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- Oil reforms prove the EU is ready to take the lead in oil drilling
- The EU is leading the oil drilling sector – more tech and infrastructure being built
DrillingThe EU is looking to regain leadership of the oil drilling industry under new leading reformsPinsent Masons 13, Outlaw: Pinsent Masons, 6/12/13, Pinsent Masons is a legal news source specializing in international governance, “EU states adopt amended offshore oil and gas safety rules,” http://www.out-law.com/articles/2013/june/eu-states-adopt-amended-offshore-oil-and-gas-safety-rules/, NN The agreement was welcomed by the UK Government and oil and gas industry, both of which had lobbied against the European Commission's original proposals to legislate using a directly-applicable regulation. Member states will be able to decide for themselves how best to implement the minimum requirements of the new Offshore Safety Directive (120-page / 371KB PDF) into their national laws. "Safety and environmental protection are essential to the success of the oil and gas industry and as Europe's leading oil producer, the UK has been at the cutting edge of lobbying and drafting this new piece of legislation," said Energy Secretary Ed Davey. "We particularly welcome the fact that the EU has chosen a directive to implement this legislation. From the outset we have strongly argued that forcing the UK to rip up decades' worth of legislation and guidance would have been counterproductive to the EU's objectives," he said. The new rules were also welcomed by industry body Oil and Gas UK, which said that the new directive complemented "the world-leading health, safety and environmental standards already in place in the North Sea that were developed from the lessons the industry learned" as a result of the 1988 Piper Alpha explosion. The European Commission proposed the creation of a unified offshore safety regime following the Deepwater Horizon accident in the Gulf of Mexico in 2010. However, control of installations varies widely across the EU, with almost half of the nearly 1,000 offshore oil and gas installations in operation located in UK-controlled waters. Italy, the Netherlands and Denmark operate a number of facilities, while nine other states have either a minimal offshore drilling presence or have been awarded licences to do so. The Offshore Safety Directive establishes minimum conditions for safe offshore exploration and exploitation of oil and gas, and provides for improved response mechanisms in the event of a major accident. It also intends to reduce the impact of an accident on the environment by requiring companies to provide evidence that "adequate provision" has been made to cover their potential liabilities as a precondition to having a licence for an offshore installation granted. Under the directive, only operators appointed by licensing authorities or license holders will be able to conduct offshore oil and gas operations. Licensing authorities must be independent, with a clear separation between regulatory oversight of economic development and that of offshore safety and environment. Drilling companies will have to provide national authorities with a copy of their major accident prevention policy before beginning works, and outline potential major hazards for that particular installation and what special measures they are adopting to protect workers. National authorities will also have to prepare external emergency response plans covering all offshore drilling installations within their jurisdiction. Transparency and cooperation provisions contained in the new rules will allow for the sharing of emergency response plans between member states. The directive will take effect 20 days after it is published in the Official Journal of the EU. Member states with offshore waters will have two years to implement the provisions, while landlocked countries will only have to do so once a relevant company registers there and conducts operations outside the EU. Only a limited number of the directive's provisions will apply to landlocked states, and those with offshore waters that have no offshore activities. Oil reforms prove the EU is ready to take the lead in oil drillingReuters 13, Reuters News Agency, 2/21/13, Reuters is an international news agency known for its incredibly factual information, “Europe to get its first EU-wide offshore oil and gas law,” http://www.reuters.com/article/2013/02/21/us-oil-drilling-safety-eu-idUSBRE91K0X720130221, NN Member states, governments need to give final endorsement * Environmentalists see progress, but not enough By Barbara Lewis BRUSSELS (Reuters) - The European Union on Thursday agreed its first law to regulate safety in offshore oil and gas drilling across the 27-member bloc and seek to prevent any repeat of BP's catastrophic Gulf of Mexico spill. Some environmental campaigners said the law, which still needs final endorsement from member states and the European Parliament, was not robust enough. Others argued it could help to protect Arctic waters from oil spills. Politicians from Britain, a major EU offshore producer, were among the first to welcome it. They argue British standards of safety, based on decades of experience in the tough environment of the North Sea, are already excellent and the new law would oblige others to follow suit. "These rules will make sure that the highest safety standards already mostly in place in some member states will be followed at every oil and gas platform across Europe," EU Energy Commissioner Guenther Oettinger said in a statement. "Past accidents have shown the devastating consequences when things go badly wrong offshore. Recent 'near-misses' in EU waters reminded us of the need for a stringent safety regime." The Commission reviewed existing national safety rules in the aftermath of the U.S. Gulf of Mexico accident in May 2010 and said it wanted to guarantee the world's highest safety, health and environmental standards throughout the European Union. EMERGENCY PLANNING, RISK ASSESSMENT The legislation covers the criteria for awarding operating licenses and penalties for breaching safety standards, which could lead to loss of license. Companies will also have to carry out emergency planning and risk assessment and will be fully liable for any environmental damage up to about 370 km (200 nautical miles) from the coast. Although the new rules will only apply to EU waters, the Commission says it will work with international partners to promote such standards across the world. In a statement, Green members of the European Parliament urged the assembly not to give final approval. Austrian Green politician Eva Lichtenberger said the new legislation did not close all the gaps in safety regimes. "It also fails to call for a moratorium on drilling in sensitive or extreme environments (like the Arctic)," she said. But environmental campaigning group Greenpeace said the preliminary deal was positive and its demand for risk assessment could deter unscrupulous operators. "This deal on the EU safety law for offshore drilling would go some way to ensuring that oil companies think long and hard before they embark on a risky adventure in the Arctic," Greenpeace EU climate policy director Joris den Blanken said. "Unfortunately, this deal still leaves too much wiggle-room in its implementation," he added. Britain was among those who campaigned for the law to be a directive, meaning each member state is left to transcribe it into its own domestic legislation, rather than an EU regulation that would automatically apply across the 27 members once approved. British Conservative members of the European Parliament said they had headed off EU proposals that could have lowered standards in the North Sea. "Instead of leveling safety standards down, we will be encouraging the rest of Europe to match Britain's high standards," said British Conservative Vicky Ford. ($1 = 0.6535 British pounds) The EU is leading the oil drilling sector – more tech and infrastructure being builtFloridis For instance, the Arctic oil drilling plans are not adequate to face and clean up a major spill in the area, raising environmental health concerns about the potential consequences of a spill to the ecosystem. Further, the consequences of the crude oil gushing into the Gulf of Mexico, on 27 May 2010, after the explosion of BP’s Deepwater Horizon oil rig, should not be repeated and offshore oil and gas operations need to be strictly regulated in order to avoid further detrimental impacts. On the other hand, due to demonstrated negative results of studies on the offshore working conditions and the human impact on offshore oil activities, EU legislation should implement precautionary measures into the petroleum and gas industries. The factors promoting sickness present on board the platforms need to be restrained, in order to ensure healthy environmental working conditions. Major offshore disasters in the last three decades and the likelihood of accidents in the sector with possible consequences provoking fatalities, environmental damage and collateral damage to coastal and massive livelihoods, intensified the need on elaborating an effective and efficient risk management system in offshore oil and gas operations. The situation requires action to reduce the risks, ensure effective response to major incidents and foresee quick recovery of the affected regions and businesses. With respect to the safety of offshore oil and gas operations, the EU faces a threefold problem which consists of a major offshore oil or gas accident risk occurring in EU waters. The existing regulatory framework, industry practices and operating arrangements do not provide for all achievable deductions in the risks, as well as to accidents that may occur throughout the EU. Justification for EU Action In line with the subsidiarity principle, EU action can be considered only where it can intervene and realize the objectives more effectively that the Member States. Industry has the primary responsibility and the means to control offshore risks. Nevertheless, there is urgent need of reducing the risk of a large offshore accident and therefore, a complementary action by public authorities will have to take place. The regulatory approach should cover not only the North Sea, but also the Mediterranean, the Black and the Baltic Seas. Further, the principle of proportionality has been ensured by assessing the effectiveness, costs and benefits of EU action to achieve the desired outcome. In parallel, EU implication could drive progress and ensure compliance through the efficient coordination and regulation of Member States’ policies. This could lead to effective international measures and solutions to be adopted, as the matter regards the sphere’s environmental balance. Policy Objectives and Options Assessment The EU initiative targets two general objectives; firstly to prevent a major incident from occurring in EU offshore oil and gas exploitation with a major emergency in case preventive measures should fail. These general objectives are divided into four measures: to ensure a consistent use of best practices for major hazards control by oil and gas industry offshore operations potentially affecting EU waters or shores, to implement best regulatory practices among EU jurisdictions, to strengthen EU’s preparedness and response capacity to deal with emergencies affecting EU citizens, economy and environment and improve existing EU liability as well as compensation provisions. The policy options which can be envisaged and be developed, contain a package of measures dealing with regular inspections and penalties, formal safety assessments for acceptance by the regulator, extension of the Major Hazards Report (MHR) to a comprehensive management model, product safety, financial capacity guarantees, a platform for regulatory dialogue as well as compensation schemes for traditional damages. Further, the measures foresee a cross border availability and compatibility of intervention assets, preparedness for effective emergency response to major offshore accidents, extension of EU practices to overseas operations as well as the establishment of a competent authority. Existing EU Legislation in the Area of the Proposal The absence of specific offshore oil and gas legislation in EU level is partially completed by EU legislation covering broader sectors of the Union. The Environmental Liability Directive (ELD) 2004/35/EC regards liability for damages to the environment also in connection with offshore oil and gas. The operator of activities causing significant environmental damage to protected species, natural habitants or water is strictly liable to prevent and remedy the damage and bear the full cost of it. The regulation proposal expands the territorial applicability of the Directive to marine waters under the jurisdiction of the Member States. The Directive 85/337/EEC and its amendments regarding the environmental impact assessment of certain public and private projects’ effects, introduce general minimum requirements. The Waste Framework Directive 2008/98/EC applies fully to oil spills, as already upheld by the CJEU. Further, the Framework Directive 89/391/EEC and 92/91/EEC refer to the protection of offshore workers and their working environment. The regulation proposal establishes a general system of control as well as a notification scheme and requires independent verification of critical risk control elements. The Seveso Directive 96/82/EC does not apply to the offshore sector and can only be used as a good practice example in the area. Nevertheless, Directive 94/22/EC regarding hydrocarbon prospection, exploration and production authorizations sets out the principle legal framework for granting licenses for exploration and production. This strengthens the obligations of the relevant authorities improving this way the assessment of the technical and financial applicants’ capacities. Last, the EU Civil Protection mechanism (Council Decision 2007/779/EC), the Monitoring and Information Center (MIC) and the European Maritime Safety Agency (EMSA) are the EU tools to be coordinated, in order to strengthen EU capacities and Member States’ compliance with the new measures regarding offshore oil and gas operations. Budgetary Implication The budgetary implication of the proposal is approximately €2.5m in the period 2013-2016 including compensations for committee participation. The European Maritime Safety Agency’s (EMSA) assistance is primarily related to the use of a satellite surveillance system and the use of emergency vessels organized by EMSA. Control of Major Hazards A prevention policy for major accidents will be set out in a document in order to ensure its implementation throughout the organization of their offshore operating including the setting of appropriate monitoring arrangements to assure effectiveness of the policy. Operators, on the other hand, shall describe their organizational arrangements for control of major hazards in a safety management system. The policy and safety management systems shall be prepared in accordance with EU requirements. Meanwhile, operators shall establish and regularly consult with the representatives of the relevant Member States, the industry priorities for preparing and/or revising standards and guidance for best practice in control of offshore major accident hazards throughout the lifecycle of offshore operations. The competent authorities shall proceed to the execution of any suitable arrangements in order to ensure the independence from conflicts of interest between regulation of safety and environmental protection, in particular licensing of offshore oil and gas activities. The whole established policy and the relevant notifications demanded for the inspection investigation and enforcement of the major hazard aspects of the offshore oil and gas operations should comply with the European Regulation. Non compliance with Regulatory provisions shall lead to the suspension of the operation and the necessary measures shall be adopted followed by notification of the competent authority. Transparency and Sharing of Information A new system will be established aiming at the efficient sharing of information among operators and competent authorities. Further updated records shall be available by both public and private entities. A company publication format will enable cross-border comparison of data regarding national operations and regular practices. In case of a major accident, the operator shall notify immediately the competent authority with relevant information including the circumstances of the accident and its consequences. Thorough investigations shall be conducted in Member States followed by recommendations of the competent authority. Coordination and cooperation. The new regulation foresees measures regarding the effective cooperation between Member States through exchange knowledge, information and experience. It focuses especially on the functioning of the risk assessment, measures on accident prevention, compliance verification and emergency response related to offshore oil and gas operations within the Union, as well as beyond its borders where appropriate. Clear priorities and procedures need to be established in order to identify and facilitate the implementation of the best practices in the area. Moreover, the Commission will promote cooperation with third countries that undertake offshore oil and gas operations in the same marine regions as Member States. In parallel, the Commission will assess the safety of oil and gas operations in the matters of the third countries adjacent to waters of Member States and will support a coordinated approach to mutual exchange of experience and the establishment of preventative measures and regional emergency response plans and high safety standards at international level. The United Nations, the Regional Seas conventions and organizations, as well as the European Union, are developing marine environmental policies and monitoring and reporting procedures in order to confront this major issue. 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