Decommissioning

Decommissioning is a normal and inevitable stage in the lifetime of an offshore petroleum project that should be planned from the outset, and matured throughout the life of operations. 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 gas operations.

While only a few facilities have been decommissioned in Commonwealth waters, most of Australia’s offshore facilities are now more than 20 years old and entering a phase where they require extra attention and close maintenance before their removal.

At the Australian Government’s direction, NOPSEMA is giving heightened focus to oversight of the planning and execution of decommissioning including during assessment of permissioning documents and inspections of facilities and activities. To support this, NOPSEMA published its Section 572 Maintenance and removal of property regulatory policy in 2020 and has published a 5 year Decommissioning compliance strategy. This compliance strategy has been developed in accordance with the wider expectations of government, set out in the Ministerial Statement of Expectations for NOPSEMA.

Legislative and regulatory changes are being considered through the enhanced decommissioning framework being developed by the Department of Industry, Science, Energy and Resources. In the interim, current laws apply and NOPSEMA will apply these until laws are amended or new functions commence. Refer to the Department’s website for further information on the Enhancing Decommissioning Framework Review.

Decommissioning compliance strategy

NOPSEMA is implementing a 5-year strategy to ensure consistency, transparency and certainty of decommissioning obligations.

The Decommissioning Compliance Strategy (PDF 85KB) includes a series of objectives to achieve the overarching goal that decommissioning is completed by titleholders in a timely, safe and environmentally responsible manner. The strategy communicates how NOPSEMA will continue to work with its stakeholders to promote, oversee and enforce decommissioning related requirements and undertake compliance actions in a risk-based way where a higher risk of non-compliance with decommissioning obligations is identified. It also provides greater certainty on how to comply with decommissioning obligations and ensure appropriate decommissioning outcomes are achieved.

Image - Decommissioning Compliance Plan - Figure 1

Decommissioning compliance plan

The Decommissioning Compliance Plan (PDF 916KB) has been developed to support successful implementation of one of the objectives of the strategy to ensure appropriate planning and completion of decommissioning. The compliance plan aims to ensure consistent, transparent and risk-based compliance actions is taken in relation to compliance risks. The plan identifies the types of regulatory compliance actions that titleholders can expect to be considered by NOPSEMA depending on the risks presented by each case as summarised below.

What is the level of regulatory intervention I may expect?

What are the triggers that will result in this type of compliance action?

What type of compliance actions may be applied?

1. Higher level of regulatory oversight

  • Field is in a permanent state of non-production

  • No permissioning document in place to conduct necessary decommissioning activities

  • Suspended wells or infrastructure posing integrity risk

  • No/limited progress in executing field decommissioning to approved end-state

  • Evidence of integrity issues that are likely to limit decommissioning options

  • Asset sale being progressed

  • Compliance actions such as statutory General and Remedial Directions or formal requests for revisions to permissioning documents

  • Commencement of investigation

2. Moderate level of regulatory oversight

  • Approaching end of field life (EOFL) within 5 years

  • No permissioning document in place to conduct decommissioning activities

  • Some property is in non-production/wet parked with low integrity risk

  • Suspended wells with low integrity risk

  • Wellheads remaining in-situ with no accepted permissioning document

  • Integrity may become an issue in near term and limit future decommissioning options

  • Limited progress in executing field decommissioning to approved end-state

  • Potential asset sale being explored

  • Compliance actions such as formal request to revisions of permissioning documents or seeking advice on compliance with decommissioning obligations from titleholders

  • Verification of compliance through targeted compliance monitoring or assessment of permissioning documents

3. Lower level of regulatory oversight

  • Operational with end of field life in 5-10 years

  • Integrity may become an issue in longer term and may limit future decommissioning options

  • Permissioning document provides some detail on decommissioning activities

  • Regular promote and advise opportunities

  • Verification of compliance through routine compliance monitoring or assessments of permissioning documents

4. Routine regulatory compliance monitoring

  • Operational with end of field life in >10 years

  • No integrity issues

  • Permissioning document demonstrates compliance with requirements and describes decommissioning planning and execution activities

  • Some promote and advise opportunities

  • Verification of compliance through routine compliance monitoring or assessments of permissioning documents

Regulatory intervention is increasing

NOPSEMA’s compliance approach will initially focus on cases where titleholder’s planning and progress towards decommissioning is not being undertaken in a timely, safe and environmentally responsible manner. This may result in NOPSEMA taking compliance actions such as issuing directions to some titleholders specific to decommissioning and end of life requirements. The goal is to ensure that by 2023 decommissioning plans are in place for all wells, structures, equipment and property.

NOPSEMA will discuss the implementation of the compliance plan with affected titleholders, including seeking further information where required from titleholders on how they are complying with decommissioning obligations where compliance is unclear.

NOPSEMA will increase its oversight of new and revised submissions for petroleum activities to ensure that decommissioning requirements are considered throughout the operational life of the project and continue to conduct inspections to monitor compliance with the ongoing decommissioning obligations to maintain and remove property when no longer to be used for operations. 

In addition, for those cases identified to fall within the lower decommissioning compliance risks categories, NOPSEMA will focus efforts on promoting and advising on expectations and communicating cases of good practice directly with titleholders.

In parallel, NOPSEMA will also work collaboratively with stakeholders to develop further policy guidance, promote and share good practice and other supporting material to provide greater certainty on how to comply with decommissioning obligations and ensure appropriate decommissioning outcomes are achieved.

Feedback on NOPSEMA’s decommissioning policy guidance including the compliance strategy and plan is welcomed.

Decommissioning obligations explained

Legal requirements

Maintenance and removal of all structures, equipment and property are long standing legal requirements that apply to all property that has been brought into a title area.

Decommissioning activities are the responsibility of the registered holder of the title under which the activities take place.

Section 572 of the Act requires titleholders to:

  • maintain all structures, equipment and property in a title area in good condition and repair so that they be removed; and
  • remove these when no longer being used in connection with operations authorised by the title. 

This requirement is long-standing and has been in the legislation since 1967. Breaches of the requirements entail either criminal or civil penalty routes.

Section 270 of the Act requires NOPSEMA to be satisfied that titleholders have removed all property brought into the surrender area prior to surrender of a title. This includes plugging and abandoning wells, providing for the conservation and protection of natural resources; and making good any damage to the seabed or subsoil to NOPSEMA’s satisfaction. As such consideration of this end-stage criteria is critical for titleholders to be planning towards from the outset.

The Australian Government’s Offshore decommissioning guideline outlines decommissioning requirements in more detail, including the Policy position that the removal of property is the base case unless the alternative offers equal or better environmental, safety and well integrity outcomes. As an Australian Government agency, NOPSEMA must have regard to this policy where relevant in its decision-making.

Titleholders should be aware that other legislative requirements may apply, such as the Environment Protection (Sea Dumping) Act 1981.

 

Compliance with legally enforceable directions

The OPGGS Act includes the ability for NOPSEMA to issue directions. This currently includes Remedial Directions to current or to (immediately) former holders of titles where the titles have expired, were revoked or were cancelled. Remedial Directions include powers for NOPSEMA to carry out the things required by the directions (requirements specific in the Act) where a titleholder fails to comply and to recover costs from the titleholder (or former titleholder) for this.

In cases where Remedial Directions cannot be issued in specific and limited circumstances, NOPSEMA may also issue General Directions relating to decommissioning requirements.

NOPSEMA initial focus outlined under the compliance plan includes taking compliance actions for fields and activities posing a higher decommissioning compliance risk, by issuing a direction. Before taking any compliance action, NOPSEMA will discuss the specific circumstances of each case with affected titleholders.

Exceptions to the requirements

Titleholders may seek approval to deviate from the requirement to remove property via a permissioning document accepted by NOPSEMA.

The legislation recognises that removal may not always be practicable at the point when property is no longer in use. Section 572(7) of the OPGGS Act provides an exception to the duty where titleholders may seek approval to deviate from the requirement to remove property. This may include a deviation to the timeframe to complete removal activities or a deviation to the end-state proposed (i.e. leave property in situ).

NOPSEMA will only approve alternatives to the requirement to remove property where appropriate justification is provided in an accepted environment plan.

NOPSEMA encourages titleholders to engage early to get advice on the content and level of detail of an environment plan that seeks a deviation from the section 572(3) requirements.

Guidance and good practice

Guidance and engagement with regulators and stakeholders is critical.

NOPSEMA encourages early engagement by duty holders to discuss their specific circumstances regarding removal of property and compliance with the Act.

NOPSEMA also encourages proactive and meaningful engagement with affected stakeholders during decommissioning planning to help inform the titleholder about the environment, level of impact and risk associated with proposed decommissioning solutions.

NOPSEMA will focus efforts on developing guidance in collaboration with industry to provide clarity around our expectations of how permissioning documents can adequately address decommissioning obligations in a range of other actions outlined in the compliance strategy.

Find out more

Decommissioning Compliance Strategy 

Decommissioning Compliance Plan

S572 maintenance and removal of property regulatory policy

Australia’s Offshore Decommissioning Guideline 2018

Minister’s statement of expectations, October 2019

NOPSEMA’s statement of intent, November 2019

Relevant Regulator articles

2020 – Issue 3 – Maintaining focus on maintenance and decommissioning of property

2020 – Issue 2 – Maintenance is still a must

2020 – Issue 1 – Stewarding Australia’s offshore assets in late life

2020 – Issue 1 – Everything must go

2019 – Issue 3 – Inspection focus areas from 2019-20

2019 – Issue 3 – Importance of planning for decommissioning during the life of an activity

2019 – Issue 2 – Cooperative efforts and information sharing on decommissioning