JUS271A Energy Law

Environmental Regulation
in exploration, production
and decommissioning
Dr Tina Hunter
Reader in Energy Law, University of Aberdeen; and
Associate, Aberdeen University Centre for Energy Law

Exploration
determine whether petroleum is present

Appraisal
determine extent of the resources

Development
facilities and infrastructure construction

Production
extract petroleum

Abandonment
close down the field

Regulatory areas
Regulation of offshore petroleum production
1. Safety
Lecture 3

2.
Environment
Lecture 5

3. Resource management

field
development
plan
lecture 2

well drilling and

abandonment
lecture 4

field
abandonment
after production
lecture 5

STAGES OF PRODUCTION
ACCESS

PETROLEUM EXPLOITATION

LCS

EXPLORATION AND DEVELOPMENT(L2)

or

PRODUCTION: SAFETY IN EXPLORATION AND

PRODUCTION (L3)

PSC

PRODUCTION: REGULATING WELLS IN

EXPLORATION AND PRODUCTION (L4)

(L1)

PRODUCTION:ENVIRONMENTAL REGULATION
IN EXPLORATION, PRODUCTION
DECOMMISSIONING (L5)

Liability

Scope of liability important

The fish!

Importance of fishing and fisheries need and

right of protection

The fish!

Importance of fishing and fisheries need and

right of protection

Section 10-1

SPILL RESPONSE

Two pronged approach

Stop the leak!!! Well kill response!
Oil spill response to clean up the oil

Well Response
Need to formulate response

well kill
Interventory
drilling
AIM Stop flow
of oil, gas or
fluid

Norwegian spill response

Private industry preparedness offshore oil industry
Norwegian Pollution Control Authority is the regulatory agency for the
preparedness

Operating companies are responsible for the activity

NOFO (Norwegian Clean Seas Organisation for Operating
Companies) provide the spill response resources.

Municipal preparedness
In each municipality
Organised into 34 inter-municipal preparedness regions

Governmental preparedness
Norwegian Coastal Administration are the responsible authority for
government preparedness.

Norway response

Norway response

Decommissioning

Background
For the fist 10 years of Norwegian Oil rig life,
decommissioning was not an issue
As rigs got older and fields came to the end of
their life, there was a need to address the issue of
decommissioning
Methods of disposal for platforms, pipelines and
cables must take into account safety and cost
aspects, and last but not least, environmental
considerations.

Types of installations

The installations on the continental shelf

vary so widely that it is difficult to find one
decommissioning option that is suitable for
all of them.
Floating

Platforms
Steel platforms
Concrete gravity platforms
FPSOs

It is not appropriate to use the same solution

for large concrete platforms as for mobile
floating installations.

Number of Installations

Over 6500 offshore installations worldwide, with a

combined removal cost of over US$20 billion
Range

from shallow fixed water installations to deep water

tension leg platforms

In all, there are about 490 floating and fixed

installations in the North Sea and North East Atlantic,
and many will stop producing in the next few years
Over next 10-20 years, it is expected that 15-25
installations are expected to be removed annually in
Europe
Represents 150-200 thousand tonnes of steel
CS bordering Norway and the states of the EC

contain 600
offshore O & G platforms, 400 subsea structures and 600
subsea wellheads

Decommissioning

Decommissioning of platforms and other

installations on the continental shelf is
difficult, due to
sheer size. A platform can be divided into the
topsides and footings, and these vary a great
deal in size.
Structure type: The solutions chosen vary
depending on whether is steel installations,
concrete installations, pipelines, cables or piles
of drill cuttings.

Options for Decommissioning

(i) Leave in place.
(ii) Partial removal, with alternatives:
(a) emplacement/toppling on site,
(b) carry to shore for recycling or disposal as waste,
(c) deepwater disposal,
(de) artificial reefs, and
(e) re-use/other uses.
(iii) Total removal, with alternatives:
(a) carry to shore for recycling or disposal as waste,
(b) deepwater disposal,
(c) artificial reefs, and
(d) re-use/other uses.

International Regulation of
Decommissioning

International conventions and standards influence the

way decommissioning is carried out and solutions chosen
for final disposal of offshore installations
The OSPAR Convention 1992 is central to
decommissioning in the North Atlantic region
(Entered

into force in 1998).

Protects NE Atlantic and is main law governing the discharge of
offshore drilling waste in these waters

Amongst other things, it provides a framework for the

disposal of disused installations, enduring that the sea
should not be used for waste disposal

OSPAR:
http://www.ospar.org/eng/html/welcome.html

instrument guiding international cooperation on the protection of the

marine environment of the North-East Atlantic.

It combined and up-dated the 1972 Oslo Convention on dumping waste at sea and the
1974 Paris Convention on land-based sources of marine pollution

Contained within the OSPAR Convention, as adopted in 1992, are a

series of Annexes which deal with the following specific areas:

Annex I: Prevention and elimination of pollution from land-based sources;

Annex II: Prevention and elimination of pollution by dumping or

incineration;

Annex III: Prevention and elimination of pollution from offshore sources;

and

Annex IV: Assessment of the quality of the marine environment

OSPAR Continued

As a result of OSPAR, the oil-producing states of

Western Europe in effect work as a single country for
the purposes of controlling offshore waste disposal,
the

detailed implementation of the OSPAR regulations is

still governed by national laws and European Union
Directives
This includes Norway, which although is not an EU
member it is an EEA country and therefore bound.
In addition, Norway has very strict environmental
regulations

MARPOL 73/78

International Convention for the Prevention of

Pollution from Ships
Note

is pollution from ships not passive installations

Essentially ship pollution protocol

119 countries signatories, including Australia
The stated object is:

To preserve

the marine environment through the

complete elimination of pollution by oil and other
harmful substances and the minimization of
accidental discharge of such substances

UNCLOS

a60 (3) any installations or structures

which are abandoned or disused are to be
removed to ensure safety of navigation
Takes

into account any generally accepted

international standards established in this regard,
and have due regard to fishing, protection of the
marine environment and the rights and duties of
other states

IMO Guidelines
Guidelines and Standards for the Removal of Offshore Installation
and Structures on the Continental Shelf and in the EEZ (ref to a60
UNCLOS)

Are required to be removed when no longer serving primary

purpose or a subsequent new use
Exception: where non-removal or partial removal is indicated

Decision to retain on the CS will be decided on a case-by-case basis,

considering the following:

Potential effect in the safety of surface or subsurface navigation, or other uses

of the sea;
Rate of deterioration of the material and its present/possible future effect on
marine environment;
Potential effect on the marine , including living resources;
The risk that the material will shift from its position at some time in the future ;
Cost, technical feasibility and risk of injury to personnel associated with the
removal of the installation or structure;
Determination of a new use or other reasonable justification for allowing the
installation

IMO Standards for removal of installations

Standing in less than 75m of water and less than 4,000

tonnes in air, excluding deck and superstructure, should
be entirely removed
All structures placed on seabed after Jan 1998 in less
than 100m water and less than 4,000 tones should be
entirely removed
All others over these may be wholly or partially kept in
place if meet the considerations for exceptions
(previous slide)
From Jan 1998 no installation or structure should be
places on CS or in EEZ unless design and construction
of installation or structure is such that entire removal
upon abandonment is feasible
Apply to existing and future structures

Norwegian Regulatory context

Chapter 5 of the Petroleum Act

deals with the cessation of petroleum activities.
It states that the licensee is responsible for submitting a
decommissioning plan before the use of an offshore installation is
terminated permanently
The oil companies must pay the costs of decommissioning,

but also there is a requirement of the state to meet a certain

proportion of these costs.

Chapter 6: Decommissioning Plan requirements

Decommissioning plan
Disposal as part of plan
Impact assessment of plan
Plan should give short account of relevant disposal alternatives and
envisaged effects to the environment and to other commercial
activities

Norwegian Environmental law

Pollution Control Act applies, and application outlined in

S 3 general provisions relating to the scope of the Act, and
S4 Application of the Act to activity on the continental shelf

Is a typical enabling act - details are outlined in discharge

permits and regulations issued by the pollution control
authorities.
Established for the purpose of preventing and reducing
harm and nuisance from pollution.
This is reflected in the main rule of the Act, (pollution is
forbidden unless it is specifically permitted by law,
regulations or individual permits.

Options

Leave in place (less than 10 000 tonnes)

Reuse

as a hotel?
Make an artificial reef
Wind farm
Relay station

Remove and deposit in deeper water

Dismantle and dispose onshore or reuse

Det Norske Veritas

Norwegian company established in 1864. DNV

is an independent foundation. Its objectives are
"Safeguarding life, property, and the
environment" and is a leading provider of
services for managing risk.
Commissioned by Norwegian Pollution Control
Authority to review options for the disposal of
oil and gas installations
Concluded that reuse and recycling are the
environmentally preferable options

Environmental impact of Oil Rigs

The deposition of oil and gas installations and

pipelines at sea can create problems related to
debris, while dismantling them may cause
occupational health problems for workers
Example

in Australia- Fuel tanks and Cancer

Other issues that have been identified are

waste

disposal problems that may arise if installations

are brought ashore for dismantling,
effects of the chemicals in the installations if they are
dumped at sea, and
reductions in resource use if metals are recycled

Brent Spar

Brent Spar

Oil storage and tanker loading buoy, operated by Shell

UK

By 1991 outlived usefulness, so needed disposing

issue of public concern in 1995, when the British

Govt supported Shells application for disposal in
deep Atlantic waters (sink!) (other choices included
onshore dismantling)

Greenpeace called for boycott of Shell globally

Shell abandoned plans for deep water disposal, even

though continued to claim was the safest option

Brent Spar Continued

Greenpeaces reputation when it acknowledged that sampling

errors had led to a substantial over-estimate of the oil remaining in
the storage tanks.

Following Shells decision to pursue only on-shore disposal

options, Brent Spar was given temporary moorings in a Norsk
fjord

In Jan 1998 Shell announced would use much of the main steel
structure in the construction of new harbour facilities in
Stavanger.

Although Shell and the

offshore industry
consider that Brent Spar
did not set a precedent
for future disposal,
OSPAR signatories have
since agreed that oil
facilities should be
removed

Ecofisk

Decommissioning of Ekofisk

Decommissioning plan by Phillips

Two stage decommissioning plan

Value 1.1 billion USD
Huge project total of 34 installations, including flare
stacks, incl 25 main structures plus 25 local pipelines of
varying diameters

Remove under provisions under OSPAR Norsk govt not allow

anything else

Mostly trenched except fro free ends near platforms

Stage 1: on 15 installations + topside talen onshore for

recycling or reuse
Stage 2 2015 another 14 installations removed and taken
onshore for recycling

Ekofisk Today

Tax Treatment of Decommissioning

Not deduction as cost paid direct to

company by Norsk govt
Want

to avoid distortions in the companys

finance hereby reducing distortions that wuld
impact on recovery rate

System of tax treatment for all fields is a

cost sharing rule
State

has been receiving 78% tax off fields..

Thus pays around 2/3 of cost of removal

Disposal and Fisheries

Decommissioning and disposal of rigs has a huge

impact on fisheries areas
May have significant economic consequences
Pipelines if left insitu can damage demersal trawl gear
Significant part of Norsk economy - $3.4 billion, and

sustainable

Several issues that need to be considered in the analysis

of decommissioning and the effects on fishing
Fish
Fish

stock pollution
Stock enhancement effect heat and other positive
effects of installation
Stock concentration effect gravitate to feedstock tht gather
around installations?
Fishing Access and obsolete installations especially
pipelines

Environmental/social issues

Environmental degradation, particularly

in third world nations
Ogoni

people: Shell in Nigeria

Deep concerns about widespread and severe environmental

damage in the River Delta region on account of oil exploration
and other operations of the Shell Petroleum Development
Company of Nigeria (SPDC) continue.

Situation of human rights in Nigeria, Report submitted by the Special Rapporteur of the Commission on Human Rights, Mr. Soli Jehangir Sorabjee, pursuant
to Commission resolution 1997/53

Contamination

of the Equatorial Amazon by Chevron

Texaco
the ExxonMobil led Chad-Cameroon pipeline,

universally condemned for its negative impact on the

environment, corporate governance and human rights.
Rights or Human Rights? (2006) Amnesty International USA http://www.amnestyusa.org/business/ecuador.html
at 4 December 2006.

Ecuador Oil