Offshore Directive – HSE legislative Changes

Health and Safety Executive Offshore Directive – HSE legislative Changes Jim Neilson Head Offshore Diving and pipelines Policy

Deepwater Horizon - 22 April 201011 workers killedPollution – 4.9 million barrels

Introduction (1) • Following the Deepwater Horizon incident in April 2010, the European Commission concluded that the existing divergent and fragmented regulatory framework applying to the safety of offshore oil and gas operations in Europe, along with current industry safety practices did not provide adequate assurance that risks from offshore accidents were minimised throughout the Union • On the 28th June 2013, the Offshore Directive was published • The objective of this 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

Introduction (2) • The UK (HSE, DECC, etc.) will have to implement the Directive by 19 July 2015 • DECC and HSE, with support from DfT, MCA, DEFRA etc. will work together to deliver this implementation project • Today we will present our emerging thoughts on the impact on the current UK offshore oil and gas regime

Implementation approach (1) • DECC and HSE propose to transpose the Directive wherever possible trying to retain the current safety standards in the Offshore Installations (Safety Case) Regulations 2005 (SCR 2005), other offshore health and safety regulations and existing environmental and emergency response legislation • This approach will: fulfil the Government’s and Industry’s desire to maintain the current world class offshore regime; maintain effective and appropriate elements of the existing safety and environmental regimes, while improving our approach by imbedding the new Directive requirements; and minimising at every opportunity the impact of any change on UK interests • As many of the Directive’s requirements are already implemented through the SCR 2005, these regulations will be revoked and re-introduced as the SCR 2015, but with existing provisions expanded, and new duties added, to implement the Directive • DECC will outline later the changes they think may be needed to environmental legislation

Implementation approach (2) • DECC and HSE will follow ‘copy out’ when possible, but in line with the Government’s Guiding Principles for EU Legislation, when appropriate we propose to: • Elaborate the Directive’s wording in places to clarify what is required (e.g. by adding in “as low as reasonably practicable” to ensure consistency with the existing UK health and safety regime • Not fully implementing some legal requirements on operators as they are unenforceable • Implement some of the Directive’s requirements without legislation, using administrative means (e.g. the functions of the new offshore competent authority in Chapter 1 of the consultation document)

Maintaining the scope of the UK regime • To maintain health and safety standards during of the most dangerous offshore activities, we propose to maintain diving operations involving less than five people (rare events offshore) within the definition of major accident • There is a risk that HSE’s interpretation of offshore installation could be perceived as gold plating, this will ultimately come down to how the Courts view the term “facility” (which is not defined in the Directive) as compared with “structure”, the term used in the UK. If we do not maintain the UK approach, it could significantly lower standards offshore by allowing some structures undertaking activities with major accident potential, to fall out of scope • The HSE monitors the movement of installations within UK waters, and require a notification when an installation enters or leaves the UK’s water. The Directive only requires notifications from mobile production installations. The UK intends to maintain its current approach, as monitoring the movements of non-production installation (e.g. drilling rigs) is essential to ensuring they follow UK requirements and so contributes to maintaining safety standards

Notification issues (1) • Notifications must now include environmental as well as safety information • Operators to take CA comments on the design notifications into account when preparing a safety case • Maintaining legal defences? • Enter or leave notifications prior to event, not on the day

Notification issues (2) • Well notification to include the findings of ICP and describe the action taken • Well operator to consult ICP before submitting a material change • New requirement to ensure that operations are conducted in line with the plans in the notification

The Safety Case • Must include safety and environmental information (e.g. SEMS and SECE) • Contain a description of the internal emergency Response plan and CMAPP • A statement made after considering the independent verifiers report, that the record of safety and environmental critical elements and their scheme of maintenance as specified in the report will be suitable • Need to be more explicit that the operator must revise the safety case in respect of a material change • Operators to provide any other information the CA feels necessary before a case can be accepted

Internal emergency response plan • Information needed generally covered in OPEPs and PFEER emergency plan • Will require some additional information (e.g. oil spill response gap) • New requirement to describe these in the safety case as the internal emergency response plan • Plans may need to be updated depending on future activities and locations, this for the operator or owner of the installation

Dismantling a fixed production installation • Sufficient details to update the description of the internal emergency response plan • Describe the means of isolating all hazardous substances, and the permanent sealing of the wells from the installation and environment • Description of major hazard risks associated with decommissioning • To maintain control systems for preventing a major accident to the environment

Independent verification • From a safety perspective, industry already establishes an independent verification scheme for safety critical elements. However, substantial changes needed as the Directive describes the verification scheme differently, there are new requirements and also a need to include SECEs within the verification scheme • Article 17(2) states that independent verification shall be without prejudice to the responsibility of the operator or owner for the correct and safe functioning of the SECEs. This is a new requirement, but as this principle already broadly applies in the UK, we do not think a legal requirement is needed • This is a difficult area that we are still considering. For example, do we need to use the SECE term, is there a difference for non-production installations between before enters waters or commences operation, and as this includes well examinations do we need to add any new bits to DCR

Corporate major accident prevention policy • Does this fall only on corporations? • To the UK, it does not make sense to only have some of the operators and owners involved in offshore oil and gas operations being captured by this duty to outline their high-level commitment to prevent major accidents • New requirement that operators and owners prepare a corporate major accident prevention policy, which covers their installations outside the union • Well operators need to submit a policy with a notification if not submitted previously

Safety and environmental management system • There is already a legal requirement to have a safety management system within UK legislation • DECC also have in place a voluntary agreement for operators to produce an environmental management system, which they intend to make a formal legal duty under their proposals • To minimise the changes to the UK’s offshore oil and gas regime, and burdens on Industry, HSE and DECC plan to maintain the current arrangements • To fully implement the Directive, new requirements are needed for operators and owners to set out in a document their safety and environment management system, explain how this is to be integrated with the overall management system, and then describe this within the safety case • Article 19(1), requires the use of suitable technical measures in order to promote the reliability of the collection and recording of relevant data and to prevent its manipulation. We propose to include this with the safety and environmental management system requirements

Reporting requirements (1) • Update on data reporting to follow • When an activity carried out by an operator (installation or well) or owner poses an immediate danger to human health or significantly increases the risk of a major accident, the Directive requires that they must take suitable measures, including suspending the activity, until the danger or risk is adequately controlled. When an operator or owner takes such action, they must notify the CA no later that 24 hrs after taking action

Reporting requirements (2) • New requirements relating to companies registered in the UK, and conducting oil and gas operations themselves (as licensees or operators) or through subsidiaries outside the European Union, to report on request any major accident in which they have been involved • The information to be reported is not defined, and we did consider including this within the legislation. However, it is possible that the information needed may be slightly different depending on the major accident, and longer-term, national regulators may want to agree a consistent approach in terms of the information requested. For these reasons, we are not proposing to define the information required in legislation • The Directive requires the UK to have a broader requirement to notify all major accidents, or a situation where there is an immediate risk of a major accident

Transitional arrangements (1) - Existing installations are those that existed on 18 July 2013 • Operators of production installations that came into existence, or owners of non-production installations without a UK safety case and working in UK waters for the first time, after the 19 July 2016 the new laws apply immediately • Owners of other non-production installations, and production installations which came into existence after 18 July 2013, must comply by the earlier date of the 19 July 2016 or the date of their next thorough review • Operators of existing production installations (other than those executing well operations) which existed prior to 18 July 2013, must comply by the earlier date of the 19 July 2018 or the date of their next thorough review • Operators executing well operations, the new laws apply on the 19 July 2016, unless this involves an existing installation with an earlier implementation date • To comply with the new legal requirements, it may be considered sufficient if an existing well notification or safety case is submitted, showing clearly the material changes and new requirements • This may require safety case material changes to be submitted at least three months prior to when compliance with the new law is required

Transitional arrangements (2) • An analysis of the thorough review dates of non-production and production installations in the UK has indicated that the majority of non-production installation safety cases are due to be assessed between April and July 2016. Most of the production installations safety cases need assessment between April and July 2018 • As these transitional arrangements will make it impossible for the UK’s offshore CA to assess and accept safety cases within the specified timeframes, and an installation cannot be operated without an accepted safety case, DECC and HSE must work with Industry to find an acceptable way forward • Initial discussions between DECC, HSE and Industry have reached an agreement in principle that operators and owners will book an assessment date with the new CA. This will ensure that each operator and owner will meet these transitional arrangements, but more importantly, that the CA will give a commitment to assess the safety case, and if appropriate accept it, by the agreed deadline • In agreeing this way forward, Industry have recognised that in most cases the timescales agreed with the CA, would be shorter than the transitional arrangements outlined in the Directive

Regulator requirements and powers • Article 6(6) requires the CA to inform the licensing authority if the operator no longer has the capacity to meet the requirements of the Directive. SCR 2015 – Regulation 33 addresses this need • Article 11(3) requires the CA to respond to the design notification with comments to be taken into account by the operator in the safety case, and if they have no comments, to make a statement to that effect. We have included this within Regulation 6(4) of SCR 2015 • Article 18(a) requires the CA to prohibit the operation, or commencement of operations, on any installation where the measures outlined in the safety case or notifications are considered insufficient. Regulation 35 of the SCR 2015 has been introduced to give the CA this power • Article 18(c) of the Directive “requires the operator to take such proportionate measures as the CA considers necessary to ensure compliance with Article 3(1). The UK argues that what steps are reasonable for an operator or owner to take to prevent a major accident are already outlined in our legislation and guidance. If an operator does not meet these duties, then we can issue an Improvement Notice (with Schedule) to require them to improve the measures taken. We have concluded that this approach meets this requirement

Reducing the stock of regulations • The Offshore Installations (Safety Zones) Regulations 1987 • The Submarine Pipelines (Inspectors etc) Regulations 1977 and Offshore Installations Inspectors and Casualties Regulations 1973 • Offshore Installations (Logbooks and Registration of Death) Regulations 1972 and Offshore Safety (Miscellaneous Amendments) Regulations 2002

Additional legislative change • As the HSE Board requested when considering unconventional gas in October 2013, we are proposing to bring underground coal gasification within the scope of our onshore oil and gas major hazard legislation • As hydrocarbon gas is now being stored onshore in solution mined salt caverns and other geological formation that have never contained oil and gas, and there are plans to do this offshore, we plan to update our onshore and offshore legislation to bring these work activities within our onshore and offshore oil and gas major hazard legislation • In 2013, we updated the Health and Safety at Work etc. Act (Application Outside Great Britain) Order. This included changes, which clarify when a structure is an offshore installation. For consistency and clarity, we propose updating the definition of offshore installation in the Offshore Installations and Pipelines (Management and Administration) Regulations • We also propose to amend the definition of operator of a production installation and well operator to ensure a duty holder can be identified for high risk decommissioning activities, if a petroleum license holder is no longer in place

Offshore ACoPs • There are two offshore ACoPs, one relates to the Prevention of Fire and Explosion, and Emergency Response on Offshore Installations and the other is on Health Care and First Aid on Offshore Installations and Pipeline Works • We are reviewing these at this time as part of the Lofstedt commitment to review all ACoPs • HSE’s initial assessment is that these ACoPs should remain, but be simplified and updated where possible. A summary of the changes proposed to update and simplify each ACoP will be in the consultation document

Next steps Website developed – Launched 6 January http://www.hse.gov.uk/offshore/directive.htm Impact Assessment development – Industry focus groups in March and April Workshops planned 26 February and 17 March (London) Formal consultation in June – September 2014 New guidance published March 2015 New Regulations come into force July 2015

Offshore Directive – HSE legislative Changes