Knowledge Centre
Background Information
On 22 April 2010, the Deepwater Horizon drilling rig sank 130 miles southeast of New Orleans, following an explosion on 20 April. Eleven lives were lost and oil was released into the Gulf of Mexico.
Naturally, questions will be asked in the UK about the safety and environmental regulations governing offshore drilling, the preparedness of the industry to respond to an oil spill and the way in which clean-up costs and compensation would be financed, should a significant oil spill occur in the UK continental shelf (UKCS). This section of the website aims to provide background information on those issues.
A. Drilling Activity
B. Drilling Regulation
C. Hydrocarbon Releases
D. Blowouts
E. Environmental Effects of Oil Spills
F. Oil Spill Response
A. Drilling Activity
Q1. How many rigs are active?
As at mid August 2011, 28 drilling rigs, operated by 21 companies are in operation in the UKCS (source: North Sea Reporter). In 2010, 28 exploration wells, 34 appraisal wells and 129 developments wells were drilled (source: DECC).
Q2. In what water depths does drilling taking place?
Over the last forty years of exploration in UK waters, the vast majority of wells have been drilled in water depths of less than 100 metres. In recent years, drilling has taken place in greater water depths (up to 1,800 metres) but only 1.1% of UK wells have been drilled at a water depth greater than 500 metres. The design of every well, regardless of its location, water depth or reservoir characteristics, must go through a rigorous approval process by DECC and HSE, before being drilled.
Q3. How many wells have been drilled?
As at mid-August 2011, 11,181 wells have been drilled on the UKCS since exploration and production began (Source: DEAL). The UK safety regime was fundamentally changed over 20 years ago in line with the recommendations of the Cullen Report following the Piper Alpha disaster in 1988. Over the last twenty years of operations, almost 7,000 wells have been safely drilled.
B. Drilling Regulation
Q1. Who regulates drilling?
In the UK, responsibility within Government for regulating offshore safety and licensing is separate. There are two regulators: the Health and Safety Executive (HSE) regulates offshore safety and the Department of Energy and Climate Change (DECC) regulates the offshore environment for oil and gas activity. This model of regulation has been replicated in many jurisdictions around the world.
Q2. How is drilling safety enforced?
The UK's safety regime was fundamentally changed in line with recommendations made in the Cullen Report following the Piper Alpha disaster in 1988, in which 167 people lost their lives.
The HSE now uses a ‘goal-setting’ approach to safety legislation which differs from the prescriptive style in that rather than being given a fixed check list of things that must be done to meet a statutory requirement, companies are required to continually demonstrate to HSE that they are taking measures to minimise the risk of oil and gas releases to as low as reasonably practicable. The industry can therefore take a more responsive approach to choosing the best methods or equipment available at the time. The HSE employs 115 inspectors to ensure that correct measures are being taken offshore. Oil & Gas UK guidelines aid this process by promoting best practice across the industry.
An HSE podcast explaining how offshore drilling is regulated can be found here.
Q3. What are the key regulations that govern drilling rigs?
Companies are required by law to make sure that a well is managed in such a way that there can be no unplanned escape of oil (or any other well fluids such as gas, condensate, etc) and that risks to people and the environment are as low as reasonably practical.
This requirement (as set out in the Offshore Installations and Wells Regulations 1996, regulations 13-21) covers all stages of the well life-cycle including design, modification, commission, construction (ie drilling), operation and maintenance, suspension and abandonment.
The Regulations require:
- That the conditions below ground are properly assessed beforehand
- That the materials used for all parts of a well are suitable for the task
- That well control equipment is installed to protect against blowouts
- That the well is operated by appropriately qualified people
Q4. Who audits drilling operations?
In the UK, the design, construction and maintenance of a well must be independently verified. Before starting on a new well design, the well operator must have arrangements in place for a well examination scheme by an independent and competent person (ICP). It is the ICP’s role to examine all stages of a well’s planning, execution and operation and demonstrate that the pressure boundary of the well is controlled throughout its life cycle. The ICP also ensures that the pressure containment equipment that forms part of the well is suitable for this purpose in order to avoid any unplanned escape of fluids.
The ICP must be sufficiently knowledgeable and separate from the immediate line management of the well operations involved. Normally the Wells ICP is employed by a separate specialist company (eg. NRG Well Examination & Management Systems Ltd or Chris Dykes International Ltd). Details of the scheme and records must be kept and may be inspected by HSE specialists.
Q5. Is the safety regime more stringent than in the US?
The goal-setting regime used in the UK is a different type of regulation to that used in the US. Oil & Gas UK believes it enables a more responsive approach because it allows companies to implement the latest technology as and when it becomes available rather than waiting for industry standards to be updated.
Q6. Does the UK have regulations on blowout preventers?
There are no specific requirements for a certain type of blowout preventer to be used. Instead, UK operators are required to work towards the objective of preventing escape of well fluids from the ‘pressure envelope’ using the technology they believe is most effective. This constitutes a risk-based approach to regulation rather than a prescriptive one. The HSE does expect companies to follow current good industry practice on the use of blowout preventers, or else justify an alternative approach.
Q7. Will safety regulations be changed?
This depends on the findings of the investigations into the Deepwater Horizon incident. It will be for HSE to consider whether any changes to the safety regime in the UK are required.
C. Hydrocarbon Releases
Q1. What is a hydrocarbon release?
This is when oil or gas is unintentionally released into either the marine environment below sea level (eg. oil spill) or into the atmosphere above sea level. Liquid hydrocarbon releases, whether released into the marine environment or contained on the installation, are reported to HSE as dangerous occurrences. Spills to sea are reported to DECC.
Q2. What is the industry’s record on hydrocarbon releases?
The number of major and significant hydrocarbon releases (including oil and gas) has been on the decline as a result not only of £4 billion of investment in asset integrity but also of behavioural change. This number relates to hydrocarbon releases into the marine environment and those contained on the installation.
Step Change in Safety, the UK’s flagship safety initiative, created a specific asset integrity workgroup to support industry-wide engagement on asset integrity issues. The Hydrocarbon Release Reduction Toolkit was also recently revised and updated. Both of these projects will support the industry’s aims to further reduce the rate of hydrocarbon releases.
Q3: Have there been many oil spills in the UK?
Oil spills from platforms in the UKCS do occur but these tend to be on a small scale. However, all spills, no matter how small, are recorded and reported to DECC.
From figures sourced to DECC, over the last 30 years, a shift can be observed towards ever smaller spill volumes and a reduction in the number of spill reports per year. In the period 1975 – 1981, for example, most spills were between 1 and 10 tonnes of oil. This is very small when compared with annual production in the tens of millions of tonnes and is an amount that would generally be dispersed by waves in the North Sea environment.
In 2009 (the latest year for which we have statistics), just 0.000082% of oil produced was spilled. The latest figures for the industry from 2005 are shown below, and as a percentage of overall production. Annual oil spill figures from 1991 are available from DECC here.
|
|
2005 |
2006 |
2007 |
2008 |
2009 |
|
Oil spilled (tonnes) |
61 |
58 |
63 |
37 |
51 |
|
Number of spills |
432 |
313 |
281 |
272 |
293 |
|
Total production (tonnes) |
76,520,552 |
69,536,701 |
69,723,439 |
65,612,976 |
61,871,293 |
|
% spilled |
0.000080% |
0.000083% |
0.000090% |
0.000056% |
0.000082% |
Source: DECC
Q4. Could an oil spill like the one in the Gulf of Mexico happen in the UK?
As we do not yet know what caused the Deepwater Horizon incident, we are not in a position to be able to comment on whether a similar accident could happen here in the UK. However, it is clearly important that we closely follow the investigations into the incident, learn any relevant lessons and apply these learnings here in the UK.
D. Blowouts
Q1. What is a blowout?
A blowout is an uncontrolled and undesired ‘kick’ of crude oil or natural gas (or a mixture of the two) in the well bore, which comes about following a failure in the pressure control systems. A blowout occurs when well pressure exceeds the ability of the wellhead valves to control it.
Q2. What barriers are put in place to prevent a blowout?
Wells are controlled using two components: an active component which uses drilling fluids to control the pressure within the well (this pressure is constantly monitored throughout the drilling process) and a passive component which, in the case of failure in the pressure control systems, is a “fail safe” method to prevent a blowout.
- Pressure control systems: the first line of defence in well control is to have sufficiently dense drilling fluid in the well bore to prevent reservoir fluids entering the well. During drilling, the strong upward pressure from the fluids in the reservoir such as gas, water or oil (the formation pressure) opposes the downward pressure of the drilling fluid (or mud). This pressure is known as the bottomhole pressure. If the formation pressure is greater than the bottomhole pressure, hydrocarbons could enter the well bore and, if uncontrolled, lead to a blowout. To prevent this from happening, when a rise in the formation pressure is recorded, the drilling fluid engineer increases the mud density to balance the pressure and keep the wellbore stable.
- Blowout preventer (BOP): the next line of defence is the blowout preventer. The blowout preventer or BOP is a large, mechanical device designed to seal off a well at the wellhead when there is imminent risk of a blowout. A number of different types of BOPs are used in an arrangement configuration, called a "BOP stack." Systems of rams (opposing pistons which move horizontally across the top of the well, creating a seal around the drill string, or shear rams to sever) and annular preventers (which deploy an elastomer cork-like device) are used to close off the well.
The diagram below shows a seabed blowout preventer (BOP).
Q3. How is the BOP switched on and off?
The BOP is triggered remotely, using a hydraulic, electronic or acoustic signal. Once the well has been sealed, the drilling mud density within the hole can be increased until adequate fluid pressure is achieved and the BOP can be opened for operations to resume.
Q4. Could the use of an acoustic switch to activate the blowout preventer have prevented the incident?
As we don’t know the cause of the incident, we cannot speculate on what would have prevented it.
A BOP may be triggered by a hydraulic, electrical or acoustic signal. Whichever system is used to take the signal from the drill floor to the BOP, the process which automatically closes the BOP remains the same.
There is redundancy built into the signal system and into the BOP, meaning there is more than one system to rely upon. There will also be a number of locations from which the BOP can be activated. This would include the drill floor, at the control unit and also in the tool pusher’s office.
A hydraulic signal system takes longer to send the signal from the drill floor to the seabed BOP. This is not generally an issue in UK where waters are relatively shallow. An acoustic system is typically a back-up system, with primary control always through either hydraulic or electronic controls.
Q5. Can the signal that triggers the BOP be switched on automatically?
Some new drilling rigs incorporate a system through which BOPs can be switched on automatically, ie. without a driller needing to activate using a switch. According to the HSE, these rigs are unlikely to be located in the UK as they are used in the less mature provinces around the world.
Q6. If the signal to trigger the BOP fails, is there another line of defence in place in the UK?
There are multiple barriers built into the BOP system and these depend on the type of BOP employed.
Q7. Have there been many blowouts in the UK?
There have been a number of incidents over the years where insufficient bottomhole pressure in the well during drilling operations has resulted in ”kicks” of hydrocarbon entering the bore well. Although the kicks have been contained, they do qualify as a notifiable dangerous occurrences to HSE. The most serious blowout in recent decades was in September 1988 when an explosion on the Ocean Odyssey, caused by a blowout whilst drilling on a high pressure high temperature field in the Central North Sea, killed one member of the crew in the subsequent fire.
E. Environmental Effects of Oil Spills
Q1. How can an oil spill occur?
Accidental discharges of oil can arise from equipment failure or from human errors during a range of offshore operations, e.g. the transfer of diesel from supply vessels, overfilling of tanks, well operations and incorrect operation of produced water treatment equipment.
Q2. How could an oil spill affect the UK’s marine environment?
The environmental impact of an offshore oil spill will depend on a number of factors including:
• The quantity and nature of the oil spilled and its behaviour at sea;
• The weather conditions and season;
• The type and effectiveness of the clean-up response;
• The ecological nature of the area;
• Its sensitivity to oil pollution.
Oil spilled at sea will break up and will disperse into the marine environment over time. This dissipation is the result of several weathering processes, including evaporation, dispersion, dissolution, emulsification, sedimentation and sinking and biodegradation.
Q3. How might an oil spill affect wildlife?
Possible environmental effects range from acute toxicity caused by low molecular weight hydrocarbons to smothering effects due to heavier oils and weathered products which find their way to the seabed. The presence of toxic components may induce temporary effects such as narcosis and tainting of tissues, which usually subside over time.
Marine bird populations can be particularly vulnerable during their moulting season since they tend to congregate on the sea surface. Oil exposure may cause drowning, starvation and loss of body heat following fouling of plumage.
F. Oil Spill Response
Q1. In the event of an oil spill, how do operators respond?
In all cases where there is a non permitted release of oil to the environment, the operator is required to submit a report to the regulator under the provisions of the Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005.
The response planned by operators is called the Oil Pollution Emergency Plan (OPEP). This is subject to approval by DECC and includes installation-specific risk assessments which take into account the type of oil, the environmental sensitivities of the location and the likely movement of the spilled oil, determined by computer modelling.
Depending on the level of risk and the spill modelling, the response will range from surveillance to monitor how a slick is behaving, through to the use of chemical dispersants and then to physical containment and recovery of the oil. During an actual event all of these are available should they be required.
Q2. How is likely environmental damage gauged?
In the case of an acute oil spill, the response first involves aerial surveillance to determine the extent of the spill and the direction the oil is heading. In the West of Shetland, for example, prevailing westerly winds generally directs the oil towards the shore of Shetland, so in this scenario the emphasis moves immediately to coastal protection. This coastal protection involves modelling where the oil would go and then putting in place the necessary protection.
Oil spill model systems are used by industry and government to assist in planning and emergency decision making. Predicting the wind direction and sea current patterns are critical to the accuracy of such systems.
Q3. What regulations govern the response?
DECC is responsible for setting the regulations and issuing guidance notes for the provision of oil spill response capability within the UKCS area of offshore operations.
The response procedures are contained in the OPEP which is mandated by the Offshore Installations (Emergency Pollution Control) Regulations 2002 and the Merchant Shipping (Oil Pollution Preparedness, Response Co-operation Convention) Regulations 1998.
Guidelines establish the standards for response that operators involved in offshore exploration and production activities must adhere to. The criteria for response is based upon the environmental sensitivity of the location, the nature of the oil and prescribed response times for certain levels of spill.
Although the response depends on many factors, one of which is the volume of oil spilled, the response can be referred to in the following categories:
- Tier 1: A small operational spill employing local resources during any clean up. (100 tonnes spill)
- Tier 2: A medium sized spill, requiring regional assistance and resources. (500 tonnes spill)
- Tier 3: A large spill, requiring national assistance and resources. The National Contingency Plan will be activated in this case. (10,000 tonne spill)
The Maritime and Coastguard Agency (MCA) is the UK authority that responds to pollution from shipping and offshore installations.
Q4. Is the procedure the same for oil spills at terminals?
Sullom Voe and Flotta terminals maintain a Tier 1 response capability in co-ordination with the harbour authorities. Although this is a Tier 1 capability, the resources are extensive and capable of rapid deployment because of the environmental and social sensitivities at the terminal locations.
Q5. How is the cost of oil spill clean-up and compensation met in the UK?
Companies operating in the UK are responsible for environmental or other material damage resulting from operational failures on their installations. In the UK, there is no legislative cap on the extent of a company's responsibility for clean-up and compensation. Details of the mandatory financial requirements that must be met before drilling or other operations can take place in the United Kingdon continental shelf (UKCS) are available here.
In 1975, the UK oil and gas industry established OPOL (Offshore Pollution Liability Association Ltd). OPOL administers an industry mutual agreement which requires each operator to accept strict (no fault) liability for: a) pollution damage: and b) reimbursement of public authorities for remedial measures; up to a pre-determined limit. The limit is US$250 million, which is sufficient to cover the third party costs of an oil spill in previously modelled spill scenarios.
Each operator is required to provide to the OPOL administration evidence of its financial responsibility to meet its liability under the agreement. All UK operators are OPOL members. Full copies of the OPOL agreement, rules, other documents and details relating to OPOL are available here.
Q6. What happens in the case of operator default?
In the event that an OPOL member fails to meet its obligation and goes into default, then without limiting claimants' rights at law to pursue claims against the relevant member for any unsatisfied claims, the other members of OPOL undertake that they will make good the default up to the pre-determined OPOL limit (the "guarantee"). OPOL therefore represents the committed response of the oil and gas industry in dealing with third party costs arising from offshore pollution incidents from exploration and production facilities.
Q7. Who provides the oil spill response services?
Offshore operations are required to have the capability to deploy all three tiers of response and this capability is supplied under contract, with two main providers in the UK – Oil Spill Response (OSR) and Briggs Marine Environmental Services (BMES).
BMES now focus on onshore / coastal response, providing Tier 1 /2. They do, however, prepare offshore OPEPs for several operators. Physical response equipment, including containment, skimmers and dispersant are kept at bases in Aberdeen and Droitwich.
OSR are the primary providers of oil spill response to UKCS operations, offering Tier 1,2 and 3 capability. This includes surveillance aircraft, aerial dispersant application and large stocks of containment equipment which is pre-packaged for rapid response. OSR also prepare OPEPs.
UKSpill represents companies, organisations and individuals working in the oil spill industry in the UK.
Q8. Who co-ordinates oil spill response?
While the Maritime and Coastguard Agency (MCA) is responsible for the UK National Contingency Plan for Marine Pollution from Shipping and Offshore Installations, operators are required to maintain the capability and resources of dealing with Tier 1 to 3 spill scenarios. The Secretary of State's Representative for Maritime Salvage and Intervention (SOSREP) will automatically become involved in incidents where there is a significant risk of significant pollution, although its primary concern is the prevention of pollution rather than the clean up.
MCA maintain stockpiles of counter pollution equipment at various sites throughout the UK and have remote sensing and dispersant spraying aircraft at Coventry and Inverness. If these resources are deployed then control of the incident will pass to SOSREP / MCA.
Q9. Would other countries provide assistance?
International assistance and co-operation is available to the UK under a number of agreements. Of particular relevance are:
- The Bonn Agreement – parties notify each other of pollution likely to affect another party and pledge to assist one another on a cost recovery basis.
- The Norway – UK Joint Contingency Plan (NorBrit Agreement) – joint counter pollution operations 50 miles either side of the median line.
- European Marine Safety Agency – created after the Erika and Prestige incidents, EMSA maintains a network of 13 pollution response vessels. These are commercial vessels that can be called up and fitted with oil skimming equipment. As this capability is aimed at shipping incidents, the stockpiles and vessels are located where a shipping incident would have a significant impact.
Q10. Does the UK have the oil spill response equipment to respond effectively to a significant, sustained oil spill?
The answer partly depends on the scenario but all our plans are built around the capacity to deal with any size of spill. In order to ensure that provisions being made continue to be adequate, the Oil Spill Prevention and Response Advisory Group (OSPRAG), comprising representatives from industry, regulators and trade unions, is reviewing the response capability of the UK with respect to a sustained oil spill and assessing the requirements for exercising that response capability. The latest update on OSPRAG's work is available here.
