Produced Water Trading Scheme

The Dispersed Oil in Produced Water Trading Scheme was intended to come into force in the UK in January 2007.  This creates a scheme under which operators can trade quotas of allowable discharges of dispersed oil in produced water between installations.

The intent is to optimise production through the reallocation of allowances, thus enhancing the ability of some installations to comply with oil discharge legislation.

Under the new trading scheme, each discharging installation will be awarded an allowance, being the total tonnage of oil which it is entitled to discharge into the sea from that installation.  Companies will then be able to trade excess allowances with other installations that face penalties for exceeding their own.  The Department of Business, Enterprise and Regulatory Reform is in the process of establishing a registry of operators’ allowance, allowing the BERR to keep track of trading between installations

Under the new trading scheme, each discharging installation will be awarded an allowance, being the total tonnage of oil which it is entitled to discharge into the sea from that installation.  Companies will then be able to trade excess allowances with other installations that face penalties for exceeding their own.  The Department of Trade & Industry is in the process of establishing a registry of operators’ allowance, allowing the DTI to keep track of trading between installations.

The proposed penalty for exceeding an allowance will be £108,000 per tonne of oil discharged.  In an industry that produces 670million tonnes of produced water a year, 240million tonnes in 2005 from the UKCS alone, one cannot ignore the potential impact of these new regulations and the potential commercial advantages of the trading scheme.

Reducing damage to the marine environment is now seen as an integral part of the oil extraction process.  The UK oil industry will always strive to maintain its well-deserved good reputation for environmental awareness and protection.

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