Oil and Gas. This topic paper: Summarises oil and gas activity on the Dorset coast and its interaction with other activities

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1 Towards policy for Dorset s Coast: Oil and Gas Dorset Coast Strategy aims to achieve integrated management of the whole of Dorset s Coast and inshore waters out to the 12-mile limit for the first time. The Strategy s policies are voluntary, and are promoted by the Dorset Coast Forum. The oil and gas industry has been a feature of the Dorset Coast since the 1930s. Oil production has become an established activity in the coastal zone with the development of Wytch Farm: Western Europe s largest onshore field, discovered in 1974, and the smaller Wareham and Kimmeridge fields. Dorset s onshore industry combines commercial success with high standards of environmental management. There is a history of offshore exploration, although some areas are still relatively unexplored. It appears that, other than those deposits already being exploited, no oil reserves have been found so far which are commercially viable. Interest in onshore and offshore exploration remains, but possibly at a reduced level compared to recent years. This topic paper: Summarises oil and gas activity on the Dorset coast and its interaction with other activities Invites comment from the Dorset Coast Forum about future policies. Oil in the rocks Dorset s geological history has created an area with proven oil and gas reserves. Commercial oil deposits result from an unusual combination of geological factors, comprising: a source rock for oil usually shale - where time and heat lead to oil being formed from trapped plant and animal remains; an oil trap: comprising a reservoir of porous rock to hold oil and allow it to flow sufficiently freely to be extracted, an impermeable cap to confine the oil within the reservoir, and a structure which ensures oil accumulates normally a fold or a fault in the rocks. Timing is also critical: the geological history of an area needs to ensure that oil formation, its migration to the trap, and the formation of the trap itself in the correct sequence. This means that oil deposits are scarce resources, requiring a large amount of study, risk and expense to locate. Even in promising areas, the chance of an exploration well making a discovery is typically only 1 in 10. The whole of Dorset including areas offshore has a geological history with the right ingredients to have formed oil deposits. This has resulted in extensive activity to explore the area, the discovery of a number Oil and Gas Page 1

2 Oil and Gas Activity in the Coastal Zone, and who regulates it... Land & Intertidal Wellheads and other infrastructure Pipelines Intertidal at particular risk from spilt oil Seismic surveying Open Sea (UK Waters) ) & UK Continental Shelf Seismic surveying Exploration and production nearshore possible from land using extended reach drilling Use of exploration and production oil rigs possible English Channel Median Line 12 Mile Limit 6 Mile Limit Mean Low Water Mean High Water The Regulators National Department of Trade and Industry Petroleum Exploration and Development Licence required for exploration and production, issued subject to local planning permission. English Nature: statutory role as advisers on conservation constraints. Environment Agency: regulate Discharge Consents to watercourses. Department of Trade and Industry (DTI) issue separate Exploration and Production licenses for offshore activity. Projects likely to have significant effects on the environment require environmental assessment. DTI administer this process and routinely consults with Ministry of Agriculture Fisheries and Food, Department of Environment, Transport and the Regions, and Joint Nature Conservation Committee to determine which projects (other than those where it is already compulsory under the Regulations) require assessment. Health and Safety Executive (HSE) responsible for setting safety standards and inspection, and designating CIMAH (Control of Industrial Major Accident Hazard) sites. Marine Pollution Control Unit (part of Coastguard) approve emergency plans, and provide national backup for major incidents. Region Standing Conference on Oil and Gas set out non-statutory policy view of local authorities regarding exploration in the English Channel County County and Unitary Councils are responsible for Minerals and Waste Local Plan, and for determining applications for oil and gas related development. Also required to produce off-site emergency plans for CIMAH sites. District Consultee on Minerals and Waste Local Plan, and individual applications. Parish Consultee on Minerals and Waste Local Plan, and individual applications. Routine consultee on all proposed activity likely to have significant effects on the environment. County/Unitary Councils may cascade consultation to District and Parish Councils. Oil and Gas Page 2

3 of reserves, and the establishment of three producing onshore fields. Block licensing process Oil and gas activity within Great Britain, its territorial seas and on the UK Continental Shelf is controlled by the Government. The main regulatory mechanism is the issuing of licences by the Department of Trade and Industry, with different systems existing for the sea and for land (including some defined estuarine and nearshore waters termed watery areas ). For licensing purposes the UK Continental Shelf (UKCS) is divided into 1 by 1 quadrants, each of which is divided into 30 blocks - with an average size of around 230 square kilometres. There are currently two types of seaward licence: Exploration licences allow survey work and shallow drilling in any part of the continental shelf not already under a production licence. They may be applied for at any time and are valid for three years, renewable for one further term of three years at the Secretary of State's discretion. Production licences grant the holder exclusive rights to explore for and produce petroleum in one or more particular blocks. They may be applied for only in response to invitations issued by the Secretary of State for Trade and Industry, when specific blocks are offered in a so-called Round of Licensing. Part of this process may involve the company agreeing commitments with the Government to carry out seismic surveying or well drilling. There are 32 licence blocks and part-blocks between the Dorset coast and the limit of the UKCS in the English Channel, 20 of which lie at least partly within the 12 mile limit. Ten of these blocks generally nearer shore are wholly or partly subject to current licences, whilst past licences have been relinquished in a further four blocks. Licence blocks are also defined on land based on 10km squares related to the national grid. Arrangements for licensing on land were revised in 1995, and are now subject to a single licence the Petroleum Exploration and Development Licence, which is broadly similar to the seaward production licence. The first such licence in Dorset PEDL48 was awarded in early 1998 and covers an area north and west of Dorchester. Prior to that a three-licence system operated, and most of Dorset s onshore oil was licensed under this regime. The Kimmeridge oil well pre-dates specific licensing arrangements for oil and gas, and is operated under a Mining Licence. Landward exploration and production licences granted in the 1970s extend over most of Purbeck, and eastwards to Christchurch and the New Forest. These are relatively long-term licences compared to current practice, extending to The EU Environmental Assessment Directive (87/337/EEC) indicates that environmental assessment may be needed for oil and gas production and transmission projects, depending on the nature and scale of the proposal. The directive is applied onshore through the planning regime under legislation which was put in place in 1988 and is currently being reviewed to take account of revisions to the Directive in Environmental assessment was already required for oil proposals in Dorset prior to it becoming a legal requirement and is now considered routine. The Directive was implemented as it applies to offshore oil and gas activity in The offshore regulations require a review of the potential environmental effects of all oil and gas exploration and production proposals, and the formal assessment of those determined likely to have a significant effect on the environment. Any new well of development off the Dorset coast would almost certainly require a full assessment. This would involve the preparation of an environmental statement which would be issued to environmental authorities (including the County and Unitary Authorities), and made available to other interested bodies or individuals on request following publication of notices in the local press. The Minister would be obliged to consider any comments from authorities or representations from the public before deciding whether or not to consent to a project. Although these regulations have only lately come into effect, all recent proposals for exploration offshore the Dorset Coast have been subject to environmental assessment. The statements published as part of this process have been important sources of new information on the marine environment. The relative lack of such information, and of clear evidence regarding the effects of exploration and production activity on the marine environment makes it difficult to assess offshore proposals compared with those on land. We need to understand not only the value of Oil and Gas Page 3

4 the environmental resource, but also the nature of possible impacts, the risk of them happening and the mitigation required to avoid them. The assessment task should become progressively easier as we learn more about Dorset s marine life. In the meantime it would be useful to achieve a greater consensus on the definition of what constitutes an acceptable risk. Exploration & Discovery Natural seepages of oil and gas occur on the Purbeck coast. It is possible to extract oil by distilling of surface oil shales, and there were a number of unsuccessful attempts to establish commercial distillation in Dorset in the late 19 th century. Interest in commercial oil exploration dates from the 1930s and Dorset has been a continuous focus for the industry s interest since then. The key dates for activity are: 1936 First exploration well in Dorset was drilled at Broad Bench near Kimmeridge in 1936 by D Arcy Exploration (later to become BP). This and other wells in Purbeck were initially unsuccessful Dorset s first commercial oil discovered at Kimmeridge. Production started in Wareham Oilfield discovered 1965 BP drill first offshore UK well in Lulworth Banks 1973 Exploration licence for onshore block PL089 awarded to British Gas and BP 1974 Bridport reservoir discovered under Wytch Farm 1976 Dorset County Council grant planning permission for Wytch Farm phase 1 to British Gas, following Government approval in Sherwood Reservoir discovered at Wytch Farm 1984 BP becomes operator of Wytch Farm following divestment of British Gas interest to partnership of new companies Dorset County Council grant approval for major Stage 2 development of Wytch Farm 1987 Approval for Purbeck-Southampton Pipeline given following public inquiry. Construction of pipeline, infield flowlines, pumping stations, gathering station and Furzebrook Rail Terminal continues until Dec Extent of Sherwood Reservoir confirmed following three offshore wells by BP in block 98/ Proposals for construction of offshore island to develop offshore reserves lodged with Parliament Wareham Oilfield brought onstream following Government approval in BP drop offshore island proposals in favour of using Extended Reach Drilling (ERD) techniques ERD commenced at Wytch Farm. Government awards blocks 97/19 & 97/20 to British Gas, 97/14 & 97/15 to Amoco and 97/12 to Kerr McGee. Elf Enterprise Caledonian carry out exploratory drilling in block 98/12. New wellsite M approved at Wytch Farm Amoco application for exploration wellsite at West Chaldon approved Amoco drill well into nearshore Arkell prospect from West Chaldon, discovering only water. Absence of hydrocarbons confirmed by side-tracked well into potential reservoir Planning permission at East Chaldon extended until November to allow evaluation of the potential to reach a second prospect named Owen and located further offshore. BP have currently drilled 15 ERD wells, 11 from new wellsite M. Dorset s Oil Industry Today The known results of oil exploration to date have been the discovery of three commercially viable deposits of very different scales: Wytch Farm, Wareham and Kimmeridge, all of which have been developed. The three sites are all different in character: Kimmeridge remains a small-scale operation, and continues to produce oil steadily at 100 barrels per day, well beyond its expected life. It is the Oil and Gas Page 4

5 longest established of the oil fields in Dorset and the single nodding-donkey has become an established part of the Kimmeridge landscape. Wareham is slightly larger, but still a small oilfield, producing between 2,000 and 3,000 barrels per day, from 2 wellsites located to the west of Wareham. It is connected to the Wytch Farm gathering station by pipeline. Wytch Farm, in contrast, is Western Europe s largest onshore oilfield and the sixth largest oilfield in the U.K. Its original daily design capacity was for 65,000 barrels of oil, 10,000,000 cubic feet of gas and 400 tonnes of propane and butane. The site has since been substantially modified and in recent years has handled in excess of 100,000 barrels per day. (1 barrel = 159 litres = 35 gallons) The economic benefits of oil exploration in Dorset are seen at a national level. Locally, the industry is not labour-intensive, but provides an appreciable number of jobs (BP estimate that Wytch Farm employs 230 people when in steady production, and more during drilling work). BP make efforts to place contracts with local companies where possible, and estimate the local expenditure of the field between is 250 million, with spending in 1997 of 6 million. Planning for Production Activity of this scale has been achieved within an area of the highest environmental and landscape sensitivity. Field development has involved large-scale investment in an infrastructure of wellsites, pipelines, gathering station and the Furzebrook rail terminal. Environmental constraints have had to be fully recognised and integrated into development plans. Potential impacts have been minimised by locating development to avoid the most sensitive areas and adopting best practice standards in site design and management. This has included very careful attention to the location of development, and site size and design, and the avoidance of potential pollution. Controls on visual impact include colour treatment of buildings and structures, using recessive green and brown paint, and control on building materials used. Existing and planted vegetation has been used to screen sites, and a planting programme of 100,000 indigenous trees and shrubs has been completed. Sites have been lowered into the ground to reduce their visual impact, and all are completely sealed so that surface pollution cannot escape. A condition of planning permission is the restoration of sites as they are finished, and a restoration plan for the entire oilfield has been agreed. This normally requires reinstatement of the land use and condition that the site was in when developed. Environmental improvements, including restoration to heathland are sought where possible. Dorset County Council, as the minerals planning authority for the main areas of interest to the industry, has had the lead regulatory role with regard to the planning of development. The policies for oil and gas development on land are set out in the Minerals and Waste Local Plan. The Purbeck-Southampton Pipeline was subject to direct consent by the Department of Trade and Industry. Oil and gas production is potentially hazardous, and wellsites and other facilities are designed to include sophisticated automatic systems to prevent escape of oil, backed up with manual systems at the field s 24- hour control room. There is a well-established oil-spill contingency plan for the field, with 24-hour call-out for key staff, and a 1 million base for response equipment in Poole. (Emergency response in the event of an oil spill is discussed in the Pollution and Environmental Quality paper). There is an ongoing programme of staff training in health, safety and environment and in emergency response, with regular review procedures. The principal sites in the field are designated as CIMAH (Control of Industrial Major Accident Hazard) sites to be replaced by COMAH (Control of Major Accident Hazard) from February BP (the operating company) and the Health and Safety Executive are required to prepare an onsite threat assessment, whilst the County Council is required to prepare and maintain an off-site emergency plan. COMAH regulations will cover a broader range of sites, and tighten up a number of standards, including the requirements to exercise plans. BP and its partners have undertaken an extensive programme of consultation and environmental assessment as part of the ongoing work of field development. Effective working relationships and community links, and a high level of trust have become well established over time. Wytch Farm has attracted the recognition of 8 major planning and environmental awards and BP have recently succeeded Oil and Gas Page 5

6 in gaining accreditation for their Environmental Management System under the international ISO and EMAS standards. The high quality of the environment and the high standards demanded place additional costs on oil exploration and production. To date the companies have been able and prepared to rise to this challenge, and experience to date demonstrates that the impacts and risks associated with oil development can be successfully managed in a highly sensitive area. The requirement to minimise environmental impacts of the industry have been a driver in the development of new technology at Wytch Farm, and have been a particularly important factor in the decision to adopt Extended Reach Drilling from land as the favoured method for future production. As well as being the option with the least environmental impacts, the situation has enabled BP to prove abilities in the use of this new technique. This has given Wytch Farm a world-leading reputation within the industry, and opened up the possibilities of using it to target other reserves in sensitive locations. Standing Conference on Oil and Gas In the absence of local planning controls offshore, the Standing Conference on Oil and Gas Development in the English Channel (SCOG) was formed in 1979 in order to co-ordinate the views of local authorities. It covers the whole of the South Coast from Devon to West Sussex, and is recognised by the Government as the point of contact for local authority views on oil licensing, exploration and production. In 1993, SCOG published its Policy Towards Offshore Exploration And Production, updating previous policies. In abbreviated form, its nine policies are that the Standing Conference will: 1. Normally support the exploration for offshore oil and gas reserves, subject to proper environmental safeguards; 2. Wish to be consulted on all proposals for exploration, appraisal and production licences 3. Expect all licence proposals to be accompanied by a full environmental statement; 4. Wish to be given advanced notice of any offshore seismic work; 5. Normally object to any drilling activity within one mile of the coast; 6. Normally object to exploration drilling between one and three miles of the coast, unless minimum criteria have been set to safeguard environmental, shipping, commercial, tourism and recreational interests; 7. Normally object to appraisal drilling within three miles of the coast unless locational need can be demonstrated, and policy 6 can be met; 8. Require any development proposals to be supported by a full environmental statement; 9. Normally object to development proposals within three miles of the coast involving major structures. Future Prospects As the Wytch Farm oilfield matures, BP have a number of options to ensure maximum recovery of oil. These include: Multilateral or infill drilling where the drill enters an existing well and then sidetracks to drill a new hole in a different area of the reservoir. Since 1997, Wytch Farm has successfully completed 4 such wells, and further plans are in hand. A 3D (three-dimensional) seismic survey is planned to take place in Poole Harbour during autumn The acquisition of this data could be crucial in deciding the trajectories for any future sidetracks. Continuation of Extended Reach Drilling (ERD) into the offshore sections of the Sherwood Reservoir. Wytch Farm holds the current world record for the longest well trajectory with a step out of 10.1 kilometres under Poole Bay. Plans are currently in place to drill a further 3 ERD wells from M-site which will see this type of drilling continue into the year A Miscible Gas Injection scheme (MGI), has recently been commissioned which involves reinjection of some of the produced gas back into the reservoir. This serves two purposes. As well as helping to maintain reservoir pressures, the additional gas in the reservoir will also help to free more oil and increase recovery. This project currently targets the onshore parts of the reservoir, but if it proves successful the scheme could be extended to the offshore section in the future. Most of onshore Dorset has been explored to some extent, but there remain known geological structures which have not yet been fully examined and might contain hydrocarbons. Interest in the area remains, as Oil and Gas Page 6

7 shown by the interest in acquiring onshore blocks during the most recent round of licensing. The picture offshore is less certain. In the last 20 years, 19 exploration wells have been drilled in a total of 9 blocks offshore the Dorset Coast. The focus for the most recent exploration is on areas to the south of Wytch Farm. Compared to the North Sea, offshore Dorset has been well explored - although the intensity varies from block to block and some areas have not been looked at in detail. The only known significant discoveries of hydrocarbons (other that those being exploited) were made in the late 1980s by British Gas in Poole Bay, southeast of Wytch Farm (block 98/11). Four wells discovered small quantities of oil and gas, which are thought to be non-commercial, and the licence for this block has recently been relinquished. There is a continued pattern of interest from the industry in oil exploration off the Dorset Coast. In addition to BP s planned seismic work in Poole Harbour, Amoco continue to investigate the feasibility of drilling a second exploration prospect from West Chaldon, and ELF have recently announced the intention to drill a second offshore well in Block 98/12 during the first quarter of The likely future interest in exploration and production is highly dependant on the price of oil, which has recently fallen to an all-time low in real terms. Whilst established fields remain economically attractive to the oil industry, investment in new developments is relatively unattractive. For the foreseeable future, the best guess is that the current position within the industry in Dorset will remain fairly stable, but that interest in offshore and onshore exploration will continue. Integrating Oil and Gas within Dorset s Coastal Zone Oil and Gas activity needs to continue to be integrated with the other uses and activities within the Coastal Zone. Its main interactions are as follows: Archaeology Offshore drilling, seismic and rig activity has the potential to impact on underwater archaeology. Marine surveys carried out by the oil industry are a potentially valuable source of information on archaeological resources. Coastal Defence Limited interactions. Educational Use Educational visits are hosted regularly at Wytch Farm and a dedicated education staff is based on site. Oil exploration and production creates information resources which are of interest for geological interpretation. Interpretation boards at Kimmeridge explain the history of the oil field. The Bridport Sands, one of the Wytch Farm reservoir rocks are exposed at West Bay, and this and other sites on the coast are well used by the industry for training. Fishing Some disruption to fishing activity is a likely impact of offshore oil exploration and production. Seismic activity is a potential cause for concern to fisheries interests, particularly within nursery or shellfish areas. Geology & Geomorphology The oil industry is a major source of information about the geology of Dorset, particularly away from the main cliff exposures. Oil and Gas Page 7 Landscape & Seascape Landscaping has been a major commitment within the onshore fields in Dorset, and they are now very well screened. There have been noticeable impacts on the landscape, most obviously through the need to improve the road and rail infrastructure into Purbeck to accommodate construction traffic. The main significant visual impacts of activity are from drilling rigs. Oil production requires continued use of 31 metre workover rigs to maintain existing wells, while directional drilling requires a 60 metre drilling rig 10 metres higher than that needed for vertical wells.

8 Offshore oil rigs are highly visible, although to date they have not been used off Dorset other than for short-term activity. Marine Aggregates Both Oil and Gas and Marine Aggregates require use of the seabed, and there is some potential for conflict for space. This is not likely to be an issue in the Dorset coastal zone due to the lack of aggregate resources. Maritime Industries The oil industry is a customer for marine service and technology industries. Military Activity Military activity is a minor constraint on offshore oil and gas exploration, with potential conflicts readily resolved through dialogue. There are no significant interactions with onshore activity. Wildlife Development related to oil exploration and production has the potential to damage and disturb wildlife on land and/or the seabed. Oil spillage has the potential to cause more widespread effects if uncontrolled. All these aspects therefore require close attention at all stages of the planning and management of activity. The development of the facilities at Wytch Farm has taken place adjacent to internationally important heathland and wetland, and mitigation has involved recreating heathland habitats. Offshore oil exploration has made a substantial contribution to the state of knowledge about the marine environment, via the work undertaken towards environmental statements. Disturbance to cetaceans by seismic activity is a concern and a code of practice was agreed locally when activity was last carried out off Durlston. Pollution & Environmental Quality Oil and gas activity represents a major pollution hazard, requiring control of emissions and an effective safety management system and emergency response (see main text above, and Pollution and Environmental Quality topic paper). Ports & Shipping Dorset s ports have provided a base for past oil exploration activity, and remain available to provide similar services in the future if required. Portland Port has provided lay-up facilities for an oil rig. Shipping needs to be considered when planning seismic surveys. Recreation Generally limited interactions, although a major consideration in planning seismic surveys, due to both possible conflicts over water space, and precautionary approach to avoiding possible hazards to divers and other watersports. Tourism Limited interactions at present. Offshore activity can be a source of concern to tourism interests. Oil and Gas Page 8

9 Policy Directions for Oil and Gas on the Dorset Coast The following policy questions are posed for comment: 1. How should the Dorset Coast Strategy support the existing local decision-taking process for onshore oil and gas? The long history of onshore exploration and production in Dorset means that many of the necessary mechanisms to ensure effective and planning and management are now well understood. Good relationships exist between the established oil producers and other interests. The Minerals and Waste Local Plan provides a local policy framework and basis to reach decisions on a case by case basis. Conflicts over new development proposals remain possible, but may be minimised by well-prepared and thorough consultation proposals, backed by rigorous environmental assessment. Minerals Planning Authorities have the lead role to manage this process effectively. 2. How should the Dorset Coast Forum participate in any proposals for future exploration or production? The main foreseeable planning conflict is the possibility of a new commercial discovery being made, which would require either a new onshore or offshore development. It should be noted that no such circumstances currently exist, nor are foreseen at present. The minerals and waste local plan provides the mechanism to deal with such proposals on land. The Department of Trade and Industry would regulate offshore proposals, and any likely to have a significant effect on the environment would be subject to local consultation. SCOG provide an established local lead and policy framework for offshore activity. It is suggested the Strategy should support this continued role, with environmental protection and safeguards ensured through local discussion co-ordinated by Local Authorities, and using the Dorset Coast Forum to achieve wider dialogue. Is there any dissent from this view, and are the current local contacts adequate? the key information which would enable greater certainty is still held by oil companies who regard it as confidential for commercial reasons. Are there any realistic mechanisms to encourage greater openness within the industry? 3. How can better use be made of the marine environmental information held by oil companies? Oil companies are an important source of primary information about Dorset s marine environment, through the work they have carried out towards environmental assessments. They are generally very open about making this information available, and there is a need to ensure that it is then well managed and disseminated. Should there be a routine arrangement for lodging and archiving environmental studies related to oil activity? How can the information within the environmental assessments be better managed, and where can resources be found to do this? How can the baseline information to support future environmental assessments be most costeffectively improved? Is there scope for oil companies, fisheries and environmental interests to work together on this? Are there still untapped sources of information, such as studies by companies who did not succeed in bidding rounds for blocks, that could be made locally available? What role could oil companies take in helping develop geological conservation, education and sustainable tourism projects through the Jurassic Coast Project and possible World Heritage Site status for the coast? Oil and gas activity is a significant strategic issue on the coast, but the future is largely uncertain. Much of Oil and Gas Page 9