Explanatory Notes

Energy Act 2008

2008 CHAPTER 32

26 November 2008

Part 3: Decommissioning of Energy Installations

Chapter 4: Wells.
Summary and Background

355.This Chapter inserts new provisions into Part 5 of the Petroleum Act 1998 (c. 17) (the “1998 Act”) for the purpose of securing the proper abandonment of wells. In particular, there is a power to require the provision of financial information and to issue a notice, after consulting the Treasury, requiring the person who receives it to take action within a stated period. This power may be used to ensure that where the Secretary of State is not satisfied that a person will be capable of plugging and abandoning a well there is, nevertheless, financial security in place for this purpose.

Commentary on Sections
Section 75: Information about decommissioning of wells

356.This section inserts a new section 45A at the beginning of Part 5 of the 1998 Act.

New section 45A: Abandoned wells

357.Section 45A gives the Secretary of State a power to require a person who has drilled or started drilling a well to provide information about that person’s financial affairs within a specified period of time. The section also allows the Secretary of State, under certain circumstances defined below, to require the person to take specified action. The relevant wells are those drilled pursuant to a petroleum licence (defined in subsection (10) as a licence under section 2 of the Petroleum (Production) Act 1934, or section 3 of the Petroleum Act 1998) or a licence under section 4 of the Act (gas storage and unloading licences).

358.Subsection (2) gives the Secretary of State a power to issue a notice requiring a person to provide specified information or documents relating to their financial affairs. Subsection (3) provides that this notice must specify the time allowed for this information to be provided.

359.Subsection (4) sets out the circumstances in which a further notice can be given under subsection (5); that is where:

360.Subsection (5) provides a power for the Secretary of State, after consulting the Treasury, to give a person a notice setting out the action that person must take within the specified period. By implication, such action may include the provision of financial security for the purpose of ensuring that a person will be capable of plugging and abandoning a well when required to do so by the terms of a licence.

361.Before giving a notice to a person under subsection (5), subsection (6) requires that the Secretary of State gives that person an opportunity to make written representations as to whether such a notice should be given.

362.Subsection (7) makes it an offence for a person to fail to comply with a notice issued under either subsection (2) or subsection (5), unless that person can prove he exercised due diligence to avoid the failure.

363.Subsection (8) provides that a person found guilty of this offence is liable:

364.Subsection (9) applies section 41 of the 1998 Act (apart from subsection (5)) in relation to prosecutions for offences under this section. Section 41 of the 1998 Act provides that: