Not surprisingly, ENI has halted the sale of its Australian assets, valued at around $1bn, after they failed to attract satisfactory bids, as reported by Reuters last month. by Andrew Hodinkson, Senior Engineering and Resources Adjuster and Regional Head - Australia and New Zealand and Nigel Lloyd, Senior Engineering and Resources Adjuster, for Insurance Day, first published on 15 February 2021: Viewpoint: Insurance is critical to the decommissioning of offshore installations. Importing these capabilities will be costly, so it is important that Australia develops expertise locally. Australia's legislation steps up scrutiny of asset sales to ensure any new owner has the financial and technical capacity to handle decommissioning. The enormous liability accumulated since ExxonMobil drilled Australia's first offshore well in 1965 has been revealed just months after two moves to tighten offshore decommissioning regulation. Titleholders are permitted to propose decommissioning options. There has been a heightened focus on decommissioning activity in recent times as decommissioning activity in the petroleum sector is expected to increase in coming years, with certain late-life offshore projects approaching cessation of production in Australia. With over 2,000 offshore oil and gas facilities in just the United Kingdom, Australia and South East Asia alone, recent reports suggest from 2021 the annual global expenditure on decommissioning . This is serious business, because Nopsema will challenge any arguments made by titleholders that attempt to inaccurately represent the feasibility or practicability of complete removal of infrastructure. "It can be done and we'll definitely see that being included in contracts going forward," he said. In 2020 NERA commissioned the first assessment of Australia's offshore decommissioning liability, produced with support and involvement from oil and gas operators. This places significant environmental, clean-up and disposal burdens on energy companies, which lead to expensive but mandatory costs. The short answer is increasingly “no”. Found inside – Page 653In 2006 the Australian Government announced project funding under its A $ 500 million Low Emissions Technology Development Fund ... Australia has had relatively little experience in decommissioning offshore petroleum facilities . Peter Milne. The 2020 Consultation Paper is part of the Australian Government's ongoing review of Australia's offshore decommissioning framework, launched in 2018. Part A looks at decommissioning and the oil and gas life cycle. Part B contains chapters on decommissioning and international law. Part C focuses on decommissioning in the North Sea. Part D provides an international comparative analysis. Found insideIn the ensuing period, the science has advanced considerably. This practical guide is a revised and much expanded second edition, which will be a valuable tool for environmental practitioners. This study presents options to speed up the deployment of wind power, both onshore and offshore, until 2050. It builds on IRENA’s global roadmap to scale up renewables and meet climate goals. ENI's plan to sell out of Australia and leave offshore decommissioning liabilities to others has struck trouble from regulator NOPSEMA and new Government policy proposals. This webinar is a timely opportunity to hear from leading regulatory experts on the latest developments in the Australian offshore petroleum industry on decommissioning. Specialists in these various fields have been brought together for this volume to contribute their assessments of the situation. The result is an important step toward the development of a co-ordinated approach to the subject. The Australian Government has also opened consultations on a revised policy framework for the offshore oil and gas industries to ensure project developers and operators can safely decommission offshore projects when they come to an end. "There is no doubt decommissioning of offshore assets will be taken seriously by the regulators and the federal government and that costs will be increasingly high (estimated to be in excess of $20bn over the coming decades)". Decommissioning refers to the safe and sustainable closure of a production facility, in this case the decommissioning of the Griffin field and pipeline. This book on hydrocarbon exploration and production is the first volume in the series Developments in Petroleum Science. Jason Medd, Director Environment, Health, Safety & Exploration, APPEA. The Walker Review. The country's oil and gas regulator, SKK Migas, said in July it has prepared a decommissioning roadmap for 100 platforms no longer in use, and is considering reusing facilities, including as reefs, to monitor weather or for border security. To ensure Australian taxpayers do not bear these costs, the Federal Government announced the introduction of a temporary levy on all offshore petroleum production in the 2021-2022 Federal Budget. Australia is signatory to a number of international conventions relevant to offshore oil and gas decommissioning: . Found inside – Page 21The British industry anticipates more than 200 decommissions until 2025. The decommissioning of offshore oil and gas installations is only in pioneering stage in the North Sea, Australia and New Zealand where ... Organized by the Australia-Pacific Chapter. 2020 Consultation Paper) 6. reflect the increasing significance of ESG performance. On 17 January 2018, the Department of Industry, Innovation and Science (Department) released its guideline on the application of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) ( OPGGSA) to the decommissioning of offshore petroleum infrastructure in Commonwealth waters . Found insideThis book clearly presents the working knowledge of subsea operations and demonstrates how to optimize operations offshore. Centre of Decommissioning Australia (CODA) The Centre of Decommissioning Australia (CODA) was established by NERA to help build an innovative, collaborative and technology-led approach to accelerate Australia's energy transition, to ensure the $50 billion decommissioning challenge is harnessed as an opportunity and to support commercialisation of energy transition opportunities. Decommissioning an offshore facility is a "petroleum activity" for the purposes of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 made under the OPGGSA . This webinar is a timely opportunity to hear from leading regulatory experts on the latest developments in the Australian offshore petroleum industry on decommissioning. "Given the trend of the large oil and gas companies exiting the region and the entry of smaller players who are less financially secure ... principles such as trailing liability could be something which the country and Petronas explore in order to mitigate some of these risks," said Fariz Aziz, a partner at Malaysian law firm Skrine. The Bill intends to regulate the construction, commissioning (and decommissioning . The facility, known as Northern Endeavor, consists of a floating production, storage, and offloading vessel that had been permanently moored in the Timor Sea. On 17 January 2018, the Department of Industry, Innovation and Science (Department) released its guideline on the application of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) ( OPGGSA) to the decommissioning of offshore petroleum infrastructure in Commonwealth waters . In January 2018, the Australian Department of Industry, Innovation and Science issued the Offshore Petroleum Decommissioning Guideline 1 (Guideline), the purpose of which is to clarify the application, operation and interaction between components of the regime for decommissioning offshore petroleum infrastructure in Commonwealth waters. Last year, Nopsema announced it would be applying heightened scrutiny to the planning and execution of decommissioning during assessment of permission documents and activity inspections. Organized by the Australia-Pacific Chapter, Stuart Barrymore, Partner, Herbert Smith Freehills Australia opens first decommissioning center. Decommissioning involves the timely, safe and environmentally responsible removal of, or otherwise satisfactorily dealing with, infrastructure from the offshore area that was previously used to support oil and . "If you get everything else right, one would hope you would never find yourself in a position where trailing liability has to be exercised," said Andrew McConville, chief executive of the Australian Petroleum Production and Exploration Association, the industry's main lobby group. 3 For example, the decommissioning liability in Australia is estimated to be more than AU$60 billion between 2020 and 2050. Typical risks that may attach to a decommissioning project include: inappropriate disposal of hazardous materials (asbestos, oils, mercury), unsafe deconstruction leading to injury or property damage, leaking wells post-plugging leading to impacts to sea-life and environment and so on. I agree to keep confidential and private all information provided in this webinar, including the handouts and presentations found in this webinar, strictly for my own use and not to share, forward, distribute or make available any of this information for persons who are not members of AIPN or persons who have not paid to view this webinar. This book will explore these topics together in a way that will be understandable to the non-expert, and those who are expert in one field, but wish to see their expertise discussed in the overall context. Production levels had dropped to less than 10% of peak production at the time of sale, yet Noga had plans to resurrect production levels for this ageing facility. In Malaysia, if a company's operating contract has expired before decommissioning work is done, the work is picked up by state-owned Petronas, exposing it to issues such as currency risk, which can blow out rehabilitation costs. Found inside – Page 295Thailand decommissioning guidelines for Upstream Installations. ... Smith, A. and King, J., Oil and gas regulation in Australia: overview. ... S. and Van Merwyk, T., Decommissioning Offshore Petroleum Facilities in Australia. Found insideOffshore Petroleum Regulator for Environment and Decommissioning (UK): ... Innovation and Science (Australia): http://www.nopta.gov.au/_documents/guidelines/decommissioning-guideline.pdf (accessed 21 September 2018) ... The Department is expected to provide the final framework and an implementation plan to the relevant Minister for consideration in 2021. An additional 2,000 offshore projects will be decommissioned between 2021 and 2040, the report noted, and total expenditures from 2010 to 2040 will amount to $210 billion. His 20-year career includes senior positions within government petroleum policy and reform, the petroleum industry and advocacy. Decommissioning an offshore facility is a "petroleum activity" for the purposes of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 made under the OPGGSA . The report by Advisian, Worley's global consulting business, concluded that there is more than $50 billion (US$40.5 billion) of necessary decommissioning work on Australia's offshore oil and gas . WoodMac's Harwood said Southeast Asia will likely see more examples of arbitration when there's a disagreement on who foots the bill, but trailing liability is set to become a feature of new contracts. The biting “teeth” in this process is the Section 572 Maintenance and Removal of Property Policy, which came into effect in April 2020. As Australia's offshore petroleum industry continues to mature, there will be an increased focus on the management of mid-to-late-life assets. The levy, to be applied at a rate of $0.48 per barrel of oil equivalent, is intended to continue until all costs associated with the decommissioning . In December 2020, Keith John Pitt, Australia’s minster for resources, water and Northern Australia, advised the maturing offshore industry will see see an increasing number of projects and assets reach the end of their productive lives and there will be a move into a decommissioning phase over the next two decades (see box). There are tracing and anti-avoidance provisions, to capture any change in control in the chain of entities that control the titleholder. Its purpose is to remove or otherwise satisfactorily deal with, in a safe and environmentally responsible manner, infrastructure previously used to support operations. The Australian Government has approved a range of measures aimed at enhancing and strengthening Australia offshore oil and gas decommissioning framework. The McGowan Government This text provides a real insight into the legal and policy ramifications in Australia. Centre of Decommissioning Australia (CODA) There is more than $50 billion of necessary decommissioning work to be done on Australia's offshore oil and gas infrastructure, over half of which needs to be started within the next ten years. As the operator of some of Australia's most mature oil and gas fields, ExxonMobil Australia is committed to decommissioning our Bass Strait offshore facilities at the right time, and in the right way. Depending on the facilities, decommissioning may involve: Full removal of equipment. The earlier examples and issues have led the Australian federal government to review the decommissioning process in more detail. The Western Australian Government has identified decommissioning as an essential operation requiring cooperation, scientific research and technical innovation. The Result: On 2 September 2021, the Offshore Electricity Infrastructure Bill 2021 ("the Bill") was introduced into Australian Parliament. However, substantial offshore assets in Brazil, Norway, Thailand, Angola, Nigeria, Australia, and elsewhere are also set to reach the end of their economic life in the coming years and require decommissioning. Noga was placed into liquidation and it became apparent the Australian government now had an unexpected decommissioning project on its hands. Oil, Gas, and Mining: A Sourcebook for Understanding the Extractive Industries provides developing countries with a technical understanding and practical options around oil, gas, and mining sector development issues. Decommissioning offshore Oil and Gas installations is an inevitable part of the 'Life of Field' activities. Its members account for about 95 percent of Australia’s petroleum production. This is a difficult scenario to achieve. On 2 September 2021, the Minister for Energy and Emissions Reduction tabled two Bills in the Australian Parliament that will, if enacted, regulate the development and operation of offshore wind and other renewable energy in the 'Commonwealth offshore area' in Australia. Decommissioning Regulator calls time on delays to $52B offshore oil and gas decommissioning. Thailand wants Chevron to pay the full rehabilitation costs of around $2 billion for the Erawan field, including assets it is due to hand over to PTTEP. Over the next 50 years Australia's offshore petroleum industry's decommissioning liability is estimated to be US$21 billion.1 Australia currently has a robust and comprehensive regulatory regime in place to ensure all The Australian Government has approved a suite of measures aimed at enhancing and strengthening Australia's offshore oil and gas decommissioning framework. This webinar is a timely opportunity to hear from leading regulatory experts on the latest developments in the Australian offshore petroleum industry on decommissioning. Minister for Resources, Water and Northern Australia Keith Pitt said the measures will ensure the offshore decommissioning framework is clear and fit for purpose. (Courtesy Northern Oil & Gas Australia) Offshore staff, May 12, 2021 LONDON - Australia's latest Budget announcement on the upstream sector included a temporary decommissioning levy, which will be imposed on the country's offshore producers. In December 2020, offshore regulator NOPSEMA gave notice of stricter enforcement of existing regulations and has separately directed Italy's ENI and . A partner since 1988, Stuart Barrymore advises clients in the energy and resources industry, and acts for many major oil and gas producers operating in Australia. The 30th edition of the World Investment Report looks at the prospects for foreign direct investment and international production during and beyond the global crisis triggered by the COVID-19 (coronavirus) pandemic. This is a strong signal previous owners and operators will be held to account to pay for their liabilities associated with the decommissioning of offshore assets. Found insideoffshore oil and gas production growth will continue to exceed the growth of onshore production (Brakenhoff, 2015). ... exploitation of offshore oil and gas), accidents and the disposal and decommissioning of offshore oil installations. The Australian Department of Industry, Science, Energy and Resources released an enhanced offshore oil and gas decommissioning framework for review in December 2020 and is now considering input received from public consultation. In Western Australia, once decommissioning of infrastructure has been undertaken, the registered holder/operator must restore the petroleum title area to its pre-activity state, unless otherwise agreed with the regulator. The cost of decommissioning offshore facilities in Australia is expected to run to $40 billion, with half of that in the next 10 years. The present book focus its attention on these three dimensional animal structures including, for the first time, all the different types of animal forests of the world in a single volume. Legislation changes loom "And it could perhaps delay PTT's efforts to invest in those blocks.". But is it this easy? Stuart has advised operator/participants in: the North West Shelf Project; the Bayu-Undan Darwin LNG Project; QCLNG Project; Macedon Gas Project; Greater Sunrise; Papua LNG and numerous Carnarvon Basin ventures; his acquisition and divestment experience includes upstream transactions in Australia, Asia, Papua New Guinea, Africa and New Zealand and pipeline privitisation and trade sales.