Why is the Government not introducing a moratorium on oil and gas drilling in the UK following events in the Gulf of Mexico?
The UK will still be dependent on oil and gas for many years as we make the transition to a lower carbon energy world. So it is a choice of either producing oil and gas here in UK waters, where we have one of the most robust safety and regulatory regimes in the world, with the associated economic benefits, or buying oil and gas from elsewhere.
We do not see a case for any ban or moratorium on deep water drilling. Our regulatory regime for oil and gas activities is already among the most robust in the world and all drilling programmes are considered on a case by case basis. In each case, the Health and Safety Executive needs to be satisfied that well design and construction are satisfactory and DECC needs to be satisfied that there will be no significant environmental impact and the plans to prevent and, if necessary, respond to emergencies for all wells represent best practice. We aim to ensure that the regime remains state-of-the-art, and are seeking to learn as much as we can from the Macondo oil spill.
What action has the UK Government taken since the Gulf of Mexico oil spill?
We have been looking very closely at all the information and findings coming out of the Gulf of Mexico incident, and determining how these relate to our own regime. We will continue to review all new information including the findings from the formal US investigations. And, once all of these have been published, we will be conducting a full review.
Interim actions include:
- action to double the number of annual environmental inspections by DECC to drilling rigs including the appointment of three additional inspectors in November 2010;
- a further announcement in January 2011 to increase inspector numbers to allow annual environmental inspections of all manned fixed installations and about 24 drilling rigs every year, as a minimum. It will also allow for inspections of deepwater and more complex projects to be made by two rather than one inspector;
- the launch of the new joint industry and Government group called the Oil Spill Prevention and Response Advisory Group – (OSPRAG) - to review the UK’s ability to prevent and respond to oil spills;
- the award, by OSPRAG, of a contract to Wood Group Kenny for the design of new oil spill mitigation technology for the UKCS;
- a study, set up by OSPRAG, in the light of the Gulf of Mexico incident, to look at estimates of the cost of oil spill clean up in the UK area; and
- the bringing forward of the planned testing of the National Contingency Plan, and its interaction with other major incident plans, including the oil pollution emergency plans submitted by operators of offshore installations, with a major oil pollution exercise involving the offshore industry in 2011.
Are the water depths in the UK Continental Shelf comparable to the Gulf of Mexico?
The UK gas fields in the southern North Sea are mainly located in shallow waters of less than 50 metres depth, whereas the oil fields further north are in water depths of between 50 and 250 metres. However, to the west and north of Shetland, there are a number of fields and appraised prospects in water depths of up to 1,000 metres, and proposals to drill exploration and appraisal wells in water depths of up to approximately 1,500 metres. The UK Continental Shelf to the west of Scotland, which may be the subject of oil and gas exploration in the future, includes areas where the water depth is in excess of 3,000 metres. The deepest well so far drilled on the UKCS was in roughly 1900 metres water depth. (The Macondo well lies in roughly 1520 metres water depth).
Why is the Government allowing UK deep water oil and gas production?
Government believes that UK deep water oil and gas production is necessary during the UK’s transition to a low carbon economy.
Oil and gas are still a major UK resource; although some 40 billion barrels of oil equivalent (boe) have been produced so far, there are perhaps 20 billion boe, or more, left to produce. Overall the deepwater oil and gas resource potential is estimated to be around 3 to 3.5 billion boe - some 15 - 17.5% of UK total resources.
How does Government ensure companies are prepared to deal with an oil spill?
Operators prepare and submit an Oil Pollution Emergency Plan (OPEP) to DECC as required under the appropriate regulations. Regulatory approvals and consents are withheld until the OPEP is approved.
As part of the regulatory process operators assess the worst case scenario in order to identify the required response capability.
DECC is the approving authority for offshore installation OPEPs. The Maritime and Coastguard Agency is the competent UK authority in terms of counter pollution measures and response at sea, and the Joint Nature Conservation Committee (JNCC) provides advice on environmental sensitivities which may be impacted as a result of any oil spill. Both MCA and JNCC are consulted as part of the OPEP review and regulatory approval process.
In the event of a significant oil spill event the operator, in accordance with its OPEP, would activate its emergency response centre to take appropriate actions to prevent further pollution and implement a response strategy. In the event that the offshore industry’s own national and international pollution response and clean up resources were insufficient to respond to a spill the MCA will implement the UK National Contingency Plan.
How would liabilities be handled in the event of a leak in UK waters?
The liability for all costs lies with the owners of the well. This is an unlimited liability. As a back-up should the operator default, the Offshore Pollution Liability Association Limited (OPOL) was established to help pay for any cleanup and liability costs. In August the signatories of OPOL agreed to increase the maximum payment for third-party costs from $120million to $250million.