Decommissioning – a path forward for Australia
Stuart J. Barrymore A B and Jane Ballard AA Herbert Smith Freehills, 250 St Georges Terrace, Perth, WA 6000, Australia.
B Corresponding author. Email: stuart.barrymore@hsf.com
The APPEA Journal 59(1) 25-33 https://doi.org/10.1071/AJ18143
Submitted: 10 January 2019 Accepted: 28 March 2019 Published: 17 June 2019
Abstract
Australia has embarked on a review of its decommissioning law and practice with a comprehensive discussion paper being issued by the Department of Industry, Innovation and Science. Initial stakeholder comments and submissions have been made, and the Department is now considering those submissions with a view to issuing recommendations to the Minister. The discussion paper ultimately proposes that new laws will be implemented to ensure that Australia has a 21st century fit-for-purpose decommissioning regime to apply to its offshore petroleum installations. After an overview of the review process and the selected issues that the Department regards of significance, this article considers a selection of the issues that emerge. It is evident that diverse views exist on almost all topics, and it will not be an easy task to find a balance that both meets the goals and aspirations of industry and community sectors. This challenge is compounded by the scale of decommissioning operations and the cost that will be incurred to remediate wells and remove associated facilities. The balance sought is one that does not stifle industry’s capacity to further invest nor impose onerous or uncompetitive imposts or controls, but also assures that adequate funding is available to carry out decommissioning works. Everyone seemingly accepts that it is not the role of the Australian Government to remove the facilities and restore the sea bed. Globally, techniques that are being increasingly utilised to manage this risk involve the imposition of securities or other assurance and enhanced statutory liability mechanisms. These legal and commercial considerations are given particular focus in the article.
Keywords: financial capacity, joint and several liability, offshore petroleum infrastructure, offshore facilities, OPGGSA, PRRT, residual liability, security, titleholder.
Stuart Barrymore is a senior member of Herbert Smith Freehills’ international energy and resources team based in Perth. Stuart acts for many of the major oil and gas companies active in Australia in the Asian region and has been involved in major project acquisition and divestment, JV structuring, LNG project development, including the North West Shelf Project, Darwin LNG Project and QCLNG Project. He provides specialised advice on applicable legislative regimes. He has degrees from the University of Western Australia and Cambridge. He is regularly rated as a top tier leading energy and oil and gas practitioner in Global and regional guides and has published and presented widely in Australia and overseas. |
Jane Ballard is a senior associate in Herbert Smith Freehills’ international energy and resources team based in Perth. She has also spent time working in the firm’s London office in the energy and infrastructure practice. She has experience in a wide range of domestic and international projects in the oil and gas, natural resources and power sectors and has acted for many of the oil and gas majors. Her experience includes advising on mergers and acquisitions, joint ventures, regulatory matters and project development. |
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