Dutch hydrocarbon sector and role of regulation and standardization. Jarno Dakhorst & Willem van der Wal

Transcription

1 Dutch hydrocarbon sector and role of regulation and standardization Jarno Dakhorst & Willem van der Wal 1

2 Outline Dutch hydrocarbon sector Regulations related to offshore gas operations Introduction into standardization and certification Overview of oil and gas standardization and standards Golden triangle Next steps for Cypriote hydrocarbon sector 2

3 DUTCH GAS & OIL SECTOR 3

4 History of natural gas in The Netherlands 1948: first gas field drilled in Coevorden 1959: discovery of Groningen field => about 900 km 2 and first estimate of billion m 3 producible gas (one of the biggest gas fields of the world) 1961: first offshore drilling in North Sea 1973: decision of scaling back Groningen production and focussing on small fields => dozens of new fields have been developed Now: increased reduction of Groningen production due to earthquakes and continued small fields policy SOURCE: NOGEPA 4

5 Gas and oil production in The Netherlands Natural gas production: 70,0 billion m 3 42,3 billion m 3 Groningen field (onshore) 27,7 billion m 3 small fields (mainly offshore) Oil production: 1,81 million m 3 Key Green Red gas field or pipeline oil field or pipeline SOURCE: Annual review 2014: Natural resources and geothermal energy in the Netherlands 5

6 Dutch stakeholders (1) Main operator: NAM (50 % Shell & 50 % ExxonMobil) Other operators like: Centrica, Dana, Engie, Hansa, ONE, Petrogas, TAQA, Total, Tulip Oil, Tullow, Wintershall Main infrastructure: Gasunie Transport Services (100 % state owned) Policy makers Regulators Suppliers Consultants Inspection bodies Researchers Trainers Organizations making part of energy value chain SOURCE: ALPS Alerian MLP Investors BINGOs PINGOs 6

7 Dutch stakeholders (2) E.g.: Dredging like Boskalis, Van Oord Ships and FPSOs like Blue Water, Damen, IHC Marine operations like Allseas, Dockwise, Heerema, Jumbo Equipment like Ampelmann, Huisman, Mokveld, NOV E.g. Deltares, Fugro, Marin, TNO Governmental bodies (next slides) E.g. Bureau Veritas, DNV GL, LR, Peterson NOGEPA Netherlands Oil and Gas Exploration and Production Association IRO The Association of Dutch Suppliers in the Oil and Gas Industry Policy makers Regulators Suppliers Consultants Inspection bodies Researchers Trainers Investors BINGOs PINGOs 7

8 Governmental bodies for Dutch natural gas exploration & production Various governmental bodies involved: Ministry of Economic Affairs (EZ) [policy-maker] Ministry of Infrastructure and the Environment (I&M) [policy maker] Ministry of Finance [revenues] State Supervision of Mines (SSM/SodM) [supervisory body] Human Environment and Transport Inspectorate (ILT) [supervisory body] Consumers and Market Authority (ACM) [regulator] Energie Beheer Nederland (EBN) Main offshore governmental bodies are EZ and SSM 8

9 About EBN EBN is 100 % state participation of Ministry of Economic Affaires is responsible for great deal of income obtained by Dutch State from gas and oil extraction from Dutch subsurface cooperates closely with operators for natural gas and oil production has extensive knowledge of deep subsurface and insight into innovative exploration and extraction techniques plays important role in successful production of natural gas and oil both on land and at sea.. participates in the E&P activities the oil and gas producers 9

10 About SSM/SodM (1) State Supervision of Mines (SSM/SodM) is only supervisory authority for offshore oil & gas activities is mandated by three ministers for supervisory activities; Minister of Economic Affairs (EZ) Minister of Social Affairs and Employment (SZW) Minister of Infrastructure and the Environment (I&M) makes Strategy and Programme (S&P) every 5 years, describing supervision policy, choices in subjects, objects and distribution of capacity, which should be approved by ministers makes annual working plans (derived from S&P) and annual reports (latter are also sent to parliament). always uses intervention policy that belongs to relevant legal regime 10

11 About SSM/SodM (2) EZ E&P legislation SZW safety and health legislation I&M environmental legislation DG Energy (policy + permits) DG (policy) DG (policy) SSM 11

12 Monitoring arrangement of SSM/SodM (1) 12

13 Monitoring arrangement of SSM/SodM (2) INTERVENTION PYRAMID Withdraw permit Suspend permit Criminal penalties Administrative penalties Public disclosure Warning Recommendation Communication Sparrow intervention tools 13

14 Legal framework for natural gas exploration & production (1) Main legislation (also available in English): Mining Act Mining Decree Mining Regulation More legislation apply in the field of: the environment incl. noise, surface water occupational health and safety working hours transport and supply of gas management and use of water systems 14

15 Legal framework for natural gas exploration & production (2) Mining Act lays down rules concerning the exploration for and production of minerals and concerning activities connected with mining : 1. definitions and general provisions 2. licences for exploration and production of minerals and terrestrial heat 3. licences for the storage of substances and for the exploration for CO 2 storage complexes 3a. reduction of an area 4. ensuring that the activities are executed properly 5. financial conditions 6. advisors 15

16 Legal framework for natural gas exploration & production (3) Mining Act (continued): 7. reporting 8. supervision and enforcement 9. guarantee fund mining damage 9a. coordination of the construction or extension of mining works and pipelines for the production of hydrocarbons and the storage of hydrocarbons 10. legal protection 11. transitional provisions 12. withdrawal and amendment of certain acts 16

17 Procedure according the Mining Act for exploration and production activities (1) Exploration license is applied for from EZ Operator indicates place and size of area of investigation in this application Application is published by EZ During this period other parties are also allowed to submit an application All applications are looked at simultaneously EZ consults: TNO (subsurface and production plan) SSM (safety procedures) EBN (economic feasibility) Applicant with best production plan got license Exploration drilling activities are carried under supervision of SSM 17

18 Procedure according the Mining Act for exploration and production activities (2) Oil or gas production license can be applied for when an economically recoverable amount is found Producer must enter into agreement with EBN Environment impact assessment must be carried out before drilling can start SSM monitors mining, environmental and labour regulations during production Installations and pipelines must be removed after depletion. 18

19 Outlook Annual natural gas production of Groningen field much lower than in the past [in response to earthquakes] Changing from a natural gas exporter to an importer [already the case since this year] Stimulation of life-time extension and enhanced recovery of small fields (mainly offshore), also to maintain existing infrastructure (e.g. pipeline systems) Continuation of being a key player in gas sector in North-western Europe, also through LNG, biogas and underground gas storage 19

20 REGULATIONS RELATED TO OFFSHORE GAS OPERATIONS 20

21 Driver for EU regulations 21

22 Underlying drivers for EU regulations (1) EU offshore industry: Ageing production infrastructure Structural shifts of main players Challenges of the new frontiers Inconsistency in company practices with respect to major hazards Continuing failure in compliance Inadequate safety culture 22

23 Underlying drivers for EU regulations (2) Regulation: Uneven technical expertise amongst regulators Inconsistency and lack of transparency in incident data and learnings from investigations Fragmented global requirements and approaches Fragmented EU legal frameworks goal setting versus prescription 23

24 Underlying drivers for EU regulations (3) Emergency preparedness and response Unreliable financial capacity of industry Inconsistency in emergency planning Incompatible response assets Liability for recovery and damages Financial mechanisms inadequate Lack of clarity for environmental liability 24

25 Observations Industry highly capable, but: strong safety culture insufficiently embedded throughout industry lack of transparency/sharing of information Some EU regulators best-in-class, but: fragmentation of regulatory systems cooperation is inconsistent safety and environment not universally coordinated Need for co-ordination and co-operation amongst regulators, and with non-eu countries 25

26 Directive 2013/30/EU Safety of offshore oil and gas operations 26

27 Directive 2013/30/EU Nature Problem part General objectives Specific objectives 1. Risks can be lowered (i.e. too high to accept) 2. Response measures need improvement 3. Liability provisions incomplete 1. To prevent a major incident from occurring 2. To deal with a major emergency should preventive measures fail 1. Attain best industry practices in the EU based on primary duty of control of major accident risks; leverage global standards 2. Implement best regulatory practices for major accident prevention and mitigation by independent expert regulators in each Member State 3. Implement fully joined-up emergency preparedness and response in all EU offshore regions 4. Improve and clarify existing EU liability and compensation provisions 27

28 Directive 2013/30/EU What is needed for proper implementation? (1) Member States: Scrutiny of technical and financial liability at licensing Ensure public participation before any new areas are drilled Appoint independent and robust competent authority (CA) for major hazard regulation safety & environment CA must publish plans and procedures for handling risk assessment documents, inspections, investigations and enforcement CA must report offshore performance annually to EC 'Inactive' coastal MS to cooperate with neighbouring MS Companies registered in EU to furnish reports on overseas major accidents to the MS CA to cooperate with EU Offshore Authorities Group 28

29 Directive 2013/30/EU What is needed for proper implementation? (2) Industry: Technical and financial capacity assessed at licensing stage Safety case' to include major environmental consequences and be 'accepted' by regulator Installation emergency response plans prepared for preventing escalation Every well to be notified => regulator / weekly well reports Must have scheme for independent verification of safety critical elements, and well plans Corporate major accident prevention policy => regulator EU-based operators to report on overseas major accidents Workforce to be consulted / whistle blowers protected incidents and near-misses reported in EU standard format 29

30 Directive 2013/30/EU Where is the resources capacity? Industry needs capacity for: formal safety assessments localised emergency response planning scheme of independent verification standardised reporting integrating response assets and capability with national arrangements Regulators needs capacity for: technical expertise stakeholder management quality systems recovering costs from operator/owner Both needs capacity for: Cooperating with EU offshore authorities group (EUOAG) on priorities for guidance and standards 30

31 Directive 2013/30/EU Time table Directive into force 18 July 2013 Member States to transpose in 2 years Fully operational in 3 years All existing installations to comply into 5 years Link to European Commission s offshore website: 31

32 INTRODUCTION INTO STANDARDIZATION AND CERTIFICATION 32

33 Introduction into standardization What are standards? Standards are documents with agreements on products, services and systems... are designed for voluntary use... contribute to: (inter)national strength of competition innovation health, safety and environment image... are in accordance with WTO 33

34 Introduction into standardization Why standardization? Overcoming trade barriers Vision ISO/TC 67 (oil & gas): 34

35 Introduction into standardization What is standardization? Standardization is an open process => all parties concerned invited to participate for broad support is developing agreements based on consensus => no sustained opposition is transparent => agreements are publicly available for comments and use takes place on three levels: national (e.g. NEN, CYS) regional (e.g. CEN, GSO) international (e.g. ISO, IEC) 35

36 Introduction into standardization How is participation organized? (1) Everyone who has an interest can participate All stakeholders + consensus creates broad support for established agreements 36

37 Introduction into standardization How is participation organized? (2) Stakeholder Input/influence (e.g. expert in working group) Stakeholder Stakeholder Stakeholder Mirror committee NC Standardization process ISO/TC 67 CEN/TC 12 Stakeholder Documents (e.g. draft standards) 37

38 Introduction into standardization How will an ISO standard be developed? 2 month ballot 3 months by default 2 months possible optional 2 months by default optional; 3 or 4 months possible 2 month translation (all ISO) 3 month ballot FDIS Opt in NP DIS Publication WD CD 3 tracks: Opt out Accelerated: 12 months to DIS and 24 months to publication Default: 24 months to DIS and 36 months to publication Enlarged: 36 months to DIS and 48 months to publication 38

39 Introduction into certification Conformity assessment Conformity assessment is demonstration that specified requirements relating to a product, process, system, person or body are fulfilled can be performed by a: first party being the person or organization that provides the object second party being a person or organization that has a user interest in the object (e.g. customer) third party being a person or body that is independent of the person or organization that provides the object, and of user interests in that object (e.g. certification body) 39

40 Introduction into certification General requirements conformity assessment process Accreditation body CAB = conformity assessment body ISO/IEC CAB management systems CAB Product certification CAB inspections CAB Certification of persons laboratory ISO/IEC ISO/IEC Guide ISO/IEC ISO/IEC ISO/IEC producer / service provider customer 40

41 Introduction into certification Specific requirements conformity assessment process Standard xxx Certification scheme yyy Requirements concerning content: product / services system person Requirements concerning: method to conduct determination activities review and attestation need for surveillance Separated according to ISO

42 Introduction into certification Practice of certification (1) Option 1: each CAB individually Accreditation body - RvA Conformity assessment body (CAB Conformity assessment body (CAB Conformity assessment body (CAB Conformity assessment body (CAB Standard Scheme Scheme Scheme Scheme Market 42

43 Introduction into certification Practice of certification (2) Option 2: central certification scheme to be used by CABs Accreditation body - RvA Scheme owner Scheme Conformity assessment body (CAB Conformity assessment body (CAB Conformity assessment body (CAB Standard Market 43

44 OVERVIEW OF OIL AND GAS STANDARDIZATIONANDSTANDARDS Lot Bakker LOT of Illustrations 44

45 Overview of oil and gas standardization Materials, equipment and offshore structures Electrical installations of ships and of mobile and fixed offshore units ISO/TC 118/ SC1 ISO/TC 67 IEC/TC 18 CEN/TC 12 CEN/TC 234 CEN/TC 282 ECISS CLC/TC 18X National mirror committees Simplified representation 45

46 ISO/TC 67 Title and scope Title: Materials, equipment and offshore structures for the petroleum, petrochemical and natural gas industries Scope: Standardization of the materials, equipment and offshore structures used in the drilling, production, transport by pipelines and processing of liquid and gaseous hydrocarbons within the petroleum, petrochemical and natural gas industries. Excluded: aspects of offshore structures subject to IMO requirements (ISO/TC 8). 46

47 ISO/TC 67 Goals Prepare standards required by the industry Prepare standards that are adopted worldwide by bodies such as ABNT (Brazil), API (USA), CEN (Europe), GOST R (Russian Federation), GSO (Gulf Region) and SAC (China) Prepare standards that are recognized by regulators Publish standards that enable companies to minimize their specifications Deliver standards to the target dates on the agreed work programme 47

48 ISO/TC 67 Structure 48

49 ISO/TC 67 Deliverables SOURCE: IOGP Poster can be downloaded from 49

50 CEN/TC 12 Title and scope Title: Materials, equipment and offshore structures for the petroleum, petrochemical and natural gas industries Scope: Standardization of the materials, equipment and offshore structures used in the drilling, production, transport by pipelines and processing of liquid and gaseous hydrocarbons within the petroleum, petrochemical and natural gas industries, excluding gas infrastructure from the input of gas into the on shore transmission network up to the inlet connection of gas appliances (covered by CEN/TC 234), installations and equipment for LNG (covered by CEN/TC 282) and those aspects of offshore structures covered by IMO requirements (ISO/TC 8). 51

51 CEN/TC 12 Mode of operation Standards are usually developed under Vienna Agreement in ISO/TC 67 working groups, with active participation of experts from at least 3 European countries. One of European experts is 'European Project Leader' (EPL) and checks that both environmental and regulatory issues are taken into account. After publication by ISO, standards are adopted in Europe as EN ISO. This development process is coherent with CEN/TC 12 s motto Global standards used locally worldwide 52

52 IEC/TC 18 Title and scope Title: Electrical installations of ships and of mobile and fixed offshore units Scope: Standardization for electrical installations and equipment of ships and of mobile and fixed offshore units, incorporating good practice and aligning as far as possible existing regulations and IEC publications 53

53 IEC/TC 18 Goals Standards will: chiefly concern factors promoting safety of ships and of mobile and fixed offshore units; factors promoting safety of life. form a code of practical interpretation and amplification of requirements of International Convention on Safety of Life at Sea, a guide for future regulations may be prepared by Administrations, and a statement of practice for use by builders and appropriate organizations. foster interchangeability of parts and ease the selection and procurement of equipment, including cables for transport of energy, signals and data, by indicating, as appropriate, IEC standards of ratings, types, dimensions, materials, quality, test methods, etc., whether or not these are influenced by regulations, and will thus facilitate interchanges between purchaser and supplier. 54

54 CLC/TC 18X Title and scope Title: Electrical installations of ships and of mobile and fixed offshore units Scope: Standardization for electrical installations and equipment of ships and of mobile and fixed offshore units used in the offshore petroleum industry, including interconnected subsea equipment, incorporating good practice and aligning as far as possible existing regulations and IEC/CENELEC publications 55

55 CLC/TC 18X Background CLC/TC 18X established in October 2011 after initiative of Norway (also secretary to IEC/TC 18) Reason relates to documents where it seems clear that EU intended to introduce EU standards for the offshore industry, including mobile units, like EU COM(2010) 560 "Facing the challenge of the safety of offshore oil and gas activities" SEC(2010) 1193 "Facing the challenge of the safety of offshore oil and gas" " Action Plan for European Standardization" Intention is to take the work of IEC/TC 18 as basis for the work in CLC/TC 18X as far as possible 56

56 GOLDEN TRIANGLE 57

57 Relationship between regulation, standardization and certification One way to demonstrate is applying standards Operator has to comply with legal requirements Regulator has confidence in value of certificate to demonstrate compliance with law Third party conformity assessment increases credibility 58

58 Case 1 Directive 2013/30/EU (1) Directive 2013/30/EU on safety of offshore oil and gas operations and amending Directive 2004/35/EC: To ensure safety in design and continuous safe operations, the industry is required to follow the best practices defined in authoritative standards and guidance. [ ] Having due regard to the established priorities the preparation of new or improved standards and guidance should be commissioned without delay. At Union level, it is important that technical standards are complemented by a corresponding legal framework of product safety legislation and that such standards apply to all offshore installations in offshore waters of Member States, and not just non-mobile production installations. The Commission should therefore undertake further analysis of the product safety standards applicable to offshore oil and gas operations. 59

59 Case 1 Directive 2013/30/EU (2) European Commission is aiming at harmonised standards for machinery used in drilling and well intervention operations in offshore oil and gas industry. For this purpose, the European Commission intends to submit a revised standardization request (formerly known as mandate), after rejecting of a previous standardization request by CEN/BT, also based on recommendations by CEN/TC

60 Oil and gas standardization and regulation WTO No barriers to trade TC ISO67 European E.g. Commission 2013/30/EU Directives Laws E.g. Dutch government Mining Act Legislation Draft mandate Mandates offshore oil & Standards gas industry Laws Regulation Standards Vienna agreement Standards TC CEN 12 NC NEN Standardization 61

61 Case 2 NTA 8120 (1) SSM/SodM: inspector safety of gas networks and integrity and safety of installations under Mining Act grid operators must have an operating safety management system (SMS) from 2011 voluntary agreement with requirements to SMS Grid operators: mostly integrated network companies (electricity and gas) also need for quality management system 62

62 Case 2 NTA 8120 (2) Result: voluntary agreement on asset management (with focus on safety, quality and capacity) willingness of participation of (currently named) ACM as supervisor for Electricity and Gas Act First edition of NTA 8120 was published in 2009; the second edition in 2014 (also in English) to align with ISO 55001, integrate security and better distinct requirements from recommendations 63

63 Case 2 NTA 8120 (3) All parties involved developed certification scheme linked to NTA 8120 Certification scheme operational since 2011 Nearly all grid operators are certified for NTA 8120 Next step to bring NTA 8120 certification under accreditation (together with ISO certification) With this certificate grid operators demonstrate to comply with NTA 8120 requirements and in this way with parts of legislation => inspector can change way of supervising to system surveillance 64

64 Diamond Working with accredited conformity assessment bodies further increases confident in value certificate 65

65 NEXT STEPS FOR CYPRIOTE HYDROCARBON SECTOR 66

66 Some observations Hydrocarbons are new market and potentially huge business opportunities (both direct and indirect) Development of market needs cooperation with all parties concerned (like standardization ) Consider establishing a collective program with joint objectives endorsed by all parties concerned to accelerate business Meeting objectives can be achieved by dividing work in task forces for each identified aspect 67

67 What would be the next steps? Are all (inter)national stakeholders already engaged? What are the gaps to be filled? Regulatory framework including role standards and certification Training / education of several bodies involved in licensing, permitting and supervising Infrastructure including provisions for workers Own use of natural gas (e.g. fuel [CNG/LNG], power generation, households, petrochemical industry) Awareness of society Cooperation with neighbouring countries and other parties What resources are needed? Do we have to prioritize? 68

68 Interactive session Please share your views 69

69 THANK YOU FOR YOUR ATTENTION or