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Energy Bill

I am grateful to both noble Lords who spoke on the amendment. I agree entirely with the noble Baroness, Lady Wilcox, that we need to ensure that the activities we are seeking to license in the gas unloading and storage regime are subject to a robust procedure for managing the final stage of the process, decommissioning. We shall hear a lot about decommissioning during the Bill's passage, but this is the first amendment which specifically addresses the concept. I agree entirely with her sentiments that there needs to be an offence defined, if there is not a successful and proper carrying out of any decommissioning programme. What she wants is that the programme must be approved by the Secretary of State at the time when the offshore gas storage or unloading facility is operational and the offence potentially occurs. We are extending through Schedule 1 to this Bill the existing decommissioning provisions in Part 4 of the Petroleum Act 1998 to include offshore gas storage and unloading, and related activities. This means that operators will be required to draw up and carry out an approved programme for the decommissioning of their installations. Such obligations can also be placed on certain other interested persons, such as companies associated with the operator, as the noble Lord, Lord Teverson, said. The problem with the amendment is that it would, in effect, create a different regime for gas unloading and storage from that which applies to oil and gas developments. We believe that there are virtues in consistency in the decommissioning regime across all types of offshore energy installations, which will help to ensure investors are clear about their obligations in respect of properly dismantling their structures. This has been a guiding principle and a strength of the proposals in the Bill, that we are continuing with existing tried and best practice on the issue of decommissioning. Changing the requirements for decommissioning projects on a piecemeal basis, which would be one of the implications of this amendment, would lead to inconsistencies across the different applicable licensing regimes. For example, the decommissioning provisions in Part 4 of the Petroleum Act 1998, which will apply to offshore gas unloading and storage, provides a penalty, in the case of a conviction on indictment, of a term of two years' imprisonment and/or an unlimited fine. However, the penalty for the part of the Bill where the amendment is suggested is, in the case of a conviction on indictment, an unlimited fine—that is, a lesser penalty regime than that of the relevant part of the Petroleum Act 1998. So we would be diluting what is already in place in relation to decommissioning regimes. By linking offshore gas with the existing regime, we provide an essential consistency, which is valuable to all those operating in the industry, and we make sure that changes made to the Petroleum Act regime, including the proposed changes in Part 3 of this Bill, flow through to the offshore gas licensing regime. I assure the noble Baroness that we take the point about security of decommissioning very seriously, but we are providing consistency across regimes by continuing with the provisions on the Petroleum Act. We also have consistency in the operation of the regime. The changes that we are proposing to Part 4 of the Act under this Bill would apply equally to the offshore gas regime. Chapter 3 of Part 3 of the Bill amends the Petroleum Act, and noble Lords can identify exactly what it does. In several clear ways, it establishes clarity on the decommissioning regime for offshore gas holding. I was asked what would happen if the contractor did not apply; that was the burden of the concern expressed by the noble Lord, Lord Teverson. We are channelling responsibility to the licence holder, which will in this case produce a more effective regulatory regime whereby the prosecuting regulator is not required to examine the relevant chains of command and allocations of responsibilities between the licence holder and the various contractors. The regulator would be able to target the licence holder in all instances, which should surely guarantee compliance with the licence holder's responsibilities. Due diligence will be found where the licence holder has done everything it can reasonably be expected to do to avoid a breach of the licence. Where a contractor is used to carrying out a particular operation, due diligence will be shown where proper steps have been taken to select a competent contractor and where there has been an appropriate level of supervision of the contractor's operations. I hope that the noble Lord recognises that we have addressed ourselves to the question of when the contractor can be guilty potentially of producing as large a breach in the licence holder's requirements as the licence holder themselves. But we think that we have got the appropriate rigorous regulation in place. The noble Baroness, Lady Wilcox, made a point on who decides when a decommissioning programme must be in place. The offshore environment and decommissioning unit of the department will serve a notice on the owner of an infrastructure as soon as it has been constructed, notifying them that the department will call for a decommissioning plan at a suitable time thereafter. This will be closer to the end-life of the facility when the best technology is known and available. If there were anxieties or concerns about the installation, the Secretary of State could insist on it being earlier. I think the noble Baroness will accept why we would want an element of delay before judgment of that. Clearly, decommissioning techniques evolve over time and the contractor would, we would hope, employ the best technology available when decommissioning is necessary. Certainly, the department has the responsibility for serving the notice and the Secretary of State has the responsibility for ensuring that a decommissioning plan is operated. But the operation of that requirement would be as close to the point of decommissioning as possible to make best use of available technology. I hope the noble Baroness will feel that she can safely withdraw her amendment.