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North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday 27 June 2013

North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

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Page 1: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

North Sea Oil & Gas – The North Sea Regulator

Michael ReidHead Offshore Inspectorate Team

The Environmental Law Enforcement Conference

Edinburgh

Thursday 27 June 2013

Page 2: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

• Background to DECC

• Environmental Management Team

• Offshore Environmental Inspectorate

• Decommissioning Unit

• Maitland Review - Deepwater Horizon– Emergency Response– National Exercise 2011– SOSREP– Liability and Insurance

• Future Developments

Topics

Page 3: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Background to DECC

Page 4: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Department of Energy and Climate Change

Responsible for• All aspects of UK Energy Policy• Tackling global climate change on behalf of UK

Regulators for Offshore Oil & Gas Industry• DECC – Environment, Consenting, Decommissioning• HSE – Health & Safety• MCA – Shipping, Counter Pollution• SEPA/EA – Radiation, Waste

Background to DECC

Page 5: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

UK Reserves, Who Owns Them?

Petroleum Act 1998

• Ownership of oil and gas within the UK, within its territorial sea, and on its Continental Shelf, rests with the Crown

• Act gives the UK Government the right to grant licences to explore for and exploit resources

• Licences include terms and conditions‒ Exploration Licences‒ Production Licences

• Operational Phase subject to consents and approvals, e.g. to drill wells, install pipelines etc.

• Decommissioning Phase subject to approval of formal programme to abandon or remove facilities

Background to DECC

Page 6: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

DECC – Offshore Environment and Decommissioning

Responsible for:• Licensing UK oil & gas developments, including CCS & gas storage

• Environmental regulation of offshore energy developments through permits / consents

• Inspection against permits

• Enforcement Action

• Review decommissioning plans for suitability

Background to DECC

Page 7: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

How Does DECC Look After the Environment?

Policy

• Influencing EU, OSPAR and Domestic Policy

Implementing Policy

• Preparing regulations and agreeing voluntary initiatives

Management

• Approvals - environmental assessment of proposals, and issuing permits for discharges, emissions and other activities

• Decommissioning - financial guarantees, programme approval

Enforcement

• Inspections, investigations and prosecutions

• Secretary of State’s Representative (SOSREP)

Background to DECC

Page 8: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

ENVIRONMENTAL MANAGEMENT TEAM

Page 9: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Exploration Activitye.g. Seismic Surveys

Drilling OperationsField

DevelopmentsDecommissioning

Production Operations

Clean Sea Bed

Each stage has an environmental impact that has to be assessed

The Offshore Oil and Gas Life Cycle

Page 10: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Regulatory Compliance Pollution Prevention,Inspections and Investigations

Enforcement

ActivitySpecific

Chemical Use And Discharge

DischargesOf Oil

Atmospheric Emissions

Incident Response

UKCS Offshore Environmental Regulation

Project and Site Specific

Generic and Wide Ranging

ENVIRONMENTAL IMPACT ASSESSMENT (EIA)HABITATS AND SPECIES DIRECTIVES (AA)

STRATEGIC ENVIRONMENTAL ASSESSMENT (SEA) HABITATS AND SPECIES DIRECTIVES (AA)

LICENSING

Page 11: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Licensing and Operatorship

Process for Operator Approval

• Formal application submitted to Licensing Authority, including details of technical, environmental and financial competence

• DECC Environmental Teams will interview all new applicants

• Environmental assessment includes review of Company Management Structure, Corporate Environmental Policy, Environmental Record, Environmental Management System and Pollution Liability Arrangements

Page 12: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Robust Assessment Process

• Technical Assessment by DECC Exploration / Field Teams

• Applicant must provide details of well location, target and architecture to obtain consent. Exploration / Field Teams can reject applications

• Environmental Assessment undertaken by DECC Environmental Operations Unit

• Applicant requires a number of environmental approvals, permits before operations can proceed

Well Operations

Page 13: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

The SEA ProgrammeEC Directive 2001/42 on the assessment of the effects of certain plans and programmes on the environment

SEA undertaken in specific geographical areas prior to each licensing round

Total cost to date approximately £21M

Page 14: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Project and Site Specific AssessmentsEC Directive 85/337/EEC on the Assessment of the Effects of Certain Public and Private Projects on the Environment

Mandatory Environmental Statement• Field developments requiring consent for the production of >500 tonnes of

oil per day or >500,000 m3 of gas per day• Extension of a development consent involving an increase in production

that exceeds the thresholds detailed above• Construction of any pipeline of >40 km in length and >800 mm diameter

Recommended Environmental Statement• Qualifying activities in sensitive areas, or in areas where there has been no

previous, similar, activity, e.g. drilling in previously unlicensed blocks West of Shetland

Directions• Other activities, e.g. drilling operations, well tests, small production

increases and small pipelines, require a mini-ES to confirm that an ES is not required

Page 15: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Conservation / BiodiversityEC Directives 92/43/EEC on the Conservation of Natural Habitats and of Fauna and Flora and 79/409/EEC on the Conservation of Wild Birds

• Potential conservation / biodiversity issues must be identified and addressed in the SEA and EIA

• DECC required to undertake an Appropriate Assessment (AA) if a plan or project could affect integrity of a protected site or affect the protected species relevant to that site

• If the AA finds no significant effect – DECC can approve the proposals

• If the AA concludes the integrity of the site, or the protected species, could be adversely affected – DECC may refuse or require modification of the plan / project

Page 16: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Protected Species Issues

Special Protected Areas (SPAs) and SACs:• Coastal SPAs for seabirds, which are to be extended offshore to include feeding

areas• Specific areas and times of the year are considered to be to be particularly

sensitive for seabirds found further offshore – OPEP content• SACs for Bottlenose Dolphin populations in Moray Firth and Cardigan Bay have

impacted licensing and exploration activities

• Specific areas and times of the year are considered to be particularly sensitive for larger cetaceans (offshore) and seals (near-shore) – OPEP content

• Significant research being undertaken to provide a better understanding of potential impacts

Page 17: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Chemicals and Oil Discharges

• Offshore Chemical Regulations 2002 - The Chemicals Regulations– OSPAR Harmonised Mandatory Control System– Chemicals permits required for all offshore operations– Controls use and discharge of all operational chemicals

• Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005 - Oil Discharge Regulations– OSPAR controls on produced water, ballast water, drainage etc– Oil discharge permits required for all major waste streams contaminated with reservoir

hydrocarbons or other oils

Both recently amended to extend provisions

Control of Discharges

Page 18: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Combustion Equipment and Flare Emissions

• The Offshore Combustion Installations (Prevention and Control of Pollution) Regulations 2001 – the IED Directive– All facilities with aggregated capacity of >50MW(th)– Controls mass of NOx, SOx CO and UHC emissions– Monitoring requirements

• The Greenhouse Gases Emissions Trading Scheme Regulations 2005 – the EU ETS Regulations– All facilities >20MW(th)– Offshore sector restricted to CO2 from combustion plant– Trading scheme based on CO2 allocations and monitoring and reporting of

emissions

Control of Atmospheric Emissions

Page 19: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

OFFSHORE ENVIRONMENTAL

INSPECTORATE

Page 20: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Offshore Oil and Gas - Operations On United Kingdom Continental Shelf (UKCS)

470 Installations - 58 Licensed Operators• 10% floating installations• 30% subsea installations• 50% small steel installations• 10% large steel or concrete installations –

potential derogations for abandonment

Approx 35,000 km pipelines• 10,000 km major pipelines

Currently 28 Mobile Drilling Units (MoDUs)

Page 21: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Assess – Inspect – Respond – Investigate – Enforce

Respond

Inspect

Investigate

Enforce

Combustion Emissions

Drilling – Cuttings and fluid management

Flare

Production Process -

Produced Water

Accidental Releases- oils and

chemicals

Chemical Use & Discharge

Bunkering

Operational Systems

Procedures

Assess &Review

Remit of Inspectorate

Page 22: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Exploration and Production - Drilling Activity

Page 24: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Operational Assessments and Inspections

Regulatory Reviews

• Linked to risk-based approach

• Onshore meetings with licence operator and drilling contractor, particularly new operators or MODU owners, or when the MODU is new to the UKCS

• Review of documentary evidence , procedures, competencies etc., to confirm that arrangements are compliant and fit for purpose

• Liaison with HSE to confirm MODUs have accepted UK safety case

Page 25: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Operational Assessments and Inspections

Offshore Inspections

• Linked to risk-based approach

‒ Unproven Operations – New Operator / New Drilling Contractor / New MODU

‒ Well type

‒ Reservoir type

‒ Estimated liquid hydrocarbon flow rates

‒ HPHT

‒ Well location

‒ Water depth

‒ Distance to the shore or nearest median line

Page 26: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Operational Assessments and Inspections

Offshore Inspections (continued)

• Pre Spud inspections undertaken prior to commencement of operations for MODUs new to UKCS and for the most complex wells

• Pre Reservoir inspections undertaken prior to drilling reservoir sections for high flow-rate wells

• Routine MODU inspections undertaken at regular intervals, with frequency dependent upon the nature of the operations

• Liaison with HSE for joint inspections

Page 27: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

UKCS Oil Spill Statistics 2008-2012*(*2011 & 2012 data subject to change)

0

20

40

60

80

100

120

140

160

2008 2009 2010 2011 2012

37

51

154

42 40

Total Volume Released - Tonnes

220

230

240

250

260

270

280

290

300

2008 2009 2010 2011 2012

272

293

271

284

248

Total Number of Oil Reports

Page 28: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

2008 2009 2010 2011 20120

50

100

150

200

250

163

180

175

242 227

Number of Chemical Reports

2008 2009 2010 2011 20120

200

400

600

800

1000

1200

1400

703

1300

593

410 402

Chemicals Released to Sea (Tonnes)

UKCS Chemical Spill Statistics 2008-2012*(*2011 & 2012 data subject to change)

Page 29: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

UKCS Statistics 2007 – 2011*High Level Cause Analysis(*2011 & 2012 figures subject to change)

05

101520253035404550

HoseFailure

PipeworkLeak

CaissonOverflow

Seal Failure Tank FillingOverflow

LevelController

DrainOverflow

ValveFailure

2008 2009 2010 2011 2012

Page 30: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Investigations

Common Factors and Learning

• Routine Operations • Reinforce Risk Assessment procedures• Procedures ‘not followed’ or ‘not in place’• Review competency and training• Ensure roles and responsibilities are understood• Communication failures• Maintain ownership of task• Equipment failure / lack of maintenance• Operator error• Lateral learning within / between companies• Post incident Implications

Page 31: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Investigation and Enforcement Policy in Practice

• Size, scale and nature of the spill• Environmental impact and potential impact• Location of incident, e.g. special area of conservation or other

environmentally sensitive area• Permit holders/operators past performance

• Previous enforcement record of the installation

• Seriousness of any potential breach of law

• Notification that may give rise to public concern or media interest

Page 32: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Enforcement Policy

• The Enforcement Policy describes an escalating tariff of enforcement:

• Enforcement options that can be applied by OED inspectors include:– Enforcement letter – Enforcement notice – Prohibition notice – Revocation of a permit – Prosecution

Page 33: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

DECOMMISSIONING

UNIT

Page 34: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

What Are We Responsible For?

• Protecting the Government and Taxpayer from incurring decommissioning liabilities

• Maintaining statutory liabilities on operators• Government policy and industry guidelines• Supporting operators as they develop their decommissioning programmes• Approving decommissioning programmes and monitoring programme execution• Management of post decommissioning activity• Cradle to grave involvement

Page 35: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Complexity and Scale

• Health and safety • Economics • Technical

• Politics • Stakeholder engagement

Page 36: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Context

• Decommissioning is taking place under the taxpayer’s radar• Increasing press coverage• Difficult economic period• High energy and fuel costs• Highly profitable industry• Significant tax relief• Freedom of Information• Actual costs >40% greater than estimated in approved programmes

Page 37: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Decommissioning

• Technical Feasibility• Environmental Impact

• Other Users of the Sea

• Safety

- Well abandonment

- Decontamination of facilities

- Topsides, jackets and pipelines

- Seabed disturbance

- Derogations (footings / concrete)

- Drill cuttings

- Monitoring

- Long-term liability

£30-40 billion and rising

Page 38: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

How much work is there?

06-07

07-08

08-09

09-10

10-11

0100200300400500600

Notfications Issued

Installations Pipelines

Q3 Q4 Q1 Q2 Q30

10

20

30

40

50

60

Items Reviewed Over the Last 2 Years

FDP Licence Transfers IPR PWA2009-10 to 2010-11

Items R

eviewed

200820092010201120122013201420152016201720182019202020210

10

20

30

40

50

60

70

Potential

Likely

Actual

Decommissioning Programmes

• 18 active decommissioning programmes

• £7 Billion estimated decommissioning costs

• Further 20 programmes on the horizon

Page 39: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Responding to increasing workload

• Continuous improvement– Measuring internal performance– Maximise use of web based systems– Streamlining programme content

• Strengthen the relationship with industry– Promote regular dialogue and open door approach– Secondment programme– Participate in industry working groups

• Recovering our costs from April 2012– simple, fit for purpose, fair to both the taxpayer and industry – balance resources against increasing workload

Page 40: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

MAITLAND REVIEW – DEEPWATER HORIZON

Page 41: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

As a result of the Deepwater Horizon incident in April 2010 the UK Government commissioned an independent review (Maitland) of the UK Offshore Oil and Gas Industry, looking at areas such as

• Well Planning and Control

Deepwater Horizon Review

• Emergency Response

• Environmental Protection

Page 42: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

• Current OPEP Guidance viewed as robust and enabled operators to produce an OPEP which is a fit for purpose operational document which sets out clear procedures to respond to offshore oil pollution incidents

• However: Letters with revised Guidance to industry sent 23 December 2010; July and September 2011

o Operator must have systems and procedures in place to source and initiate contract for controlling the well situation – details of time taken to source and deploy equipment both for capping and relief well drilling

o Confirmation of operators financial position or insurance provision to cover costs of responding to a spill, deploying a capping device or drilling a relief well.

• OPEP Guidance strengthened and re-issued July 2012

Emergency ResponseOPEP Guidance

Page 43: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Emergency ResponseEnvironmental Assessment

• All offshore operations must be covered by an Oil Pollution Emergency Plan, as required under Oil Pollution Preparedness Response and Cooperation Convention

• Development and production wells are incorporated within the main Field Plan and exploration and appraisal wells are either likewise an appendix to this plan or a completely separate plan

• DECC requires additional information within the OPEP to provide evidence that systems and procedures are in place that allows both the Operator and their third party oil spill response contractor(s) to respond effectively to any pollution event

• Well operations plans must assess the worst-case scenarios of an uncontrolled release of hydrocarbons (a blow out) and the loss of the installation’s maximum fuel inventory

Page 44: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Emergency ResponseEnvironmental Assessment

• Operators responsibility to ensure the OPEP clearly identifies the potential release scenarios, including the worst case scenario, the potential environmental impacts and the strategies/measures that will utilised to respond to and mitigate those impacts

• The measures that must be detailed include, where applicable, the deployment of a capping device and/or the drilling of a relief well – with all the logistical timeframes for such deployment

• Plans must include modeling to assess whether, and when, spills would cross median lines or beach (UK or adjacent States)

• Plans must demonstrate operators ability to respond to a spill and the procedures that would be followed, and confirm they have the financial capacity to deal with the potential consequences of the spill

Page 45: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

National Exercise 2011Exercise Sula Overall Aim & Objectives

To exercise the United Kingdom’s (UK) response to major oil spill from deep water drilling incident (similar to Macondo / Gulf of Mexico incident)

• Test National Contingency Plan for marine pollution from an offshore installation• Demonstrate Oil and Gas Industry’s ability to respond to major deepwater well control

incident and resulting oil spill• Exercise Chevron Well Control, Oil Spill Response and Tier 2&3 emergency response

plans• Test liaison on National and International basis (Norway, Denmark, Faeroe Islands)• Exercise National Contingency Plan media response and management

In addition:• Physical demonstration of Industry Tier 2/3 oil spill response assets

‒ Surveillance and dispersant aircraft‒ Marine vessels – dispersant and oil skimming‒ Shoreline protection and counter pollution response

Page 46: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

National Exercise 2011SULA Scenario

• Chevron drilling Cambo 4 appraisal well in Atlantic Ocean 162 kilometres West of Shetland Islands, 170 kilometres east of Faeroes and 8 kilometres from the median line between UK and Faeroese waters.

• Water depth is 1090 metres and well flowing at 6,000 barrels of oil per day.

• Emergency disconnect occurs of Stena Carron after failure of marine riser tensioner system and an increasing sea state.

• Failure of subsea test tree and BOP system to fully close.

• Resultant uncontrolled release of oil to sea.

Page 47: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

National Exercise 2011SULA - Resultant Release (6,000bopd)79 days duration with 68,000 tonne gross release

• Surface (OSIS) modelling predicts ‒ first oil beaches in 9 days‒ Max Oil Day 18 (8,700 tonne)

• Alternate OSCAR Modelling ‒ Majority of oil remains within water

column‒ First beaching day 12‒ 83 tonnes of oil beaches in Shetland‒ Further 12 tonnes beaches Norway

day 77‒ 0.14% oil beached

Exercise ArtificialityWeather simulated to drive oil towards Shetland.

Exercise Artificiality• Models do not account for counter

pollution measures.• Assume ongoing release with no well

intervention.

Page 48: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

National Exercise 2011SULA - Increased Release Scenario

Day 2 injects will assess response capability with increased oil rate of 88,000 bopd.

Replace BOP Scenario (2 day increase)• 34,404 tonne gross release• >75% remains in water column• Beaching in 12 days• 114 tonne estimated beached

Failure case (79 day increase)unable to replace BOP

• 926,000 tonne gross release• 800 tonne beached on Shetland• Majority remains within water column• Norwegian Coastline beaching 60 days

Exercise Artificiality• Models do not account for counter pollution

measures.• Assume ongoing release with no well

intervention.• Worst case exercise weather conditions.• Maximum theoretical well flow condition.

Cambo NCP - 6mbd/6 days + 88mbd/2 days

Page 49: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

National Exercise 2011Exercise Sula – Recommendations

Following the completion of the exercise, a report was published and contained therein were 13 recommendations and 15 Observations/Best practice issues - published on both DECC and MCA web sites.

A Recommendations Review Group established to oversee the outcome of the recommendations. Target dates were set and the group required monthly updates from the action assigned personnel.

Report of the Recommendations Review Group is published on the MCA web sites.

http://www.dft.gov.uk/mca/mcga07-home/emergencyresponse/mcga-dops_cp_environmental-counter-pollution_and_response.htm

Page 50: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

SOSREP

Page 51: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

SOSREPNational Contingency Plan (NCP)

• As a Party to the UN Convention on the Law of the Sea (UNCLOS), the UK as do all coastal states, has an obligation;‘to protect and preserve the marine environment.’

• The Plan is one of the measures that the UK has taken to meet this obligation.

• Currently under review

Page 52: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

SOSREPHistory and Development

• Following the Sea Empress incident in 1996 – 72,000 tonnes crude released

• Lord Donaldson’s Review of Salvage and Intervention and their Command and Control

‒ 26 recommendations – 4 deemed fundamental1) The ‘Trigger’ point is when there is “a threat of significant pollution” to

the UK’s pollution control zone, territorial waters or coastline;

2) MCA as a whole should play a much larger part in operations;

3) Response to the threat of pollution from or involving an offshore installation to be compatible with same from shipping casualty – need for new legislation;

4) Involvement of Ministers in Operational decisions is not a practicable option

Page 53: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

SOSREPHistory and Development

‘There should be ‘ultimate’ control of salvage by a Secretary of State’s Representative acting

in the overriding public interest’

‘SOSREP’

Secretary of State’s Representative for Maritime Salvage and Intervention

Page 54: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

SOSREPRole

To represent the Secretaries of State for Transport and Energy & Climate Change by removing or reducing the risk to persons, property and the UK Environment arising from accident involving ships, fixed or floating platforms or sub-sea infrastructures within UK waters, within the remainder of the UK Pollution Control Zone and on the UK Continental Shelf

Page 55: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

SOSREPFunction

• One person to act as representative of Secretary of State’s

• Free to act without recourse to higher authority

• Ultimate and decisive voice

• Ultimate control

• Cannot choose to ignore a situation

• Tacitly approves all actions

• During operations must be

“Backed or sacked”

Page 56: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

SOSREPPowers of Intervention

• Merchant Shipping Act 1995, as amended;• Dangerous Vessels Act 1985• Maritime Security Act 1997• Offshore Emergency Pollution Control (EPC) Regulations 2002• Marine Safety Act 2003

• Powers cannot be used in anticipation of an incident

• In all cases an accident must have occurred

Page 57: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

SOSREPPowers of Intervention

• Purpose:‒ Removing, preventing or reducing the risk to safety or of pollution‒ Securing safety of a ship/installation, persons or property

• Application:‒ Safety – UK Territorial Waters (12 miles)‒ Pollution – UK Pollution Control Zone (200 miles)/median line‒ Pollution - Offshore Installations – UK Continental Shelf

• Directions:‒ Ship/Installation is/is not to be moved, use of facilities, remove from UK

waters‒ Destruction of a vessel or installation!

• Served to:‒ Masters, owners, offshore operators, managers, servants etc.

Page 58: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

As a result of the Deepwater Horizon incident in April 2010 the UK Government commissioned an independent review (Maitland) of the UK Offshore Oil and Gas Industry, looking at areas such as

• Well Planning and Control• Environmental Protection• Emergency Response

Deepwater Horizon Review

• Implementation Assurance

• Learning from Incidents and Best Practice

• Competency and Training of Work Force

• Work Force Engagement

• Liability and Insurance

Page 59: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Liability and InsuranceFinancial Responsibility Guidance

What is it DECC requires?

Assurance that OPEP will be implemented, when required, including the mitigation measures identified

Assurance that operators have accurately calculated the risks associated with the planned activity

Assurance that appropriate financial mechanisms are in place to meet those risks

DOES THE OPERATOR HAVE THE FINANCIAL RESOURCE TO IMPLEMENT THE RESPONSE STRATEGY AND/OR DEAL WITH

COMPENSATION CLAIMS?

Page 60: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Liability and InsuranceFinancial Responsibility Guidance

The level of Financial Responsibility that operators are required to demonstrate for any particular well should be calculated by establishing the combined:

– 1st party costs - Cost of well control, and– 3rd party costs - Cost of financial remediation and compensation from

pollution

This should be provided at the time the OPEP is submitted to DECC for approval, unless otherwise agreed with DECC

Page 61: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

Liability and InsuranceFinancial Responsibility Guidance

Financial Responsibility can be verified by means of

– Reliance on credit/financial strength rating of the operator or co-venturer– Insurance– Parent company/affiliate undertaking– Any combination of the above

DECC also requires confirmation through a Resolution of the Board of Directors of the Operator Company and Board of any Joint Venture

Partners that DECC Guidance Note and OGUK Guidelines have been implemented.

Page 62: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

As a result of the Deepwater Horizon incident in April 2010 the UK Government commissioned an independent review (Maitland) of the UK Offshore Oil and Gas Industry, looking at areas such as

• Well Planning and Control• Environmental Protection• Emergency Response• Learning From Incidents and Best Practice• Implementation Assurance• Competency and Training of Work Force • Work Force Engagement• Liability and Insurance

Deepwater Horizon Review

• Regulator Issues

• Technology Development

Page 63: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

FUTURE

DEVELOPMENTS

Page 64: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

The objective of this Directive is to

• reduce as far as possible the occurrence of major accidents relating to offshore oil and

gas operations and limit their consequences

• increase the protection of the marine environment and coastal economies against

pollution

• establish minimum conditions for safe offshore exploration

• exploit oil and gas and limit disruptions to Union indigenous energy production

• improve the response mechanism in case of an accident

EU Directive on Safety of Offshore Oil and Gas Operations

Page 65: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

• Appointment of Competent Authority – Assess and accept reports on major hazards– Oversee compliance by operators, including inspections, investigations and

enforcement actions– Produce Annual Plans securing compliance with the regulatory framework for

major accident prevention– Produce reports

• Functions of the Competent Authority shall be carried out within an authority that is independent of functions relating to economic development of the offshore resources, licensing and collection and management of revenues.

EU Directive on Safety of Offshore Oil and Gas Operations

Page 66: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

• PILOT is the Joint Oil and Gas Government

Industry and Trade Union strategic forum,

originally started in 2000 and refocused in 2010

• Unique collaborative forum which works on the

key issue affecting the UKCS

• 8 industry representatives at MD level from Oil

and Gas

• UK and 5 independent industry members

appointed by the Ministers

• Trade Union representative from Scottish TUC

Role:

T To secure full economic recovery of our hydrocarbon resources

T Secure the long term future of the UK oil and gas industry

T Ensure security of energy supply for the UK

Government and Industry Working in Partnership

Page 67: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

What PILOT is working on now and for the future

Current PILOT Work Areas

• Infrastructure – working to ensure the infrastructure is available to exploit the remaining reserves.

• Improved Oil Recovery/ Enhanced Oil Recovery – working to improve our recovery rates in the UK.(currently leaving more behind than recover)

• Access to Capital – ensuring the funds are available for investment.• Supply Chain – drive on increasing UK content.

New work streams» Technology» Exploration

Page 68: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

The Future

• The oil and gas sector has been one of the UK’s major industrial success stories, a key contributor to growth, jobs and tax revenue

• 41 billion barrels produced and circa 20 billion barrels or more could still be produced

• New challenges face the offshore oil and gas industry in extracting this oil and gas reserves

• Factors to be considered– Declining exploration and production rates– Aging infrastructure risk of premature decommissioning– New areas of exploration – deep water West of Shetland

Page 69: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

The Future

Secretary of State for Energy and Climate Change has initiated a review on challenges facing UKCS

• Licensing regime

• Optimising use of and extending life of infrastructure

• Production efficiency

• Better collaboration across industry

• Increasing the exploration effort

• Maximising the use of enhanced oil recovery techniques

• Effectiveness of Government Stewardship regime in line with the increased technical and commercial complexity of mature market

Emerging conclusions from the review to be published in the autumn with the final report and recommendations to be published in early 2014.

Page 70: North Sea Oil & Gas – The North Sea Regulator Michael Reid Head Offshore Inspectorate Team The Environmental Law Enforcement Conference Edinburgh Thursday

THANK YOU