Plenty of stones still unturned

Safety on North Sea oil platforms is beinghampered by free market philosophy, argues Charles Woolfson

A recent government inspection of the Piper Bravo oil platform, off the Scottish coast, revealed serious maintenance shortfalls. According to some sources, 11 important safety valves failed to operate properly when the platform was shut down. And last year safety concerns about the Claymore platform were disputed by its owners. These shortcomings occur in an industry that has claimed 400 lives in the past 25 years, including 167 in the 1988 Piper Alpha disaster.

A 1990 report into the Piper Alpha fire recommended an overhaul of the offshore regulatory regime and initiated a new "safety culture". Unfortunately, this culture is finding it hard to take root, because the trend is towards removing onerous regulatory burdens on businesses rather than on ensuring that existing regulations governing safe working practices are scrupulously adhered to.

Since the 1990s, the government has been committed to scrapping unnecessary red tape. John Major has urged officials to adopt a "presumption against regulation unless strictly necessary". Instead, market forces are set to rule.

The 1994 Deregulation and Contracting Out Act allows legislation to be repealed via the use of statutory instruments - procedures which are subject only to scant parliamentary scrutiny. This is a deeply anti-democratic development.

The act also gives businesses "new rights" to request detailed written justification before regulators force a company to adopt correct health and safety procedures. Last September the government launched a list of hotline phone numbers for aggrieved businesses to seek redress against "overzealous" regulators. Yet existing regulations already provide for the right of appeal to tribunals. What purpose can these new "rights" for business serve other than to inhibit public officials?

The 1994 act also spells out even more elaborate procedures for appealing against the regulators' demands. This "model appeals mechanism" is likely to generate yet more of the red tape the government claims to be committed to sweeping away. The overall effect is to make regulators think extremely carefully before embarking on enforcement.

Perhaps this is why the damning indictment of safety management failures on the Piper Bravo concludes with a risibly limp request from the offshore regulators to the platform owners for a written reply "within 28 days" to a catalogue of omissions, some going back nearly a year. Hardly overzealous enforcement.

In our study of the offshore oil industry, Paying for the Piper, we obtained detailed evidence of industry-government collaboration in elaborating the current deregulation agenda. Confidential correspondence reveals the development of a common programme between the Department of Trade and Industry and the organisation representing the industry, the United Kingdom Offshore Operators Association.

As part of an ongoing bid to cut costs, an association task force, co-chaired by Shell and BP, identified a comprehensive hit-list "of regulatory procedures affecting the oil and gas industry, developed in close collaboration with DTI officials". Other documents relate to correspondence between the association and former energy secretary Tim Eggar, who, leaving Parliament at the election, has already been appointed to two oil-related directorships. A "highly confidential" note of a meeting between executive officers of UKOOA and Eggar reports Eggar urging the industry "to ensure they left no stone unturned in identifying areas (for deregulation) which perhaps officials had not".

Since Piper Alpha, the industry has attempted to limit the cost implications of new regulatory controls while claiming to have spent billions of pounds on safety. Successive tranches of regulation have been effectively vetoed by the industry in negotiation with the regulatory body. Any regulation which insists on specific targets is resisted by the industry as "old-fashioned" and "prescriptive". Instead, the notion of "modern goal-setting" regulation has been exploited to create a situation in which the industry has a high degree of discretion about how to handle safety matters.

Finally, and most worryingly, we have evidence which suggests that the industry is "massaging" injury statistics to minimise regulatory interference. Since Piper Alpha there has been no significant improvement in the rate of fatalities and serious injuries. Indeed, latest figures suggest a rise, which is dismissed by the industry as an "unfortunate blip".

Charles Woolfson is deputy convener, Centre for Regulatory Studies, University of Glasgow.