At Oil & Gas UK and Decom North Sea’s Decommissioning Conference in St Andrews in November there was a presentation about the potential for decommissioning to contribute to the circular economy, and in particular the need to move our focus from recycling to re-use.
In the era of Trump and Brexit it’s a risky business trying to second guess what the future might hold, especially when it comes to the UK ‘s often volatile oil and gas sector. There are, however, some developments we can look back on from the last 12 months in trying to assess what might lie in store over the course of 2019.
Germany is in the process of transitioning away from nuclear and fossil fuels towards a low carbon, environmentally sound, reliable and affordable energy policy.
Decommissioning is now a significant part of the landscape of activity in the UKCS – annual decommissioning expenditure has topped £1 billion since 2015 and may come close to £2bn when Oil and Gas UK reports its estimate for 2018 later this month.
Three north and north-east firms have been singled out for special praise in an annual review of the UK’s legal market.
The Scottish Government published Scotland’s first Energy Strategy in December last year.
A new support programme has been launched targeted at North Sea technology start-ups to maximise their potential.
Unlike the common practice in the UK, licensees in the Norwegian continental shelf (NCS) do not routinely provide or have the benefit of security for the cost of decommissioning the facilities and installations used to extract oil and gas.
The UK Government’s decision to end certain renewable energy generation subsidies, including the closure of the Renewables Obligation to all new generating capacity from March 2017 and the intention to close the FIT scheme to new applicants from 1 April 2019 (with some exceptions), has necessarily triggered a reduction in the pipeline of new onshore projects across the nation’s renewable energy sector. As the Scottish Government strives to reach its target of generating 100 per cent of its electricity consumption and 11 per cent of its heat demand through renewable sources, the sector’s long term viability is more dependent than ever on its ability to continue to adapt to this more challenging environment, in order to secure external investment.
China’s growing demand for non-contractual liquefied natural gas (LNG) will change the landscape in the next few years, influencing the global market, LNG prices, international LNG supply agreements and China’s domestic gas industry.
“Safety is not an intellectual exercise to keep us in work. It is a matter of life and death. It is the sum of our contributions to safety management that determines whether the people we work with live or die.”
With output of around 4.4 million barrels per day (as of March 2018), Iraq is the second largest oil producer in OPEC after Saudi Arabia, and holds the world’s fifth largest proven crude oil reserves.
Given that OTC will be in full swing in Houston as this is published, and that it is celebrating its 50th anniversary, I thought it would be timely to look back over 50 years of oil and gas in the North Sea with a bit of a legal lens. We are also celebrating at CMS, since our Aberdeen office is 25 years old this year so it’s a good time for reflection.
The digital economy is something that is often spoken about but which to some degree feels remote to us here in the north-east of Scotland.
The UK’s oil & gas industry is hotly anticipating the introduction of Transferable Tax History (TTH) to the UKCS taxation regime with effect from November 1, 2018.
Aberdeenshire has a new energy industry and it’s green. From being the dream of a few individuals probably written off as slightly barmy, offshore wind has become a major part of the energy transition, for the UK as a whole, but also for north-east Scotland. Just take a look off the beach at Balmedie where the piles for the Aberdeen Bay Offshore Wind Farm are being installed as I write. Work is also continuing apace in the Moray Firth where the last 12 months have seen installation of all the offshore piles and a third of the jackets for the 84-turbine, £2.6billion Beatrice Offshore Windfarm. The first electricity could be generated as early as July and the operator, SSE, expects the farm to generate up to 588MW of power – enough for about 450,000 homes – once it is fully operational, which is expected in 2019.
The UK Government’s decision to end wind farm subsidies, including closure of the Renewables Obligation to nearly all new generating capacity, has raised concerns across the nation’s renewable energy sector. New renewable generating stations will now be expected to seek support under the Contract for Difference (CFD) mechanism but this is only open to emerging technologies such as offshore wind. The more established means of renewable power generation including onshore wind, solar and biomass are currently excluded from CFD support.
A few recent legal developments have implications for the subsea sector, among others.
Notwithstanding a degree of stability during 2017, the “lower for longer” oil price continues to affect the industry, and while these pressures can be positive, forcing efficiencies and stimulating innovation, they also bring challenges, and at times disputes.
December is always a good time to reflect on what we’ve seen in the past year and consider what the next 12 months might hold for the UK’s oil and gas sector.
Who takes the risk in an offshore construction project if the design imposed by the contract terms is wrong? The company which has required the use of that design, or standard, or the contractor which agreed to design and build using it?
As 2017 progresses, the Oil & Gas Authority (OGA) will have a lot on its plate as it clarifies expectations, identifies priorities and grows more confident in applying its powers.
Law firm CMS has led a three-way merger with rival city firms to create the UK’s sixth largest law practice.
Last week’s incident in Aberdeen Harbour where an offshore supply vessel was detained with 15 Indian nationals on-board, who had allegedly been unpaid for two months, has highlighted the relevance of the Modern Slavery Act in today’s offshore oil and gas industry.
Decommissioning and security related issues have been one of the principal barriers to upstream oil and gas mergers and acquisitions activity in recent years.