Petroleum production is generally a heavy regulated businessSafety for personnel and environment as well as security of supply of are important considerations behind the regulationsAlso resource management and economy are importantRegulation and control considered necessary, in addition to penal and civil liabilitySafety regulation in Norway based on internal control

Some individual conditions are given in the License (time limit, work obligations etc.)Different drafting techniques are used in different countries as to what are part of the License and what is regulated in Petroleum Act and regulationsWhat legal impact does this have?

Can the standards for conduct be changed?

Can new competences for the government be introduced?

In most countries it would be limits to changes in the conditionsNorway the case of payment of royalties

Detailed regulations and strict control of the Activity is necessary and usual but also strong emphasis on internal control in the industrySystems for internal control and security manuals have to be in placeCombined with penal sanctions as well as tort liabilityInstitutions for control with necessary technical, legal and economic competence are necessary

Plan for development and operation of a petroleum deposit (PDO)Plan for installation and operation of facilities for transport and utilisation of petroleum (PIO)Plan for cessation of petroleum activityThe plan is made by the companies but need approval from the authorities. Places the responsibility on the companies but gives the government a certain control

Approval of the plan for the activity:

The licensee shall submit to the Ministry for approval a plan for development and operation of the petroleum deposit.

Economic aspects, resource aspects, technical, safety related, commercial and environmental aspects, as well as information as to how a facility may be decommissioned and disposed of when the petroleum activities have ceased.

Facilities for transportation or utilisation

The Ministry may, when particular reasons so warrant, require the licensee to produce a detailed account of the impact on the environment, possible risks of pollution and the impact on other affected activities, in respect of a larger defined area.

Production of petroleum shall take place in such a manner that as much as possible of the petroleum in place in each individual petroleum deposit, or in several deposits in combination, will be produced. The production shall take place in accordance with prudent technical and sound economic principles and in such a manner that waste of petroleum or reservoir energy is avoided. The licensee shall carry out continuous evaluation of production strategy and technical solutions and shall take the necessary measures in order to achieve this.

Measures to increase production. Injection of water or natural gas

Drilling operations

Research obligations

Water injection-project on Ekofisk

If a petroleum deposit extends over more than one block with different licensees, or onto the continental shelf of another state, efforts shall be made to reach agreement on the most efficient co-ordination of petroleum activities in connection with the petroleum deposit as well as on the apportionment of the petroleum deposit. This shall apply similarly when, in the case of several petroleum deposits, joint petroleum activities would obviously be more efficient.Agreements on joint exploration drilling shall be submitted to the Ministry. Agreements on joint production, transportation, utilisation and cessation of petroleum activities shall be submitted to the Ministry for approval. If consensus on such agreements is not reached within reasonable time, the Ministry may determine how such joint petroleum activities shall be conducted, including the apportionment of the deposit.

Oil fields sometimes crosses borderlines between license areas or even between countries

If there is communication in pressure through oil, gas or water, the field will be defined as one field (one geological structure)

Division of petroleum necessary, based on evaluation of the resources which is found in each part of the reservoir

Coordinated production to reduce costs and secure effective recovery of the petroleum can be demanded by the state authorities

Volume or value? The example of Johan Sverdrup-field:354.06 mill. Sm recoverable oil10.61 bill. Sm recoverable natural gasPartners:

Det norske Oljeselskap 11,9 %

Statoil 40,0 %

Lundin Norway 22,1%

Petoro 17,8 %

Maersk Oil 8,1 %

A licensee who owns infrastructure that can be useful for other licence holders, might be obliged to let the others use his infrastructure

Plattforms

Transport facilities

Third party access to natural gas pipelines

Risk of pollution damageStrict rules on internal controlPenal reactions against breach of security rules (Statoil paid 30 mill NOK in fine for breach of security rules)Strict liability for damage made by the activityCompensation for damage on Biodiversity

Pollution Control Act applies, and Application outlined in

S 3 general provisions relating to the scope of the Act, and

S4 Application of the Act to activity on the continental shelf

Is a typical enabling act - details are outlined in discharge permits and regulations issued by the pollution control authorities.

Established for the purpose of preventing and reducing harm and nuisance from pollution.

This is reflected in the main rule of the act, (pollution is forbidden unless it is specifically permitted by law, regulations or individual permits.

Collaboration between employers, unions and government as well as worker participation are important cornerstones in efforts to establish and develop a high level of HSE in the petroleum industry.Integrated managementNorways Working Environment Act. Right and duty of workers to participate in ensuring a fully acceptable working environment.Risk-based regulations and regulatory regimes based on functional specifications.Functional approachThe industry accordingly has more freedom to choose between alternative solutions than would be the case with detailed regulations.This freedom of action imposes great demands on the quality of decisions and decision-making processes including the ability to ensure that workers have the necessary level of involvement before solutions are chosen.Safety Forum and the Regulatory Forum.

The ministry has provided the following guidelines on how the PSA should discharge its duties:

audits should be system-oriented and risk-based

audits should be a supplement to and not a replacement for internal control by the industry

the PSA must strike a balance between its role as high-risk/technology regulator and a labour inspection authority

contributing to and collaborating with companies and unions represent a crucial requirement for and principle in the PSA's operations.

NSOAF
The North Sea Offshore Authorities Forum (NSOAF). Safety regulators for activities in the North Sea basin, .

IRF The International Regulators Forum (IRF) occupies a central position in the global arena, bringing together Australia, Brazil, Canada, the Netherlands, New Zealand, Norway, the UK and the USA. This organisation has also appointed working parties to deal with issues of shared interest. It is currently assessing whether common criteria can be defined for reporting offshore incidents.

Research: ICRARD

Offshore Mechanical Handling Equipment Committee (OMHEC)

European Diving Technology Committee (EDTC).

Bilateral collaboration with other north European offshore regulators, and the UK
The framework agreement on cross-boundary petroleum collaboration between the UK and Norwegian authorities was signed in April 2005. It has since been amplified through specific agreements on safety and the working environment between the British Health and Safety Executive (HSE) and the PSA.

PSA and the British regulators regularly conduct joint audits and supervision.

Exchange information on legislation and regulatory strategy in the two countries, experience from the activity, and developments in the EU area which are significant for regulation and the exercise of regulatory authority.

PA 7-1Pollution damage means damage or loss caused by pollution as a consequence of effluence or discharge of petroleum from a facility, including a well, and costs of reasonable measures to avert or limit such damage or such loss, as well as damage or loss as a consequence of such measures. Damage or loss incurred by fishermen as a consequence of reduced possibilities for fishing is also included in pollution damage.

The liable party and the extent of liability

The licensee is liable for pollution damage without regard to fault. The provisions relating to the liability of licensees apply correspondingly to an operator who is not a licensee when the Ministry has so decided in connection with the approval of operator status.

If there are several licensees under the licence and one of them is the operator, or if the Ministry has made a decision according to the first paragraph, claims for compensation shall initially be directed to the operator. If any part of the compensation is left unpaid on the due date by the operator, this part shall be covered by the licensees in accordance with their participating interest in the licence. If someone fails to cover his share, this shall be allocated proportionately between the others.

If it is demonstrated that an inevitable event of nature, act of war, exercise of public authority or a similar force majeure event has contributed to a considerable degree to the damage or its extent under circumstances which are beyond the control of the liable party, the liability may be reduced to the extent it is reasonable, with particular consideration to the scope of the activity, the situation of the party that has sustained damage and the opportunity for taking out insurance on both sides.

The liability of a licensee for pollution damage may only be claimed pursuant to the rules of this Act.Liability for pollution damage cannot be claimed against:a) anyone who by agreement with a licensee or his contractors has performed tasks or work in connection with the petroleum activities.b) anyone who has manufactured or delivered equipment to be used in the petroleum activities.c) anyone who undertakes measures to avert or limit pollution damage, or to save life or rescue values which have been endangered in connection with the petroleum activities, unless the measures are performed in conflict with prohibitions imposed by public authorities or are performed by someone other than public authorities in spite of express prohibition by the operator or the owner of the values threatened.d) anyone employed by a licensee or by someone mentioned under literas a, b or c.If the licensee has been ordered to pay compensation for pollution damage, but fails to pay within the time limit stipulated by the judgement, the party that has sustained damage may bring action against the party that has caused the damage to the same extent as the licensee may bring action for recourse against the party causing the damage, cf. Section 7-5.

Compensation may be claimed pursuant to this section for pollution that is not permitted and that hinders, impedes or limits the benefit of exercising rights of common for non-commercial purposes, provided that this applies to reasonable costs of restoring the environment so that rights of common can as far as possible be exercised as before.

Claims for compensation pursuant to the first paragraph shall be made by the municipal pollution control authority pursuant to section 81, first paragraph, litra c, if the pollution damage is restricted to the municipality. If compensation is claimed from the municipality, or damage has been caused in several municipalities, the claim shall be made by the county pollution control authority pursuant to section 81, first paragraph, litra b. If compensation is claimed from the county municipality, or damage has been caused in several counties, the claim shall be made by the state pollution control authority pursuant to section 81, first paragraph, litra a. The Ministry may lay down rules concerning which of the pollution control authorities mentioned in section 81, first paragraph, litra a and b, may put forward the claim for compensation.

A claim for compensation pursuant to the first paragraph may, irrespective of whether the claim is put forward by the pollution control authority, also be made by a private organization or an association with a legal interest in the matter.

If a party such as is mentioned in the third paragraph puts forward a claim pursuant to this section, the compensation awarded shall nevertheless accrue to the pollution control authority according to the provisions of the second paragraph.

The pollution control authority will make further decisions on how the compensation awarded is to be used. Claims may be submitted for necessary costs incurred by a private organization or the like to be covered from the amount awarded.

If it is demonstrated that an inevitable event of nature, act of war, exercise of public authority or a similar force majeure event has contributed to a considerable degree to the damage or its extent under circumstances which are beyond the control of the liable party, the liability may be reduced to the extent it is reasonable, with particular consideration to the scope of the activity, the situation of the party that has sustained damage and the opportunity for taking out insurance on both sides.
In the event of pollution damage from a facility located in an area outside the Norwegian continental shelf, the party who has approval from the competent authority to conduct the activities to which the facility is connected, is regarded to be a licensee.

Has led to new discussion on the limited liability in some states in USSeveral states had regulation in limited liability for oil pollution.BP accepted unlimited liabilityDirective 30/2013/EU on safetyNorway critical to what they see as old fashioned command and control system

Compensation to fishermen for loss of fishing area:

In the event of petroleum activities within an area entirely or partly occupying a fishing field, the State is obliged, to the extent that fishing becomes impossible or is substantially impeded, to award compensation in respect of any resulting financial loss. Compensation may be set entirely or partly as a lump sum or as fixed annual payments. Compensation may normally not be claimed for losses that have occurred more than seven years after the occupation took place. The State may claim recovery from the licensee if the licensee ought to have averted the loss.

The licensee is liable, regardless of fault, in respect of financial losses incurred as a result of pollution and waste from the petroleum activities, and the cost of reasonable measures to avert or limit such damage or such loss, including damage or loss as a result of such measures. The liability of the licensee pursuant to the first paragraph also includes damage and inconvenience due to pollution and waste as a result of supply vessel and support vessel traffic, as well as during relocation of the facility to or from the field concerned. The licensee has the right of recourse against the perpetrator actually causing the loss or the shipowner, providing the other prevailing conditions of liability have been fulfilled.

Special permit for the transport solutionShip transport is regulated by general rulesPipeline transport is part of the Petroleum activity (Upstream pipelines)Regulation of ship transport with Oil cargoes. Coastal state v. Flag state.

Strict liabilityLimited liability according to international treatyA question for discussion: Should the liability be limited?

When a field is empty of the license/contract time is out, production stopsRemoval or decommissioning or restoring the fieldDumpingState take overTaxation problemshttp://www.npd.no/en/Publications/Reports/Decommissioning-of-offshore-installations/

International conventions and standards influence the way decommissioning is carried out and solutions chosen for final disposal of offshore installations The OSPAR Convention 1992 is central. (Entered into force in 1998). Protects NE Atlantic and is main law governing the discharge of offshore drilling waste in these watersProvides a framework for the disposal of disused installations, enduring that the sea should not be used for waste disposal

Contained within the OSPAR Convention, as adopted in 1992, are a series of Annexes which deal with the following specific areas:

Annex I: Prevention and elimination of pollution from land-based sources;

Annex II: Prevention and elimination of pollution by dumping or incineration;

Annex III: Prevention and elimination of pollution from offshore sources; and

Annex IV: Assessment of the quality of the marine environment

As a result of these agreements, the oil-producing states of Western Europe in effect work as a single country for the purposes of controlling offshore waste disposal, although the detailed implementation of the OSPAR regulations is still governed by national laws and European Union directives (with the exception of Norway, which is not an EU member but has, in general, strict environmental regulations).

International Convention for the Prevention of Pollution from Ships Essentially ship pollution protocol119 countries signatoriesThe stated object is: To preserve the marine environment through the complete elimination of pollution by oil and other harmful substances and the minimization of accidental discharge of such substances

Chapter 5 of the Petroleum Act deals with the cessation of petroleum activities. It states that the licensee is responsible for submitting a decommissioning plan before the use of an offshore installation is terminated permanently The oil companies must pay the costs of decommissioning, but also there is a requirement of the state to meet a certain proportion of these costs.

Decommissioning of platforms and other installations on the continental shelf is difficult, due to

Sheer size. A platform can be divided into the topsides and footings, and these vary a great deal in size.

Structure type: The solutions chosen vary depending on whether is steel installations, concrete installations, pipelines, cables or piles of drill cuttings.

New technological development

Leave in place (less than 10 000 tons)

Reuse

Artificial reef

Remove and deposit in deeper water Dismantle and dispose onshore or reuse

The deposition of oil and gas installations and pipelines at sea can create problems related to debris, while dismantling them may cause occupational health problems for workers.

Other issues that have been identified are waste disposal problems that may arise if installations are brought ashore for dismantling, effects of the chemicals in the installations if they are dumped at sea, and reductions in resource use if metals are recycled