Notable Provisions Of The Upstream Petroleum Decommissioning and Abandonment Regulations

This article will be looking at important provisions of the Upstream Petroleum Decommissioning & Abandonment Regulations as recently issued by the Nigerian Upstream Petroleum Regulatory Commission (or “The Commission”), with a focus on :-

– Objectives of the regulations

– Their application scope

– Decommissioning & abandonment plans

– Updating decommissioning and abandonment plans

– Implementation of approved decommissioning and abandonment plans.

What are the objectives of these regulations?

– To ensure the decommissioning and abandonment of petroleum wells, installations, structure, utilities, plants and pipelines for upstream petroleum operations on land and offshore are conducted in accordance with good international petroleum industry practice.

– To set the framework for the establishment and administration of a decommissioning and abandonment fund.

What is the application scope of these regulations?

These regulations apply to :

– The decommissioning and abandonment of facilities used in upstream petroleum operations in Nigeria.

– Wells, installations, facilities, associated with upstream petroleum operations under a license or lease saved under Section 311(2) of the Petroleum Industry Act and licenses and leases granted under the act.

What are the provisions of the regulations regarding decommissioning and abandonment plans?

– A licensee or lessee engaged in upstream petroleum operation shall within one year from the commencement of these regulations, submit to the NUPRC s decommissioning and abandonment plan and where a decommissioning and abandonment plan exists, provide an updated decommissioning and abandonment plan in accordance with the regulations.

– A licensee or lessee engaged in upstream petroleum operations in Nigeria shall conduct its operations in accordance with a decommissioning and abandonment plan approved by NUPRC.

– The requirement for decommissioning and abandonment plans under these regulations shall apply to upstream petroleum operations, irrespective of whether there is a decommissioning and abandonment plan previously approved –

a). Under any other law by an approving authority before the coming into effect of the Petroleum Industry Act.

b). By the NUPRC prior to these regulations.

– A decommissioning and abandonment plan pursuant to these regulations shall be as prescribed by the NUPRC.

– All new licensees and lessees shall submit a decommissioning and abandonment plan to the NUPRC as part of a field development plan.

What do the regulations say on updating decommissioning and abandonment plans?

– A licensee or lessee shall communicate to NUPRC for approval, any update to the decommissioning and abandonment plan prior to implementation of the decommissioning and abandonment operations.

– The commission shall review the proposed update and approve, where it meets the requirements pursuant to the regulations.

What do the regulations say on the implementation of approved decommissioning and abandonment plans? 

– A licensee or lessee who pursuant to an approved decommissioning and abandonment plan intends to –

a). suspend or abandon any well,

b). decommission any installation, structure, utility, plant or pipeline within its upstream operations,

c). decommission and abandon all or part of a facility in an oil or gas field,

Shall pay applicable fees and obtain approval of NUPRC prior to the commencement of the execution of the abandonment or decommissioning.

– In an emergency, a licensee or lessee may proceed to suspend a well that is at immediate risk to personnel, environment or the asset & shall immediately inform the NUPRC of the risk.

What are the provisions of the regulations on the decommissioning of infrastructure on offshore fields?

– In respect of the decommissioning of infrastructure on offshore fields, a licensee or lessee shall make an application to the commission in the prescribed form for approval to decommission offshore installations, structures, utilities, plant or pipelines, not involving the abandonment of wells, at least 60 months prior to the proposed start date of the commissioning.

Section II

This article installment will be looking at the provisions of the regulations on the acceptance or rejection of decommissioning and abandonment applications by the Nigerian Upstream Petroleum Regulatory Commission (or “The Commission”) as well provisions on the commencement of decommissioning and abandonment.

Approval of applications for abandonment/decommissioning under the regulations?

– An application under this regulation shall be accompanied with a decommissioning programme in a form prescribed by NUPRC which shall comprise of  :

a). A description of items to be decommissioned, inclusive of diagrams, covering – 

(i). Support structures for offshore fixed and floating installations at the time of removal, type, size, arrangements and weights.

(ii). Topsides for offshore fixed and floating installations, type, size, configuration, equipment and weights.

(iii). Subsea equipment and installations on or in the seabed, size, weight, height above seabed, whether piled or not, type of construction and material, details of interaction between equipment and other uses of the sea, such as fishing.

(iv). Pipelines, flow lines and umbilicals – lengths, diameters, type of construction, the extent of burial, trenching and details of any concrete mattresses, frond mattresses, grout bags, rock-dump or other materials used to cover the lines.

What do the regulations say on the rejection of applications ?

– The commission shall not approve a decommissioning application that does not meet the requirement of these regulations.

– Where the commission fails to make and communicate its decision on application to the licensee or lessee within 12 months the application shall be deemed approved by the NUPRC.

What do the regulations say on the commencement of decommissioning and abandonment?

– The decommissioning and abandonment pursuant to these regulations shall commence with an application by the licensee or lessee for approval accompanied by a decommissioning and abandonment programme.

– The NUPRC shall within 120 days of receipt upon an application from a licensee or lessee, communicate its decision to the applicant.

– An approval by the commission pursuant to these regulations shall be subject to directives issued by it on the implementation of the approval.

-Where an application is rejected by the NUPRC, the licensee or lessee shall be given 80 days within which to resubmit an amended application that meets the requirements of the commission.

– Where the licensee or lessee fails to submit an amended application within the time specified above, the NUPRC may invoke its power to access the fund to implement the decommissioning and abandonment of the facilities and notify the licensee or lessee accordingly pursuant to Section 23(3) of the Petroleum Industry Act.

Section III

The focus of this article installment is the provisions of the NUPRC regulations regarding:-

– Public consultations

– Post-completion of decommissioning and abandonment programme

– Obligations for decommissioning and abandonment.

What do the regulations say on the requirement for public consultation?

– Upon the receipt of an application for decommissioning and abandonment, the commission shall, in conjunction with a licensee or lessee, conduct public consultations with relevant stakeholders before giving approval.

– The relevant stakeholders referred to above shall include communities likely to be affected by the decommissioning and abandonment activities, public authorities and bodies and other interested parties, with respect to the planned decommissioning.

Changes to the decommissioning and abandonment programme

– Where a licensee or lessee proposes a change to an approved decommissioning and abandonment programme, such changes shall be submitted to the commission for review and approval.

– The NUPRC shall within 60 days of receipt of the licensee or lessee’s proposed changes, notify the licensee or lessee  of its approval or non-approval of such changes, failure of which shall result in such revisions being deemed approved.

– Where the proposed change is during the execution of the decommissioning and abandonment programme, the licensee or lessee shall obtain approval of the NUPRC before the execution of such change.

Post- Completion of Decommissioning and Abandonment

– Upon completion of decommissioning and abandonment, a licensee or lessee shall – 

a). notify the NUPRC I’m writing within 6 months of the completion of decommissioning and abandonment,

1. b) submit an end of operations report including :

(i). a statement of measures for monitoring, maintenance and management of any abandoned well and decommissioned site.

(ii). statement of procedure for maintaining of installations or pipelines that may still exist, and

(iii). the actual cost incurred and any other relevant information that may be necessary.

c). submit results of all post-completion monitoring surveys established in paragraph (a)(i), upon completion of each survey.

– Upon the completion of the last survey as provided in the statement of measures pursuant to paragraph 1, any further work shall depend on the results of the monitoring survey and shall be agreed with NUPRC.

What are the obligations for decommissioning and abandonment?

– The obligation to carry out the decommissioning and abandonment of a well, Installations, structure, utilities, plants or pipelines associated with a license or lease under these regulations, shall in respect of a license or lease –

a). terminated by expiration of time, the obligation shall be on the licensee or lessee of the expired license or lease.

b). terminated by surrender, the obligation shall be on the licensee or lessee of the surrendered license or lease.

c). terminated by revocation, the obligation shall be on the licensee or lessee of the revoked license or lease.

d). that has been assigned, wholly or partly, with the consent of the minister of petroleum in accordance with the Petroleum Industry Act or any enactment preserved by the act, the obligation shall be on the assignee to the extent that the assignee has assumed obligations.

Section IV

This final article installment talks about the provisions of the NUPRC regulations regarding :

– The installations, structures and assets database.

– The Decommissioning and Abandonment Fund.

– Utilization of the Decommissioning and Abandonment Fund.

– Reporting.

– Deemed assignee liability.

Database of installations, structures and assets

– The NUPRC shall maintain a database of upstream petroleum installations, structures and pipelines on land and offshore, used in the petroleum operations and their status.

– The database pursuant to the above provision shall be a public document and shall be published on the commission website annually.

– For the purposes of maintaining and updating the database pursuant to this regulation, a licensee or lessee shall submit information relating to its upstream petroleum operations, installations, structures and pipelines to the NUPRC in the prescribed form and within the time frame specified by the commission.

Establishment of the decommissioning and abandonment fund

– There shall be set up for each licensee or lessee, a decommission and abandonment fund (“The Fund”).

– The fund shall be set up –

a). by the licensee or lessee, in respect of operations under the license or lease.

b). not later than 90 days from the date of commencement of production in the case of new licenses or leases.

c). 90 days from the date of commencement of these regulations for existing licenses or lease, of a producing field.

– A licensee or lessee shall submit notice of the setting up of the fund not later than 14 days from the date of setting up the fund.

Contributions to the Fund

– The contributions to the fund shall be made by yearly payments of the cash amount stipulated in the applicable decommissioning and abandonment plan by the licensee or lessee.

– In the case of a joint venture, the contributions to the fund shall be made by yearly payments of the cash amount stipulated in the applicable decommissioning and abandonment plan by the individual parties to the joint venture agreement pro-rata their respective participating interest in such joint venture.

Utilization of the Fund

– The fund shall be used to pay for decommissioning and abandonment costs.

– The licensee or lessee shall have access to the fund upon receipt of a written approval from the NUPRC pursuant to these regulations yo undertake the decommissioning programme & shall use such funds only for conducting an approved decommissioning and abandonment plan.

– The commission shall authorise the refund of any expenditure incurred by the licensee or lessee who carries out decommissioning or abandonment of a facility in an emergency situation from its contribution to the fund.

Reporting

– The licensee or lessee shall not later than 90 days succeeding the end of each calendar year, submit to the NUPRC & the Federal Inland Revenue Service (FIRS), a statement of accounts with respect to its contributions into the fund for the preceding year.

Deemed liability of an assignee

– Where the whole or part of an interest in the license or lease is assigned, novated or otherwise transferred to another party,the proportionate legal and equitable interests,rights and obligations of the license or lease in respect of the decommissioning and abandonment obligations under the Petroleum Industry Act and these regulations, shall be deemed to be attached to the property transferred to the transferee.