Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005.  

rose to move, That the Grand Committee do report to the House that it has   considered the Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005. The noble Lord said: The draft regulations before the Grand Committee today are designed to provide a statutory basis for the UK offshore oil and gas industry to continue to reduce the quantities of oil discharged into the sea during the course of offshore operations. The regulations achieve this by introducing a more robust and effective approach to the management of oil discharges, and will also enable the United Kingdom to meet international obligations. Some background to what is inevitably a fairly technical set of regulations might be helpful. Virtually all the oil discharged into the sea as a result of offshore oil and gas exploration and production activities is contained in the water that is produced with the oil. The total amount of oil discharged in this way is comparatively small but not insignificant. In 2003, 266 million tonnes of produced water were discharged containing 5,190 tonnes of oil. Other oil discharges occur, for example, in the drainage from offshore installations, during subsea pipeline maintenance operations and during commissioning and decommissioning operations. There is no evidence that   any of these discharges have had an adverse environmental effect, but the precautionary principle has been applied. Since United Kingdom oil production first began in 1975, oil discharges have been regulated under the Prevention of Oil Pollution Act 1971. This Act was implemented to regulate either accidental or intentional oil discharges from shipping. Although the Act anticipated offshore oil and gas exploration and production, the Government believe that this Act now lacks the necessary flexibility to cope with the nature of today’s environmental demands. These demands arise specifically as a result of changing environmental attitudes among contracting parties to the OSPAR Convention—the Oslo/Paris Convention for the Protection of the Marine Environment of the North-East Atlantic. The new regulations are therefore required to remedy the deficiencies of the 1971 Act and to give the United Kingdom more wide-ranging powers to fulfil its international obligations. Members of the Committee will have seen from the regulatory impact assessment that there are four reasons for making these regulations. The first is to introduce a more comprehensive definition of oil to include all relevant materials likely to be encountered in offshore oil and gas operations. The definition of oil in the 1971 Act is now inadequate. The definition in the draft regulations will allow discharges of all types of oil to be controlled. The second reason is to provide my department’s offshore environmental inspectors with stronger and more explicit inspection, investigation and enforcement powers in the event of unlawful oil discharges or potentially hazardous operations. The regulations will confer powers on offshore inspectors to conduct inspections, including routine monitoring, and to carry out investigations following an incident. The regulations will also allow offshore inspectors to demand action to minimise the risk of pollution. The third reason for making these regulations is to introduce a permitting system for operational discharges which will replace the issue of exemptions under the 1971 Act. A permitting system is a positive means of control, where operators of offshore oil and gas installations will have to obtain permits to cover all operational discharges of oil, which will specify appropriate control measures to prevent any adverse effects. The final reason for making these regulations is to authorise the setting up of a trading scheme for reducing the amount of dispersed oil discharged in produced water. In order to achieve the OSPAR target commitment of a 15 per cent reduction in such discharges, it has been agreed with the industry that the most cost-effective way to meet the target would be to introduce a trading scheme rather than demanding that reductions are made at every installation irrespective of relative cost. One of the documents noble Lords will have seen is the rules for the scheme, which set out in detail how it will operate. The regulatory impact assessment confirms that significant costs will arise from the investment in technology to reduce these discharges. The estimate provided by the industry—£130 million—may seem large, but the United Kingdom is committed to meeting that obligation. It was agreed with the OSPAR contracting parties and the offshore industry several years ago, so the time for debating its economic implications has passed. Indeed, possible adverse consequences of that investment may have been rather diluted in the light of current oil prices. It is therefore highly unlikely that oil production or future investment in new developments will be affected by the obligation. The direct benefit will be a 15 per cent reduction in discharges. The only other contracting party to the OSPAR convention that produces large quantities of oil, and produced water, is Norway. The Netherlands, for example, produces mostly gas. Norway is also subject to the 15 per cent reduction target, but it will be achieved by the adoption of technical measures further to clean up the discharges. Norway can do that because most of its offshore installations are newer than those on the UK continental shelf and its production is amenable to new treatment technologies. In contrast, UK installations are generally much older and the production is more difficult to treat, so it will have to rely to a greater extent on the more expensive option of re-injection of the produced water. The UK offshore industry accepts that that different approach is an inevitable consequence of the maturity and nature of the UK offshore sector. That is the main reason why a trading scheme is being introduced to reduce the overall costs of meeting the target. There has been wide and extensive consultation on drafts of the regulations, the trading scheme rules, the   accompanying guidance notes and the regulatory impact assessment, and meetings have been held with representatives of the industry and environmental bodies. Implementation of the regulations will nevertheless be kept under review and there is provision to amend the guidance notes and the trading scheme rules in the light of experience. In putting together those regulations, we have sought to keep the burden on the industry to a minimum and believe that that has been achieved. I also believe that we have reduced the burden of the OSPAR 15 per cent reduction target by including provision for a trading scheme. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005 [13th Report from the Joint Committee].—(Lord McKenzie of Luton.)