Minister for Climate settles case over decommissioning gas field off south coast

High Court reporters

Minister for Environment and Climate Eamon Ryan has settled a High Court case against an energy company over the costs of decommissioning a gas field off the south coast.

The Minister had sought judgment for €7.5 million against a company which guaranteed to pay costs of decommissioning the Seven Heads Gas Field in the Celtic Sea.

He sued San Leon Energy plc, with a registered address in Ballsbridge, Dublin, which acquired the share capital of the original guarantor, Island Oil and Gas Limited, following a survival scheme for Island in 2014.

San Leon, the Minister said, undertook to take over as guarantor for monies which were due for decommissioning once commercial production ceased at the gas field.

But as a result of default on payments for that, the Minister brought proceedings against San Leon which were admitted to the court's fast track commercial division last November. San Leon opposed entry to that list saying the case did not have a commercial urgency.

When the case returned on Friday, Andrew Fitzpatrick SC, for the Minister, said the case had been settled on a confidential basis. Counsel asked for an adjournment so certain steps could be taken.

Mr Justice Denis McDonald adjourned it to next month.

In his claim, the minister said two companies, PSE Seven Heads Ltd and Island (Seven Heads) Ltd, signed the first 2005 lease agreement to operate the fields, and subsequent agreements.

Island Oil and Gas, and later San Leon, guaranteed the obligations under the lease agreement, including the facility decommissioning agreement, the Minister said.

The decommissioning agreement provided that the minister was conferred with the authority to enforce the lessees' (PSE and Island) respective obligations to share in decommissioning costs.

Commercial production at the Seven Heads field ceased in July 2020, thereby triggering the lessees' obligations, the Minister said.

In the event that one of the lessees failed to pay its percentage interest share of liabilities, the other lessee was required to make up the shortfall.

The minister said total decommissioning costs amounted to €7.55 million since the last quarter of 2020.

Demands for payment were made, and no monies were paid, the Minister said.