Stewarding Australia's Offshore Assets in Later Life

Article published in The Regulator | Issue 1: 2020 

In addition to thousands of kilometres of subsea pipeline and hundreds of wells, there are approximately 45 offshore oil and gas production facilities in Australian waters currently regulated by NOPSEMA. Of these, more than half are older than 20 years and some exceed 50 years, highlighting ageing as a growing challenge facing the industry.

While life expectancy for most offshore facilities spans several decades, preservation is determined by how well facilities are maintained and managed to withstand the elements. As steel is the main component of most facilities, exposure to salt and sea 365 days a year is a significant challenge.

Age related problems need to be correctly managed to avoid accelerated degradation. Additionally, considerations need to be made regarding the inspection, maintenance and repair requirements necessary to ensure asset integrity if field life exceeds original expectations.

In comparison to the North Sea in northern Europe, where hundreds of oil and gas platforms have progressed through various stages of the life cycle, including the decommissioning stage, few of Australia’s oil fields have been depleted to the point of decommissioning. Under Australian laws, when an offshore petroleum project comes to the end of its life, an oil and gas company must remove or satisfactorily deal with disused infrastructure. To date, most production facilities that have reached the decommissioning phase are floating facilities with subsea equipment and wells. Fixed production platforms present different challenges as they require specialised equipment to remove them from the offshore area. A number of facilities in late life have been divested from large oil and gas companies to smaller entities, presenting challenges with regard to the technical and financial aspects of decommissioning. According to NOPSEMA’s Head of Safety and Integrity, Derrick O’Keeffe, the acquisition of late-life petroleum assets may present a range of issues and risks when there are pressures to reduce production costs as production declines at the end of field life.

“These pressures can have an impact on the maintenance of infrastructure and equipment, resulting in increasing threats to facility integrity and safety. In particular, NOPSEMA has identified cases where audit and maintenance regimes have not been undertaken in accordance with relevant standards or accepted permissioning documents,” Mr O’Keeffe said.

In the past two years NOPSEMA has taken enforcement action against two operators of Floating Production, Storage and Offtake facilities (FPSOs) which have failed to properly maintain ageing infrastructure. This action has included an order in September 2018 to shut down the first FPSO facility. The order resulted from a gas compressor exhaust that was exceeding maximum temperature conditions. This was followed by severe corrosion that led to further remedial works before production could restart. More recently, NOPSEMA issued an order in July 2019 for a second FPSO to halt production, after inspections found unacceptable levels of structural corrosion and equipment that had not been properly maintained.

NOPSEMA inspectors have extensive international and Australian industry experience and expertise in determining whether risks are being maintained appropriately by the facility operator. The scope of their inspections extends from appropriate risk assessments and application of relevant standards to deployment of appropriate maintenance strategies and competency of staff and commercial independent certifiers.

As offshore facilities age in Australia, greater consideration is being given to end-of-lifecycle management and decommissioning obligations

“To ensure safety standards are maintained as facilities approach late-life, NOPSEMA recognises the importance of regulatory engagement and holding titleholders to account for planning and undertaking decommissioning practices. Where necessary, NOPSEMA will take action to ensure appropriate decommissioning outcomes are achieved,” Mr O’Keeffe said.