Decommissioning and remediation challenges for the petroleum industry

Abstract

The life cycle of the petroleum industry in Australia is necessitating decommissioning and remediation of aging onshore and offshore assets. This activity provides significant challenges for operators. Decommissioning and remediation is neither a core capability of operators nor a key driver of value for businesses that derive value from exploration, development and production.

There is no revenue stream at the completion of decommissioning and remediation. This exacerbates the need for accurate cost estimates and well-planned projects. International experience has demonstrated that remediation costs have often significantly exceeded provisioning for rehabilitation. These issues are felt even more acutely in a low oil price environment.

Finally, some Australian jurisdictions are currently developing policy frameworks and guidelines around the decommissioning and remediation responsibilities. This creates uncertainty for operators in planning and costing decommissioning and remediation work scopes. As well as satisfying legislative and policy requirements of governments, operators need to manage a range of other stakeholders that have interests in the decommissioning methodologies and remediation outcomes. This paper addresses these challenges and proposes that innovative decommissioning and remediation strategies are required to shorten project execution times, reduce costs, maintain high safety standards and produce suitable environmental outcomes. Decommissioning and remediation requirements differ significantly from development requirements; decommissioning project organisational capabilities should be structured to reflect these requirements.

Case studies are used to demonstrate that effective waste management strategies are key determinants of success due to high waste disposal costs and the sensitivity of waste handling and disposal for key stakeholders.