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Energy and Climate Change - Second Report UK Deepwater Drilling - Implications of the Gulf of Mexico Oil Spill

January 6, 2011

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This report from the U.K. House of Commons expresses confidence in the government's regulatory ability over the oil drilling sector, while conceding that some proposed expansions in regulation should be adopted in light of the B.P. spill in the Gulf of Mexico.

On 20 April 2010, a blowout of BP's Macondo well in the Gulf of Mexico led to the deaths of 11 workers on Transocean's Deepwater Horizon drilling rig, and the release of an estimated 4.9 million barrels of oil. The wellhead was located in a depth of water over 1,500m. In the aftermath of this incident the United States observed a moratorium on deepwater drilling until 12 October 2010. Despite calls for a moratorium from the European Commission, the UK Government has decided that the UK regulatory regime is "fit for purpose". Even so, in the Annual Energy Statement to Parliament on 27 July 2010 the Secretary of State, Rt Hon Chris Huhne MP, announced that the UK would, "undertake a full review of the oil and gas environmental regulatory regime" following the outcome of investigations into the causes of the Gulf of Mexico incident.

We believe that the UK has high regulatory standards—as exemplified by the Safety Case Regime that was set up in response to the 1988 Piper Alpha tragedy—and the flexible, goal-setting approach adopted by the Health and Safety Executive's Offshore Safety Division is superior to the regulatory regime under which the Deepwater Horizon incident occurred. However, we welcome the Government's review. As demonstrated by BP's response to the blowout in the Gulf of Mexico, the offshore oil and gas industry was clearly not prepared for a sub-sea blowout of a well. The industry felt that it had mitigated away the risks associated with high-impact, low-probability events and so did not need to plan for them—it needs to revisit scenarios that it thought were too unlikely to occur. The Government needs to ensure that offshore oil and gas exploration companies have considered such outcomes as part of the process by which they obtain a licence to drill.

The blowout in the Gulf of Mexico could have been prevented if the last-line of defence—the blind shear ram on the blowout preventer, located at the well head on the ocean floor—had activated and crushed the drill pipe. Given the importance of this equipment, and the evident dangers of relying on a single device, we urge the HSE to consider prescribing specifically that blowout preventers on the UK Continental Shelf should have two blind shear rams. The blind shear ram on the Macondo Well appears to have failed in part due to the absence of simple checks—such as whether the batteries had sufficient charge. The UK's offshore inspection regime should never allow such simple, potential failures to go unchecked.

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