Exxon applies to Australian Govt. to abandon 8 old oil rigs

Mar 16, 2024 ExxonMobil, News, Oil & Gas

ExxonMobil’s decommissioning plan for eight Bass Strait platforms. This option involves cutting the steel pile jackets at a minimum of 55 metres below mean sea level, removing the top section and leaving the lower section in place. Source: ExxonMobile.com.au

Kaieteur News – The Gippsland Basin Joint Venture (GBJV), in which American oil giant ExxonMobil Cooperation subsidiary, Esso Australia operates, has submitted a proposal to the Australian government for the abandonment of eight oil rigs.

A recent Sydney Morning Herald article sheds light on the growing debate surrounding the decommissioning of offshore oil and gas platforms in Australia. It was stated that the federal government estimates that decommissioning these structures will cost the industry at least $60 billion, presenting both challenges and opportunities.

In the oil and gas industry, decommissioning refers to the process of safely dismantling and disposing of offshore and onshore oil and gas facilities once they reach the end of their productive life. This involves cleaning up the site, removing equipment, plugging wells to prevent leaks, and restoring the environment as closely as possible to its original state.

This process is also crucial for minimising harmful environmental impacts, ensuring safety, and complying with regulatory requirements. Decommissioning is also a costly exercise, sometimes demanding billions of US dollars hence countries are often advised to mandate that oil companies set aside money in a fund for this purpose. This fund ensures that the country is not left to carry the burden of handling those costs which ought to be covered by the oil companies.

ExxonMobil’s Marlin B platform in the Bass Strait. CREDIT: EXXONMOBIL

Exxon’s proposal to abandon eight platforms in the Bass Strait region of the Gippsland basin has sparked controversy. The company intends to leave the steel legs of the platforms in place while removing contaminated structures above the waterline and down to a depth of 55 meters below the surface.

While Exxon portrays this approach as environmentally responsible, citing the thriving marine ecosystems that have developed around the platforms, critics remain skeptical. Friends of the Earth campaigner Jeff Waters has called for independent research into the pollution levels near the platforms, expressing concerns about the potential environmental impact of leaving partially dismantled structures in the ocean.

On the local front, this publication reported last November that Natural Resources Minister, Vickram Bharrat confirmed on that ExxonMobil Guyana will now be required to follow a series of robust decommissioning rules as outlined in the nation’s Petroleum Activities Law.

Guyana’s Petroleum Activities Law which came into effect last year sets out strict rules for companies to follow on the decommissioning of oil projects. The law states that the company would have to submit for the minister’s approval, a proposed decommissioning plan and budget no later than two years before the expiration of a petroleum licence or no later than two years before the anticipated end of production.

Once that plan is approved, the minister would instruct that a Decommissioning Fund is created. The company would have to make contributions to that fund to ensure that when the time for “clean up” arrives, there would be adequate funds to cover the associated expenses. Importantly, the law states that the minister will dictate the terms and conditions of the fund for deposits and disbursements.

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Australia, decommissioning, expenses, Exxon, oil

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