Preventing offshore oil and gas accidents - will the new laws help?

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This article was first published on Lexis速PSL Environment on 14 April 2015. Click for a free trial of Lexis速PSL.

Preventing offshore oil and gas accidents--will new laws help?

14/04/2015 Environment analysis: What will be the impact of the Offshore Installations (Offshore Safety Directive) (Safety Case etc) Regulations 2015? Helen Mitcheson, environmental consultant at Conestoga-Rovers & Associates, considers the new requirements placed upon operators and owners in a bid to reduce the number of accidents caused by offshore works.

Original news Offshore Installations (Offshore Safety Directive) (Safety Case etc) Regulations 2015 EU laws on the safety of offshore oil and gas operations are transposed into the domestic law of Great Britain from 19 July 2015. Enforcement provisions are included for reporting requirements and existing legislation on offshore installations and pipelines is consolidated.

What is the background to the Regulations?

On 28 June 2013, the European Council published Directive 2013/30/EU on the safety of offshore oil and gas operations (the Directive). The objective of the Directive is to reduce, as far as possible, the occurrence of major accidents related to offshore oil and gas operations and to limit their consequences. The UK must fully implement the requirements of the Directive by 19 July 2015.

To maintain existing procedures and keep administrative burdens to a minimum, the majority of the Directive's requirements have been transposed into the new Offshore Installations (Offshore Safety Directive) (Safety Case etc) Regulations 2015, SI 2015/398 (SCR 2015). SCR 2015 replace, in relation to British external waters, the Offshore Installations (Safety Case) Regulations 2005, SI 2005/3117 to provide for the preparation of safety cases for offshore installations and the notification of specified activities to the competent authority.

SCR 2015, together with the Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015, SI 2015/385 and the Merchant Shipping (Oil Pollution Preparedness, Response and Co-operation Convention) (Amendment) Regulations 2015, SI 2015/386 implement the Directive in relation to British external waters, which are comprised of the territorial sea adjacent to Great Britain and any area designated by order under the Continental Shelf Act 1964, s 1(7).

For the purposes of SCR 2015, the competent authority refers to the Health and Safety Executive (HSE) and the Secretary of State acting jointly.

What are the key new requirements for owners and operators of offshore installations?

SCR 2015 places new requirements upon the operator/owner, including: Corporate major accident prevention policy

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Under SCR 2015, reg 7, Schs 1, 2, the duty holder (defined as the operator in relation to a production installation or the owner in relation to a non-production installation) must prepare, in writing, a corporate major accident prevention policy (CMAPP). The CMAPP must establish the overall aims and arrangements for controlling the risk of a major accident and how those aims are to be achieved. The arrangements are to be put into effect by the duty holder. The CMAPP must cover the duty holder's installations in British external waters and outside of the EU. The definition of a 'major accident' has been extended to cover any major environmental incident resulting from a major accident, where a major environmental incident is defined as an incident which results, or is likely to result, in significant adverse effects on the environment in accordance with Directive 2004/35/EC. A duty holder must implement the CMAPP throughout its offshore oil and gas operations and set up appropriate monitoring arrangements to assure effectiveness of the policy.

Safety and environmental management system (SEMS) Under SCR 2015, reg 8, Schs 2, 3, the duty holder must prepare a document that outlines the SEMS in place. The SEMS must be used to implement the CMAPP and include information on the: o o o o o o o o o

organisational structure and responsibilities identification and evaluation of major hazards, their likelihoods and potential consequences integration of environmental impact into major accident risk assessments in the safety case control of major hazards during normal operations emergency planning and response limitation of damage to the environment management of change monitoring, audit and review arrangements integration of the SEMS with the overall management system

Establishment of verification and well examination schemes Under SCR 2015, regs 11, 12, 14, Sch 4, Pt 2, owners/operators are required to have in place an independent verification scheme to provide assurance that safety-critical elements of the installation's plant and equipment are suitable for their intended purpose. Under SCR 2015, the duty holder must establish a 'verification scheme' for ensuring that the safety, as well as the environmental-critical elements, including specified plant, are suitable and remain in good repair and condition. In addition, the verification scheme must now contain arrangements to manage the flow of information between the duty holder and the independent verifier and ensure the verifier is given sufficient authority to carry out their functions.

The well operator must establish a well examination scheme for ensuring the well is designed, constructed and maintained so there can be no unplanned escape of fluids from the well. It must also establish that the risks to health and safety of persons from the well, or anything in it, are as low as reasonably practicable.

Effective communication of information between the well operator and the well examiner must be in place, and the well operator must take all appropriate action following the report by the well examiner. The well operator must ensure the well examination scheme is reviewed and revised as often as may be appropriate, until the well is abandoned.

Safety cases for production and non-production installations and for dismantling a fixed installation SCR 2015 defines a safety case as a document prepared by the duty holder demonstrating that: o

o o

the duty holder's management system is adequate to ensure compliance with relevant statutory provisions and that the management of arrangements with contractors and subcontractors is satisfactory the duty holder has established adequate arrangements for audit and for the making of reports of the audit all hazards with the potential to cause a major accident have been identified

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o

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all major accident risks have been evaluated, their likelihood and consequences assessed, including any environmental, meteorological and seabed limitations on safe operations, and that suitable measures, including the selection and deployment of associated safety and environmental-critical elements have been, or will be, taken to control those risks to ensure the relevant statutory provisions will be complied with in the case of a non-production installation, all the major hazards have been identified for all operations the installation is capable of performing (SI 2015/398, reg 16(1))

The safety case (for the purposes of SCR 2015, regs 16, 17, 18, 20 Schs 6, 7, 8) must include: o o o o o

o o

o o o

a copy of the CMAPP a description of the SEMS a description of the verification scheme identification of all hazards with the potential to cause a major accident evaluation of all major accident risks and assessment of the likelihood and consequences of each--this should include any environmental, meteorological and seabed limitations on safe operations measures taken to control all the risks and prevent major accidents resulting in damage to the environment, persons or the installation a description of how the duty holder has ensured, or will ensure, compliance with the Offshore Installations (Prevention of Fire and Explosion, and Emergency Response) Regulations 1995, SI 1995/743 arrangements for the maintenance of control systems to prevent damage to the installation and the environment in the event that all personnel are evacuated description of internal emergency response arrangements summary of arrangements in place for coordinating the management systems of all duty holders involved in a combined operation

The owner of a non-production installation must send the safety case to the competent authority at least three months before the movement of the installation to British external waters. The operator of a production installation must send the safety case to the competent authority at least six months prior to commencing operation in external waters. Where a non-production installation is to be converted to enable it to be operated as a production installation, the owner must submit a safety case at least three months before commencing the operation and also a design notification prior to the completion of the design of the proposed conversion to the competent authority (SCR 2015, reg 19).

The operator of a fixed installation must ensure it is not dismantled unless the operator has prepared revisions to the current safety case, and sent this to the competent authority at least three months prior to commencement of dismantling activities.

A duty holder must review their safety case after five years, at suitable intervals following the first review, and if directed to do so by the competent authority (SCR 2015, reg 23).

Design and relocation notification for production installation Under SCR 2015, regs 15, 19, Sch 5, operators/owners of installations are required to submit a design notification in the case of a planned production installation. In addition, where an existing production installation is to be moved, the operator must submit a relocation notification. The key change under Directive 2013/30/EU is that design and relocation notifications must now include reference to environmental information, in addition to safety information. They will need to describe the design concept in relation to major hazard scenarios for both the environment and safety.

The design or relocation notification must be completed before the submission of the field development plan to the Department of Energy and Climate Change (DECC), as this will enable the operator to take account in the design and safety case of any matters raised by the competent authority within three months of that time.

Notification of well operations

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Under the current UK regime, operators are required to submit a well notification to provide the competent authority with information relating to the planned well operations, including particulars of the well, a description of the well operations and both the proposed and current programme of work, including environmental information. Under SCR 2015, reg 21(6), there is a new requirement for the duty holder to include a report on the findings of the well examiner in a well notification, with a description of any action taken in relation to the findings. The well notification must be sent to the competent authority at least 21 days prior to commencing the operation.

Notification of combined operations SCR 2015 sets forth new requirements for inclusion of environmental information in the combined operations notifications submitted under the current regime. The notification must include reference to a bridging document authorised by all parties of how the management systems for the installations involved in the combined operation will be coordinated, so as to reduce the risks from a major accident. The notification must be sent to the competent authority at least 21 days prior to operations commencing.

Reporting a major accident In addition to the reporting requirements under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013, SI 2013/1471 and in accordance with SCR 2015, reg 33, the duty holder must notify the competent authority, without delay, of a major accident or a situation where there is an immediate risk of a major accident. The notification must describe the circumstances, including, where possible, the origin, the potential impacts on the environment and the potential major consequences. At present, it is unclear what the term 'immediate risk of a major accident' will mean in practice. It is anticipated the forthcoming guidance will provide further clarification.

Under SCR 2015, reg 34, the competent authority will now be able to request details on any major accidents in which UK-registered companies or their subsidiaries have been involved outside the EU. Operators/owners are also required to take suitable measures to reduce risk including, where necessary, suspending operations where an activity carried out significantly increases the risk of a major accident and reporting to the competent authority when such measures have been taken (SCR 2015, reg 29)

What implications will these have for the industry?

SCR 2015 was laid before Parliament on 23 March 2015 and will come into force on 19 July 2015. SCR 2015 will be accompanied by revised guidance that will be published 12 weeks before the regulations come into force.

New installations will be required to comply with the new regulations immediately. Existing installations can rely on the transitional provisions. For existing production installations undertaking well operations and non-production installations, the updated safety case must be approved by 19 July 2016 or the date of the next thorough review, whichever is earlier. For other existing and proposed production installations, the updated safety case must be approved by 19 July 2018 or the date of the next thorough review, whichever is earlier.

In practice, this means many installations may be required to submit a new safety case earlier than the 2016/18 deadlines. This could lead to many duty holders submitting their safety cases to the competent authority within the next two years. It would be advisable for duty holders to check the status of their current safety case and ensure adequate time is allowed for the competent authority review and commenting or acceptance.

The second major impact from SCR 2015 will be the integration of environmental content into the safety cases. SCR 2015 requires the inclusion of environmental assessment, management and emergency response arrangements within the safety case. However, duplication of environmental information already provided for assessment and acceptance under the Oil Pollution Emergency Plan, Environmental Management System and Environmental Impact Assessment would introduce unnecessary administrative burdens on the industry and regulators. It has been proposed in the impact assessment associated with SCR 2015 that, when appropriate, the safety case contains relevant short descriptions of the required

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environmental information with links to existing environmental documentation. Guidance will be provided in relation to the relevant content of the environmental information and the descriptions required in the safety case.

Helen Mitcheson is an environmental consultant at Conestoga-Rovers & Associates (CRA), where she specialises in environmental regulation. She has an LLM in Environmental Law from Newcastle University.

Interviewed by Jane Crinnion.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.