$52B Offshore Clean Up Underway

Thousands of maritime jobs in the making as oil and gas giants ordered not to trash our oceans.

Multi-billion-dollar oil and gas players have been winding up and walking away from major offshore projects in Australian waters, leaving tonnes of steel and plastic to pollute the ocean.

Now a union push for industry regulation and new government legislation is yielding results, with offshore companies ordered to clean up their act.

“It could create thousands of jobs,” said Maritime Union Assistant National secretary Adrian Evans, citing a recent report.

National Energy Resources Australia in February found the industry decommissioning bill could come to $52B – mostly labour and vessel hire costs to plug 1008 wells and remove all offshore equipment including 755,000 tonnes of fixed facilities, 6,660km of pipelines, 130 umbilicals 1,500km long and 535 subsea structures.

Global energy consultancy group Wood Mackenzie has projected that 65 offshore platforms and seven floating facilities will cease production in Australia by 2026.

While oil and gas majors have been required to cover the bill since the sixties, they have failed to do so. This is despite industry profits running into tens of billions of dollars.

Companies have no incentive to clean up after themselves. There are no profits in decommissioning. They have to be compelled to act.

Peter Milne, journalist and former engineer in the oil and gas industry highlights three tactics companies use to avoid cleaning up: selling off aging assets, delaying clean-up until it is unsafe to do so or simply dumping everything in the ocean.

“People are fearful of losing their jobs and don’t want to speak up.”

JACK MCCABE

These tactics all worked in the companies’ favour until a move by Woodside to avoid the clean-up for the Northern Endeavour oil production vessel in the Timor Sea backfired.

Woodside sold the vessel in 2015 for $29M profit to a one-man company Northern Oil and Gas Australia. The company went bust a year later. Responsibility for removing the vessel then fell to the federal government.

To date the cost of keeping the vessel safe and preparing it for decommission is $200M. The final cost is estimated at $1.2B.

The government was compelled to act or foot the bill. It commissioned an independent report into the debacle in 2020. The Walker Review found sellers of oil and gas assets should stay liable for clean-up. It made nine recommendations to improve practices, policies and legislation.

Some of these recommendations have been adopted. Some have not. First up the government introduced an industry levy of 48 cents per barrel. This will see industry, not the taxpayer foot the clean-up bill.

“The changes were a rare case of the fossil fuel industry not getting its way with the Federal Coalition government and have halted a rush by major oil and gas companies to exit ageing Australian assets,” Milne reported.

The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) has also stepped in, issuing directions with fixed deadlines for wells to be made safe within three years of end of production. Companies then have two years to remove everything from the ocean.

A report by global consulting firm Advisian estimates a coming surge of decommissioning work, mostly in the North Carnarvon Basin off Northwest WA between Exmouth and Dampier, but also the Bass Strait.

Twenty-seven per cent of decommissioning work needs to take place before 2025. The majority, 51% of the work, is to take place before 2030.

NOPSEMA has already issued directions to ENI, Woodside, BHP, Mobil, Inpex and Cooper Energy to plug and remove over 200 disused wells and associated subsea equipment and at least 10 platforms, located off Victoria and West Australia.

AGEING ASSETS

In a series of submissions to NOPSEMA and the federal government, both the Offshore Alliance and the Maritime Union have warned about an alarming rate of offshore facilities past their use by date and dangerous lack of maintenance.

The fleet of aging assets includes some 50-year-old platforms. Yet the typical design life of oil platforms is 26 years and for floating production vessels it is 20. NOPSEMA found half of offshore facilities were over 20 years old.

“Under financial pressure, they (companies) may be pushing out the operation of the facility beyond design life in order to avoid decommissioning costs,” the unions submitted.

Oil and gas majors have postponed maintenance and slashed 28,000 jobs. One in five of the jobs lost were in maintenance.

Unions submit the new policy must ensure clear triggers and penalties are in place to ensure plans to cease production and remove equipment are executed.

They have called for government to put a six-month timeline on company clean ups to get underway. Oil and gas majors should cover the costs.

“We also want NOPSEMA to inspect jobs,” said Adrian Evans. “We want them to send divers down to make sure the job has been done. Not just take the word of the oil majors!”

WA organiser Jack McCabe warns decommission jobs are going to be full of risks.

“It’s reverse construction,” he said. “It’s easy to put in but when taking it out it’s rush, rush, rush.”

McCabe says without a regulator able to walk onto the job there is always the risk that operators will cut corners.

“You know what they say – when you go offshore there’s no one watching,” he said. “People are fearful of losing their jobs and don’t want to speak up.”

“We want them to send divers down to make sure the job has been done. Not just take the word of the oil majors!”

ADRIAN EVANS

SAFETY PARAMOUNT

No profits spin out of decommissioning, making it ripe for cost cutting. This also undermines safe work practices.

On the Sinbad platform (see box) a lift went bad threatening the lives of three workers. The near-death experience was filmed and went viral. Only the quick-thinking action of the crane operator saved their lives.

In August 2021 a worker on the Northern Endeavour was seriously injured by falling off a faulty walkway. He suffered fractured ribs, torn shoulder tendons and a T3 transverse fracture in the vertebra. The walkway was a recognised safety hazard and had been reported to management. They did nothing.

As MWJ went to press, the industry levy to pay for the decommissioning of the Northern Endeavour and its oilfields passed through Parliament. But it is not tied to legally binding oversight of contractors and job safety on the work that it will pay for, and the minister has unilateral powers to reduce it at any time.

When unions raised this objection, the Minister promised in writing that the Northern Endeavour operator UPS would become a ‘registered operator’ under the offshore safety and environment act, but three months later this has still not happened.

Unions argue the government measures to date fall short of the Walker recommendations – for example oil and gas operators are not required to prove they have financial security in place to cover their decommissioning costs. The government floated this idea in 2020 but has now gone quiet.

The MUA is also calling for government to maximise jobs for the future. Australia should set up a decommissioning yard to dismantle facilities and recycle steel.

The oil and gas industry is putting a lot of resources in to argue there is an environmental benefit to leaving their old facilities and pipelines in place. We know they just want to cut costs. Going forward, the union will be carefully examining all the applications companies are putting in to leave oil and gas infrastructure in place, and raising our objections. We will also be looking at the safety plans companies are filing for decommissioning work to ensure corners are not being cut and experienced workers are doing the job.

Unions are also pushing for a requirement that decommissioned oil fields are inspected before being handed back to public ownership, to ensure work has been properly completed.

Union wins to date include ensuring that offshore rates are paid for divers do decommissioning work and making it NOPSEMA policy to talk to Health and Safety Reps on every inspection. The Offshore Alliance has successfully organised workers on the Northern Endeavour, and it is negotiating a new EA – but now there are indications that the contract could go to another operator.

“The Government has, belatedly, moved in the right direction, but unions and the workforce need to scrutinise everything they do to ensure there are no loopholes,” said Evans. •

Victory for Divers

After workers took a stand, Total AMS Group now pays full offshore rates to contracted divers. This is despite the Thevenard decommissioning contract being based on inshore rates for divers.

“TAMS do not have an offshore EA that we could rely upon to enforce the scope through the courts,” said Assistant National Secretary Adrian Evans. “But thanks to the strength of our divers, we have been able to get to the table the last couple of days and achieve the bulk of what we were seeking.”

In a letter circulated to all MUA divers, Evans said there was a heap of pressure on the young TAMS guys.

“But they stuck fast for which they should be commended,” he said.

Evans said the other key outcome was a commitment from TAMS to engage in an industry Offshore Dive Agreement.

“We did not get 100% of what we wanted,” he said. “But the unity of the divers has delivered offshore rates for decommissioning, a job that I expect TAMS will now be out of pocket for.”

Evans said the union and divers need to spread the word far and wide that any decommissioning work must be offshore rates “or we don’t take the job.”

“This message to industry needs to remain loud and clear and requires unity among the diving membership to enforce it. This is a good win to build on,” he said, stressing the need to lock in ALL the offshore players. •

HORROR FILM goes VIRAL

“Get it off, get it off!” three workers scream as an attempt to lift a huge platform above them goes terribly wrong. Two hundred tonnes of steel swings out of control just above their heads as they cling to a pylon jutting 20 metres out of the ocean.

Steel cables snap and in a heart stopping moment, it looks as if the hunk of steel will swing back onto the workers.

The video of the July 5, 2021, decommissioning of the Sinbad platform near Varanus Island west of Karratha was uploaded onto Facebook. It got 343,000 views and 1,400 comments.

“No such thing as a ‘Near Miss’ – it was a Near Hit!” one seafarer commented. “Typical oil company, profits before people,” said another.

“It was one of the most horrifically scary accidents we’ve seen captured on camera,” AWU secretary Daniel Walton told 9 News. He accused Santos of cutting corners to save a buck.

“If it wasn’t for the quick actions of the crane operator they undoubtedly would have been crushed.”

Santos said it reported the incident and worked with the regulators to ensure corrective measures were in place. •