“The View from Down Under” Australia Energy Review – February 2021

Early New Year is traditionally a quiet time in these parts as folk take their well-earned summer breaks, after the usual slow start in January people are now drifting back to work and the buzz in the Central Business District in Perth returns to near normal.

With just 1 rig active off the ANZ coasts at the moment it is expected that by end Q2 this year the active count will have risen to 6, with the possibility of a heavy well intervention vessel joining the offshore fleet before the end of the year.

Decommissioning and well abandonment continue to have high visibility.

The Australian regulator NOPSEMA issued two directives to ENI Australia as 2020 drew to a close concerning 2 of their fields.

The first concerns the Woollybutt field, off the North West Coast, which lies in 100m of water and ceased production several years ago.

There have been several phases of discussion and plans made by the local ENI entity since at least 2014 about abandoning the wells using a range of options from single hulled intervention vessels, heavy well -intervention vessels to drilling rigs.

NOPSEMA have now directed that ENI must abandon the wells before end of 2021.

The second concerns a decommissioning plan for the Blacktip Field off the NNW coast.

Curiously, this gas field is still very much in production with 2 wells onstream since 2009 and firm plans to drill a 3rd well at some stage over the next 12 to 24 months.

This reason for this stance by the regulator is believed to be twofold:

In early 2016 new Well Operations Management Plan (WOMP) procedures were instigated by NOPSEMA. Instead of WOMPs being required only for existing producing and upcoming E&A and development wells, the remit was extended to all wells drilled in Commonwealth waters, which goes back to the 1960s.

It is understood that any non-producing / suspended / partially abandoned well would not have its WOMP approved by NOPSEMA without firm plans to permanently plug and abandon that well. The WOMPs are on a 5-year cycle, so as 2021 begins many of these chickens will be coming home to roost.

The second reason concerns the liquidation of Northern Oil and Gas Australia (NOGA) and the resulting vesting of the Corallina and Laminaria fields to the Federal Government (for details please refer to Sep 20 and Jan 21 issues).

The liability to the Australian taxpayer to P&A the wells and decommission the field could exceed well over US$200m and has raised the profile of ultimate responsibility for the decommissioning of late life assets, especially when they change hands from the original owner. The possibility of a levy on the industry to cover this has been floated.

It is believed this change in attitude to liability for decommissioning is one of the reasons why ENI, XOM and BHP recently withdrew from sale their respective assets off the NW and SE coasts.

Read the latest issue of the OGV Energy magazine HERE.