Environmental Liabilities – a case study in managing environmental risk at Whiddy

Posted on: 7th August, 2019

Category: Environment

Contributor: West Cork People

The Environmental Protection Agency is at the front line of environmental protection and policing. It ensures that Ireland’s environment is protected, and monitors changes in environmental trends to detect early warning signs of neglect or deterioration.

By Jim Moriarty 

Senior EPA Inspector

If unexpected events occur that can damage the environment, it is important to ensure that there is adequate money and resources set aside to cater for this. These ‘environmental liabilities’ may arise at EPA authorised facilities due to closure and requirement for restoration or aftercare, or as a result of incidents or accidents, such as spillages. Where they occur, the cost of addressing the liabilities can be significant. This is called ‘financial provision’ and serves to protect the environment and minimise the exposure of the state to the cost of remediating environmental damage and pollution. 

Facilities licensed by the EPA are required to ensure that sites are returned to a satisfactory condition following closure and incidents. Thus, many EPA licences contain conditions requiring licensees to cost their environmental liabilities, and make financial provision for same. The EPA has prepared guidance on how to determine costings and what financial instruments need to be put in place. 

An example of an EPA-licensed facility that has put such financial provision in place is Whiddy Oil Terminal on Whiddy Island. This case study explains how this action will minimise the risks to the environment and safeguard the Bantry Bay surroundings.

Whiddy Oil Terminal was originally constructed in the 1960s by Gulf Oil. Zenith Energy Bantry Bay Terminal Limited now operates the oil storage terminal on the south western end of Whiddy Island.

Terminal facilities include: a ‘Single Point Mooring’ (SPM) approximately 1600m from the shore, with underwater pipe connection for the import and export of crude oil and petroleum products; a small craft harbour and; 17 storage tanks with capacities ranging from 7,500 to 95,000m3.  

The SPM can accommodate tankers from 20,000 dead weight tonnes (dwt) to 320,000 dwt and has a throughput capacity of up to 10,000 tonnes of crude oil per hour.

The terminal has been operating under an EPA licence for 20 years. 

To comply with their EPA licence, Zenith Energy submitted a detailed environmental liabilities risk assessment report which was, following a number of iterations, approved by the EPA. This identified a worst-case scenario that, while unlikely, could potentially give rise to a release of petroleum outside of a bunded area with the potential for material to reach Bantry Bay and lead to a significant environmental liability.

The estimated maximum liability that may be incurred is calculated at approximately €60 million. The EPA has ensured that there would be sufficient financial provision in place to meet the costs of clean-up and environmental remediation, with Zenith Energy providing financial guarantees of up to €60 million to meet the potential liabilities of a worst-case environmental incident, including the cost of clean-up and environmental remediation.  

Added to this, the EPA continually works to ensure that equipment and procedures are in place to minimise the risks to the environment and safeguard the Bantry Bay surroundings. The role of the EPA includes carrying out inspections to check compliance with the licence, and to conduct monitoring. Over 90 per cent of EPA inspections are unannounced.

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