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The petroleum industry operating in the North Sea (on both the Norwegian Continental Shelf (“NCS”) and United Kingdom Continental Shelf (“UKCS”) has entered into a more mature stage in which many production facilities are due for decommissioning in the near future. Decommissioning can be a costly affair and may provide technological difficulties. This especially applies to large concrete installations such as Condeep structures. On the UKCS, the operator of the Brent field has submitted a decommissioning plan where three concrete installations are proposed abandoned offshore. In response, Germany has made a formal objection to these plans pursuant to rules and regulations of the OSPAR Convention and a special consultative meeting between the OSPAR member states is due to take place on 18 October 2019. The Brent field decommissioning is of great significance both economically and politically and the conclusions of the OSPAR committee may provide a rare opportunity for clarification of the established principles of decommissioning of offshore installations in the North Sea.
The Brent field is operated by Shell UK Limited (“Shell”) and has long been one of the most productive fields on the UKCS, but has now reached a stage where production is no longer economically viable. The on-field infrastructure consists of four platforms, of which three; Bravo, Charlie and Delta have concrete base structures. The planning for the Brent Decommissioning Project began already in 2006 and the production has now ceased on Brent Alpha, Bravo and Delta. The production on Brent Charlie is likely to cease in the near future. The Brent Delta topside structure was decommissioned on-shore in April 2017 and the remaining Brent decommissioning work will continue for several years until the mid-2020s.
Shell’s decommissioning solution includes a proposal to abandon the concrete structures of Brent Bravo, Charlie and Delta in place offshore and the British government has given its full support to Shell’s proposal.
All nations extracting petroleum from the North Sea have signed and ratified the Convention for the Protection of the Marine Environment of the North-East Atlantic (the “OSPAR Convention”). Both Norway and United Kingdom have thus ratified the convention.
The OSPAR Commission has in its decision 98/3 (the “OSPAR Decision”) introduced certain policies and requirements for the disposal of disused offshore installations where the main policy in Paragraph 2 is that the “dumping, and the leaving wholly or partly in place, of disused offshore installations within the maritime area is prohibited”. The OSPAR Decision Paragraph 3 also includes an important exemption to this main policy. The competent authority of a member state can provide a permit for the dumping or leaving concrete installations wholly or partly in place, if an assessment considering the potential impacts of proposed disposal of the installations on the environment is prepared, and the assessment shows that there are “significant reasons” for this alternative decommissioning solution.
Pursuant to the OSPAR Decision Annex 3, any member state considering whether to issue a permit under Paragraph 3, shall send a notification to the OSPAR Executive Secretary, containing the prepared assessment and an explanation why the requirements of Paragraph 3 may be satisfied. The Executive Secretary will then immediately send copies of the notification to the other OSPAR member states, whereby the member states are given the opportunity to object to or comment on the proposed exception from the main policy in Paragraph 2.
For the Brent installations, this procedure has been followed, with the result that Germany, as one of the other OSPAR member states, has issued a formal objection to the planned abandonment of the Brent Bravo, Charlie and Delta concrete structures. Germany has expressed concerns about shortcomings in the proposed decommissioning solutions; believing that an estimated 11,000 tonnes of raw oil and other fluids will remain in the abandoned installations. A report commissioned by Germany and prepared by consultants Scientia et Sagacitas Ltd. of Aberdeen reviewing the proposed decommissioning solutions, has concluded that the proposed methodology is “fundamentally flawed” and contains a “high level of mathematical bias”. According to an article published in the Guardian on 4 September 2019, Shell, as operator of the Brent field, has rejected these allegations and emphasised that the recommended decommissioning solution is a result of extensive research and was only submitted after they were “confident that the [decommissioning solutions] were safe, technically achievable and environmentally and socially sound”.
Pursuant to the principles laid down in the OSPAR Decision Annex 3, the OSPAR member states should first aim to resolve objections by mutual consultation amongst themselves. In the Brent case, such mutual consultations have not yet resolved the objections and disagreement of the Brent decommissioning solution.
The OSPAR Decision Annex 3 also provides a procedure when the member states do not successfully resolve an issue by mutual consultations, whereby a member state may, with the support of at least two other member states, request the OSPAR Executive Secretary to arrange a special consultative meeting to discuss the objections raised. Germany has allegedly gathered the support from several other member states, resulting in the OSPAR Executive Secretary, for the first time summoning a consultative meeting in London on 18 October 2019. The meeting will be open to all OSPAR member states. Following the meeting, the chairperson of the meeting shall prepare a report of the views expressed and any conclusions reached.
If the special consultative meeting’s report concludes in line with Germany’s objections, the UK authorities are however not obliged to adhere to these conclusions in their local decision and may still decide that the Brent installations are to be abandoned offshore. Pursuant to the OSPAR Decision Annex 3, the UK authorities are only obliged to “consider the views and conclusions recorded in the report of the special consultative meeting, and any views expressed by the Contracting Parties” before making the decision. The OPSAR Commission is not equipped with any legal remedies such as fines or other sanctions to ensure observance of its conclusions.
On the other hand, if the OSPAR special consultative meeting concludes in line with Germany’s objections, and the UK authorities still decide to abandon the Brent concrete installations offshore, the UK authorities are expected to sustain substantial political pressure from other OSPAR member states.
The scheduled OSPAR hearing and the political aftermath may therefore prove very exciting for both the European oil and gas industry and the political climate between the involved states. Being the first time that an OSPAR case has been referred to a special consultative meeting, the Brent case may provide important clarifications for future decommissioning of concrete installations not only on the UKCS, but also on the NCS. On the NCS ten fixed concrete structures remains offshore (excluding two floating concrete structures and two concrete structures (the Ekofisk Tank and Frigg TCP2) where offshore abandonment already have been approved by Stortinget). The case may also be significant for the future of the OSPAR Convention itself. In recent years, certain environmentalists and politicians have expressed concerns that the legal framework of the OSPAR convention may be outdated, as it may in certain cases be more harmful to the environment to remove concrete infrastructures, than to abandon them. An argument in this direction has been that the installations may work as artificial reefs, important for the marine life and habitat in the respective ocean areas. If the UK government disregards any views and conclusions made by the OSPAR majority, this can be seen to undermine the principles of the convention as it stands today, underlining the case for an amendment of the OSPAR rules and regulations.
Arntzen de Besche is a leading business law firm in Norway with more than 40 years’ experience providing regulatory and commercial advice to the oil, gas and energy sector both on NCS and internationally. Our experience spans the entire petroleum value chain and all project phases, from exploration to decommissioning. Arntzen de Besche and our experienced oil and gas team are ready to provide any legal services needed in respect of decommissioning on the NCS.