In PAA Series: Environmental Management – Decommissioning Part 1, we noted that the Petroleum Activities Act 2023 (‘PAA’) contains provisions for a critical environmental management process called ‘decommissioning’. We understood that ‘decommissioning’ “…refers to the process of taking something out of active use, often followed by its safe removal, dismantling, disposal or repurposing” and that “it is typically applied in contexts such as infrastructure, equipment or facilities that have reached the end of their operational life or are no longer needed”. We also looked specifically at offshore decommissioning, particularly the range of activities required to ensure safety and responsibility in what is usually a complex and expensive process.
Some of the key obligations of the Licence Holder were also highlighted – submission of a decommissioning budget and plan, the contents of the plan, the establishment of a decommissioning fund, and post-decommissioning reporting with independent verification – whilst noting that overall, the responsibility for decommissioning rests solely upon the Licence Holder (Licensee). In this publication, we will continue our review of the decommissioning provisions within the PAA, highlighting those aspects that are especially focused on ensuring a safe, responsible, and environmentally sound process.
Decommissioning
Matters pertaining to decommissioning are addressed in Part IX, sections 56 to 65 of the PAA.
The Decommissioning Plan and Budget
The obligation to carry out decommissioning activities lies solely with the Licence Holder and applies to the holder of a petroleum exploration licence and the holder of a petroleum production licence. Section 56 states –
Following the expiration, surrender, or termination of a petroleum exploration or production licence…or cessation of petroleum operations in an area, the licensee shall solely be responsible for –
(a) the removal [of] all property used in petroleum operations from the affected area, subject to any arrangements for future use of any property under an approved decommissioning plan; and
(b) remediate the affected area in accordance with best international industry standards and practices.
Petroleum operations, as defined in the PAA (section 2), also include environmental protection.
Licence Holder’s Obligation to submit a Preliminary Decommissioning Plan and Budget
Section 57(3) of the PAA makes it mandatory for a Licence Holder to submit a preliminary decommissioning plan and budget as part of the field development plan, which is submitted to be approved by the Minister along with the application for a petroleum production licence.
(For more on field development plans and their approval, see the PAA Series: Management Themes Part 5 and Part 6)
- Content of a Preliminary Decommissioning Plan
Section 58(2) provides the following mandatory content which must be included in any preliminary decommissioning plan submitted to the Minister for approval –
(a) a detailed description of the decommissioning operations to be undertaken by the licensee (Licence Holder);
(b) a description of the proposed methods of removal and disposal;
(c) an analysis of alternative removal and disposal methods considered in preparing the plan, including cost estimates and the rationale for selecting the preferred methods;
(d) an environmental impact assessment in compliance with the Environmental Protection Act;
(e) any other matter that may be prescribed by regulation or direction of the Minister.
Licence Holder’s Obligation to submit a Decommissioning Plan and Budget
Section 57(1) requires the Licence Holder to submit a proposed decommissioning plan and budget to the Minister for approval –
(a) no later than two years before the expiration of a petroleum exploration, or the relinquishment of a part of the licence area;
(b) no later than two years before the anticipated cessation of production under a petroleum production licence.
Section 57(2) also speaks to instances of surrender or cancellation of a licence, and provides that “where the petroleum exploration licence or petroleum production licence is determined by surrender or cancellation…earlier than its scheduled expiration date, the licensee shall submit to the Minister a decommissioning plan and budget no later than ninety days after the determination of the licence”.
- Content of a Decommissioning Plan
We noted the mandatory contents of a preliminary decommissioning plan above, set out in section 58(2) of the PAA.
Section 58(1) provides that both a preliminary decommissioning plan and a decommissioning plan may include options for –
(a) complete and total removal of all wells, facilities and assets used in the conduct of petroleum operations;
(b) partial removal, removal in place, or decommissioning of offshore platforms and other facilities for use as reefs or for any other applicable purposes;
(c) reuse or relocation of the facility for use in petroleum operations at another location; or
(d) alternative use of petroleum infrastructure for purposes other than petroleum operations.
US$9.8 billion set aside by Petrobras to push decommissioning strategy | OilNOW
In our next publication, we will continue our review of the Decommissioning provisions contained in Part IX of the PAA.
DISCLAIMER: This series is not intended to serve as a replacement for the Petroleum Activities Act 17 of 2023, nor is it a substitute for legal or other professional advice in any manner whatsoever.
