North Sea oil spill risk ‘unacceptably high’, claims European commission
Commission says new laws needed to prevent another Deepwater Horizon disaster, as Shell and Exxon reveal massive profits
The European commission has warned that the likelihood of a Deepwater Horizon-type accident in the North Sea remains “unacceptably high” as it outlined new laws to counter the danger.
The moves have angered the UK government and offshore oil industry while threatening to put a brake on some of the massive profits declared by key operators Shell and ExxonMobil.
Brussels officials defended their plans to effectively seize overall control of North Sea regulation from the British authorities.
"We need to prevent accidents like Deepwater Horizon in the Gulf of Mexico from happening," said energy commissioner Günther Oettinger. “Securing best industry practices in all our offshore operations is an undisputable must. Today’s proposal is a crucial step forward towards safer offshore activities to the benefit of our citizens and our environment.”
In the UK the Department of Energy and Climate Change said it was “very concerned” the moves could undermine its already strong safety regime while the Oil & Gas UK industry association said it opposed the proposals.
Malcolm Webb, chief executive of the association, said: “Relinquishing regulatory control to the EU, which has no established competence in this matter and where only three out of the 27 member states have an offshore oil and gas industry of real scale, risks undermining safety and environmental performance here in the UK.”
Among those hit by the proposed new licensing, inspection and liability rules would be Shell and ExxonMobil, two of the world’s biggest oil companies, which often work together in the North Sea.
Shell reported it had doubled its third-quarter profits to more than $7bn (£4.4bn) and triggered a major share buyback programme after being helped by an increase in production from the tar sands of Canada as well as its North Sea fields.
Exxon raised net income in the three-month period by more than 40% to $10.3bn over 12 months ago, even though its production fell by its heaviest level for three years. The company reported sales of $125bn – or nearly $1.4bn a day.
The two oil groups – the largest in Europe and the US respectively – are collectively pumping nearly $70bn a year into new projects, including some in highly sensitive areas such as the Arctic.
Expansion of a controversial Canadian plant at Athabasca, Alberta, meant Shell and its partners were able to produce 255,000 barrels a day of tar-sands oil, in a development that will raise its own carbon dioxide contribution from the sector to more than 3.7m tonnes a year.
Shell plans further increases in output from the tar sands in a project set to run for 40 years, despite mounting opposition from environmentalists. The company’s share of tar sands production has been raised to 153,000 barrels so far – meaning it now accounts for around 5% of total corporate output.
Simon Henry, Shell’s financial director, said the carbon impact would be diluted in future by Shell pressing ahead with a carbon capture and storage (CCS) project backed by both regional and national governments.
He described as a “disappointment” the company’s involvement in another CCS prototype scheme – at Longannet in Scotland – which has been shelved.
Shell saw overall oil and gas output for the third quarter, excluding divestments, rise by 2% over the same period last year with the help of both tar sands and a gas-to-liquids scheme – which converts natural gas to synthetic liquid fuels – in the Gulf state of Qatar.This helped to raise quarterly profits from $3.5bn to $7.2bn on a current-cost-of-supply basis – the main way the company measures its earnings – while cash flow from the first nine months reached $30bn.
Shell spent $800m buying back its own shares and Henry admitted that looking after its $20bn pile of cash in today’s turbulent financial climate was a worry. “We are pretty careful where that is on a daily basis,” he said.