Pipeline Crossing Agreements: Lessons Learned
By Mike Conradi, Christian Keogh, and Coran Darling
March 22, 2021
In January of this year, DLA Piper concluded pipeline crossing agreements with two
natural gas pipeline owners on behalf of our clients, a submarine cable owner, and a submarine cable operator.
Any submarine cable owner or operator who has had to enter into such agreements will know that in certain scenarios, the negotiation process can be long and fraught with complications. As the number of these structures increases, the likelihood of coming across one of these agreements, or the need to enter into one, will only increase.
In this article we set out:
1. what a pipeline crossing agreement is;
2. why a pipeline crossing agreement may be entered into;
3. some “lessons learned” from our recent negotiations, for other submarine cable owners and operators to consider when entering into pip
eline crossing agreements of their own; and
4. a scenario where a pipeline crossing agreement is required to be entered into, but a crossing is undertaken in its absence.
In this article, we refer to the owner/operator of the existing pipeline the “crossed party” and the owner/operator of the submarine cable that will cross that existing structure as the “crossing party”.
What is a Pipeline Crossing Agreement?
There are a number of matters relating to the ocean floor that need to be considered when laying a submarine cable. These include those which relate to naturally occurring aspects of the seabed, such as its geography, and those that relate to manmade structure, such as existing submarine infrastructure. While each present their own complications, it is the manmade items which can be the most problematic for a submarine cable owner.
There are already hundreds of subsea cables and oil and gas pipelines in operation, which are on or buried under the seabed. Despite the best planning efforts, these structures can be difficult to avoid. For example, the existing structures may cut across a submarine cable’s planned route for a span of hundreds of kilometres. Re-routing a submarine cable’s route to avoid such structures may require a significant deviation to the originally planned route of the cable. This can involve many more metres of cable, changes to planned operations, and additional time and effort, which can make re-routing expensive and uneconomical.
It is where the routes of a submarine cable and another submarine cable or pipeline cannot be avoided that a submarine cable has to “cross” the existing structure. This means for the submarine cable to be physically laid over the other cable or pipeline, or to be laid over the portion of the seabed under which the existing structure is buried.
In this scenario the parties will often enter into an agreement to set out matters relating to the crossing. A pipeline crossing agreement, is exactly what the name states: a crossing agreement covering a scenario where the existing structure being crossed by the submarine cable is a pipeline. The content of the agreement, and whether it will be entered into or not, will depend on the legal relationship between the parties and matters of international law. However, as a minimum, a pipeline crossing agreement records the agreed terms on a number of matters in respect of the crossing itself and potentially ongoing matters for the period the cable remains in place over the pipeline. These typically include:
1. risk and liability, and in particular what liability is owed by one party to the other if their structure damages the other structure;
2. obligations for the crossing party to have specific forms of insurance and the amounts of coverage required; and
3. the methodology for operations on or around the existing structure which should be undertaken by the crossing party and any rights for the crossed party to oversee or influence those operations.
Often it may be possible to enter into a pipeline crossing agreement on a set of standard terms, such as those recommended by the ICPC – but there is no obligation on either party to use those terms (and see our comments below on the care needed to ensure any template is appropriate).