Court showdown to decide if oil and gas company Santos must prove it can pay to clean up its toxic infrastructure

The Wilderness Society will take Santos and Australia’s offshore oil and gas regulator to the Federal Court today in a landmark case that could force Australia’s offshore oil and gas industry to “show the money” and prove it has the financial means to clean-up its toxic footprint in Australia’s oceans. 

The case, to be heard on 7-8 April, challenges whether the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) failed to ensure Santos has the financial means to decommission infrastructure at the Reindeer gas field before approving its environment plan to leave this field in limbo for a number of years.

At stake is a looming industry-wide liability estimated at more than $60 billion - the cost of removing ageing offshore oil and gas infrastructure and repairing damage to marine environments over coming decades. 

“The fossil fuel industry has made billions from Australia’s oceans. They must also be held accountable for cleaning up their mess,” said Fern Cadman, Fossil Fuel Industry Campaigner, The Wilderness Society.

“This case will consider whether Australia’s oil and gas regulator should have assessed that Santos had the financial means to clean up its Reindeer field in Western Australia, before agreeing that clean up of the field could be left in limbo.  

“This case is fundamentally about protecting Australia’s unique marine environment from a spiralling inventory of contaminated oil and gas industrial waste.” 

Under current law, decommissioning is the responsibility of titleholders, and infrastructure is expected to be removed at the end of a project’s life. But the system relies heavily on the promises of an industry with a track record globally and in Australia of cutting and running from clean up responsibilities, with limited transparency over whether clean up funds are actually secured.

“Australia is entering a decommissioning decade as offshore oil and gas fields age and production declines. Without stronger safeguards, companies may delay clean-up, underestimate costs, or collapse, leaving taxpayers exposed, continued Cadman.

Previous failures have already demonstrated the risk. When offshore operator Northern Oil and Gas Australia collapsed, the federal government was forced to step in to manage decommissioning, highlighting the real prospect of public liability.

David Hertzberg, Principal Lawyer at Equity Generation Lawyers, said: “This case will be of broad significance. The key issue is whether oil and gas companies are required to demonstrate - throughout the life of a project - that they can pay to decommission the infrastructure they have installed.

“The Wilderness Society will argue that NOPSEMA failed to satisfy itself that Santos had adequate financial assurance to cover the costs of cleaning up the infrastructure at the Reindeer field, and that this amounted to a legal error.

“Our client is concerned that, without strong regulatory oversight, there is a real risk that the cost of cleaning up offshore infrastructure will fall to taxpayers. If our client is successful in this case, it will set a precedent that would help to ensure decommissioning costs stay with the oil and gas companies who have profited from these projects.”

ENDS

Spokespeople available for interview: Fern Cadman, Fossil Fuel Industry Campaigner, The Wilderness Society. Legal representatives, Equity Generation Lawyers