Oil and gas sector is safe and sound

Date: 27/06/1996

By Tim Jones

IN recent times, the vital industrial interests of the UK have been synonymous with beef and farmers.

But every northern European country has a beef industry. The same cannot be said for oil and gas production.

In this sector, the UK accounts for 70&percent; of the EU's total domestic oil production and 45&percent; of its gas. So far, two billion tonnes of oil have been produced from UK waters, with total remaining reserves estimated to stand at up to 6 billion tonnes.

When the UK oil and gas lobby speaks, it speaks for the whole industry in Europe.

“We want to persuade the EU that the industry has a very healthy future,” says Harold Hughes, director of the UK Offshore Operators' Association (UKOOA).

“Production will peak in both oil and gas during the next four years with a mild downturn afterwards, and even that could be exaggerated.”

In a report dubbed 'Towards 2020' which the UKOOA recently presented to officials at the European Commission, the association estimates that North Sea production will rise from 2.7 million barrels per day in 1995 to 2.9 million next year.

The decline in output to about a million barrels in 2020 will, Hughes believes, be offset to some extent by new developments in the North Sea as well as in the west of the Shetlands field.

Moreover, improved output from older fields and better-than-expected exploration results from frontier areas should bolster production. The UK is expected to remain self-sufficient in oil for the next decade.

Gas production potential is expected to increase to between 10-11,000 cubic feet per day between 1998 and 2004, before declining to about 4,000 by 2020.

Over the past 30 years, the UK oil and gas industry has grown from nothing to providing three-quarters of the total primary energy produced in the country. In 1994, the industry invested 10 billion ecu, with 1 billion going into exploration and 4.5 billion ecu each for operations and new developments.

However, all this requires predictability on the part of politicians.

“This continuing impetus depends upon political and fiscal stability at both the UK and the EU level,” insists Hughes.

Increasing demands for social and enviromental legislation both nationally and at the Union level need to be watched, he argues.

The association was particularly concerned by the outcry over the decommissioning of the Brent Spar oil platform in the summer of 1995, when Greenpeace forced Shell to abandon attempts to dispose of it at sea despite UK government opposition.

After this, the industry decided to review the way it had approached this issue in the past.

“This is becoming increasingly important since, over the next decade, as many as 50 installations will need to be decommissioned,” says Hughes, who puts the cost at nearly 2 billion ecu.

DGXI (environment) and DGXVII (energy) are conducting a study into all the aspects of decommissioning: the environmental impact, safety for those involved in the work and the cost and public acceptability of different forms of dumping. The UKOOA is keenly awaiting the results, which are due in the autumn.

Similarly, following the explosion on the Piper Alpha platform in 1988, an independent report was drawn up for the UK government and an EU directive was passed to tighten up health and safety procedures.

Hughes says the industry has dramatically improved its safety record over the past decade, with injuries being reduced by almost a half between 1988 and 1994.

However, even though the EU agreed a directive to limit working time across the EU, it exempted offshore oil and gas workers from these strictures - a derogation the UKOOA wants to maintain.

“If we had artificial limits on how long people were allowed to work offshore, this would lead to significant extra costs for companies and no benefits for the offshore workers,” says Hughes.

The industry has traditionally operated the so-called '12 hours on, 12 hours off' system. Workers are flown out to the platforms by helicopter for two- or three-week shifts, followed by an equivalent time onshore.

“That minimises helicopter costs and does not impose leisure time on workers in a situation where they cannot do anything with it.”

After a transition period, the Working Time Directive is meant to bring an end to Sunday working, with night shifts being limited to eight hours.

But Hughes says: “I do not want to overemphasise this. We believe that DGV (employment) recognises the particular requirements of working offshore.”

He is pleased that the Commission seems to take on board many of the arguments put forward by his members, even though these must be very alien to them.

“The offshore scene is not that familiar to EU officials,” he points out. “By and large, they come from countries that either have no offshore industry or those where it is very limited in size.”