Letting the cat out of the bag at the Energy Club WA June Industry Dinner
A Schrödinger’s cat situation isn’t acceptable for Australia’s burgeoning decommissioning industry, according to CODA general manager Francis Norman.
At the Energy Club WA’s June industry dinner Mr Norman likened the past state of decommissioning to the philosophical concept of a cat sitting in a closed box where something may or may not happen that may or may not kill the cat.
“We knew our decommissioning liabilities were coming, but we didn’t know what they would be,” Mr Norman said.
“When we opened the box, we found a whole bag of cats, and the first thing we needed to do was to work out how many cats were there and what they looked like.”
The results came in the form of the Centre of Decommissioning Australia’s (CODA) Offshore Oil and Gas Decommissioning Liability report, which found that the future national cost of decommissioning was likely to reach more than $50 billion.
The metaphor continued with Mr Norman saying the first order of business for companies about to start the decommissioning journey was to learn to live with their new cat.
“When you first bring your cat home, you don’t know how to take care of it,” Mr Norman said.
“You need to look around at people who have owned cats before and, in this case, we looked globally at what other jurisdictions were doing to address their decommissioning liabilities to learn from them.”
The second order of business was to figure out what to do with the mess the cat makes once it has settled into the home. “This is where you look at what to do with material that’s decommissioned and brought onshore – where do we take it, and what do we do with it once it’s there?” Mr Norman said.
The third aspect was to learn how to entertain the cat. “We need to understand what technology is out there now and what we can use it for in Australia,” Mr Norman said.
“We also need to understand what doesn’t work for us that may work elsewhere, and what isn’t available that we should be looking at.”
Taking a less analogous approach, NOPSEMA decommissioning manager David Christensen said the consequences of companies which didn’t proactively plan for decommissioning came in the form of limited options for activities and the associated increased cost and risk profile.
“If we’re going to meet the opportunities that are available in decommissioning, it’s important we see greater planning and collaboration,” Mr Christensen said. “This will help companies see reduction in risk and costs and will help the industry maintain its social license to operate.”
APPEA environment, health and safety and decommissioning director Jason Medd said collaboration would help Australia develop a robust regulatory environment for decommissioning. “Cooperation between industry and government regulators is the key to reducing duplication and overlaps,” Mr Medd said.
“Industry has a habit of waiting to receive a draft policy before rapidly gathering the troops and coming up with solutions which are duly ignored. “That approach wasn’t working, so we developed a codesign model where we collaborate with government to come up with solutions for decommissioning which has seen some success.
“The first step in getting decommissioning right is getting in the room and thrashing out the issues.”
He said it was important to look at other jurisdictions to learn from them, but to remember that Australia was unique. “We can learn from other part of the world on decommissioning,” Mr Medd said.
“It’s been done in the Gulf of Mexico, the North Sea, the UK. The UK has a similar legal framework and so is a good starting point for the regulatory infrastructure we’re looking to implement here.”
Mr Norman stressed the notion that industry wasn’t competing in the decommissioning space. “We’re not rushing to be first to market with our product, we’re looking for best practice in decommissioning,” he said. “The more we collaborate, the better the outcomes will be for everybody.”
He closed his Schrödinger’s cat analogy by saying companies couldn’t rely on excuses when it came to decommissioning. “We need more visibility with decommissioning work so we can have early engagement,” he said. “You can’t do that with the traditional model of not knowing what the state of your cat will be until you open the box.
“We can’t have excuses or say we don’t know what it looks like anymore.”
Thank you to our June Dinner Event Sponsors: Vertech Group, Kent, Helix Energy Solutions, Baker Hughes and Petrofac.