BP fined by regulator in UK over licence breach

The Oil and Gas Authority (OGA) has fined BP £50,000 (about $68,955) and served it with a sanction notice for breaching a licence condition by failing to report the progress and results of two extended well tests.

Having previously consented to the drilling of two development wells, the OGA granted further consent to conduct extended well tests (EWT) on two wells in August 2019. Those consents included the need for the licensee to provide regular reports during EWT operations (the reporting requirements), the OGA said on Monday.

BP was also required to submit a full report of the results and conclusions within 90 days of completion of the EWT operations.

However, in November 2020, following an OGA enquiry, BP admitted that it had failed to report as required. According to the OGA, the company’s own investigation found that internal communications had broken down, there was no guidance in place for managing OGA consents, and there was a lack of awareness among engineers of consent requirements.

This lack of information unintentionally created an unregulated environment in which the OGA was unsighted of BP’s actions. This, in turn, could have exposed BP to a potential flare breach, of which the OGA would not have been aware and would have been unable to take prompt regulatory action. However, in this case, there was no flare breach.

The reporting requirements, if followed, would have allowed the OGA to track that the EWT proceeded in line with the plan submitted by BP; and helped ensure the clean-up criteria being used did not result in excessive flaring.

This investigation and sanction follow the publication of the OGA’s Thematic Review into Industry Compliance with Regulatory Obligations in October 2020.

The OGA’s Thematic Review recognised that industry is improving, following earlier interventions, but stressed the importance of maintaining the high standards now achieved by the majority, and the need for a minority to catch up. In particular, the review noted that there remains room for improvement around managing production, flare and vent consents and the timeliness of licence extension requests.

Jane de Lozey, OGA Acting Director of Regulation, said: “We are committed to maintaining a strong regulatory regime to uphold standards and ensure a level playing field for licensees and operators in the UKCS.

“On this occasion, BP has fallen short of our expectations but, since becoming aware of the breach, BP has engaged positively with the OGA to investigate the cause of the failure and reaffirmed its commitment to compliance with its regulatory obligations in future”.

Partners BP and Ithaca Energy started production from the Vorlich development, located in the UK North Sea, in November 2020. The project was developed as a Central North Sea subsea tieback. Vorlich hydrocarbons are processed through Ithaca’s FPF-1 floating production facility, located around 240 kilometres east of Aberdeen.