Norwegian Regulators Sharpen Focus on Offshore Drillers and Arctic Safety

By Gwladys Fouche

STAVANGER, Norway, Jan 16 (Reuters) – Oil companies are overlooking some vital safety issues when preparing to drill in frontier Arctic areas, the head of the safety watchdog for the Norwegian oil industry said.

The Arctic is estimated to hold some 30 percent of the world’s undiscovered gas and 13 percent of its untapped oil, which is leading energy firms to explore further north.

But exploring in this remote, cold region is risky, as Royal Dutch Shell most recently experienced when its Kulluk oil rig ran aground in Alaska on New Year’s Eve in near hurricane conditions.

Environmentalists have long said the Arctic’s challenging conditions make it too risky to search for hydrocarbons. A spill, they say, would be near impossible to clean up.

Norway, the world’s eighth-biggest crude exporter, is one of several Arctic nations opening vast swathes of northern offshore areas to oil companies, most of them so far ice-free and relatively accessible. But oil companies are also looking even further north to more difficult zones.

“There are several things that do not appear to be clearly on their agenda,” Magne Ognedal, head of the Petroleum Safety Authority Norway, said in an interview.

“One of them is satellite coverage, which is so bad so far north that some say that you cannot navigate safely in these areas,” he added.

“Polar low-pressure fronts are (also) difficult: a storm can form in half an hour. Suddenly you have a storm that you were not warned about, and what do you do? We need better weather warning systems.”

A third issue is the lack of interest in predicting the edge of the polar ice cap, which changes in size with the seasons and the years, Ognedal suggested. Installations could be covered with ice or risk colliding with drifting icebergs.

“Where will the ice edge spread to? It could be that they (companies) do not need to care about that, because the ice and snow are melting,” he said.

He cited Skrugard, Norway’s northernmost oil discovery so far, situated some 240 kilometres (150 miles) north of Europe.

“From a 10,000-year perspective, Skrugard is lying on the ice polar cap. It could be in 2014 or in 10,000 years, but there is a risk, and they need to factor that in.”

NO CHANGE TO REGULATIONS

On other safety aspects, the industry is making good progress, including developing suitable clothing for staff to work outdoors in very cold temperatures, the regulator said.

Companies are also concerned about emergency preparedness – how to respond to a crisis situation, he said.

“They have a lot of good things on their agenda, for which they are seeking solutions,” he said.

Norway has no plans to change its safety regulations to make it easier for the industry as it pushes further north, Ognedal added.

“Someone who drops in the sea with a survival suit must be picked up from the sea within two hours, whether it is in the southern North Sea or in the North,” he said.

“There will be no change in the regulations to make it feasible for companies to do work there.”

FOCUS ON DRILLING FIRMS

This year, the Norwegian safety regulator will pay particular attention to the monitoring of drilling firms.

“We are sharpening our attention at the moment … towards drillers … such as Transocean and Seadrill, and not just the oil firms,” he said.

“Before Macondo, (drillers) did not have a good enough focus on how to prevent big accidents,” Ognedal added, referring to the BP’s huge Macondo oil spill in the Gulf of Mexico following an explosion that killed 11 people.

The Macondo disaster and a 2009 accident in the Montara field operated by Thailand’s PTT in the Timor Sea off Australia have resulted in a wider focus on drilling by safety regulators, he said.

In the United States, the regulator is scrutinising contractors more closely, unlike its previous practice of mainly examining the operators employing the contractors.

BOOMING NORWAY

In Norway, high oil prices and a slew of recent discoveries have boosted investment to record levels. Authorities expect investments of 157 billion crowns ($28.2 billion) this year, rising to 190 billion crowns in 2017.

Companies are so busy exploring and producing oil that the industry’s own lobby has warned they may not have enough engineers to do the work required. Ognedal is concerned that a lack of competent staff could have an impact on safety.

“I have told the industry that they must set the limits themselves, not the authorities, but they must take it seriously,” he said.

“Some companies are very good and serious, but it is a more important question today than it was before … when you see the level of investments expected for Norway.”

Ognedal is also concerned about delays in maintaining safety-critical equipment in good condition at ageing installations.

“It is getting better, but there is a lot to do … Not everything is as it should be,” he said.

He did not name specific companies, but the largest operator off Norway, state-owned Statoil, came under fire a few years ago for delays in maintenance at its Norwegian platforms.

Statoil says it still has a backlog to address but that maintenance of equipment crucial to safety is under control.

($1 = 5.5652 Norwegian kroner)

(editing by Jane Baird)

(c) 2013 Thomson Reuters, Click For Restrictions