EC proposes European rules for offshore oil and gas work

Oct. 25, 2010
The European Commission has edged toward suggesting a partial suspension of offshore drilling while proposing centralization of oil and gas licensing and regulation off Europe and beyond.

The European Commission has edged toward suggesting a partial suspension of offshore drilling while proposing centralization of oil and gas licensing and regulation off Europe and beyond.

The EC's call for a "precautionary approach" by European Union members conflicted with an earlier resolution by the European Parliament that excluded a drilling moratorium from broad recommendations for a European response to the Apr. 20 Macondo blowout and spill in the Gulf of Mexico (OGJ Online, Oct. 8, 2010). The explosion and fire destroyed the Transocean Deepwater Horizon semisubmersible rig, killing 11 workers.

A communication from the EC drew a quick rebuke from Oil & Gas UK, which represents UK offshore operators. Malcolm Webb, OGUK chief executive, called the nod toward drilling suspensions "wholly unjustified and inappropriate for the UK offshore oil and gas industry."

The EC made its recommendations after a review of EU safety and environmental standards for the oil industry. The review, it said in a press statement, "found safety standards are generally high, though there are gaps in legislation, mostly due to different standards between countries." Rules often vary among companies, it added.

The EC said it will propose new rules early next year. Meanwhile, it urged "precaution," especially with complex operations such as those involving extreme climate, reservoirs with high pressures and temperatures, deep water, and sensitive natural environments.

"The commission reiterates its call upon the member states to rigorously apply a precautionary approach in the licensing of new complex oil or gas exploration operations and to examine whether a suspension of such licensing is needed until the European offshore safety regimes have been assessed in light of the Deepwater Horizon accident," it said. Warning of "heterogeneity" of current standards set by individual countries, the EC said it "proposes to work towards a more coherent legal framework" for exploration and production "which ensures EU-wide application of state-of-the-art practices."

Licensing oversight

The EC said the unprecedented legislation it will propose will include European oversight of licensing.

"Key requirements for the licensing of hydrocarbon exploration and production should be defined at EU level," it said. The requirements to be evaluated, it added, should include full safety-case documentation, demonstration of technical capacity for accident prevention and response, and financial ability to respond to "unforeseen events."

The EC said its proposal will include measures for supervision of offshore platforms by national authorities evaluated by "independent experts," new technical standards for control equipment, and extension of the sea area for which operators are responsible for cleaning up spills and paying for damage to 200 nautical miles from coastlines from 12 miles at present.

The EC defended its move toward centralization of European offshore regulation by saying, "environmental, economic, and social damages caused by a possible offshore accident do not know borders."

Webb disagreed with the approach.

"This would undermine the advanced and highly sophisticated regulatory regimes currently working so well, for example in the United Kingdom, Norway, and the Netherlands, each of these being global exemplars of which Europe should be proud," the OGUK chief said.

He also objected to a suggestion by the EC that companies with headquarters in EU countries be required to meet the European standards worldwide.

"This proposal reflects a fundamental misunderstanding of the distinct and complex nature of operations in different oil basins both within Europe and around the world," he said.

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