The protection of the marine environment is a matter of increasing world-wide concern, and the oil and gas industry is subject to increasing levels of environmental control. The main area of concern is generally seen as being directly from hydrocarbons exploited offshore, but there is also potential for the marine environment to be contaminated by the discharge of other offshore chemicals used in the exploration and exploitation of oil and gas.
What do these regulations do ?
The Offshore Chemicals Regulations 2001 (the "Regulations") will implement the UK's obligation under OSPAR (the Decision of the Convention of the Oslo and Paris Commission on activities in the North East Atlantic) for a "Harmonised Mandatory Control Scheme for the Use and Reduction of the Discharge of Offshore Chemicals". These replace the voluntary Offshore Chemical Notification Scheme (OCNS) and are intended to impose stricter controls including pre-screening, ranking and risk assessment of chemicals and the substitution of certain chemicals by less hazardous alternatives.
Under the Regulations the use and discharge of offshore chemicals by offshore operators will require a permit to be issued by the Secretary of State for Trade and Industry. Fees for permits will be charged to effect full cost recovery for administration of the Regulations.
Who do the Regulations apply to?
The Regulations apply to the UKCS offshore oil and gas industry only, and specifically to operators. They will apply even to operators who contract out all of their operations, for instance to a drilling contractor.
When do the Regulations come into force?
The Regulations are expected to be laid before Parliament shortly.
The requirement to have a permit for new activities will apply from the prescribed date. This will be three months from the date the Regulations come into force - this is likely to mean that the Regulations will come into force for new activities by the end of the year or early next year.
However, for existing activities, as the Government could not handle the administrative burden arising from the number of permits required, there is a two year "rolling start" period whereby the Secretary of State will specify dates by which individual operators require a permit and notify them accordingly. Operators should now have received notification from the DTI of their place in this schedule.
What is an "offshore chemical"?
This is defined in the Regulations as "a chemical, whether comprising a substance or preparation, intentionally used in connection with offshore activities in the relevant area".
The definition is intentionally wide: it covers chemicals used offshore directly in the exploration, exploitation and processing of petroleum and chemicals generated offshore. This definition will not cover ancillary chemicals which are used on offshore structures, such as those used in accommodation areas, paints, fuels and fire-fighting foams, where the risk of discharge is low.
Operators will only be able to use chemicals notified to and assessed by CEFAS. CEFAS will pre-screen and rank each substance notified to it and publish a ranked list of chemicals on its website. Operators will be encouraged to substitute less hazardous chemicals where these will achieve the same objective.
Application for a permit
An application should be made in writing or by electronic communication (in practice, it is envisaged that all permit/application and issue will be carried out electronically) and must contain details of:
- the offshore installation;
- the chemicals and amounts expected to be used and discharged;
- proposed techniques for preventing or reducing the use or discharge of the offshore chemical;
- the measures planned to monitor the use or discharge of the offshore chemical; and
- the risk of harm to the environment from the use and discharge of the offshore chemical.
The format and procedures will vary according to whether publicity is required, but generally applications for these permits are intended to proceed in parallel with applications for consents under the existing PON system.
Publicity
A person applying for a permit must make a copy of the permit application available for public inspection and publish a description of the application in the relevant Gazette newspaper (Edinburgh, London or Belfast). Copies must also be made available to anyone on request. However, the publicity obligation does not apply where a permit is applied for in connection with a relevant project for which the Secretary of State has consented under regulation 6 of the Offshore Petroleum Production and Pipelines (Assessment of Environmental Effects) Regulations 1999 (a PON15b) or in connection with a discharge from a pipeline consented to under Part III of the Petroleum Act 1998.
In effect, publicity will be required for applications in relation to new stand-alone developments or for existing production under the rolling start programme and for wells subject to environmental impact assessment. No publicity will be required for wells where a direction is given that no environmental impact assessment need be carried out, nor for pipeline discharges.
Granting of a permit
The Secretary of State may then either reject or refuse the application for a permit, but must have regard to any opinion expressed by the general public and, in England and Wales, the Centre for Environment, Fisheries and Aquaculture Science or, in Scotland, the Fisheries Research Services.
The Secretary of State can attach conditions to a permit which in his opinion are calculated to ensure that there are appropriate restrictions on use of chemicals, less hazardous substitutes are considered and that appropriate measures are taken to prevent various types of pollution and accidents. He can also attach such other conditions as he thinks fit.
Generally monthly reporting will be required of use and discharge of offshore chemicals. Accidental releases to the sea must be reported within 24 hours by use of a PON1. Monitoring of the marine environment may also be required.
Duration of permits
There are intended to be two types of permit - "production permits" for uses and discharges at installations, which will be for an indefinite period but subject to review every three years, and "term permits" to cover time limited uses such as drilling and pipeline commissioning where an environmental impact assessment is not required. Satellites and sub-sea completions will usually be covered by the production permit of the host platform.
Renewal, Variation and Revocation
The Secretary of State has wide powers with regard to renewal, variation, reconsideration and revocation of permits.
Inspection
In order to ensure permits are complied with, the Secretary of State can appoint inspectors to investigate whether the requirements of the Regulations are being complied with or to monitor the use or discharge of any offshore chemical.
Under the Regulations, generally, inspectors have wide powers, including powers to:
- board any offshore installation;
- make investigations;
- take measurements, photographs and samples;
- require any relevant person to answer questions and sign a declaration of truth;
- require the production of, inspect and take copies of records.
Where an inspector considers that any activity in relation to the use or discharge of an offshore chemical involves a serious and imminent risk of pollution, he may give such directions, including a direction requiring the activity to stop, as he considers necessary to avoid or minimise the risk.
Offences
It is a criminal offence if a person:
- uses or discharges any offshore chemical in the relevant area without a permit or in breach of the terms of any condition attached to any permit;
- fails to comply with the directions of or wilfully obstructs an inspector or without reasonable excuse fails to comply with an obligation imposed by an inspector;
- fails to supply any information required under the Regulations; or
- knowingly or recklessly makes a statement which he knows to be false or misleading.
Penalties
A person convicted of an offence is on summary conviction liable to a fine of up to GBP 5000 and on conviction on indictment to an unlimited fine. Where it can be shown that the offence is attributable to an officer of the operator in question, he or she, as well as the company, will be guilty of an offence.
Effect
The Regulations are designed to achieve better control on the use and discharge of chemicals from offshore installations in a cost effective and proportionate manner. However, the introduction of these Regulations will undoubtedly increase costs to operators offshore - the costs for the first two years' administration of the system and chemicals database is estimated to be GBP 600,000 (to be borne by the operators on a "polluter pays" basis). However, these costs are small in comparison to the potentially unlimited and adverse publicity generated from a breach of these Regulations.
Any effect on chemical suppliers is harder to predict: chemical suppliers are not required to obtain permits under the Regulations and there will be no direct costs for chemical suppliers who already register their chemicals under the voluntary OCNS. However, there will clearly be an indirect effect on chemical suppliers as operators drive towards less hazardous alternative chemicals in the future, and chemical suppliers will need to build the pre-screening into their product development programmes.
Action Point
Operators should:
- begin to prepare the appropriate data on chemicals in use on their offshore installations, in readiness for notice from the Secretary of State extending the Regulations to
- ensure that their internal procedures now cover the obtaining of a permit when introducing any new chemical offshore.
Further details of the Regulations can be found on the DTI website at http://www.og.dti.gov.uk/regulation/legislation/environment/cp24.htm or from Norman Wisely in our Aberdeen office (norman.wisely@cms-cmck.com, telephone +44 (0) 1224 622002).
