Decommissioning Offshore Petroleum Infrastructure in the North Sea and Beyond: Regulatory Challenges and Opportunities

Brian Yu--Ekofisk

Regulatory Challenges and Opportunities in Aging Offshore Oil and Gas Fields

by Brian Yu, Staff Contributor

The lives of offshore oil and gas fields in the North Sea are now at a turning point where energy and environmental regulators’ decisions will have potentially major marine ecological impacts and set the model for other regulators around the globe. Within the next twenty-five years, a high percentage of fields in the sea between Scotland and Norway will have reached a depletion threshold past which they are no longer economically viable. As that occurs, companies that own and operate the offshore platforms will have to decommission these structures and plug the wells used to extract oil and gas from the seabed. This is a process fraught with environmental risk, and energy companies and regulators have decisions to make as to the methods employed and the resulting environmental impacts they are willing to accept.

There are currently 1357 platforms operating off the coasts of Western Europe, the majority of them in British or Norwegian waters.[1] A recent report by energy consultancy Douglas-Westwood estimates that 146 platforms will need to be decommissioned in British waters alone by 2026.[2] The high cost of extraction in deep and choppy seas, coupled with the recent collapse of global oil prices has hastened the contraction of an already mature regional industry.[3] In light of the situation, the region is now set for a wave of decommissionings in which regulators must now play the role for which they have spent decades preparing.

The current framework for decommissioning exists within the Convention for the Protection of the Marine Environment of the North-East Atlantic (OSPAR [for Oslo/Paris]), a set of accords between 15 European governments and the EU.[4] In 1998, the Convention promulgated OSPAR Decision 98/3 on the Disposal of Disused Offshore Installations.[5] The decision prohibits “[t]he dumping, and leaving wholly or partly in place, of disused offshore installations within the maritime area.[6] A “competent authority” may issue a permit for derogation upon an assessment that an “alternative disposal . . . is preferable to reuse or recycling or final disposal on land” for certain support structures on which the platform topsides rest.[7] Where the support structure is a steel framework, the alternative may be to leave the footing in place.[8] In the rarer case that the topside rests on a much larger concrete gravity-based structure (CGBS), Decision 98/3 permits a partial or full leaving in place, or dumping the structure in the sea.[9]

In the UK, the competent authority is the Department of Energy and Climate Change (DECC), which does not permit the dumping of concrete installations and requires that a request for derogation to leave in place be accompanied by a comparative assessment of environmental impact.[10] Indeed, leaving both steel and concrete structures in place may often be a less harmful option.[11] Some structures may be sound enough to support the topside, but not sturdy enough to handle mechanical deconstruction.[12] Collapses pose risks of pollution and to worker safety.[13] Moreover, decades after the introduction of hard substrate to the seabed, the ecosystem around the structures may have adapted in a way that demolition or removal of the structures would harmfully reduce biodiversity.[14] So far, all of the CGBSs in the OSPAR area over 15,000 metric tons (far smaller than the ordinary CGBS) have been the subject of derogations granted by the British or Norwegian authorities. [15]

A similar provision to the OSPAR decision exists in US federal regulations, as in the regulations of other countries with major offshore industries.[16] The experience in the North Sea will serve as a model as to the application of those regulations and perhaps cause national regulators to consider requirements that future subsea installations be more easily removable than their twentieth-century predecessors. Today’s decisions could make the difference for the future of marine environments around the globe, whether traces of drilling activity will be removed, or if we will be left with a skyline of permanent subsea towers marking the seascape.

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[1]    OSPAR Comm’n, 2015, Update of the inventory of Oil and Gas Offshore Installations in the OSPAR Maritime Area,  4 (2015), http://www.ospar.org/documents?v=7374.

[2]    Energy Reporter, 146 oil rigs in UK waters ‘could be scrapped’ by 2026, Energy Voice (Feb. 2, 2016, 10:47 AM), https://www.energyvoice.com/oilandgas/north-sea/100942/146-oil-rigs-in-uk-waters-could-be-scrapped-by-2026.

[3]    Erikka Askeland, Oil price decline may lead to “decommissioning glut”, Energy Voice (Nov. 11, 2015, 7:08 AM), https://www.energyvoice.com/oilandgas/87427/oil-price-to-decline-to-usher-decommissioning-glut.

[4]    UK Dep’t of Energy and Climate Change, Guidance Notes: Decommissioning of Offshore Oil and Gas Installations and Pipelines under the Petroleum Act 1998 3 (Offshore Decommissioning Unit, Mar. 2011).

[5]    OSPAR Decision 98/3, available at http://www.ospar.org/documents?d=32703.

[6]    Id. ¶ 2.

[7]    Id. ¶ 3.

[8]    Id. ¶ 3(a).

[9]    Id. ¶ 3(b).

[10]  UK Dep’t of Energy and Climate Change, Guidance Notes: Decommissioning of Offshore Oil and Gas Installations and Pipelines Under the Petroleum Act 1998 33-34 (Offshore Decommissioning Unit, Mar. 2011).

[11]  Int’l Ass’n of Oil and Gas Producers, Decommissioning of offshore concrete gravity based structures (CGBS) in the OSPAR maritime area/other global regions 26-27 (OGP Publications, Nov. 2012).

[12]  Id. at 23-24.

[13]  Id.

[14]  The scientific debate over this point continues. See Rachael E. Salcido, Enduring Optimism: Examining the Rig-to-Reef Debate, 32 Ecology L.Q. 863, 897-98 (2005). Nevertheless, conservationists insist that the presumption in reviewing comparative assessments should be in favor of full removal. Id.

[15]  Int’l Ass’n of Oil and Gas Producers supra note 11, at 33-34.

[16]  Mark Osa Igiehon & Flávia Kaczelnik Altit, Offshore Decommissioning and International Law: The Unfinished Business, 53 Rocky Mtn. Min. l. inst. §22.01, at §22.09 (2007).

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