ABSTRACT
Chapter 21 addresses the issues arising at the end of the productive life of oil and gas facilities when they have to be decommissioned. Options for removal and disposal of structures must be assessed, a plan of action formulated by the Operator, approved by government and then implemented. Decommissioning and disposal of offshore facilities must satisfy a range of international treaties and national legislation intended to protect the environment and personnel safety. Contractual obligations prior to, during and after decommissioning are governed by three principal agreements, which govern the rights and obligations of all parties to any joint or solely owned property. In the UK, there is some standardisation of contractual forms. A detailed decommissioning programme must be prepared to address the risks of decommissioning and document the procedures to be followed. As with any offshore operation, the risks must be identified and appropriately managed to protect the environment and personal safety. There are a variety of contractual issues that will need to be addressed, including funding to cover the decommissioning costs and liabilities, security, potential interface with production operations in adjacent fields, JVP’s approval of the Operator’s decommissioning plan and programme, and disposal of joint property. Appropriate contracts will need to be entered into that address the specific risks uniquely associated with decommissioning, such as the condition of the structures, unforeseen problems relating to poor records or deterioration, activities with proximity to continuing production operations and achieving new technical challenges. Variable commercial factors mean that decommissioning forecasts are continually adjusted, leading to uncertainty in the marketplace.
