Stricter offshore Oil & Gas regulations cause unrest in Industry

Offshore Oil & Gas Installation

By Anshuli Lakhan

The European Commission has recently made a proposal regarding stricter offshore oil and gas regulations on companies that fall under the European Union area. The companies believe that due to only three out of 27 member states having an oil and gas industry of any significance, this matter should be left in their own hands.

After the Deepwater Horizon incident last year, the European Union has taken steps to attempt to prevent such an occurrence from happening in their waters. However, these proposed legislations are causing companies in the industry to be unhappy with EU involvement.

According to Joe Hennon, spokesperson for the Environment Commissioner, this is the reaction from the industry whenever new legislation is proposed.

“This response is expected and should not affect the legislation from being passed in the EU,” he said.

The legislation should come into effect by 2013 and that other than the usual opposition by the industry this proposal should not have many groups or individuals disputing the draft states Mr Hennon.

 

The reason behind the legislation

Due to the Deepwater Horizon accident in the Gulf of Mexico last year, the EU have been taking a look at their own waters and analysing the risk of it happening in their backyard.

The Commission stated in a press release that if they want to prevent a similar accident in their territory then precautions must be taken now to prevent it. This is a pre-emptive strike to prepare for the possibility of it happening and damaging the marine life and the environment.

The regulation, according to the Commission, introduces clear rules for effective prevention and response of a major accident. It is a precautionary step that should have been taken long ago, especially with the possible dangers involved in this industry.

Currently, the member states all operate under different environmental, health and safety standards. With this new regulation, all companies will be required to follow the highest safety standards.

Energy Commissioner Gunther Oettinger said in a press release: “Securing best industry practices in all our offshore operations is an undisputable must. This proposal is a crucial step forward towards safer offshore activities to the benefit of our citizens and our environment.”

There have been accidents that have occurred in the EU waters that could have been disastrous and had the possibility of having extreme consequences. The EU has found that after the accident in Mexico, measures need to be taken in order to make oil and gas instalments in their territory much safer; not only for the people but also for the environment.

Deepwater Horizon spill - what could happen in the EU

Janez Potočnik, Environment Commissioner, said: “We have learnt our lessons from last year’s Deepwater Horizon accident. This safety update is good news for the environment, but it’s also good news for business which will be able to deploy its operations in a predictable framework. There is ample evidence from past accidents that prevention is better than cure.”

 

Response from the Oil and Gas Industry

A source from inside the Commission said that the companies in the industry are not happy about this draft proposal and a few of the major companies in the industry have already voiced concerns about an EU level regulation. The Source would not name the companies, however.

There are over 1000 offshore oil and gas installations in the EU almost 50% of which is located in the UK; one of the largest being Oil & Gas UK. With the majority of them being located in three out of the 27 member states territory, the companies feel that it is their own business to ensure the safety of their workers and the operations themselves.

In response to the Commission’s proposal on offshore safety, Oil & Gas UK released a statement.

Chief executive, Malcolm Webb, said: “Oil & Gas UK is opposed to blanket EU regulation of this country’s offshore oil and gas industry, which operates under a fully fit for purpose and robust regulatory regime. Relinquishing regulatory control to the EU, which has no established competence in this matter and where only three out of the twenty-seven member states have an offshore oil and gas industry of real scale, risks undermining safety and environmental performance here in the UK.”

When asked to comment further, Oil & Gas UK declined the opportunity.

With the unrest amongst the members of the industry, it has been suggested that some of the larger companies may continue doing things their own way.

“If this becomes a regulation, which it should by 2013, then they will simply have to be followed,” said Joe Hennon in response to this suggestion. “If they do not adhere to them, then it will be up to the individual member states to enforce the legislation. If they fail to do so, only then would the EU intervene.”

 

The Oil and Gas Industry

Energy Commissioner Günther Oettinger said that most oil and gas in Europe is produced offshore, often in harsh geographical and geological conditions. Given the growing energy demand, the EU will need all the oil and gas from beneath our seas. But the government also needs to prevent accidents like Deepwater Horizon in the Gulf of Mexico from happening again.

With oil remaining the main source of energy at 37% consumption, the EU will continue drilling and producing oil to meet this demand. Therefore they must ensure the safety of those installations and reduce the risk of an accident; this proposal is a step towards that goal.

Not only is the United Kingdom one of the largest consumers of energy but it is also one of the highest consumers of energy. In 2009, the European Union combined consumed approximately 460 million toe (tonnes of oil equivalent). The UK, one of the largest consumers after Germany and France spent 13% of that number.

Dan Jorgensen, a member of the Environment committee in the European Parliament, suggests that this initiative will be beneficial to the environment. Their goal for the environment is, with the help of the rest of the world, to keep the increase in temperature below 2 degrees and this proposal will help that endeavour.

 

 

 

 

 

 

 

 

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