UK OIL AND GAS REGULATORY REVIEW

Offshore

Oil and Gas

in the UK

- an independent review of the regulatory regime

December 2011

Contents

Foreword

1

Executive Summary

3

The Report

1. Well Planning and Control

7

2. Environmental Protection

16

3. Emergency Response Coordination

31

4. Learning from Incident Experience and Improving Best Practice

41

5. Implementation Assurance

55

6. Competency and Training of Workforce

63

7. Workforce Engagement

69

8. Liability and Insurance

76

9. Regulator Issues

84

10. The European Dimension

94

11. Technology Development

96

12. Recommendation Summary

100

Page i

Appendices

A Panel Composition

110

B Terms of Reference

114

C The UK Regulatory Environment

117

D Panel Meetings

122

Regulators¡¯ Review Inputs (including summaries of gap analyses):

E Health and Safety Executive (HSE)

123

F Department of Energy and Climate Change (DECC)

137

G Maritime and Coastguard Agency (MCA)

185

H List of Stakeholder interviews

196

I List of Written Submissions

198

J

199

List of Principal Reports

K List of Acronyms and Abbreviation

201

Page ii

FOREWORD

I was asked earlier this year to chair a Review Panel, the purpose of which was to

consider findings from official reports which had been published - and were continuing

to emerge - into the circumstances surrounding the tragic accident which befell

Transocean¡¯s Deepwater Horizon rig in the process of drilling BP¡¯s Macondo well in

April 2010. The rig had been drilling a deep water prospect in Mississippi Canyon Block

252 in the Gulf of Mexico when well control was lost, leading to explosions which

ultimately cost 11 lives and precipitated one of the worst oil spills in US history.

The principal role of the Review Panel exercise was to examine the recommendations

which emerged from these various reports, to consider their relevance to the oil and gas

industry in the UK and review the extent to which they might inform modification or

improvement of the regulatory regime in this country.

The Panel comprised three

independent appointees, including myself, all with an element of experience and

knowledge relevant to the industry, alongside a senior representative of each of the three

national regulatory bodies with responsibilities for the offshore oil & gas sector, namely:

the Department of Energy and Climate Change (DECC), the Health and Safety Executive

(HSE) and the Maritime and Coastguard Agency (MCA).

In considering the consequences of the Macondo accident for the UK regulatory regime,

the Panel were mindful of some significant differences between the United Kingdom

Continental Shelf (UKCS) and the Gulf of Mexico - both in the physical environment

concerning weather, climate and normal sea state, and the nature of the regulatory regime,

where a goal-setting approach plays a major role in the UK compared to a largely

prescriptive US approach. To identify the issues that the Panel needed to address in the

UK context, a ¡®gap analysis¡¯ was carried out on the findings and recommendations of five

official reports on the Macondo incident and one on the closely related Montara incident

in Australia (see Appendices E-G).

As well as examining the implications of the

Macondo recommendations, the Panel took the opportunity to consult a wide range of

interested parties to take their views on the efficacy of the UK regime. Receipt of written

comments was supplemented by a series of stakeholder interviews conducted by myself

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and other independent panel members. The Panel is grateful to all those organisations and

individuals who wrote to us and found the time to hold valuable discussions.

The consultation process indicated that both the UKCS operators and the regulators have

already taken significant steps in response to the lessons emerging from the Macondo

incident. It also highlighted a number of additional issues and themes, many of which

reflected the different environment in which the oil and gas industry operates in the UK.

This report gives the Panel¡¯s observations and recommendations around all the issues

where, in its judgment, there is scope for achieving improvement in the current regime

and further reducing the risk of major accidents and consequential environmental damage.

The Panel paid particular attention to implementation assurance processes and regulators¡¯

resourcing issues as both can significantly impact the overall effectiveness of the offshore

regime.

In the latter stages of finalising our report, the European Union published draft proposals

for a regulatory initiative across the EU. The Panel notes that many of these proposals

resonate with the findings and recommendations of this report. Readers should bear in

mind that although several official reports on Macondo have been published by a range of

US authorities, investigations are ongoing and further findings may yet emerge from

which valuable lessons might be learned.

It is vitally important that regulators and

industry alike continue to analyse evidence as it becomes available and carefully consider

its relevance to the UK environment. Indeed, in the spirit of continuous improvement, the

process initiated by this report should be continued indefinitely as future enhancements

are suggested by operational experiences and technology developments.

Geoffrey Maitland FREng

Professor of Energy Engineering

Imperial College London

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