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03/09/13 08:53

Speech at Offshore Europe event

First Minister, Alex Salmond
Offshore Europe event
September 2nd 2013

Addressing an event held on the eve of the Offshore Europe conference in Aberdeen and attended by oil and gas industry experts, the First Minister Alex Salmond said:

I completely approve of the decision to change the arrangements for this evening. The Offshore Europe conference is an immensely important event, and it is right that it should go ahead – not least so that the industry can consider how to improve safety. But it is also absolutely right that this evening’s supper should be a reflective occasion, as well as one which looks forward - and that, inevitably, has changed the remarks that I am going to make this evening.

The four lives lost 10 days ago are a tragic reminder of the difficult conditions faced everyday by those working offshore.

Our thoughts are with the families and friends of George Allison, Sarah Darnley, Duncan Munro and Gary McCrossan.

They are also with the 14 passengers and crew who survived the crash. We wish those who were injured a speedy recovery.

And we recognise the efforts of the individuals involved in the rescue effort, and in treating the casualties when they came ashore - the staff at Gilbert Bain Hospital in Lerwick, the lifeboat crews from Lerwick and Aith, and the helicopter crews from the coastguard, RAF Lossiemouth and Bond Rescue. Their courage and dedication is hugely appreciated.

The theme of this conference is “the next 50 years”.

Yesterday, I opened the new welding facility at Banff and Buchan College in Fraserburgh. That facility includes equipment and simulators especially designed to train people to work in offshore conditions. It is just one of the projects that Energy Skills Scotland is supporting, through the Oil and Gas Academy for Scotland.

The trainees I met yesterday were mainly in their late teens or early twenties. If they choose to, they can spend the whole of their working lives in Scotland’s offshore industry. One of our jobs – a responsibility for all of us – is to get across the message that the oil and gas industry in Scotland is a sunrise industry, not a sunset industry. It offers people at school today the prospect of a lifetime of skilled employment.

I want to reflect on two other responsibilities this evening.

I’ll talk in a moment about our shared responsibility to ensure that those recruits - and the tens of thousands of people currently working offshore – work in an environment which is as safe as it possibly can be.

But first I want to reflect briefly on one of the key responsibilities of Government – it’s to ensure that a country’s natural resources bring benefits to the population as a whole.

The theme of this conference reflects the sheer scale of offshore oil and gas reserves which are left. More than half of the wholesale value of offshore oil reserves – up to £1.5 trillion worth – remains to be extracted.

The Scottish Government has set up an expert commission under Melfort Campbell, to see how we can maximise the returns from offshore oil. Fergus Ewing, Energy Minister, will speak about that tomorrow morning.

We have also asked the Fiscal Commission Working Group - which includes two Nobel laureates, Professor James Mirrlees and Professor Joseph Stiglitz – to publish recommendations on how an oil fund could be established and managed.

That group’s conclusions will be published shortly. They will provide practical recommendations about how to ensure that Scotland’s oil resources benefit future generations, as well as this one.

Norway established its Oil Fund in 1990. It made its first investment six years later, in 1996. Norway’s pension fund is now the largest sovereign wealth fund in the world. By the end of the decade, it is expected to be worth over 1 trillion dollars.

Norway is benefiting from the decisions it took two decades ago. Now that we know that there is an industry for the next half century, we should start investing in our future.

But in looking ahead over the next 50 years, it’s most appropriate this week to focus on safety. The investigation into the details of the Shetland crash is under way. I am sure everyone here tonight shares my determination that we will learn from its findings.

Many of us earlier in the summer were involved in the moving commemorations for the 25th anniversary of the Piper Alpha disaster. The Scottish Government contributed to the restoration of the memorial garden in Hazlehead Park - as, I know, did many of you. Oil & Gas UK held an offshore safety conference, Piper 25, to reflect on the lessons learnt from the tragedy; and to reinforce the industry’s commitment to continuously improving safety.

After Piper Alpha, Lord Cullen’s report put forward 106 recommendations for improving offshore safety.

Two key recommendations were the requirement for companies to produce “safety cases” - ensuring that companies adopted a comprehensive approach to safety assessment and safety management - and the decision to transfer health and safety regulation from the Department for Energy to the Health and Safety Executive.

Since then, the “Step Change” initiative, established in 1997, has been extremely important in maintaining progress.

Since Step Change began, fatal and major injuries in the offshore industry have reduced by 55%.

I remember speaking in a debate at Westminster on the 15th anniversary of the Piper Alpha tragedy, when Step Change had been going for approximately six years. It seemed then – and this has been borne out since - that there were two factors in particular which were helping Step Change to make a meaningful and lasting difference.

The first had been outlined to me by Rab Wilson, a union official with long experience in North sea matters. He had called Step Change “a breath of fresh air” for creating a more transparent way of dealing with safety issues. The way in which Step Change involved unions and employees as partners for improving safety has been of great significance.

Secondly, the initiative has been led at a senior level within the oil industry itself- starting with George Watkins of Conoco, and continuing to this day with Geoff Holmes and other senior industry figures.

It is right that the industry should lead a review of helicopter safety, in the wake of the crash in Shetland. That review should consider what lessons we can learn from the approach adopted in other countries. For example, research published in 2010 suggested that from 1990 onwards, Norway has had a significantly better record in helicopter safety than the UK – 0.9 fatalities per million passenger hours for Norway, in contrast to 3.1 for the UK.

Now of course statistics can be misleading- the effect of a small number of major incidents. However it is right to look at practices elsewhere to see if our own practices can be improved.

The Scottish Government will do anything we can to facilitate such a review, and to help to implement its findings. That’s the appropriate role for us to play. Improvements to safety should be supported by government and underpinned by state regulation. But to succeed fully, they must be led by the industry, in partnership with employees and unions. That was one off the essential lessons of the tragedy that the Cullen report investigated.

A commitment to safety is both a moral imperative, and also enlightened self-interest. After all, the reputation for safety is an important advantage. That’s why employees with North Sea experience are in demand around the world.

Safety is not an obstacle to a successful industry – it is an essential precondition for a successful industry.

Ladies and gentlemen, in all of our work, the Scottish Government is absolutely committed to working together.

That spirit of partnership is one of the reasons why I’m so glad to be here this evening, and why I’m delighted that Fergus Ewing is attending so much of the conference. I can assure you that the Scottish Government will work with you throughout the next 50 years – as the oil and gas industry continues to create jobs, exports and prosperity here in the north-east, and across the whole of Scotland.

In doing so, we will work with you to achieve the goal set out in Step Change –to make our offshore oil and gas industry the safest in the world.

That’s the purpose, and the responsibility, that we all share this evening. The events of the last two weeks remind all of us – politicians, the industry, and representative bodies – that it is essential to keep making improvements to safety.

It is the only way in which this industry will retain long-term commercial viability, environmental credibility and public confidence. And it’s the best possible way of paying tribute to those we have lost.