Permits and advance commitments of permits for mobile non-production installations used in connection with offshore oil and gas operations

Arbejdstilsynet, The Danish Working Environment Authority (WEA) guideline 65.1.17-2 on Permits and advance commitments of permits for mobile non-production installations used in connection with offshore oil and gas operations

January 2017

The most important rules regarding applications for permits to operate and permits to make modifications to mobile non-production installations, as well as for advance commitments of permits in connection with offshore oil and gas operations.

This guideline concerns requirements with regard to applications for an operating permit, for a modification permit, and for an advance commitment of a permit to carry out offshore oil and gas operations for a mobile non-production installation, e.g. a drilling rig or an accommodation unit. Furthermore, the guideline concerns requirements for notification of relocation of a mobile non-production installation from one position to another. Finally, the guideline concerns the operator’s duties in connection with entering an agreement with an owner concerning the use of a mobile non-production installation.
The guideline is aimed at owners of mobile non-production installations and operators entering an agreement about the use of mobile non-production installations in situations in which the owner is the contractor.

The most important rules

The owner of a mobile non-production installation must ensure that a permit from the DWEA has been obtained before the installation is commissioned in the Danish sector.

Furthermore, the owner must obtain a permit from the DWEA before material modifications significant for the risk of major accidents are made to the installation or its operational conditions.

Prior to commencing relocation of an installation from one position to another, the owner must inform the DWEA about the new position.

At the request of the owner, the DWEA may grant an advance commitment of a permit to carry out offshore oil and gas operations from a mobile non-production installation.

When entering into an agreement on use of a non-production installation, the operator must ensure that the health and safety risks associated with the construction, layout, equipment and operation of the installation are reduced in accordance with the ALARP principle.

The guideline is divided into the following chapters:

  1. Operating permit.
  2. Modifications of the physical or operational conditions of an installation.
  3. Notification about relocation.
  4. Advance commitment of an operating permit.
  5. Deadline for applications, costs etc.

 

1. Operating permit

When choosing a mobile non-production installation, the operator must ensure that the health and safety risks and risks of major environmental incidents associated with the construction, layout, equipment and operation of the installation have been or will be reduced in accordance with the ALARP principle, including that requirements stipulated in the legislation are or will be complied with. The DWEA expects the operator to submit documentation to this effect, e.g. an audit report, as soon as possible, and by no later than in connection with the rig owner applying for a permit.

The owner must ensure that an operating permit has been obtained before commencing operations from the installation.

If necessary, prior to granting an operating permit for the Danish sector, the DWEA, by agreement with the owner, may perform an inspection of the installation (supervisory visit) in an overseas sector or at a shipyard in order to gather additional up-to-date information about the physical condition of the installation (e.g. the state of maintenance for existing installations) and to help identify any deviations from Danish regulations. The DWEA will not necessarily identify all deviations. The duty to ensure compliance with Danish regulations rests with the owner of the installation, and, as stated above, the operator is expected to ensure compliance prior to entering an agreement with the owner of the mobile non-production installation.

It is important that an application is submitted as early as possible, so that any inspection can be performed and any modifications can be carried out required to reduce, according to the ALARP principle, health and safety risks and risks of major environmental incidents, and to comply with legislation, before the installation is commissioned in the Danish sector.

An updated Health and Safety Document (also known as a Health and Safety Case (HSC)) constitutes the primary documentation accompanying the application. An operating permit will always be of limited duration, either because it expires at a specific date or it expires at the completion of a given operation. Furthermore, a permit is based on the assumption that the owner has an agreement with a specific operator, and a change to another operator will therefore cause the permit to lapse. The maximum duration of a permit is five years.

A permit with a limited duration can be extended following an application to this effect, but the total duration of a permit cannot exceed five years.

The application must state which offshore oil and gas operations are to be carried out using the unit, and the requested duration of the permit. In practice, this will normally correspond to the duration of the contract period with the operator, including any options, however no more than five years.

A health and safety document or similar acknowledged by other North Sea countries, such as a Safety Case accepted by the British authorities or an Acknowledgement of Compliance (AOC) from the Norwegian authorities, possibly with some modifications, can be included as part of the HSC to the extent that it complies with Danish requirements. In some cases, only management of risks of major accidents will be included in accepted documentation from other countries. In such cases, an assessment of other risks (work-related risks) and health and safety risks not related to work, will be required as a supplement.

Guidance concerning rules on the content of the Health and Safety Document is available in the guideline from the DWEA on health and safety cases in connection with offshore oil and gas operations.

Permits may be more specific or less specific. For example, a permit may apply to operations that are not in combination with other installations (stand-alone operations), or a permit may apply to operations located on a specific fixed production installation (combined operation). In the latter case, the owner will have to obtain a separate permit for the mobile non-production installation, either in the form of an operating permit or a modification permit, while the operator of the fixed production installation must obtain a modification permit. As of 19 July 2018, the operator will have to obtain a separate permit for combined operation.

A list of the information expected by the DWEA to accompany an application for an operating permit has been prepared. This list is available at the DWEA website here: www.at.dk/vejledninger/65-1-17.

 

2. Modifications of the physical or operational conditions of an installation

Prior to making material modifications to the physical conditions of a mobile non-production installation, the owner must obtain a permit from the DWEA, if the modifications are significant for the risk of major accidents. The same applies to material modifications to operational conditions where these modifications are significant for the risk of major accidents.

The DWEA administers the rules such that a permit must be applied for prior to physical and operational modifications if at least one of the following criteria is met:

  1. The physical modifications include equipment or a part of the installation which is associated with a risk of major accidents, and the modifications are material.
  2. The operational modifications are material, and overall they are significant for the risk of major accidents.

Examples of modifications according to no. 1:

Material modifications of drilling equipment, pressure equipment or load-bearing structures.

Replacement with identical components or equipment (so-called 1:1 replacement) is not considered a material modification. Therefore, in such cases, no modification permit is required.

Modification of safety and environmental critical elements.

Replacement with identical safety and environmental critical elements (so-called 1:1 replacement) is not considered a material modification. Therefore, in such cases, no modification permit is required.

Examples of modifications according to no. 2:

Material modifications in the manning of the installation, drilling conditions (e.g. HP/HT wells, underbalanced wells, presence of H2S), shift of operation from stand-alone operation to production drilling or establishment of accommodation for an associated production installation where there are hydrocarbons.

Increased use of helicopter shuttling or other transport entailing a risk of major accidents.

 

The application for a permit to make modifications must be accompanied by an updated Health and Safety Document reflecting the health and safety conditions that will apply after the modification. A new operating permit is not required to utilise the modifications. A permit to make modifications may be granted on certain conditions, e.g. that further documentation must be submitted after making the modification.

The owner is responsible for applying for modification permits where this is required. The owner’s management system for health and safety must state the relevant criteria for assessing when a modification permit must be applied for. If there is any doubt, the DWEA should be contacted with regard to clarifying the matter.

With regard to modification projects for which no application for a modification permit is made, the underlying assessment of risks associated with carrying out the project, as well as risks present after completion of the project, must be documented in an update of the Health and Safety Document.

If the modification involves combined operation, a permit for combined operation must be applied for. However, this requirement will not apply until 19 July 2018, if at least one of the installations is an existing installation, i.e. an installation for which an operating permit has been granted before 19 July 2015. Until then, the previous rules will still apply. If one of the installations is an existing production installation, a modification permit is required for this installation, and if the other installation is a mobile non-production installation, an operating permit is required for this other installation, where such operating permit has not already been granted; otherwise a modification permit is required.

 

3. Notification about relocation

The requirement to notify the DWEA about relocation of mobile non-production installations is intended to provide the DWEA and other authorities with a complete and current overview of the position of mobile installations in the Danish sector. However, a short relocation to another position on the same platform, e.g. in connection with several well operations, does not have to be notified.

If a relocation requires a modification permit, see chapter 2, notification about the new position must be included in the application documents. The assessment of risks associated with a relocation, including the relocation operation, must be included in the application documents.

Under all circumstances, the DWEA must be notified when the relocation to a new position has taken place. 
Relocation under an operating permit requires that the operator at the new position is the same as the operator at the abandoned position. If this is not the case, a new operating permit is required.

 

4. Advance commitment of a permit to operate

For owners of mobile non-production installations, it may be relevant to ensure that the installation is in line with, or can be brought into line with, Danish legislation in order to make it possible for the installation, at a later point in time, to be granted a permit to operate in the Danish sector. For example, this may be relevant when building new installations or making modifications to existing installations. Consequently, it is possible for the DWEA, upon request, to grant an advance commitment of a permit to operate, following a supervisory visit of the installation and a review of the related documentation.
The application for an advance commitment of a permit must contain the same information as an application for an operating permit, see chapter 1, and will be treated in the same way. An advance commitment of a permit is valid for a maximum of five years and differs from an operating permit in that the owner has not yet signed a contract with an operator.

Costs incurred by the DWEA in connection with granting an advance commitment of a permit must be reimbursed by the owner. This is a condition for the DWEA to respond to the application and grant an advance commitment of an operation.

5. Deadline for applications, costs etc.

The DWEA aims for a period of four working weeks to process an application. 
Several factors may affect the actual case-processing time, and the owner can help facilitate case-handling by ensuring

  • that the operator has submitted the outcome of its assessment of the installation to the DWEA,
  • that all application documents have been submitted as a single package,
  • that information is consistent across the different documents submitted in the application package,
  • that all documents are up-to-date,
  • that the application documents are generally adequate and comply with the regulations and the supervisory visit, if relevant, and
  • that, for installations with a MODU 79 certificate, a gap analysis has been conducted between MODU Code 79 and the consolidated version of the MODU Code 89 from 2001. How deviations will be handled must be described.

The DWEA is aware that situations may occur in which an application process is of an urgent nature. The sooner the DWEA receives an indication that an application may be underway, the better prepared it will be to receive and process the application within the intended case-processing period of four weeks, as described above.

The costs incurred by the DWEA in connection with processing an application must be reimbursed by the owner of the installation. In addition to time consumption, the costs include expenses incurred by the DWEA in connection with conducting supervisory visits (travelling, hotel and accommodation), if relevant. Furthermore, it may be necessary for the DWEA to draw on specialist knowledge, e.g. concerning maritime conditions, and remuneration of specialists will be re-invoiced to the owner.

It naturally follows that processing of applications may vary in scope, and thereby also in terms of time and costs, depending on whether the owners or installations involved are new or already known, whether the installation immediately complies with all regulatory requirements or requires more detailed assessments, whether the application documents are submitted as a full package or in parts, etc.

List of abbreviations used

 ALARP

As Low As Reasonably Practicable. Requirements for risk reduction.

 HP/HT

High Pressure/High Temperature. Drilling with high pressure and temperature.

 HSC

Health and Safety Case. Documentation accounting for the health and safety conditions on an offshore installation in connection with operations and in the event of emergency situations.

 SECE

 Safety and Environmental Critical Elements