MANY of you may be aware that when the European Commission announced its proposal to bring the whole of Europe’s offshore oil and gas regimes up to a standard similar to that of the UK Continental Shelf, it acknowledged that Britain’s safety regime is already a global exemplar.
It’s no surprise then that in drafting the intended regulation, they effectively “cherry-picked” much of our existing safety case and environmental structure.
You might well think that we have nothing to worry about and, if the UK is asked to adhere to a new set of requirements close to what we’ve already got, then there’s no discernible change for us.
If so, you couldn’t be more wrong.
Oil & Gas UK believes the proposed regulation, if implemented, will: significantly undermine major hazard management on the UKCS; create uncertainty which could hinder or even stop operations and impact the UK’s right to manage its own resources.
The EU regulation would address health and safety, and environmental issues. However, the proposals are so poorly worded that they are at best ambiguous and at worst have the potential to cause widespread confusion among operators and regulators alike.
There is a lack of accompanying interpretative guidance to help understanding of the requirements, which among other matters require each safety case for the 350 UK offshore installations to be replaced by a new major hazard report (MHR).
Each MHR must then be submitted to the competent authority (DECC/HSE), assessed and accepted within a two-year transition period – an optimistic timetable.
The proposed regulation offers insufficient time for operators to comply; for well consents this is as little as three months from the time of enactment. It took seven years to fully implement Lord Cullen’s recommendations for the UK’s post Piper Alpha regulatory framework; since when they have been refined and made more effective through review and revision. The inevitable burden that the Commission would place on operators and regulators would be considerable. Already stretched regulators could find their attentions diverted with additional work assessing the new MHRs during the transition phase.
The implication for operators is similarly severe. If their MHRs are not drafted, approved and in place in the short window allocated, then they may not be able to continue to operate and what we would have here in the UK is a de facto moratorium.
In that regard, we believe the implications of these proposals run contrary to the Lisbon Treaty by interfering with member states’ abilities to manage their own resources.
Aside from the confusion and added complexity created by this Regulation, there are significant health, safety and environmental risks in moving regulatory oversight away from the established and experienced UK regulators to the Commission, where the necessary specialist competence simply does not exist.
There is also a hidden danger behind a shift of control to Brussels. Once the proposed regulation is in place, there is the real potential for future, damaging additions and amendments without first consulting either industry or member states’ governments.
Prescriptive changes are the antithesis of the principles of the Cullen Report upon which so much of the UK’s world-class safety regime is based.
There are also serious and irreversible flaws at the heart of the proposal that which we believe render it invalid.
Oil & Gas UK recently commissioned a close examination of the impact assessment that Brussels produced as a foundation on which to base its proposals and a justification for action.
The study found that the impact assessment used a cost benefit analysis which makes a series of glaring misassumptions, including grossly overestimating the costs associated with a blow-out and the flow rates of North Sea wells.
Indeed, when the correct but conservative figures are re-applied to the EU’s impact assessment, it is clear that the cost of implementing the Regulation actually outweighs any hypothetical benefits.
There are only three EU member states with an oil and gas industry of note – the UK, Denmark and the Netherlands.
If you consider, as the EU Commission itself acknowledges, that 90% of offshore oil and gas activities in European waters fall within a risk-based regulatory framework which “is considered at present among the very best in the world,” then it’s difficult to see what additional benefit EU regulation would even bring.
Besides, the Commission appears, alarmingly, to have completely disregarded industry and member states’ responses during the public consultation exercise prior to publishing these proposals.
It also appears that they have completely disregarded the work of the Oil Spill Prevention and Response Advisory Group (OSPRAG) and the host of benefits that it has made to UK offshore safety.
We support the Commission’s desire to improve offshore safety across Europe. We believe, however, that the most effective way of achieving this would be, instead of a regulation, to introduce a properly worded directive.
This would encourage member states which do not currently achieve the recognised high standards present in the North Sea, to do so in a way that blends with their established legislation.
Secretary of State for Energy, Chris Huhne, has already called for a directive and Prime Minister David Cameron has promised to “work hard to make sure we get a good deal for the North Sea.” In the meantime, Oil & Gas UK and its members will continue to oppose the EU’s regulatory proposal at every level and make the case for an appropriate directive in its place.
Robert Paterson is health and safety director at Oil & Gas UK
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