Commercial process

Elgin/Franklin aims for an efficient negotiation process that helps give commercial confidence to third-party developments. In this section we outline how we aim to negotiate and the types of items that may be considered during a negotiation.  Further information on the process or terms and conditions can be obtained by contacting our commercial team as detailed on the Contact Us page.

 

As a general rule, where an offshore tie-in or additional equipment is required to process the enquirer's gas, the associated capital expenditure (capex) is charged directly to the service user. Where equipment is exclusive to a particular user, then opex for such equipment will be at their sole cost.

Connecting to Elgin Franklin

TOTAL E&P UK Ltd would normally perform engineering and modifications work for such equipment on behalf of new users. Ownership of the offshore tie-in or additional equipment would be transferred to the Elgin/Franklin Owners on completion of the works.

The tie-in point for third party access would be via the new Elgin B wellhead platform.

How we work

Elgin/Franklin is committed to the DECC Commercial Code of Practice and the Oil and Gas UK Infrastructure Code of Practice. We aim to respond in a timely manner to all service enquiries.  The typical process for negotiations is as follows:

 

howwework4.jpg

The process typically starts with a formal written enquiry from the Operator (or substitute commercial operator) of the field development group requiring access to the infrastructure containing relevant field information and an outline of requirements in accordance with the process described in the Code of Practice on Access to Upstream Oil and Gas Infrastructure on the UK Continental Shelf.

 

We’ll respond with a termsheet for services and capital modifications based on our Key Commercial Terms and meeting the needs of the service request. The termsheet can then form the basis for more detailed commercial discussions.

Standard terms and conditions

Elgin/Franklin PUQ facilities operate in a highly competitive area of the North Sea.  We seek to provide both attractive terms and conditions and an equitable negotiation process to parties interested in utilising our infrastructure.  Individual terms and conditions may vary according to the needs of tie-in parties.

The Tariffs

Detailed Tariff information is available on request.

 

Platform Processing and Transportation Service :

The actual tariff charged will depend on the level of service requested by the incoming field – that is, firm versus reasonable endeavours service. These tariffs are typically subject to annual escalation of 2.25% compounding on the 1st of October each year.

Throughput

Capacity Basis

For transportation only services, capacity is offered subject to unreserved capacity in the SEAL pipeline system.  In the case of the platform processing and transportation service, the service is offered on a firm or reasonable endeavours basis.  The profile and duration of the firm service will be negotiated on a case-by-case basis as well as the required notice period for amendments to the production profile. 

 

Send or Pay

These conditions are negotiated with incoming parties on an individual basis dependent on the level of service required.

 

Capital works

Tie-in and Construction

Flexible tie-in and construction arrangements are offered depending on the needs of individual parties.

 

Investment

The cost of tying-in to the Elgin/Franklin PUQ or to the SEAL line will fall to the tie-in party as will the cost of decommissioning any third party facilities.

Start-up and duration

In order to ensure capacity is available in both the SEAL line and the PUQ at the appropriate time we will work with third-parties to help to meet their commercial timelines.  This could include a funnelling mechanism in the contract that ensures that each party sequentially commits to the start date as more information about the development becomes available.  Elgin/Franklin is a development with a long future ahead of it, so the duration of the contract can be negotiated on an individual basis. 

Other conditions

In addition, the following conditions will form the basis of negotiations:

  • Maintenance – An annual shutdown plan for the SEAL system is prepared in advance and to coincide with the shutdown of connected facilities (as far as possible).
  • Governing Law and Disputes – English law will govern the agreement and disputes for certain technical matters will be settled through expert determination.
  • Liabilities and Indemnities – will be based on the Industry Mutual Hold Harmless standard established in the UKCS, however the tying-in party should provide full indemnity up to an agreed cap during the construction and tie-in phase (except for wilful misconduct of the Operator).  All tie-ins must become party to the SEAL cross-user liability agreement which allows for liabilities arising from off-spec gas.