Highlights

June 2008

As decision-makers in Brussels have started discussions on how the EU will address climate change, OGP’s Management Committee has approved two relevant positions papers. According to EU Affairs Manager Diederik Peereboom, ‘These will provide the OGP script for our advocacy campaign during the intense debate that will continue for the remainder of this year on the future rules for installations covered by the Emissions Trading Scheme (ETS). The papers also outline OGP’s main concerns about the proposal on how carbon dioxide can be stored safely in geological formations. With European elections imminent in June 2009, legislators are under pressure to adopt final legislative acts by the beginning of next year,’ Diederik says.

Proposals under consideration are aimed to advance the EU in its goal to reduce its greenhouse gas emission by 20% in 2020, based on emissions recorded in 2005. For ETS, the European Commission has proposed to gradually reduce the number of allowances allocated free of charge to installations by making CO2 emitters pay for an increasing share in auctions. By 2020 no free allowances would be given. The Commission also proposes to raise its objective to an emission reduction of -30%, if there is an international agreement on climate change.

OGP is requesting more clarity on what policy-makers understand to be an international agreement, Diederik says. ‘It’s clear that companies would have to factor in the ETS price in their operations. OGP’s concern is that the additional ETS price would add to the cost of producing oil and gas in Europe. This could lead to leaving valuable resources in the ground, hydrocarbons which could otherwise contribute to securing Europe’s energy supply from indigenous fields.’

Concerning carbon capture and storage (CCS) in geological formations, the European Commission has proposed legislation that would establish a framework across the EU. While the political debate is currently being dominated by the question on how to finance CCS projects, OGP is focusing on further improving the draft legislation through contacts with decision-makers. ‘One area of attention is to ensure that CO2 storage activities do not conflict with authorised uses of the areas involved, including the exploration and production of oil and gas,’ Diederik says. OGP also has a number of suggestions to clarify the text in such a way so as to provide greater legal certainty for both oil and gas companies and CO2 storage operators.

On the basis of the agreed position papers, OGP’s Brussels secretariat is meeting with member companies about how to best make the industry’s views known to Members of the European Parliament and Member States. ‘Our objective is to contribute to clear legislation that is workable for the industry,’ Diederik concludes.

For more information, contact:

diederik.peereboom@ogp.be.

Diederik Peereboom

June 2008

OGP joined forces with the World Climate Research Programme and the Joint Technical Commission for Oceanography and Marine Meteorology (JCOMM) to hold a workshop on climate change and the offshore industry on 27-29 May. The venue was WMO’s (World Meteorological Organization) Geneva headquarters and the event attracted 80 participants from the offshore industry and the science community.

The workshop’s objectives were to:

Gather evidence on climate change and its emerging impacts on offshore activities while reviewing the evolving industry requirements for metocean services within the context of a changing climate

Identify and prioritise key areas for future research as well as strengthening coordination of future development initiatives

According to OGP Metocean Committee Chair Chris Shaw, the main goal of the workshop ‘was to provide metocean engineers with the most up-to-date information from leading scientists on a range of climate change issues, such as potential increased storm intensity or changes in storm tracks in different parts of the world. Knowledge of any expected changes over the next 10-50 years in the probability distributions of key parameters such as wind speed and wave height are valuable in assessing engineering design reliability and estimating downtime for planning operations.

As a result of the workshop, it became apparent that current Global Climate Models (GCMs) as used for the latest IPCC (Intergovernmental Panel on Climate Change) scenario planning, are not yet reliable enough to answer our questions which are quite region/location specific, Chris reports. ‘Nevertheless, in the next rounds of climate modelling, advances will be made in our understanding of the physical processes and the time and space resolution of the GCMs such that we will be able to quantify some of the uncertainty. If traditional methods of using past climate are not a good basis for studying the future, the metocean engineers would like to be able to gain insight into the uncertainty surrounding the planning of future offshore operations as well as extreme storms which might affect design,’ he says. This is also likely to lead to the development of new statistical tools for determining extremes and hence engineering design criteria.

A number of initiatives were discussed in Geneva. These included sharing of historical data; improving standards for data collection and quality control; and formulating the industry requirements for model data to enable better co-operation and use of GCM data in the future.

‘Our Geneva meeting was a milestone for the metocean engineering community,’ Chris concludes. ‘Now, the dialogue we established with climate change scientists will continue.’

For further information, contact:

christopher.shaw@shell.com.

Lloyd Slater

June 2008

With OGP’s EGM in Rio just six months away, Executive Director Charles Bowen combined attendance at IPIECA’s May AGM in Brazil with the opportunity to make some preliminary plans with host company Petrobras. He also met with the Executive Secretaries of two South America’s most important regional and national oil and gas associations: ARPEL and Institute Brasileiro de Petroleo e Gas (IBP).

ARPEL, whose members are responsible for more than 90% of Latin America and the Caribbean’s upstream and downstream operations, is currently focusing on industry sustainability and reputation. IBP’s emphasis is on making Brazil’s oil and gas industry among the world’s most competitive, sustainable, ethical and socially responsible.

‘My meetings with Jose Felix Garcia-Garcia of ARPEL and Alvaro Alves Teixeira of IBP will help to shape our EGM agenda in Rio,’ Charles says. ‘Based on input from these organisations, we can ensure that participants get a real understanding of operations in the region.’

The date for the EGM will be Thursday, 13 November. A Management Committee meeting will precede it. For further information, contact:

dianne.james@ogp.org.uk.

Charles Bowen

June 2008

When law makers discuss the finer points of upstream-generated sound and its potential impact on marine life, they can get lost in the more arcane details and lose sight of basic physics at work. To help provide common ground for everyone involved in the issue, OGP, in conjunction with the International Association of Geophysical Contractors (IAGC) has just issued a new document: Fundamentals of underwater sound.

This 20-page primer, aimed at a broad audience, describes the behaviour of sound waves as they travel beneath the sea. Using readily comprehensible diagrams and tables, it examines sound levels, sound measurement and signal measurements. It compares measurements in air and water and also looks at sound propagation in water and special propagation modes – with particular emphasis on seismic signals.

According to OGP Technical Director John Campbell, Fundamentals of underwater sound meets a long-standing need for brief, non-contentious background resource on a complicated topic. ‘This document will form the basis for informed discussion on more specific issues related to sound and marine life,’ he says. It also couldn’t come at a better time, he says, at the beginning of a series of international conferences over the next month or so. These include the Capitol Hill Ocean Week in Washington, DC, the International Whaling Commission’s meeting in Santiago Chile and the World Petroleum Congress in Madrid.

Copies of Fundamentals of underwater sound are available from the publications section of

www.ogp.org.uk.

John Campbell

June 2008

A total of 87 people were killed in incidents relating to upstream activities in 2007. That was 28 fewer fatalities than recorded by participating companies the previous year. The fatal accident rate (FAR) rate was 3.0 deaths per 100 million hours worked, a 24% improvement over the figure recorded in last year’s report.

There was an even more dramatic drop in the frequency of lost time injuries, which decreased by a third from 0.99 per million hours worked in 2006 to 0.66 in 2007.

These improvements are considerably greater than might be expected from the slightly smaller size of the 2007 database. It recorded 2.91 billion hours worked, a 1% drop from the previous year’s 2.94 billion hours worked. In 2007 a total of 38 companies contributed data versus 41 companies in 2006. The most recent report, does, however, record a wider geographic spread, covering activities in 93 countries as compared to 84 countries previously.

On the negative side, the 2007 industry data showed that vehicle incidents were once again the single largest cause of fatalities in the upstream industry. In 2006, for the first time in several years, there had a been a reduction in such fatalities. In 2007, vehicle-related incidents accounted for 29.9% per of deaths.

According to Charles Bowen, OGP Executive Director, ‘This is a worrying regression, particularly since it follows a publication by OGP of a series of land transportation safety recommended practices. Once again, there is a concern that not enough operators and contractors are incorporating these practices into their safety management systems.’

Safety performance indicators – 2007 data can be downloaded in full from the publications section of:

www.ogp.org.uk.

Fatalities

A total of 87 upstream fatalities were reported in 2007. Of these, 11 involved company personnel and the rest were contractors. This is compared with a total of 115 fatalities recorded in 2006. Since then there has been a 1% drop in the number of work hours reported.

The overall FAR is 3.0 per 100 million hours worked, a decrease of 24% from 2006. The company FAR was 1.7, half of the FAR for contractors. The most common cause of fatalities in 2007 was the vehicle incident category. The previous year’s most significant fatality category was ‘struck by’.

In the single incident with the highest number of deaths in 2007, eight contractor employees were killed when an anchor-handling vessel capsized and sank west of the Shetland Islands.

Lost time injuries

Defined as a measure of the number of incidents that resulted in one or more days away from work, the LTI frequency in 2007 was 0.66 per million hours worked, a 33% decrease compared to 2006. This improvement was spread across both company and contractor performance. However, the difference between company and contractor LTIF has increased, with contractor performance 30% greater than that of companies.

There were 1,846 reported injuries resulting in a least one day off work. This equates to an average of 35 such injuries for every week in2007, a 34% reduction compared to 2006.

In total, the equivalent of about 293 person years were lost by reporting companies and their contractors as a result of injuries.

Total recordable incidents

The TRI rate of 2.68 per million hours worked was down 8% compared to the 2006 rate. It was, in fact, the lowest value on record for overall performance.

However, while contractor companies continued the improvement trend, it should be noted that there was a slight rise in recordable incidents reported by operating companies.

Carl Woolf

June 2008

If, as some predict, carbon dioxide capture & storage (CCS) initiatives are to be a significant means of reducing greenhouse gas emissions to the atmosphere, OGP can claim the Association was on hand when the experts who would regulate such schemes first got together. Environment Manager Abby Findlay represented OGP at the launch of the International CCS regulators’ Network in Paris on 13-14 May.

The venue was the headquarters of the International Energy Agency (IEA), which organised the meeting along with the carbon Sequestration Leadership Forum. Other delegates included regulators and policy makers at local, state/provincial, national and international levels. Overall, the primary focus was on those with responsibility for:

Environmental impact assessment/groundwater monitoring

Pipeline locations and approvals

Managing property rights

Monitoring and verification of greenhouse gas emissions

Attendees included representatives of 20 national governments and 13 international organisations including two EU directorates and the World Bank.

According to the organisers, the aim of the session was to ‘help inform the development of legal and regulatory frameworks for CCS.’ To that end, an international regulators’ network ‘will meet regularly to provide updates and exchange views on specific legal issues associated with the expansion of CCS worldwide.’

For Abby, the launch was ‘an excellent opportunity to get to know the leading figures in CCS and to identify emerging issues that could have a bearing on members’ CCS plans in future.’

For more information contact:

abby.findlay@ogp.org.uk.

Abby Findlay

June 2008

The new voice of OGP is particularly well-trained. Oonagh Hurley, who joined as the Association’s London Admin Assistant on 2 June, has a degree in theatre. She is currently in training for a top-level singing qualification. So what brings her to OGP?

‘A theatrical career isn’t for everyone. But we all have a role to play. I like to think that I can apply my skills to whatever I do. And as a Admin Assistant you need to be gracious and confident to everyone you deal with. My training in the theatre is helping with that,’ Oonagh says.

She’s particularly excited about working in the upstream industry. ‘When the job was first mentioned to me, the idea appealed from the start. It seemed as though it would put me at the centre of things since the oil and gas industry seems to be at the core of the global economy. Of course, it’s early days and I’m still learning the terminology. But now when I see a headline about oil and gas, I think – “I’m part of that world”’ – and it’s an exciting place to be.

Lloyd Slater

May 2008

On Friday, 18 April, OGP rounded off a busy week with the Association’s Annual General Meeting (AGM). The event attracted 59 people representing companies and associations from 19 countries in Europe, the Americas, the Middle East and Asia.

In his welcoming remarks, Management Committee Chair Raphael Vermeir suggested that participants bear in mind particular OGP issues, activities and achievements. ‘Naturally, in a week dominated by the SPE conference, we’re all well-attuned to HSE factors – particularly the interconnecting issues of asset integrity, personnel competence and skills shortages,’ he said.

Focusing on OGP’s published recommended practices, Raphael noted ‘copies had been flying off the shelves of the OGP stand at SPE. That’s great news. But I’m less happy to hear that it’s OGP members who have been taking them. Naturally, they’re welcome to do that. But the fact is, as members, they’ve had access to those documents for quite a while. They should be applying them to their own operations by now. That’s why our committees and task forces have been working so hard to produce them. Actually implementing recommended practices is the only way to make a positive difference to the industry’s HSE performance,’ he said. (At the end of the meeting, Raphael welcomed a challenge from the floor to the Management Committee members, suggesting that they set an example by encouraging their own companies to be among the first to implement OGP recommended practices.)

Raphael also took the opportunity to stress the need for improved communication between the Management Committee and the wider membership. To that end, he invited member representatives to suggest specific issues for discussion at the Management Committee’s August meeting in London. ‘To formalise and facilitate the process, you should take advantage of the opportunity that’s being offered in each standing committee meeting.’

Looking further ahead, Executive Director Charles Bowen confirmed that the next EGM will take place in Rio de Janeiro on November 12, 2008.

Lloyd Slater

May 2008

SPE kicked off the week with its 9th annual International Conference on Health, Safety and the Environment – recognised as the industry’s premier event on these topics. OGP Executive Director Charles Bowen addressed the opening session on the morning of 15 April.

He started, somewhat controversially, by questioning the meeting’s theme, In search of sustainable excellence. ‘Though I’m proud to be a member of the SPE Executive Committee that helped to shape this conference, I’m getting increasingly uncomfortable with the pursuit of excellence as our health and safety goal,’ he said. ‘My concerns aren’t over excellence itself. There’s certainly nothing wrong with excelling at anything you do. But hasn’t excellence just become one of those words like “passion” and – dare I say it? – “sustainability” – that have lost their real meaning through overuse and abuse?’

‘Instead,’ Charles argued, ‘the industry might be more effective in meeting its goals to reduce harm by concentrating on “rigour and reliability” in safety matters.’

Providing his audience with a sneak preview of some of the results of OGP’s annual Safety performance indicators report, Charles pointed out that there had been some improvements in 2007 over the previous year’s performance, particularly in reducing the number of industry-related deaths and in the frequency of lost time injuries.

‘But it doesn’t matter how you look at the statistics. It doesn’t matter how committed our reporting companies are to excellence. The fact remains that upstream work and associated activities are still injuring and killing people. Clearly, as an industry we’re still getting things wrong,’ Charles said.

While acknowledging the challenges of upstream operations – in harsh environments, on aging facilities and in places where safety cultures are still developing – Charles stressed that the imperatives to produce oil and gas won’t lessen. ‘According to the International Energy Agency, oil and gas will still account for 60% of the world’s energy needs in 2030,’ he said. With stretched resources between now and then, ‘It’s all too easy to be tempted into ill-judged short cuts and to get priorities out of perspective,’ he cautioned. ‘But as you know from experience, these are classic recipes for disaster. So maybe we should aspire to the ultimate goal of excellence by taking smaller, more immediately achievable steps,’ he suggested. ‘Maybe our first goal should be consistent competence in everything we do and dependability at all levels.’

While acknowledging that competence is not a very exciting word, it’s only when you think about its opposite ‘incompetence’ that things begin to clarify, he said. ‘While incompetence is seriously damning, competence stems from experience’ and benefiting from lessons learned from such major disasters as Piper Alpha, Charles pointed out.

A key way forward is through knowledge management, ‘an area in which organisations such as OGP are playing a leading role,’ he said, citing the guidance the Association is producing on asset integrity as a current example. Equally important, he added, are management systems, effective job training, and tried and tested recommended practices – all of which foster competence at work.

Within that context, Charles defined competence as:

Understanding what you’re doing and its implications on others

Realising that it may be best to do one more check before doing it

Having contingency plans in place in case of problems

And knowing when to say ‘stop’

‘Creating the culture I describe certainly isn’t going to be easy. It calls for leadership that inspires, recognises and rewards dependable, competent players who deliver,’ Charles concluded.

Other OGP contributions to SPE sessions during the rest of the conference included a presentation by Jill Kerr of ExxonMobil and the EQC on waste management guidelines, a session on sound and marine life led by Maartin Smies from Shell and the Sound & Marine Life Task Force, and Technical Director John Campbell’s talk on environmental reporting.

Charles Bowen

May 2008

Responding to a question posed by OGP, the author of Transparency International’s (TI) new report on the oil and gas industry made a major concession to the reality of the situation. Juanita Olaya admitted that oil and gas companies locked into decades-old confidentiality agreements with some host governments couldn’t be expected to unilaterally change the terms of their contracts. She added, however, that it would be helpful to the cause of transparency if companies restricted in their ability to publish their payments made such restrictions public.

The exchange came during TI’s panel discussion to coincide with the 28 April launch in London of its report Promoting Revenue Transparency. The report concluded that ‘a majority of leading oil and gas companies are far from transparent when it comes to the payment they make to resource-rich countries.’ TI urged companies ‘to act quickly to introduce pro-active reporting, rather than wait for legislation.’

In a statement on the TI report, OGP questioned the validity of the TI findings. The Association disagreed on the type of data sought – much of it proprietary and irrelevant to the issue of transparency – and also expressed doubts about the methodology used in the document.

‘TI rejected most of the concerns we raised,’ the OGP response said, and these had a bearing on company ratings. ‘What the TI report identifies as areas of low performance by some of our members should be viewed within the proper historic context. In some cases, it was decades ago, that companies signed agreements with host governments that don’t permit disclosure,’ the response said.

On the positive side, ‘OGP was pleased to see that the TI report acknowledges the potential of the Extractive Industries Transparency Initiative (EITI). EITI aims to persuade producing nations to publish what they are paid, so gets to the heart of the transparency issue,’ the response said. The Association has been closely involved with EITI since its inception following the world Summit on Sustainability in 2002. (See Highlights February 2003.)

Lloyd Slater