“This scenario is exactly why all oil and gas companies in Australia must be made to pre-fund their clean-up costs,” said Fern Cadman, the Wilderness Society’s fossil fuel campaign manager.
“The Albanese Government has reforms planned for next year. From what we’ve seen so far, the proposal is fundamentally flawed and will continue the special treatment where gas companies are simply trusted to clean up, when they have no commercial incentive to do so and their global history is littered with decommissioning defaults.”
Conservation Council of WA (CCWA) executive director Matt Roberts said his organisation had raised doubts about Pilot Energy’s ability to pay for the cleanup.
“We sounded the warning in January this year that Pilot Energy was unlikely to be in a position to progress its risky carbon dumping plans, let alone meet its decommissioning obligations for Cliff Head,” he said.
Mr Roberts questioned what assurances the government had sought before committing $6.5 million of taxpayers’ money to the exploratory CCS phase of the project.
“This now appears to have been nothing more than a cynical attempt to delay decommissioning obligations,” he said.
The Australian government was forced to take on the decommissioning of the Northern Endeavour in 2020, after offshore operator Northern Oil and Gas Australia (NOGA) entered administration in 2019.
The government signed a $325 million contract for the first phase of decommissioning in April 2022.
It also introduced a temporary levy on offshore oil and gas production to recover the project’s costs from the industry.
The Australia Institute supported the levy but warned it should be made permanent, arguing in a 2021 submission that “there is no reason to believe similar incidents will not happen again”.
“Indeed, the 60,000 unfunded, abandoned mine sites on the Australian mainland suggest that further abandonments are almost certain,” it said.
“Wherever possible, oil and gas companies will try to pass decommissioning costs onto other, smaller companies and eventually to governments.”
