Environmental regulation of offshore oil and gas activities : evaluating the adequacy of the current legal regime

Abstract

“We can drill safely and efficiently with an ever-decreasing environmental footprint”. These words were spoken by the President of Shell Oil Company a few months before the Montara and Deepwater Horizon incidents When the Deepwater Horizon incident occurred in 2010, the world watched helplessly as barrel after barrel of oil spilled into the Gulf of Mexico. This was certainly not the first oil-related incident to be suffered by the marine environment; nevertheless it quickly got the attention of the international community which, until that moment, had focused primarily on vessel source-, rather than offshore installation, pollution damage. As the shock of the disaster subsided, it began to dawn on many states, as well as the European Union, that pollution damage of a magnitude as great as that which had just occurred, could be caused by offshore facilities and not just oil-carrying vessels. They further recognised that in the event of an accident occurring in their own jurisdictions and, in the absence of a global regime on civil liability for pollution damage caused from offshore installations, issues of liability and compensation would be left solely in the hands of the individual states. With the production of oil and gas increasing, and the drilling going deeper and deeper, the threats to the environment and natural resources can only increase. This inevitably calls into question the suitability of the existing international framework regulating offshore drilling activities. The carrying out of these activities gives rise to main legal issues: the first deals with the safety of operations and the second deals with issues of liability and compensation for pollution damage. Whilst a number of instruments exist under international law addressing the protection of the marine environment, none appear to offer comprehensive cover of these legal issues. In recent years, attempts were made to develop an international regime which could regulate all aspects of offshore activities; however these appear to have failed and such issues have seemingly been left to be regulated at a regional and national level. To better understand the threats posed by, and potential consequences of, a major offshore accident, Chapter 1 will first describe the range of processes involved in offshore exploration, from surveying to production. Following this, an overview will be given of the various environmental impacts which could result from major oil spills. Chapter 2 will present an overview of the existing regime by looking at a number of international, regional and even national instruments regulating, in some aspect, the protection of the marine environment from pollution damage associated with offshore oil and gas activities. In the short space available, it will not be possible to cover all of the international and regional instruments dealing with marine environmental protection; nor will it be possible to discuss all aspects of the regimes covered. Essentially, the aim of this work will be to evaluate and determine whether the current legal regime offers sufficient protection to the marine environment from pollution damage resulting from offshore oil and gas operations. This analysis will largely be made in Chapter 3 where the effectiveness of the international, regional and EU legal frameworks will be discussed and an attempt to answer the question whether these existing regimes are in fact adequate will be made. This discussion will lead to the further question as to whether a global agreement is needed which will regulate all aspects, particularly liability and compensation for pollution damage, of offshore oil and gas operations. This question will be the focus of the discussion in Chapter 4. Determining the adequacy of any regime is not an easy task. An evaluation of this type can be made in many ways and could potentially give rise to more than one conclusion. However, the evaluation which this thesis will attempt to make will be based solely on the aspects of safety of operations and liability and compensation for pollution damage.