The British oil giant, BP, has repeatedly breached legal safety rules on all its rigs in the North Sea over the last year, according to the government watchdog, the Health and Safety Executive (HSE).
The multinational company has kept failing to comply with the HSE’s statutory instructions to improve risk assessments after a series of alarming near-misses on several oil platforms, including Clair and Schiehallion west of Shetland and a network of nine fields in the Central North Sea.
The revelation comes after BP and its partner oil companies last week announced a massive £10 billion investment in exploiting new oil and gas reserves around the UK, triggering warm congratulations from the UK Prime Minister, David Cameron, and the Scottish First Minister, Alex Salmond.
The investment is centred around opening up the more dangerous waters west of Shetland, and promises to reverse the decline in UK oil production, if only for a few years. It is forecast to create 3,000 jobs in the oil and gas supply chain, sustain the Sullom Voe terminal in Shetland for decades and bring in billions of pounds of tax revenues.
At a time of economic recession, this has been greeted as good news by many. And it was heralded by BP on Thursday as proof that the 40-year-old story of the North Sea oil industry was far from over, with drilling now projected to continue to 2050.
But the resurgence of the black stuff has also attracted the ire of the industry’s critics, who question unfettered exploitation. They highlight BP’s poor safety record, its sometimes disastrous environmental legacy, and the climate pollution that more oil will inevitably cause.
The most immediate allegation is about BP’s safety performance over the last year. Last November it was served a legal improvement notice by the HSE, which applied to all 40 of the company’s offshore oil and gas fields around the UK.
“You are not carrying out suitable and sufficient assessments of the risks to the safety of your employees and other persons working on your offshore installations when you consider whether plant or equipment may be operated outwith its normal operating parameters,” HSE told BP.
Such assessments are required by law because without them, catastrophic accidents can happen. As an example, HSE pointed out that no assessment had been carried out on the Schiehallion platform to consider whether operations should be shut down because of “severe wall thinning” of a pipe carrying very hot liquids.
“You carried on operation of this line and directed that work be carried out in close proximity to it and the line failed catastrophically on 24 September 2010 discharging approximately 27 tonnes of fluid at 123 degrees centigrade,” said HSE.
On the Clair rig, HSE said the risks from an oil leak had been inadequately assessed. This involved workers carrying out monitoring “that caused them to deactivate fire detection and suppression systems and open the door of the enclosure thus exposing them to risk should a fire have broken out”.
On the Eastern Trough Area Project, known as ETAP, which covers nine oil and gas fields, BP considered carrying on when only one of three lifeboats was available. If there had been an accident, it might have been impossible to evacuate all the staff, HSE suggested.
HSE initially gave BP a deadline to fix the problems by the end of May 2011, but it’s still not clear that they have been fixed. The deadline was extended to the end of August, and then again to the end of October. The matter is still formally “ongoing”.
This prompted a scathing response from Rory O’Neill, a visiting professor in occupational and environmental health research at the University of Stirling, and the editor of the health and safety magazine, hazards.org. “We had assurances from BP after Texas City, when 15 workers died and 170 were injured,” he said.
“There were more assurances after Deepwater Horizon, when 11 died and the Gulf of Mexico was smeared with oil. But over the last 10 months it has failed to remedy criminal safety failings across its offshore rigs in the UK, missing three HSE deadlines.”
O’Neill accused BP of putting profits first, and argued that only the prospect of jail would persuade its London-based bosses to change its approach. “The company can’t handle its affairs safety at the moment,” he added. “Why should anyone trust it to behave in a safe manner when it is doing more, in more taxing circumstances?”
He was backed by Rena Steinzor, a law professor at the University Of Maryland in Baltimore. “The company is a renowned scofflaw that must be laughing all the way to the bank as it escapes any meaningful penalty over and over and over again,” she said.
BP responded by saying that it had done “a substantial amount of work” reviewing its risk management procedures. “A new process has been developed that will apply across BP's North Sea business,” a company spokesman told the Sunday Herald.
“Essentially the changes help to ensure greater consistency in the way we carry out the numerous operational risk assessments that are required given the scale of BP's North Sea business.”
BP believes that it has now completed the improvements demanded by the HSE, but this has not yet been agreed by the government regulator. HSE pointed out that because the improvement notice applied to all BP’s UK offshore installations there were difficulties in predicting a “realistic” compliance date.
“BP has recently communicated to HSE it considers it is now in compliance with the improvement notice, and HSE is now in the process of testing that compliance,” said an HSE spokesman.
In the five years prior to the latest improvement notice, BP breached health and safety rules 54 times with lapses that put workers and the environment at risk. Inspectors from the UK Department of Energy and Climate Change also said that four of the company’s North Sea rigs failed to comply with emergency regulations on oil spills in 2009.
Last week, the company was hammered by the environmental group, Greenpeace, for its worst-case scenario for the planned North Uist oil well, west of Shetland. This suggested that a blowout could leak over 10 million barrels of oil, more than twice the amount leaked in the Gulf of Mexico last year, and threaten a potential disaster for marine and coastal wildlife.
BP, though, pointed out that it was legally required to imagine the worst possible spill, and say how it would deal with it. “Key lessons from the Deepwater Horizon incident have been incorporated in to the overall planning for this well,” said the company.
Environmentalists argued that the fundamental issue at stake was the future of the planet. WWF Scotland estimated that if all the 25 billion barrels of oil that the industry said were left in the North Sea were extracted, 11,000 million tonnes of climate-wrecking carbon dioxide would result.
That is equivalent to more than 200 years of greenhouse gas emissions from Scotland, and would increase the risks of floods and droughts around the world. “The planet certainly can't afford to allow all the oil left in the North Sea to be burnt,” said WWF Scotland’s director, Dr Richard Dixon.
"While it is true that the oil and gas industry is and will continue to be for some time a major contributor to Scotland's economy, that is no excuse for the way politicians continue to compete to see who can be most pro-oil.”
But Alex Kemp, the professor of petroleum economics at the University of Aberdeen, argued that companies would carry on exploiting oil as long as people bought it. “As long as there is a demand, they will meet it,” he said.
The new £10 billion investment might stop the decline in oil production from the North Sea and for a few years could reverse it, he said. “It will increase tax revenues and increase employment. In a time of economic stagnation, it will help.”
Opening up Clair Ridge
It’s BP’s biggest investment in a single year in the North Sea, and it bucks the trend. While production in most places is expected to decline over the next decade, in the wild waters west of Shetland, it’s forecast to increase (see table below).
The British oil giant’s £4 billion investment is going towards developing four oil reserves. With its partner multinationals - ConocoPhillips, Chevron and Shell – a total of £10 billion is going to be spent on extracting lots more of the black stuff from the seabed over the next five years.
On Thursday the UK government gave the go-ahead to the latest and most ambitious plan to open up a new area known as Clair Ridge. This is part of the Clair field discovered in 1977, a vast area located some 75 kilometres west of Shetland in seas around 140 metres deep.
The whole field is thought to contain the equivalent of seven billion barrels of oil, the largest of the UK’s reserves in the North Sea. But because the reserve is fractured, complex and doesn’t flow easily, it’s been uncertain how much it would possible to extract
For the Clair Ridge project, BP is planning two modern, state-of-art platforms, linked by a bridge, which will pump oil ashore to the Sullom Voe terminal in Shetland. They are planned to come on stream in 2016 and operate until around 2050, producing perhaps 640 million barrels of oil.
The platforms will be powered by dual-fuel generators, which prevent heat from being wasted by recovering it. The oil will be extracted with another new, high-tech system that reduces the salinity of water injected into the reservoir to increase the recovery of oil.
BP and partners are also investing in the £3 billion redevelopment of the Schiehallion and Loyal oil fields, west of Shetland. Smaller sums of money are being spent in the central North Sea on the Devenick gas field, which is expected to come on stream next year, and the Kinnoull field.
“The efficient management of giant fields such as Clair, using state-of-the-art technology to manage complex reservoirs and increase oil recovery, is an important element of BP’s strategy and one of the key drivers that we see generating value in BP’s upstream business,” said the company’s chief executive, Bob Dudley.
“After some years of decline, we now see the potential to maintain our production from the North Sea at around 200,000-250,000 barrels of oil equivalent a day until 2030. And we are working on projects that will take production from some of our largest fields out towards 2050.”
UK oil and gas production is expected to increase west of Shetland, but to decline elsewhere.
oil fields / production 2011/ expected 2015 / expected 2020 (barrels a day)
West of Shetland / 150,000 / 200,000 / 550,000
Northern North Sea / 400,000 / 500,000 / 400,000
Central North Sea / 1,250,000 / 1,230,000 / 600,000
Southern North Sea and Irish Sea / 400,000 / 350,000 / 100,000