EnergyEnergy

Facing the Challenge of the Safety of

Offshore Oil and Gas Activities

[European Commission proposal for regulation of safety and environmental protection against EU offshore major

accidents]

A presentation by

Directorate General for Energy

for a meeting with

IndustriAll

18 June 2012

Taf Powell

Courtesy of Wintershall 1

EnergyEnergy

Problem definition1. Likelihood of an EU major

incident is significant (and can be reduced)Precursor reports UK & Norway; frequency analysis of incidents

2. Full-scale consequences of an EU major incident not acceptableGaps in EU legislation; maritime response model

3. Provisions for financial liability/recovery are incompleteScale of costs and damages seen in GOM

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EnergyEnergy

Offshore licensing in EU/EEA & adjoining states

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EnergyEnergy

Exclusive economic zones in the EU

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EnergyEnergy

Case for EU action• No case for non-action:

• Accident frequency and costs surprisingly high

• Industry and MS action uneven• EU voice in global efforts (G20, ….)

• Subsidiarity vs. European interest:

• Health & safety of workers• Protection of wider communities

and the environment: cross-border impacts of spills

• Deepening of single market: consolidation of product stds

• Security of energy supplies

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EnergyEnergy

Objectives of EU action

Problem part General objectives Specific objectives

1. Risks can be lowered

(i.e. too high to accept)

1. To prevent a major incident from occurring

1. Attain best industry practices; feed raise of global standards

2. Implement best regulatory practices throughout the EU

2. Response measures need

improvment 2. To deal with a major emergency should preventive measures fail

3. Implement better emergency preparedness and response in all EU offshore regions

3. Liability provisions incomplete

4. Improve and clarify existing EU liability and compensation provisions

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EnergyEnergy

Measures to implement objectivesBlack measures considered separately, red measures not taken further

Specific objectives Measures Considered (incl. suggestions from stakeholders)

1. Attain best industry practices; feed raise in global standards

•Establishing a goal-setting (“major hazard report”) regime•Extending EU standards overseas•Establishing a dynamic best practice model for industry

2. Implement best regulatory practices throughout the EU

•Verifying technical capacity during licensing •Establishing an inspections and penalties regime•Establishing EU-wide cooperation for offshore regulators•Ensuring information sharing & transparency at EU level•Establishing EU regulatory body•Achieving consistency of product safety standards across EU

3. Implement measures for better emergency preparedness and response in all EU offshore regions

•Ensuring cross border availability of compatible assets•Ensuring effective response to major offshore incidents•Establishing EU intervention response capacity•Ensuring financial capacity of operators to cover liability

4. Improve and clarify existing EU liability and compensation provisions

•Clarifying scope for environmental liability•Establishing compensation regimes for traditional damage

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EnergyEnergy

Key points of Legislative Proposal• General measures to prevent

major accident• Risk-based planning and

operations• Best practices by operators and

regulators• Transparency/sharing of

information• Co-ordination and co-operation

amongst regulators, and with non-EU countries

• Emergency preparedness and response

• Technical annexes for detailed provisions

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EnergyEnergy

Relationship with existing EU legislation – safety directives

• Framework Directive & Directive 92/91 includes provision for risk based approach to protection from all workplace hazards

• New EU regulation requires in addition:• Enhanced scrutiny of licensing applications for major

accident prevention and response capability• Incorporating environment risks into major hazards risk

assessment• Assessment by and acceptance of major hazards risk

assessment report (MHR) and specified activities by new competent authority

• Independent verification of safety critical elements & well control

• Sector specific inspections and penalties regime• Major accident response plans for each installation, feeding

into national arrangements• Common reporting format and sharing lessons learned• Extending liability for environmental damage to full extent of

continental shelf

EnergyEnergy

Relationship with existing EU legislation – environment directives

• Seveso 2 Directive 96/82 provides for control of major accident hazards integrated for environment and safety at onshore high hazard sites

• New EU regulation has many similar provisions e.g.

• MHR for safety/environment• Competent authority• Emergency response plans

• New EU regulation differs or goes further

• Specific provisions needed for marine environment• Protection measures for local populations not relevant • Qualifying hazards of Seveso not appropriate• Stringent licensing reviews• Thorough assessment acceptance of MHR• Enhanced liability provisions• Common reporting & transparency

EnergyEnergy

Legal instrument: Regulation raison d'etre

• Counter the fragmented and uneven application of existing law (Directives).

• Act swiftly and directly on industry – highest priority as the risks are in the industry.

• Limit impact only to MS with offshore licensing.

• Level up all MS to the sum total of best EU practices (no MS has achieved it, but UK, NL and DK closest).

• But Commission continuing to engage on the legal form

MS can set stricter requirements in national legislation (art. 192.1/193 TFEU) 11

EnergyEnergy

Legal instrument: Regulation Reaction of stakeholders

• Most MS opposed to the form of the instrument (except DE, SE) on grounds of unwarranted disruption of national regimes

• BUT all MS in Council supportive and constructive towards principle and substance of the COM proposals

• NGO's strongly in favour• Industry and offshore TU's

strongly against EU regulation• EP? (Previous opinion –

ITRE/Vicky Ford/2011 – supportive of EU intervention)

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EnergyEnergy

EU Offshore Authorities Group – purpose(1st meeting held 8 May 2012)

First EU-wide forum for regulators, builds on NSOAF and IRFAdvisory roleIdentification and exchange of best practices for:

Major Hazard preventionEmergency preparedness

Disseminating lessons learned from accident investigations

Facilitating rapid information exchange between national authorities and the Commission

Identification and exchange of best practices for competent authorities:

Verifying complianceExecution of projectsAuditing and enforcement

Comment on new (national) legislation and EU or international proposals for oil and gas industry

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EnergyEnergy

EU Timetable (provisional/May 2012)

• 2nd draft revision of text by energy working party released 16 April

• Progress report from DK Pres in drafting (NB recitals have not been discussed so far)

• TTE meeting will discuss 15 June• In EP, File divided, including points of detail:

• ITRE (most) – Rapporteur Ivo Belet• ENVI (quite a lot)• JURI (little)

• COM has met with representatives of ITRE and ENVI committees

• EP may complete first reading in the autumn• CY Pres indicated Lex Offshore is 2nd high priority• Several discussions so far with IE officials who show keen

interest 14