Environment

Environmental Standards for Offshore Drilling

a report by

Alan Spackman
Director, Offshore Technical and Regulatory Affairs, International Association of Drilling Contractors (IADC)

Alan Spackman is Director of Offshore Technical and Regulatory Affairs for the International Association of Drilling Contractors (IADC). His duties involve participation in industry standards organisations and responding to numerous regulatory proposals at both the international and national level. He is IADCs principal representative to the International Maritime Organization, a specialised agency of the United Nations dealing with maritime safety and environmental protection. Mr Spackman joined the association in 1991 after retiring from the US Coast Guard, where he held the rank of Commander. He received a Masters in Naval Architecture and Marine Engineering from the University of Michigan and a Bachelor of Science from the United States Coast Guard Academy.

The need for measures to address pollution from offshore oil and gas activities has been considered by the General Assembly of the United Nations and, for several years, has been discussed actively within both the Commission on Sustainable Development (CSD) and the International Maritime Organization. The United Nations Convention on the Law of the Sea (UNCLOS) creates both an obligation and provides a structure for such measures, which are being pursued by several United Nations organisations. The United Nations CSD has considered the matter and has concluded that there is no compelling need at this time to further develop globally applicable environmental regulations in respect of the exploitation and exploration aspects of offshore oil and gas activities. Nonetheless, views are divided. Those in favour of international regulations or guidelines have argued that there are many oilproducing regions that do not have the capacity to develop either national or regional standards and that some kind of international regulations or guidelines would help them. Those who have argued against global measures contend that offshore oil and gas activities only pose a threat of local pollution, which can be dealt with through national regulations or regional agreements. The industry itself has developed only a modest number of high-level standards. The implementation of meaningful environmental management systems by the oil companies, coupled with changes to well design and overall operational procedures, may offer a means of reducing adverse environmental impacts whilst avoiding prescriptive regulations.
The United Nations and a Structure for Environmental Regulation of Offshore Activities

assembly of developments in ocean affairs. It held its third meeting on 815 April 2002. The report of this meeting2 makes the following recommendations with respect to offshore oil and gas activities. The General Assembly should recommend that regional seas conventions and action plans in regions where offshore oil and gas industries are developing or are in prospect, and where installations do not exist, should develop programmes and/or measures to prevent, reduce and control pollution from offshore installations. The General Assembly should invite regional seas conventions and action plans that have developed such programmes and measures to make their information and experience available for this process. The General Assembly should invite International Maritime Organization (IMO), United Nations Environmental Programme (UNEP) and World Meteorological Organization (WMO) to undertake an initiative, involving the relevant regional organisations as well as the oil and gas industry, to develop guidance on the best environmental practices to prevent and control pollution from accidents on offshore installations and to mitigate their effects. The UNCLOS, which entered into force on 16 November 1994, is a widely accepted treaty, having been accepted by 138 nations (states party) as of 1 October 2002. The convention provides an overall framework for environmental governance of offshore and, to some extent, onshore oil and gas exploration and production operations. The implementation and enforcement principles of UNCLOS can be summarised as follows. States party must adopt laws and regulations on

The United Nations Open-ended Informal Consultative Process was established by the General Assembly1 to facilitate the annual review by the

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1. Report of the Special Committee on the Charter of the United Nations and on the Strengthening of the Role of the Organization, A/54/33 (1999). 2. Report on the work of the United Nations Open-ended Informal Consultative Process established by the General Assembly in its resolution 54/33 in order to facilitate the annual review by the assembly of developments in ocean affairs at its third meeting, A/57/80 (2 July 2002).
BUSINESS BRIEFING: EXPLORATION & PRODUCTION 2003

Environmental Standards for Offshore Drilling

pollution from land-based sources and through the atmosphere, taking into account international provisions, and enforce these laws and regulations (Articles 207(1), 212(1), 213 and 222). With respect to seabed activities subject to national jurisdiction, states party must adopt and enforce national laws and regulations to prevent, reduce and control pollution of the marine environment arising from, or in connection with, seabed activities subject to their jurisdiction and from artificial islands, installations and structures, which must be no less effective than international rules, standards and recommended practices and procedures. States are also required to endeavour to harmonise their policies at the appropriate regional level (Articles 208 and 214). States shall adopt laws and regulations and take other measures on pollution from seabed activities and from dumping, which shall be no less effective than international (in the case of dumping, global) rules and standards (Articles 139, 208, 209, 210 and 214). Coastal states are required to adopt and enforce national laws and regulations to prevent, reduce and control pollution of the marine environment from artificial islands, installations and structures under their jurisdiction. Furthermore, states must adopt measures to minimise, to the fullest possible extent, pollution from installations and devices used in the exploration or exploitation of the natural resources of the seabed and subsoil (Articles 194, 208 and 210). States should co-operate in establishing contingency plans against pollution (Article 199). States shall enforce this legislation within their jurisdiction (including vessels flying their flag and aircraft of their registry) and ensure that their nationals, and bodies controlled by such nationals, comply with the requirements applicable in the areas of the seabed that are beyond national jurisdiction, known as the area (Articles 139, 208, 209, 210 and 214). States must adopt laws and regulations on pollution from vessels that are entitled to fly their flag (flag states) that are at least as effective as generally accepted international rules and standards (Articles 139, 208, 209, 210 and 214). Industry trade organisations have also developed a framework of standards, recommended practices and other guidelines for environmental protection. The principal such organisations for the oil and gas industries are the International Organization for Standardization (ISO), the International Association of Oil and Gas Producers (OGP), the International Association of Drilling Contractors (IADC) and the American Petroleum Institute (API). These organisations represent their membership before government and governmental organisations.3 The Society of Petroleum Engineers sponsors a semiannual environmental conference and a number of regional conferences with environmental best practice as their focus. It is noteworthy that Articles 208, 209 and 211 of UNCLOS do not differentiate between international standards, recommended practices and procedures developed by intergovernmental bodies such as the IMO and those developed by the industry organisations producing internationally recognised standards such as the ISO, OGP, IADC and API.
Land-based Sources

A structure and action plan for addressing landbased sources of pollution was developed by the 1995 Washington Global Program of Action for the Protection of the Marine Environment from Landbased Activities. This structure was reviewed at a subsequent meeting held in November 2001 in Montreal and is addressed in the Plan of Implementation (Paragraph 32) developed at the World Summit on Sustainable Development in Johannesburg, South Africa, in September 2002. The structure is reinforced by a variety of regional agreements. In the face of many other environmental issues of greater priority, little attention has been directed at the international level towards land-based oil and gas exploration and production operations. Industry-specific guidelines have been published by API.4
Offshore Activities in Areas Subject to National Jurisdiction

Under UNCLOS, exploitation of seabed mineral resources is subject to the exclusive control of the adjacent coastal state out to the limit of its exclusive economic zone or the limit of its continental shelf if the continental shelf extends beyond 200 miles. In 1996, the United Nations CSD concluded that there is no compelling need at this time to further develop globally applicable environmental regulations in respect of the exploitation and

3. The International Maritime Organization recognises both OGP and IADC as non-governmental organisations with consultative status. IADC is similarly recognised by the International Seabed Authority. 4. API RP 52, Land Drilling Practices for Protection of the Environment.
BUSINESS BRIEFING: EXPLORATION & PRODUCTION 2003

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Environment

exploration aspects of offshore oil and gas activities.5 Further, it was concluded that the primary focus of action on the environmental aspects of offshore oil and gas operations continues to be at the national, sub-regional and regional levels, and noted that, in support of such action, there was a need to share information on the development and application of satisfactory environmental management systems.6 Thirteen regional seas programmes7 have been established under the auspices of UNEP, involving more than 140 nations. Two other regional programmes are based on free-standing conventions: The Convention for the Protection of the Marine Environment of the North-East Atlantic (OSPAR Convention) and the Convention for the Protection of the Marine Environment of the Baltic Sea (Helsinki Convention). In addition, a high-level intergovernmental forum, the Arctic Council, has been established to address the mutual concerns faced by the Arctic governments and indigenous populations. While no global measures have been adopted regulating the discharges directly arising from the exploration, exploitation and associated offshore processing of oil and gas, harmonised regulations with respect to the exploration and exploitation of oil and gas have been developed as part of the Baltic, Mediterranean, north-east Atlantic and Kuwait regional programmes and under the Arctic Council. The matter has been considered by other regional programmes; however, in general, they have decided that other issues should be given higher priority. OGP has issued industry-specific guidelines for operations in tropical rainforests, onshore areas in arctic and sub-arctic areas, arctic offshore regions, mangrove areas and sensitive environments.8 The regional programmes also offer a means for intergovernmental exchanges on regulatory practice and experiences, including exchange of information on best environmental practice. The UNEP maintains a website9 to facilitate the exchange of such information as it relates to offshore oil and gas exploration and production.

Activities in the Area

Under Article 209 of UNCLOS, the development of seabed mineral resources in areas beyond national jurisdiction (i.e. the area) is subject to control by the International Seabed Authority (ISBA). The ISBA has directed its efforts towards developing regulations for prospecting and exploration for polymetallic nodules, since this is the limit of current commercial interest. However, the ISBA has noted the potential for hydrocarbon and gas hydrates in areas where there is a potential claim for a continental shelf extending beyond 200 nautical miles, including the Atlantic seaboard of North and South America (including the Labrador Sea) and the Alaskan Arctic seaboard.10 The authority acknowledges that development potential for these resources is currently marginal, but notes that technological improvements in recovery efficiency and greater access to deepwater areas are increasing the range of economically recoverable resources.
At-sea Disposal (Dumping)

The dumping of wastes at sea is governed by the 1972 London Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter. Seventy-eight nations have ratified or acceded to the London Convention. This agreement has been revised and amended by its 1996 protocol (16 nations have ratified or acceded to the 1996 protocol). The protocol has not yet entered into force; however, it has been reported that it may enter into force as early as 2003.11 The protocol introduces a wider definition of dumping than that contained in UNCLOS. It includes within the definition the expressions, any storage of wastes or other matter in the seabed and the subsoil thereof from vessels, aircraft, platforms or other man-made structures at sea and any abandonment or toppling at site of platforms or other man-made structures at sea, for the sole purpose of deliberate disposal. The London Convention and protocol exempt the disposal into the sea of wastes or other matter incidental to, or derived from the normal operations of vessels, aircraft, platforms or other man-made structures at sea; the placement of matter

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5. United Nations Commission on Sustainable Development, CSD Decision 4/15, paragraph 26. 6. CSD Decision 7/1, paragraph 3(a). 7. Black Sea, Caribbean, East Asian Seas, East African, Kuwait, Mediterranean, North-West Pacific, Red Sea and Gulf of Aden, South Asian Seas, South-East Pacific, South Pacific, South-West Atlantic and West and Central Africa. 8. See http://www.ogp.org/publications/index/html 9. http://www.oilandgasforum.net 10. Report of the Secretary-General of the International Seabed Authority under article 166, paragraph 4, of the United Nations Convention on the Law of the Sea, ISBA/8/A/5, (7 June 2002). 11. IMO, Report of the Twenty-Third Consultative Meeting of the Contracting Parties to the London Convention, LC 23/16 (10 December 2001).
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Environment

Table 1: Average Annual Input (19901999) of Petroleum to Marine Waters by Source (Kilotonnes)
Source
Best Estimate

North America
Min. Max. Best Estimate

Worldwide
Min. Max.

Natural seeps Extraction of petroleum

160 3.0

80 2.3

240 4.3

600 38

200 20

2,000 62

Platforms Atmospheric deposition Produced waters

Transportation of petroleum Consumption of petroleum Total

0.16 0.12 2.7

9.1 84 260

0.15 0.07 2.1

7.4 16 110

0.18 0.45 3.7

11 2,000 2,300

0.86 1.3 36
150 480 1,300

0.29 0.38 19
120 130 470

1.4 2.6 58
260 6,000 8,300

Source: Oil in the Sea III: Inputs, Fates, and Effects, Committee on Oil in the Sea: Inputs, Fates, and Effects, National Research Council, National Academies Press, 2002.

for the purpose other than the mere disposal thereof, and the disposal or storage of wastes or other matter directly arising from, or related to the exploration, exploitation and associated offshore processing of seabed mineral resources. This exemption leaves considerable opportunity for divergence of interpretation with regard to what constitutes normal operations of offshore oil and gas drilling and production facilities, which some find troublesome. The Netherlands has recently proposed that consideration be given to expanding the London Convention to explicitly include a wide variety of issues associated with offshore oil and gas activities,12 specifically: seabed activities; sub-seabed activities; offshore platforms (discharges, removal and disposal); and matters related to past dumping activities (recovery of wastes dumped in other marine engineering activities (e.g. OTEC, artificial islands). A number of technical reports and guidance documents have been produced by OGP on the issue of decommissioning offshore oil and gas installations.13
Pollution Prevention (Oil, Noxious Chemicals, Garbage and Sewage)

Protocol of 1978 relating thereto (MARPOL 73/78), covers accidental and operational oil pollution as well as pollution by chemicals, goods in five annexes that are currently in force or soon to enter into force: oil (Annex I), noxious liquid substances (chemicals) carried in bulk (Annex II), harmful substances carried by sea in packaged form (Annex III), sewage (Annex IV) and garbage (Annex V). Annexes I and II entered into force in 1983 and currently have 121 contracting parties. Annex III entered into force in 1992 and currently has 104 contracting parties. Annex V entered into force in 1988 and currently has 108 contracting parties. Annex IV has recently received its 88th contracting party and will enter into force in September 2003. Obviously, a variety of ships is used to support offshore oil and gas exploration activities; however, a significant number are also utilised directly in both drilling for (e.g. mobile offshore drilling units) and producing (e.g. floating production units) offshore oil and gas and these are subject to the provisions of the convention and its annexes through the legislation and regulations imposed by the nation under whose flag they are entitled to fly. Fixed and floating platforms are also subject to MARPOL 73/78 because Article 2(4) of the convention defines ship as a vessel of any type whatsoever operating in the marine environment and includes hydrofoil boats, air-cushion vehicles, submersibles, floating craft and fixed or floating platforms, thus extending the convention to virtually all offshore facilities. The coastal state under whose jurisdiction such facilities operate is obliged to regulate such facilities. An agreement among the parties regarding the application of the provisions of Annex I effectively limits its applicability to the discharge of machinery space drainage (which is limited in oil content to 15 parts per million or less,

The IMO is the principal United Nations organisation for maritime safety and environmental protection. Developed under its auspices, the International Convention for the Prevention of Pollution from Ships 1973, as modified by the

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12. IMO, Future Work Program, Future objectives for the London Convention 1972 and the 1996 Protocol thereto, Submission by the Netherlands, LC 24/14 (9 August 2002). 13. See http://www.ogp.org/publications/index/html
BUSINESS BRIEFING: EXPLORATION & PRODUCTION 2003

Environmental Standards for Offshore Drilling

without dilution).14 Drilling and processing discharges and production displacement water discharges are left to national (or regional) regulation. Industry guidelines have been developed by both OGP15 and API. There is an active effort underway, inspired by Australia, to re-examine the applicability of the Annex I requirements to floating production, storage and offloading units (FPSOs) and floating storage units (FSUs), particularly with respect to the possibility of oil outflow following accidental damage to the hull.16 There have been repeated, albeit unsuccessful, efforts to inspire the IMO to address offshore oil and gas activities more explicitly within the scope of MARPOL 73/78. The most recent was led by the Russian Federation.17 One of the difficulties faced by the IMO in this regard is that the organisations focus has traditionally been ships and shipping, so the national delegations comprise shipping regulators. Only rarely have representatives of national oil and gas regulatory bodies been included. Mobile offshore drilling units (MODUs), FPSOs and other vessels employed by the industry are confronted with a unique challenge in conforming to MARPOL 73/78. While underway between operating locations, they are subject to their flag states interpretation of MARPOL 73/78; however, when they actively engage in oil and gas development activities, they become subject to the host coastal states interpretation of MARPOL 73/78. Not only are there wide variations in the interpretation and enforcement of the convention among coastal states, but there are also variations in interpretation as to when the coastal states authority begins. As loss of well control poses the most serious threat to the safety of a drilling unit, and of causing a significant oil spill, the IADC has developed a series of minimum training standards in well control and a programme for accrediting training institutions with those standards.18
Organotin Anti-fouling Systems

growth on the hulls of ships and offshore installations led the IMO to develop the International Convention on the Control of Harmful Anti-fouling Systems on Ships in 2001. The convention will enter into force after ratification by 25 nations representing more than 25% of the worlds merchant shipping tonnage. There is currently only one signatory.
Airborne Pollution

There are a number of international agreements that may obligate nations to set standards for air emissions from oil and gas activities. The United Nations Framework Convention on Climate Change (UNFCCC) attempts to stabilise greenhouse gas concentrations in the atmosphere. The convention was adopted in 1992 and entered into force on 21 March 1994. The convention currently has received 186 instruments of ratification. The protocol to the UNFCCC was adopted by the parties to the UNFCCC in Kyoto, Japan, on 11 December 1997. The protocol contains individual emissions limitations and reductions for the industrialised (Annex I) nations. It will enter into force after not less than 55 parties to the convention, incorporating Annex I parties, which accounted, in total, for at least 55% of the total carbon dioxide emissions for 1990 from that group, have deposited their instruments of ratification, acceptance, approval or accession. As at 25 September 2002, 95 parties (25 Annex I parties, accounting for 37%) have ratified or acceded to the Kyoto protocol. The 2001 Stockholm Convention on Persistent Organic Pollutants, which was developed, inter alia, in response to concerns on long-range airborne pollution of the seas expressed in the negotiations on the Global Program of Action to Protect the Marine Environment from Landbased Activities. The Stockholm Convention currently has 22 of the 50 ratifications required for it to enter into force. Annex VI of MARPOL 73/78, which attempts to control potentially harmful emissions (nitrogen

Concern over the adverse environmental impacts of organotin paints used to protect against marine

14. MARPOL 73/78, Consolidated Edition, Unified Interpretations of Annex I, Requirements for drilling rigs and other platforms. 15. OGP (formerly E&P Forum), Exploration and Production Waste Management Guidelines, 1993. 16. IMO, Report to the Maritime Safety Committee and the Marine Environment Protection Committee on the 7th session of the Sub-Committee on Bulk Liquids and Gases, BLG 7/15 (25 July 2002). 17. IMO, Marine Environment Protection Committee, Follow Up Action to UNCED, Development of the Environment best practice guidelines in the offshore oil and gas activities, Submission by the Russian Federation, MEPC 44/13/2. 18. See http://iadc.org/wellcap.htm
BUSINESS BRIEFING: EXPLORATION & PRODUCTION 2003

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Environment

and sulphur oxides) in the exhaust of ships engines. Indications are that Annex VI will enter into force in 2004. The IMO is also examining strategies to control greenhouse gas emissions related to ship operations. In addition, there are regional agreements such as the UN Economic Commission for Europes Convention on Long-Range Transport of Air Pollution.
Pollution Intervention and Response

The Oil Pollution Preparedness, Response and Cooperation Convention (OPRC Convention) was adopted in 1990 and entered into force in 1995. An IMO convention, it was designed to help governments combat major pollution incidents by facilitating co-operation and mutual assistance in preparing for and responding to major pollution incidents. Requirements regarding oil pollution emergency plans on installations are set out in the OPRC convention. Sixty-six nations are parties to the OPRC Convention. In 2000, the IMO adopted the Protocol on Preparedness, Response and Cooperation to Pollution Incidents by Hazardous and Noxious Substances (2000) (HNS Protocol), which follows the principles of the OPRC Convention for hazardous and noxious substances other than oil. With only one contracting party, the HNS Protocol has not entered into force. Regional centres have been established in Malta (in co-operation with UNEP) and in the Caribbean to assist in training and anti-pollution efforts. The International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties 1969 entered into force in 1975. This convention affirms the right of a coastal state to take measures to protect its territory from oil pollution from casualties occurring on the high seas. The convention has 77 contracting parties. A 1973 protocol to this convention extends its principles to substances other than oil. The protocol entered into force in 1983 and currently has 44 contracting parties. Industry-specific guidance on emergency response is provided by ISO 15544.19
Biological Diversity

for sustainable development. One of the key agreements adopted at Rio was the Convention on Biological Diversity. This convention sets out commitments for maintaining the worlds ecological underpinnings whilst maintaining economic development. The convention establishes three main goals: the conservation of biological diversity, the sustainable use of its components and the fair and equitable sharing of the benefits from the use of genetic resources. This free-standing convention entered into force in 1993 and has been ratified or otherwise accepted by 186 nations.
Enforcement

While there is a commonly held view that international agreements and their regulations direct the actions of industrial activities, they do not. It must be emphasised that it is only through the establishment of implementation and enforcement of legislation or regulations at a national level that these agreements are given practical effect. There are no established means for states party to UNCLOS to force non-parties, or even other states party to UNCLOS, to effectively implement the convention; however, there is growing pressure for the industrialised nations to take action against nonconforming nations through trade agreements and through restrictions or conditions placed on aid and development programmes.
Measuring and Reporting Environmental Performance

Most of the conventions described here have one or more measures intended to foster compliance through requirements for monitoring or reporting of conformance with provisions of the convention or its regulations for compliance purposes. Some are straightforward, for example requirements under Annex I of MARPOL 73/78 for oil content meters and recording devices to ensure that the regulations regarding percentage oil content of ships bilge water discharge are met. Others, such as those agreed under the Framework Convention on Climate Change, require governments to collect and aggregate large volumes of data. In late 1997, a private-sector initiative was begun with the mission of developing globally applicable guidelines for corporations to use for voluntarily reporting on their economic, environmental and social performance. While targeted initially at corporations, the goal was to develop guidelines that

At the 1992 Earth Summit in Rio de Janeiro, world leaders agreed on a comprehensive strategy

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19. ISO 15544, Petroleum & natural gas industries Offshore production installations Requirements and guidelines for emergency response.
BUSINESS BRIEFING: EXPLORATION & PRODUCTION 2003

Environmental Standards for Offshore Drilling

could be used by any business or governmental or non-governmental organisation. Convened by the Coalition for Environmentally Responsible Economies, in partnership with UNEP, the Global Reporting Initiative (GRI) was established as a permanent, independent global institution in April 2002. The GRI released its Sustainability Reporting Guidelines20 in June 2000. These guidelines encourage triple bottom line reporting of an organisations economic, environmental and social performance. They use 16 high-level core environmental performance indicators and 19 additional indicators. ISO 1400421 provides practical guidance about environmental systems, including general guidance about external reporting. ISO 1403122 provides guidance on the selection and implementation of performance indicators that can be used by management of a company to evaluate and report (internally or externally) on the companys environmental performance.
20. 21. 22. 23.

ISO is developing a further standard to provide guidance on communicating environmental performance.23 To date, there is no consensus on the appropriate measures of environmental performance for the exploration and production industries; however, the matter is under active consideration by the OGP. While it is relatively simple to measure or at least produce reliable estimates of discharges and emissions related to drilling activity, selection of measures by which performance is to be evaluated poses some difficulty. For example, the volume of drill cuttings produced in drilling a well is generally considered a matter of environmental concern. Sections of footage drilled as a normalisation factor would provide for straightforward comparison on a well-to-well basis; however, it could result in a nonproductive well being considered as superior to one that is highly productive.

Available on the Global Reporting Initiatives website at http://www.globalreporting.org ISO 14004:1996, Environmental management systems General guidelines on principles, systems and supporting techniques. ISO 14031:1999, Environmental management Environmental performance evaluation Guidelines. ISO WD14063, Environmental management Environmental communications Guidelines and examples.

Environment

Environmental Management Systems

offshore drilling unit operations in the north-west European region.30 Properly implemented corporate environmental management systems continuously challenge management to assess both current operations and new endeavours to develop approaches that will help them achieve improved environmental performance, with or without the imposition of specific goals or standards by regulatory bodies. Compliance with regulatory standards can be improved by a systemised process for identifying the applicable standards, incorporating them into company policies and procedures, distributing them to operations personnel and providing appropriate training. For drilling contractors, this might be difficult. Environmental permits or stipulations are generally issued to the operating company, can be site-specific and may be regarded as proprietary. Where such permits are in the public domain or are made available to the contractor, an important issue is whether the contactor relies on the operating companys interpretation of the requirements or its own. Adopting new or improved technology can be one means of improving environmental performance. For example, using slim-hole or expandable casing technology provides the potential for a well to be drilled with the production of fewer cuttings and with less total energy expended when compared with a traditional telescoping well design. Unfortunately, these benefits can be offset by the more complex procedures required to drill such wells, the more complex well control situations that may be encountered and the potential for a longer period for return on investment because of lower production rates in the smaller well bore. Similarly, diesel engines can be fitted with selective catalytic reduction units to reduce emissions of certain pollutants. However, such units tend to reduce both fuel efficiency and the engines ability to respond rapidly to increased power demands. A drilling contractor may fit such equipment to satisfy the demands of one client, only to find that subsequent clients do not wish to bear the increased costs. For the contractor, this is difficult to reconcile with the goal of continuous improvement.

Environmental management systems are tools by which government and industry can strive to improve environmental compliance and performance. A number of management system guidelines have been produced. Such systems generally require the establishment of: management commitment to managing environmental performance; a process for identification of applicable environmental legislation, regulations and standards; and a process for attaining continuous improvement of environmental performance. The ISO 14000 series of standards focuses on corporate environmental management systems and operating practices, products and services. The standards promote continual improvement without specifying actual standards of performance. Under ISO 1400124, companies may register their environmental management systems when it has been demonstrated to conform to the specifications provided in the standard. The European Unions Eco-Management and Audit Scheme (EMAS) was made available in 199525 as a tool for companies and other organisations to evaluate, report and improve their environmental performance. The European Commission has recognised ISO 14001 and its European counterpart, EN ISO 14001, as establishing a specification for environmental management systems corresponding to its regulations.26 Both OGP and API have produced industryspecific guidance on the development of combined safety and environmental management systems.27,28 OGP has worked with UNEP to produce specific guidance on Environmental Management in Oil and Gas Exploration and Production.29 In addition, the IADC has developed guidance on the development of combined health, safety and environmental management systems for mobile

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24. ISO 14001:1996, Environmental management systems Specification with guidance for use. 25. Council Regulation (EEC) No. 1836/93 (29 June 1983). 26. Decision 97/265/EC (16 April 1997). 27. OGP (formerly E&P Forum), Guidelines for the Development and Application of Health, Safety and Environmental Management Systems, 1994. 28. API RP 75, Development of a Safety and Environmental Management Program for Outer Continental Shelf Operations and Facilities, Second edition, July 1998. 29. OGP (formerly E&P Forum), Environmental Management in Oil and Gas Exploration and Production, 1997. 30. IADC North Sea Chapter, North West European HSE Case Guidelines for MODUs, August 2002.
BUSINESS BRIEFING: EXPLORATION & PRODUCTION 2003

Standards for Offshore Drilling

Revising operational procedures to improve efficiency can also improve environmental performance, for example the use of sharing agreements to obtain greater efficiency in the use of aircraft and supply vessels, or eliminating standby boats. However, the cost, in terms of responsiveness or safety, may be unacceptable either in terms of operations or to the regulator. Environmental management systems also challenge management in other ways. Prescriptive regulatory standards may relieve management of difficult decisions on comparative benefit. Regulatory standards tend to be stovepipe standards, i.e. they target environmental benefits in one specific area, having already determined that potentially adverse impacts in other areas need not be considered, or simply ignoring such impacts. For example, prohibiting seabed disposal of drill cuttings solves perceived location-specific water quality problems; however, it requires that another disposal site be identified, that the cuttings be stored, handled and transported to that site (with the attendant safety concerns, energy usage and potential for spillage) and, ultimately, the disposal at the chosen site be mitigated. Operating under an environmental management system, management is charged with deciding on the comparative benefits of the possible alternatives, with the potential of subsequently being asked to justify its decisions to shareholders or others with interest in the management system. Shareholders and others may also wish to evaluate the environmental performance for specific operations or activities or compare the companys environmental performance with that of its peers. Some of the multinational oil producers who have reported their environmental performance publicly have already come under pressure to disaggregate their data so that their performance could be examined in specific areas. While the drilling contractor and its equipment and personnel clearly will impact the environmental performance of a particular operation, the operating companys commitment to improving environmental performance will have a far greater impact. The operating company not only selects the contractor, but generally dictates the design of the well and the materials to be used in its construction. Only the operating company can effectively make comparative assessments of the environmental impact of one development project against another on either a regional or global basis. Ultimately, it is the environmental ethic of the operating companies that will drive environmental performance in the drilling industry. s

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