Decommissioning—legislative background
Produced in partnership with Isla Stewart of Matheson
Decommissioning—legislative background

The following Energy guidance note Produced in partnership with Isla Stewart of Matheson provides comprehensive and up to date legal information covering:

  • Decommissioning—legislative background
  • Well decommissioning
  • Installation decommissioning
  • Pipeline decommissioning
  • Request for financial information
  • Involvement of the Oil and Gas Authority
  • Other applicable legislation
  • Application of international law

The Petroleum Act 1998 (PA 1998) provides the Secretary of State (SoS) with the power to grant licences to companies to search and bore for and get petroleum (through the auspices of the Oil & Gas Authority (the OGA)) (see Practice Note: Oil & Gas—UKCS licensing regime). Decommissioning however is managed by the Department for Business, Energy and Industrial Strategy (BEIS), in consultation with the OGA.

Well decommissioning

The Licence governs the relationship between the Licensee and the SoS. It includes the key terms and incorporates a series of terms known as the Model Clauses. The current Model Clauses are contained in the Schedule to the Petroleum Licensing (Production) (Seaward Areas) Regulations 2008, SI 2008/225. For more information on licensing and the terms and conditions of the Licence, see Practice Notes: Oil & Gas—UKCS licensing regime and Oil & Gas Authority (OGA).

The Licence and the Model Clauses only cover the decommissioning of wells. Model Clause 19(2) states ‘the Licensee shall not abandon any Well without the consent in writing of [Department of Energy and Climate Change (DECC)]’ (now Department for Business, Energy and Industrial Strategy (BEIS)). Such consent will likely have conditions attached.

Decommissioning of wells must occur one month before the expiry of the Licence. If the Licence expires without completion of decommissioning of the well, the Minister can direct