WA regulator signals divergence from federal approach to decommissioning obligations 3 min read
In news that will be of particular interest to petroleum titleholders and prospective titleholders in Western Australia, the Department of Mines, Industry Regulation and Safety (DMIRS) has released a draft discussion paper (Draft Discussion Paper) outlining DMIRS's expectations for the decommissioning of onshore and state waters petroleum assets under the Petroleum and Geothermal Energy Resources Act 1967 (WA), Petroleum Pipelines Act 1969 (WA) and Petroleum (Submerged Lands) Act 1982 (WA) (together, the Petroleum Acts). Following stakeholder consultation, DMIRS intends to create policy documentation to assist titleholders with understanding their decommissioning obligations. At this stage, it does not appear that legislative change is proposed.
The release of the Draft Discussion Paper appears to signal a change in direction from the approach taken by the Federal Government, which introduced trailing liability for decommissioning and change in control restrictions for titleholders under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGSA) in March 2022 (see our previous Insight).
Submissions on the Draft Discussion Paper close on 18 November 2022.
Key takeaways
- The Draft Discussion Paper indicates that the financial resources of a prospective transferee will be a key consideration for an application to transfer a title (to ensure, in part, that a transferee can meet its decommissioning obligations). It appears that, under the WA Petroleum Acts, liability for decommissioning will remain with the titleholder at the relevant time.
- The Draft Discussion Paper does not indicate any intention of following or advocating for regimes similar to those implemented by the Government under the OPGGSA. Instead, DMIRS mostly appears to be looking to existing legislative frameworks to regulate decommissioning and ensure positive closure outcomes. Whether or not legislative change will flow from the consultation process remains to be seen.
- It is unclear how the resulting policy documentation will interface with existing guidance, such as the Petroleum Decommissioning Guideline released by DMIRS in October 2017.
Overview of the Draft Discussion Paper
Key decommissioning principles
DMIRS outlines the key principles as falling into the following three broad categories:
- early planning, continual review and preparation is critical to decommissioning and rehabilitation success;
- progressive decommissioning and rehabilitation should be undertaken as early as possible in the development phase; and
- case-by-case consideration is appropriate, but the end goal should be the complete removal of property and to return the site to an agreed state.
A number of further expectations are also set out, including that operators are expected to have established all-encompassing decommissioning and rehabilitation EPs at least five years prior to the end of field or asset life. Wells are also expected to be closed off within three years of inactivity and all other equipment and infrastructure is to be decommissioned within five years of the cessation of operation.
Expectations for Environment Plans, Field Management Plans and Well Management Plans
The Draft Discussion Paper outlines a list of expectations for EPs that DMIRS considers must be met in order for a titleholder to comply with the EP acceptance criteria in regulation 11 of the Environment Regulations.
These expectations include:
- an EP must contain a description of progressive decommissioning when equipment is not in use and how and when full decommissioning is expected. It should also discuss production rate trends and the anticipated cessation of production, which should be accompanied by remaining resource estimates;
- a commitment to full removal of all property, equipment and infrastructure as a base case, though partial removal may be considered by the Minister on a case-by-case basis. The responsibility lies with the titleholder to demonstrate equal or greater outcomes; and
- comparative risk assessments to leave infrastructure in place should be holistic and include all risks, benefits, environmental impacts, technical risk, effect on other uses and full social and economic considerations.
DMIRS also expects that Field Management Plans should include details of the estimated timing of decommissioning and closure, and a description of closure and field decommissioning plans. Well Management Plans should similarly include a description of the arrangements that will be in place for the permanent plugging or closing off of wells.
Compliance
Finally, DMIRS states that compliance monitoring will be risk-based and dependent on factors that include relative asset age and the likelihood of an asset being used again. DMIRS also flags that it intends to introduce public reporting of non-compliances and publishing directions under the Petroleum Acts.
Actions you can take now
- Petroleum titleholders and prospective titleholders should review the Draft Discussion Paper against their decommissioning obligations under the OPGGSA and their existing compliance practices (particularly in relation to the preparation of EPs).
- Feedback may be provided to DMIRS by 18 November 2022. Workshops are also being held on 28 September 2022 and 4 October 2022.