Essay FINAL

Submitted By tomike
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Pages: 10
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Question
Critically evaluate the legal requirements surrounding decommissioning of offshore oil and gas installations in UK and Europe. In this respect, comment on the efficacy of the contractual clauses that address how the financial liabilities of decommissioning are allocated.

You must support your answer with relevant and appropriate examples as well as adequate reference to industry based articles/journals and commentaries.

WORD COUNT 2, 071

According to James Phillips at a November 2014 Oil conference, there is a lot of decommisisioning work to be done. Basing on the Sir Wood report, he talks of a huge budget of £35 billion by 2012 projected over the coming thirty years. The decommissioning budget is expected to increase to beyond fifty billion pound sterling. Phillips writes that there are 475 installations, 10,000 kilometres of pipelines, 15 onshore terminals and 5,000 wells that will eventually have to be decommissioned to free the UK continental shelf. This would also involve the plugging of 927 wells. This has to be done by approval of the Government agency- currently, the Department of Environment, Climate Change. An example of decommissioning was the completed work of the Maureen platform in the UK which was done by Phillips Petroleum UK (now ConocoPhillips) for a whole eight years. It is very hard work that cannot be scientifically and technically planned for with precision. It is costly and costs have often been under estimated. In the past however, the work would be ignored and the word used was abandonment. According to the Industry website of Oil and Gas United Kingdom, when a field eventually ceases production, the final phase is decommissioning. This broadly involves the plugging and abandonment of all wells, cleaning of manifolds and pipelines, and the removal of topsides and subsea facilities and jackets (the steel supporting structures) to shore.1

There is an international, regional and national legal framework governing decommissioning of oil and gas installations within Europe and at the national level in the UK. At the International level, there is the Geneva Convention . There is also the London Convention. The United Nations also sponsored UNCLOS. There are also International Maritime organisation Guidelines. At the regional level (Europe), there is the OSPAR Convention which with regard to decommissioning in off-shore situations was clarified by the OSPAR Decision 98/3. This decision is according to James Phillips, a leading lawyer “regarded by UK government as primary source of decommissioning obligations”.2 The OSPAR Decision 98/3 (1) stipulated that “the dumping, and the leaving wholly or partly in place, of disused offshore installations within the maritime area is prohibited” . This was a landmark achieved in light of the Shell Brent Spar saga in which Green Peace Environmentalist campaigners helped bring an end to the abandonment of rigs through dumping in deep seas.

There are however, some exceptions but these are still regulated by the law through procedures and approval requirements. These include the dumping of steel installations that weigh in excess of 10,000 tonnes while in air provided they were placed in maritime area before the 9th of February 1999. The Sintra statement reiterated the resolve of the contracting states to not use the sea as a dumping ground. According to Efe, the other international instruments on offshore decommissioning of oil and gas installations are the the Convention on the Prevention of Marine Pollution by Dumping of Wastes and other Matter (London Convention), of 1972. This came into force in 1975. There is a 1996 Protocol to this London Convention.3
In terms of national legislation of the UK, the main law is the Petroleum Act 1998. There is also the Marine and Coastal Access Act 2009, the Offshore Chemical Regulations 2002, the Merchant Shipping (Oil Pollution Preparedness, Response and Co-operation Convention) Regulations 1998, Offshore
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