Maintaining focus on maintenance and decommissioning of property

Article published in The Regulator | Issue 3: 2020 

During a sustained low oil price environment and in the context of late life fields and ageing production facilities in Commonwealth waters, NOPSEMA is taking active steps to ensure that duty holders are continuing to maintain facilities and are actively planning for decommissioning as per the approved end state.  In line with the Ministerial Statement of Expectations issued to NOPSEMA in October 2019, NOPSEMA is also ensuring that end state planning is geared towards full removal of property, as per the legislative requirement, with NOSPEMA only accepting alternatives where appropriate justification is provided when deviation is sought.

As highlighted in previous editions of The Regulator, NOPSEMA continues to increase focus through its advice, guidance, assessment and inspection program on ensuring that dutyholders undertake maintenance necessary to control risks and ensure asset integrity so that equipment can be removed once operations cease. These efforts include consideration of approving alternatives to full removal where appropriate justification is provided, as well as taking enforcement where there are serious breaches of the requirements.  

On 6 August 2020, the Commonwealth Department of Industry, Science, Energy and Resources (DISER) released the outcomes of an independent review into the circumstances leading to the administration of Northern Oil and Gas Australia (NOGA). The Walker Review sought to understand how and why the NOGA group of companies entered liquidation. The review also considered how best to minimise risks of a similar event occurring again. A serious consequence of NOGA entering liquidation was that they could not meet their decommissioning obligations, putting a spotlight on the risks of late-life assets and underfunded titleholders.

While the review found NOPSEMA to be a robust, professional and independent regulator, it made nine recommendations. Three relate to NOPSEMA’s inspection processes including planning, focus on root causes of non-compliance and the use of inspection recommendations. NOPSEMA is currently taking steps to ensure that inspection processes and practices are reviewed and appropriately modified to respond to the outcomes of the Walker Review.

The remainder of the recommendations of the review related predominantly to legislative changes and clarifications to strengthen the decommissioning framework under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act). NOPSEMA is supportive of appropriate legislative reforms that seek to strengthen requirements in relation to asset maintenance and ensure that titleholders are ultimately held to account for the decommissioning of facilities, including the plugging and abandonment of wells and the removal of equipment.

The DISER Decommissioning Framework Review and the DISER Offshore Oil and Gas Safety Review were identified by the Walker Review as the most appropriate mechanisms to deliver recommended reforms and NOPSEMA is actively providing regulatory and operational advice to DISER on these matters.

As the reviews progress, NOPSEMA will continue to take all available actions under the current OPGGS Act framework to monitor and enforce compliance with requirements in relation to property maintenance and decommissioning.