Unions flag North Sea safety fears
Changed working terms have triggered strikes in both the the UK and Norwegian North Sea oil industries
Earlier this summer, hundreds of people gathered at the memorial garden in Aberdeen, where the names of 167 men who died in the Piper Alpha rig disaster 30 years ago were read out.
The sombre occasion marked the anniversary of the North Sea's greatest disaster and acted as a reminder, noted by trade body Oil and Gas UK's (OGUK) chief executive Deirdre Michie at the event, that the industry must "keep remembering them so that we don't repeat the mistakes of the past".
As the anniversary of the tragedy approached, trade unionists used the spectre of the accident to highlight fears that mistakes could be repeated now if operators continued to cut costs.
Jake Molloy, the regional organiser for the National Union of Rail, Maritime and Transport Workers (RMT), told Petroleum Economist he believes conditions driving a spate of industrial action in the North Sea now have direct parallels to those around the time of Piper Alpha.
"I have been around this game long enough to have seen this played out before. I remember what happened after the '86 crash—thousands paid off, everyone gets squeezed," he said. "Two years into that squeeze, Piper Alpha blows up. The next thing is you have two years of industrial action and sit-ins and disputes. We have been here before."
The unions' belief that cost reduction is threatening health and safety offshore is a common complaint, but was backed by an unusually forthright letter from Chris Flint, director of the UK Health and Safety Executive's energy division. In April, he wrote to all UK operators warning that, although the number of hydrocarbon releases had fallen, "several" major spills in recent years had come "perilously close to disaster".
Unrest on the rise
Both the UK and Norwegian sides of the North Sea have been facing summers of worker discontent, although the drivers for this are perhaps less alarming than the prospect of burning oil rigs.
In Norway, up to 1,600 workers belonging to the Safe union downed tools in July in a dispute over proposed changes to pension terms. Fellow union, Industri Energi, had concluded a wage deal with Norsk Rederiforbund, the Norwegian shipowners' association earlier in the year and didn't take part.
The first round of strikes caused the shutdown of production on Shell's Knarr field floating production storage and offloading facility. That's thought to have contributed to a brief hike in the price of Brent crude to $79 a barrel. Action affecting Equinor's Snorre B shut down drilling, but not production.
Norway, with its high proportion of union membership—over 50% across all industries—compared to the UK, tends to experience industrial action at two-year intervals when contract negotiations take place. The most extreme case occurred in 2012 when the government had to intervene to end a strike that was estimated to have cost £300m in lost production.
On the UK side, industrial action is rare. But this year unrest broke out on a variety of North Sea operations.
The most significant of these, led by the union Unite, hit production on assets owned by Total. The Alwyn, Elgin and Dunbar platforms, which handle around 70,000 barrels a day of oil and produce about 10% of UK gas output, were affected in July and August. Talks persistently broke down and the workers went ahead with a series of 12 and 24-hour work stoppages. However, with 45 of 60 workers taking action, production on the platforms was reduced rather than shut down completely.
The nub of the union workers' disagreement was the proposed imposition by Total of equal time rotas—three weeks on, three weeks off, or 3/3—where 2/3 is preferred. The operator said the move would be more cost efficient and bring rotas in line with those on former Maersk rigs, acquired when Total bought Maersk Oil in a $7.45bn deal last year.
As the Total employees went to arbitration to solve the impasse, further union members employed by the Offshore Contractors Association (OCA) continued to threaten fresh disruption into the autumn involving 2,500 workers.
Only last year, the unions—Unite, GMB and RMT—grudgingly accepted an improved pay offer from the nine employers that make up the OCA, which represents companies including Aker Solutions, Petrofac and Wood. This came after a prolonged dispute involving the rejection of two prior offers and ballots that ultimately failed to cross the line to strike action.
Part of the agreement required OCA to commission a report on the impact of 3/3 rotas on the workforce to determine if union claims they were a risk to health and safety were valid.
The report, undertaken by Aberdeen's Robert Gordon University (RGU) and released in April, was inconclusive. The unions pointed to findings that workers suffered from fatigue and psychological distress when working offshore for 21 days on 12-hour shifts; but employers pointed out the study found no impact on safety.
Matt Abraham, the supply chain and health, safety and environment director at OGUK, said the schedules were safe and would continue to be used by operators to ensure the North Sea avoids returning to its traditional "boom and bust" cycle.
“Companies need and want a motivated and engaged workforce” - Abraham, OGUK
"Equal time rotas are among a range of measures some companies have implemented to improve efficiency and help restore their international competitiveness, which is vital if peoples' livelihoods are to be protected in the long term," he said.
"We are emerging from one of the most severe downturns in our industry's history, the hard-won efficiency improvements of recent years have contributed to the UK continental shelf (UKCS) becoming more competitive, which is essential for the long-term success of the UK industry and its employees."
The recent higher oil price has helped, Abraham continued, "but we are in a globally competitive industry where we are competing for investment. Companies need and want a motivated and engaged workforce and, as the recovery gathers momentum, some increase in costs is inevitable; but they have to manage these carefully to avoid a return to boom and bust."
The industry remains on edge about the issue—Shell has been undertaking a review on implementing 3/3 since 2015, which is expected to be completed by the end of 2018. Its reticence is understandable, as it was Shell production facilities that were hit by the first work stoppages on the UKCS in 30 years when RMT and Unite members employed by Wood Group downed tools in 2016.
This action took the industry by surprise, according to Euan Smith, a partner specialising in employment law at the Aberdeen office of law firm Pinsent Masons. "You have to bear in mind industrial action in North Sea is still quite a rare beast. It was a big shock when Wood Group guys took action in 2016," he said.
Antipathy towards 3/3 rotas has been strong since they became more commonplace in the past few years, as operators and contractors sought to cut costs, Smith added. Unite estimates 56% of UK North Sea workers are on 3/3, up from 17% a decade ago.
Meanwhile, OGUK estimates that unit operating costs across the basin nearly halved this year from their peak in 2014, which means the North Sea is becoming more sustainable. Operators are enjoying the benefit of $80-plus oil prices