The European Commission has shown welcome flexibility in its push to centralize safety regulation of offshore oil and gas activities (OGJ, Feb. 6, 2012, p. 26). Its next move toward enhanced offshore safety should be to rethink the need for centralized regulation.
At a meeting of European energy ministers June 15 in Luxembourg, Energy Commissioner Gunther Oettinger indicated a willingness to review the safety proposal it made public last October. That's encouraging. Europe's offshore oil and gas producers see little to cheer in the published draft.
Stitched together
High on their list of complaints is the appearance that writers merely stitched together patches of regulations from several jurisdictions. The outcome is confusing. The method of production shows little evidence of the expertise needed to regulate effectively activities as complex as oil and gas drilling and production. Confidence in the proposal suffers further from unrealistic assumptions, such one noted by the trade group Oil & Gas UK that all wells are exploratory and as prolific as the disastrously blown out Macondo wildcat in the Gulf of Mexico. The EC's regulatory push responds to that tragedy.
Clearly, a review of the proposal's technicalities is in order. What Oettinger suggested might be changed, however, is form. According to reports by participants in the meeting, the commissioner said the EC might advance offshore safety regulation as a directive rather than regulation, as proposed in October.
Such a change would be substantial and constructive. Regulation would emanate from the EC, forcing countries with well-developed safety regimes, such as the UK and Norway, to revamp their systems. Those countries argue convincingly that doing so would delay work and detract from overall safety. A directive would be more flexible. Oil & Gas UK has suggested that a thoughtfully constructed directive would allow the best features of safety schemes now in place to be applied across Europe without requiring that effective systems be dismantled.
Oil & Gas UK Chief Executive Malcolm Webb welcomed Oettinger's indication that the EC will reconsider structure of the final measure it submits to a vote of the European Parliament in October. Webb said his group "is encouraged by the news that the European Commission is prepared to be flexible in the approach it adopts to raising safety standards in Europe up to those high standards now prevailing in the countries around the North Sea." UK Energy Minister Charles Hendry, citing his government's earlier "concerns over the proposal for a regulation rather than a directive," issued a statement hailing Oettinger's "flexibility on this issue."
As important as a possible change in form is the hint that the EC might reconsider other aspects of its initiative. Maybe it also will submit details of the proposal to experts for the thorough review they obviously need. A directive would be better than a regulation, but quality of the details would determine the degree of improvement.
Concept remains a problem. The EC has asserted its need to regulate offshore safety across Europe regardless of the expertise at its disposal. The presumption must be that its regulation would be superior to regulation applied by individual countries. Why should that be so? The question needs to be asked.
Interests in safety
European countries with no history of offshore oil and gas production are encouraging exploration and development off their shores, mainly in the Mediterranean. Yes, their experience regulating offshore safety is limited. But it's no less limited than that of the EC. Countries newly welcoming offshore work possess inherently strong interests in safety of the activity—stronger, it can be argued, than those of EC officials based in Brussels.
The EC might serve helpfully as a clearinghouse for expertise in offshore safety regulation, of which no shortage exists in Europe. A directive might accommodate the function. But even that much centralization of authority, relative to activities of eminently local concern, deserves scrutiny. The EC's self-assertive response to Macondo still looks reflexive, uninformed, and possibly unsafe.
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