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Oil & Gas UK

Part 2: Policy Overview

2. Are there any other comments you would like to make on Part 2?

Are there any other comments you would like to make on Part 2?§
The collapse in oil price in the second half of 2014 has put the upstream oil and gas industry under pressure to reduce its expenditure in all areas to secure sustainable operations, whilst upholding the imperative for safe and environmentally responsible exploration and production. Industry achieved a 45 per cent reduction in operating costs per barrel in 2016. The industry therefore supports the aims of the simplification of the regulatory regime and reducing administrative burden in the proposed integrated authorisation framework and improving efficiency. The adoption of a level of control proportionate to the risk posed by the regulated activities is sensible. The SEPA team in Aberdeen who support the offshore oil and gas industry has been under resourced over the past year(s) which can led to delays to authorisation application reviews. It is hoped that the introduction of the integrated authorisation framework results in the service improvement and greater operational efficiency as stated in the consultation document which will allow resources within SEPA to be allocated to sufficiently support the offshore oil and gas industry.

Part 3: Key features of the new framework for authorisation holders.

5. If so, are the outcomes proposed the right ones?

Comments:
The use of BAT and BEPO are used and understood in the current regimes. It would be preferable to continue the current practise rather than introduce a new concept of ‘universal outcomes’. Further definition of the universal outcomes and the potential implications for operators would be appreciated.

8. Do you agree that these are the right factors for SEPA to consider?

Comments:
It would be beneficial if the potential impact on the industrial sector affected were also considered as part of SEPA decision on the tier each regulated activity will be placed into.

9. Do you agree that SEPA should consult on the guidance setting out the likely tier of authorisation for particular activities?

Do you agree that SEPA should consult on the guidance setting out the likely tier of authorisation for particular activities?
The oil and gas industry would strongly encourage consultation on the guidance setting the likely tier of authorisation.

10. Do you agree that standard rules will deliver the benefits we have set out?

Comments:
Further consultation on the proposed standard rules is strongly encouraged

11. Do you agree with the procedure for making standard rules?

If not, why not?
Industry consultation on the development of standard rules is strongly encouraged. It is unclear how the proposed introduction of ‘goal setting’ (standard rules) conditions in registrations and permits would be inspected and regulated by SEPA and how the operator is expected to demonstrate compliance with such conditions. Concern has been raised that that interpretation of compliance with such goal setting conditions would be on individual SEPA inspector basis and has the potential for inconsistency.

13. Do you agree that all regulated activities should have an authorised person responsible for overall compliance and that this person should be named in a permit and registration?

If not why not?
The use of the term authorised ‘person’ has the potential to cause confusion with a named individual rather than the organisation responsible for the activity. An alternative nomenclature for example, authorisation ‘holder’ would be preferable.

15. Do you agree that SEPA should include more than one person as the authorised person where appropriate?

Comments:
The implications of this proposal are unclear, further clarification would be appreciated on whether the offshore operator or duty holder for an installation which is responsible for the day to day operations (as is the case today) and the licenced operators would all be named on the authorisations in future?

18. Do you think that the criteria set out above will achieve the stated purpose of the FPP test?

Comments:
The criteria proposed for the fit and proper person test introduces an element of subjectivity to SEPA’s assessment. The proposal for; not all criteria to be applied to every regulated activity is welcomed. Further detail on how the test will be carried out by SEPA in the different regimes and for the different regulated activities would be appreciated; as would clear definition of the terms used in the criteria such as ‘likely to secure compliance’, ‘good repute’, ‘technically competent’, and ‘any other grounds’. Further discussion with SEPA would be appreciated on how the FPP test will be applied to management of radiological substances offshore. The FPP test includes an element of financial provision and industry would like to understand how this will be applied, if at all offshore. The industry would not wish to see an additional cost burden being placed on operators at this time through the requirement to obtain financial provision.

19. Do you agree with the proposed application processes?

Comments:
The proposed review of registrations within 28 days is welcomed by the oil and gas industry. Clear guidance on each of the application tier information requirements would be most welcome to reduce the need for SEPA to refuse applications if it finds the information submitted is incorrect or in-sufficient. The proposal to create a centralised core team within in SEPA responsible for application reviews is supported.

20. Do you agree with the proposal to have a statutory determination period of four months for the majority of permit applications?

If not, what do you think the determination period should be?
The four-month review of permits is the same review period as the current RSA regime for offshore authorisations.

23. Do you agree with the proposals for variations?

If not, why not?
Further clarification would be appreciated on whether if registration covers several activities within the same tier, would the removal of an activity also be allowed by variation?

24. Do you agree with the proposals for transfer?

If not, why not?
Transfer of licences to new authorised persons under current RSA93 regime is not permitted. A change under the new regime to permit this would be welcomed as this would potentially reduce the burden on Operators and SEPA regarding revocation and re-issuing on new licenses.

25. Do you agree with the proposals for surrender?

If not, why not?
Further clarification would be appreciated on the information required by SEPA to assess the potential impact on the environment from the cessation of the activity and what is the requirement for restoration of the environment beyond the conditions set out in the site authorisation or permit. Offshore decommissioning is regulated by BEIS and clarity that this is excluded from the scope of surrender applications would be appreciated. Any proposal for decommissioning of an offshore installation will required decommissioning reports to be created and submitted to BEIS. These are currently consulted on by SEPA for the safe removal and disposal of radioactive sealed sources and NORM waste. Offshore installations are therefore unlikely to be exempt from the scope of a surrender document. Industry would appreciate further clarification and confirmation from SEPA that the consultation process via BEIS will be unaffected and no separate surrender document will be required for submission directly to SEPA under the new regime. Terminals currently regulated under PPC are required to prepare and maintain decommissioning plans and create final site condition reports to support an application for licence surrender. Would the new regime follow these same guidelines?

26. Do you agree with the proposed approach to enforcement notices set out above?

Comments:
The introduction of the broad power that means SEPA would be able to serve an enforcement notice whether the activity is authorised or not and without needing the notice to be related to failure to comply with an authorisation condition is of concern. It creates uncertainty around SEPA expectations for compliance for a regulated activity. It is unclear how the proposed introduction of ‘goal setting’ (standard rules) conditions in registrations and permits would be inspected and regulated by SEPA and how the operator is expected to demonstrate compliance with such conditions. Concern has been raised that that interpretation of compliance would be on individual SEPA inspector basis. Of concern is enforcement would “not need to be related to a failure to comply with an authorised condition”; could we receive enforcement for something not previously required by our license conditions? This has the potential to be subjective between regulatory officers.

27. Do you agree a notice used in the way set out in 3.7.10 to 3.7.12 is a different type of notice and should be therefore be called something different, such as an improvement notice?

Comments:
Whilst Industry acknowledges that the financial and enforcement implications of these regime changes are outwith the scope of this consultation; we would welcome further consultation to discuss the impacts in these areas. Where enforcement does not need to be related to a failure to comply with an authorised condition, it is unclear what enforcement may be applied and how. Would a lone officer empowered to make that decision e.g. civil penalty? This has the potential to be subjective between regulatory officers.

32. Do you have any views on the proposed policy principles for transitional arrangements?

Comments:
The oil and gas industry would appreciate further discussions with SEPA on the detailed timetable for the transition to the integrated framework and for the timetable to be clearly laid out ahead of the transition. The proposal by SEPA to automatically transfer existing registrations and authorisations into the appropriate tier is welcomed. It is hoped this will occur after the consultation on the standard rules and tier guidance has been completed.

Part 7: Radioactive Substances

39. Do you agree that it is appropriate to have controls on radioactively contaminated materials whilst they remain on the premises where they were contaminated?

If not, why not?
We would welcome further consultation on proposed standard rules for controls on radioactive contaminated material held on the site which they were generated.

40. Do you foresee any practical implications of the proposal to have controls on radioactively contaminated materials whilst they remain on the premises where they were contaminated?

Do you foresee any practical implications of the proposal to have controls on radioactively contaminated materials whilst they remain on the premises where they were contaminated?
Whilst held on site the actual activity level of the contamination present on the equipment or item is likely to be unknown and only measured in CPS.

41. Do you agree that all substances associated with NORM industrial activities should be subject to control under the integrated authorisation framework, where they exceed the out-of-scope values, irrespective of whether or not they are classed as radioactive material or waste?

If not, why not?
Further discussion with SEPA would be appreciated on the proposed changes to offshore authorisations conditions with the removal of Type 2 NORM exemptions. Concerns have been raised that this has the potential to increase the levels of record keeping and sampling offshore for NORM scales.

47. Do you agree that SEPA should have the power to impose conditions in an authorisation requiring the permit holder to carry out operations off their site?

If not, why not?
This is of concern to onshore operations as the scope of the ‘operations off site’ is unclear. This introduces uncertainty and complexities in liabilities (financial, health and safety, restoration) for the operations on sites owned by 3rd parties. Industry would welcome further clarification and consultation on how this might be implemented. In particular, if several sites share the same boundary how will SEPA distinguish clear boundaries for Operator liability?