The 2018 AMPLA Annual Conference in Perth included a session on End of Life for Offshore Oil & Gas Facilities that provided an overview of the still developing legal and policy framework in end-of-life offshore abandonment and decommissioning.
Paul Shillington, a Partner in our Perth office, reflects on some of the key issues for our clients that arise from this still evolving area of regulation.
The oil & gas industry is facing a tsunami of offshore abandonment and decommissioning that will need to be executed over the next 10 to 20 years, at a substantial cost to oil & gas industry players, and if not handled correctly, to the taxpayers of the countries that have sovereignty over these offshore fields. By the same token, this represents a great opportunity for oil & gas contractors to obtain a steady stream of offshore construction work, following the tough years of the market since the oil price crisis of 2014.
However, the legislative and regulatory regime for offshore decommissioning in Australia is now dated, and is widely considered to lack suitable detail. Consequently, there are a number of review processes and regulatory reforms underway in Australia that are likely to result in legislation being amended and new regulations being enacted to better guide and control decommissioning obligations and liabilities. This includes the Commonwealth Department of Industry, Innovation and Science's recently released Discussion Paper and associated framework review, the Western Australian Department of Mines, Industry Regulation and Safety's new decommissioning guidelines and public forum sessions, and various industry supported papers and reviews such as the Western Australian Marine Science Institution's draft report, "Decommissioning offshore infrastructure: a review of stakeholder views and science priorities".
Other legally sophisticated oil & gas jurisdictions, particularly the UK and Norway, are well advanced in imposing detailed (and potentially quite onerous) new regimes to manage the myriad technical and financial risks of decommissioning.
Although the session presenters indicated that it is unlikely that there will be a revised and detailed regime in Australia until 2020, we suggest that our clients closely monitor the developing legal and policy framework around decommissioning in Australia, and make sure that their voices are heard through the different consultation processes that are currently underway in Australia. Close monitoring will also ensure that oil & gas players (both operators and contractors) will be ready for the new regime that is likely to be effected.
To assist in this process, we have highlighted some key points below for our clients to keep in mind.