Decommissioning is the final stage in the offshore energy production lifecycle. As offshore facilities reach the end of their productive life, the leftover infrastructure must be stripped apart and removed.
The estimated cost to decommission these facilities is $60 billion over the next 5 decades (Wood Mackenzie 2020). A small number of decommissioning projects have been completed in the past 20 years. However, the volume of future decommissioning activity is expected to increase significantly in the next 30 years. Some of the infrastructure in the Gippsland Basin offshore Victoria will be the first to be decommissioned this decade.
This roadmap is the Australian Government’s plan to create an efficient and sustainable domestic decommissioning industry. The roadmap is intended to be an enduring framework to guide future policy decisions. It will ensure that we maximise the national benefits to the Australian community from planned offshore decommissioning activity.
CSIRO estimates the decommissioning and resource recovery value chain could create more than 3,500 new jobs. It can draw on the existing skills and expertise of our offshore resources sector workforce (CSIRO 2024a). A strong decommissioning industry will also create more opportunities in regional areas and attract new investment for Australian businesses.
Australia can build on our existing strengths to underpin an efficient, competitive, and sustainable decommissioning industry. Our strengths include:
- an educated workforce with strong engineering and science skills that can address challenges in the initial planning, preparation, and coordination stages for large-scale decommissioning projects
- existing metal and concrete recycling facilities that can scrap and recycle offshore material
- a skilled offshore resources sector workforce that can help to scale up a domestic decommissioning industry as the oil and gas sector moves towards the energy transition.
A safe and environmentally responsible industry
An Australian decommissioning industry is an opportunity to both embed circular economy principles across our onshore and offshore industries and to reduce our emissions.
The offshore resources industry has environmental and legal obligations under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act). This includes when oil and gas projects reach the end of production. These obligations require companies to remove property and restore the environment in a timely, safe and environmentally responsible way.
Australia’s legislative and regulatory requirements ensure that any risks to the marine environment and marine users are appropriately regulated and compliant with our international obligations. Offshore resources companies must plan and provide for the removal of all property unless alternative arrangements are approved by the regulator. The roadmap does not change these policy settings and industry must continue to ensure it meets all decommissioning obligations in full.
The role for government
A national roadmap is needed to seize the estimated $60 billion economic opportunity.
This roadmap outlines steps the Australian Government will take to coordinate, guide policy and set clear regulatory expectations to underpin a successful Australian decommissioning industry.
Many industry stakeholders across the decommissioning supply chain have told us that individual companies alone cannot overcome barriers to create an efficient and effective decommissioning industry. This accords with the experience of comparable countries with established decommissioning industries like the United Kingdom (UK) and Norway.
To implement the national roadmap, a dedicated Offshore Decommissioning Directorate will be established within the Department of Industry, Science and Resources. The directorate will work with industry, unions, state and territory governments, First Nations groups, international organisations and local communities to help build an Australian decommissioning industry.
In an Australian context, the directorate will focus on the most pressing issues identified by stakeholders in the course of developing this national roadmap. This work will include facilitating cooperation between industry, the Australian Government, and state and territory governments to drive efficient decommissioning outcomes between companies. The directorate will also work across government to put in place necessary policies that maximise the contribution of decommissioning to the Australian economy.
The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) is responsible under the OPGGS Act for regulating safety and environmental approvals in Commonwealth waters to ensure best-practice safety and environmental outcomes are preserved. The directorate will work with NOPSEMA where there are opportunities to support and clarify regulatory processes.
The directorate will also work with industry and the community to develop a suite of regulatory and policy reforms. These reforms will help ensure the risks and liabilities of decommissioning offshore infrastructure remain the responsibility of industry.