Ⅰ Offshore Oil and Gas Technology 1
A The Exploration Phase 1
B The Construction Phase 2
1 Steel Jacketed Platforms 2
2 Concrete Gravity Platforms 4
3 Articulated Columns 8
4 Pipelines 9
C The Development and Production Phase 11
1 Drilling 11
2 Production of Oil 22
3 Production of Gas 25
4 Subsea Completions 27
5 Workover 29
6 Storage of Oil 32
7 Personnel: Logistics, Training and Safety Measures 33
8 Communications and Security 39
9 Tanker Traffic 40
10 General North Sea Production Data 42
Ⅱ Proprietary Considerations 45
A Exploration 45
B The Right to Drill for and Produce Oil and Gas Offshore 48
1 The Present United States Leasing System 49
2 Suggested Alternatives and New Legislation Affecting the U.S. Bonus Bid System 51
3 Summary of British Licensing System 55
4 Licensing in the Norwegian Sector of the North Sea 58
(a) Allocation Technique 59
(b) Payment of Roylaties 60
(c) Participation by Statoil 61
(d) Disposition of Oil 63
5 Abandonment of the License 63
C Joint Operating Agreements 65
1 General Concepts 65
2 Participation Agreements in the Norwegian Sector of the North Sea 66
(a) Exploratory and Developmental Activity: Statoil's Role 66
(b) The Operator and the Management Committee 68
(c) Ownership Assets 72
(d) Liability of the Joint Venturers 75
(e) Disposal of Production 77
(f) Statoil's Option to Increase Its Participation 80
(g) Provisions for the Assignment or Sale of a Participant's Interest 81
(h) Consequences of Breaching Participation Agreement or License 83
(i) Resolution of Disputes 84
3 Antitrust Implications of Group Development and Exploitation of Offshore Resources 85
(a) Behavior and Agreement Inside the United States 85
(b) The United States Impact of Extra-Territorial Action 88
D Construction Contracts for Offshore Facilities and Services 95
1 Representations, Warranties, Quality Assurance and Design Data 96
(a) Representations and General Obligations 96
(b) Warranties 96
(c) Quality Assurance 99
(d) Proprietary Information 100
2 Mechanics of Payments and Acceptance of Work 101
(a) Basis of Payment 101
(b) Change Orders and Extra Work 102
(c) Acceptance 103
(d) Problems Relating to Sub-Contractors 104
3 Remedies for Breach by Contractor 105
(a) Replacement of Work and Materials; Options to Complete 105
(b) Delay and Extensions; Liquated Damages 106
(c) Cancellation 107
(d) Force Majeure 108
(e) Limitation on Recovery; Consequential Losses 109
4 Indemnification 110
5 Towage Contracts 113
(a) Transport Obligations and Payment Schemes 114
(b) Indemnity and Exclupatory Clauses 116
(c) Excusing Events 118
(d) The Forum Clause 119
6 Pipe Fabrication and Pipelaying Contracts 119
(a) Acceptance Testing 120
(b) Compensation 120
(c) Indemnity 121
(d) Remedies 122
7 Drilling from Fixed Facilities 123
(a) Compensation Schemes 123
(b) Indemnity and Hold Harmless Clauses 125
(c) Cancellation 127
8 Choice of Law and Dispute Resolution 127
E Financing 130
1 Conceptual Issues Connected With Offshore Loans 131
(a) The Constellation of Risks 131
(b) The Value of the License and Assets as Collateral 134
(c) The Negative Pledge Concept 135
(d) Some General Parameters for Loan Approval in Project Financing 136
(e) Typical Lending MechaNisms for Medium-Term Roll-Over Eurodollar Loans 136
Drawdown & Repayment 137
Commissions and Fees 138
2 Variations of Financing Arrangements 138
(a) Recourse Financing 138
(b) Non-Recourse or Project Financing 140
(c) Forward Purchase Agreement Assignments; Take-or-Pay Contracts; Throughput Agreements 141
(d) Export Credits 145
(e) Supplier Credit 145
(f) Production Payments 146
3 Acts of Default 147
(a) Insolvency 147
(b) Failure to Make Payments; Breach of Covenants 149
(c) Cross-Default Clauses 150
4 Options and Remedies of the Lender 151
(a) Consent Clauses; Covenants; Coparticipant Responsibility; Intervention in Decision Making 151
(b) Acceleration Clauses 153
(c) Attempts to Attach or Foreclose on Offshore Assets or the Proceeds of Production 153
F Insurance 156
1 Builders' All Risk Coverage 156
(a) The Assureds 156
(b) The Period of Coverage 157
(c) Valuation and Basis of Recovery 158
(d) Coverages for Property Loss and Related Expenses 161
(e) Conditions, Exclusions, Limitations and Deductibles 167
(f) Coverage for Liability to Third Party 172
(g) Wreck Removal; Direct Actions 175
2 Operations Phase Insurance 175
(a) Property Risks on the Platform 176
(b) Pipelines 178
(c) Costs of Control 178
(d) Pollution Liability 180
(e) Liability Insurance 181
3 Oil Pollution Liability Agreement (OPOL) 181
(a) Internal Arrangements and Guarantees 181
(b) Claims Which Can Be Brought Under the OPOL Agreement 185
(c) Dispute Resolution and Payments Mechanism 186
4 O.I.L. Syndicate 186
(a) Eligibility and Internal Arrangements 187
(b) Coverage, Basis of Recovery and Exclusions 187
(c) Premium Calculation, Policy Term Recovery Limits and Deductibles 189
Ⅲ Public and International Law Considerations 193
A Internatiunal Law 193
1 The Truman Proclamation 193
2 Unilateral Assertions of Control or Sovereignty 194
3 The 1958 Convention of the Continental Shelf 196
4 Resolution of North Sea Boundary Disputes 198
5 The U.K.-Norway Treaty for the Frigg Field 200
6 Law of the Sea Conference 202
(a) The Exclusive Economic Zone 203
(b) The Seabed Authority 206
B Administrative Law Regulating Offshore Exploitation 209
1 U.S. Geological Survey (USGS) 210
(a) Development Plan Approval 210
(b) Special Orders bY Supervisor 211
(c) OCS General Orders; Inspections 213
Conservation 213
Platforms 214
Drilling 216
Subsurface Safety Valves 218
(d) Failure Data Bank and Other Technological Improvements 220
2 Bureau of Land Management 221
(a) Lease Stipulations; Cancellations and Suspension 222
(b) United Kingdom Model License Clauses 223
3 United States Coast Guard 225
4 United States Army Engineers 227
5 Office of Pipeline Safety 228
6 Department of the Interior 229
(a) Environmental Impacts Statements (EIS) 229
(b) Judicial Challenges to Administrative Action 233
(c) 1976 Amendments to the Coastal Zone Management Act 240
(d) New Federal Legislation 244
C State Legislation Pertaining to Coastal or Offshore Petroleum Activities 248
1 United States v. Maine,/ 420 U.S. 515 (1974) 248
2 Atlantic Richfield Co. v. Ray,/ 98 S.Ct. 988 (1978) 249
3 Askew v. American Waterways Operators, /411 U.S. 325 (1973) 254
4 A State Statute Not Yet Challenged 255
D The Deepwater Ports Act 255
1 Applications and Approval Procedures 257
2 Ongoing Requirements 259
E Regulatory Restraints in the United Kingdom 260
1 Conservation and Production Control 260
2 Safety Regulations 262
F Regulatory Constraints in Norway 264
1 Conservation and Production Profile Review 264
2 Norwegian Petroluem Directorate Technical Approvals 266
(a) Facility Construction 266
(b) Drilling and Workover 268
(c) Safety Inspections and Production Equipment 269
(d) Sanctions for Non-compliance 270
G Criminal Law 271
Ⅳ Civil Liability Considerations 275
A Manufacturers' Liability 275
1 Design Defects and Errors in Selecting or Applying Safety Factors 275
2 Testing and Reliability 281
3 Manufacture, Assembly and Installation 283
4 Servicing and Repairs 285
5 Component Suppliers 285
6 Warnings and Instructions: Misuse and Other Defenses 287
7 Economic losses 290
8 Interplay with Contract Provisions 291
9 Scandinavian Law of Manufacturers' Liability 293
B Collision 295
1 Collisions Involving the Platform While Under Tow 295
2 Collisions Occurring after the Platform is in Place 298
3 Measuring Damages 301
C Personal Injury and Death 303
1 Employees of the Operator 303
(a) Death on the High Seas Act (46 USC §§ 761-768 (1970)) 303
(b) Outer Continental Shelf Lands Act (43 USC § 1331 et. seq. (1970)) and other Federal Statutes 305
(c) Longshoreman and Harborworkers Compensation Act (33USC ~901et. seq. (1976)) 310
(d) Occupational Safety and Hazards Act (29 USC §§ 651 et. seq. (1970)) 311
2 Employees of Service Contractors 313
3 Injury and Compensation under Norwegian Law 318
4 United Kingdom Law Governing Personal Injury 319
D Liability Arising Out of Design, Operations, and Maintenance of an Offshore Facility 323
1 Design Negligence; Possible Non-Delegable Duty 323
2 Ultra-Hazardous Activity 324
3 Preventative Maintenance 326
E Oil Pollution 327
1 Sources of Oil Pollution from Offshore Oil and Gas Operations 327
(a) Leaks and Ruptures of Pipelines or Storage (Corrosion or Trauma) 329
(b) Produced Water 331
(c) Displaced Water, Deck Drainage and Drilling Muds 332
(d) Blowouts 333
(e) Sabotage and Terrorism 336
(f) Slick Dispersion, Drift and Weathering 337
2 Types of Damage 339
(a) Property Damage 339
(b) Lost Profits 340
(c) Fish Kill and Other Biota Losses 341
(d) Lost Fisher's Profits; Mariculture Losses 344
3 Cleanup Obligations 345
(a) United States Law 345
(b) United Kingdom 352
(c) Norway; the Bonn Agreement 353
4 Compensation of Claimants 354
(a) FWPCA Inapplicable 354
(b) Deepwater Ports Act 357
(c) Selected State Law 359
(d) New Federal Legislation 361
(e) North Sea Pollution Treaty 363
(f) Pending Norwegian Legislation 365
F Special Problems With the Fishing Industry 368
1 Access Denied to Fishing Grounds 368
2 Gear Losses 370
Addenda 375
List of Appendices 379
Appendices 381
Table of Cases 433
Topical Index 439