DTI Consults On Changes To The Decommissioning Regime For Oil And Gas Offshore Renewables

Author:Ms Judith Aldersey-Williams
Profession:CMS Cameron McKenna LLP
 
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The offshore energy industry is in a period of rapid change. In oil and gas, the arrival of many smaller players on the UKCS, while offering opportunities for extending the life of the basin, also raises financial viability issues, as demonstrated by the Ardmore partners' collapse. Although the cost of decommissioning of the FPSO on this field was a relatively modest 5 million, the event looms large over the consultation paper, as it clearly gave the DTI a wake-up call. Many of the installations designed to generate offshore renewable energy are likely to be relatively cheap to decommission when compared to oil and gas assets but the companies operating them may again be relatively small and therefore vulnerable.

The DTI published on 21st June a consultation paper on proposed changes to the decommissioning regimes for both offshore oil and gas production and offshore renewables. The consultation deals with a number of changes to close what the DTI sees as loopholes in the decommissioning schemes for the two sectors.

DTI consults on changes to the decommissioning regime for oil and gas offshore renewables

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The offshore energy industry is in a period of rapid change. In oil and gas, the arrival of many smaller players on the UKCS, while offering opportunities for extending the life of the basin, also raises financial viability issues, as demonstrated by the Ardmore partners' collapse. Although the cost of decommissioning of the FPSO on this field was a relatively modest 5 million, the event looms large over the consultation paper, as it clearly gave the DTI a wake-up call. Many of the installations designed to generate offshore renewable energy are likely to be relatively cheap to decommission when compared to oil and gas assets but the companies operating them may again be relatively small and therefore vulnerable.

The DTI published on 21st June a consultation paper on proposed changes to the decommissioning regimes for both offshore oil and gas production and offshore renewables. The consultation deals with a number of changes to close what the DTI sees as loopholes in the decommissioning schemes for the two sectors.

The main changes proposed to the oil and gas decommissioning regime under the Petroleum Act 1998 are:

To enable the DTI to seek security for decommissioning costs at any stage of the life of a development if the risk is judged to be unacceptable - currently the...

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