Clause 7 - Shippers etc of gas

Deregulation Bill – in a Public Bill Committee at 3:00 pm on 4th March 2014.

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Question proposed,That the clause stand part of the Bill.

Photo of Tom Brake Tom Brake The Deputy Leader of the House of Commons

The clause will amend an oversight in the Energy Act 2008 that led to a duplication of licensing requirements on ships importing gas. Currently, the Act requires those who ship gas to hold a licence to unload gas at an already licensed offshore installation. That adds an additional burden on the shipper.

Sections 2 to 16 of the Act provide for a licensing regime governing the offshore unloading of natural gas from liquefied natural gas tankers to installations sited offshore before being piped to the UK by subsea pipelines. The intention behind the Act was to create a streamlined, consenting regime for the construction and operation of such an installation. The Secretary of State is responsible for granting licences for that purpose. This provision  will remove an unnecessary regulatory burden on international maritime shippers of gas wishing to use such importation facilities, which will help to increase the attractiveness of such facilities in the years to come and add to our import facility diversity and, therefore, security of supply.

I stress, however, that all existing legislation in relation to the protection of the environment and health and safety considerations remains unchanged by this change to the Energy Act. I comment the clause to the Committee.

Photo of Toby Perkins Toby Perkins Shadow Minister (Business, Innovation and Skills)

I do not intend to speak at length. The clause relates to the regulations for gas importation and storage that came into force in 2009. It applies to offshore activities, comprising both the UK territorial sea and areas beyond that designated as a gas importation and storage zone. The clause alters the regulations that currently prohibit the use of an offshore installation for the unloading of gas without a licence. Under the proposals, a third party wishing to unload their gas at an installation owned and licensed to another party would not need to be covered by a licence as long as the owners of the facility had the correct licensing documentation.

The Minister said that the related health and safety legislation would still apply. Will he assure us, however, about what enforcement regime will be considered necessary, what laws and processes he will put in place to ensure safety in this potentially dangerous area and how that enforcement will appear on the ground?

Photo of Tom Brake Tom Brake The Deputy Leader of the House of Commons

I am happy to do that. The important thing to underline is that the operator has a licence for all the activities associated with the unloading of gas at the offshore unloading point. The operator undertakes all the associated operations.

How will the unloading operations be safely co-ordinated? The intention is that the terminal operator and the arriving LNG tanker will both be covered by the Society of International Gas Tanker and Terminal Operators ship-to-ship transfer guide for petroleum chemicals and liquefied gases, which represents the industry standard and recommended practice, supported by the Maritime and Coastguard Agency. The unloading terminal will develop terminal rules based on the guidelines. The whole terminal operation will be overseen by the Maritime and Coastguard Agency with support from the Health and Safety Executive as required.

In essence, the installation master is responsible for the connection and disconnection of all cargo and safety interfaces on the installation and will control the cargo operations, including pre and post-transfer operations such as purging and cool-down. A loading master will be on board the LNG tanker during the cargo transfer period and will liaise directly with the operator for the unloading installation for all operational preparations. The loading master will remain on standby on the LNG tanker during the entire process and will advise the tanker crew throughout the operation.

We are not removing any HSE or environmental protection. The offshore environmental legislation of the Department of Energy and Climate Change, which regulates the oil and gas industry, has been amended to require the licensee operating the unloading station to comply with all necessary environmental legislation.  Likewise, the HSE has extended the scope of the Health and Safety at Work, etc. Act 1974 to apply to such installations.

I hope that I have been able to satisfy the hon. Gentleman that all the necessary controls are in place. There is a clear process that the licensee, who is licensed to operate the facility, must follow to ensure that gas is safely unloaded.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.