Best practice and regulatory reform for plugging and permanent abandonment of offshore petroleum wells in Australia

Studies have demonstrated that around 25% of all offshore wells (including those in operation, suspended, or plugged and abandoned) on the Norwegian continental shelf, 10% of wells on the UK continental shelf, 43% of wells in the Gulf of Mexico, and 20% of offshore Canadian wells have experienced either well integrity issues or failures.1 Historically, wells have often been poorly plugged and abandoned since it is a cost incurred with no financial return to the operator. Although there is no accessible data is available for Australia, it can be assumed that well integrity issues also arise, demonstrated by several wells in the Legendre field which have been leaking post-decommissioning in 2014, and still not subject to a Direction from the regulator, NOPSEMA.
This report considers the integrity of wells which are plugged and abandoned (P&A) as part of the decommissioning of a field. A consideration of the legal framework for P&A of offshore wells in Australia, compared to similar jurisdictions (UK, Norway and Canada). The IOGP assessment of 35 legal frameworks for well P&A reveals Australia to be the only mature offshore petroleum jurisdiction, and the only jurisdiction that participates in the International Regulators Forum, to not set out requirements for P&A or stipulate guidelines/standards. Also according to IOGP, Australia continues to be the only mature jurisdiction that has no guidance for companies seeking to P&A wells. Of the 35 countries considered by the IOGP, a similar lack of guidance is also seen in Algeria, Spain, Kazakhstan, Oman, Angola, Gabon, Nigeria, South Africa, Myanmar, and Venezuela, all poorly developed regulatory jurisdictions. The summary of P&A requirements by the IOGP for Norway, UK, Canada, and Australia is found in Appendix 1.
Australia’s absence of minimum requirements and no set standards for well P&A, combined with a lack of well inspection, establishes a substandard regime with poor oversight of well P&A. The following recommendations will assist in bringing Australia’s practice up to standards akin to comparator countries Norway, the UK, and Canada.