Social Sustainability

Indicators, trends and commentary

Health and Safety peformances

The vision for the UK offshore is that, in 2010 the UK is HSE publish offshore injury, ill-health and incident the safest place to work in the worldwide oil and gas statistics which show that the safety performance of the industry. 2004 saw the UK continuing to close the gap offshore sector remains mixed. It compares favourably on the best in the world and lead European performance.

Figure 17: Lost Time Injury Frequency – UK to be chemicals sector and manufacturing. the Safest Place to Work in the World-wide Oil and Gas Industry by 2010.

A key feature of the UK offshore regulatory regime is the scheme is currently being explored. This concept requires every duty holder looked at the inconsistency in reporting categories and (usually the operator) to demonstrate (in document form) that proper safety arrangements, including an effective management system, are in place on their installation and that all major accident hazards are

HSE publish offshore injury, ill-health and incident statistics which show that the safety performance of the offshore sector reminas mixed. It compares favourably with agriculture, transport, construction and other extractive sectors, but less so with the onshore chemicals sector and manufacturing.

There were no fatal accidents during 2004 (the last was in September 2003), but over-3-day and major injury rates remain stubbornly high, with around 50 people being seriously hurt each year offshore.

Individual companies have well established occupational health programmes in place with all offshore installations participating. In addition over 130 offshore locations and 90 onshore locations are participating in Scotland's Health at Work scheme leading to nationally recognised awards. Three health related industry workshops were held during 2004, involving offshore managers/ supervisors, doctors and offshore medical reps. A comprehensive offshore occupational health reporting is currently being explored. During 2004 it looked at the inconsistency in reporting categories and will now look to review the use of the Energy Institute's guidance on 'Occupational Health Procedures for Reporting Occupationally Related Illness'.

Figure 18: HSE Accident Statistics for UKCS Offshore Sector, 1999/2000 to 2003/4

Installation Integrity

2004 saw a new joint industry and HSE initiative on installation integrity. Feedback from HSE inspectors and duty holders on good practices, in particular in maintenance management, is being compiled into a 'toolkit' for all. Also high level, key performance indicators, KPIs are being developed to set targets and track industry progress. These KPIs will include hydrocarbon releases (previously tracked, see below), verification non-compliance and production efficiency.

The UKOOA/HSE workgroup on hydrocarbon release reduction generated a publication to summarise all the deliverables during the 2001-2004 campaign. In the period to end 2004, a 40% reduction in total releases was achieved, with 90% reduction in the major release category. (N.B. It is believed that the increase in minor releases is due to better quality reporting in recent years, although more analysis of this is under way.)

A new target for major and significant releases was agreed between industry and HSE in 2004: a 10% year- on-year reduction.

Figure 19: UKCS Hydrocarbon Releases 1994-2005

Employment

The UKCS provides employment for around 260,000 with 30,000 directly employed by E&P companies and 155,000 as contractors or in the supply chain. An additional 75,000 induced jobs are sustained through the investment and wages from the industry. Employment overseas and export of international goods/services further boosts the total numbers employed through our industry.

Employment extends across the UK, though it is concentrated in north-eastern Scotland, Orkney & Shetland Islands, the east coast of England, London and the South-East.

Sustained employment is a direct consequence of continuous investment with around 33 jobs for each £million spent.

Figure 20: UK Jobs attributed to Upstream Oil and Gas (direct & indirect)

Workforce capacity and capability

The industry is working hard to ensure that it retains a suitably sized and skilled workforce to meet future requirements and challenges.

A key issue to be addressed is the present demographics of the offshore workforce. With the province only half way through its life, we see that in 2005 the number of those aged 56+ is more than double that of 2001 (up from 190 to 445) and estimate that this population will double again by 2010, when they will make up 20% of the workforce.

Figure 21: UKCS Offshore Employment Demographics (2005 forecast)

This chart also shows the positive impact that the Upstream Technician Training Scheme is having on the 18-23 age group.

100 new apprentices were recruited onto this Modern Apprenticeship scheme for the industry in September 2004. A further 100 places are to be offered this September, bringing the total that have been involved in the scheme to more than 500 by the end of 2005.

A Graduate attraction programme, started in 2002, has resulted in a mobile exhibition of industry career opportunities visiting up to 29 universities and colleges each year to 2005, with between 2500 and 3300 students attending annually.

Business practices and behaviours

PILOT has challenged the industry to devise codes of practice to influence behaviours that promote social responsibility and business efficiency. There are currently three in operation for the offshore sector:

Supply Chain Code of Practice – launched in 2002 to promote behavioural change in contract relationships. The results of the 2004 survey in the 5 key areas were:

• Commitment to code and involvement in surveys: 360 code signatories; 38 (80%) purchasers and 77 (28%) suppliers replied to survey
• Invoice payments within 30 days: 65%
• Commitment to the industry's registration process on FPAL: 63% (33% in 2003)
• Use of industry's standard contracts: 74% (68% Social responsibility reporting in 2003)
• Contract opportunity 'share fairs' held in spring & autumn

Commercial Code of Practice – launched in 2002 to identifies and references many of those reports. promote positive commercial behaviour and to speed up transactions between licence holders. The results of the Contribution to UK public fi nances 2004 survey in the 5 key areas were:

• Responses to survey: All licensees identified an in-house 'champion' for this code.
• These met twice and the number of transactions reported in the survey was up by 140% from 2003
• Transactional compliance with code: 83% (55% in 2003)
• Committing to negotiation timetable: 74%
• Senior management commitment to negotiations: 88%
• Post-deal audit: 34%

Infrastructure Code of Practice – launched in September 2004 to promote business behaviours that would improve the usage of existing infrastructure and encourage new developments. A full survey will be conducted early in 2006, but already;

• Over 50 companies have signed the CoP, including all UKOOA members, who cover all currently operating systems
• Technical/operational information is publicly available on over 20 systems through the DEAL website (www.ukdeal.co.uk)
• Many transactions have been registered with the DTI and are now reaching the time for resolution

Social responsibility reporting

A number of companies operating on the UK Continental Shelf subscribe to non-financial corporate reporting (see discussion in introduction). The table at the bottom of the page identifies and references many of those reports.

Contribution to UK public finances

The UK economy has benefited from £203 billion (2004 prices) in North Sea taxes since the mid 1960s. Tax receipts have been on the increase since 2003 and rose by £1 billion to £5.2 billion in tax year 2004/5. Tax receipts in the current tax year are projected by HM Treasury to increase to £7.1 billion, a 34% increase on the previous year. This is caused in part by the changes in the 2005 Budget, which accelerated payments, as well as continued strong oil and gas prices (based on an average $40 oil price). However, if current prices persist, tax receipts for 2005 could reach £10 billion.

Figure 22: UK North Sea Taxes (2004 Prices), 1991-2006