Australia’s ‘urgent’ $50b oil and gas problem looms
A new report has revealed Australia will be hit by a massive, multibillion-dollar problem within the next 10 years - and "the time is now" to take action.
According to the report by Advisian, much of the nation's existing offshore oil and gas infrastructure is so old, it will need to be decommissioned in the years ahead.
In fact, there is more than $50 billion of crucial decommissioning work to tackle, with over half of the work needing to be started within the next 10 years and deemed to be "urgent".
However, industry insiders say up to 35 per cent of that staggering cost could be cut if we act now - and the challenge could also help to put local businesses on the map, and catapult Aussie firms into global heavyweights.
As a result of this looming issue, the Centre of Decommissioning Australia (CODA) has been launched today by Perth-based National Energy Resources Australia (NERA).
CODA will bring together many of the world's biggest oil and gas companies - Chevron, Woodside Energy, Santos Limited, Esso Australia Pty Ltd, Vermilion Oil and Gas Australia and BHP - as well as many leading service and research organisations in a bid to address the challenge ahead, and help Australia take advantage of the opportunities on the table.
Andrew Taylor, general manager decommissioning at NERA, told news.com.au the problem could not be ignored.
"Under Australian government legislation, at the end of its productive life, oil and gas infrastructure in the ocean has to be removed," he said.
"A lot of Australia's oil and gas infrastructure that commenced in the '80s is now approaching its end-of-life phase, so we are rapidly approaching the point where decisions need to be made around the removal of that.
"It's not a question of if the work needs to be done - it does need to be done. So we need to find a way to ensure we do it in the best way possible."
He explained that more than half of the $50 billion work needed to start by 2030 - but that around $18 billion could be wiped off that sum if certain cost-cutting measures were adopted.
"The key takeaway is that the time is now for action, and if half the work is to begin within the next 10 years, and if we are to achieve a 35 per cent saving, we need to drive an improved approach to decommissioning today," he said.
He said given the work was necessary, it was crucial that Australian companies be involved as much as possible in order to keep the profit in local hands.
"There's also a significant amount of decommissioning work in the Asia-Pacific region … it's a massive opportunity for local service and technology companies to upskill and export into the region," he said.
"Australia's service sector is globally recognised as world-class for its ability to engineer solutions, so it makes perfect sense that when there's a significant amount of work to be done in the Asia-Pacific region, that Australian companies would be well placed to do that work."
He said that the key to reducing the cost of this essential work was "efficiency and collaboration" and "early planning".
"We need to find smarter ways of being able to decommission across a large geographic area - what do we need to do to ensure we're doing it in the most efficient way possible?"
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He said the problem should be on every Australian's radar given most of the population lived along the coast and that the issue concerned the health of our oceans.
NERA's chief executive Miranda Taylor said decommissioning represents a "multi-generational challenge for Australia".
"CODA will play a critical role in transforming our approach to late life planning and decommissioning and maximising the value of these activities for Australia's community, environment, industry, economy and future," she said.
CODA has also announced a series of "foundation projects" designed to ramp up industry understanding of the decommissioning challenge.
Originally published as Australia's 'urgent' $50b problem looms