The National Audit Office (NAO) report Fracking for shale gas in England[i] demonstrates that it is still uncertain who pays for the cost of shale gas decommissioning if the operator becomes bankrupt.
Fortunately for the taxpayer, London based firm Quatre Ltd provides a financial solution. Its Environment Trust (ET), will if adopted by the government, protects both the taxpayer and landowner from the possible decommissioning risks should an operator become bankrupt.
It costs some £1 million to decommission a well site.[ii] According to the NAO, the government does not have a clear idea on who should pay for the decommissioning of onshore shale gas sites in England at the end of their operating life if the operator ceases trading. In fact, the NAO report finds that existing statutory powers are unclear and untested in recovering the decommissioning cost from former operators or even the landowner.
This is not uncommon. Policy failures over who funds the eventual decommissioning of well sites when operators go bankrupt and abandon wells have been experienced by taxpayers worldwide including Canada,[iii] the US[iv] and Australia.[v]
Quatre Ltd offers a clear solution to this problem through its Environmental Trust, which removes the risk that future liabilities will not be met. The Trust is applicable to onshore or offshore well sites including proposed shale gas sites in England. The Quatre Ltd Environmental Trust is effective, efficient, transparent and sustainable. The Environmental Trust is independent of the operator and funds are protected from creditors in the event of insolvency.
“Quatre's range of solutions protects the public purse and enables clients to put aside funds for future decommissioning and rehabilitation, in an independent trust.”
Quatre's solutions are “crafted to meet the specific challenges facing both industry and government in funding the cost of decommissioning and rehabilitation, while also providing useful environmental and economic benefits.”
A Special Purpose Trust, designed to protect the public purse from decommissioning liabilities and ensure that economic recovery is maximized.
Provision of post-decommissioning liability insurance to address the risk of failure of any decommissioning work.
Quatre Ltd provides services and products that support the financial risk management associated with the decommissioning of oil, gas and other extractive industry assets. Quatre's services and products allow industry to:
Manage decommissioning and post-decommissioning liability, efficiently and effectively.
Paul Jardine, a veteran of the oil and gas industry founded Quatre Ltd in 2013. Quatre's integrated team of professionals, covering insurance brokerage, investment management, legal, taxation, trust management and E&P operations, helps industry clients address the financial requirements associated with decommissioning liabilities. Quatre is an Appointed Representative of Property Insurance Initiatives, who are authorized and regulated by the UK Financial Conduct Authority, in respect of the negotiation and placement of post-decommissioning liability insurance policies.
Note: Paul Jardine is available for interview
27 John Snow Place, Oxford, OX38BB, UK
Mobile: 0758 0469 514 / Skype: oxfordprospect
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