As North Sea decommissioning is drawn into ever sharper focus, the importance of an effective regulatory framework in the UK will only increase.
TAQA has recently submitted decommissioning programmes for both the Tern and North Cormorant platform topsides to BEIS. According to the Company, the timing of submission of the programmes has "always been part of the business planning process" and was not accelerated by a low oil price or the impact of COVID-19. However, with falling oil and gas prices leading to reduced production and exploration budgets, we may well see companies bringing forward their abandonment plans.
According to the research business Rystad Energy: "The low oil prices could play a pivotal role in boosting decommissioning spending in the UK if they persist beyond the end of this year."
They estimate that in the coming five years an average of 23 North Sea assets will cease production annually. It is anticipated that over £17 billion will be spent on North Sea decommissioning over the next decade, with the UK taking an 80% (£13.6 billion) share of that expenditure.
Unsurprisingly, we are seeing a rise in specialist companies establishing themselves in the market. For instance, ports will pay a large part in decommissioning activity and Lerwick Port has already invested heavily to ensure that they are properly appointed to accommodate decommissioning activity
As with all offshore activities, decommissioning is strictly regulated and monitored. The Offshore Petroleum Regulator for Environment and Decommissioning (OPRED), the Oil and Gas Authority (OGA), the Health and Safety Executive (HSE), the Scottish Environment Protection Agency (SEPA) and the Environment Agency (EA) all have a hand in regulating abandonment in the North Sea. However, the involvement of multiple regulatory bodies at various stages of the process, along with the application of unrelated pieces of legislation and different sets of guidance documents, leads to a complex system.
The potential for confusion and non-compliance is an issue that has been acknowledged by the regulators. In an effort to streamline the process, OPRED, OGA, HSE, SEPA and EA have grouped together to form the Decommissioning Regulatory Hub (DecomRegHub). Established in late 2018, the DecomRegHub:
- "supports effective and efficient regulation in the UK by bringing together guidance on compliance in a single Digital Hub, helping industry carry out decommissioning safely, cleanly and cost effectively"; and
- "can help answer questions about regulatory challenges and problems where issues involve more than one of the partner regulators".
There are some established links between the various bodies. Since the OGA's inception and the establishment of the Maximising Economic Recovery ("MER") strategy in 2015-2016, BEIS has been required by statute to operate in conjunction with the OGA. The Petroleum Act 1998 requires BEIS to consult with the OGA on the MER implications of any decommissioning programmes submitted by an operator.
Similarly, the HSE and SEPA are accustomed to working together given their joint status as regulator in terms of the COMAH Regulations. Further, a Memorandum of Understanding between the HSE and SEPA has been in place since 14 December 1998 which establishes a framework for cross agency liaison to ensure effective co-ordination of the regulation of plant, processes and substances.
Streamlining regulation of the decommissioning process is in the interests of both industry and the regulators. A joined-up approach by the regulators – as demonstrated by the DecomRegHub – is to be welcomed. Time will tell how well this collaborative approach will work in practice.
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