Platforms at end of life

EXXONMOBIL has confirmed it will continue its early decommissioning works in Bass Strait this year, as well as planning for the eventual – and costly – decommissioning of non-producing platforms in the Gippsland Basin.

However, after the federal government’s recent approval of a raft of changes to Australia’s decommissioning framework, oil and gas companies are facing stricter decommissioning regulations.

The process of decommissioning offshore facilities is a complex process for oil and gas companies, and inevitably costs the industry billions of dollars.

A 2018 government report found a “substantial number” of about 136 fixed facilities (including pipelines) around the country were likely to begin decommissioning activities in the coming decade.

During the next 50 years Australia’s offshore petroleum industry’s decommissioning liability is estimated to be US$21 billion.

In the waters around Australia there are dozens of oil and gas platforms and an estimated 3500 kilometres of pipeline that are now coming to the end of their life span.

Under the Offshore Petroleum and Greenhouse Gas Storage Act 2006, titleholders must remove all structures, equipment and property when no longer used, and must be “planning for and executing decommissioning activities in a timely and responsible manner” in accordance with the legislation.

This includes plugging and abandoning wells, rehabilitating sites and carrying out any necessary monitoring.

While Australia has a regulatory regime in place to ensure safety and good environmental management, a new framework is improving accountability.

Under the framework, which will be supported by legislation and regulation changes, decommissioning activities are now subject to tighter regulations.

One such change has removed the ability of oil and gas companies to avoid their decommissioning responsibilities through title transactions.

As it stands, oil and gas companies must give assurances of their financial obligations when it comes to decommissioning, however, there has previously been no ability by the Title Administrator to assess “indirect” transactions where companies changed ownership or there was a change in titleholder entity.

The new Enhancing Australia’s decommissioning framework, released for consultation in December, identified the need for transparency and oversight of commercial transactions and change of ownership and control of a titleholder entity through a corporate merger, acquisition or takeover.

It found that in recent years, there had been “occasions where companies have entered or exited Australia’s regime through a change in company control”.

Another change included in the framework is to improve the accountability and trailing liability of oil and gas companies.

To ensure the risks and liabilities of petroleum activities remain the responsibility of companies “who have derived the greatest financial benefit from the project” the government’s scope to “call back” a previous titleholder to remediate a title area or conduct other activities will be strengthened.

In addition, once a decommissioning activity is complete, information will be publicly available to enable stakeholders to understand how a titleholder has met its decommissioning obligations and the environment has been remediated.

Other key elements of the approved enhanced framework include increased oversight of financial assurance, including the use of bonds and securities; modernising field development plans; and early and proactive use of remedial directions powers.

On revealing its approval of the new framework, Federal Resources, Water and Northern Australia Minister Keith Pitt recently said it would ensure the offshore decommissioning framework was “clear and fit for purpose”.

“Australia’s offshore oil and gas industry has supported Australia’s energy security and economic activity for over 50 years and it will continue to be an important economic and energy security driver for the foreseeable future,” Mr Pitt said.

“The enhanced framework will make certain that there is effective regulatory oversight and robust financial and accountability safety nets for offshore oil and gas decommissioning requirements.

“It will strengthen protections for the environment, the industry, the Australian government and taxpayers.”

Currently there are three main options for decommissioning property: complete removal, partial removal, and re-purposing or reuse.

And while the federal government’s ‘base case’ for decommissioning is complete removal, several companies that operate in and around Gippsland have investigated whether leaving sub-sea structures in place as ‘reefs’ could be environmentally “beneficial” for marine life.

The CSIRO is also working to help identify alternative methods of decommissioning that minimise risk to the environment and cost to industry.

One proposal is that sub-sea structures can be left to become part of the marine environment and act as hard surfaces for corals and other marine life.

However, in its submission to the review of the decommissioning process, Greenpeace Australia submitted that any attempts to weaken the presumption for removal of platforms, were led by “underlying desire to cut costs of the decommissioning program in the years ahead”.

The environmental group’s submission disputed arguments that end-of-life structures could provide vital habitat for marine species, and called for the government to focus greater attention on reducing pressures on marine systems “from other human activities”.

In a recent newsletter, ExxonMobil Australia stated that as the operator of some of Australia’s most mature oil and gas fields, it was committed to decommissioning its Bass Strait offshore facilities “at the right time, and in the right way”, to ensure a consistent and effective approach to decommissioning across the country.

However, records from NOPSEMA show it does not always meet industry standards, having been issued with five directions orders in 2019 and four in 2018 requiring it to either complete health and safety improvements or maintenance works on its Bass Strait infrastructure.

The oil and gas giant has said its decommissioning program in Bass Strait this year will include the use of a platform-based rig to plug and abandon wells at its Kingfish B and Fortescue fields, as well as remove platform-based conductors from the Mackerel platform.

The company said its “Australian decommissioning team is using learnings from our experiences in other locations, and liaising closely with our decommissioning centre of expertise, to ensure our local decommissioning activities will meet regulatory, community, government and importantly, our own, high expectations”.

So far, the company has unplugged and abandoned its Blackback, Whiting, Seahorse, Tarwhine and ackerel wells, which has been an expensive exercise requiring specialist vessels, people, technology and equipment, including the use of semi-submersible, jack-up and platform-based rigs and remote operated vehicles, as well as a support network including a heliport and helicopter fleet for transporting workers, a shore base and multiple marine vessels to move materials, equipment and supplies.