Decommissioning - regulatory

context

Richard Brooks

Head of Offshore Decommissioning

DECC

Contents

• DECC priorities

• UK Decommissioning activity

• Regulatory outlook

DECC priorities

• Save energy with the Green Deal and support vulnerable

consumers

• Deliver secure energy on the way to a low carbon energy future

• Drive ambitious action on climate change at home and abroad

• Manage our energy legacy responsibly and cost-effectively

Maintaining the balance

Affordable, secure

and sustainable

energy supplies

Manage our energy

legacy responsibly

and cost-effectively

• UK must make the most of its own

oil and gas resources

• That means encouraging

companies to develop all possible

reserves whilst discoveries get

smaller

• So decommissioning liabilities

must be managed effectively and

responsibly as part of the package

of regulations for oil and gas

developments

Affordable, secure and sustainable

energy supplies means

Managing our energy legacy

• Protecting the Government and taxpayer from

decommissioning liabilities

• Meet international rules and public expectations

• Ensure the companies concerned can do the work

• Manage the decommissioning approval process

UK Decommissioning Activity

UK - Already Decommissioned

• 3 installations with large concrete substructures*

• 1 with large steel jacket (> 10,000 tonnes)*

• 19 other steel jackets

• 8 floating production systems

• 6 subsea production systems

• 11 other facilities (loading buoys, flares etc)

• 19 pipeline programmes

* OSPAR derogation cases

Only 7% of installations decommissioned to date

UK – Infrastructure still in place

• 8 installations with large concrete substructures*

• 31 with large steel jackets (> 10,000 tes)*

• 223 other steel jackets

• 280 subsea production systems

• 21 floating production systems

• 3,300 pipelines

• <5,000 wells

• <200 cuttings piles

* Potential OSPAR derogation casesWater Depths

• Southern North Sea 15 – 80 m

• Central North Sea 50 – 150 m

• Northern North Sea 90 – 190 m

• West of Shetland 120 – 1,300+ m

Only 7% of installations

decommissioned to date

How much work is there?

0

100

200

300

400

500

600

06-07 07-08 08-09 09-10 10-11

Notfications Issued

Installations Pipelines

0

10

20

30

40

50

60

Q3 Q4 Q1 Q2 Q3

Item

s R

evie

we

d

2009-10 to 2010-11

Items Reviewed Over the Last 2 Years

FDP Licence Transfers IPR PWA

0

10

20

30

40

50

60

70

Potential

Likely

Actual

Decommissioning

Programmes

How much work is there?

0

100

200

300

400

500

600

06-07 07-08 08-09 09-10 10-11

Notfications Issued

Installations Pipelines

0

10

20

30

40

50

60

Q3 Q4 Q1 Q2 Q3

Item

s R

evie

we

d

2009-10 to 2010-11

Items Reviewed Over the Last 2 Years

FDP Licence Transfers IPR PWA

0

10

20

30

40

50

60

70

Potential

Likely

Actual

Decommissioning

Programmes

• 18 active decommissioning programmes

• £6 Billion estimated decommissioning costs

• Further 20 programmes on the horizon

Decommissioning Regulatory

Outlook

Regulatory review

• Budget 2012 statement regarding certainty of tax relief

• OSPAR review 2013

• Marine licenses will come with defined reporting criteria

• Approved decommissioning programmes will require a more substantial

agreed and detailed progress reporting procedures

• Offshore Inspectorate and Offshore Decommissioning Unit will become

more physically involved during programme development and execution

• Increased financial due diligence

• Formalising the capture and dissemination of learning

Working with DECC

• Existing industry working groups

• Operators

• Preparation, Preparation, Preparation

• Get to grips with the guidelines and our procedures

• Engage with us early and regularly

• We have a shared agenda so be open with us

• Supply Chain

• Open door

• Raise concerns, discuss new ideas and approaches

• Existing relationship with Pilot Secretariat

• Thank you for listening

• Any questions?