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Hazardex Interview: Malcolm Webb, Chief Executive, Oil & Gas UK

26 September 2013

Malcolm Webb has exceptional experience of the UK hydrocarbon sector, both upstream and downstream. For the last 10 years he has been CEO of Oil & Gas UK, which represents the offshore industry, and before that was head of the UK Petroleum Industry Association, representing the UK oil refining and marketing sector. Earlier still, he held a range of legal and senior positions at Burmah Oil, the British National Oil Corporation, Charterhouse Petroleum and PetroFina.

Oil & Gas UK is the leading representative body for the UK offshore oil and gas industry, with a membership open to all companies active in the UK continental shelf, from super majors to large contractor businesses and from independent oil companies to SMEs working in the supply chain.

Its aim is to strengthen the long-term health of the country’s offshore oil and gas industry by working closely with companies across the sector, governments and other stakeholders. 

The Piper 25 Conference

One of the main ways of achieving this is through a programme of events to allow the exchange of ideas and to provoke debate. The latest of these was the Piper 25 offshore safety conference which ran for three days in June in Aberdeen, and was held to review how far offshore safety has evolved 25 years on from the Piper Alpha disaster.

“Piper 25 was very successful,” says Webb. “It achieved most of the goals we had set. We wanted a thought-provoking conference and we got that. It acted on a number of different levels, and we had some seminal moments at the conference, not least during Lord Cullen’s presentation on his investigation and report on Piper Alpha, which set the tone for much of our approach to safety since then.” 

The calibre of the keynote presentations was exceptional, with contributions from the US Coast Guard Admiral responsible for the Deepwater Horizon incident, a former chairman of the US Chemical Safety Board, the chief executive of the Australian offshore regulatory agency, the chair of the UK’s HSE and several others at this level. Another highlight for Webb was Hon. Mr Justice Haddon-Cave’s Nimrod review (“A masterclass”), and he is keen to point out that all these top-level presentations are still available for viewing on the Oil & Gas UK website.

Another important element for Webb was the interactive nature of the event, with keynote speeches every morning followed by a large number of high quality parallel sessions on different aspects of offshore safety over the rest of the day. A unique feature was the involvement of a theatre company which mounted two staged reconstructions of events in the control rooms of the Fukushima Dai-Ichi nuclear plant and Deepwater Horizon drilling rig as loss of control turned to disaster.

“Here we were looking at how events unfolded and impacted on the humans involved. As the story progressed, the presenters would step in and invite us to reflect and comment on what was happening with neighbours in the auditorium, and try and draw lessons from it. I found that very powerful.”

Safety is one of the most important aspects of the association’s work, and Webb says an important part of the message has to be that complacency is the biggest enemy.

“As I said in my opening remarks at the conference, I think it is right to say that things have improved since Piper Alpha. The Cullen report put us on a different trajectory and I think it gave us the right approach – a strong regulator working with the industry within a goal setting regime. I think that is the right prescription and things have definitely improved as a result. But then, they really had to…

“The great trap for us would be to start believing that things were satisfactory, that we’re at the end of the journey. We’re not. The fact is that we are a hazardous industry – that is unavoidable – and we must get to a place where we do no harm to the people who work in the sector and to the population at large. We’ve got a way to go to achieve that.

“For example, this wasn’t in our direct area, but recently two people were killed and another seriously injured in the Dutch sector of the North Sea, so these events are still happening and we’ve got to find a way to stop them happening.”

With a number of the presentations at Piper 25 looking at the situation in North America, the conversation turned to some of the differences between regulation in the UK and the USA.

The Safety Case

Malcolm Webb, Chief Executive, Oil & Gas UK
Malcolm Webb, Chief Executive, Oil & Gas UK

Prof. Andrew Hopkins of Australian National University, for example, uncovered some of the deficiencies in US regulation and investigations in his paper ‘Safety Case Regulation Post-Macondo’.

“In the US, I think they haven’t come as far as us as regards offshore regulation – certainly as far as adopting a goal-oriented regime is concerned,” says Webb. “We heard from Andrew Hopkins in his presentation on Deepwater Horizon about the distance they still are from a goal-oriented safety regime.

“I met with some US regulators when they came over to the UK after Deepwater Horizon, and I went before the US Secretary of the Interior Ken Salazar’s commission in Washington, so I had a good few conversations on the subject. But no, I don’t think they accept the Safety Case method yet. I find this regrettable, because I passionately believe it to be the way forward.

Webb is aware of the potential weaknesses of the Safety Case method, as evidenced in the Haddon-Cave Nimrod review, where corners were cut and lazy assumptions allowed to stand, but still thinks it better than the alternatives.

“I think there could be a view in the US that the Safety Case, because it isn’t a prescriptive regime, is somehow soft. But it isn’t. The Safety Case regime is very onerous, I believe, on both sides. 

“It demands a lot of industry – you can’t just sit back and rely on the regulations that were passed a year or two ago – you’re constantly having to think about new technology and the application of that new technology and how it could assist to reduce the risk to ALARP. 

“And I think it’s also quite tough for the regulator too, because they can’t rely on ticking boxes either. They’ve got to be there in that space as well, so you need strong, enlightened, highly professional and well-resourced regulators to make it work – and I think that was a clear message from Piper 25.

“I think we’re very lucky in this country to have a robust, well-respected regulator in the Health and Safety Executive, and an important part of my job is to see that it remains fit for purpose into the future. Proper resourcing is very important and Sir Ian Wood’s review on the HSE will be very interesting to read on this.”

The importance of simplicity

At Piper 25, former US Chemical Safety Board Chairman John Bresland alluded to the problems the CSB had experienced investigating the fatal West Fertilizer incident in Texas, where the many different regulators and investigators trod on each others’ toes in the aftermath of the disaster (See the interview with Bresland in the August edition of Hazardex).

In the UK, most energy or manufacturing sector companies have to deal with only two regulators – the HSE and Environment Agency. In the USA, companies face regulation by an alphabet soup that may include the Occupational Safety and Health Administration, Environmental Protection Agency, Department of Homeland Security, US Pipeline and Hazardous Materials Safety Administration, Bureau of Alcohol, Tobacco and Firearms, Mine Safety and Health Adminstration, Bureau of Safety and Environmental Enforcement, Bureau of Ocean Energy Management, Regulation & Enforcement amongst others. And after an incident, a whole slew of other investigatory agencies might get involved. 

Webb thinks in this instance that less is more. 

“At Piper 25, again and again we heard about the importance of simplicity, the importance of intelligent design, and that applies on the regulators’ side as much as on the industry side. Safety is about organisational design, too.”

One possible consequence of the relative simplicity of oversight and clearly defined responsibilities are the generally positive relations between the different parties involved in the UK offshore sector. 

Stakeholder involvement

One of the senior US regulators visiting the UK recently expressed surprise at the cordial and constructive relations he witnessed in the UK between government, regulators and industry. In the US offshore sector, he told Webb, relations between regulators and trade bodies were usually adversarial, and sometimes positively poisonous.

The UK offshore sector also benefits from stronger than usual cross-sector and cross-workforce involvement in safety. Oil & Gas UK is a founding member of Step Change for Safety, the cross-industry partnership with the remit to make the UK the safest oil and gas exploration and production province in the world.

It has a number of working groups covering such areas as workforce engagement, competence, helicopters, asset integrity and human factors, and the involvement of every side of the industry, including unions and regulators, makes for a particularly effective forum for discussions.

“I think Step Change in Safety has done fantastic stuff, on hydrocarbon releases amongst much else, and is driving real improvements,” says Webb.

“Workforce involvement has to be the way forward, and Step Change is leading this – we had 500 offshore staff representatives in the Workforce Involvement Day at Piper 25. I think the fact that we can have Jake Molloy of the RMT union as a main speaker at the conference is a sign of maturity in this area.

“Something else to come from the event was the importance of sharing our safety data – we need to see when we get it wrong, as well as when we get it right. I was in a break-out section at the conference and we had a discussion about whether the law helps or hinders. Unfortunately the law and litigiousness can give rise to very conservative practices towards release of data – and we’ve got to get away from that.

 “To improve safety, we should not just be honest about accidents, but also near misses. That is hugely important.”

Ensuring a sustainable future

In the near future Webb says Oil & Gas UK, as well as safety, has a number of other primary areas of focus.

“Our first aim is to maximise production from the UK offshore and ensure we have a sustainable long-term future for the supply chain, both in the UK and in export markets. This gets us into the area of business regulation and tax here in the UK, and we do a lot around that. 

“A recent example of this is the time and effort we devoted to stop the EU gaining control of offshore regulation. It would have required us to dismantle existing UK safety regulations and rebuild from scratch – a worrying prospect. Thank goodness we won that battle, but we still have the EU Safety Directive and we’ll be playing a constructive role in ensuring that industry complies with this. The principles of the directive closely reflect the existing situation, so we are not anticipating too many problems.

“Our second gets us involved in industrial promotion, making sure everyone understands what is going on in the supply chain, and how it can thrive in the UK and export markets. One thing we will do in the near future is come up with a supply chain map – we’ve never had one before.

“We are also raising awareness about the sector. We ran a couple of large-scale opinion polls and found 70% of the population believed we now import most or all of our oil and gas. If the public don’t believe we are still a significant oil and gas producer, they certainly won’t understand the significance of our magnificent supply chain.

“The oil & gas industry provides direct and indirect employment for 450,000 in the UK, and Aberdeen is one of the world hubs for the sector, a one-stop shop for the offshore industry.

“This does not seem to be well enough understood, which we think is quite dangerous. If people doesn’t understand the importance of the sector, then politicians probably won’t either, and they could make decisions that are detrimental to the industry.

After three years at UKPIA and ten at Oil & Gas UK, Webb is conscious of the supreme importance of closely managing the relationship between government and industry.

“I took over at UKPIA during the latter stages of the refinery blockades. The government at the time was at a low point in its popularity and was keen to micro-manage the situation, which created serious problems for us.” 

Webb learned a lesson from those stressful times and now, when faced with major incidents, tries to ensure the industry is on the front foot from the start, helping shape the narrative rather than being buffetted by unfolding events.

Relations with the coalition government in Westminster are good, he says, after a disastrous start when Petroleum Revenue Tax was increased to 81% in the budget on 23 March 2011. This resulted in a perfectly foreseeable crash in offshore investment.

But since then, ministers have taken measures to support the sector with, for example, a pledge of £20 billion to help with the costs of decommissioning.

“They now seem to get it. We now have security over decommissioning, which is hugely important, and they are giving us allowances which are to a great extent taking us back to the situation prior to the 2011 budget,” Webb says.

He also thinks the government in Holyrood is fully supportive of the sector. “We are taking a neutral stance over Scottish independence, but we’re pleased to see that both sides now have a constructive attitude towards the industry.

“We now have an industrial strategy for the offshore industry for the first time in 47 years, and government now needs to do the same thing for the refining sector, which is a vital part of the equation.

“There’s this view abroad that we’re suddenly going to come out of the petroleum age. Well we’re not. We won’t be able to power this country with renewables for decades yet. We’re going to need those refineries and the UK at the moment is not a good place to be refining.”

The Oil & Gas UK CEO emphasises that this does not mean it is not important to progressively de-carbonise the energy stream. 

“We need to go about this in a sensible way - if we run out of energy we’re going to be in real trouble, and therefore we need to make sure that we have plentiful supplies of energy - and oil and gas is a vital component in that. 

“Our main purpose remains to stand up for oil and gas and ensure that in a UK and European context that the importance of this crucial industry is well-understood.”

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