On 15 December 2005, the Danish Parliament passed a new Act on Safety etc. on Offshore Installations (the Offshore Safety Act) to replace the previous Offshore Installations Act from 1981. The act came into force on 1 July 2006.
The objective of the act is to maintain a high offshore health and safety level
The objective of the new act is to maintain a high level of health and safety on offshore installations that reflects the technical and social development in society, as well as to establish a framework that enables the oil companies independently to manage health and safety issues offshore. The goal is to keep the health and safety standards in the Danish part of the North Sea among the highest in the North Sea countries.
The need for a new act became apparent when existing legislation was reviewed in 2003-2004 for the purpose of simplifying legislation in accordance with the Government’s action plan.
Thus, the new act is to create a platform for a simple, transparent and user-friendly set of rules contained in a contemporary framework and comprising all aspects of offshore health and safety regulation. Moreover, the Offshore Installations Act from 1981 gave rise to various points of doubt with regard to legal implications that could not be solved by merely amending the act.
At the time of its introduction, the Offshore Installations Act was based on the development of a completely new infrastructure, a new industrial sector in the offshore area and the imminent establishment of a public authority supervision system.
Today, Denmark has a well-established industrial offshore sector, an extensive offshore infrastructure and more than 20 years’ experience.
In light of the North Sea Agreement of 29 September 2003 between the Danish Government and A. P. Møller-Mærsk regarding an extension of the Sole Concession, it is to be expected that oil and gas activities in the Danish part of the North Sea will continue well into the 21st. century.
The new act contains the framework for regulating an offshore sector where the infrastructure is expected to continue developing, but where increasing focus will be placed on automation, efficiency improvements, maintenance, extended service life and the decommissioning of offshore installations.
Underlying principles
The act regulates physical safety, i.e. the safe design of offshore installations, as well as the health and safety of personel working offshore. The act only include health and safety issues on offshore installations from which exploration and production of hydrocarbons take place, and not health and safety issues on other types of offshore installations, for example offshore windmills.
New definitions
In the new act, “offshore installations” are defined both as fixed production installations, such as the Dan, Gorm and Tyra platform complexes, and as mobile units, primarily drilling rigs.
The provisions of the act cover the design, construction, installation, operation, modifications and decommissioning of offshore installations based on the following principles:
- Health and safety offshore must reflect the technical and social development in society and, as a minimum, correspond to the level applicable onshore, adapted to the special conditions existing offshore.
- The companies will hold the primary responsibility for checking whether the health and safety level is satisfactory.
- To ensure that the players in the industry, i.e. the oil companies, monitor the health and safety risks in compliance with the provisions of the act or regulations issued in pursuance of the act, they must establish a health and safety management system. This management system must be set up in compliance with generally recognized standards and codes of practice for management systems or similar schemes. Generally recognized standards and codes of practice include ISO 9001, ISO 14001 or OSHAS 18001.
- Health and safety risks must be reduced to a level “as low as reasonably practicable”, abbreviated ALARP, a well-known principle used in the other North Sea countries.
- In a so-called health and safety case, the companies must substantiate that they have adopted the ALARP principle in accordance with their management systems.
- The supervisory authorities will use the health and safety case chiefly when they process applications for permits and approvals in accordance with the new act.
- The oil companies’ administrative burdens are to be reduced. This means that the authorities must design and arrange the administrative tasks that they place on the companies under the new act in a way that ensures the administrative burdens are no larger than warranted by health and safety considerations.
Major changes from the Offshore Installations Act of 1981
A number of issues in the Offshore Installations Act of 1981 was only phrased in highly general terms, and provisions of the act conferred very broadly defined powers on the Minister to lay down more detailed provisions on health, safety and environmental matters.
Compared to the previous act, the provisions of the Offshore Safety Act that confer powers on the Minister have a more concrete and precise wording. For one thing, such powers enable the Minister to continue fulfilling the large number of obligations under EU law that exist in this area.
The Marine Environment to be regulated by the Marine Environment Protection Act
As before, the act regulates health and safety issues offshore, which include the safety and stability of offshore installations and the health of the personel. However, the Offshore Safety Act no longer contains provisions on protecting the marine environment, which is now regulated by the Marine Environment Protection Act, an Act within the province of the Danish Environmental Protection Agency.
Nevertheless, the DEA and the Danish Environmental Protection Agency will continue to cooperate and thus ensure that issues relating to health, safety and protection of the marine environment are safeguarded based on an overall assessment.
Danish offshore installations situated outside Denmark’s or another state’s continental shelf area also came within the geographic scope of application of the Offshore Installations Act of 1981. Moreover, the Minister could lay down rules to the effect that the act was to apply, in whole or in part, in the territorial waters or continental shelf area of another state. These provisions were never applied.
Consequently, the geographic scope of application of the Offshore Safety Act merely comprises offshore installations in Danish territorial waters and in the Danish continental shelf area.
Pipelines and Special-purpose Vessels
Although pipelines for transportation of hydrocarbons across the continental shelf or in territorial waters are not considered offshore installations, they are nevertheless covered by the provisions on emergency preparedness and safety in the Offshore Safety Act.
Special-purpose vessels, such as crane and pipe laying barges, are only covered by the Offshore Safety Act if the activities or work processes performed by the vessels are associated with offshore installations and pose a safety risk to persons or valuables on the offshore installation.
For example, this means that a crane barge that is to lift a module onto a fixed offshore installation will only be covered to the extent of the actual crane and the planning and implementation of the lifting operation, whereas the rest of the crane barge will be covered by rules applicable to vessels and thus already be satisfactorily regulated.
Increased Focus on Health and Safety Management Systems
The provisions of the new act to the effect that the companies are to establish a health and safety management system for the design, operation and decommissioning of offshore installations are more detailed than the corresponding provisions on management systems in previous legislation.
Another important aspect of the act is that the companies are to use their management systems to improve the health and safety level in accordance with the technical and social development in society.
Moreover, the performance of less detailed control by the supervisory authority is contingent upon a well-documented health and safety management system.
The Offshore Safety Act does not require existing offshore installations to apply for new operating permits. However, existing installations will be covered by the general provisions of the act, particularly those concerning risk assessment and risk reduction. At the same time, the supervisory authority will intensify the supervision of load-bearing structures once the design life of the installations expires, if continued operation is planned beyond that date.
More detailed Provisions on Emergency Response
The new act contains more detailed provisions regarding emergency response. As before, emergency response consists of procedures to contain incidents such as fire and explosion, as well as rescue, evacuation and anti-terrorism procedures and a emergency response plan for specific offshore installations to ensure the continued supply of oil and natural gas to Danish society in emergencies. The more detailed provisions result from amendments to the Emergency Preparedness Act and the national emergency plan.
The Offshore Installations Act contained corresponding, but more generally worded provisions. The new act harmonizes the offshore companies’ civilian emergency duties with those applying in the natural gas and power sectors.
The Manning and Organization Appeals Board is abolished
Manning and organizational charts will no longer constitute individual plans requiring separate approval, but will form part of the health and safety case for the individual offshore installation. Consequently, unlike the Offshore Installations Act, the new act does not contain provisions on a Manning and Organization Appeal Board to hear appeals against administrative decisions in cases concerning the manning of offshore installations.
The Offshore Safety Council replaced the Coordination Committee
The Coordination Committee on Offshore Installations developed from a coordination forum mainly consisting of supervisory authorities into a three-party forum comprising public authorities and the two sides of industry, along the same lines as the Working Environment Council, which is responsible for onshore issues.
Therefore, the new act has changed the name of the Coordination Committee to the “Offshore Safety Council”, which better reflects the council’s principal duties in relation to preparing rules. The Coordination Committee’s previous areas of responsibility have not changed as a result of the new name.
Other than the right to appeal against decisions in cases concerning manning, the Offshore Installations Act contained no special provisions on appeals. This has been remedied by the Offshore Safety Act, such that appeals against decisions made by the Minister for Transport and Energy or the authority to which the Minister has delegated some of his powers may be brought before the Energy Board of Appeal. The Energy Board of Appeal has already replaced the ordinary, administrative right of appeal under most Acts in the energy area.
In fact, this appeals scheme corresponds to its counterpart under the Working Environment Act applicable onshore. Thus, the Working Environment Board of Appeal hears appeals against decisions made by the National Working Environment Authority under the Working Environment Act.
Enabling Legislation
On the commencement of the Offshore Safety Act on 1 July 2006, all executive orders and guidelines issued under the Offshore Installations Act were abolished. In order for a number of EU Directives within the working environment area still to be implemented and the provisions of the new Act to be put into force in central areas, the previous regulations and guidelines are replaced by new ones under the new act.
This is done by a number of new executive orders and by a compiled executive order containing several rules and guidelines laid down under the Offshore Installations Act and the Working Environment Act. Subsequently, these upheld rules will be replaced by new rules under the Offshore Safety Act, resulting in a new, simplified and transparent set of rules.