DEFENDING OFFSHORE WORKERS

RMT helpline 0800 376 3706 :: january 2015 :: RMTnews 11 RMT has set out an action plan for politicians to rescue British jobs and infrastructure in the offshore industry in the wake of the slump in world oil prices. The union has major concerns about the impact of cost-cutting across the sector after several different operators including Total, Apache, Shell and others have made clear that terms and conditions are to be slashed in an effort to reduce costs. RMT general secretary Mick Cash warned that if immediate action wasn't taken then it runs the risk of turning today's crisis into longer-term damage that would threaten the very core of the offshore industry. "With tens of thousands of jobs at stake, along with the prospect of lasting damage to infrastructure, production capacity and the safety culture, intervention is absolutely critical," he said. He demanded that Westminster and the Scottish Parliament adopt an immediate crisis management approach to ensure sustained production, maintenance of infrastructure, retention of skills, and a robustly regulated regime in the future. The most worrying element of these cuts are the proposed changes to working patterns which could see workers currently working to-weeks on, three-weeks off, being altered to either two-on, two-off; or three- on, three-off. These changes if pushed through will see significant redundancies and a loss of experience. For those remaining, the 'safety culture' RMT has developed over the years will be irreparably damaged as working hours increase significantly whilst income stands still. Talk of low morale is already widespread, which in a major hazard industry should be cause for concern. The cost-cutting agenda will see major refurbishment projects delayed indefinitely, as investment dries up. The Health and Safety Executive key programmes 3 & 4, 'Asset Integrity' and 'Ageing Infrastructure' respectively, are wholly reliant on investment for redevelopment and refurbishment, without it many installations will be run inefficiently and moreover with greater risks and hazards. History demonstrates that during every downturn which the sector has suffered it has come close to disaster and the fatality rate has increased. The pressure to reduce costs, but maintain production, creates scenarios like the Shell Brent Bravo incident of 2003; insufficient numbers of motivated people avoiding the risk of losing production by doing little or no intrusive maintenance on safety critical equipment so leaving us a spark away from another Piper Alpha disaster. The HSE will be stretched trying to deal with the introduction of the new EU Offshore Safety Directive which will require every installation to submit their respective safety cases. The impacts of cost- cutting may well elude the inspectorate as they deal with the 'paperwork' of safety case assessment and they are already under resourced. The Offshore Elected Safety Representatives (ESR's) are enthusiastic, committed amateurs and undoubtedly are making a difference. However, the ESR's are primarily workers and are subject to the same pressures and constraints as their peers. Therefore when faced with the same fears and threats their approach to auditing and inspecting will inevitably be impacted. The frequently referred to 'Wood Review' sets out the 'master plan' for maximising recovery from the UK sector and sustaining production. However, the 'collaboration' required to enable this is reliant on the infrastructure being fit for purpose. New fields are smaller and more difficult to access so a means to transport the product to shore is critical to sustainability, which in turn means the existing infrastructure has to be maintained to the highest standard. The 'Wood Review' was drafted and based its projections on an oil price in excess of $100 a barrel, as a result such sustainability must now be at risk. If none of these issues are addressed, then the industry face the loss of the infrastructure and with it the ability to exploit remaining reserves. On top of this, the UK tax payer faces a massive bill - some estimate as much as £30 billion - for decommissioning and meeting the EU commitments on a clean up. Westminster must adopt a crisis management approach and ensure sustained production, maintained infrastructure, retention of skills, and a robustly regulated regime. WHERE NEXT FOR OIL? Sir Ian Wood, founder of the Wood Group and a government adviser, said that fears that the UK oil industry was close to collapse were "over the top" but the sector was facing a "very difficult year". "It will be a tough time for the industry and the people that work in it, but we are entering a downturn from which we will recover. "The UK Continental Shelf does face a very difficult year to 18 months which will see a slowdown in investment, the loss of some offshore production, up to 10 per cent, and the possible loss of around 15,000 jobs within an industry which employs 375,000, although this is difficult to estimate,” he said. Forecasters Oxford Economics said that "oil prices are likely to be lower over the longer-term than forecast three months ago" due to weak demand from China and strong production from the US. But it expects oil prices to rise to 111 US dollars (£71) a barrel by 2020 and 200 US dollars (£128) a barrel by 2040. Chief Secretary to the Treasury Danny Alexander described the recent slump below 60 US dollars (£38) a barrel as "a big concern" but insisted the North Sea is "open for business" and backed by government support for decommissioning, investment and exploration. "We have to accept that there is going to be significantly less tax from North Sea oil and gas because that is necessary to get the investment, to continue to create the jobs and support what is one of the most important employers, not just in Scotland but across the whole of the UK. "It is very important to send a message to investors around the world that the North Sea is open for business,” Mr Alexander said. Scottish First Minister Nicola Sturgeon called on the UK Government to provide more tax incentives. "The Scottish government will continue to do what we can around skills and innovation, but we need serious and very definite measures from the UK government to help," she said. Stuart Haszeldine, professor of carbon capture and storage at Edinburgh University's School of GeoSciences, has called for an "urgent review" of the "extreme" taxes levied on oil and gas production. He said that it should also provide tax incentives to encourage investment in "enhanced oil recovery", which involves injecting carbon dioxide into mature fields to both decarbonise the atmosphere and extract more oil. He warned that major redevelopment and refurbishment projects will be "delayed indefinitely as investment dries up", the Health and Safety Executive "will be stretched to maximum capacity trying to deal with the introduction of the new EU Offshore Safety Directive", the sustainability of production is "at risk", and the UK taxpayer faces a bill of up to £30 billion for decommissioning.