Offshore Safety Directive (OSD)

Update on the Offshore Petroleum

Licensing Regulations 2015

Derek Saward

DECC EDU OGED

18th December 2014

Introduction• New regulations to implement requirements of

Offshore Safety Directive (OSD)

• Outline provisions for licensing and obligations on licensees

• Significantly amended to cater for multiple operator model

• Outline provisions for appointment of OSD operators, and the ‘capacity’ of operators

• Made under Section 2(2) of European Communities Act 1972

2 Offshore Safety Directive – Industry Update 18 th December 2014

Regulations 1 and 2• Regulation 1- Citation

• Regulation 2 – DefinitionsMost definitions based on ‘copy out’ of OSD text

Competent Authority – HSE and Secretary of State (SoS)

Connected infrastructure – gold plates OSD to meet HSE requirement to include connected wells and supplementary units outside safety zone

Licensee – extended provisions to maintain liability following relinquishment, expiry or revocation of licence

Licensing Authority – part of the new Oil and Gas Authority

Well Operations – based on HSE definition of well

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Regulation 3• Grant and Transfer of Licences

Must consider technical and financial capability of applicants

Must consider risks and hazards relevant to the licensed area

Must provide details of security to cover liabilities

Safety and environmental performance of applicant

Sensitivity of local and adjacent environment, and potential cost of degradation of that environment

Detailed safety requirements have still to be drafted

Where details can’t be provided at the application stage, commitments will be checked prior to operations

Licensing authority will consult competent authority

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Regulation 4• Appointment of Operators

Provisions only apply to OSD operators, and do not apply to DECC ‘licence operator’

Operators can only be appointed by licensees or licensing authority (e.g. when an appointment is terminated)

Proposed appointments must details functions relating to the appointment

Will be able to appoint installation operators and well operators, for different phases of operations

Licensing authority will consult competent authority

Licensing authority will be able to object to, and effectively prevent proposed appointments

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Regulation 5• Obligations on the Licensee

Must have appropriate provisions in place to cover liabilities prior to the start of offshore operations

Must maintain capacity to meet obligations relating to operations undertaken by appointed operators

Must ensure production installations only operated in licensed area

Must ensure appointed operators have the capacity to meet requirements of relevant functions

Must take reasonable steps to ensure that appointed operators carry out functions and duties to meet

requirements of OSD

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Regulation 6• Liability for Environmental Damage

Licensees are financially responsible for prevention and remediation of environmental damage as defined in Environmental Liability Directive

Liability extends to operations carried out by licensee, on behalf of the licensee, by an appointed operator or on behalf of an appointed operator

No previous examples of environmental damage in offshore waters as a result of offshore oil and gas operations that would have qualified for remedial action

Potential for significant spill damage and remediation in coastal waters

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Regulation 7• Capacity of Operators

Competent authority can assess capacity and notify licensing authority if performance is considered unacceptable

Licensing authority must notify licensees of competent authority’s determination

Where licensees are informed of determination, the operator’s appointment is terminated

Where an operator’s appointment is terminated, the licensee becomes responsible for carrying out the operator’s

functions

Where an operator’s appointment is terminated, the licensee must propose a new operator

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Regulation 8• Information

Licensing authority can request information from licensee, proposed operator and operator in relation to their functions under regulations

Competent authority can request information from licensee, proposed operator and operator in relation to their functions under regulations

Requests must be dealt with in timeframe specified by licensing authority or competent authority (as

appropriate)

Licensing authority and competent authority can exchange relevant information

HSE and SoS can exchange relevant information9 Offshore Safety Directive – Industry Update 18 th December 2014

Regulations 9 and 10• Regulation 9 - Enforcement

If the licensee fails to comply with any obligations, the licence can be revoked

If the proposed operator fails to comply with any obligations, the proposed appointment can be rejected

If the operator fails to comply with any obligations, the appointment can be terminated

•Regulation 10 – OffencesFailing to provide information or providing false

information

Offshore operations being undertaken by a body other than an appointed operator

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Regulation 11• Transitional Arrangements

Licensing provisions for new licences or new licence transfers will come into effect when regulations come into force

Operatorship provisions for new licences / transfers will come into effect when the regulations come into force

Operatorship proposals for existing licences will be discussed with operators early in 2015

Well operatorship proposals for operations under existing licences must be fully implemented by 19th July 2016

Installation operatorship proposals for existing installations must be fully implemented by 19th July 2018

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Next Steps • Regulations to be reviewed by second legal adviser

• Regulations to be checked against draft HSE regulations to ensure there are no contradictions or unnecessary duplication

• Regulations have been shared with HSE for review by HSE and Treasury Solicitor (TSol) staff

• Regulations to be shared with industry in January 2015

• OSD package government write round in February 2015 with regulations laid in March 2015 after the write round

12 Offshore Safety Directive – Industry Update 18 th December 2014