The decommissioning challenge facing Australia is coming into sharp focus, presenting critical legal and contractual issues for all involved, according to law firm Wotton Kearney (WK).
In a recent update, the firm outlined the scale of the task facing operators, contractors and engineering teams against a regulatory environment that will be watching closely.
Over the next 50 years, Australia is expected to see more than US$40bn in offshore decommissioning activity, with most of that spend focused on well plugging and abandonment, as well as pipeline removal.
Titleholders are legally responsible for the full cost and safe removal of offshore infrastructure under the Offshore Petroleum and Greenhouse Gas Storage Act 2006, and must meet strict environmental and consultation obligations.
“While this signals significant economic opportunities for the broader Australian maritime sector,” WK noted in the update, “in an era when much greater focus and emphasis is placed on the green economy, decarbonising, and prioritising environmentally sound practices over economic expediency, it also raises questions.”
These questions include not only the technical feasibility in carrying out these complex and potentially hazardous operations, but also precisely what the decommissioning and environmental obligations are for operators and infrastructure owners.
“The media has recently focused on some high profile examples, such as Esso’s decommissioning plan for 12 platforms in the Bass Strait, Victoria, with the Maritime Union of Australia raising concerns that not all of the infrastructure will be removed,” the WK update added.
It noted that the discussion around Esso’s proposal has prompted debate as to what the 2006 Act actually permits.
“While decommissioning activities under the 2006 Act cannot commence without the titleholders securing a series of environmental approvals through the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), Esso’s decommissioning proposal includes leaving rigs in place and converting these into artificial reefs. This was previously done in the Gulf of Mexico.”
But the practice of leaving some infrastructure in place has created debate about the environmental implications and whether that breaches any legal obligations, WK added in the update.
In this regard, decommissioning involves a range of “complex and sometimes controversial issues,” WK stated.
Australia, like other nations, also has international obligations as a signatory to the United Nations Convention on the Law of the Sea 1994 (UNCLOS), which is the primary international legal instrument governing decommissioning.
What it means is that “complying with regulatory requirements for decommissioning is far from the straightforward.”
That is purely from a legal and regulatory perspective, without the additional burden from any public scrutiny or reputational risks arising from decommissioning activities.
“It’s therefore crucial to develop an appropriate strategy with appropriate stakeholders, align this with insurance cover, and coordinate execution of this plan with logistic and supply chain suppliers,” WK added.
The law firm is exploring some of these issues in a series on decommissioning to identify key issues for stakeholders and to help navigate the uncertainties ahead.
A recent breach flagged by Australia’s offshore regulator Nopsema during decommissioning activities on the Stybarrow field highlights some of the hazards now facing operators.
As Australia’s decommissioning effort gathers pace — an industry estimated to be worth US$60bn over the next few decades — oil and gas operators must seek to navigate what is becoming an increasingly complex legal and regulatory minefield.
Nopsema recently issued US-based offshore contractor McDermott with an ‘Improvement Notice’ citing safety concerns on its DLV2000 construction vessel.
The ship was undertaking decommissioning activities at the Stybarrow field for operator, Woodside Energy, but was ordered to cease work until it had rectified any breaches.
A Nopsema inspector visited the ship in March and raised concerns about the securing of a portable generator, which it was claimed could have resulted in heightened health and safety risks to personnel on board.
“The incorrect securing of the generator resulted in the generator shifting, when the generator was used as a secure point for belaying a tag line, subsequently the tag line became snagged,” the Improvment Notice stated on 20 March, 2025.
“The Manual does not describe the assurance procedure to ensure the generator has suitable sea fastening.”
The status of the case has now been marked as ‘Complied With’, which suggests that McDermott took immediate action to rectify the issue.
It highlights the increasing glare of regulators on the industry as it grapples with the decommissioning challenge.
Nopsema has scrutinised the work of other offshore contractors in recent times, including Subsea 7, though this was not linked to decommissioning activities.
The Stybarrow development is situated within production licence WA-32-L located on the North West Shelf in Commonwealth waters ranging from 700 to 850 metres in depth, approximately 51 km northwest of the North West Cape, Western Australia.
First oil was produced at the field in 2007 and production ceased in 2015.
Subsea infrastructure connected the field’s reservoirs to the Stybarrow floating production, storage and offtake (FPSO) facility, which has already been removed.
At the cessation of production, all wells were bull-headed and valves were pressure tested and closed, while flowlines were flushed with treated seawater.
Ongoing operations involve periodic surface and subsea inspections of the remaining subsea infrastructure.
“Well abandonment and full-field decommissioning of the remaining infrastructure will be undertaken at a future point in time and will be subject to separate approvals for this phase of activities,” Nopsema states in an information resource on its website.
Australian law firm Johnson Winter Slattery (JWS) has released a paper on some of the legal issues surrounding what it calls the 'rising regulatory scrutiny' on offshore petroleum assets.
It has been estimated that around 5.7 million tonnes of decommissioning material will need to be removed from Australian waters over the next 30-40 years at a cost of around US$60bn.
The document — entitled ‘Navigating the Waters of Decommissioning: Legal Obligations and the Rising Regulatory Scrutiny on Offshore Petroleum Assets’, by Rebecca Cifelli, a Partner at JWS — highlights key steps and processes facing operators and contractors in this fluid environment.
“Decommissioning forms part of the offshore petroleum lifecycle,” the paper notes. “Obligations to remove or appropriately deal with property arise for titleholders, not just at final cessation of operations, but throughout the operation phase as assets within an operating field reach the end of their useful life.”
As the Australian oil and gas industry matures, a number of fields are reaching end of life. Accordingly, the paper notes, decommissioning liabilities are coming into “sharper focus” for both industry and regulators.
“Regulators are increasingly concerned that titleholders meet their obligations during the operations phase by proactively decommissioning throughout the life of the project and planning for decommissioning as early as possible,” it notes.
This is reflected in The National Offshore Petroleum Safety and Environmental Management Authority’s (NOPSEMA) information paper, ‘Planning for proactive decommissioning’ and its ‘Decommissioning Compliance Strategy 2024-2029’.
NOPSEMA sets out its expectations that titleholders engage in planning for decommissioning from the inception of a project and detail this planning in environment plans (EPs) submitted under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGSA).
The JWS paper goes on to other key areas of interest such as decommissioning obligations in Commonwealth waters and the timing for removal of physical infrastructure and assets.
NOPSEMA’s ‘base case’ for all offshore operations is the full removal of all property unless an alternative arrangement is accepted, it adds.
In terms of timelines, Section 270 (OPGGSA) requires decommissioning to be completed on a title before it is relinquished. However, the OPGGSA does not otherwise stipulate any timeframes for the completion of decommissioning obligations.
The Australian Government and NOPSEMA have interpreted section 572 as requiring timely decommissioning. In the absence of any express timeframes in the legislation, NOPSEMA’s ‘Decommissioning Compliance Strategy’ 2024-2029 sets the following targets:
Non-producing wells: to be suspended with downhole barriers within 12 months of loss of real-time monitoring and permanently abandoned within 10 years of suspension.
Floating infrastructure: to be removed within 12 months of cessation of production (COP).
All wells: to be plugged and abandoned within three years of COP.
All other property: to be decommissioned to approved end state within five years of COP.
“While these are targets only, our experience indicates that NOPSEMA will apply them to its assessment of EPs and will need to be satisfied that departures from the targets are justified,” the JWS paper adds.
The vast majority of decommissioning liabilities are located off Western Australia and will therefore fall within the jurisdiction of either NOPSEMA or the WA Department of Energy, Mines, Industry Regulation and Safety (DEMIRS).
Victoria is the only other State that has significant property to be decommissioned in its coastal waters.
In the second half of 2024, the Victorian Government launched an inquiry into offshore petroleum infrastructure requiring decommissioning over the coming decades and the regulatory powers of the Victorian Government to ensure oil and gas producers meet their obligations.
The JWS paper also explores areas such as permissioning documents and early planning, as well as remedial directions and trailing liability.
Global Underwater Hub (GUH) and Subsea Innovation Cluster Australia (SICA) have signed an MoU to collaborate over the development of the subsea sector in both hemispheres.
Under the agreement, the organisations will actively promote opportunities for their subsea supply chains in both countries and share market intelligence and learnings around diversification strategies for the energy transition and defence operation.
GUH Chief Executive, Neil Gordon, said, “Australia has a broad conventional energy mix with strong ambitions towards net zero […] crucially, and similar to the UK, Australia champions a just transition which builds in energy resiliency and security with opportunities in sustained oil and gas production, decommissioning and carbon capture.”
Gordon also highlighted the continued production within the oil and gas industry within Australia where there are opportunities within new developments as well as in the expansion oil current production by leading operators including Woodside and Santos.
He added, “Decommissioning is a significant opportunity in Australia where the inventory of subsea assets requiring to be decommissioned includes over 1,500 wells and structures and 4,500km of pipelines with major opportunities for specialist plugging, cutting, inspection and recovery technologies.”
SICA Cluster Manager, Colin McIvor, commented, “This MoU marks an important step in strengthening collaboration between Australia and the UK’s subsea sectors. By working with GHU, we’re opening new opportunities for innovation, knowledge sharing, and international market access for SICA members. Both organisations bring unique strengths: SICA’s agility and cross-sector innovation focus and GUH’s depth of experience and established global networks. By sharing these, we can deliver real impact for established and emerging industries and accelerate significant growth for both countries.”
Australia’s 2025 federal budget, unveiled this week, reinforces the government’s commitment to decommissioning, including the completion of the Northern Endeavour project.
Earlier this month, the Australian Government awarded COSCO Shipping Heavy Transport (COSCO) a contract to dry tow the Northern Endeavour FPSO vessel to its recycling location.
The Hua Rui Long semi-submersible heavy lift vessel will tow the Northern Endeavour to a facility for decontamination, dismantling and recycling. The FPSO measures 274 metres in length, meaning there are only a few vessels in the world capable of carry something of this magnitude. Securing a vessel in the right timeframes for this project marks a significant milestone for the programme.
COSCO will work with Petrofac to arrange for the FPSO to be towed to the recycling location after disconnection. The Department of Industry, Science and Resources released a request for tender to find a supplier to recycle the FPSO. Submissions closed on December 13th, 2024, and the Department is currently evaluating its options.
Liberty Industrial has completed the onshore deconstruction and recycling of the Santos Campbell platform on behalf of McDermott International Ltd.
The project featured the Roll-On-Roll-Off procedure of the oil platform using Self-Propelled Modular Transporters (SPMTs) at the Australian Marine Complex Common User Facility (AMC CUF).
“The decommissioning of the Campbell platform exemplifies Liberty Industrial’s ability to tackle the intricate nature of onshore decommissioning, setting a benchmark for excellence in a rapidly growing industry sector,” said Jed Van Iersel, decommissioning manager at Liberty Industrial.
Van Iersel added that it highlighted the company’s ability “to meet all stakeholder requirements” and to handle complex marine operations.”
Following the offshore removal by McDermott, the Santos Campbell platform arrived at Port Henderson in three unique structures via barge.
These structures were safely transported via SPMTs to the onsite deconstruction yard for disposal and recycling.Liberty Industrial executed the Roll-On-Roll-Off procedures in just five days, following six months of meticulous planning with leading in-house and subcontractor engineers.
The deconstruction posed significant logistical challenges, the company added in a statement.
Each structure, the heaviest weighing over 600 tonnes, required a bespoke handling plan to ensure safe and efficient transfer from the barge to the decommissioning site, addressing various water displacement considerations and tight port schedules.
The remaining onshore deconstruction and recycling programme was completed on budget, on time, and with exceptional stakeholder satisfaction in 57 days, the statement noted.
Located in the Varanus Island hub, the Campbell Platform removal was contracted to McDermott in 2023, who then engaged Liberty Industrial for the task of deconstruction and waste recycling management.
All structures were deconstructed using suitable demolition excavators, with demolition of taller structures achieved by high reach excavators, oxy-cutting from EWP to pre-weaken structures before final induced collapse, the Liberty Industrial statement noted.
The materials from these structures were then downsized and moved to the processing area for segregating and processing using hot oxy-cutting and cold mechanical shearing, achieving a 99.5% recycling rate.
“We are extremely pleased with our ability to manage the complexities of the project by expanding our capabilities to include marine offloading operations and set a new benchmark for onshore decommissioning in Australia,” said Warwyck Smith, Decommissioning Project Manager, Liberty Industrial.
“We look forward to expanding on our already established and growing presence as a subject matter expert in onshore decommissioning in Australia and internationally.”
A major milestone has been reached regarding the decommissioning of the Northern Endeavour FPSO wherein an extensive well suspension and flushing campaign has been successfully completed.
The campaign started in September 2024, led by Phase 1 contractor Petrofac Facilities Management Limited (Petrofac). Sapura Constructor, the light well intervention vessel, has completed the works in the Laminaria-Corallina oil fields.
The critical work included temporarily suspending seven of the nine oil wells in the Laminaria-Carollina oil fields (two of the wells were previously suspended). The process involved closing off the valves that control pressure and flow on the sea floor, and installing two sets of specialised barriers at two different sections of the well to ensure fluids cannot escape.
The other part of the campaign involved flushing of nearly 30km of pipeline, including subsea umbilicals, risers and flowlines. The process ensures the pipeline are clear of hydrocarbons and hazardous materials before disconnecting the FPSO which is penned for the second half of 2025.
The completion of this well suspension and flushing campaign is a major step towards allowing the FPSO to be safely disconnected from the subsea infrastructure without leaking fluids into the ocean. More work will take place in later phases of the project to permanently plug and abandon the wells.
The decommissioning process comprises a total of seven stages, with preparation being the third stage.
This stage involves well P&A, cleaning, purging and isolation, and a preliminary categorisation of material streams. Using renewable energy sources like wind, solar or wave power to perform offshore decommissioning activities offers a plethora of environmental and cost-saving benefits.
Some notable applications include:
Australia’s total decommissioning liability is estimated at around US$40.5bn, with the region’s disposal industries, although being well placed, possess some critical knowledge gaps that urgently need addressing.
According to a report by CODA, a scenario mapping exercise based on the Strengths, Weaknesses, Opportunities Threats (SWOT) analysis was performed. From the analysis, the following potential disposal solutions were found to be ideal:
With the presence of an efficient domestic recycling industry and concrete recycling market, the waste management and recycling phase of Australia’s offshore decommissioning seems to be on track. However, a number of negative factors have resulted in the preference of abroad disposal over domestic disposal:
By working towards enhancing domestic disposal capabilities, Australia can not only reap economic and environmental benefits, but also promote technology and infrastructure development and adhere more strongly to local laws. This in turn helps in building public trust and reputation, thereby giving Australia a chance to position itself as a leader in sustainable offshore decommissioning.
A recent report by Macquarie University’s Centre for Energy and Natural Resources Innovation highlights a pressing issue regarding how the structural integrity and failure risks that come with offshore wells that are suspended, plugged or abandoned tend to be severely underestimated.
Wells that are not appropriately abandoned can pose a serious threat to the health of neighboring countries and the environment. Inadequate plugging can also result in excessive emission of methane, contributing to climate change. Moreover, leaks and operational issues can make them a significant safety hazard.
The report highlighted six recommended best practices and regulatory reforms that would be useful for handling plugged and abandoned oil and gas wells. Upon its launch, professor of Energy and Resources Law at Macquarie and writer of the report, Tina Soliman-Hunter, in collaboration with the members of the Maritime Union of Australia (MUA) urged the need to strengthen the regulatory framework for end-of-life offshore oil and gas assets.
CODA's forecast emphasised that around 51% of Australia's on- and offshore decommissioning liability will occur before 2030, with 23% occuring between 2031 and 2040. This liability considers the removal of offshore material, most of which comprises steel and concrete. The removal of a majority of offshore infrastructure material would depend on NOPSEMA requirements.
According to an article by Petroleum Australia, deputy leader of the Victorian Greens and Member of the Victorian Legislative Council, Sarah Mansfield stated that nearly 150,000 tonnes of methane were being emmitted by just a handful of surveyed sites each year. She also initiated the inquiry into abandoned and plugged wells, given Victoria's gradual transition towards renewables.
Global law firm Clifford Chance has provided its feedback on Australia’s recently-published roadmap for decommissioning, calling the blueprint a welcome development but one that needs "tangible" support to ensure success.
In its report – The Road to Decommissioning: Establishing a Global Decommissioning Hub in Australia – it charts the steps Australia plans to make following the release of the government’s long-awaited Offshore Resources Decommissioning Roadmap. In its closing remarks on where to next for the industry, Clifford Chance highlights some of the many opportunities –and challenges –ahead.
"There is significant potential for growth in the Australian decommissioning industry through involvement in upskilling employees, re-purposing existing ports and building facilities that will improve the efficiency of recycling decommissioned materials," it states. "The government's commitment to ensuring Australia is equipped to grow the decommissioning industry is a welcome development, which needs to be matched with tangible actions."
Testimony to Australia's continuing commitment to energy transition, the main objective of the roadmap is to develop a world leading decommissioning hub in Australia. This proposed hub will service global demands, seizing the opportunity to capitalise on the estimated US$60bn spend on decommissioning offshore facilities over the next 30 to 50 years. Among the growth opportunities highlighted by Clifford Chance are prospects for international collaboration. It notes that Australia lacks adequate vessels for engaging in heavy offshore decommissioning and there is also an opportunity for stakeholders to collaborate with other global markets to import machinery. Port modification is also seen as another area of opportunity. No existing Australian port researched by CODA and KPMG has all the required attributes to handle offshore decommissioning, Clifford Chance noted in its report. This means existing ports will need to be modified to host decommissioning.
But ultimately, this is only the beginning of the journey, it adds. "It is clear that the Australian government, and its state counterparts (who must come along this journey), are still in the information-gathering phase of developing the industry, as there has been a recent request for tender by the Department of Industry Science and Resources for technical advice relating to decommissioning.
"It is a long road ahead, but the areas of development highlighted by the government should act as a checklist for interested parties in ensuring that Australia is at the forefront of the decommissioning industry.
"The roadmap is a welcome and significant stepping stone in Australia’s energy transition journey, and in developing and fostering stakeholder engagement on Australia's ambitions to become a global leader in the offshore decommissioning sector. Australia's next step is eagerly awaited."
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