen to secure full learning from
all new and emerging information, and to ensure that the system
is in every respect as good as it can be.
17. Interim steps are already being implemented
action to double the number of annual
environmental inspections by DECC to drilling rigs including the
appointment of three additional inspectors, bringing the total
number of environmental inspectors to 10 (nine inspectors and
one senior inspector);
the launch of a new joint industry and
Government group called the Oil Spill Prevention and Response
Advisory Group(OSPRAG),to review the UK's ability
to prevent and respond to oil spills;
the award, by OSPRAG, of a contract to
Wood Group Kenny for the design of new oil spill mitigation technology
for the UKCS;
agreement by the industry to increase
by more than double oil spill liability insurance for the settlement
of claims, from US$120 to US$250 million;
a study, set up by OSPRAG, in the light
of the Gulf of Mexico incident, to look at estimates of the cost
of oil spill clean up in the UK area; and
bringing forward the planned testing
of the National Contingency Plan, and its interaction with other
major incident plans, including oil pollution emergency plans
submitted by operators of offshore installations, with a major
oil pollution exercise involving the offshore industry in 2011.
18. The consenting of all wells is on a
case by case basis taking full account of new and emerging information.
And for deepwater wells, this now includes rigorous testing against
the findings of BP's report into the causes of the Deepwater Horizon
accident. The companies will have to demonstrate effective coordination
between companies involved in the well, and between the companies
and relevant Government agencies. The testing of the effectiveness
of these arrangements will be a condition of future permissions.
The Government is working closely with other Government and international
bodies to secure that all lessons from the Macondo accident are
learned. This may result in additional cooperation across borders
and, where appropriate, companies will need to demonstrate that
they have given full effect to these arrangements and that they
have been tested.
19. The Government plans to review our new
and existing procedures as soon as the detailed results of the
formal investigations into the Deepwater Horizon incident in the
Gulf of Mexico are available. We expect this to build on the work
already begun by OSPRAG.
20. As part of our response to these events
HSE and DECC are also in contact with our counterpart offshore
regulators in the United States, the Bureau of Ocean Energy Management,
Regulation and Enforcement (previously the Minerals Management
Service), as well as engaging in high level contacts with BP in
the UK. This will ensure that we can identify at the earliest
opportunity any lessons from Deepwater Horizon that might be relevant
and applied to UK offshore activities.
21. At the European level HSE and DECC have
been actively involved. Although nation states have primacy in
these issues, Mr Oettinger, the European Union Energy Commissioner,
has taken a particular interest in this matter and has called
for a review of the broader EU regulation of such activities.
Mr Oettinger has also called for a moratorium on deep sea drilling;
a review of how to improve the capacity for co-operation in terms
of response and clean up; and consideration of the need to strengthen
regional and international standards. Through HSE and DECC, the
UK will be a key contributor to Commission workshops to discuss
22. As has been described above the UK already
has a robust regulatory regime, the but we are seeking to learn
as much as possible from the Macondo accident, and steps have
nevertheless already been taken to increase our regulatory vigilance.
All drilling programmes are considered on a case by case basis,
taking account of the latest available information. HSE needs
to be satisfied that well design and construction are satisfactory
and DECC needs to be satisfied that emergency plans for all wells
represent best practice. For deep water drilling, operators are
being required to demonstrate that the factors identified in the
BP report have been satisfactorily addressed; and that there is
effective coordination between all the companies involved, and
between companies and relevant Government agencies. This may delay
or halt the commencement of some wells but we do not consider
that such an approach will result in a de facto moratorium. In
this light, the UK Government does not see a case for any ban
or moratorium on deep water drilling.
23. Following a meeting between UK and Norwegian
Energy Ministers in August, a joint statement was issued which
included a commitment by the UK and Norway to exchange information
and confer on the investigations into the Gulf of Mexico oil spill
and the appropriate regulatory and industry responses to the accident.
24. At a broader international level, through
the G20, the Russian Government have initiated a review of best
practice for deepwater drilling as part of a global marine environment
initiative. The terms of reference and activities to deliver on
this initiative are under discussion. The aim is an intermediate
report mid-October 2010 and for the work to be concluded for the
Seoul G20 Summit in November 2011.
25. The position of the three agencies with
regard to these initiatives is that we need to be closely involved
in shaping and contributing to them to ensure that lessons are
learned and best practice is shared. However, we also need to
ensure that any proposals for change:
are based on robust evidence;
are proportionate and risk assessment
avoid disruption to existing mature regulatory
regimes (such as the UK's) that have proven to be effective over
do not lead to any reduction in national
safety requirements by setting lower international standards.
What are the implications of the Gulf of Mexico
oil spill for deep water drilling in the UK?
26. The majority of UK gas fields are located
in water depths of less than 50 metres, whilst oil fields are
mainly located in water depths between 50 and 250 metres. However,
to the West of Shetland, there are a number of fields and undeveloped
discoveries in water depths of between 300 and 1,600 metres, and
proposals to drill in water depths greater than 1,600 metres.
27. The UKCS to the West of Scotland, which
may be the subject of oil and gas exploration in the future, includes
areas where the water depth is in excess of 3,000 metres.
28. Overall deepwater oil and gas resource
potential (including both West of Shetland and the less well understood
West of Scotland) is estimated to be around 3 to 3.5 billion barrels
of oil equivalent (some 15-17.5% of UK total resources) of which
about a third is gas and two thirds oil. Earlier this year DECC
gave the go-ahead to Total's Laggan/Tormore gas development, which
lies in 600 metres of water, and which is set to open up West
of Shetland for wider development with a new gas pipeline to mainland
Scotland via the Shetland Islands.
29. The southern part of the North Sea is
a gas province and so if there were a blow out it would not result
in significant oil spillage. Some other areas of the North Sea
contain oil reservoirs which have insufficient pressure to support
a blow out similar in nature to the Deepwater Horizon spill. In
these reservoirs oil has to be pro-actively pumped for it to be
produced. However, there remain other oil reservoirs, including
some in the deeper waters to the West of Shetland, where the pressure
and hydrocarbons are such that, were the safety measures in place
to fail, a blowout incident could occur. Although the possibility
of blowouts occurring are not confined to deep water, water depth
clearly can increase the technical challenge of drilling a well
and can make any mitigation measures required more difficult to
implement. (See also Annex D for more detail of operational factors
relevant to deep water operations.)
30. In advance of the conclusion of the
formal investigations into the Gulf of Mexico incident, Oil &
Gas UK (the offshore industry's main representative body) has
established the Oil Spill Prevention and Response Advisory Group
(OSPRAG) to review the industry's practices in the UK. The Group
is formed of senior representatives from all sides of the industry,
the relevant regulatory authoritiesDECC, HSE and MCAand
31. OSPRAG has established four specialist
review groups whose remit is to focus on:
Technical issues including first response
for protection of personnel, the well examination process and
an inventory of blowout preventers and remotely operated vehicles
currently employed in the UKCS;
Oil spill response capability and remediation
including national emergency response measures;
Indemnity and insurance requirements;
European Issues (Pan-North Sea regulations/response
32. On 5 August 2010, OSPRAG announced that
it had awarded the contract for engineering services to assess
subsea capping and containment options for the UK continental
shelf to Wood Group Kenny. Wood Group Kenny will work closely
with the OSPRAG Technical Review Group and recommendations will
be presented in September 2010. These recommendations will allow
OSPRAG to make an informed decision about the potential contingency
options for subsea capping and containment that should be put
in place in the UK.
33. Clearly improvements in the stand-by
capability to cap and capture leaking oil would allow us to engage
much more rapidly in a mitigation exercise should an incident
involving leaking oil occur on the UKCS in the future.
34. The strength of the UK regulatory regime
is reflected in the fact that the initial report from the US Department
of the Interior has already indicated that elements of our own
approach will help inform the changes to be implemented in the
US systemfor example: case-by-case safety case appraisal,
independent verification of the design of wells, and the separation
of the safety function from licensing within Government.
35. Although the UK regulations on the design
and construction of wells are goal setting in approach, they do
require a full assessment of subsurface conditions before drilling.
This is to identify potential hazards and require that the well
is designed, constructed, maintained and operated such that, so
far as is reasonably practicable, there can be no unplanned escape
of fluids from the well. In addition the UK will not consent to
the drilling of wells unless we are satisfied that the emergency
plans represent best practice.
36. The Macondo incident has shown that
co-ordination between all the companies involved, and between
companies and relevant Government agencies, is an essential part
of safe operation. For deepwater wells the case by case assessment
of wells will now include the requirement for companies to demonstrate
rigorously the effective coordination between all the companies
involved, and between companies and relevant Government agencies.
Companies seeking to drill in deep waters will need to provide
evidence that such co-ordination arrangements are in place and
37. The regime developed since Piper Alpha
ensure that the roles and responsibilities of all parties, including
rig owners, well operators, sub-contractors and regulators, are
clear and well understood. The overall responsibility for safety
on an offshore installation falls to the Safety Case Duty Holder
who appoints an Offshore Installation Manager (OIM) and the ability
to discharge this responsibility must be demonstrated through
the Safety Case. All parties involved in offshore operations including,
for example, the cementing contractors have legal duties to co-operate
with both the operator of the installation (the Safety Case Duty
holder, OIM) and the Well Operator when the well is being constructed.
The Safety Case Duty holder and the Well Operator must demonstrate
that their safety management systems will operate effectively
in combination, who has primacy in emergencies, and who has overall
responsibility for decision-making. A recognised way of achieving
this is through a formal bridging document. Safety Case holders
and Well Operators must be able to demonstrate appropriate crew
training, and the crews' understanding of the decision-making
procedures for events that may occur during the well construction.
The regime is regulated by HSE who can take formal enforcement
action where duty holders' performance falls short of that expected
and poses serious risks.
38. In addition, the industry through its
OSPRAG workgroup is reviewing the training of crews on this critical
area and the crucial relationship between OIM, Well Operator and
key contractors to be able to demonstrate that no opportunity
to improve the safety of operations is missed.
39. Once the results of the formal investigations
into the incident in the Gulf of Mexico are known we will ensure
that all the lessons to be learnt are incorporated into our procedures
and that the UK continues to appropriately regulate its offshore
oil and gas industry in order to maintain the highest possible
To what extent is the existing safety and environmental
regulatory regime fit for purpose?
40. As detailed above, it cannot be guaranteed
that a blow-out incident could not happen on the UKCS, but we
strongly believe the safety and environment regulatory regime
is fit for purpose. There is a comprehensive regulatory regime
in place, administered by the HSE and DECC, which covers all aspects
associated with the proactive management of this type of risk.
Details are given below along with action that has been taken
thus far following the Gulf of Mexico incident to provide further
reassurance that the regime remains robust, and to improve it
41. HSE is responsible for regulating the
risks to health and safety arising from work in the offshore industry
on the UKCS. The UK has one of the best health and safety records
in the world, based on the simple, enduring principle that those
who create the risk are best placed to manage it. HSE has nearly
40 years' experience as an independent regulator of a wide range
of industrial hazards. In practice, HSE has a system where the
regulator, duty holders, worker representatives and other stakeholders
work together, utilising the best available evidence, to produce
proportionate regulation, standards and guidance aimed at protecting
the health and safety of workers and the public. This is backed
up by a regime of inspections, assessments, investigations and,
where necessary, enforcement.
42. The UK has a comprehensive offshore
regulatory framework in place to prevent or mitigate the health
and safety risks associated with drilling for oil and gas offshore.
The main regulations include:
The Offshore Installations (Safety
Case) Regulations 2005 (SCR) which require operators
or owners of an offshore installation to prepare a safety case
providing evidence that all major accident risks have been evaluated
and measures taken to control risks. This must be submitted to
HSE for acceptance before a rig drills in UK waters;
The Offshore Installations and Pipeline
Works (Management and Administration) Regulations 1995 (MAR)
which set out requirements for the safe management of offshore
The Offshore Installations (Prevention
of Fire and Explosion, and Emergency Response) Regulations 1995
(PFEER) which provide for the protection of people
from fire and explosion, and for securing an effective emergency
The Offshore Installations and Wells
(Design and Construction, etc) Regulations 1996 (DCR) which
set out the requirements for the integrity of installations and
the safety of offshore and onshore wells; and
Offshore Installations (Safety Representatives
and Safety Committees) Regulations 1989which place
duties on offshore installation managers, owners and operators
to establish arrangements for consultation with workers. These
regulations apply to the workforce on the installation regardless
of their employer's identity.
43. The UK offshore regulatory framework,
developed after the Piper Alpha disaster in 1988, implements the
relevant European Directive 92/91/EEC on the minimum requirements
for improving the safety and health of workers in the mineral-extracting
industries through drilling. The UK regulations also contain a
range of additional safeguards to mitigate the health and safety
risks associated with offshore drilling. These measures also reduce
the risk of an oil pollution incident occurring:
DCR requires a full assessment of subsurface
conditions before drilling to identify potential hazards. DCR
also requires that the well is designed, constructed, maintained
and operated such that, so far as is reasonably practicable, there
can be no unplanned escape of fluids from the well;
There is a statutory requirement for
wells to be notified to HSE at least 21 days prior to drilling
or well intervention operations taking place, which allows specialist
wells inspectors to review well design and procedures and require
improvements if necessary;
A second check is required of the design
and construction of the well by a competent person, independent
of the operator, to ensure that it is fit for purpose;
An independent competent person (such
as Lloyds Register) must verify the suitability and state of good
repair of safety critical equipment such as blowout preventers
(BOPs) on mobile drilling rigs;
Regulations require that everyone involved
in well operations has received suitable information, instruction,
training and supervision;
Weekly summaries of operations are required
to be submitted by well operators to HSE Wells Inspectors; and
HSE Wells Inspectors assess and inspect
well control and well integrity arrangements and other HSE offshore
specialists assess and inspect other aspects of drilling rig operations
44. To apply the UK's legislation and monitor
safety within the offshore oil and gas industry, HSE's Offshore
Division has 114.5 specialist inspectors (figures as at 1 April
2010) who provide expertise in the following disciplines: regulatory
inspection; well engineering; occupational health; process safety;
fire and explosion; marine and structural; evacuation and escape;
mechanical; electrical; and diving. Overall, this equates to 105.5
inspector years when factors such as part time working are taken
45. A further measure worth noting is the
level of Hydrocarbon Releases (HCRs) on the UKCS. This is a key
indicator of how well the offshore industry is managing its major
accident potential. The UK offshore oil and gas industry has shown
considerable improvements in recent years in relation to HCRs.
There has been a steady decrease from 2001-02 to 2009-10. However,
HSE has just reported a rise in HCRs last year. There were 61
HCRs in 2008-09the lowest since HSE began regulating the
industrywith a provisional total of 85 being reported for
2009-10. These figures show that there is no room for complacency.
As a result of this, HSE has increased the level of its offshore
investigation of all major and significant HCRs to ensure that
root causes are identified and rectified by duty holders. HSE
will continue to monitor the industry's HCRs performance closely
and will take action against operators where required improvements
are not delivered and/or poor practice is evident.
46. In summary, the Government believes
the UK has a rigorous offshore oil and gas safety regime, with
significant differences in the type and style of the legislative
requirements and the regulatory/enforcement approach compared
with the USA. The UK offshore oil and gas industry also has a
somewhat different safety culture than that in the Gulf of Mexico.
Here, there is greater workforce engagement in safety issues,
which is supported by regulatory requirements. Whilst it is impossible
to say that such a blowout as occurred with the Deepwater Horizon
could never happen in UK waters, our additional and different
layers of regulatory protection provides a reduced probability
that it would.
47. A comprehensive framework of environmental
protection measures has been developed to minimise the impact
of oil and gas activities. This is embodied in the relevant legislation,
consistent with and in large part derived from the legislation
framework of the European Community (EC). In addition, the UK
is a signatory to the Oslo and Paris Convention for the Protection
of the Marine Environment of the North East Atlantic (the OSPAR
Convention). To date, the UK has implemented and applied all of
the OSPAR decisions and recommendations.
48. This robust offshore environmental protection
regime covers oil and gas development throughout its life cycle,
from the initial licence application to the final decommissioning
of facilities. All activities that could potentially impact on
the environment are subject to rigorous assessment, and significant
activities are controlled through the issue of permits, consents
or authorisations. There is also an inspection and enforcement
regime in place to confirm compliance with the conditions included
in the environmental approvals.
49. The robust regime is reflected by the
industry's performance, and the UK has a good environmental record
with no significant impact on the marine environment resulting
from offshore oil and gas activity.
50. The regime includes:
The Environmental Assessment of Plans and
Programmes Regulations 2004require a Strategic Environmental
Assessment to be carried out before oil and gas licensing is undertaken.
The SEA is subject to public consultation and evaluates both the
individual and cumulative impacts of offshore oil and gas activity
at a strategic level.
The Offshore Petroleum Production and Pipelines
(Assessment of Environmental Effects) Regulations 1999require
the operator to undertake an environmental assessment for a wide
range of projects.
The Offshore Petroleum Activities (Conservation
of Habitats) Regulations 2001require an Appropriate
Assessment for all projects or activities that could affect the
integrity of a protected habitat or species.
The Offshore Chemicals Regulations 2002 (as
amended) control the use and discharge of all operational
chemicals and implement OSPAR Decision 2000/2 on a harmonised
mandatory control system for the use and reduction of the discharge
of offshore chemical.
The Offshore Petroleum Activities (Oil Pollution,
Prevention and Control) Regulations 2005control all
deliberate oil discharges. Major discharges are waste streams
contaminated with reservoir hydrocarbons eg produced water.
The Offshore Combustion Installations (Prevention
and Control of Pollution) Regulations 2001 (as amended) control
the quantities of noxious pollutants emitted from combustion equipment
on qualifying installations, and implement the Integrated Pollution
Prevention and Control Directive for offshore oil and gas installations.
The regulations ensure that Best Available Techniques are employed
to reduce emissions.
The Greenhouse Gas Emissions Trading Scheme
Regulations 2005 (as amended) authorise the emission
of greenhouse gases (currently only CO2) and implement the EU
Emissions Trading Scheme.
The Offshore Installations (Emergency Pollution
Control) Regulations 2002ensure that operators have
appropriate measures in place to prevent oil spills and to ensure
that if they occur they are handled effectively and provide for
the role of the Secretary of State's Representative for Maritime
Salvage and Intervention.
The Merchant Shipping (Oil Pollution Preparedness,
Response and Co-operation Convention) Regulations 1998require
operators to prepare and submit an Oil Pollution Emergency Plan,
covering all activities where there is a risk of hydrocarbon spill
and detailing the action to be taken should a spill occur.
Offshore Environmental Inspections
51. As detailed above, most oil and gas
activities are controlled by the issue of activity specific permits,
consents or authorisations containing legally binding terms and
conditions. DECC actively ensures that industry is complying with
the conditions included in environmental approvals by reviewing
permit compliance returns and undertaking a series of prioritised
environmental inspections using a risk based approach.
52. DECC inspectors visit offshore installations
and onshore offices to:
inspect records and management systems;
observe site conditions, standards and
53. This allows for a comprehensive assessment
of environmental legislative requirements, restrictions or prohibitions
imposed upon operators and best practice as regards pollution
prevention and incident response measures. Where applicable enforcement
action is taken in accordance with the DECC Enforcement Policy
to ensure that those who have duties under the law take preventative
or remedial measures to prevent pollution; put in place measures
to achieve compliance; and are held to account when failures to
54. During 2008 and 2009, the Inspectorate
undertook 76 and 65 offshore trips respectively, covering both
inspection and investigation activities. To July 2010, 39 offshore
visits have been undertaken (comprising of 23 fixed installation
inspections, four fixed installation investigations and 12 drilling
55. In addition to regulatory inspections
carried out by DECC, operators carry out their own internal audits
and reporting as part of their Environmental Management System
(EMS) requirements. DECC requires all operators of installations
to have an independently verified EMS which satisfies the requirements
of OSPAR Recommendation 2003/5 that recognises the requirements
of international standards.
56. All of the 81 licensed operators on
the UKCS have an independently verified EMS. An EMS is designed
to achieve the prevention and elimination of pollution from offshore
sources and to deliver and manage compliance with environmental
laws and regulations on an ongoing basis. As part of the DECC
EMS requirements operators must also produce an annual public
statement providing an overview of their offshore operations and
environmental performance. The public statements are available
via the DECC website (www.og.decc.gov.uk).
57. Following an initial review of DECC
procedures in the light of the Deepwater Horizon incident, it
was concluded that with exploration and appraisal moving to ever
deeper waters, including those West of Shetland, it would be prudent
to reinforce the level of assurance available that the regulatory
processes are being adhered to by increasing the number of inspections
to drilling rigs operating in this area including undertaking
joint environmental & safety inspections with HSE where appropriate.
58. DECC's regulatory process encompasses
the general oversight of offshore activity through permitting
and consenting which is undertaken prior to the activity being
agreed. DECC's Offshore Environment and Decommissioning Unit has
three senior environmental managers and six environmental managers,
who are responsible for the environmental assessment of offshore
oil and gas activities, and for the administration of environmental
legislation. The Environmental Management Team coordinates the
review of applications or submissions required under various legislation,
for example environmental statements, applications for chemical
permits and applications to undertake seismic surveys. Most of
these activities are controlled by the issue of activity specific
permits, consents or authorisations.
59. Given DECC's less extensive areas of
responsibility compared to HSE, it and its predecessor Departments
have always operated with many fewer inspectors than HSE. However,
to further ensure industry compliance, three additional offshore
environmental inspectors are being recruited alongside the existing
team of six, bringing the total number of inspectors to ten (one
senior environmental inspector and nine environmental inspectors).
This will increase supervision of drilling contractors by allowing
DECC to double the number of environmental inspections carried
out on mobile drilling rigs in the UKCS from an average of eight
to at least sixteen on an annual basis with immediate effect.
60. Offshore drilling activity varies throughout
the year but currently there are approximately 24 mobile drilling
operations ongoing in the UKCS. DECC's Offshore Inspectorate use
a risk based strategy to implement their offshore environmental
inspection regime. Of those rigs undertaking drilling activity
in the UKCS at present, approximately 20% are working on gas reservoirs,
which inherently pose less of a potential risk to the environment
compared with those working on oil reservoirs. The locality of
any rig and the nature of the well also contributes to the risk
assessment process. On this basis the Department targets inspections
on those rigs that are undertaking exploration, appraisal and
development drilling of specific oil reservoirs.
Reporting of Oil and Chemical Spills
61. Under the Regulations DECC requires
that all oil and chemical spills, irrespective of volume, be reported
to the Offshore Inspectorate within six hours of such an accident
occurring, or within one hour if the release is over one tonne.
DECC's Inspectorate maintain a 24/7 incident response on call
service to receive calls regarding pollution incidents and incidents
which may affect security of supply. If a pollution incident occurs
the Inspector communicates with the operator to ensure that contingency
arrangements are implemented in accordance with the operators
approved OPEP (see paragraph 71). In doing so, the Inspector would
also liaise with the MCA on matters associated with pollution
response and act as assistant to the SOSREP (see paragraph 76),
who would monitor the operators actions to ensure adequate measures
were taken to prevent pollution. This allows the most effective
incident response and environmental strategy to be developed and
adopted according to the circumstances of the incident.
62. In accordance with DECC's investigation
policy, incidents are investigated by Inspectors from the Department's
Offshore Inspectorate, and the relevant enforcement action pursued.
Methods of enforcement include letters, enforcement notices, prohibition
notices, revocation of a permit and prosecution. The first four
methods are non-punitive in nature and are focussed on bringing
the permit holder or licensed operator into compliance.
63. Incidents that could be of relevance
to other operators on the UKCS, because of common working practice
or because of the nature of the event, are circulated as an Environmental
Alert on the DECC website, which can be accessed by all operators
(who are notified of new alerts by e-mail), drilling contractors
or other third party companies.
64. In addition to the HSE Hydrocarbon Release
reporting (see para 45), DECC, as the offshore environmental regulator,
also requires operators to submit details of oil spills to sea,
regardless of quantity. During 2009 DECC were notified of 56 crude
oil spills which resulted in approx six tonnes of crude oil being
released to sea which, by comparison to the previous years' results,
where 83 crude oil spills were notified resulting in approx 20
tonnes of oil being released to sea, shows that spill numbers
and quantity have gone down. Against this background the industry's
general performance has improved but there is always more that
can be done and DECC will continue to regulate the environmental
aspects of the offshore oil and gas activity as rigorously as
National Contingency Plan
65. As a party to the United Nations Convention
on the Law of the Sea, the United Kingdom has an obligation to
protect and preserve the marine environment. The National Contingency
Plan for Marine Pollution from Shipping and Offshore Installations(NCP)
is one of the measures the UK has taken to meet this obligation
and the Department of Transport's Maritime Coastguard Agency (MCA)
is the custodian of the Plan.
66. The NCP's purpose is to ensure there
is a timely and measured response to an oil pollution incident.
The plan sets out the circumstances in which the MCA deploys the
UK national assets in response to a marine pollution incident
to protect the overriding public interest and how these resources
are managed. The plan deals with a variety of issues, including:
establishing the level of response;
setting up the national response units;
at sea response and shoreline/onshore
67. The NCP supports and underpins an operator's
individual Oil Pollution Emergency Plansee below.
68. To test the effectiveness of the NCP,
and its interaction with other major incident plans, including
OPEPs submitted by operators of offshore installations, a major
oil pollution exercise involving a shipping casualty is held annually
and an offshore installation exercise is held every five years.
69. The last such exercise involving the
offshore industry was Exercise Unicorn, held on 10 June 2008,
involving BP as the operator. The exercise was designed to test
all the facets of incident response, such as key roles being identified
and understood, utilising a challenging scenario which incorporated
a number of foreseeable risks, all of which had the potential
to occur on and/or around an offshore oil and gas production facility.
The exercise's main objectives were to:
Test the NCP for marine pollution as
it effects offshore installations;
Test the effectiveness of the operator's
Ensure an integrated approach is achieved
between BERR (now DECC), MCA and other stakeholders; and
Test the powers of intervention of the
70. Whilst the next date for a national
exercise involving an offshore asset was not due until 2013, this
has been brought forward to Spring 2011 and exercise planning
has just commenced, through the auspices of OSPRAG which provides
a focal point for the oil & gas sector's review of the industry's
practices in the UK, in advance of the conclusion of investigations
into the Gulf of Mexico incident.
71. The NCP has consistently been shown
to be effective when it has been invoked in response to incidents
in the last ten years. Where there are lessons to be learned from
such incidents, they are incorporated in the NCP when it is periodically
reviewed and refreshed. A review of the NCP has just started and
this will take account of any lessons learned from the Gulf of
Mexico incident. Part of this review will include consideration
of the frequency of offshore installation oil pollution exercises,
with initial views being that such exercises should be held every
three years in future.
Oil Pollution Emergency Plans (OPEP)
72. Under the requirements of the Merchant
Shipping (Oil Pollution Preparedness, Response and Co-operation
Conventions) Regulations 1998, all operators of an offshore installation
or oil handling facility must have an Oil Pollution Emergency
Plan in place. The plans are reviewed by DECC, MCA and relevant
environmental consultees, such as the Marine Management Organisation
or relevant Devolved Authority, the Joint Nature Conservation
Committee and the relevant inshore statutory nature conservation
body, eg Natural England, before approval by DECC.
73. OPEPs set out the arrangements for responding
to incidents with the potential to cause marine pollution by oil,
with a view to preventing such pollution or reducing or minimising
its effect. The plan is relevant and particular to a specific
field or installation and covers activity such as drilling rigs
carrying out exploration, appraisal and development drilling,
production installations, pipelines, subsea tiebacks and new installations
that are on site but not yet producing.
74. The OPEP covers a variety of topics
for both onshore and offshore personnel, including; pollution
incident scenario and hazard identification, pollution incident
assessment and dispersant and aerial surveillance requirements.
OPEPs focus on the worst-case scenario. Following the Gulf of
Mexico incident, operators are now required to carry out additional
modelling for deep water drilling operations, which includes an
extended time frame for oil spill beaching predictions. The OSIS
model that is used industry wide has limitations with regard to
predicting long term spill and deep water predictions. The OSPRAG
Oil Spill and Emergency Response Group is undertaking a review
of the model and comparing oil spill scenarios with OSCAR, a model
which appears better suited to deep sea oil releases.
75. To ensure the OPEP is, and remains,
fit for purpose operators are expected to exercise personnel and
equipment through different scenarios at different frequencies,
In addition to the NCP exercise (see
above), operators are obliged to hold an exercise with the SOSREP
every five years and during the last cycle of such SOSREP exercises,
the OPEPs of 22 operators were tested. The latest cycle of SOSREP
exercises is presently being undertaken and to date 13 have been
held since 2008.
Under the International Convention on
Oil Pollution Preparedness, Response and Co-operation Convention
1990, adopted by the UK in 1994, there is a requirement for all
operators of offshore installations, drilling rigs and offshore
loading terminals to have in place an oil spill response system
that will include an element of pre-positioned response equipment,
training and regular exercise, appropriate to the perceived risk.
1. testing their OPEP offshore with every shift
at least once per year;
2. deployment of dispersant spraying equipment
offshore at least once per month;
3. deployment of oil recovery equipment offshore
at least once per year;
4. testing their onshore emergency response
centre and associated procedures at least once per year; and
5. testing the industry deployment of oil spill
response equipment at least every five yearsthe industry
deployment of equipment will be included in the NCP exercise being
planned for 2011.
Secretary of State's Representative for Maritime
Salvage and Intervention (SOSREP)
76. The Offshore Installations (Emergency
Pollution Control) Regulations 2002 give the Secretary of State
for Energy and Climate Change the powers to intervene in an incident
involving an offshore installation where there is, or there may
be a risk of significant pollution. The UK created the role of
the Secretary of State's Representative for Maritime Salvage and
Intervention (SOSREP) in 1999, following a recommendation contained
in Lord Donaldson's Review of Salvage and Intervention and
their Command and Control.
The SOSREP acts as the single representative on behalf of the
Secretaries of State for the Department for Transport (in relation
to ships) and for the Department of Energy and Climate Change
(in relation to offshore installations). Once oil, from a ship
or an offshore oil & gas installation, enters the water the
MCA lead any Government response to clean-up the spill.
77. The SOSREP will monitor the operator's
response to a pollution incident and if he deems necessary, has
the powers to give directions and to take such other actions as
may be required to prevent or minimise pollution or the threat
of pollution. The SOSREP is empowered to make crucial and often
time-critical decisions, without delay and without recourse to
higher authority, where such decisions are in the overriding UK
78. Operators must have facilities and personnel
available to work alongside their existing Emergency Response
Centre to accommodate the SOSREP and his associated team in the
Operations Control Unit, which may be set up as a result of a
pollution incident. It is also a requirement of the legislation
that every five years each operator must conduct an exercise to
test the OPEP and the involvement of the SOSREP.
The Offshore Pollution Liability Association Limited
79. To search for and extract petroleum
requires a licence issued by DECC under the Petroleum Act 1998.
Licensees are, among other things, required to comply with instructions
from DECC to ensure sufficient funds are available to discharge
any liability for damage attributable to any oil pollution incident.
80. The licence sets no limit to the licensee's
liabilities and the licensee must demonstrate at the time of the
licence application that they have sufficient funds or indemnity
provisions to meet expected commitments, liabilities and obligations.
81. All offshore operators currently active
in exploration and production on the UKCS are also party to a
voluntary compensation agreement known as the Offshore Pollution
Liability Association Ltd (OPOL), which came into being on 1 May
82. The agreement provides for each operator
to provide an orderly means for compensating and reimbursing any
person who sustains pollution damage and any public authority
which incurs costs for taking remedial measures (clean-up) as
the result of a discharge of oil from any offshore installation.
As part of the process, OPOL requires every operator to provide
satisfactory evidence of its ability to meet any liability under
the Agreement. OPOL provides for the mutual agreement from all
of its members for the settlement of claims up to US$ 250 million
per incident, in the event of a default by an operator. This liability
is based on worst case scenario planning.
83. As part of its work following the Deepwater
Horizon incident OSPRAG has set up an Indemnity and Insurance
Review Group (IIRG) to review the provisions of OPOL and the financial
and cross-indemnity arrangements behind the current mutual co-operative
industry mechanism (Offshore Cooperative Emergency Services).
DECC has already requested that OPOL immediately revisit the modelling
to review the worst case scenarios. This is being taken forward
by IIRG which has commissioned modelling of alternative spill
scenarios with the aim of providing a more comprehensive picture
of potential oil spill costs so that discussions about the future
OPOL level are better informed. It is expected that this modelling
will be concluded in September 2010. The industry has already
agreed to increase the limit for the settlement of claims from
US$120 to US$250 million.
Aerial and Satellite Surveillance
84. Following the Torrey Canyon incident,
the Bonn Agreement was signed by Belgium, Denmark, France, Germany,
Ireland, Netherlands, Norway, Sweden and the UK in 1969. This
was updated in 1983 with the inclusion of the European Community.
In 1987 the agreement was extended to cover co operation in surveillance.
The Bonn Agreement facilitates co operation and mutual support
between the contracting parties in responding to large scale maritime
pollution incidents by ensuring a common approach.
85. The Bonn Agreement includes procedures
on mutual aerial surveillance, both aircraft and satellite, and
highlights the deterrent aspect of known surveillance operations
in preventing deliberate illegal discharges. To meet the UK's
Bonn obligations DECC undertakes aerial surveillance flights,
through a service level agreement with MCA, to monitor offshore
oil and gas installation activity and identify any potential release
of oil. The flights identify the extent and volume of any such
spill and play a key role in directing appropriate resources to
the incident. Through the MCA, the aerial surveillance contract
also provides for resources to be deployed to counteract the effects
of such a spill through the application of dispersants.
86. In addition, DECC has access to the
satellite surveillance, provided through the European Maritime
Safety Agency (EMSA). The Cleanseanet service allows for marine
oil spill detection and surveillance in European waters, including
certain footprints over the UKCS. DECC uses this tool to identify
discharges to the marine environment, including cases where the
release may not have yet been identified by the operator. The
satellite surveillance facility can be used in tandem with aerial
surveillance, where pre-planned flights follow the path of the
87. In summary, whilst the continued development
of the UKCS offshore oil and gas sector is considered to be crucial
to the security of the UK's energy supply, the Government is committed
to ensuring that the impact of oil and gas activity on the environment
continues to be minimised. Legislation adopted over the last fifteen
years has resulted in the development of a comprehensive, robust
and effective environmental regime, which is consistently applied,
understood by industry and fully satisfies the UK's international
What are the hazards and risks of deepwater drilling
to the West of Shetland?
88. Drilling for petroleum is an intrinsically
hazardous activity. It involves breaking the integrity of an underground
reservoir of highly flammable gases and liquids. The most immediate
risk is therefore of fire and explosion with a consequential loss
of heavier hydrocarbons contained in the reservoir leading to
89. Most wells drilled in the UK's waters
present a hazard of a blowout but there are degrees of technical
difficulty with not all wells being equally hazardous or having
the same risk of failing. The majority of wells are at the low
difficulty end of the spectrum. Deepwater wells tend to be at
the higher end of the spectrum. The factors that affect the risk
the nature of the rock strata;
the pressure and type of fluid expected
to be encountered (eg how much gas or oil there is);
the depth of the well beneath the seabed;
the depth of water in which the well
is being drilled.
90. Many of these factors tend to extend
over wide areas and so inevitably are better understood the more
wells have been drilled in an area. For example, a condition that
is exceptional in an early well can be routine in later exploration
in the same area. However, even in mature exploration areas, errors
or unexpected conditions can occur. For this reason, it is essential
that procedures are in place for the well to be designed to contain
the flow and that the drilling crew are trained to know how to
avoid errors and respond to abnormal events.
91. Potentially challenging wells are already
drilled in many parts of the UKCS. For example, wells drilled
deep into the formations of the Central North Sea often encounter
abnormally high pressures and require great care. To assist in
this process the UK industry has developed detailed guidance on
planning and drilling high pressure wells, with even more stringent
safety requirements than for more routine wells.
92. The frequency of "kicks"
(an early warning that there has been an unexpected flow into
the well and that action must be taken) varies widely between
geographical areas, with kicks more common, although generally
low risk, in the Southern North Sea, which has been explored since
the 1960s. In 2009 there were 18 kicks in the UKCS.
93. Although offshore drilling operations
in UK waters all carry a risk of a blowout, these risks are heightened
in deepwater. This is because there is a chance of the marine
pipeline, or riser, between the drilling rig and the seabed failing
or disconnecting allowing drilling fluid to leak out and lighter
seawater to seep in. This will cause the well to flow. In consequence
of this added hazard, operators need a high level of confidence
in the operability of blowout preventers.
94. To date there has been limited exploration
West of Shetland, and hence the pressures and the geological hazards
are less well knownit is the UK's frontier exploration
area. However, from experience to date, and in contrast to the
Gulf of Mexico, the geology in the UK's deepwater offshore blocks
West of Shetland appears relatively benign. Since 2006, nine deep
water wells have been drilled in the area with only one kick reported
(a minor brine flow that did not pose a threat either to safety
or the environment).
95. Other operational factors have the potential
to make deepwater drilling hazardous. These relate to the high
pressures encountered when drilling a well to such depths, the
problems associated with stopping a flowing well and other well
control risks (see background at Annex D).
Is deepwater oil and gas production necessary
during the UK's transition to a low carbon economy?
To what extent would deepwater oil and gas resources
contribute to the UK's security of supply?
96. Taking both of these questions together,
the Government believes that UK deep water oil and gas production
is necessary during the UK's transition to a low carbon economy,
and that recovery of indigenous resources contributes to the UK's
security of supply. The following text details the expected contribution
of oil and gas to the UK energy mix and by extension security
97. The table below shows that on central
projections (consistent with DECC's Updated Energy and Emissions
Projections published in June 2010 at
oil and gas are each expected to continue to provide a third or
more of total UK primary energy demand until at least 2025. Together,
they are expected to continue to provide approaching three quarters
of total UK energy demand. The UK is no longer self-sufficient
in oil or gas but indigenous production of both is expected to
be a major contributor to meeting domestic demand in the years
ahead. On the basis of DECC's UK oil and gas production projections
published in September 2010 (at
UK oil and gas production are each expected to provide half of
UK demand in 2020 and well over a third in 2025.
SHARES OF TOTAL UK PRIMARY ENERGY DEMAND
|Oil & Gas||74%||72%
|UK Oil Production||29%
|UK Gas Production (Gross)||25%
|UK Oil & Gas Production||54%
UK PRODUCTION AS PROPORTION OF UK DEMAND
|Oil & Gas||73%||61%
98. The contribution of deepwater oil and gas, whether
from the UK or elsewhere, has not been projected separately. But
deepwater reserves have the potential to provide a significant
share of UK production and (thus) to meet a sizeable share of
UK energy demand in the years ahead.
99. As noted above it is vital for UK security of supply
and the economy that the Government and industry work to ensure
economic recovery of indigenous hydrocarbon reserves. Oil and
gas are still a major UK resource and, although some 40 billion
barrels of oil equivalent (boe) have been produced so far, there
are perhaps 20 billion boe, maybe more, left to produce.
100. Currently, the main prospective oil and gas producing
areas in deep water within the UKCS are considered to be in areas
West of Shetland. The area West of Scotland may contain substantial
hydrocarbon resources but owing to the lack of geological knowledge
and distance to existing infrastructure, only very small areas
have been explored and therefore much less is actually known about
the potential oil and gas resources. The water depths map attached
at Annex C also shows an approximate dividing line between the
areas considered to be West of Scotland and West of Shetland.
101. Based on current analysis the area to the West of
Shetland is estimated to hold a potential 3.5 to 4.5 billion boe,
which is around 20% of the UK's remaining oil and gas reserves.
This includes about 1 billion boe of gas, (which represents around
17% of remaining UK gas reserves), the majority of which lies
in deep water. The remaining West of Shetland oil potential (some
three billion barrels) is split approximately 50:50 in deep vs
shallow water. The area West of Scotland may contain perhaps 1
billion boe, almost all of which is likely to be in deep water,
although, as noted above, current resource estimates for this
area are highly uncertain.
102. Overall the deepwater oil and gas resource potential
(including both West of Shetland and the less well understood
West of Scotland) is estimated therefore to be around 3 to 3.5
billion boe (some 15-17.5% of UK total resources) of which about
a third is gas and two thirds oil. But it should be noted that
this estimate includes 1 billion boe of highly uncertain resource
from the West of Scotland area. The pie chart below shows the
make up of UKCS reserves and elements attributable to west of
Shetland and West of Scotland.
103. It can be seen that deepwater areas make a significant
contribution to the future UK energy mix. Earlier this year DECC
gave the go-ahead to Total's Laggan/Tormore gas development, which
lies in 600 metres of water, and which is set to open up West
of Shetland for wider oil and gas development with a new gas pipeline
to mainland Scotland via the Shetland Islands. First gas is scheduled
104. As indicated in the evidence above, Government considers
that the UK regulatory regime is robust but nobody in our regulatory
process can afford to be complacent. Faced with the events we
saw unfold in the Gulf of Mexico we must continue to do everything
we can to minimise the risks so this will never happen in the
UK. We have therefore instigated or contributed to a wide range
of initiatives addressing all aspects of drilling operations.
105. At the domestic regulatory level HSE, DECC and MCA
have undertaken rapid reviews of regulatory regimes to ensure
that they are fit for purpose.
106. At the international level, the UK is a key contributor
to European Commission led efforts to review the suitability of
European legislation and to share best practice approaches, and
will do the same with respect to G20 initiatives. The UK is also
working with Norway, with both countries committed to exchanging
information between them and conferring on the investigations
into the Gulf of Mexico oil spill and the appropriate regulatory
and industry responses to the accident.
107. At the technical and operational level, the joint
industry, trades union and regulator forum, OSPRAG, is making
good progress in developing new designs for well capping and containment
technology as well as looking more broadly at first response and
longer term remediation capability and well control and well examination
guidelines. The outcomes of this OSPRAG work will be a key influence
on future regulatory and response work.
108. At the operational level:
HSE, DECC and MCA remain in close contact with BP
and the US Authorities to ensure that we get the earliest feedback
on Deepwater Horizon causation that we can then act upon;
DECC's environmental inspection capacity for mobile
drilling has been increased, and where appropriate and where offshore
facilities allow, DECC environmental and HSE safety inspections
will be made at the same time; and
proposals for drilling in deepwater West of Shetland
are being thoroughly scrutinised, including rigorous testing against
the findings of BP's report into the causes of the Deepwater Horizon
accident. The companies will have to provide evidence that effective
arrangements are in place and tested, to secure full cooperation
between all companies involved and between the companies and relevant
agencies, and that these arrangements effectively provide for
international cooperation where relevant.
109. With these workstreams in progress, once the causes
of the Deepwater Horizon incident are known, DECC, HSE and MCA
will take stock of the totality of legislative and technical barriers
to similar incidents happening on the UKCS. In doing so, to ensure
that an independent perspective is brought to bear on the work,
we intend to involve external experts who will have relevant background
knowledge of offshore oil and gas activities and/or regulatory
processes but who currently sit outside of government or industry.
ENERGY & CLIMATE CHANGE SELECT COMMITTEEDEEPWATER
DRILLING INQUIRY: ADDITIONAL INFORMATION REQUESTED BY THE NATIONAL
AUDIT OFFICE (NAO)
Since 2000, there have been 3,002 wells drilled on the UK
Continental Shelf. Of these, 145 have been drilled in depths of
300 metres or more. 87 of these were development wells on the
Foinaven, Schiehallion and Loyal fields. The remainder were exploration
or appraisal wells West of Shetland or West of Scotland.
1. Oil spills (barrels/tonnes) resulting from UK deepwater
drilling operations in each year during the last 10 years?
In the period from 1 January 1999 to 11 August 2010, there
were no crude oil drilling operation spills in water depths of
2. Number of reported incidents involving deepwater drilling
operations by type in each year during the last 10 years?
Information on well control incidents reported to HSE for
wells drilled at water depths of over 300m (~1,000ft) is shown
in the following table. Years with no incidents are not shown.
A minor kick is a small influx into the well (less than 20 barrels)
which was detected in a timely manner, controlled and removed
without further influx or release of hydrocarbons.
There have been no incidents reported to DECC involving deepwater
drilling operations during the period from 1 January 1999 to 11
3. Total oil production (barrels) from deepwater drilling
during last 10 years (compared to total North Sea production)?
Over the calendar years 2000 to 2009, total UKCS oil production
was 6,896 million barrels, of which 552 million barrels (ie 8%)
came from deep water (viz Foinaven, Schiehallion and Loyal fields).
4. Number of deepwater drilling incidents investigated;
number of prosecutions; number and value of penalties (£s)
in each year during the last 10 years?
There have been no deep water drilling incidents which required
investigation by DECC in the last 10 years.
For investigation of safety incidents see Table in Q2 above.
All of the incidents reported to HSE were minor kicks and there
were no related prosecutions. A minor kick is not in itself a
safety failure as the safety barriers operated effectively to
control influx to the well.
5. Minimum, maximum and average length of time taken to
investigate incidents/close cases?
The average length of time taken to investigate the well
kick incidents was 29 days within a range from five to 53 days.
6. Number of incidents (and level of severity) by Company?
WELLS DRILLED IN WATER DEPTH OF OVER 300M (~1,000FT).
|Severity of incident||Company
|Minor||Chevron (Including Texaco)
|Minor ||ExxonMobil (as Mobil)
Seven other companies drilled a total of seventeen other wells
in the same period
7. Planned and actual spending on inspection/enforcement
relating to deepwater drilling operations in 2009-10, and budget
for inspection/enforcement in 2010-11?
DECC has no set budget for environmental inspection &
enforcement activity related to mobile drilling units as all spend
is recoverable through fees paid by the offshore oil & gas
operators. Actual spend on environmental inspection & enforcement
activity related to mobile offshore drilling rigs in 2009-10 was
approximately £190,800. This covers staff, accommodation,
allowances & equipment costs.
In 2010-11 again there will be no set budget as actual spend
will be recovered via fees. However, it is estimated that actual
spend for environmental inspection & enforcement activity
related to mobile offshore drilling rigs will increase to approximately
£424,131 taking into account increased numbers of inspectors
These figures do not include the environmental managers (see
question 8 below) nor the administrative support given to both
the Inspectorate and the Management Team. The overall budget for
all environmental regulatory activities for 2009-10 is £5.1
HSE has no separate budget for activities related to deepwater
drilling operations and the level of regulatory activity is dependent
on the operations which are planned or carried out by offshore
operators. HSE's planned and actual spends for all offshore inspection
and enforcement (including assessment and investigation) is summarised
Note: The enforcement of offshore safety law takes place under
a cost recoverable permissioning regime. The above figures relate
to the planned and actual cost recoverable activity and are calculated
under a Memorandum Trading Account.
8. Number of staff trained in the inspection of deepwater
drilling operations, and number of unfilled vacancies?
Within DECC there are six environmental inspectors and one
senior environmental inspector, all of whom have been trained
to carry out environmental inspections on all North Sea Installations/mobile
drilling rigs, including those carrying out deep water drilling
operations. Following the Gulf of Mexico incident, it was decided
that an additional three inspectors should be recruited to allow
us to increase the number of inspections being carried out both
generally and more specifically in relation to deep water drilling.
The recruitment process is well progressed with interviews being
held during w/c 16 August. Following completion of this process
and given the likely conditions of the applicants' current employment,
we would anticipate the additional staff being in place by mid-October.
In addition to the Offshore Inspectorate, DECC also employs
three senior environmental managers and six environmental managers,
who are responsible for the environmental assessment of offshore
oil and gas activities and for the administration of environmental
legislation. The Environmental Management Team coordinates the
review of applications or submissions required under various legislation,
for example environmental statements, applications for chemical
permits and applications to undertake seismic surveys (all of
which may be required in relation to drilling operations). Most
of these activities are controlled by the issue of activity specific
permits, consents or authorisations. There is one vacancy in this
team for which we are currently recruiting.
The Health and Safety Executive has 114.5 specialist inspectors
involved in the regulation of health and safety of the UK's offshore
oil and gas industry (figures as at 1 April 2010). This equates
to 105.5 inspector years when factors such as part time working
are taken into account. Specialist inspectors are employed in
safety critical areas such as Well Engineering, Process Safety,
Fire and Explosion, Marine & Structural, Evacuation and Escape,
Mechanical, Electrical and Diving.
There are 10 Well Engineering inspectors who deal specifically
with well control and drilling operations. Deepwater drilling
is not a separate specialism within well engineering; rather the
potential difficulties increase progressively with the water depth
and other factors such as exposure to weather. The more experienced
inspectors deal with the more complex drilling notifications.
Across all offshore disciplines there are 18 vacancies; there
is one vacancy within Well Engineering.
9. Number of inspections of deepwater drilling operations
planned and number completed in 2009-10; and number planned for
Offshore drilling activity will vary throughout the year,
but currently there are approximately 24 mobile drilling operations
ongoing in the UKCS. DECC's offshore environmental inspectorate
use a risk based strategy to implement their offshore inspection
regime. Of those rigs undertaking drilling activity in the UKCS
at present, approximately 25% are working on gas reservoirs, which
inherently pose less of a potential risk to the environment compared
with those working on oil reservoirs. The locality of any rig
also contributes to the risk assessment process. As such the Department
is focused on those rigs that are undertaking exploration, appraisal
and development drilling of oil reservoirs.
The Department's Offshore Inspectorate undertake a series
of prioritised environmental inspections to fixed installations
and drilling rigs using a risk based approach. The inspections
ensure that permit holders/operators have been, or are complying
with the requirements, restrictions or prohibitions imposed upon
them by the relevant statutory provisions. In 2009, DECC carried
out 12 drilling rig inspections of which one was in deep water.
There is currently 1 deep water inspection planned for 2010-11.
The average number of drilling rig inspections by DECC in
past years has been eight and at least 16 are intended during
2010. Although DECC will be focusing particularly on those drilling
in deep water, this is dependent on activity actually taking place
at these water depths.
2009-10 OFFSHORE DEEP WATER (+300M WATER DEPTH) DRILLING
ACTIVITY INSPECTIONS BY HSE:
|All offshore specialist inspections
||Inspections involving wells inspectors
|Paul B Lloyd Jr||1||0
The inspection of well operations is not solely performed offshore
but is also conducted onshore by inspection of Well Notifications.
In 2009-10 HSE received some 500 offshore well operation notifications
which included 20 in deep water; 275 offshore designs were inspected
of which 29 were in deep water. (Some of these 29 were significant
changes to design not recorded as separate notifications. Deep
water West of Shetland is largely an exploration area involving
a higher level of design review than mature areas.)
2010-11To date no drilling activity in deep water.
A well notification has been received for deepwater drilling
activity (Chevron Stena Carron). HSE plans to undertake an inspection
of the drilling operation this year if the well goes ahead.
A safety case currently being assessed for the Seadrill West
Phoenix which is capable of operating in deep water. One inspection
of West Phoenix has already taken place this year with a further
10. A copy of DECC's recently completed review of the
safety and environmental regulatory regimes?
In light of the Gulf of Mexico incident, and on the basis
of the limited information currently available, Senior Management
conducted a rapid review of the implications for DECC's offshore
It was considered that in the past, drilling activity has
mainly been conducted in water depths of less than 300m. The review
looked at potential future levels of activity and the resources
available to ensure compliance with regulations. In addition,
existing regulations and controls and in particular those related
to oil spills and contingency plans were reviewed. This concluded
that with exploration and appraisal moving to ever deeper waters
and to the particularly environmentally sensitive area to the
West of Shetland it would be prudent to reinforce the level of
assurance available that the regulatory processes are being adhered
to. So, although the current regime was considered to be fit for
purpose, it was determined that DECC should further strengthen
this regime. As a result, three additional environmental inspectors
are to be recruited and more environmental inspections carried
out. Regulation will only work if it is applied fully by those
regulated and we are determined to ensure that this is the case
by carrying out increased checks on compliance.
The review activity did not result in a written report. A
further much more comprehensive review of the UK regime will be
undertaken as soon as the detailed analysis of the factors which
caused the Gulf incident has taken place. This will look at the
how the root causes of the Gulf incident can be protected against
and determine what more, if anything, needs to be done to reinforce
further our regulatory approach.
11. Of the North Sea platforms in operation, how many
are exploration rigs and how many are production platforms, and
how many are operating in deepwater (or plan to be)?
There are 289 oil and gas installations on the UKCS (270
platforms and 19 Floating Production Systems), of which two are
located in deep water (the Foinaven and Schiehallion-Loyal FPSOs)
There are no approved Field Development Plans in place for
new deep water installations. However there is a Floating Production
System being planned for Chevron's Rosebank project. Also for
the Schiehallion field, the operator is planning to build and
install a replacement FPSO.
Total are developing the Laggan and Tormore gas fields in
~ 600 m water depth West of Shetland using subsea technology .
This does not require a production platform, but drilling using
mobile drilling rig is expected to start in 2012 to allow first
production in 2014.
BP are planning to replace the Schiehallion FPSO with a new,
larger, vessel in 2014. Chevron are considering options for a
floating production system on Rosebank, but no decision has yet
been made on whether or not to proceed to development.
Development options for three other deep water discoveries
are being studied, but no decision has yet been made on whether
or not to proceed or what development scheme might be adopted.
A: An up to date stakeholder map of who does what in respect
of the regulatory framework over environmental, health and safety
framework (including whether MMO taken over the role of MCA for
pollution from shipping and offshore installations)
A stakeholder map attached is attached at Annex B. The Maritime
and Coastguard Agency remains responsible for pollution from shipping
and offshore installations. The Marine Management Organisation
does not have a role to play in this area.
B: The date of the latest DECC review on oil pollution
emergency plans, and the results of this review?
Under The International Convention on Oil Pollution Preparedness,
Response and Co-operation 1990 (OPRC Convention) and The Merchant
Shipping (Oil Pollution Preparedness, Response and Co-operation
Convention) Regulations 1998 (OPRC), all operators of an offshore
installation or oil handling facility must, to satisfy the requirements
of the OPRC regulations, have in place an approved oil pollution
emergency plan (OPEP). The Department of Energy and Climate Change
is the competent authority for the approval of such plans and
as such has also issued Guidance Notes to Operators of UK Offshore
Oil and Gas Installations (including pipelines)
to assist operators in their preparation and submission. This
Guidance Note was re-issued on 3 April 2009 after a comprehensive
review of the structure and format of content, including a suggested
layout of the plan. The consultation process involved all DECC
stakeholders, such as the Maritime and Coastguard Agency (MCA),
Joint Nature Conservation Committee (JNCC), Oil and Gas UK and
oil and gas operators.
The information provided in the Guidance Note allows an operator
to prepare and submit a more focussed response document that sets
out the arrangements for responding to incidents which cause or
have the potential to cause marine pollution by oil, with a view
to preventing such pollution or reducing or minimising its effect.
The plan is relevant and particular to a specific field or installation
and covers activity such as drilling rigs carrying out exploration,
appraisal, development and production operations, production installations,
pipelines, subsea tiebacks, new installations that are on site
but not yet producing. All OPEPs must be resubmitted for approval
every five years and operators must submit the plans at least
two months prior to the end of this period to ensure an approved
OPEP remains in place.
The plan covers a variety of topics for both onshore and
offshore personnel, including:
1. Pollution incident scenario and hazard identification;
2. Pollution incident assessment;
3. Dispersant and aerial surveillance requirements. In this
regard, there are minimum dispersant and aerial surveillance response
requirements that must be met and must be detailed within the
plan. The operator must specify within the plan their capability
to provide such surveillance or dispersant arrangements. In addition,
should a plan identify an activity taking place in any block wholly
or partly within 25 miles of the coastline, additional measures
must be considered, including:
Presence at all times of a vessel with the capability
to provide dispersant spraying within a shorter period (30 minutes
Sufficient dispersant stock to deal with a pollution
incident of 25 tonnes and if required have the capability of recovering
oil likely to be lost under a Tier 1 scenario, and
Submission of a Shoreline Strategy Plan. The potential
for shore line contamination must be assessed and determined by
the operator and must be submitted with the OPEP. The Shoreline
Protection Plan must contain certain information, such as:
Procedures for the shoreline protection, response
initiation, implementation and close out;
Arrangements with local authorities and other integrated
emergency management responders for the methods to be deployed
to respond and recover any oil that reaches the coastline. In
this regard, local authorities and other responders will ensure
the plan co-ordinates with local arrangements developed as part
of the NCP and/or those through the Civil Contingencies Act 2004
( Resilience groups);
Details of environmental sensitivities likely to be
Estimated resource mobilisation and deployment times.
4 Response strategy and implementation. Included within this
remit are the tier levels of response, namely:
Tier 1 is the lowest level of response and requires
resources to be available on the offshore installationdispersants
may or may not be used;
Tier 2 is for larger pollution incidents where the
local resource may be insufficient. In these cases, and as detailed
with the plan, the operator would call upon the resources of a
third party contractor to provide assistanceagain this
capability must be able to be mobilised within a minimum period
of time; and
Tier 3 is where national resources are required and
the NCP implemented. MCA dispersant stocks are located at various
locations around the UK, including Inverness, Shetland, Northern
Ireland, Southampton and Coventry, whilst Shoreline and Offshore
Response Equipment are currently held at Bristol, Barnsley and
Under the OPRC Regulations, personnel with a responsibility
for oil pollution incident response must be competent, both in
oil pollution incident response and in the use of their OPEP.
Again, DECC has produced Oil Response Training Guidance which
must be followed by industry as a minimum standard.
To ensure the OPEP is, and remains fit for purpose, operators
are expected to exercise personnel and equipment through different
scenarios at different frequencies. For example, as a minimum,
the offshore OPEP must be exercised by every shift offshore at
least once per year and the offshore deployment of Tier 1 dispersant
spraying equipment must take place at least once per year.
Finally, The Offshore Installations (Emergency Pollution
Control) Regulations 2002 (EPC) give the Secretary of State for
Energy and Climate Change the powers to intervene in an incident
involving an offshore installation where there is, or there may
be a risk of significant pollution. The Secretary of State's Representative
(SOSREP) acts as the single representative on behalf of the Secretary
The SOSREP will monitor the operator's response to a pollution
incident and if he deems necessary, has the powers to give directions
and to take such other actions as may be necessary to prevent
or minimise pollution or the threat of pollution.
Operators must have facilities and personnel available to
work alongside their existing Emergency Response Centre to accommodate
the SOSREP and his associated team in the Operations Control Unit
(OCU), which may be set up as a result of a pollution incident.
Within their respective OPEPs, operators must:
include arrangements to reflect the potential involvement
of the SOSREP and his team;
demonstrate where the OCU fits into the company's
emergency response management structure; and
identify those personnel who may be deployed to the
OCU as part of the SOSREP's team.
It is a requirement of the legislation that every five years
each operator must conduct an exercise to test the OPEP and the
involvement of the SOSREP.
C: Confirmation of whether the regulatory regime been
subject to best practice review by the Better Regulation Task
Force or Risk & Regulation Advisory Council and the results
of that review if one has been completed
The DECC oil & gas regulatory regime has not be subject
to either a best practice review by the Better Regulation Task
Force or Risk & Regulation Advisory Council.
However, Action 9 of DECC's Annual Energy Statement makes
a commitment to "undertake a full review of the oil &
gas environmental regime following the outcome of investigation
into the causes of the GoM incident." This review of
the UK regime will be undertaken as soon as the detailed analysis
of the factors which caused the Gulf incident has taken place.
This will look at the how the root causes of the Gulf incident
can be protected against and determine what more, if anything,
needs to be done to reinforce further the UK's regulatory approach.
The Better Regulation Task Force undertook an enforcement
review which included health and safety in its scope in 1999.
This was a general study and did not specifically consider the
offshore regulatory regime.
UK OFFSHORE OIL & GAS REGULATORY LANDSCAPEKEY
|CCW||Countryside Council for Wales
|CEFAS||Centre for Environment, Fisheries & Aquaculture Science
|CPA 1949||Coast Protection Act 1949
|DCR||Offshore Installations & Wells (Design & Construction, etc.) Regulations 1996
|DECC LED||Department Energy & Climate ChangeLicensing Exploration & Development
|DECC OED||Department Energy & Climate ChangeOffshore Environment & Decommissioning
|DEFRA||Department for Environment, Food & Rural Affairs
|EHS||Environment & Heritage Service
|EPC||The Offshore Installations (Emergency Pollution Control) Regulations 2002
|EU EIA Directive||Environmental Impact Assessment Directive
|EU ETS||The Greenhouse Gas Emissions Trading Scheme Regulations 2005
|EU SEA Directive||Strategic Environmental Assessment Directive
|FEPA||Food & Environment Protection Act 1985
|HSE OD||Health & Safety Executive Offshore Division
|JNCC||Joint Nature Conservation Committee
|MAR||Offshore Installations & Pipeline Works (Management & Administration) Regulations 1995
|MCA||Maritime & Coastguard Agency
|MMO||Marine Management Organisation
|MOD||Ministry of Defence
|NFFO||National Federation of Fishermen's Organisations
|NIA||Northern Ireland Assembly
|NLB||Northern Lighthouse Board
|OCR||Offshore Chemicals Regulations 2002
|OPEPS||Oil Pollution Emergency Plans
|OPPC||Offshore Petroleum Activities (Oil Pollution Prevention & Control) Regulations 2005
|OPRC||The Merchant Shipping (Oil Pollution Preparedness, Response Co-operation Convention) regulations 1998
|PFEER||Offshore Installations (Prevention of Fire & Explosion, & Emergency Response) Regulations 1995
|PPC||Offshore Combustion Installations (Prevention & Control of Pollution) (Amendment) Regulations 2007
|SCR||Offshore Installations (Safety Case) Regulations 2005
|SEPA||Scottish Environment Protection Agency
|SFF||Scottish Fishermen's Federation
|SNH||Scottish Natural Heritage
|SOSREP||Secretary of States Representative
|SRSCR||Offshore Installations (Safety Representatives & Safety Committees) Regulations 1989
|UKHO||United Kingdom Hydrographic Office
|WAG||Welsh Assembly Government
Wells are controlled and prevented from flowing by a column
of high density drilling fluid, commonly referred to as "mud."
The level of risk at any given well location is determined by
the particular way in which rocks have been laid down over time.
However there are a number of operational factors for deepwater
drilling operations that result in the wells being more difficult
to control. As a rule of thumb the reservoir pressure is determined
by the depth below the sea surface, while rock strength increases
only with depth below seabed. As result, for a given depth below
seabed deepwater wells are more highly pressured than wells in
shallower water, while rock strength is unaffected by water depth.
Factors which affect well control in deep water wells include:
Higher pressures encountered when drilling a well.
There is no information about the pressure regime in the Gulf
of Mexico well, but assuming a normal pressure gradient, the reservoir
pressure would be in the order of 8,000 psi compared to 6,000
psi for a well in shallow water in otherwise similar circumstances.
Lower tolerance to kicks. As deep water wells tend
to be more highly pressured they require a higher density of drilling
fluid to control the reservoir. However, the rock strength may
be insufficient to withstand the higher density of the fluid,
fracturing the rock, allowing the drilling fluid to leak away
and allowing the reservoir to flow. This is countered by lining
the well with steel casing and has to be done more often than
in wells in shallower water.
Temperature variations between cold sea and hot rock
below the seabed can alter the density of the drilling mud. In
deep water drilling, this complicates the ability to control the
density of the drilling fluid, keeping it sufficient to stop the
well from flowing but not too high to fracture the rock.
Less responsive pressure control arrangements. With
the long distance between rig and seabed changes in pressure in
the well take longer to detect, and longer to respond to action
taken at surface to control them.
Disconnection or failure of the marine riser. The
marine riser is the large diameter pipe connecting the well at
seabed to the rig at surface during drilling operations. The riser
will contain high density drilling fluid, but before it is disconnected
the drilling fluid ("mud") will need to be replaced
by seawater. In deep water the combination of seawater in the
riser and drilling fluid below the seabed will be insufficient
to prevent the reservoir from flowing, so for planned disconnection
the density of drilling fluid below seabed is increased to compensate.
For an unplanned disconnection or failure of the riser, the well
must be shut in at the seabed by closing the blowout preventers
at the seabed.
A Shallow gas event occurs where hydrocarbon gas close to the
sea bed is encountered during drilling operations and, as it cannot
be contained using standard well control practices, it is allowed
to deplete. Eleven of these type of events have occurred in the
UKCS since 1987. Back
DECC's enforcement policy, which is publicly available, sets out
the general principles that inspectors shall follow to ensure
that any enforcement action taken is proportional, consistent,
transparent and targeted.
Lord Donaldson's Review of Salvage and Intervention and their
Command and Control, published February 1999 ISBN 0 10 141932
For the most part, kicks involve geological conditions (eg dolomite
rafts which float in salt and compartmentalized reservoirs) that
are difficult to detect before the well is drilled. Kicks are
more common in the Southern North Sea and, generally, these are
low risk as they involve brine and not hydrocarbon. Back