Tackling redundant fossil fuel rigs a looming shitshow

Earlier this year, Crikey looked at the ticking timebomb of decommissioning redundant offshore fossil fuel rigs and the risks concerning radioactive waste and the diplomatic tensions they present. Not to mention the tens and tens of billions of dollars in cost. There are more than 1,000 wells and 57 fixed facilities off Australia’s coast that are nearing their end.

The pinnacle of this potential fiasco, we argued, is the Northern Endeavour. The rust-covered oil rig, pocked with corrosion and holes, has already cost taxpayers hundreds of millions of dollars and could cost the oil and gas industry up to a billion to be packed up and towed away for scrap.

It was run by Woodside until it was sold to a small, inexperienced company called Northern Oil and Gas Australia (NOGA) in 2016. By 2019 it had been forced to shut down after a series of environmental and work safety notices from the government regulator, the National Offshore Petroleum Safety and Environmental Management Authority. The decision to sell to NOGA, a company that it turned out could not afford the decommissioning job, was slammed by all sides of the debate, from Greenpeace to Chevron. NOGA went into liquidation and left the government holding the bill.

On top of all that, the bizarre contradictory maritime rules it is subject to — the rig sits above Australia’s continental shelf for extraction purposes but floats on Indonesia’s waters — hold the potential for diplomatic tensions with our biggest regional neighbour.

A new report from the Department of Industry shows just how difficult this process would end up being, under a title beautifully redolent of managerial euphemism: “Unique challenges and opportunities in decommissioning the Northern Endeavour“.

In the “challenges” column we have:

• The Northern Endeavour was “in a state of disrepair” when the Commonwealth took over in 2020. The “excessive” corrosion was causing structural integrity issues and much of the operating equipment “had become unreliable”.
• The report notes that many of the systems and equipment on board were “well past their useful life, needing extensive repairs and maintenance, or complete replacement”. However, because the oil rig is so old, “spare parts or replacements were no longer manufactured and were difficult to find”. These faulty systems included trifling matters like “sewerage treatment” and “fire and gas detection”.
• The poor condition makes towing “complicated”. The Northern Endeavour needs a great deal of work before it can be towed to a recycling location. Depending on where this happens, the department “may need to apply for hazardous waste permits and manage biosecurity issues”.
• Current regulation means decommissioning is the responsibility of the facility’s titleholder, and the titleholder must be an oil and gas company. But the Commonwealth is not an oil and gas company — even if it acts like it is — so, it can’t be the titleholder of the oil rig. This has “resulted in applying complex arrangements to ensure effective regulation of the program”.

So those are the challenges, but on the plus side, it’s a wonderful learning experience! The case study concludes:

• “By engaging industry for help and advice we are fostering better relationships and encouraging transparency.”
• “Our work with industry on the Northern Endeavour is also informing important policy development work in offshore oil and gas. This includes the upcoming Decommissioning Roadmap, which will outline how we can build an Australian decommissioning industry.”

Certainly, the Northern Endeavour experience demonstrates how urgent that task is. It’s ironic, then, that this case study quietly dropped on the same day that Labor announced it had approved a new round of offshore gas exploration.