Oil and Gas Authority (Offshore Petroleum) (Disclosure of Protected Material after Specified Period) Regulations 2018

Baroness Featherstone Excerpts

Thursday 19th July 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, the UK’s offshore oil and gas industry is one of the country’s great industrial successes, but it has faced numerous challenges, including ageing infra- structure and growing international competition. In this context, in 2013 the Government asked Sir Ian Wood to conduct a review of the sector, specifically looking at how the economic recovery of offshore petroleum could be maximised. One of the key recommendations from the Wood review was the need to ensure that industry has timely and transparent access to petroleum-related information and samples. These can include, for example, data about infrastructure or reservoirs, or pieces of strata acquired in the course of drilling a well.

The Government committed to implementing the Wood review and included various powers in the Energy Act 2016 covering information and samples related to the offshore exploration and production of petroleum. These included a requirement for relevant persons within industry to retain certain information and samples for a specified period, as set out in the Oil and Gas Authority (Offshore Petroleum) (Retention of Information and Samples) Regulations 2018. Information and samples plans were also introduced to safeguard information where licence events, such as termination, occur.

The Oil and Gas Authority was given powers to require relevant persons to provide it with petroleum-related information or samples which they hold and which the OGA might need to discharge its regulatory role and to deliver the objective of maximising the economic recovery of offshore petroleum. The regulations we are considering today form the final piece of the picture: once information or samples have been acquired by the OGA, the regulations enable it or a subsequent holder to make such material available after a specified period.

The Energy Act 2016 places a general prohibition on disclosure of protected material, subject to certain exemptions. One of those exemptions permits the OGA or a subsequent holder to make protected material available at such time as may be specified in regulations. The protected material to which these regulations apply includes information about geological surveys, wells drilled, petroleum production and other reports and computerised models of the subsurface or a reservoir. It also includes samples of petroleum, fluids or strata acquired or created when drilling or producing from a well. Other relevant categories include information about installations, infrastructure and pipelines associated with offshore petroleum development.

Following a recommendation of the Delegated Powers Committee, the Energy Act 2016 included a list of factors to which the Secretary of State must have regard when determining the appropriate period after which protected material may be made available under the regulations. In summary, the requirement is to consider: first, whether companies have had sufficient time to satisfy the main purpose for which they created or acquired the information or samples; secondly, the potential chilling effect of requiring disclosure on discouraging future activity; and, finally, the benefit to industry and the economy in making such information and samples more widely available.

Each of these factors has been taken into account when setting the period after which different types of information and samples can be disclosed. The periods vary from immediate disclosure of very basic information which is not deemed to be sensitive, such as the fact that a survey has been carried out of a particular area, to 15 years for raw information from such seismic surveys, reflecting the fact that they are carried out at significant cost for commercial purposes. While care has been taken to ensure that the specified time is set appropriately, there is no absolute requirement to publish the material, and the OGA could consider representations where there are particular justifications for keeping information confidential for a longer period. However, in doing so, the OGA would need to weigh up the impact on delivering the statutory objective of maximising economic recovery of the UK’s offshore petroleum.

These are very technical regulations and the proposals they are based upon were subject to consultation with industry and other interested parties by the Oil and Gas Authority. The OGA has published a consultation response detailing how feedback received had been reflected through making appropriate adjustments to certain proposals; for example, excluding more subjective information from immediate release. The OGA will provide guidance on its application of these regulations before they come into force.

As petroleum licence conditions permit publication of certain information and samples after set periods, the additional impact of disclosure under these regulations is expected to be marginal. As such, a full impact assessment is not required. Other costs on industry will be due to familiarisation with the new regulations.

In conclusion, the Oil and Gas Authority considers that improvements to information retention, reporting and disclosure processes, including through these regulations, are critical to achieving the statutory objective of maximising economic recovery of the UK’s offshore petroleum reserves. The changes are expected to make an important contribution to the OGA’s vision for the industry, which indicates that maximising economic recovery can create £140 billion of additional gross value for the UK. In addition, they could potentially facilitate the reuse of reservoirs and infrastructure for other purposes, including carbon capture, utilisation and storage. I commend the draft regulations to the House.

[Baroness Featherstone (LD)]

My Lords, the legal obligation to retain specified classes of information and samples and specifying when such obligation ends is important, and these regulations will deliver that obligation clearly. What it also indicates, I hope, is that it is important to make the samples and analysis public, as opposed to keeping them hidden. That means that the exemptions such as commercial sensitivity should be very few and should be monitored to check that they are not used inappropriately.

The principal objective for timely and transparent access to petroleum-related information and samples was, as the Minister said, one of the recommendations in the 2014 Wood review. Making access to information a better process—I have a very similar speech to the Minister’s—can only help the industry. It is estimated that a potential £140 million in additional revenue may result from the more timely management of samples and analysis. Is it million?

[Lord Henley]

Billion.

[Baroness Featherstone]

I was not sure; I have written “billion”, but I thought that was an awful lot.

[Lord Henley]

Someone said, “A billion here, a billion there, and pretty soon we will be talking about real money”.

[Baroness Featherstone]

It is an industry that probably works in billions—way above my pay grade. We have no particular comments on the regulations per se. They seem fit for purpose and the consultation responses appear to have been taken note of.