The decommissioning bill for the Northern Endeavour, which is now set to exceed $2 billion, has been labelled a "clarion call" for decommissioning reform by the Conservation Council of WA.
The Northern Endeavour was a floating oil production storage and offtake facility that was left stranded in 2020 when it’s owner Northern Oil and Gas Australia (NOGA) entered voluntary administration.
The facility was formerly owned by Woodside Energy, which sold the asset near the end of its production, transferring all decommissioning liability and responsibility to NOGA.
The initial decommissioning liability was estimated to be $362 million, but contract information published by Boiling Cold indicates the mounting bill has reached $1.5 billion so far and could reach as high as $2.5 billion.
CCWA Exective Director Matt Roberts said that in 2021, the Federal Government established an industry levy to recover the cost of the Northern Endeavour decommissioning bill, and the Department of Industry, Science and Resources (DISR) had since started drafting legislative reforms.
“The cost blowout of the Northern Endeavour clean-up bill, and the recent abandonment of the Cliff Head oil platform, are both serious warnings to the federal government that we need strong decommissioning reforms right now,” Mr Roberts said.
“Aged, stranded assets pose economic, environmental and safety risks to Australia. With 5.7 million tonnes of oil and gas infrastructure needing to be decommissioned in the coming decades, the government must use these reforms to ensure we prevent the worst-case scenarios we’re seeing.
“Our current legislation allows decommissioning planning to be delayed and unfunded, for fossil fuel companies to underestimate costs and transfer assets and responsibilities to other companies when they don’t want to clean up their mess.
“The reforms currently under consideration from the government must ensure industry pays for decommissioning activities.
"Oil and gas companies must be legally required to set aside dedicated clean-up funds and upfront security, and we need trailing liability provisions to prevent future costs becoming the responsibility of the government or the Australian community.
“Unless our legislation enforces it, oil and gas companies remain financially disincentivised to uphold their decommissioning responsibilities, and the Australian government, taxpayers, economy and environment pay the price.
“With more fossil fuel companies, such as Jadestone, already at risk of being unable to meet their decommissioning costs, these are reforms we need to get right, right now.”
ENDS
Media contact: Matt Roberts - 0430 232 070