Operatorship

Operatorship

oil worker wearing a hard hat

Under the Model Clauses attached to each licence, the Secretary of State must approve the appointment of an operator (DECC does not choose or appoint the operator – the licence group nominates one and then seeks approval).

Operator approval relates only to a company's competence and does not confer any permission to carry out actual activities such as drilling, seismic surveys, or field developments. It is specific to the licence under which it is given and each case is considered on its own merits. Approval of a company to operate a field does not cover any other operations and should not be taken to mean that further operator approvals will be rubber-stamped.

There are two types of operator:

  • exploration operator: carries out or arranges the licence group's exploration activities (including exploration drilling), but would need further approval as a production operator to begin production 
  • production operators: exercise "any function of organising or supervising all or any of the operations of searching or boring for or getting petroleum in pursuance of this licence"
 

Operator approvals

DECC requires the same information for all onshore cases regardless of whether they concern exploration or production operatorship. For offshore cases, however, DECC's requirements differ between exploration and production operatorships. 

Operator approvals can be made at any time but are usually made at licence award (exploration operator usually appropriate), at field development approval (production operator more likely) or at approval of a licence assignment.

DECC will normally expect the operator to be a member of the licence group.

In some cases, different bits of acreage within a single licensed area have different operators. This reflects the commercial/operational arrangements within the licence group.

Most of DECC's dealings with a licence group will be addressed to the operator but some (notably the rental invoices) will be addressed to a 'licence administrator'. The same company often acts as both licence administrator and operator, but this does not have to be the case. The licence administrator is sometimes misleadingly called licence operator, but that's a misnomer – a licence group needs no approval to nominate its licence administrator and no competence has to be demonstrated.

Form of approval

Approval covers a specific piece of acreage (in the case of production operatorship, a specified field). It relates only to the operator's competence and confers no permission to drill; for example, a separate well consent is still required for each well.

Approval is most commonly granted as part of the approval of a licence assignment or the award of a new licence, but it can be granted as a separate procedure. Application for operator approval as part of an assignment or award should be made as part of the overall application; when made as a separate procedure it should be submitted to approvals@decc.gsi.gov.uk


Health and safety

Since the Offshore Safety Act 1992, health and safety has not been a factor DECC checks when considering the competence of an operator; it is now wholly the responsibility of the Health and Safety Executive.

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