Oil companies operating in European waters are racing to comply with a 19 July deadline to implement new EU safety rules on offshore drilling, adopted in the aftermath of the disastrous BP oil slick in the Gulf of Mexico.
“The likelihood of a major offshore accident in European waters remains unacceptably high.” So said the European Commission in 2011 when it tabled legislation to tighten EU rules on offshore drilling in the wake of the Deepwater Horizon catastrophe the year before.
The Safety of Offshore Oil and Gas Operations Directive was adopted two years later, ushering in strict requirements aimed at preventing such a disaster occurring in European waters, and ensuring oil and gas companies were liable for any damage they might cause.
EU countries were obliged to adopt the new rules into domestic law by 2015, but a three year transition period means that the new rules will only apply fully this year.
By 19 July, governments must ensure that all existing oil rigs and other production installations comply with the directive. “It’s a milestone for the offshore industry,” said Rob Beks, a senior consultant on asset risk management at DNV GL, which is offering independent verification services to offshore operators.
“There is a huge rush now to get in compliance, this is a challenge both for operators and for the Dutch authorities – the deadline is really a deadline, and the system must be in place,” Beks said.
Under the offshore safety directive (OSD), operators are required to imagine the worst-case scenario and put a plan in place to make sure it does not happen. They also have to have plans to mitigate the impact of major incidents such as oil spill, and all planned measures must be subject to independent verification.
This is where consultancies like Norwegian firm DNV GL and competitors such as UK-based Lloyds Register and France’s Bureau Veritas come in.
Beks said operators in Europe were initially resistant to the new regulatory rules. “As they saw it, the oil price was low and they were being asked to perform another task costing a lot of money,” he said. “I think operators now see the positive side and see it as an improvement in their maintenance and assurance operations,” he continued.
But not everyone is happy with the directive, which was criticised by MEPs in a recent resolution on liability, compensation and financial security for offshore oil and gas operations.
The European Parliament “deplores the fact that…incidents are defined as ‘serious’ only if they give rise to deaths or serious injuries, with no reference to the consequences for the environment”, according to the non-legislative resolution.
MEPs called on the European Commission to put in place “strict civil liability rules…for offshore accidents in order to facilitate access to justice for victims…as this can provide an incentive for the offshore operator to properly manage the risks of operations”.
Norway dragging its feet
Nor was Norway happy at being expected to abide by a Directive that is officially a “Text with EEA relevance”.
As a member of the European Economic Area, Norway is bound by the bulk of EU single market rules. In this case, however, Oslo is refusing to comply, arguing that its existing safety regulations mean applying another level of EU regulation would be an unnecessary additional layer of bureaucracy.
The Norwegian newspaper Aftenposten reported back in 2016 that the European Commission was putting pressure on Oslo over the issue, which was still unresolved in the Council of the EEA a year later. A source at the EU executive’s energy directorate told EURACTIV this week that “the Commission is in contact with Norway on this matter”.
Frederic Hauge, president of the Norwegian environmental group Bellona, believes Norway will be forced to acquiesce to the EU’s demands. He believes this would increase safety in Norwegian waters, and welcomed the fact that it would put pressure on smaller operators.
“How could they cover the liability in a large accident…they have less capacity to handle a large scale accident, and of course they don’t have the economic liability, so the cost would be very much carried by the public,” Hauge said.
The activist added that trust in Norway’s domestic safety regime has been eroded by the case of ENI, which was ordered to shut down its Goliat platform in the Barents Sea after repeated safety issues. Hauge said the Norwegian authorities’ failure to take prompt action had undermined confidence.
ENI did not respond to a direct request regarding its readiness for the July deadline, but the International Association of Oil and Gas Producers (IOGP) said its members “generally speaking…already comply with the key requirements of the OSD”.
The association said it supports the directive in its current form.
“By establishing key requirements in important areas such as the major hazard reports, financial responsibility and emergency response, the OSD has helped industry and member states, in particular in parts of Europe which are newer to offshore E&P, to understand the key principles, procedures and techniques associated with ensuring offshore safety,” said spokesman Nareg Terzian.
BP, which is active in UK and Norwegian waters, said it already complies with the OSD as it was “fundamentally based on” the best practice systems in place in the UK and Norway. “We believe the Directive should help raise safety practices, standards and performance across all of Europe, to the levels already seen in the UK and Norway,” a spokesperson said.
In terms of advances in ongoing safety monitoring required by the directive, Beks sees a potentially a huge role for increased digitalisation, for example using smartphone cameras on platforms to allow for “remote witnessing” reduces the need to travel to offshore platforms or be physically present at other assets. “We recently performed four pilots offshore, and they have been very successful,” he said.