Requirements for Information and Sample Plans and Coordinators to come into force for UK offshore oil & gas industry

United Kingdom
The OGA has now announced that the provisions of the Energy Act 2016 (“the Act”) which relate to Information and Sample Plans and Information & Samples Coordinators will come into effect on 21 October 2017. Licensees, operators and others should have their Co-ordinators appointed by that date and should consider whether any licence events are planned which will require Information and Sample Plans.

On 2 October 2017, the Oil and Gas Authority (OGA) published two documents, ‘Guidance on Information and Sample Plans’, and ‘Guidance on the Role of Information and Samples Coordinators,’ which provide guidance on how these new provisions should be implemented. The guidance documents describe the OGA’s expectations with regards to the Information and Sample Plans (ISPs) as well as what the OGA expects from Information and Samples Coordinators (ISCs) and aim to promote good stewardship of samples and information. While the guidance is not in itself binding, it helps clarify the OGA’s expectations around Chapter 3 of the Act and promote best practice. Failure to comply with the guidance could be seen as a failure to meet MER UK standards.

Background and Summary

The Wood Review recognised, among other issues, that in order to maximise recovery of petroleum from the UKCS, high quality subsurface data has to be made available. It stated, “The ready access to timely data is a prerequisite for a competitive market and this is even more important in an industry which relies on good data to create value.” The Act contains a number of provisions to achieve this objective including obligations on relevant persons to retain information and samples, powers for the OGA to request information and samples from such persons, and to retain and disclose such data, all discussed in our earlier Law-Now.

Most of the provisions relating to information and samples are already in force. The provisions relating to ISCs and ISPs coming into force on 21 October 2017 are the last provisions of the Act relating to the powers of the OGA to be brought into force and are:

  • Sections 30 to 33, which require a responsible person (i.e. licensee) to prepare an ISP in connection with a licence event, agree the ISP with the OGA and comply with it.
  • Sections 34(1)(b), which empowers the OGA to request and be provided with information or samples from persons who hold information or samples in connection with an ISP.
  • Section 35 which requires a relevant person to appoint an ISC and to notify the OGA of the ISCs name and contact details.
  • Section 36(2) provides for appeal against decisions by the OGA to prepare an ISP.

Failure to comply with these requirements may lead to sanctions in accordance with Chapter 5 of the Act. Notably, however, the requirements imposed by section 31(2)(a) of the Act, which relates to a person agreeing an ISP with the OGA in case of a licence event, are not sanctionable before 12 November 2017.

The remaining piece of the regulatory puzzle relating to information and samples is a set of regulations giving more detail around the retention and public disclosure of petroleum-related information and samples by the OGA. The OGA issued a consultation in June 2017 which sought views from industry on this topic: however, draft regulations have not yet been published.

Guidance on Information and Sample Plans

  • Under the Act, a responsible person is required to prepare a plan setting out what is to happen to information and samples on the occurrence of any licence event. The plan should document what information and samples are to be transferred or retained, and how and when that transfer will take place.
  • A licence event is the transfer of rights under an offshore licence in relation to all or part of the licence area, the surrender of all remaining rights under a licence, the expiry of an offshore licence or the revocation of a licence.
  • The ‘responsible person’ is defined as the licensee affected by the event, so on a transfer of an interest the assigning party would be responsible while on a surrender or expiry of a licence all the then licensees would be responsible. The Act permits the responsible person to delegate its duties to another person with that person’s consent – this approach might be taken where the licence event affects a number of licensees and the operator agrees to take on the obligation for all of them. The operator would then be subject to sanctions for any failure to comply with the statutory requirements.
  • ISPs must be agreed with the OGA – for all licence events other than revocation this must be done before the licence event takes place and on a revocation, within a reasonable time period after the event.
  • Therefore, when a licence event is being planned, the responsible person should contact the OGA to determine the requirements for an ISP. This can be done before the official notification of the event to the OGA via the PEARS system and the guidance recommends that consideration is given to the requirements regarding ISPs early in the planning process for the event.

Petroleum-related information and samples are very broadly defined in section 27 of the Act. However, the ISP will need to decide which information and samples are relevant to the licence event so that the effort expended on planning and implementing the plan is proportionate to the value of the information.

The ISPs should stipulate what information is relevant and whether it will be retained by the responsible person, transferred to a new licensee or perhaps left in storage with a third party. The OGA can supply templates for ISPs for different licence events: however, there is no requirement to use these templates, since information and sample types are incredibly varied and the template may not be suitable.

If an ISP is not agreed with the OGA, the OGA may prepare one itself in connection with the licence event by requiring the responsible person to provide it with relevant information.

Guidance on the Role of Information and Samples Coordinator

Section 35 of the Act relates to the appointment and role of an information and samples coordinator (ISC).

  • Each relevant person must appoint an ISC with effect from 21st October 2017 or, if later, on becoming a relevant person.
  • Relevant persons are defined in section 9C of the Petroleum Act 1998 and include licensees, operators and owners of offshore installations and upstream petroleum infrastructure.
  • The OGA must be notified on the appointment of the ISC of the ISCs name and contact details and must be notified if the identity or the contact details of the ISC change. Whilst the OGA do not approve the ISC, they will confirm receipt of the ISC contact information.
  • An ISC is responsible for monitoring the relevant person’s compliance with its obligations under the Act and working with leaders of all departments within their organisation to ensure information and samples are reported and retained.
  • The ISC also acts as the primary point of contact with the OGA for communications relating to petroleum-related information or samples including routine reporting and ad hoc queries as well as regarding development of ISPs. They are responsible for ensuring that appropriate actions are taken when a notice is received from the OGA requesting relevant information and that the requirements under the Act are complied with.

Urgent actions for industry

  • Each operator, licensee, or owner of offshore installations or upstream petroleum infrastructure has a statutory obligation to appoint its ISC and notify the OGA of that appointment by 21st October 2017.
  • Any operator or licensee which is involved in a licence event due to take place after that date should immediately contact the OGA to discuss the requirement for an ISP.

Comment

While the need for good stewardship of industry data is unarguable, licensees will be concerned that these new requirements may increase administrative burdens in an industry which is working to adapt to its new regulatory requirements at a time of significant cost constraint. Some comfort may be taken from the following statement in the guidance: “The OGA expects that ISPs should be no more onerous than the existing plans made to facilitate the transfer of information and samples between two parties, who are following commonly accepted industry best practice. Those best practices have been promoted by organisations such as Oil and Gas UK for over a decade.”

The OGA guidance can be found at the following link:

https://www.ogauthority.co.uk/news-publications/publications/2017/guidance-relating-to-information-and-samples-plans-and-the-role-of-information-and-samples-coordinators/