Australia

The Maritime Union of Australia (MUA) has launched a report produced alongside the Macquarie University’s Centre for Energy and Natural Resources Innovation and Transformation calling for a major shakeup in government policy and regulation for the dismantling, processing, recycling and disposal of offshore oil and gas infrastructure.

The report focuses on the decommissioning processes of offshore infrastructure and the necessary next steps once the structure are removed.  

MUA’s Assistant National Secretary, Adrian Evans, said, “Australian maritime workers built and maintained our offshore oil and gas industry throughout the latter decades of the 20^th Century, and with our eyes set firmly on the need to decarbonise our economy and diversify our renewable energy supplies the MUA is advocating for a sustainable and clean withdrawal from offshore oil and gas that includes the comprehensive removal and recycling of the massive volume of disused offshore equipment.”

The MUA and the Centre for Energy and Natural Resources Innovation and Transformation have examined Australia’s international and legal obligations and domestic laws relating to the decommissioning and disposal of the offshore infrastructures and have identified gaps in the legal framework, analysed best practice in mature jurisdictions and provided a series of recommendations for the development of the Australian government’s policy.

Mich-Elle Myers, MUA Assistant National Secretary, commented, “Offshore energy projects have provided generations of members with rewarding and fulfilling work building and maintaining the infrastructure that powers our economy. That’s not going to change with the shift to offshore renewable projects, and as older oil and gas projects wind down and come offline we have a collective obligation to remove and dispose of these installations thoroughly and sustainably.” 

The recent 'Decommissioning and Abandonment Australia 2023' conference held in Perth saw many insightful presentations from a distinguished list of speakers. On the legal and regulatory side, Ben Adamson, a lawyer from HFW, an international law firm specialising in offshore energy and maritime law, provided a diverse audience with an in-depth dive into Australia’s offshore decommissioning regime.

Ben kicked off his presentation with a briefing on the international framework relevant to decommissioning, which is driven primarily by United Nations Convention of Law of the Sea (UNCLOS) and the International Maritime Organisation (IMO). He then transitioned his presentation to discuss Australian legislation designed to enforce local decommissioning obligations. Of particular interest were his comments comparing and contrasting various national regulatory regimes, which appear to vary significantly between countries and offshore regions.

Ben pointed out that nothing in the Australian offshore oil and gas industry happens in a vacuum. An overlay of international laws and conventions exists that will continue to have a real effect on how Australia regulates the large pipeline of decommissioning work set to take place over the next two decades.

Revamped regime

The most important parts of the Australian offshore decommissioning regime are set out in the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and its various regulations. Parts of the Act relevant to decommissioning underwent a major overhaul in 2021 to make the legislation fit for purpose and to respond, in part, to an unfortunate series of events where the decommissioning of an Australian FPSO and associated offshore field fell at great cost to the Australian taxpayer following the insolvency of the titleholder.

As Ben set out, the Australian government appears anxious to avoid a repeat of such events. The central pillar of the revamped Australian decommissioning regime is that titleholders must maintain and repair all structures, equipment and property brought into a field. Once the structure, equipment or property is no longer in use, titleholders must remove it. If the current titleholder is not available, or is unable or unwilling to undertake decommissioning, the Australian government has the power to bring former titleholders (as well as a range of other parties) back to decommission the offshore asset.

Trailing liability 

The most important and topical of the changes to Australia's offshore decommissioning regime is what Ben described as trailing liability. Common in some other offshore jurisdictions around the world, trailing liability means that the government has the power, as a last resort, to 'call back' a past titleholder to remediate the environment or remove property. In that context, Ben raised some pertinent questions such as what would or could occur if at some distant point in the future a plugged well began leaking oil. Who will (or should) be brought back under a trailing liability regime to remediate it? Is it fair to force a former titleholder to decommission a well where that titleholder was at some point operating the field, but was otherwise not responsible for drilling or plugging the well?

In addition, Ben canvassed a number of other as-yet unresolved aspects of Australia's new decommissioning laws that arise from trailing liability. For example, what is the fair approach regarding small-percentage titleholders that form part of a joint venture comprising the titleholder? In the event that a former titleholder must decommission an asset, should they be entitled to tax breaks? Further, as Ben put it, can titleholders ever get a 'clean break' from a field after legitimately divesting their interest, if the spectre of trailing liability exists in perpetuity? As Ben concluded, current Australian decommissioning laws do not fully address these tricky issues, as well as a host of other issues raised by the new regime.

The second important point under the new Australian framework is that surrender of titles can only occur with the consent of the regulator. If a titleholder has not done the necessary decommissioning and the field is nearing the end of its life, Ben pointed out that with the passage of the amendments to the legislation, it will be difficult for the titleholder to transfer title, especially to a more speculative entity attempting to extract profit from an aging field.

In light of the major overhaul to Australia's decommissioning laws, Ben's opinion was that the most interesting aspect of Australia's updated decommissioning regime is how the regulator will manage its growing regulatory burden while upholding Australia's decommissioning obligations under international law. This is a complex and involved area that will evolve over time.

Increased accountability from titleholders

In terms of the role the Australian oil and gas regulator plays, the revamped decommissioning regime hands the regulator a new arsenal of powers to enforce titleholders' decommissioning obligations. Broad powers now exist to monitor and if necessary, intervene to stop, changes to the control of a titleholder, and passage of title from one titleholder to another.

Now, a change of ownership at the level of the titleholder is firmly within the regulator's grasp. Ben stated that players in the market can expect the regulator to act should it conclude, for example, that the entities taking control of a titleholder are not suitably resourced or experienced, or do not have the appropriate financial backing to carry out decommissioning. Before concluding his remarks about the new Australian regime, Ben reiterated that the trailing liability laws and powers to intervene in changes to control of the titleholder do not directly apply to contractors, employees, banks or customers.

The second part of Ben's presentation was a practical discussion on what a typical decommissioning contract may look like from a risk management perspective. He prefaced the discussion by setting out the typical options presented to those engaged in work offshore: either transfer risk, or accept it, insure against it, and price it in. Although decommissioning is a highly specialised undertaking, in Ben's view, the major themes and principles underlying contracts typically found in the offshore oil and gas sector would be relevant for offshore decommissioning contracts.

The offshore industry is a unique environment and there have been, over a long period of time, contractual terms developed that deal with the unique risk and liability issues faced in the offshore setting. Ben was clear that the typical knock-for-knock indemnity arrangements so common in the wider offshore and maritime world would likely be retained in decommissioning contracts, because these terms allowed contracting parties to either transfer risk, or assume it and insure against it.

Dealing with waste

Perhaps the biggest difference between typical offshore contracts and decommissioning contracts is how waste is dealt with. This aspect of Ben's presentation was directed to those in the audience who are preparing to deal with the vast volume of waste equipment, assets and material that is expected to be generated over the coming decades as Australia tackles its offshore decommissioning task. The big questions in this space are: what is to be done with the waste (some of it clearly hazardous) and crucially, how risk and title in the waste may be transferred between contracting parties. Ben recounted the difficulty his clients experienced exporting Australian offshore oil and gas waste overseas. As a final parting word, he challenged those present to develop local, home-grown waste disposal alternatives to avoid the issues arising in sending Australia's hazardous waste overseas.

Reflex Marine's STORM-WORK suspended work basket was successfully employed in its 100th offshore project in October 2020.

The STORM-WORK was designed specifically for offshore industrial work activities and was very well received by offshore operators across industries – heavylift, decommissioning, oil & gas, and offshore wind. ConocoPhillips in Australia is using the customised enlarged version of STORMWORK while the standard units have been employed in multiple projects throughout Europe, among others, with Seaway7.

The design, safeguarding both the workers inside the basket and the assets worked on thanks to the soft-touch features and contoured shape, is praised by users worldwide. The small footprint and light weight allow for improved manoeuvring, while the highly durable, low-maintenance materials used ensure long unit lifespan.

“The unit is excellent for accessing areas with obstacles and tight landing spaces," comments a STORM-WORK user from Boskalis. Reflex Marine’s innovative work basket design has been recognised by industrial engineering body LEEA with an award in the Safety category confirming the outstanding crew protection features and safety benefits.

STORM-WORK is available for purchase and hire and can be customised to meet the required size and capacity.

C-Kore Systems has announced the successful completion of a decommissioning campaign offshore Western Australia.  

The campaign was completed using C-Kore Sensor Monitor units to interrogate the wellhead pressure and temperature sensors on the oilfield. With their automated test routine, the Sensor Monitor units repeatedly tested and data-logged the information, allowing the operator to complete the campaign swiftly and safely.

Cynthia Pikaar, Sales & Marketing Manager for C-Kore, said, “It is fantastic to be working on this project in Australia. With an increasing number of orders for our Sensor Monitor tools, operators understand the value of our testing tools offer, automating and data-logging results. We look forward to working in Australia again on the next campaign.”

C-Kore Systems has a range of subsea testing tools used globally for decommissioning, fault-finding and new installation campaigns. The tools can be operated without the need for C-Kore personnel to be present, providing rapid feedback. The systems offer significant operational savings to testing campaign with the simple, accurate and reliable deployment. 

Relatively stable oil prices and a growing global oil demand is creating favourable dynamics for the oil and gas community in the near-future, however uncertainty is rife over how long this will last as the race to meet the Paris Agreement 2050 target intensifies.

While this is raising questions over further drilling activity offshore Australia, it is suggesting a promising future for the country’s well intervention market as operators seek to squeeze the last drops of oil out of existing assets and perform end-of-life work in preparation for the substantial decommissioning task ahead. At the same time, the offshore carbon capture and storage space is garnering significant interest and marks another tantalising frontier that is receiving Government backing.

Read Offshore Network’s full report to understand the background and nuances of Australia’s offshore well intervention market as well as the potential challenges (such as labour shortages and vessel availability) which threatens to stifle it. The full report can be found at: https://offsnet.com/australia-well-intervention-outlook?utm_source=Web+Article&utm_medium=Content+Download&utm_campaign=OWI+AUS

McDermott has been awarded an engineering, procurement and removal contract for offshore decommissioning work by Woodside Energy.

The award is for the full removal of the Stybarrow disconnectable turret mooring (DTM) buoy, as part of the decommissioning of the Stybarrow field located in the north-western Cape of Western Australia.

Under the contract scope, McDermott will provide project management and engineering services for the recovery, transportation and offloading of the DTM buoy to an onshore yard for dismantling and disposal.

Mahesh Swaminathan, Senior Vice President, Subsea and Floating Facilities, McDermott, said, “This award not only demonstrates McDermott’s proven track record in undertaking deepwater projects of diverse scopes, but it also highlights the critical importance of decommissioning in the offshore industry.

“With our seamless integration of engineering, fabrication, and offshore mobilisation expertise, we believe we are well-equipped to execute this project efficiently and responsibly, ensuring the safe recovery and removal of the Stybarrow DTM buoy.”

The DTM buoy will be removed utilising McDermott’s DLV2000 vessel, with the Perth-based team overseeing project management while engineering and fabrication support will be provided by the team in Kuala Lumpur, Malaysia, and Batam, Indonesia.

Global energy consultancy Xodus has been awarded a contract to provide technical and project support services for Phase One of the decommissioning of the Northern Endeavour FPSO.

Phase One covers activities to facilitate the disconnection and removal of the FPSO including topsides and subsea flushing and well suspension.

Xodus will be working on behalf of the Australian Government, providing advice and project coordination, regulatory and environment, health and safety, technical, quality assurance, and contract management as part of the agreement.

Alasdair Gray, Late Life and Decommissioning Lead at Xodus, said, “We have a highly experienced local team with several of our colleagues having extensive experience of the Northern Endeavour either from the early design and installation phase of the project or during production operations. This means that whilst being able to bring a fresh approach, the facility is already familiar to much of the team.

“We understand environmental sensitivities and the impact these can have on any proposed activity or execution plan. Expert technical advice and careful planning will be critical to the successful decommissioning of the offshore field in a safe and responsible manner. We are pleased to provide the necessary support to ensure that the decommissioning strategy is robust and ultimately compliant with regulatory expectations.”

The Northern Endeavour is a 274 m long FPOS which is permanently moored between the Laminaria and Corallina oil fields in the Timor Sea. The now redundant production system comprises a network of subsea wells tied back to the permanently moored vessel unit through a system of subsea manifolds, flowlines, umbilicals, and dynamic risers.

Helix Energy Solutions’ Q7000 vessel has berthed in Port Taranaki to carry out a crew exchange and load up on supplies before heading to complete the third stage of the Tui oil field decommissioning campaign, which is set to take approximately three months to complete.

Port Taranaki’s head of commercial, Ross Dingle, said the port was pleased to support the project, having also provided berthing services and laydown facilities for the first two stages.

Port Taranaki is working with New Plymouth-headquartered energy consultancy, Elemental Group, which is providing project management assistance of New Zealand operations for Helix Energy Solutions.

Nick Jackson, Elemental Group Director, said, “All up, there will be a team of more than 100 on the Q7000, over half being Kiwis and Aussies in operations roles working alongside the Helix crews, as well as several specialist roles, such as wireline and cementing.

“We’re excited to be a part of the project. I worked on some of the original Tui exploration wells, so it’s nice to be involved in restoring the mauri of the area.”