Well Test - Extended

• Petroleum Licensing (Exploration and Production) (Seaward and Landward Areas) Regulations 2004
• Petroleum Licensing (Production) (Seaward Areas) Regulations 2008

The powers of the Secretary of State in relation to the development of and production from oil and gas fields were first set out in model clauses scheduled to the Petroleum and Submarine Pipelines Act 1975 (now superseded by the Petroleum Act 1998). Similar clauses are incorporated into every production licence. The Petroleum Licensing (Exploration and Production) (Seaward and Landward Areas) Regulations 2004 includes the full text of the four major sets of Model Clauses still in use. These Model Clauses regulate consents for extended well test production. Licences issued post 6 April 2008 will have Model Clauses as set out in the schedule to the 2008 Regulations.

• Offshore Petroleum Production and Pipelines (Assessment of Environmental Effects) Regulations 1999
• Offshore Production and Pipelines (Assessment of Environmental Effects) (Amendment) Regulations 2007

A formal EIA may be required if the oil and gas flared during the duration of the test is considered to be "significant" (see Performance Standards). The 2007 Amendment Regulations implement the requirements of the Public Participation Directive.

• EC Directive 2001/81/EC on National Emission Ceilings for Certain Atmospheric Pollutants
• National Emission Ceilings Regulations 2002

These Regulations set national ceilings and a requirement for the development of a reduction programme for sulphur dioxide, nitrogen oxides and volatile organic compounds in the UK. These Regulations apply to emissions from land, territorial sea and the UKCS.

At present, the UK government believes that it can meet targets through existing targets onshore. However, this does not preclude future targets for offshore operations. The UK Government is in the process of preparing a national programme for reduction of these emissions.

• DECC Flare Trading Scheme

A joint DECC/industry initiative under the PILOT scheme introduced a voluntary flare trading scheme from 1 January 2001. This allows companies to trade with others on the UKCS avoiding a return to DECC for increased consent. DECC administers the trades and the membership has available a set of rules (Flare Trading Rulebook - available from DECC). Currently the flare volume trade does not involve any exchange of money.

• EU Emissions Trading Scheme (EU Directive 2003/87/EC and the Greenhouse Gas Emissions Trading Scheme Regulations 2005)
• The Greenhouse Gas Emissions Trading Scheme Regulations 2005

• The Greenhouse Gas Emissions Trading Scheme (Amendment) Regulations 2007
• The Greenhouse Gas Emissions Trading Scheme (Miscellaneous Provisions) Regulations 2007
• UK Phase 2 National Allocation Plan 2008-2012

The Greenhouse Gas Emissions Trading Scheme 2005 (the 2005 Regulations) as amended provide a framework for a greenhouse gas emissions trading scheme and implement Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading. Flaring from installations covered by the EU ETS is included in this scheme from 2008 onwards (see Pending Legislation).

Any well test with a total flow duration of >96 hours or which produces a total of more than 2,000 tonnes of oil is classed by DECC as an Extended Well Test. This requires Consent for Test Production.

Consent for Test Production must be obtained in accordance with the requirement of the Model Clauses of the relevant Petroleum Production Licence (as consolidated by the Petroleum Act 1998).

There may be a requirement for an Environmental Assessment (EA) under the Offshore Petroleum Production and Pipelines (Assessment of Environmental Effects) Regulations 1999 (see Performance Standards).

Any chemical use proposed will require a Chemical Permit under the Offshore Chemicals Regulations 2002 (see Drilling Chemicals or Production Chemicals).

Note: A permit/exemption is no longer required for potential oil fall-out from flaring under the OPPC Regulations. However, any oil fall-out must still be reported as an oil spill via the PON1 (see Oil Spill Reporting).

Application for Consent for Test Production by letter to DECC.

Letter should set out the timetable and objectives of the test and quantities of oil and gas to produced, saved or flared.

DECC Oil and Gas Office Contacts for Extended Well Test Consents are as follows:

Northern and Central North Sea

Southern North Sea and Onshore

Ivor Newman
Tel: 020 7215 5163

Email: ivor.newman@berr.gsi.gov.uk

The primary objective of an Extended Well Test is to obtain essential field information and DECC recognises that this may necessitate the flaring of substantial quantities of gas and possibly oil. The test should be designed so that oil and gas flaring is kept the minimum that is technically and economically justified.

• Give careful consideration to the need for well test flaring.
• Use efficient burners if flaring required.
• Monitor discharge at all times.
• Operation to cease if any visible oil seen on sea surface.

There are no strict criteria governing the maximum volume to be produced or the duration of an Extended Well Test and the duration may be extended if there is a technical justification. However, it should be noted that Extended Well Tests are not an alternative to production under an approved Field Development Programme.

Continuously monitor the production rates, water cut, downhole pressures and GOR histories.

There are two types of reporting required for flaring. The first is statutory reporting to DECC (which for the purposes of this procedure details the requirements of the Consent for Test Production i.e. reporting flare volumes and associated details). The second is voluntary reporting of environmental emissions due to flaring.

Statutory information: Reporting to DECC every Monday during the period of the consent, the Operator shall fax the following information relating to the previous week:

• Short technical summary of performance of gas handling plant, highlighting any features which have affected or could affect the operation of the plant.
• Daily rates in respect to oil production, gas production, gas export, gas used for fuel and gas flared.
• Cumulative average production for production and flare.
• Weekly calculations of gas compression plant efficiency.

Some consents may include the provision that specific monthly flare reporting is not needed and that flare volumes are reported in the routine field reporting into DECC Petroleum Production Reporting system. In this case, specific flare reporting would be by exception only if flaring is out of consent.

Upon completion of the test, the operator must inform the Department of the results of the test and of their intentions for the future production status of the well.

Voluntary information: complete relevant parts of applicable atmospheric emissions inventory EEMS pro forma, that can be found at the EEMS website.

Statutory information: DECC's Petroleum Production Reporting according to terms of consent.

Voluntary information: Completed forms should be submitted electronically to the EEMS website where they can also be viewed, amended and updated.

Statutory information: Schedule of reporting will be established through consent. It varies widely according to stage of field production and between fields and operators.

Voluntary information: annually before 1st March.

A permit is no longer required for potential flare drop-out. However, if flare drop out does occur, a PON1 report must be submitted.

The UK has now submitted its final National Allocation Plan for Phase II of the EU ETS to the Commission and had the plan accepted.  A final list of installation level allocations is available on the Defra website.

As a result of consultation carried out in 2005, the following decisions have been made for the expansion of the scheme for Phase II:

• There will be free EU ETS allowances available for new entrants into the Phase II scheme although the level of allocation has not yet been decided.
• Allowances will be distributed in two stages.  First to sectors in the form of a ‘sector cap’ and then to individual installations.  Individual allowances will be set according to historical emissions data.

There has also been changes to the allocation methodology applied in Phase I:

• The commissioning rule has been changed for a ‘first year of operation’ rule which applies to all sectors and will allow data from start up to be omitted. 
• The rules will apply to all installations who had rules applied in Phase I (except for commissioning) and all other installations will be invited to apply for application of the rules before finalization of the draft NAP.