1. DECOMMISSIONING IN IRELAND
BY ADEGOKE OSHUNNIYIEsq.
According to Professor John Paterson,1
‘the starting point of any discussion on
decommissioning, (of oil and gas installations), outside of territorial waters … must be
international law.’2
The learned Professor’s position is probably due to international concerns
about what becomes of offshore oil and gas installations at the end of their field life. Admittedly,
the location of the Spanish Point oil discovery ‘in the Northern Porcupine Basin, about 170 km
off the west coast of Ireland,’3
raises international law considerations. However, this section on
decommissioning will first discuss ‘the provisions in Irish law relating to decommissioning cost
provisions before evaluating the local regulatory arrangements for the development and
implementation of a decommissioning plan or program.’4
COST PROVISIONS
While the UKCS exploration field ‘is characterised by ageing infrastructure, where the decision
on decommissioning, (of various installations), looms large,’5
the same cannot be said of the
Irish field with exploration activity in yet to mature stages. Nevertheless, it would be unwise for
the Irish authorities to repeat the mistake made on the UKCS, where at the commencement of
exploration activity, ‘decommissioning costs were notable by their absence.,’6
though according
1
Professor John Paterson is a renowned Professor of Oil and Gas Law
http://www.abdn.ac.uk/about/management/professor-john-paterson-772.php
2
Professor John Paterson in ‘Gordon Greg, Paterson John and UsenmezEmre;‘Oil and Gas Law – Current Practice
and Emerging Trends.’ 2nd
Edn. Page 289
3
Providence Resources Ireland Operations.http://www.providenceresources.com/ireland-northern-porcupine-basin-
fel-204
4
2016 Professional Skills LS5906.Spanish Point EssayQuestion
5
Luke Havemann in ‘Gordon Greg, Paterson John and UsenmezEmre;‘Oil and Gas Law – Current Practice and
Emerging Trends.’ 2nd
Edn. Page 284
6
Ibid (n2) Page 287

2. to the Oil and Gas UK, ‘forecasting decommissioning expenditure at the outset of a project is
challenging due to the many uncertainties and factors influencing expenditure.’7
In Ireland, the starting point of who bears responsibility for decommissioning costs might be the
provisions of section 9A of the Petroleum (Exploration and Extraction) Safety (PEES) Act 2015,
which requires that prior to the grant or transfer of an offshore petroleum authorisation, the
Minister must ‘satisfy himself or herself as to the ... financial capability of the prospective
offshore petroleum authorisation holder to carry out the functions and obligations conferred by
that offshore petroleum authorisation ... for the duration of the offshore petroleum
authorisation.’8
Moreover, both the 1992 and the 2007 Licensing Terms (LT) permits the ‘Minister to attach
conditions to the approval of abandonment proposals.’9
Furthermore, the LT in its reference to
abandonment costs require that, where the authorisation holder ‘fails to implement an
abandonment plan approved by the Minister or fails to submit an abandonment plan, the
Minister may carry out an abandonment programme and the authorisation holder shall be liable
for all costs incurred by the Minister.’10
In addition, the Petroleum Safety Framework requires that, ‘a petroleum undertaking be also
financially liable for the prevention and remediation of environmental damage caused by
offshore petroleum activities.’11
Finally, it is instructive that in the Irish Fiscal policy, ‘a 100% tax
allowance applies (to company’s) for abandonment expenditure (they incur) in Ireland for the
chargeable period in which the expenditure is incurred.’12
7
OIL AND GAS UK: DECOMMISSIONING INSIGHT 2014 Page 10
8
Section 9A of the PEES Act 2015 amending section 9 ofthe 1960 Act
9
Licensing Terms For Offshore Oil And Gas Exploration, Development& Production In Ireland 2007
Article 69(2)
10
Ibid (n9) Article 69(5)
11
Paragraph 3.3.1.2 Requirements ofthe Petroleum Safety Framework
12
Global Oil and Gas tax Guide Page 273 http://www.ey.com/Publication/vwLUAssets/EY-2015-Global-oil-and-gas-
tax-guide/$FILE/EY-2015-Global-oil-and-gas-tax-guide.pdf

3. However, in the UK the legal position with regard to decommissioning costs is as captured in
the Energy Act 2016, which places a duty on any person or company upon whom an
abandonment notice is served, to ‘frame the abandonment programme so as to ensure … that
the cost of carrying it out is kept to the minimum that is reasonably practicable in the
circumstances.’13
CONCLUSION
It would appear from the above regulations and law that the duty of bearing decommissioning
costs in Ireland rests on the authorisation holder. Though, in the UK such a person has an
additional duty to ensure that the cost of abandonment ‘is kept to the minimum.’14
Regulatory Arrangements for the Development and Implementation of a
Decommissioning Plan
The Irish PEES Act 2015 defines the decommissioning process, ‘in relation to petroleum
infrastructure, as … taking the facility, structure or installation, or any part of such facility,
structure or installation, permanently out of use with a view to its abandonment in situ or
removal.’15
It would appear however, that the above definition made no mention of partial
removal of disused installations. Nevertheless, in order to regulate the decommissioning
process, the PEES Act mandated the Commission for Energy Regulation (CER), to ‘prepare
safety case guidelines …which may include provision for … the decommissioning of petroleum
infrastructure.’16
13
Energy Act 2016 Schedule 2, Section 3(3)(b)
14
Ibid (n13) Schedule 2, Section 3(3)(b)
15
Section 2 Irish PEES Act 2015 (‘in situ’ is Latin for ‘in its original place.’)
16
Section 8(3) PEES Act

4. Further to its mandate, the CER published the said safety case guidelines (the guidelines) and
included within the same regulatory arrangements for the development and implementation of
decommissioning plans or program. A specific guideline requires that;
“Where there is decommissioning of a pipeline, or commencement, or preparation for the
removal of primary or secondary structures with a view to complete decommissioning of
the petroleum infrastructure, the petroleum undertaking must hold a Decommissioning
Safety Permit for that specific decommissioning activity which will be issued pursuant to
an approved Decommissioning Safety Case (DSC).”17
The Guidelines further require that the approved ‘DSC must describe the process of
decommissioning and demonstrate how the risks associated with that process are reduced to a
level that is ALARP.’18
However, since the PEES Act 2015 made no provision for partial
decommissioning, ‘there is no requirement to produce a DSC in respect of a partial
decommissioning of petroleum infrastructure.’19
In addition to the ALARP requirement for DSC, the PEES Act further requires ‘petroleum
undertakings to ensure that … any petroleum infrastructure is … decommissioned in such a
manner as to reduce any risk to safety to a level that is ALARP.’20
It further requires a list of
various companies ‘contracted to the petroleum undertaking, or with whom the petroleum
undertaking must co-operate in order to secure the safe management of the
decommissioning.’21
Perhaps to forestall the type of negative societal concerns, which happened during the
decommissioning of the Brent Spar in the UK, the guidelines also require that the DSC should
describe both the ‘initial, pre-decommissioning and post decommissioning final state of the
17
Para 8.1 Safety Case Guidelines Partof the Petroleum Safety Framework
http://www.cer.ie/docs/000290/CER14145.PDF
18
Ibid (n17) para 8.1
19
Ibid (n17)
20
Paragraph 3.3.1.2 Requirements ofthe Petroleum Safety Framework
21
Ibid (n17) Paragraph 8.2

5. petroleum infrastructure.’22
As well as ‘the sequence of major decommissioning operations
required to make the installation hydrocarbon free.’23
The 1960 Act further requires that Companies, such as ours, desiring ‘to explore the Irish
offshore,… need to be issued an authorisation to do so by the Minister, which are granted
subject to the Licensing Terms. (LT).’24
However, there are two sets of LT in operation in
Ireland. While ‘authorisations awarded prior to 1st January 2007, apply the 1992 LT,
authorisations awarded after that date, apply the 2007 LT.’25
Our Company’s Farm in discussions with Providence Resources pertain to their holdings in the
Spanish Point area offshore Ireland. According to Providence’ 2015 Annual Report, she ‘was
the only company to be awarded licensing authorisations in the Porcupine Basin in the 2004
Atlantic Margin Licensing Round, when it successfully secured licence authorisations over
Spanish Point (FEL 2/04) and Dunquin (FEL 3/04).’26
However, Providence has other holdings
she secured after the 2004 licensing round such as the ‘FEL 2/14, located in the southern
Porcupine Basin off the south west coast of Ireland, which was awarded to the Company … as
part of the 2011 Irish Atlantic Margin Licensing Round.’27
However, since both the 1992 Licensing Terms and the 2007 Licensing Terms (LT) contain
detailed provisions for abandonment of installations, they are both relevant because the
Spanish Point area the Company is interested in has licenses issued before and after January
1st
, 2007. However since the two sets of LT are identical, this report will cite from the 2007 LT
for reference purposes.
22
Ibid (n17) paragraph 8.3
23
Ibid (n17) paragraph 8.3.6
24
Licensing.DepartmentofCommunication Climate Change and Environment.http://www.dccae.gov.ie/natural -
resources/en-ie/Oil-Gas-Exploration-Production/Pages/Licensing.aspx#
25
Licensing Terms: Departmentof Communications Climate Action and Environment.www.dccae.gov.ie
26
Providence Resources Plc. Annual Reportfor the year ended 31 December 2015 Page 4
27
Ibid (n26) Page 14

6. Under the 2007 LT, ‘it is the responsibility of every authorisation holder to make provision for
and to carry out abandonment of fixed facilities, as approved by the Minister.’28
The LT went
further to define abandonment as ‘the removal, part removal or leaving in place of any
installation or facility following completion of operations involving such installation or facility.’29
Furthermore, as part of the regulatory arrangements for a decommissioning plan and program,
the LT further requires the authorisation holder to submit to the Minister for approval, within a
specified date, ‘a written plan which sets out proposals for the abandonment of all fixed facilities
... following permanent cessation of operations in the area.’30
By way of comparison, the newly inaugurated UK Oil and Gas Authority (OGA) ‘has developed
the Decommissioning Strategy (DS) in collaboration with industry and the MER UK Boards…
with priorities, which include cost certainty and reduction.’31
It would appear that one of the main
aims of the DS is to ensure ‘that decommissioning is executed in the most cost effective way
without prejudice to, and in balance with, the maximisation of value from economically
recoverable reserves.’32
While, the Energy Act 2016 in the UK further places a duty to comply
with the strategy on Owners, while also prohibiting ‘the beginning or continuation of
decommissioning of installations and pipelines unless an approved abandonment program’33
submitted to the Secretary of State has taken effect.
CONCLUSION
With such detailed regulatory arrangements for the development and implementation of a
decommissioning plan, as above, in addition to provisions in Irish law relating to cost, there
appears to be a moderately robust decommissioning regime in Ireland.
28
Ibid (n70) Licensing Terms Article 69(1)
29
Ibid (n70) Licensing Terms Article 69(3)
30
Ibid (n70) Licensing Terms Article 69(2)
31
Decommissioning Strategy. Oil and Gas Authority. Page 4
https://www.gov.uk/government/publications/decommissioning-strategy
32
Ibid (n77) page 4
33
Ibid (n57) Schedule 2, Section 2(1)