Discharges

Reductions achieved

In the 2000 baseline year for Recommendation 2001/1 there were 117 installations on the UKCS permitted to discharge oil in produced water.  These installations discharged 5749.4 tonnes of oil, as measured by the OSPAR solvent extraction/infra red detection method for dispersed oil. The 15% reduction proposed by the recommendation therefore required a target discharge of 4887 tonnes.

By the end of 2006 the discharges on the UKCS had been reduced to 4336 tonnes, measured by the same solvent extraction/infra red detection method - a reduction of 24%.

94 installations were achieving the 40mg/l concentration standard in effect during 2000.  At the end of 2006, 78 out of a total of 98 installations were meeting the 30mg/l standard. 12 of the installations not in compliance were low volume discharges from condensate installations. The industry average for the UKCS was 19.59 mg/l.

Technology selection and justification 

Financial and energy costs

The cost of abatement varies significantly with the technique employed, ranging from £50,000 for minor plant improvements to £15 million for drilling a dedicated disposal well.

The exact costs of abatement are commercially confidential, however, the projects undertaken to mitigate the discharge of 1413 tonnes of oil have cost approximately £350 million and a further £50 -100 million investment is planned over the next two years.

For the UKCS as a whole the cost averages out at approximately £250,000 per tonne of oil abated.

Energy costs of significance are only applicable to produced water re-injection.  Direct costs relate to the increase in fuel gas used for power generation to drive the injection pumps, which would otherwise have been available for export. There is also a cost to the environment resulting from increased emissions of CO² arising from power generation.  The direct and environmental costs depend on the type of injection technique employed.

Where the re-injected produced water is used to replace seawater for pressure maintenance, through an existing well, each tonne of oil abated requires the use of approximately 70,000 sm³ of fuel gas and releases 203 tonnes of CO².

In the worst case, where a new disposal well is drilled and requires sufficient pump pressure to achieve fracture of the sub strata, each tonne of oil abated requires the use of approximately 279,000 sm³ of fuel gas and releases 812 tonnes of CO².

Regulatory approach and management of implementation

Following the adoption of Recommendation 2001/1, DTI (now BERR) required operators to provide them with produced water management plans and reported to OIC 2002 that the goal would be challenging but the UK would expect to achieve the required reduction, possibly utilising a trading scheme. However, based on forecasts of future discharges, it appeared that the aggregated plans of individual operators would not meet the target and industry was invited to propose a co-ordinated approach.

The core concepts in developing an industry approach were to avoid over achievement in reduction using cost effective mitigation measures.  Initially, attempts were made to establish a cost sharing scheme, whereby operators would voluntarily engage in bi or multilateral non profit projects.  Despite considerable effort to enable this scheme, difficulties with Joint Venture agreements and the non profit concept, proved insurmountable.  With concerns about the potential for complexity, discussions were opened with DTI in May 2003 around the development of a formal trading scheme.

After 2 years of collaborative effort, the Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005 came into force, requiring all discharges of hydrocarbon to be subject to a permit and enabling a cap and trade trading scheme for oil in produced water, with civil financial penalties for non compliance.

In essence, under the Dispersed Oil in Produced Water Trading Scheme, each installation is allocated an allowance of oil in produced water which is set to achieve the desired reduction.  Installations which cannot physically or economically operate within the allowance may purchase excess allowance from those installations that can.  Failure to surrender sufficient allowances at year end will attract a financial penalty. An electronic register has been established to enable the regulator to monitor the status of allowances.  Participation in the scheme is mandatory for permitted installations but there is no compulsion to trade.

The scheme provides allocations for new entrants, with appropriate justification for departure from zero discharge and requires independent verification of annual data returns.  The financial penalty for discharging more oil than is covered by allowances has been set at £108,000 per tonne of oil and was based on industry estimates of cost of abatement. This is a civil, rather than a criminal penalty and has been set at this level to stimulate investment in abatement techniques.

Although the enabling legislation was in place from 2005, implementation of the scheme involved detailed negotiation and the final allocation plan could not go to the EU Commission for State Aid approval until July 2006.  This delay in introduction of the scheme resulted in a lack of confidence within industry that trading would offer an alternative to abatement, causing operators to act independently.  This, together with the risk of financial penalty / legal non compliance, forced operators towards abatement projects and the resultant over achievement and substantial expenditure incurred on the UKCS.

BERR have committed to maintaining the 15% reduction level and hence the trading scheme and current allocation plan will remain in place for 2007and 2008. Discussions have begun to determine the nature of produced water management from 2009 onwards.

Environmental Benefits

As part of the industry sustainability strategy UKOOA (now Oil & Gas UK) commissioned a study on the management of produced water from the Policy Studies Institute.  The study, which applied the technique of flow analysis to make a comparative assessment of abatement technologies, was authored by Professor Paul Ekins, a member of the UK Royal Commission on Environmental Pollution.  The report, published in 2005, draws the following conclusions:

“Overall, the scientific literature does not demonstrate that any harm is being caused by discharges of produced water in the North Sea. Furthermore, the best available assessments of risk are able to exclude significant risks of reproductive effects at the population level, with the possible exception of fish in the close vicinity of the discharges.

It is not currently technologically feasible to remove completely hazardous substances from produced water, and the environmental and economic implications of reducing discharges to zero (for example through complete PWRI) might outweigh the benefits. The environmental implications of complying with the OSPAR 15% reduction in OIW by 2006 may be either the capturing and onshore disposal of around 4 kt of low-level radioactive waste (if filtration is required) or the generation from PWRI of up to 1.5 MtCO², which are not inconsiderable increases in emissions that, in other contexts, public policy is seeking to reduce.

There has been no harm demonstrated by the various field studies, carried out at current discharge concentrations, which have been reviewed in this study. It is in this context that the 30mg/l limit for dispersed oil in produced water as recommended by OSPAR would seem to represent a sensible precautionary way of keeping concentrations at levels in the middle of the range reviewed by these field studies, which have shown no harmful effects.

Whether it is worth tightening this discharge limit further will depend on the evidence of harm or risk of harm that may come from future studies.

At present the scientific evidence of risk from components of produced water would hardly seem to justify the economic and environmental cost of reducing discharges to zero, but such an approach could become justified in the event of any new information emerging, such as that relating to endocrine disruptive impacts. It would seem important that continuing scientific investigation seeks to reduce the uncertainties in this area”.

Lessons Learned

During the development of Recommendation 2001/1 the UK industry suggested that a goal setting rather than prescriptive approach, based on the principles of BAT, would be appropriate. Regulatory goals determined through an assessment of overall risk would lead to an improvement in environmental performance consistent with the principles of sustainable development.  On a national basis this would have enabled effective targeting of resources to manage the overall risks.

It is now clear that a more holistic, risk based approach, as exemplified in part by the Norwegian system, would benefit both the environment and the commercial interests of the industry.  Such an approach would have provided the additional benefit of a more harmonized approach to the management of produced water across the North Sea.

Regardless of the regulatory scheme, where a target is set at a national level, there is a need to ensure that individual companies are not disadvantaged in meeting the target.  Emissions trading is a valid mechanism to achieve this but the UK experience has shown that the development and implementation of a trading scheme is complex and time consuming, particularly when European Commission approval is required.  The fundamental lesson learned is that a scheme, its rules and delivery mechanism must be established well in advance of the need to take commercial decisions, to give confidence in the scheme and to avoid an over-liquid or fixed market.

Compliance with 2001/1 on the UKCS has also shown that the ability for individual installations to readily install abatement technology varies greatly.  Long lead times for equipment delivery, commissioning difficulties, prioritization of resources etc can significantly impact project timescales.  These difficulties are exacerbated by the need to meet prescriptive, load based, reduction targets within a given timeframe.  A risk based regime, possibly combined with a discharge concentration limit, would mitigate these problems.

The change in analytical reference method whilst complying with a reduction target has fundamentally affected the trading scheme in the UK. The discharge allowances for use in the trading scheme were agreed using the IR method and changes to these may have financial consequences if the scheme is taken forward in its current form.  This is a lesson that must be learned for the future and as with the other lessons would be more easily accommodated within a risk based regime. 

Studies

The Policy Studies Institute, PSI, has undertaken a study of the management of produced water using flow analysis methodology.  This draws several conclusions, which are summarised below:

Overall, evidence does not demonstrate that any harm is being caused by discharges of produced water in the North Sea.  However, there is sufficient uncertainty associated with the risks from some components of produced water to warrant further investigation

Evidence suggests that the main risk factor from produced water is the concentration rather than the total discharge volume

As there has been no harm demonstrated by field studies, the 30mg/l limit would seem to represent a sensible precautionary approach

Whilst the 15% reduction will reduce the quantity of hazardous substances discharged, this is arbitrary with no evidence that it would achieve a meaningful reduction in environmental risk but would impose its own environmental burden and cost

It is not currently technically feasible to remove completely hazardous substances from produced water and the burden of reducing discharges to zero (by re-injection) might outweigh the benefits i.e. injection of each tonne of oil will release 200-800 tonnes CO₂

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