Offshore operators are still grappling with a review of the UK North Sea safety regime, which is set for a shake-up in the wake of a government report prompted by the Macondo well blowout and oil spill nearly three years ago.

Changes are being implemented following the report by an independent expert, Geoffrey Maitland, professor of Energy Engineering at London’s Imperial College, who was commissioned by the UK government to examine the country’s offshore safety regime and review other reports into Macondo. He started work in March 2011 – a year after Macondo and the loss of the Deepwater Horizon – and his review panel reported in December 2011.

Maitland’s 201-page report broadly gave the UKCS regulatory regime a clean bill of health, noting, “The review panel was reassured that the UK regime already incorporates a number of positive, key features that were not present in the US at the time of the Macondo incident.”

But it also identified areas where UK regulations and offshore management systems still need to change.

At the beginning of 2013, the UK offshore industry association, Oil and Gas UK (OGUK) said it has accepted and acted on many of Maitland’s points. “The majority have already been implemented. Oil & Gas UK has accepted Maitland and is working to implement targets within timeframes agreed with the DECC (Department of Energy and Climate Change),” according to OGUK environment director, Mick Borwell.

Some of the new industry guidance required by Maitland on operations and practices is not due to be published for some time though. Borwell said this is because the industry wants to be sure to get it right.

“The guidelines will take time to create, and there is a timetable in place for future guidelines. In producing this world-leading guidance, the importance must be placed on developing something thoroughly and comprehensively, without rushing to have it published,” he said.

After reviewing Maitland’s report, Ed Davey, Secretary of State at the DECC, published his own 61-page response in December 2012 – in consultation with OGUK – and promised that much of it would be implemented. Davey has established a steering group comprised of personnel from DECC, the Health and Safety Executive, MCA, and OGUK to implement most of Maitland’s recommendations.

New guidance has been developed on keeping critical safety equipment in good repair. A pan-industry forum for sharing best practices on well management and design, which was one of the issues at the heart of the Macondo incident – the Well Life Cycle Practices Forum – is to be made permanent.

Maitland said incidents requiring emergency closure of BOPs have occurred on the UKCS and, worryingly, “It is not clear that the lessons from such incidents were always as widely or rapidly communicated and implemented as they should be.”

He also added that the “capping and containment of free-flowing deepwater wells and the development of fail-safe flow barriers remain key technology challenges for the industry.”

Maitland remarked that OGUK had led in developing new well-capping equipment. But, as “encouraging as this response is, it is only the first stage in what is needed in terms of improved and new technology to reduce the risks of deepwater drilling and to minimize the timescales and consequences of any failures of well integrity. The industry must take responsibility for investing immediately in the R&D necessary to address these critical issues.”

In the future, petroleum license holders on the UKCS will have to demonstrate sufficient financial resources to respond to an incident, before exploration and appraisal wells are consented.

Borwell said this requirement is being assessed by DECC. Also the industry association has produced new financial responsibility guidelines, which propose a new way for operators to assess potential costs of well control, pollution remediation, and compensation in the event of an incident.

The DECC has indicated it will give “considerable weight” to an operator that can demonstrate the financial guidelines have been followed, he said. Self-insurance, such as a credit rating of A- or higher from an agency such as S&P, a certificate from a third-party insurer also with an A- credit rating or higher, or a parent company undertaking to DECC to pay for any well clean-up and compensation may suffice.

But won’t this financial burden be harder to bear for smaller licensees with less capital?

Borwell does not believe so. “Not necessarily, it would depend on a broad range of factors, each of which has to be considered on a case-by-case basis. These include the properties of the well being drilled, its location and the business model deployed by the lead operator and its co-venturers planning to drill the well,” he continued.

Operators are now required to carry out emergency response exercises more frequently, every three rather than five years. OGUK said desktop emergency response exercises for the Secretary of State’s Representative (SOSREP), which test duty holders every three years, are already being done. The frequency of National Contingency Plan exercises – which test physical emergency assets – is also now being considered by the UK’s Marine Coastguard Agency.

However OGUK indicated it does not yet know how much all this will cost. Borwell commented, “Cost is dependent on a broad range of factors, such as the type of well/operation. Generally speaking, ‘frontier’ exploration would likely be where additional costs could be found.”

Malcolm Webb, chief executive of OGUK, said Maitland and the government’s response was a “useful exercise,” but he accepts further improvements are possible. “The majority of these have now been implemented.”

But, he added, the European Union Commission plans to introduce “one-size-fits-all” offshore safety regulation was misguided. “We are pleased to note that the movement in Europe is now clearly away from a regulation of that nature.”

Certification authority DNV has also signalled that European offshore operators will face further regulation after Macondo. In its latest annual report, DNV – which carried out a forensic examination of the BOP used on the Deepwater Horizon after Macondo – said major change to both US and European offshore regimes is coming.

“While such new and modified regulations may be prescriptive in the short term, these are expected to become more performance and risk-based in the longer term. Requirements relating to safety cases, risk-based systems, environmental impact assessments, emergency response systems, and technology qualification will become more explicit,” it said in the report.

John Bradbury, Special to E&P

Offshore