1 Safety of offshore
oil and gas activities
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14768/10
COM(10) 560
| Commission Communication: Facing the challenge of the safety of offshore oil and gas activities
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| Legal base | —
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| Document originated | 12 October 2010
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| Deposited in Parliament | 15 October 2010
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| Department | Energy and Climate Change
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| Basis of consideration | EM of 25 October 2010
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| Previous Committee Report | None
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | For debate in European Committee A
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Background
1.1 The Commission notes that the oil leak arising from the
explosion of the Deepwater Horizon drilling rig in the Gulf of
Mexico earlier this year caused significant environmental, economic
and social damage, and it says that the first lessons can already
be drawn, not least in relation to the large number of offshore
installations in the north east Atlantic, as well as those in
the Mediterranean and other waters in the close vicinity of the
EU. It observes that the European offshore oil and gas industry
has not been immune to severe accidents, as a result of which
it says a number of European countries have in recent years introduced
strict safety requirements and regulatory regimes. However, it
suggests that the Deepwater Horizon incident requires a fresh
look to be taken at the adequacy of these arrangements, as does
the increasing tendency for exploration to be carried out in more
challenging environments, arising from the EU's need to maintain
indigenous oil and gas production both for energy supply and wider
economic reasons.
1.2 It says that it has therefore launched an
urgent assessment of the safety of offshore activities in European
waters, as well as reviewing applicable legislation, as a result
of which it has identified a number of areas where action is needed
to maintain appropriate safety and environmental standards. In
particular, it says that the aim should be to ensure that the
best practices which currently exist should become the norm throughout
the EU involving determined action by public authorities and a
strong partnership between all those involved, and it has sought
in this Communication to set out ways in which that goal can be
achieved.
The current document
1.3 The Commission says that improved safety
cannot be achieved by self-regulation, and that steps are needed
to ensure that industry complies with clear, robust and ambitious
rules, allowing only safe and sustainable operations and providing
a high level of transparency. It goes on to note that the situation
in Europe is largely determined by national legislation, as EU
measures either do not cover relevant aspects or provide only
performance minima, and that national regimes vary as between
Member States, thereby slowing down a coordinated response to
accidents. It says that it will
work towards an overhauled
and more coherent legal framework for offshore exploration and
production activities in Europe, its preference being a single
new piece of specific legislation to govern offshore oil and gas
activities (possibly supported by guidelines).
ENSURING "STATE OF THE ART" OPERATIONS
1.4 The Commission then looks at a number of
different ways of achieving a "state of the art" regime.
These include:
Responsible licensing
The Commission says that licensing is the key tool,
but that existing EU legislation deals only with the competition
aspects in order to ensure equal access to national bidding rounds,
as a result of which other criteria for awarding licences are
set by individual Member States. At the same time, it observes
that drilling approvals issued by one Member State can affect
others, and it says that licensing procedures anywhere in Europe
should conform to certain basic common criteria, with all national
procedures being reviewed to reflect recognised best practices
and to include EU-wide obligations for safety, health and environmental
performance, risk management and independent verification. It
also believes that this needs to be backed up by an unequivocal
liability regime, including adequate financial security instruments
to cover major incidents. It says that it will put forward in
2011 proposals the key requirements of which would:
- involve a "safety case"
regime, comprising the use of quantified risk assessment and management
prior to engaging in offshore activities such as the drilling
of wells;
- oblige operators to demonstrate that they have
the technical and financial means to deal with critical events
(such as blowouts).
Achieving high operational safety
The Commission observes that the fragmentation of
legal frameworks concerns not only licensing, but the operation
of installations, which can result in rigs owned by a company
in the waters of different Member States having to conform to
different regimes, with adverse consequences for both safety and
operational costs. It therefore believes that, in order to guarantee
maximum safety and a level playing field, there need to be uniform
and rigorously enforced criteria covering financial and technical
capability, the protection of worker health and safety, the integrity
of installations, a high level of environmental protection, and
the prevention of accidents (as well as the response to them).
In particular, it notes that offshore installations are not covered
by EU legislation on pollution control and major accident hazards,
and that, although product safety legislation applies in general
to equipment in offshore facilities, it does not extend to mobile
offshore drilling units. It says that it will:
- strengthen existing legislation
(or draft new measures) to address pollution control, inspection,
accident prevention and the management of individual installations;
- review Directive 92/91/EC on the safety of workers
in the mineral-extracting industries, amending it if necessary
in the light of the investigation into the Deepwater Horizon accident;
- call on Member States to review and update of
existing "safety cases" in the light of that investigation;
- investigate the feasibility of extending of the
scope of EU product safety legislation to include equipment used
in offshore activities;
- assess current regulations and practices with
regard to well design and control;
- encourage the development of necessary technical
standards.
Liability regimes
The Commission suggests that clear provisions on
the responsibility for clean-up and the ultimate liability for
damage discourage operators from under-estimating risks and compromising
on safety measures, thereby helping to limit the likelihood of
environmental damage: and it notes that, based on the precautionary
and polluter pays principles, EU environmental and maritime legislation
contains provisions for the remedy of damage following an accident.
However, it says that the Environmental Liability Directive must
ensure that offshore operators are under strict liability, not
only for damage caused to protected species, natural habitats
and the waters covered by the Water Framework Directive, but also
to all marine areas under the jurisdiction of Member States. It
says that it will:
- amend the Environmental Liability
Directive to broaden its scope to all marine waters as defined
in the Marine Strategy Framework Directive;
- re-consider the option of introducing a requirement
for mandatory financial security, and examine the adequacy of
existing financial ceilings for potential major accidents which
involve parties with limited financial capacity;
- address in a new guidance document the application
of the Waste Framework Directive to oilspills.
Responsibility of industry
The Commission says that industry bears the primary
responsibility for the safety of its operations, and that it is
in companies' own interest to give unequivocal priority to safety
and sustainability, through investment in prevention, accident
response and oil recovery. It notes that the steps taken vary
from company to company, and need to be complemented by joint
industry initiatives: and it points out that, although resources
were effectively mobilised to contain the oil spill in the Gulf
of Mexico, the time needed to stem the leak was a matter of concern,
suggesting a need to work on new response tools capable of use
in all marine environments in Europe. It says that it will call
on industry:
- to contribute to standard setting
and the imposition of standards and self regulation;
- to present in 2010 individual action plans for
scrutiny by regulators;
- to establish joint facilities in Europe for first
rapid response in case of accidents.
Public oversight
The Commission believes that public authorities bear
crucial responsibility for setting a correct regulatory framework
for offshore activities, and ensuring full compliance. It also
highlights the need for active engagement with the public and
affected interests, and for transparency and inclusion in decision-making,
with oversight being based on the best practices already available
and reinforced at EU level. It says that it will:
- define state-of-the-art practices
in offshore licensing, inspecting and compliance monitoring;
- establish a voluntary consultation/reporting
mechanism on licensing to enable wider "Peer review"
of licensing;
- work with Member States and industry to increase
transparency;
- provide an independent framework for the evaluation
of the performance of national regulators.
INTERIM MEASURES
1.5 The Commission says that, until complete
results are available from the investigation into the causes of
the Deepwater Horizon accident, additional caution should be applied
both to ongoing exploration and to new operations. It adds that
precaution should be proportional to the risks and focus in particular
on complex offshore operations where extreme climate, high pressure/high
temperature reservoirs, deep water or particularly sensitive natural
environments would warrant extra care and a temporary suspension
of future operations. The Commission calls upon Member States
to review all complex oil and gas exploration, to ensure best
standards apply, to apply a precautionary approach to the licensing
of new operations, and to examine whether a suspension of such
licensing is needed until the results of the Deepwater Horizon
investigation have been assessed.
REINFORCING THE EU'S INTERVENTION CAPACITY
1.6 The Commission says that, where a serious
accident occurs off a Member State's shores, it must be able to
call on all available capacities, including those of industry
and other Member States. It notes that the EU has instruments
to complement those of Member States through the Community Civil
Protection Mechanism, and that the Monitoring and Information
Centre operates around the clock. It adds that the Centre can,
if needed, quickly mobilise the oil recovery capacity of the European
Maritime Safety Agency, and that it is therefore initiating changes
to the Agency's Founding Regulation. In addition, work is under
way to strengthen the overall EU disaster prevention and response
capacity, and to seek synergies with actions taken by the industry,
though the Commission points out that the response to an emergency
also depends on the availability of information on the state of
the water column and sea bottom (which it says is not fully available
on an EU-wide basis). It says that it will:
- present, in 2010, a Communication
on a strengthened EU disaster response system;
- seek ways to enhance the availability of the
emergency response capacity;
- call on Member States to share information on
the water column and sea bed in order to enhance the efficiency
of emergency responses.
OFFSHORE SAFETY OUTSIDE EUROPEAN WATERS
1.7 The Commission says that the EU needs to
pay close attention to offshore areas adjacent to its territory
where drilling is growing and where an accident would affect several
coastal Member States. It therefore suggests that the EU should
seek regulatory framework and industry supervision in jurisdictions
neighbouring European waters which provide equally high levels
of protection, and that the potential of regional conventions
should be explored. It notes that European oil and gas companies
often have increasing offshore operation outside Europe, and that
the industry needs to maintain state-of-the-art safety and environmental
practices regardless of where it operates, with one option being
to introduce obligations on industry with headquarters in the
EU to apply uniform offshore safety and environmental policies
to all its operations worldwide. Finally, the Commission points
out that the coverage and enforcement of international law governing
prevention, emergency planning and response is uneven and incomplete,
and that financial liability for oil and gas pollution from offshore
installations is not covered by any international convention.
It suggests that, although the EU will need to engage with its
partners, it is well placed to take a key role in strengthening
existing rules globally, the ultimate aim being a global system
fixing common targets in order to promote strict rules on safety
and coordinate action in areas beyond national jurisdictions.
1.8 The Commission says that it will:
- intensify dialogues with European
neighbours on offshore safety;
- work with Member States to export the knowledge
and experience of North Sea authorities to the Mediterranean,
Black and Baltic Sea states;
- promote action in the context of existing conventions
and protocols;
- call on industry and Member States to adopt obligations
to apply European standards of safety in all of industry's operations
worldwide;
- initiate an EU-driven global initiative for offshore
safety.
The Government's view
1.9 In his Explanatory Memorandum of 25 October
2010, the Minister of State at the Department for Energy &
Climate Change (Mr Charles Hendry) says that oil and gas are still
a major UK resource, and that, although some 40 billion barrels
of oil equivalent (boe) have been produced so far, there are perhaps
20 billion boe, or more, left to produce, with the overall deepwater
oil and gas resource potential being estimated at around 3 to
3.5 billion boe (some 15-17.5% of UK total resources). He
adds that the UK has had decades of experience in regulating the
offshore regime, including the lessons learned from the Piper
Alpha incident over 20 years ago, and that those lessons resulted
in a dramatic improvement in the regulatory system in the UK and
more generally in Europe. As a consequence, the UK now has a robust,
proven, national regime.
1.10 The Minister says that the Government would
have to consider very carefully any proposals the Commission
may make for changes in the licensing or consenting of offshore
activities, and that it is not convinced that there would be added
value from another layer of regulation regardless of where it
is located. He also observes that, although any legislative proposals
are at a very early stage, making it impossible to determine whether
they will be consistent with the principle of subsidiarity, a
number of them might raise subsidiarity issues.
1.11 Finally, the Minister points out that the
Commission proposes to consult before tabling proposals for legislative
and non-legislative measures in 2011, and he says that the Government
intends to play a full role in that process.
Conclusion
1.12 As the Government points out, this document
is not in itself a legislative proposal, but it does deal with
a subject which is highly topical in the light of the Deepwater
Horizon incident, and which has substantial, political, economic
and environmental ramifications. Also, insofar as the Commission
appears to envisage a more coordinated European approach in future,
there clearly could be important subsidiarity issues.
1.13 In view of this, and the major UK interest
at stake in this area, we think it would be helpful if the various
issues to which the Communication gives rise were to be aired
more fully at this stage, rather than when the Commission's thinking
has become more firmly established. We are therefore recommending
the document for debate in European Committee A.
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