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Decom expansion for NOPSEMA can't prevent another NOGA

08 Apr 2020 5:56 PM | Sonia Harvey (Administrator)

THE offshore oil and gas regulator has issued a draft recommendation on decommissioning of oil and gas rigs, which is open for public comment after former resources minister Matt Canavan issued a ‘statement of expectations’  in November that it step up oversight of decommissioning activities.

All this already comes under section 572 of the Offshore Greenhouse Gas Storage Act but the National Offshore Petroleum and Safety Authority has outlined how it plans to oversee and enforce the section in more detail. 

It will not prevent another NOGA fiasco, however. 

Canavan said he expected NOPSEMA would "ensure that titleholders are appropriately planning for, and executing decommissioning activities in a timely and responsible manner". 

It was around this period when Northern Oil and Gas Australia went into administration and it was clear the small private company had little ability to decommission the aging floating storage production and offloading vessel, The Northern Endeavour, NOPSEMA had shut down in July over safety concerns. 

NOGA has since been liquidated and Canavan replaced by Keith Pitt  but the Northern Endeavour remains moored in the Timor Sea in lighthouse mode and no closer to a long term solution. Upstream Production Solutions, which had the original contract to run the vessel on a third-party basis, is taking care of maintenance. 

The vessel is under official control of the federal government.  

NOGA bought the vessel from Woodside Petroleum in 2016 and took over its operations along with the depleted Coralina-Laminaria oil fields, saving the latter significant decommissioning costs. 

New minister for natural resources Keith Pitt called the debacle a "wake up call to the Australian oil and gas industry" but did not outline what steps he might take as minister to prevent a recurrence of a similar event.  

Taxpayers could be liable for a $200 million-plus decom bill, despite Pitt's promises otherwise, but the new draft on section 572 does not take into account title transfer, or if an operator can meet the costs of its decommissioning plan under its wider Environmental Plan. 

New titleholders must submit EPs and decommissioning plans at that point but they are generally spartan given the long life of offshore assets.  

However each five year EP review must provide increased details. 

However unlike the titles administrator - which oversaw the transfer from Woodside to NOGA - NOPSEMA does not take into account an operator's ability to meet financial demands outside of its ability to manage oil spills. 

Given the issue is now with Australia's aging offshore infrastructure it is hard to see how the expanded rules could prevent the issue recurring. 

NOPSEMA said titleholders must remove all property in their title once it is no longer used "and only accepts alternative arrangements where justification is appropriate". 

Property applies to all equipment, including subsea and wells, brought into the area but the policy "does not cover financial liabilities that may be associated with property as addressed in the Australian Government Offshore Petroleum Decommissioning Guideline". 

Should property not be removed or an environmental plan submitted on how it might meet removal obligations "NOPSEMA may escalate to enforcement action… whether in relation to failure to maintain property or failure to remove property". 

Enforcement includes  "directing a titleholder or former titleholder to comply with the OPGSS act" or it may prosecute and "have either civil or criminal penalties applied".

Source: Energy News Bulletin

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