CHAPTER 22 DECOMMISSIONING OF OIL AND GAS FACILITIES

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment
(Apr 2011)
CHAPTER 22
DECOMMISSIONING OF OIL AND GAS FACILITIES
Timothy T. West (Moderator)
Vinson & Elkins, L.L.P.
Houston, Texas
William W. Pugh
Liskow & Lewis
Houston, Texas
Paul Stockley
Bond Pearce
Bristol
Paulo Valois Pires
Schmidt, Valois, Miranda, Ferreira & Agel
Rio de Janeiro

TIMOTHY T. WEST joined Vinson & Elkins as Counsel in 2010 after serving as Associate General Counsel of a large independent oil and gas company with responsibility for the legal affairs of its international oil and gas business including supervision of its overseas legal offices. Previously, he served in executive positions as President and General Manager of an energy company's upstream businesses in Ecuador, Colombia and Brazil before returning to Houston to assume worldwide responsibility for upstream legal and commercial negotiations as Vice President - International Negotiations. Tim has held positions as Chief Counsel for upstream operations in the Americas for a major oil and gas company, including its business in Alaska and the Gulf of Mexico, and, as Vice President and General Counsel for the worldwide exploration and production business of a large independent oil and gas company. With more than 35 years of inside counsel and executive experience with multinational energy companies, he is well-versed in international and domestic energy transactions, joint ventures, acquisitions and divestitures and project development. He serves as Trustee (at large) of the Rocky Mountain Mineral Law Foundation and as Chair of the Governance and Nominations Committee, Institute for Energy Law, Center for American and International Law. He served as Chair of the Executive Committee, Institute for Energy Law, Center for American and International Law, and as President of the Association of International Petroleum Negotiators. Tim received his undergraduate degree from the University of Virginia in 1965 and received his law degree from Rutgers School of Law - Newark in 1968, where he was a member of the Board of Editors of the Rutgers Law Review. He also holds an M. B. A. degree from Columbia University.

WILLIAM W. PUGH chairs Liskow & Lewis' Houston office. In his practice, he handles a wide variety of maritime and energy-related matters. Mr. Pugh is licensed to practice in Texas and Louisiana, and he has extensive experience analyzing, drafting, and reviewing energy-related contracts and insurance, indemnity and other contract issues. His practice background also includes master service agreements, onshore and offshore drilling contracts, charters, flight service agreements and onshore and offshore construction contracts. Mr. Pugh received a B.A. from the University of Virginia, in 1976, and received his J.D. from Louisiana State University Law School where he served as Editor-in-Chief of the Louisiana Law Review. Mr. Pugh works with companies, both domestically and internationally, to develop comprehensive contracts that maximize the company's risk allocation, including indemnity and insurance protection. Mr. Pugh maintains an active seminar and speaking schedule. He has given numerous presentations on issues related to insurance and risk allocation in the energy industry and speaks before leading professional and legal organizations. He has also helped clients, internationally and domestically, integrate their contracts, both internally and following mergers or assignment of contracts (such as drilling contracts). Mr. Pugh is currently serving as a member of the Council of the Oil, Gas and Energy Resources Law Section of the State Bar of Texas. In addition, Mr. Pugh previously participated in drafting the 2002 AIPN International Model Well Services and Seismic Agreements, and he is currently co-chair of the AIPN Model Contract Committee that is drafting an international drilling contract and reviewing the 2002 Model Well Services and Seismic Agreements.

PAUL STOCKLEY is a partner at Bond Pearce in Bristol and is the joint leader of the firm's oil and gas team. He has worked in the oil and gas industry for 13 years and has in-house as well as private practice experience. Prior to joining Bond Pearce Paul was senior legal counsel for six years with Hess Corporation and has spent time on secondment to Shell. Paul's range of experience covers the full E&P cycle and includes licensing, concessions, production sharing contracts, joint ventures (including joint bidding agreements and joint operating agreements), development contracts, transportation, processing, marketing and sales as well as share/asset acquisitions and disposals. He has extensive experience both within the UKCS and internationally and has worked on projects in many overseas jurisdictions including Algeria, Azerbaijan, Brazil, Gabon, Ghana, Indonesia, Kazakhstan, Malaysia, Mauretania and Thailand. Paul's recent work in the sector includes projects in the UKCS, Algeria and Ghana and, in particular, he has been heavily involved since 2004 advising on the Baku-Tbilisi-Ceyhan Pipeline project in Azerbaijan for BP and providing legal support for the upstream ACG fields in the Caspian Sea for which the BTC pipeline is the primary export route. Paul has also worked on renewable energy projects, including wind farm, biomass and biofuels projects. Paul is a member of the Association of International Petroleum Negotiators and the International Bar Association. He is currently Publications Officer of the Oil and Gas Committee of the IBA.

PAULO VALOIS PIRES' practice involves the representation of clients in O&G, energy, shipbuilding, offshore supply, platform and pipeline finance and construction, M&A, infrastructure domestic and international transactions and tax related matters. He started his career in 1989 as an in-house counsel for Shell in Brazil. Between 1993 and April 2007, he worked at Ulhôa Canto, Rezende e Guerra - Advogados. He was made partner and head of the O&G practice group of the firm in 2001. He studied at the Université Robert Schuman, Strasbourg, FR, (Certificat des Hautes Études Européennes - 1992) and has a Master's Degree in international law from the University of Sao Paulo (1999). He is author of the book The Evolution of the Oil State Monopoly (2000). He was quoted in the 2003 Latin Lawyer energy survey, and nominated as a leading lawyer in Energy and Natural Resources by Chambers and Partners for 2006, 2007, 2008, 2009, 2010 and 2011. He was appointed to the 2007 energy arbitrators' list of the International Centre for Dispute Resolution (ICDR) of the American Arbitration Association (AAA) and ranked in the 2008 and 2010 Guide to the World's Leading Energy and Natural Resource Lawyers by Euromoney. He is also listed in Best Lawyers 2009, and The International Who's Who of Oil & Gas Lawyers, 2009 and 2010.

Co-sponsored by the Rocky Mountain Mineral Law Foundation, the International Bar Association Section on Energy, Environment, Natural Resources and Infrastructure Law and the Latin American Regional Forum

April 5, 2011

Rio de Janeiro, Brazil

Hotel Windsor Barra

Decommissioning of Oil and Gas Facilities/Overview

Agenda

• Overview of Decommissioning

• Survey of Offshore Decommissioning Trends Post-Macondo:

• Paulo Valois Pires - Brazil and Latin America

• William W. Pugh - United States and North America

• Paul Stockley - United Kingdom and Europe

• Closing

Worldwide Offshore Developments

Number of developments 〉 7,500 (15,000+ platforms)

Decommissioning cost 〉 US$75 billion

Platform Size Comparison

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Decommissioning of Oil and Gas Facilities/Overview

What is Decommissioning?

• When production stops, there remains:

• Installations (fixed, floating, subsea)

• Pipelines and cables

• Drill cuttings

• Disposal options:

• Full removal to shore

• Deep water disposal

• Partial removal

• Leave in place

Legal Framework for Decommissioning

• Offshore decommissioning legal framework

• International conventions

• Regional conventions

• National law

• Host government contract

• Joint operating and abandonment agreements

Legal Issues in Decommissioning

• Removal of petroleum facilities

• Disposal of petroleum facilities

• Residual liability

• Who pays?

Removal and Disposal of Petroleum Facilities

• Different types of facilities require decommissioning alternatives:

• Removal - full or partial

• Disposal - sea or land

• Pipelines in situ

• Drill Cuttings

• Removal technology -- explosives or alternate

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