Australian offshore decommissioning campaigns face environmental and WHS complexities

Last week, the Wilderness Society commenced proceedings against the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) in the Federal Court seeking judicial review over its approval of an environmental plan (EP) from Santos WA Northwest Pty Ltd (Santos) for its Reindeer wellhead platform to be “left in a preserved state for future phases”. This is despite Santos’ Reindeer field having ceased production this year.

Offshore activities, including decommissioning, must be approved by NOPSEMA. The approval process involves lodging certain documents, including an EP, along with an operation management plan and a safety case. The EP is generally the most significant, and potentially problematic, of these.

The Wilderness Society has publicly claimed that, by approving Santos’ EP, NOPSEMA did not enforce Santos’ duty under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGS Act) as titleholder of the Reindeer facilities to maintain financial assurance, in particular in relation to decommissioning the infrastructure and remediating damage to the surrounding environment.

Section 571(2) of the OPGGS Act requires a titleholder to maintain financial assurance sufficient to give the titleholder the capacity to meet costs, expenses and liabilities arising in connection with, or as a result of:

• the carrying out of the petroleum activity; 
• the doing of any other thing for the purposes of the petroleum activity; or  
• complying, or failing to comply, with a requirement under the OPGGS Act in relation to the petroleum activity.

The duty imposed by section 571(2) of the OPGGS Act extends to covering any costs, expenses or liabilities arising in connection with, or because of, compliance with a titleholder’s duty under section 572C of the OPGGS Act, which relates to the escape of petroleum.

If NOPSEMA’s decision to approve Santos’ EP is ultimately quashed by the Federal Court, it could result in NOPSEMA assessing EPs in the future on the basis of demonstrated financial capacity to undertake decommissioning. The Wilderness Society matter is now before the Federal Court.

This litigation contributes to the recent rise in legal challenges to NOPSEMA’s EP approvals. Whether this leads to a more conservative approach to decommissioning activities by titleholders and NOPSEMA, potentially disincentivising developers from exploring innovative decommissioning solutions with positive environmental outcomes, remains to be seen.

Environmental approvals for major offshore decommissioning projects will continue to be under increased scrutiny, adding to the complexity of offshore decommissioning campaigns. Businesses operating in the offshore space should ensure that EPs and assessments, including consultation, are undertaken in a comprehensive manner with a close eye on recent legal and scientific developments.

Offshore decommissioning campaigns and work, health and safety  

In general, offshore decommissioning is an inherently hazardous process that exposes workers to a variety of physical and psychosocial risks.

Infrastructure requiring decommissioning is often located in harsh and unpredictable marine environments which are geographically isolated. Remote work has become a well-known psychosocial hazard in many industries but is particularly acute in the renewable energy industry, due to minimal access to resources and support, often for prolonged periods of time.

In addition, other obvious physical hazards include the handling of hazardous chemicals and contaminants; manual handling challenges in bringing infrastructure to shore; fires and explosions; and interactions with people and mobile plant, including sea vessels.

NOPSEMA is paying close attention to offshore decommissioning works in Australian waters and is cracking down on operators who are failing to mitigate risks.

Recently, NOPSEMA issued three general directions to Woodside for its Stybarrow (7-page / 152kb PDF) and Griffin (7-page / 153kb PDF)  fields off the Western Australian coast and Minerva (7-page / 149kb PDF) field offshore of Victoria.

Each direction requires Woodside to undertake and document a risk assessment to identify and evaluate all risks to health, safety and the environment associated with Woodside’s removal activities. This includes a requirement that “control measures” are in place to reduce risks to as low as reasonably practicable. NOPSEMA’s intervention comes off the back of an oil spill incident at Woodside’s Griffin field. In addition to potential environmental damage, there were concerns that workers were exposed to hydrogen sulphide, an extremely toxic gas, due to the spill.

NOPSEMA has powers to enforce WHS compliance on offshore projects that reflect the powers of state, territory and Commonwealth regulators under the model harmonised work health and safety laws. For example, inspectors can:

• enter offshore facilities to conduct inspections and interviews; 
• issue provisional improvement notices, prohibition notices and infringement notices; and 
• take possession of plant and samples. 

NOPSEMA can also commence criminal and civil prosecutions, seek injunctions - stopping someone doing a certain action or activity - and apply for adverse publicity orders against corporate entities, with reputational impacts.

Operators of decommissioning projects in Australian offshore environments are reminded that they must take all reasonably practicable steps to protect the health and safety of workers at the facility and of any other persons who may be affected by their activities. This is a legislative obligation prescribed by the OPGGS Act, largely mirroring the primary duty under the harmonised work health and safety framework that requires a person conducting a business or undertaking to ensure, so far as is reasonably practicable, the health and safety of workers and others.

If risks cannot be fully eliminated, which is usually the case in high-risk workplaces such as offshore decommissioning facilities, operators should not wave the white flag and sit still. They have a duty to ensure that all risks are minimised, so far as is reasonably practicable, particularly those which are known, obvious and foreseeable.

Co-written by Cormac Mercer and Laura Slocombe of Pinsent Masons.