North Sea Regulator Fines Shell

The North Sea Transition Authority (NSTA) has announced that it has fined Shell UK Limited $62,347 (GBP 50,000) and served it with a sanction notice for breaching five field production consents.

The NSTA said it had raised concerns with Shell in November 2020 that the company had failed to comply with the maximum and minimum volumes specified in the production consents for five Southern North Sea fields in 2020. An NSTA investigation confirmed the failure, the NSTA noted.

Shell’s own internal review found that it did not fully implement a new procedure to improve compliance with production consents because it failed to conduct an effective handover following a restructuring exercise, the NSTA outlined. Following discussions with the NSTA and having completed its own internal report into the failings, Shell has engaged more proactively with the NSTA, the organization said. The company is implementing the recommendations of its internal review and is committed to improving compliance, the NSTA highlighted.

The North Sea regulator emphasized that effective management of production consents is an indicator of good stewardship of fields, and is an important component of a stable, well-regulated industry which has the trust and confidence of investors and the public.

The NSTA said it has repeatedly signaled to the UK oil and gas industry that compliance with regulatory obligations is vital to sustaining the sector’s social license to operate and retaining the confidence of investors. This investigation was the fourth probe into compliance matters opened by the NSTA in 2021, the organization highlighted.

“In this instance, Shell did not live up to its commitments and responsibilities, in a way that could detract from industry’s social license to operate,” Tom Wheeler, the NSTA Director of Regulation, said in an organization statement.

“However, Shell did cooperate fully with the NSTA’s investigation and is already implementing the recommendations from its internal review, dealing with the immediate causes of the failure to comply with production consents,” he added.

“The NSTA is committed to maintaining a stable and predictable system of regulation which encourages investment in relevant activities and is working with industry to ensure that compliance continues to improve,” Wheeler continued.

When asked for comment on the matter, a Shell spokesperson told Rigzone, “we take our regulatory commitments very seriously and on this occasion we fell short”.

“We have undertaken an internal review and acted on its findings, as well as cooperating with an investigation by the regulator. We will have regular reviews with the NSTA and value this collaboration,” the Shell spokesperson added.

The NSTA regulates and influences the oil, gas and carbon storage industries, according to the organization’s website, which notes that the body helps drive the North Sea energy transition, realizing the significant potential of the UK Continental Shelf as a critical energy and carbon abatement resource. The NSTA works with the UK government, the industry and other regulators, its website highlights.

To contact the author, email andreas.exarheas@rigzone.com