Australia

• Region: Australia
• Topics: Decommissioning
• Date: August, 2023

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.

• Region: All
• Topics: Decommissioning
• Date: August, 2023

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.

• Region: Australia
• Topics: Decommissioning
• Date: Aug, 2023

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. 

• Region: Australia
• Date: July, 2023

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.

• Region: Australia
• Topics: Decommissioning
• Date: July, 2023

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.

• Region: Australia
• Topics: Decommissioning
• Date: July, 2023

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.

• Region: Australia
• Topics: Decommissioning
• Date: May, 2023

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.”

• Region: Australia
• Topics: Decommissioning
• Date: Apr, 2023

Following new developments to the Decommissioning and Abandonment Australia 2023 programme, Offshore Network has released a revised agenda.

More than 250 decommissioning experts are expected to attend this year’s D&A AUS conference, being held at the Duxton Hotel, Perth, from 30-31 May. As the country’s largest decommissioning summit, attendees will receive unique access to updated regulatory guidelines, innovative technologies and valuable lessons which contribute to the success of upcoming campaigns.

With the forthcoming decommissioning wave more visible than ever, D&A AUS 2023, like its predecessors, will serve as a meeting point for the industry to get ahead of the challenge and unlock the opportunities held within. Now, there is more incentive to join the community in Perth this year, with new presentations and tech displays added to the agenda.

Notably, Craig Baxter, Decommissioning Technical Manager from Claxton Engineering will present on innovation and collaboration in underwater laser cutting, allowing attendees to access insights into the tools capabilities and understanding of where the technology can be utilised best.

Visitors will now also be looking forward to a presentation from Richard Bazen, Sales Director of Energy from RemSense. At the conference, Bazen will look at mitigating the risk of HSE and decommissioning liabilities using photogrammetry based digital twins. With the digital age firmly upon us all, this is one session not to be missed.

Offshore Network has now announced additional facets with AF Offshore Decom presenting and Trident Australia exhibiting at the conference. Furthermore, the organiser has revealed group bookings from Woodside, Santos, Weatherford, Mann Group, Tetra Tech and more.

Find all relevant information and the agenda in the brochure here: https://offsnetevents.com/da-aus/

Or contact:
Erin Smith
Global Accounts & Australasia Regional Manager
Offshore Network Ltd.
t: +64 (0) 3 569 3074 | e: This email address is being protected from spambots. You need JavaScript enabled to view it. | www.offsnet.com

• Region: Australia
• Topics: Decommissioning
• Date: Jan, 2023

Pressing climate concerns and an overall healthy oil price across 2022 have set the stage for Australia's decommissioning industry to flourish, according to a new report published by Offshore Network.

Reports estimating that oil prices through 2027 will stay at a healthy rate of approximately US$90 per barrel bodes well for the decommissioning industry as companies can consider liability expenses even more open-handedly.

The government-backed Northern Endeavour project has triggered a flurry of decommissioning prospects to swing into action; a trend that is expected to continue over the next few years. Because of this, promising engineering companies like Wood and Monadelphous are being shot into the limelight, as the government onboarded them for various roles on the Northern Endeavour decommissioning.

Companies like Santos, Woodside, BHP and Vermillion Energy have signed up for kick-starting end-of-life activities, with ExxonMobil leading the way. Chevron has ongoing decommissioning projects onshore and offshore at Thevenard Island, which was rendered inactive in 2014. NOPSEMA has granted decommissioning approval to companies like Woodside, BHP and Cooper Energy early last year. Decommissioning activities in the Enfield Oil Field are being conducted by Woodside in phases, and is expected to be completed by 2024. Australia is financing research initiatives and organisations are tying up to tackle the challenges of decommissioning through knowledge sharing. Xodus, along with ANSTO, SA Radiation, Total Hazardous Integrated Solutions and Qa3, form the Contaminant Advisory Group that helps operators to work through the government’s OPGGS bill.

This flurry of activity has been prompted by a government determined to ensure that decommissioning responsibilities are carried out. The new Offshore Petroleum and Greenhouse Gas Storage Amendment (Titles Amendment and other Measures) Act 2021, makes sure the entities intending to carry out petroleum or greenhouse gas activities are capable, competent and responsible in proper discharge of obligations under the act.

The Centre of Decommissioning Australia (CODA) has estimated the decommissioning expenses of the Australian oil and gas industry to reach as high as US$40.5bn, considering the nation's significant asset stock. According to a report by Rystad Energy, 890 offshore wells in total were drilled in Australia before 2015, of which 108 have been permanently abandoned. Around 440 wells are P&A candidates, the majority of which are in the Gippsland Basin.

Based on the identified numbers, CODA has come up with a comprehensive liability report, to serve as the go-to manual for operators when it comes to making smart economical choices. Critical to this, as stressed by Francis Norman, CEO and Managing Director of CODA, is the importance of collaborative campaigning and in-situ decommissioning as effective cost-cutting measures.

Players like CODA are guiding the Australian decommissioning industry through the climate conundrum through strikingly innovative approaches. One of them is the rig-to-reef concept, which involves a special combination of materials that resulted in the Exmouth Integrated Artificial Reef, better known as the 'King Reef' in the Exmouth community. It combined 49 purpose-built concrete modules with six steel structures from a BHP-operated field that is no longer in use, providing home to 27,000 cu/m of new marine habitat. As incredible as that sounds, operators must have clarity about the risks involved as well, so that they can keep pushing barriers through innovation.

With every stakeholder working in tandem and taking onboard lessons from other more developed regions, the Australian industry can ensure that the forthcoming decommissioning wave can be weathered.

• Region: Australia
• Topics: Decommissioning
• Date: Jan, 2023

Esso Australia, a subsidiary of Exxonmobil Australia, has entered into an agreement with Helix Energy Solutions to charter the Helix Q7000 semisubmersible vessel to support decommissioning activity across the Gippsland Basin.

The vessel will join Esso Australia’s growing fleet, with its roster of mobile offshore assets now including Rig 22, the HWT600 and a DOF Subsea Multi-Purpose Support Vessel.

Dylan Pugh, ExxonMobil Australia’s Chair, said, “The Helix Q7000 is a welcome addition to our extensive fleet of vessels and rigs currently operating across the Gippsland Basin. It is the forth mobile offshore asset we have added to our decommissioning fleet, and marks the first time we will be using a light well intervention vessel for subsea work locally.

“We are committed to sourcing the right assets for the work we are completing, given the variety of fields we have operated for over 50 years. Our priority is to remain safe, whilst using fit for purpose solutions which ensure we are meeting our decommissioning requirements.”

The Helix Q7000 is set to support decommissioning activities in Bass Strait from the end of 2023.

• Region: Australia
• Topics: Decommissioning
• Date: Oct, 2022

The decommissioning of the Northern Endeavour facility has reached a significant milestone as contractor Petrofac Facilities Management Limited (Petrofac) has begun Phase One of the decommissioning process.

The process will see the Northern Endeavour disconnected from subsea equipment and the suspension of the oil wells.

The facility is moored in the Commonwealth waters in the Timor Sea, between the Laminaria and Corallina oil fields. It stopped oil production in 2019, after being shut down by National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) for immediate breeches in health and safety.

“The Australian Government remains committed to the successful decommissioning of the Northern Endeavour, the removal of infrastructure and the remediation of the Laminaria and Corallina oil fields,” said Madeleine King, Minister of Resources and Northern Australia.

“Petrofac taking operational control is a significant step in the decommissioning process.”

The US$355mn contract was drawn up with Petrofac in March 2022 to deliver the first phase of the decommissioning project.

• Region: Australia
• Topics: Decommissioning
• Date: Sept, 2022

Engineering company Monadelphous Group Limited has secured a contract to provide operations, maintenance and industrial services to support Petrofac in the decommissioning of the Northern Endeavour Floating Production, Storage and Offtake (FPSO) facility.

The Northern Endeavour is a 274 m long FPSO, permanently moored between the Laminaria and Corallina oilfields, approximately 550 km northwest of Darwin in the Timor Sea. Production began in 1999 and peaked at 170,000 barrels of oil per day.

In 2019, the facility was shut down by NOPSEMA after an immediate threat to health and safety was found at the facility. After owners Northern Oil & Gas Australia went into liquidation, it fell to the Government to maintain and ultimately decommission it.

Petrofac was contracted earlier this year as outsourced operator responsible for decommissioning and disconnection of the FPSO. The scope includes the provision of its unique integrated services, working with both local and global suppliers.

The support to Petrofac represents Monadelphous’ first offshore decommissioning contract with work expected to be completed in the second half of 2023.

It represents a host of new contracts and contract extensions awarded to Monadelphous totalling approximately US$160mn.