regulations in the north sea keith mayo, head of offshore decommissioning, decc, uk date 1/2 october...
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Regulations in the North Sea
Keith Mayo, Head of Offshore Decommissioning, DECC, UKDate 1/2 October 2009
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What is DECC?
• Set up by the UK Prime Minister in October 2008
• Focus is on twin challenges of climate change and energy supply
• DECC is responsible for UK meeting climate change targets
• And for affordable, secure and sustainable energy supplies
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Affordable, secure and sustainable energy supplies means -
• UK must make the most of its own oil and gas resources
• That means encouraging companies to develop all possible reserves whilst discoveries get smaller
• So decommissioning liabilities must be managed effectively and responsibly as part of the package of regulations for oil and gas developments
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UK industry - some facts
• 8 installations with large concrete substructures
• 31 with large steel jackets (> 10,000 tes)
• 214 other steel jackets
• 278 subsea production systems
• 21 floating production systems
• >15,000 km pipelines
• <5,000 wells
• <200 cuttings piles
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UK industry – decommissioned since 1988
• 3 installations with large concrete substructures
• 3 with large steel jackets (> 10,000 tes)
• 15 other steel jackets
• 7 floating production systems
• 2 subsea production systems
• 16 pipelines
• 10 other facilities (loading buoys, flares etc)
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UK Government obligations
• Meet international rules and public expectations
– UN Law of the Sea
– International Maritime Organisation
– OSPAR Convention for the Protection of the Marine Environment of the North East Atlantic
• Ensure the companies concerned can do the work
• Don’t obstruct future developments and production unreasonably
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International Rules
• UN Law of the Sea
• International Maritime Organisation
• OSPAR Convention for the Protection of the Marine Environment of the North East Atlantic
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OSPAR Decision 98/3
• Agreed by the 15 members after the Brent Spar incident
• UK Government approved disposal of the Spar in a deep sea trench
• Shell reversed its plans following Greenpeace campaign
• Spar was removed and recycled as foundations for a quayside in Norway
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Decision 98/3 requirements
• No dumping or leaving in place of installations in the marine environment
• Should be brought ashore for re-use, recycling or final disposal
• Possible exceptions for large concrete substructures, footings of jackets >10,000 tes, concrete anchor bases and damaged structures.
• No requirements for pipelines, wells, subsea facilities
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UK Legislation
• Petroleum Act 1998 enables DECC to make companies liable for decommissioning
• Joint and several liability for all companies concerned
• Liability maintained throughout field life; new owners will take liability; may be withdrawn from sellers
• DECC can insist on financial security if concerned about ability to pay for decommissioning
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Decommissioning Programmes
• Petroleum Act requires companies to prepare decommissioning programme
• Other regulators and public consulted
• Programmes approved after all comments considered
• Decisions based on balance of impacts on safety, environment, other users of sea and economics
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Financial Security
• Trend in North Sea is for smaller companies to develop new fields and take over old assets from majors
• DECC can keep liability on original developers if concerned about strength of buyers
• DECC can require financial security such as letters of credit
• Basic test is whether decommissioning costs more than 50% of company’s shareholders funds
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UK Decommissioning Costs
• £14 billion for installations
• £5 billion for subsea systems
• £4 billion for pipelines
• £23-25 billion in total
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Issues for regulators
• Pipelines – leave in place or remove?
• Mattresses – leave in place or remove
• Drill Cuttings Piles - cover, remove, leave to degrade naturally?
• Wells – standards for plug and abandonment
• Radioactive scale in pipes and vessels
• Re-use of oil and gas facilities for hydrocarbon gas storage, CO2 sequestration
• Low carbon decommissioning