Australia seeks expressions of interest to decommission stranded FPSO

The Australian Government has released a Request for Expressions of Interest (REOI) for Phase 1 works to decommission the stranded Northern Endeavour FPSO.

Northern Endeavour FPSO
Northern Endeavour FPSO; Source: Australian government

The move is the next step in the process to disconnect and decommission the Northern Endeavour FPSO from Laminaria-Corallina oilfields in the Timor Sea, which has been stranded in Australian waters since 2019 when its operator, NOGA, went into liquidation.

The Australian Government committed to decommissioning the Northern Endeavour FPSO and also remediate the associated oil fields back in December 2020.

The REOI from the Department of Industry, Science, Energy and Resources invites qualified and experienced organisations to demonstrate their capability and capacity to undertake the Phase 1 works to decommission and disconnect the FPSO from the related subsea equipment. Information for Phase 2 and Phase 3 contracts will be announced at a later date.

Resources, Water and Northern Australia Minister Keith Pitt said: “The Department intends to use this process to shortlist organisations for a more detailed Request for Proposal stage later in the year”.

Northern Endeavour FPSO
Northern Endeavour FPSO; Source: Australian government

The project will be undertaken in three distinct phases. Phase 1 will consist of decommissioning and disconnection of the facility from the subsea equipment, Phase 2 of permanent plugging and abandonment of wells, and Phase 3 of removal of subsea infrastructure and remediation.

The work in Phase 1 is expected to include the removal of the FPSO from the field in accordance with good industry practice; installation of temporary barriers between the reservoir and the environment; subsea and topside flushing, cleaning, and demucking; sea fastening for tow; disconnection of risers; disconnection of moorings; and ocean tow to a designated location. The submission deadline is 29 July 2021.

The Australian government in May 2021 announced a temporary levy on offshore petroleum production to recover the costs of the FPSO decommissioning and remediating the Laminaria and Corallina oilfields and associated infrastructure, stunning the oil and gas sector.

Following the initial announcement, further details were revealed by the department, stating that the levy would apply at a rate of $0.48 per barrel of oil equivalent (BoE) produced, as measured at the well-head.

APPEA, an Australian oil and gas industry association, labelled the new levy by the country’s government as over the top, extreme, and a terrible precedent.

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The levy will start on 1 July 2021 and all entities with an ownership interest in a petroleum production licence issued under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 will be liable for the levy.