The Draft Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2003

The Draft Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2003

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. Draft Regulations and Guidance Notes with respect to oil discharges occurring offshore have recently entered the consultation stage at the DTI.

The deadline for responses is 14th August 2003.

The existing law

At present discharges of oil offshore are governed by the Prevention of Oil Pollution Act 1971 which provides that it is an offence to discharge oil into the sea (section 2). It became clear in the early 1970s that the technology did not exist to enable operational activities to be carried out in compliance with the Act. Therefore certain specified activities (principally discharge of oily water and oil contaminated drill cuttings) were exempted subject to certain conditions, as specified by the DTI.

What will these regulations do ?

The Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2003 (the "Regulations") are intended to introduce a more robust and effective approach to the management of oil discharges by the oil and gas industry. The Regulations will:

1. introduce a system of permits for oil discharges to replace the current exemptions issued under the Prevention of Oil Pollution Act 1971;
2. introduce wider-ranging powers for inspectors to monitor and investigate oil discharges and spills; and
3. update the existing definition of "oil".

Who will 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. Contractors may apply for permits on behalf of the operator.

Where assets are tied-back to an installation, the operator of the tied-back asset will only require an oil discharge permit if there are direct discharges of oil from the tied-back facilities. Indirect discharges via the "host" installation should be included in the host installation permit.

What is the definition of "oil"?

"Oil" is defined as meaning "oil of any description including any liquid hydrocarbon, or substitute liquid hydrocarbon whether obtained from plants or animals, or mineral deposits or by synthesis."

This definition is designed to capture all hydrocarbons produced offshore and/or used in the course of exploration and production. The previous definition lent heavily on the use of the word "oil" and did not cover all hydrocarbon waste streams. "Oil" will include oil contained in produced water and oil contained in drill cuttings.

The permit system

Under the Regulations the discharge of oil 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.

Oil discharge permits will not be required for hydrocarbons or substitute hydrocarbons designated as "chemicals" for the purposes of the Offshore Chemicals Regulations 2002; therefore the use of low toxicity oil-based drilling fluids, synthetic-based drilling fluids and lubricants added to water based drilling fluids will be permitted under the Offshore Chemicals Regulations 2002.

Application for a permit

It is envisaged that all permit applications will be made and permits issued electronically. Applications must contain details of the offshore installation, a description of the oil to which the application relates and of the circumstances in which it is to be discharged; and the measures planned to monitor the use or discharge of the oil.

Granting of a permit

The Secretary of State may consult with third parties and may then either grant or refuse the application for a permit.

Permits may be subject to conditions:

• restricting the discharge quantities, duration, frequency and location;
• ensuring that appropriate measures are taken to minimise pollution, to prevent accidents affecting the environment and to minimise their consequences;
• to ensure that appropriate monitoring is carried out; and
• requiring measures to prevent or limit discharges in abnormal operating circumstances.

In practice the permits will contain schedules detailing the conditions relevant to that particular waste stream including sampling, analysis and reporting requirements.

Publicity

Unlike the Offshore Chemicals Regulations 2002, there is no requirement for public notice. The DTI give several reasons for this, stating that there is no legal requirement for public notice, and that as there are generally few responses, little is added to the overall process. Nor is there provision for statutory consultation with any other government departments or agencies. Here the DTI considers that there is sufficient expertise within the department to assess the applications for permits. Nevertheless, it would seem somewhat curious to have on one hand a public consultation requirement under the Offshore Chemicals Regulations 2002 and no such requirement under these Regulations, particularly given that the environmental impact of failure to act within the conditions of a permit granted under these Regulations may be greater.

Duration of permits

A permit may be granted for the life of the installation (a "Life" permit) or for the duration of the activity to be covered by the permit (a "Term" permit), whichever is appropriate for the activity.

Transitional arrangements

Existing exemptions issued under the Prevention of Oil Pollution Act 1971 will remain in force until they expire or are replaced by permits issued under the Regulations. However, for "Life" permits, as the DTI could not handle the administrative burden arising from the number of permits applied for, there is a one year "rolling start" period whereby the Secretary of State will specify dates by which individual operators require a permit and notify them accordingly. The "rolling start" will not apply to "Term" permits.

Renewal, variation and revocation

The Secretary of State will have wide powers with regard to renewal, variation, reconsideration and revocation of permits. In particular, the Secretary of State may revoke a permit if she considers that the permit holder has been guilty of a breach of the permit or where the application (or supporting documentation) contained a false or misleading particular.

Inspection

In order to ensure that the conditions set out in the permits are complied with, the Secretary of State will appoint inspectors to investigate whether the requirements of the Regulations are being complied with and to monitor the discharge of oil.

Under the Regulations, generally, inspectors have wide powers, including powers to:

• board any offshore installation;
• make investigations;
• give directions that a part of the installation be left undisturbed for the purposes of investigation;
• take measurements, photographs and samples;
• require any relevant person to answer questions and sign a declaration of truth; and
• require the production of, inspect and take copies of records.

Where an inspector considers that any activity in relation to the discharge of oil 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 of pollution.

If the Secretary of State considers that the Regulations are being, or are likely to be, contravened she may serve an Enforcement Notice specifying the contravention, the steps to be taken to remedy it and by when. Where the required action is not taken, the Secretary of State may undertake the action and recover the costs from that person.

Offences

It will be a criminal offence if a person:

• uses or discharges oil without a permit or in breach of permit conditions;
• fails to comply with an Enforcement Notice;
• 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 will on summary conviction be liable to a fine of up to £5,000 and on conviction on indictment to an unlimited fine. Somewhat curiously the proposed fine on summary conviction is set at the statutory maximum (£5,000) – under the Prevention of Oil Pollution Act 1971, this was £50,000. 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 encourage operators to continue to reduce the quantities of hydrocarbons discharged during offshore operations. However, the introduction of these Regulations will undoubtedly increase costs to operators offshore. At present, operators have to seek exemptions for some (but not all) oil discharges under the Prevention of Oil Pollution Act 1971 and therefore the introduction of a permitting system should not represent major additional cost. At present though, the DTI does not have any definitive estimates. The DTI has stated that a "rough" estimate is that the additional cost to an operator will vary from a few thousand pounds per year to at most, around £150,000. However, these costs are small in comparison to the potentially unlimited and adverse publicity generated from a breach of these Regulations.

For further information on the Regulations or the consultation process, please contact Norman Wisely in our Aberdeen office - [email protected] or on 01224 622002.