Fracking: Insolvency

Department for Business, Energy and Industrial Strategy written question – answered on 13th September 2017.

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Photo of Greg Knight Greg Knight Conservative, East Yorkshire

To ask the Secretary of State for Business, Energy and Industrial Strategy, pursuant to the Answer of 6 July 2017 to Question 1697, what provisions and safeguards he has made to ensure that where a disused shale gas well needs decommissioning or maintenance and the company responsible is insolvent that the costs incurred do not fall to the taxpayer either locally or nationally.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The regulatory framework has provisions in place to ensure wells can be decommissioned with no need for on-going attention.

As part of the petroleum licensing process, and prior to awarding a licence, the Oil and Gas Authority (OGA) assesses whether a company has adequate financial capacity for its planned operations. The OGA also checks at the drilling and, where relevant, production stage that the company has sufficient funding and appropriate insurance.

From the outset a shale gas operator is required to design and construct an oil and gas well with a view to its safe decommissioning. HSE specialist inspectors scrutinise these plans to ensure the well can be abandoned safely.

At the end of the life of a well, The Offshore Installations and Wells (Design and Construction, etc.) Regulations 1996 requires all oil and gas wells to be abandoned in such a way that there can be no escape of fluids from the well or from the reservoir associated with it, so far as is reasonably practicable.

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