Work to decommission offshore oil and gas infrastructure in Australia could cost up to A$60bn ($38.4bn) over the next 30-50 years, contributing to the domestic economy, said minister for resources and northern Australia Madeleine King in a statement to Parliament.
Decommissioning involves the removal of oil and gas infrastructure, the secure plugging of disused wells, and the restoration of the marine environment. It also allows for the recycling of a significant portion of these materials onshore. Simultaneously, there is hope that these decommissioning efforts will foster a thriving domestic maritime decommissioning industry, King said.
"Establishing a decommissioning industry in Australia will provide immense economic opportunities and create well-paid jobs in regional communities," King said, leveraging insights from the decommissioning of Northern Endeavour, a large offshore production facility that entered into administration and failed to fulfill its decommissioning obligations, forcing the government to take responsibility for its decommissioning.
Australian law mandates that the offshore resources industry bear all the costs associated with decommissioning oil and gas infrastructure and the government's objective remains to maximise the benefits of these decommissioning projects. "The Australian government wants as much of the anticipated $60bn in spending to remove old oil and gas infrastructure to be spent backing Australian ingenuity and jobs," King said. "We want to build an industry to service not just ageing offshore oil and gas assets in Australia, but also meet future demand for sustainably decommissioning offshore wind farms at the end of their productive life."
Australia's May federal budget included a provision of A$4.5mn dedicated to the development of a decommissioning roadmap to be unveiled in 2024, King said.
The Australian parliament legislated a levy in 2022 on the offshore oil and gas industry to pay for the decommissioning of Northern Endeavour. The Northern Endeavour incident exposed key risks associated with the management of ageing oil and gas infrastructure in Australia, King noted.
In an update on the project, King said that the Northern Endeavour decommissioning programme is making steady progress and has provided valuable insights into what a future offshore decommissioning industry in Australia could look like. Phase 1 of the programme, initiated last year, focused on disconnecting the vessel from its surrounding oil fields, and work is now under way to prepare for the next stages of the programme, which include the plugging of existing oil wells and the removal of seabed infrastructure, he said.
Apart from capturing economic opportunity in Australia, the roadmap is designed to recognise the potential to export Australia's decommissioning expertise to the Asia-Pacific region, King added.
