With the Deepwater Horizon wellhead finally sealed, the offshore oil and gas industry is left to measure the damage done to its reputation and to scrutinise safety protocol to ensure that a disaster of this scale never happens again.
Mark McAllister, CEO of Fairfield Energy and chairman of the Oil Spill Prevention and Response Advisory Group (OSPRAG), reveals what oil companies operating in UK waters are doing to safeguard the nation’s coastline.
Chris Lo: Obviously the effects of the Deepwater Horizon disaster are being felt most keenly in the US, but would you agree that the ramifications of the spill apply to the whole industry?
Mark McAllister: Let me give an example with the UK. We believe we have very good regulations, but it would be complacent of us not to look at our own regulations in the context of what’s happened in the Gulf of Mexico. So what we’ve done in the UK is set up this OSPRAG group – the Oil Spill Prevention and Response Advisory Group – and we’ve brought together oil companies, contractors, DECC [Department of Energy and Climate Change], the HSE [Health and Safety Executive], the Coastguard Agency and the trade unions. So everyone’s together looking at these issues.
One thing that distinguishes us from the Gulf of Mexico is that we have separation in DECC and the HSE, of the health and safety responsibilities of regulation from the commercial responsibilities. So it’s not under one roof, and that’s a good safeguard in itself. The second thing that is very different to the Gulf of Mexico is that as a result of the Piper incident 20 years ago, we have a very different style of regulatory regime, based on the safety case. What that means is for every operation, every platform, every installation, the onus is on the operator to describe all of its risks, quantify them and put mitigations in place against them. It’s a very proactive type of regulatory regime that’s very mature, and we’ve seen very safe drilling in the UK for many years as a result.
The third thing that we have different from the US is that every time we drill a well in the UK, we have to get an independent well examiner to sign off on the well plans. So there are three very different aspects of our regulation. But of course, we’re going through those again and making sure that we’re comfortable that they remain appropriate for what we’re doing.
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CL: From OSPRAG’s perspective, what are going to be the main priorities for regulators to reduce the risk of a reoccurrence of a disaster on this scale?
MM: Clearly, we need to see what comes out of the investigation of Macondo (the oil and gas prospect that was the site of the Deepwater Horizon spill) and look at every element of it in terms of process, in terms of equipment, but also in terms of environment, because it’s described as a deepwater activity and indeed it is a deepwater activity; it’s in 5,000ft of water. That’s well in excess of where most of the UK’s wells are drilled. But the other important element is not the fact that it’s deepwater, it’s deep reservoir. The reservoir is at 25,000ft and below, five miles below the seabed. We don’t drill at anywhere near that sort of depth in the UK. So that’s a key aspect. We need to see how those different environmental elements have contributed to both the incident happening and then to the ability to deal with it.
CL: Hypothetically, do you think a project like the Deepwater Horizon would have been allowed to go ahead in UK waters?
MM: Well, it is a hypothetical question because we don’t drill in those water depths. But I would have thought that under the UK regulatory regime, there certainly would have been a well-developed safety case, which would have been examined by an independent well examiner and so all the things I have described to you would be in place. So certainly it would dramatically lessen the risk of something like that happening if the well had been drilled in the UK.
CL: From OSPRAG’s perspective, are there any major programmes that you’ll be bringing in within the next few months?
MM: Well, we’re looking at a whole range of things. We’re looking at not only maintaining standards but also our response if there were a spill. Of course, we have a number of things in play already in the UK.
We have OSRL [Oil Spill Response Limited], which is an industry club, as it were, for access to oil spill equipment. So first of all, we’re looking at that and making sure that, given what we’ve learnt from Macondo, the equipment that we have available for the entire industry in the North Sea remains appropriate. Secondly, we are looking again at our modelling to make sure we’re current on how an oil spill might propagate. Thirdly, we’re looking at financial provisions, because obviously we have the OPOL [Offshore Pollution Liability Association] system in the UK, in which everybody who drills a well is a member of OPOL, and that gives a degree of mutual cover against third-party liability on an oil spill. We have a lot of things in place in the UK already, so it’s a question of taking every one of them, examining them and making sure they remain fit for purpose.
The final element of what we’re doing is coordinating not only with the investigations going on in the US but also coordinating with other regimes in other areas of the world to make sure there is a coordinated response to this.
CL: Presumably, international co-operation is important when it comes to oil spill containment and safety regulation?
MM: I think it’s very important. On the one hand it may be the sharing of equipment. On the other hand it may be uniformity in design. So it’s those sorts of things that need to be taken into account.
CL: OSPRAG welcomed HSE’s recently launched inspection programme for ageing offshore rigs – do you see this as an important step in maintaining safety, and what are the major risks associated with older offshore installations?
MM: Clearly, older installations require a lot of investment in terms of fabric integrity, and we ourselves [Fairfield Energy] operate the Dunlin platform and a lot of our annual operating capital goes into ensuring that we have the integrity of the equipment and of the platform. The HSE has always been very diligent, and the other thing we have is a large number of very highly qualified inspectors in the UK, which is very good. The fact that the HSE announced a step up in their inspection we can only welcome because we are all responsible citizens of the UK and we are absolutely there to ensure that our staff and contractors are safe and that the UK’s environment is protected, so how could we do anything but welcome it?
CL: The disaster has amplified the debate on how industry and governmental regulatory agencies should interact – in your opinion, what is the ideal set up?
MM: I think some of the elements we’ve put in place in the UK are very important. One is the separation of the HSE from the more commercial arm of regulation, which I think is important. But definitely the fact that we can come together, and OSPRAG is not the first example. There are a number of examples in the UK – like the Helicopter Task Group and Step Change in Safety – in which the industry and regulators have worked together to make sure that what we design is appropriate and fully understood and owned by the companies, not just something imposed from outside. I think that’s a really good model. It doesn’t undermine the independence of the regulator, but it certainly makes for a much more mature and sensible conversation.
CL: Oil & Gas UK recently announced that it has awarded Wood Group Kenny a contract to design new spill containment and subsea capping systems for the UK continental shelf, in partnership with OSPRAG. Can you talk a little about this partnership and the kinds of options you will be looking into?
MM: We’ve looked at some of the solutions that BP have come up with on Macondo to control the spill and eventually to cap it, and asked ourselves, based on their experience, are there any pieces of equipment that it would be sensible to build and to have centrally, so that if something like that did happen, we’ve already gone through the learning experience that BP have gone through and have the equipment immediately available. All we’re doing at the moment is costing and looking at the design to see if equipment could be designed to cope with lots of different perceived scenarios of a blowout of that kind.
CL: Do you think there might be a new wave of innovation in terms of spill containment and well capping technology as a result of the disaster?
MM: To be honest, I think a lot of that has actually happened in real time during Macondo. I think you’ll find that quite a few things they’ve tried with Macondo and their success in the end will inform people’s thinking going forward.
CL: The offshore oil and has industry seems to penetrate the public consciousness only when a major disaster occurs, and the Gulf of Mexico spill is the biggest example of this. Do you think the industry can convince the public that offshore drilling is safe when carried out responsibly, and if so, how?
MM: I think we have to point to our track record. We have thousands and thousands of wells drilled on an annual basis safely. Macondo is by far the extreme example. But as you’ve said, what Macondo has demonstrated is when things do go wrong they can have very serious consequences. The daily job of oil and gas drillers is to design drilling operations and wells that are safe. That’s what they do for a living – building in all the relevant safety factors and making sure they have both the processes and the equipment to make sure that’s done. I think we need to use this opportunity to demonstrate to the public not only the value of oil and gas, which drives the world’s economies, but also that we have and will continue to exploit it in a safe and environmentally sensible way.