UKCS Contribution to Delivering UK Environmental Targets

Produced Water Trading

Water is produced in combination with the associated hydrocarbons from oil and gas reservoirs; this produced water is first cleaned to remove hydrocarbons then discharged to sea. Currently the maximum allowable discharge of oil in produced water is 40mg/l; however the industry averaged less than 20mg/l in 2003. Independent research indicates that produced water’s contribution to the total volume of oil entering the North Sea is around 6%. In 2003 around 266 million tonnes of produced water were discharged to sea and the rate of water production continues to rise as reservoirs age.

Following from recommendations by OSPAR in 2001, the DTI is introducing new regulations to:

1. Limit dispersed oil in discharges to sea to a monthly average of 30mg/l by the end of 2006.
2. Reduce total dispersed oil in produced water discharges by 15% below the quantities produced in 2000 by 2006.

The reduction in the discharge of produced water effectively requires a 28% reduction in total water discharged to sea, given the continuing trend of increasing water production since the 2001 recommendation was made. It is also proposed that all new installations achieve zero discharges of oil in produced water to sea. This may be problematic to implement and will act as an impediment on new developments given most are subsea tiebacks and rely on the use of existing processing facilities. It is also questionable whether a zero discharge has an environmental benefit.

Regulations are expected to be in place by July 2005 as part of the new Oil Pollution Prevention and Control Regulations. Every installation discharging produced water will be issued with a permit addressing the 15% reduction, including provisions for new entrants. The regulations will include a trading mechanism through which installations should be able to work together to meet the UK wide target. The regulations also contain a substantial civil penalty, currently set at £280 for every kilo of oil discharged in excess of that permitted.

Current indications are that the Industry will invest over £100 million in additional abatement measures to meet the new regulations. The trading scheme is still in its infancy and given the size of the penalty, operators will almost certainly be encouraged to over invest. A large variety of techniques are already employed to remove oil from produced water and it has to be recognised that further abatement measures come with an environmental as well as a financial cost. These costs should be compared with the incremental environmental benefit. The Policy Studies Institute has examined the overall environmental impact from further abatement of produced water⁴ and made an overall impact assessment. The study concludes that current levels of emissions suggest only a hypothetical or low risk; it must be questioned, therefore, whether the substantial new investments will deliver environmental value for money and will provide the most appropriate environmental effects.

Footnotes
4 Management of Produced Water on Offshore installations: A Comparative Assessment Using Flow Analysis. Final Report March 2005: Paul Ekins, Robin Vanner and James Firebrace; Policy Studies Institute.