LEGAL FRAMEWORK AND LIABILITY OF LEAVING OIL AND GAS FACILITIES IN-SITU OR DEEP SEA DISPOSAL ON AUSTRALIA’S CONTINENTAL SHELF

Abstract

Australia’s offshore petroleum industry is beginning to mature and many of its offshore oil and gas production facilities are reaching the end of their operational life. These facilities consist of an array of infrastructure including wells, wellheads, platforms and monopods of various construction, pipeline and flowlines, and anchors and risers. Many of these facilities will need to be decommissioned at the end of their operational and economic life in a safe and environmentally responsible manner.

The Australian government has the jurisdiction to direct a company to remove all facilities associated with offshore production projects located on Australia’s continental shelf, but there is room for discretion for other decommissioning options. The manner in which facilities are decommissioned must be assessed on a case-by-case basis, taking into account factors such as technical feasibility, commercial risk, safety and social impacts, costs and environmental effects.

Two decommissioning options appropriate in some instances are to leave selected facilities in-situ or dispose of a facility to some other location on the continental shelf, preferably in deep water. Residual liability refers to the responsibility and liability associated with leaving facilities on the seabed. If a facility is allowed to remain on the seabed, questions related to residual liability arise:

who is responsible for any facility left on the seabed; and

who is liable to pay for compensation in the event that this facility is allowed to remain in place on the seabed and injury or damage is caused to a third person or property?

There is no universally accepted practice in relation to residual liability in relation to decommissioning. In some countries, the State assumes responsibility; in other countries the company remains responsible in perpetuity. This issue still needs to be clarified in Australia.