Decommissioning – the next Australian oil and gas boom?

Abstract

In the Oil and Gas Competitiveness Assessment recently published by National Energy Resources Australia (NERA), Australia ranked at the bottom of the group of 30 oil and gas producing nations in abandonment and decommissioning (NERA 2016). With the recent focus on the massive investment in liquefied natural gas (LNG), it is easy to forget that the Australian oil and gas industry is nearly 100 years old and many assets are reaching the end of their producing life. Liabilities are estimated at more than US$21billion over the next 50 years (Wood Mackenzie 2016a). With nearly 70% of producing assets located offshore, this problem is complex and costly. The industry must develop strategies to address this looming challenge, however Australia has completed few large-scale decommissioning projects and currently lacks the required experience. This paper explores how Australia must: evaluate a range of approaches from complete removal to allowing assets to remain in situ; develop multi- and interdisciplinary solutions based on the collaborative input of all stakeholders and ocean users to develop a framework suited to our geographic location and environment; develop fit-for-purpose policies and regulations to support the most appropriate decommissioning framework for Australia, by learning from other countries, while recognising local uniqueness; and build workforce capability and capacity to support efficient and economical decommissioning activities and stimulate economic growth, which is more challenging than in other regions given our remoteness and high cost structure. The upcoming decommissioning wave represents a perfect ‘greenfield’ opportunity to apply innovative thinking, new technologies and collaborative approaches as well as an opportunity for Australia to demonstrate global leadership in this inevitable final stage of the lifecycle.