UK: Inquiry into Deepwater Drilling in the North Sea

MPs are to launch an inquiry into deepwater drilling in the North Sea in the wake of the Gulf of Mexico oil spill.

The Energy and Climate Change Committee will examine whether the government was right to rule out a moratorium on deepwater drilling in the North Sea. The Committee has issued a call for written evidence for this inquiry. The deadline for the submission of written evidence is Monday 13th September 2010.

The inquiry will consider:

  • The implications for the UK oil industry of the explosion on BP's Deepwater Horizon rig;
  • The hazards and risk of drilling in the North Sea and whether the existing safety regime and environmental rules are fit for purpose; and
  • Whether deepwater oil and gas production is necessary as the UK attempts to move to a low-carbon economy, and to what extent those fossil fuel resources would add to the country's energy security.

Last month, Energy Secretary Chris Huhne said an urgent review sparked by the Gulf of Mexico disaster had found the measures governing the oil and gas industry in UK waters were "fit for purpose". But he announced an increase in the inspections of North Sea drilling rigs.

The energy committee chairman Tim Yeo said MPs believed "serious questions" needed to be asked about the safety of deepwater drilling off the coast of Scotland in light of the oil spill off the US. "The committee will be questioning BP and environmental and industry experts to find out whether the government has made the right decision in ruling out a moratorium on new deepwater drilling in the waters west of Shetland," he said. "We will also want to question the industry about whether they consider the political risk of exploration and investment in the United States needs to be reviewed in the light of the attitude of the Obama administration."

Gunther Oettinger, the EC energy commissioner, recently met UK oil companies and industry regulators and made it clear he would like to impose a moratorium on new wells until lessons were learned.

The Department of Energy and Climate Change (DECC) has said the UK was exercising "utmost caution" in the North Sea and was recruiting more environmental inspectors to double inspections of drilling rigs. But it made it clear that Oettinger's demands for a moratorium would not be heeded. "There is no current provision within EU law which would enable any EU body to declare a moratorium on new drilling, or deep water drilling," said a spokesman.

Oettinger told the European Parliament last week that "the precautionary principle should prevail" adding: "Any responsible government would at present practically freeze new permits for drilling with extreme parameters and conditions."

A spokeswoman for Oil & Gas UK, said that the industry was disappointed that Oettinger reiterated his desire for a moratorium. She added: "It is such a different situation compared to the Gulf of Mexico given the tighter regulations since the Piper Alpha disaster."

Kevin Myers, deputy chief executive of the HSE, said he wanted Oettinger to produce evidence to back his calls for a further clampdown on UK drilling.

Annual Energy Statement - DECC Memo 27 July 2010

The Department of Energy & Climate Change (DECC)) in a Departmental Memorandum dated 27 July 2010 has stated:

"Action 10: We are doubling environmental inspections of offshore oil and gas rigs and will undertake a full review of the oil and gas environmental regime following the outcome of investigations into the causes of the Gulf of Mexico incident.

Action 11: In the forthcoming Energy Security and Green Economy Bill, we will seek to ensure that access to UK oil and gas infrastructure is available to all companies. This will help the exploitation of smaller and more difficult oil and gas fields, allowing us to make the most of our natural resources.

Action 12: We will introduce further measures on gas security as promised in the Coalition Programme for Government. In the future, we need more gas storage capacity, and greater assurance that our market will deliver gas when it is needed. This means that our gas market arrangements must have a sharper focus on increased flexibility and resilience....

The UK's own indigenous supplies of oil and gas remain important. There are potentially twenty billion barrels of oil equivalent remaining in the UK Continental Shelf. We must maximise economic production while applying effective environmental and safety regulations."

Save the date - Clyde & Co London Seminar

Please note that the news mentioned in this update and all other important developments in health, safety and environmental law will be discussed by a team of experts at Clyde and Co on 16 September 2010 from 4.30-6.30 pm. The panel includes Gerard Forlin QC, David Leckie, Victor Rae-Reeves and Georgina Crowhurst. To reserve a place please contact us.

Oil & Gas at Clyde & Co

Clyde & Co represents clients across the entire spectrum of transactional, contentious and regulatory matters encountered in the upstream, midstream and downstream sectors of the oil and gas industry. The team has substantial North Sea experience as well as a wider geographic footprint that spans six continents.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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