How Efficient Is Your Hybrid?

Transcription

1 How Efficient Is Your Hybrid? Legal and Regulatory Consequences of Deploying Undersea Telecommunications Cables with Additional Energy- or Scientific Research-Related Functions Kent Bressie 13 April 2011

2 Overview Technological advances and commercial imperatives have made undersea cables with a combination of telecommunications transport, energy or power-transmission, and/or scientific research functions increasingly attractive. 2

3 Overview The Benefits of Hybrids Infrastructure supporting multiple uses or crossing industry sector boundaries allows a cable owner to: Take advantage of technological advances with fiber-optics; Recover infrastructure and maintenance costs across a broader user base; Diversify revenue streams; and/or Secure revenue from a dedicated customer. 3

4 Overview and the Risks Nevertheless, in a world where regulatory regimes and treaty protections assume that undersea cables will be dedicated to a particular use or function and afford different rights and protections to those individual activities are hybrid cables really so efficient? 4

5 1. Hybrid Scenarios 5

6 a. Telecommunications cables connecting energy-related facilities These cables provide commercial telecommunications services to or among energyrelated facilities, such as offshore oil and gas platforms. In some cases, they are owned and operated by energy companies; in others, they are owned and operated by telecommunications providers for the benefit of a single customer. 6

7 Telecom Cables Connecting Energy Facilities CAT Telecom-Chevron Source: Chevron Corp. In 2010, CAT Telecom and Chevron Thailand announced a fiber-optic project connecting Chevron s offshore central processing platforms in the Gulf of Thailand to onshore operations centers; this system is due to enter service in 2012 or CAT will build and operate this system for Chevron under a services contract. 7

8 Telecom Cables Connecting Energy Facilities CAT Telecom-Chevron (cont d) The system is designed to improve real-time communications and monitoring. The system will initially link 8 platforms and displace existing terrestrial microwave and satellite facilities. The project is supported by Thailand s Ministry of Communications and Information Technology, which is expected to issue a license for the project. 8

9 Telecom Cables Connecting Energy Facilities BP Gulf In 2006, BP announced that t it had contracted t with Tyco Telecom (now TE SubCom) to build the BP Gulf of Mexico Fiber Optic Project, connecting drilling platforms off the southern coast of the United States. Source: BP plc The FCC licensed the system in 2007; BP s application noted that it might sell capacity on the system to third parties, though it appears that BP has not done so. There was no Team Telecom national security review. 9

10 b. Energy-Related Sensing and Monitoring With these kinds of projects, fiber-optics are deployed to measure temperature, pressure, flow rate, liquid and gas phase fractions, strain, and seismic waves. They often consist of segments inserted into wells, as well as segments connecting the well to a platform or a platform to the shore. 10

11 Energy-Related Sensing & Monitoring Petrobras Jubarte Source: Petrobras In 2010, Petrobras announced that it had signed an agreement with Petro- Geo Services to install a fiber-optic seismic monitoring system in the Jubarte field off the Brazilian coast. Petrobras will use the system to map the flow of fluids in deep-water reservoirs and improve connectivity with Petrobras s onshore geophysics team. 11

12 c. Cables with power transmission and telecommunications transport capabilities Increasingly, undersea cables contain both power- transmission and telecommunications transport capabilities. Usually, the fiber optics are used in connection with the power-transmission-related related functions of the cable or for the energy-company owner s own corporate communications needs. In some cases, telecoms regulators are unaware that power transmission cables are used to provide telecommunications transport services for third parties. 12

13 Dual Power- Telecom Cables Basslink Interconnector Basslink is a 290 km-long dual power-telecoms cable connecting the Australian states of Victoria and Tasmania, with a high-voltage direct current power transmission and unrepeatered fiber-optics. Basslink commenced power transmission services in 2005 and telecom services in Initially, Basslink obtained only state and Commonwealth environmental permits and energy-related licenses. Source: Basslink 13

14 Dual Power- Telecom Cables Basslink Interconnector (cont d) Although installed as dark fiber, the telecoms capabilities were developed later as the business case evolved. Basslink did not obtain a cable permit from the Australian Communications and Media Authority ( ACMA ) (in this case, for location outside a cable protection zone). In 2008, Basslink Telecoms obtained a telecom carrier license and later lit 40 Gbps of capacity using Ericsson DWDM equipment. 14

15 d. Cabled Observatories These scientific research cables provide data and electrical power connections for scientific research instruments located in the deep sea. To date, most of these observatories have not extended beyond the EEZ or continental shelf of a single country. 15

16 Cabled Observatories MARS Observatory MARS includes a 52-km cable connecting to a "science node" on the deep seafloor in Monterey Bay, California. Source: Monterey Bay Aquarium Research Institute Science experiments can be attached to the science node using underwater data/power connectors and extension cords up to four kilometers long. 16

17 e. Commercial Telecommunications Cables with Scientific Sensors An increased focus on climate-change research, recent natural disasters, and the need for more cost effective means of monitoring oceans have generated significant interest in combining undersea telecommunications cables with remote sensing capabilities. 17

18 Telecom Cables with Scientific Sensors Multipurpose Repeater Proposal In a proposal advanced by Yuzhu You, Bruce Howe, and others (with the support of the International Telecommunications Union), commercial undersea cables would be deployed with sensors in repeaters, aiding in climate change research and tsunami warnings. The concept is meant to replace the expensive and inefficient Deep-Ocean Assessment and Reporting of Tsunamis ( DART ) system. 18

19 Telecom Cables with Scientific Sensors Multipurpose p Repeater Proposal (cont d) Repeaters would contain sensors to measure changes in pressure/wave amplitude, temperature, and salinity. Commercial operators would recover their costs by charging for data/access. Source: ITU 19

20 2. Compartmentalized Legal and Regulatory Regimes 20

21 Legal & Regulatory Regimes Compartmentalized Licensing Regimes Many coastal states have regulatory regimes that issue separate licenses for telecommunications, energy, and scientific research facilities, even where environmental reviews are integrated. Some projects fit more clearly into a single category, while others do not. Moreover, telecommunications and energy regulators have bureaucratic incentives to protect their regulatory turf. 21

22 Legal & Regulatory Regimes UK: licensing regime depends on operator s status and location All cable projects require consent from the Department for Environment, Food and Rural Affairs ( Defra ). A telecommunications code operator requires authority from Ofcom pursuant to the Electronic Communications Code. In most cases, Defra s jurisdiction extends only to the edge of the UK territorial sea, pursuant to the Telecommunications Act But if the cable extends beyond the UK territorial sea and passes within 500 meters of an offshore installation, then Defra has jurisdiction over the cable to the edge of the UK continental t shelf. 22

23 Legal & Regulatory Regimes UK (cont d) A non code operator requires authority pursuant to the Coast Protection Act Defra s jurisdiction extends to the edge of the UK continental shelf. Certain activities are subject to licensing under the Food and Environmental Protection ti Act, unless specifically authorized under the Petroleum Act

24 Legal & Regulatory Regimes Regulatory Presumptions Based on Commercial or Non-Commercial Nature Some coastal states also have regulatory regimes that favor research cables while disfavoring or prohibiting commercial telecommunications cables in the same geographic region. The U.S. National Oceanic and Atmospheric Administration provides the best example of this phenomenon, with differential licensing and fees for commercial vs. non-commercial cables transitting national marine sanctuaries. 24

25 Legal & Regulatory Regimes Compartmentalized Treaty Rights and Protections The freedoms accorded to submarine cable installation and maintenance activities by articles 58 (EEZ), 79 (continental shelf) and 87 (high seas) of UNCLOS are absolute. Energy-related facilities, however, are subject to much greater regulation on the continental shelf. And marine scientific research which is not even defined in UNCLOS is subject to significant national regulation. 25

26 Legal & Regulatory Regimes UNCLOS Allows Significant Regulation of Energy-Related Activities in the EEZ A coastal state has sovereign rights for purposes of exploring, exploiting, and conserving natural resources and with regard to other activities for the economic exploitation ti and exploration of the zone, such as the production of energy from the water, currents and winds. (art. 56(1)(a)) A coastal state has the exclusive right to construct and to authorize and regulate the construction, operation and use of artificial islands, energy-related installations and structures described in art. 56, installations with other economic purposes, and installations ti and structures which may interfere with a coastal state s exercise of its rights in the EEZ. (art. 60(1)) 26

27 Legal & Regulatory Regimes UNCLOS Allows Significant Regulation of Energy-Related Activities on the Continental Shelf A coastal state has the right to approve the delineation of the course for the laying of such pipelines on the continental shelf. (art. 79(3)) As with the EEZ, a coastal state has the exclusive right to construct and to authorize and regulate the construction, operation and use of artificial islands, energy-related installations and structures. (art. 80) 27

28 Legal & Regulatory Regimes UNCLOS Allows Significant Regulation of (Ill-Defined) Marine Scientific Research A coastal state has the right to regulate, authorize, and conduct marine scientific research ( MSR ) within its EEZ and on its continental shelf. (art. 246(1)) UNCLOS, of course, does not define MSR. Disagreement among drafters led to muddled compromise. Coastal states have asserted that they have the right to define the scope of MSR. Consent required in normal circumstances for peaceful MSR conducted to increase scientific knowledge. (art. 249(3)) 28

29 Legal & Regulatory Regimes UNCLOS and MSR (cont d) UNCLOS art. 249(5) allows the coastal state to withhold consent in exceptional circumstances, including: Direct significance for the exploration and exploitation of natural resources, whether living or non-living, Drilling into the continental shelf, the use of explosives, or the introduction of harmful substances into the marine environment, and Construction, operation or use of artificial islands, installations and structures referred to in UNCLOS arts. 60 and

30 3. Consequences 30

31 Consequences Regulatory Confusion, Duplication, and Costs As hybrid cables do not fit neatly into existing regulatory regimes, they may be subject to delays as regulators determine how to treat such facilities thereby imposing delays and further expense on operators. Hybrid cables may also be subject to expensive, duplicative licensing and permitting requirements, thereby undermining the efficiency benefits of a hybrid. 31

32 Consequences Jurisdictional Creep Coastal states already make increasingly aggressive jurisdictional claims over undersea cable-related activities in their EEZs and on their continental shelves, ranging from permitting requirements to assessments of customs duties, taxes, and royalty payments to preferences for local vessel owners. Hybrid cables make even more attractive targets where certain characteristics could expose them to particular jurisdictional assertions. 32

33 Consequences Possible Erosion of Protections for Pure Telecommunications Transport Facilities? Undersea telecommunications cables have historically enjoyed a unique status under international law, afforded rights and protections accruing to no other activity on the sea bed. Attempts to exercise these rights and protections for more varied activities could, however, lead to their erosion. 33

34 4. Project-Specific Strategies and Possible Institutional Solutions 34

35 Strategies and Solutions No Easy Solutions Underlying problems with regulatory and treaty regimes. Nevertheless, cable operators should focus on the hybrid scenarios presenting the greatest risks: Telecoms projects touching on the energy industries. Commercial cables with scientific sensors. 35

36 Strategies and Solutions Markets May Address Some Issues Basslink scenario likely to remain rare, given technical and commercial challenges for a dual power transmission-telecoms cable covering a longer distance. The market for scientific sensors on commercial cables remains uncertain, as it is not clear if the sensors or sensing data are commercially viable or if governments or scientific organizations would fund them. For energy-centric projects, energy companies may care a lot less about legal or regulatory consequences, given expansive regulation of energy exploration and exploitation. 36

37 Strategies and Solutions Short Term: Distinguish Telecommunications from Power Transmission, Science, and Sensing So long as existing regulatory and treaty regimes remain in place, cable operators should work within them to distinguish primary cable functions. Many projects have individual components that may require differential treatment or regulation (e.g., oil platform vs. well sensor vs. platform connectivity). Ultimately, cable operators should seek to prevent conflating of regulatory regimes. 37

38 Strategies and Solutions Long-Term: Treaty-Based Solutions? UNCLOS already insufficient in its protection of undersea cables. Given global concerns regarding climate change and preparedness for natural disasters such as earthquakes and tsunamis, the use of scientific sensors on commercial cables is appropriately the subject of an international agreement. Prospects for success highly uncertain, given challenges of any treaty negotiation and unresolved issues with status of MSR. 38

39 Kent Bressie WILTSHIRE & GRANNIS LLP th Street, N.W., Suite 1200 Washington, D.C U.S.A office mobile fax Kent Bressie 39