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Offshore Oil and Gas Industries (Health and Safety)

Volume 474: debated on Tuesday 1 April 2008

I beg to move,

That leave be given to bring in a Bill to make further provision to secure the health, safety and welfare of persons at work in offshore oil and gas industries; and for connected purposes.

In July, we will mark the 20th anniversary of the Piper Alpha disaster, when 167 workers were killed in the world’s worst offshore oil and gas accident. There is no doubt that, following the implementation of Lord Cullen’s report, safety in the North sea has improved significantly, but recently there has been an increase in concerns. Much of the infrastructure offshore is old and requires high maintenance and investment to sustain it. There is concern that companies are cutting corners to save money or keep equipment operating.

In 2003, two workers were killed by a gas leak on the Brent Bravo platform. In the criminal and the fatal accident proceedings that followed, serious shortcomings in maintenance on the part of Shell, the operator, were highlighted. However, the problems are not limited to one company. Between 2004 and 2007, the Health and Safety Executive’s offshore safety division carried out an asset integrity programme involving targeted inspections of nearly 100 platforms. The report, now known as the “Key Programme 3” report, had some worrying things to tell us about conditions in the North sea. It states:

“There is a poor understanding across the industry of the potential impact of degraded, non-safety critical plant and utility systems on safety critical elements in the event of a major accident. The role of asset integrity and concept of barriers is not well understood… In some companies the decline in integrity performance that started following the low oil price has not been effectively addressed and there appears to be an acceptance of this knowing that the asset is likely to be sold… Declining standards in hardware is having an adverse impact on morale in the workforce.”

The offshore oil and gas industry is crucial to the economy of this country. It makes a massive contribution to the balance of payments and to Government tax revenue. It employs about 400,000 people—approximately 20,000 offshore—and accounts for 20 per cent. of the investment made in manufacturing industry in this country each year. It is also one of our most dangerous industries. It needs the highest standards of safety, but there are barriers to those high standards, which I can wrap up in one sentence. Oil companies are resistant to change, especially when it has an impact on their internal working arrangements and relationships. On most offshore facilities, only a small number of employees are employed by the operating oil companies. The majority are employed by contractors, which usually means one large offshore service company and a number of smaller contractors providing specialist services.

The senior person on a production platform is the offshore installation manager, who has all the powers of a ship’s captain. One of the more unpleasant aspects of the offshore culture is the NRB or “not required back” system. Because of their unique status, OIMs can order anyone off the facility or insist that a person is “NRB-ed”. The employer has no say in the matter. That means that unless an employer can find another job for the worker, onshore or on another platform, the employee will be dismissed. Employment tribunals have ruled that such dismissals are fair, because the contractor is obliged to accept the decision of the client.

That is a not a dark secret, hidden away by the oil industry employers. I am told by union officials that it is a standard part of offshore contracts that the contractor has to accept the situation. The industry body, Oil and Gas UK, publishes guidance for employers on NRB. That guidance is currently under review. Even at a time of serious skills shortages in the industry, the NRB culture remains. That culture leads to a sense of job insecurity offshore and, from there, to low morale among the work force.

In 2003, the Government introduced regulations to implement the working time directive offshore. For the past four and a half years, the oil industry has fought against implementation. The unions have won the legal argument twice, in the employment tribunal and at the employment appeal tribunal. After the expenditure of several hundred thousand pounds on legal fees by both sides, the major companies are finally accepting what was obvious to anyone who seriously studied the regulations in 2003—that those workers who do not receive the holiday entitlement set out in the regulations are entitled to extra holidays. The industry had serious issues on which it needed answers, but none that could not have been negotiated with the unions in the normal way.

In the meantime, a work force who had to suffer a long history of having a two-class employment system—first class for those who worked for an oil company, and second class for those who worked for a contractor—developed a real sense of grievance. They felt that they were being denied the holiday time to which they were entitled and which was already enjoyed by their first-class co-workers in the oil industry. The industry approach seemed a particularly insensitive and ham-fisted way of dealing with a human problem and one that took no account of the effect on the morale of the work force.

Then, there is the permit to work system. At the root of virtually every significant accident in the North sea oil and gas industry, including Piper Alpha, is a failure in the permit to work system. Every company insists on keeping its own individual system; yet the pattern of work offshore nowadays means that many workers, particularly those with special skills, work on a number of installations. In each different workplace, they have to deal with a different permit to work system.

It has been recognised for many years that safety would be improved if there were a common system that everyone could become familiar with. Experience suggests that there could also be economic savings in adopting such a system. The unions want it, the Health and Safety Executive wants it and many of the contracting companies want it. The Norwegians have it, as do, just recently, the Dutch. What we have is endless technical committees and companies trying to cling on to their special system. Again, that has a negative impact on the morale of the work force.

There is huge investment in safety in our oil and gas industry, but it is all meaningless unless the human aspects are addressed. I have raised three critical areas—maintenance, employment practices and working systems—where I believe the industry acts and has acted to protect narrow interests. It has ignored the wider impact of its decisions, particularly on the morale of its work force and therefore on the safety regime offshore.

In response to the issues that I have raised, my Bill would improve the safety system in the offshore oil and gas industry by doing two things. First, there are many areas of offshore work that require greater external scrutiny, consideration and perhaps intervention. The permit to work system is just one area where the industry collectively and individually has failed to take a wider view and recognise that the interests of safety override individual company preferences. My Bill would strengthen the powers of the HSE to make regulations in areas where there is evidence that common systems are necessary to improve safety.

Secondly, my Bill would bring the regulations dealing with safety committees and safety representatives in the offshore oil and gas industry into line with the regulations in onshore workplaces. The key difference between the two systems is that the onshore regulations have a statutory trade union involvement. The unions can appoint safety reps; they will support them and provide them with professional advice and support wherever necessary. They allow the safety reps to be much more independent of management, which strengthens the safety systems, gives workers confidence and encourages greater involvement and commitment to safety.

Those two measures, by giving the Health and Safety Executive the power to intervene to create common systems where appropriate and to bring a more independent element to the safety committee and representative systems, would, I believe, go a long way to improving the overall safety system in the North sea oil and gas industry. I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Frank Doran, Miss Anne Begg, Mr. Anthony Wright, Mr. Kevan Jones, Mr. Alistair Carmichael, Sir Robert Smith, Ms Dari Taylor, Andrew Miller, Mark Lazarowicz, Mr. Russell Brown and Jim Sheridan.

Offshore oil and Gas Industries (Health and Safety)

Mr. Frank Doran accordingly presented a Bill to make further provision to secure the health, safety and welfare of persons at work in offshore oil and gas industries; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 9 May, and to be printed [Bill 93].