Decommissioning

Decommissioning of an offshore project is inherent and should be planned from the outset and undertaken throughout the operations.

Decommissioning is a normal activity in the lifetime of an offshore petroleum project. It involves the 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 request, NOPSEMA is giving heightened scrutiny to the planning and execution of decommissioning during assessment of permissioning documents and activity inspections. This supports the Minister for Resources and Northern Australia’s statement of expectations relating to the performance of NOPSEMA’s functions.

In increasing its focus on decommissioning, NOPSEMA has published a regulatory policy to improve oil and gas companies’ understanding of their legislative obligations to maintain and remove offshore structures, equipment and property. The section 572 Maintenance and removal of property policy has been finalised following a period of consultation in April 2020. A consultation report has been prepared to communicate how feedback on the regulatory policy has been considered and incorporated.

Legal requirements

Maintenance and removal of all structures, equipment and property (collectively referred to hereafter as ‘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. These activities require approval under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act).

Section 572 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 applies to all property brought onto a title area during any stage of operations, including:

  • petroleum or greenhouse gas equipment and infrastructure
  • wells
  • facilities and structures
  • subsea equipment
  • pipelines.

This requirement is long-standing and has been in the legislation since 1967.

NOPSEMA’s section 572 regulatory policy (link to policy) explains the policy principles and compliance oversight that apply to the requirement.

Section 270 of the Act requires titleholders to remove 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.

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

Requirement to maintain property

The Act requires property to be maintained so that it is fit for purpose and can be removed when no longer used.

Decommissioning is dependent on the maintenance of ageing assets.

Oil and gas companies must:

  • ensure all property is fit for purpose
  • appropriately manage late-life assets
  • do all they can to limit risks to safety, well integrity and the environment throughout the lifecycle of their offshore facilities
  • ensure all property is maintained so that it can be removed.

Appropriate maintenance of ageing assets has emerged as a key regulatory issue for the offshore industry.

NOPSEMA regulates compliance with the requirement to maintain property through the assessment and inspection of permissioning documents where property is brought onto a title area.

Requirement to remove property

The Act requires property to be removed when it is neither used, nor to be used in connection with the operations.

The Australian Government’s expectation, as outlined in the offshore decommissioning guideline, is the full removal of all property that is no longer in use.

This is an ongoing obligation that covers:

  • the removal of property at the end of production
  • the removal of disused infrastructure at appropriate points throughout the life of the title.

To achieve this, NOPSEMA expects titleholders to design, install and operate property in such a way that it can be removed when it is no longer in use.

Exceptions to the duty

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

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.

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

The legislation recognises that removal may not always be practicable at the point when property is no longer in use. We encourage titleholders to engage with us 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.

Regulating compliance with the requirements

Regulatory oversight of titleholder’s compliance with OPGGS Act section 572 obligation is increasing.

In line with the Minister’s statement of expectations, NOPSEMA is increasing its oversight of compliance with section 572 in its assessment and inspection activities.

As detailed in the section 572 regulatory policy, NOPSEMA will:

  • consider compliance with section 572 in submission of permissioning documents submitted for assessment
  • focus on inspection of titleholder compliance with the requirement during decommissioning inspections and progress towards planning for decommissioning
  • consider and, where appropriate, take all available compliance and enforcement actions to bring titleholders back into compliance where non-compliances around property maintenance and decommissioning are identified.

The Australian Government’s Offshore decommissioning guideline outlines the requirement in more detail, including the Australian Government’s expectation that the removal of property is the base case unless a deviation is approved through an accepted environment plan. NOPSEMA has regard to the principles outlined in the guideline when undertaking assessment and compliance monitoring of permissioning documents.

Guidance and good practice

Guidance and engagement with regulators and stakeholders is critical.

NOPSEMA encourages early engagement by duty holders to discuss the 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 duty holder about the environment, level of impact and risk associated with proposed decommissioning solutions.

NOPSEMA continues to work cooperatively with industry to develop further guidance to ensure compliance with the legislative requirement.

Find out more

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