Oil and gas firms to pay £265,000 in emission-related fines
Image credit: Dreamstime
The North Sea Transition Authority (NSTA) has fined three oil companies a total of £265,000 for risking "the industry’s drive to cut emissions and bolster the UK’s energy security."
The crackdown is part of the regulator's commitment towards upholding its flaring and venting guidance, which aims to eliminate unnecessary or wasteful flaring and venting of gas, with a view towards achieving zero routine flarings and venting by 2030.
While venting is the discharging of gases into the atmosphere, flaring is burning the gases before they are discharged and mainly results in CO2 emissions.
Inspectors revealed UK-based EnQuest was fined £150,000 for flaring an excess 262 tonnes of gas on the Magnus Field, in the North Sea, between November 30 and December 1 last year, "despite knowing it did not have the necessary consent in place", the NSTA said.
Norway-based Equinor was also fined £65,000 for flaring at least 348 tonnes of CO2 above the amount permitted on the Barnacle Field, located in the North Sea, between June and November 2020.
According to the NSTA, Equinor uses an allocation model to measure flaring volumes for the Barnacle Field, whose production is mixed with oil and gas from other fields and processed on the Statfjord B platform in Norwegian waters.
As a result, the NSTA said, the exceedance of the flare consent on Barnacle did not result in an overall increase of CO2 emissions from Statfjord B during the period of breach.
"The breach of the consent was in essence an administrative breach. Nonetheless, Equinor was in breach of its UK flare consent for Barnacle for four months," the regulator said.
Ola Morten Aanestad, of Equinor, said "not a cubic centimetre of gas from Barnacle has been flared in the UK and not a gram of CO2 has been emitted without being accounted for”.
“Barnacle is developed with a single well drilled from the Statfjord B platform on the Norwegian side of the median line,” Aanestad added. “The flaring on Statfjord was within Norwegian permits, but, technically, the field was operating outside the UK flaring consent for a period of four months due to the missing logs.”
Spirit Energy has been fined £50,000 for exceeding the maximum allowed production volumes from two fields over three years.
The NSTA criticised the company's mechanisms and management oversight, saying they were not sufficient to prevent the failure to comply with the licence conditions for the Rhyl Field between 2018-20 and the Ceres Field between 2019-20.
"Producing too much oil and gas can reduce the overall long-term production from a reservoir, to the detriment of the UK’s security of supply, so it is vital that when an operator wants to raise production it applies for a new consent so that its new plan can be assessed," the regulator said.
A spokesperson for Spirit Energy said: “After identifying the circumstances which gave rise to this sanction, Spirit reported them to the NSTA and fully co-operated with their investigation.
“Spirit also conducted its own separate internal review.
“Both investigations have now concluded, with Spirit implementing all resulting recommendations with a view to ensuring its future compliance with production consents.”
An EnQuest spokesman said: “EnQuest can confirm it has been sanctioned by the North Sea Transition Authority for a breach of flaring consent that occurred on the group’s Magnus asset in November 2021.
“The NSTA recognised that EnQuest made contact promptly and maintained a constructive dialogue over the course of the incident. EnQuest took immediate steps to shut production down on December 1 2021 until authority to restart by the NSTA was received in writing on December 3 2021.
“The regulator also recognised that the group had fully co-operated with the enquiry and investigation that followed. The company also conducted its own internal review to determine the cause of the failure and to prevent any future failure to comply.
“Notwithstanding the above, EnQuest accepts the NSTA’s sanction and will meet its obligations to pay the financial penalty as required by the regulator.”
NSTA said operators such as EnQuest and Equinor must follow a clear process to apply for consent to flare or vent gas.
In February 2021, an investigation revealed that North Sea oil and gas firms produce annual carbon emissions equivalent to a coal plant through flaring and venting activities. Since then, the NSTA has been encouraging firms to meet the targets agreed upon in the ‘North Sea Transition Deal’ and to lower gas waste.
The regulatory body said progress has been encouraging with overall emissions from North Sea oil and gas production activities down 21.5 per cent between 2018 and 2021.
Last year, flaring on the UK Continental Shelf, the region of waters surrounding the United Kingdom, was at a record low, having been cut by 20 per cent to 25.8 billion cubic feet of gas, a reduction equivalent to the annual gas demand of 130,000 UK homes.
"EnQuest, Equinor and Spirit all cooperated fully with the NSTA’s investigations, conducted their own internal reviews and have taken steps to avoid repeats of these breaches," the NSTA said.
The fines are the result of an investigation the NSTA opened in November into an oil and gas company for flaring and venting in the North Sea without consent.
Last month, the NSTA issued more than 100 new oil and gas drilling licences to “boost” the UK’s energy sector, despite the UN’ warnings that any plans to expand fossil fuel projects over the next decade would be severely out of line with ambitions to cut greenhouse gas emissions and limit temperature rises to 1.5°C.
Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.