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Wireline | issue 20 | Feb 2012 News


An independent review by GL Noble Denton commissioned by Oil & Gas UK has revealed flaws in the analysis being used to justify the introduction of new EU legislation tightening the regulation of the offshore oil and gas industry. The study examined the impact assessment and cost benefit arguments that the European Commission claims support its proposals. The authors found a number of disturbingly basic errors and false assumptions (see box) leading them to conclude that the Commission’s case for regulation is invalid. This assessment is echoed by similar findings in Norway.


On 31 January, Oil & Gas UK’s chief executive, Malcolm Webb, repeated the UK industry’s opposition to the EU proposals at a stakeholder meeting organised by the Commission in Brussels. He said: “The draft regulation will be hugely damaging for our industry. It is poorly worded, ill-constructed and confusing, with no guidance on its interpretation. It will require significant work by the industry and its regulators to implement, stretching resources that are already tight and diverting attention away from front line safety issues. It is this latter point which concerns us greatly.


Meet our new director for supply chain issues and policy


Towards the end of 2011, Oil & Gas UK welcomed its new director of supply chain issues and policy, David Ripley. David joins Oil & Gas UK to promote a safe and sustainable future for the UK oil and gas industry as a major international supply chain hub.


One of his immediate priorities will be to step up engagement with BIS to develop the industry’s relationship with this government department


Report reveals flaws in EU Regulation analysis Flaws identified by GL Noble Denton


“The UK, the Netherlands, Denmark and Norway, which together account for 90% of European oil and gas production, all have regulatory regimes which are widely recognised as being robust. The UK’s post-Cullen regime is acknowledged to be one of the best in the world and is seen as such by the Commission itself. Centralised EU regulation would mean dismantling these gold standard regimes and replacing them with a fundamentally flawed version, for no environmental or safety gain. The UK industry is not against regulation and Oil & Gas UK will always support the right moves to improve safety standards, but we fear that this proposal is likely to have exactly the opposite effect.”


Oil & Gas UK is encouraged by the fact that the UK Government is of a similar opinion and that it has signalled its intention to oppose the Regulation in the best interests of safety. The trade unions have also voiced their own concerns.


For more information on Oil & Gas UK’s position, visit http://www.oilandgasuk.co.uk /ProposedEURegulation.cfm and go to p.11.


Assumption


All wells are capable of polluting the marine environment to the same degree as Macondo.


Regulation would reduce incidents, achieving a 50% reduction in incident costs


Reality


Not all wells flow at the same rate as Macondo. Half of UK wells need artificial stimulus to flow at all.


90% of oil and gas in Europe is produced by just three member states and Norway. The safety regimes in these countries are already regarded as among the very best in the world so it is difficult to see how improvements in countries accounting for just 10% of production can result in a 50% reduction in costs across the EU.


50% reduction in incident costs would achieve financial savings of €63.5 million.


The Regulation would cost governments over €130m to implement, far outweighing any potential benefits.


responsible for business, innovation and skills. Plans are already being drawn up for a supply chain summit in the spring, on the suggestion of the Business Secretary Vince Cable.


David has over 30 years in the upstream oil and gas industry in drilling and well engineering technology and has experience in both technical and business development roles.


David said: “I want to make sure that our forums and workgroups are productive and that they achieve measurable progress. It’s vital to identify the most pertinent issues, such as knowledge transfer and the uptake of innovations, and to encourage members to participate wholeheartedly in our discussions on the solutions that will help the supply chain to flourish.”


For more information, please contact David Ripley on dripley@oilandgasuk.co.uk.


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