Wilderness Society takes legal case questioning Santos’ clean up funds

The Wilderness Society is taking Australia’s national offshore oil and gas regulator, NOPSEMA, to court over what they say is a failure to ensure Santos has financial means to decommission their Reindeer gas field off the coast of Karratha, WA.

In early May NOPSEMA approved an Environment Plan from oil and gas giant Santos to “preserve” their Reindeer wellhead platform for “future phases”, despite the field ceasing production this year. The Wilderness Society, represented by Equity Generation Lawyers, is challenging this decision.

The case will argue that the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGS Act) requires Santos to prove to the regulator that it has the financial means to decommission the infrastructure and remediate damage to the surrounding environment. It will argue that in approving the Environment Plan, NOPSEMA did not enforce this requirement. 

Section 571(2) of the OPGGS Act requires oil and gas companies to maintain sufficient financial assurance to meet certain costs, expenses and liabilities. NOPSEMA has interpreted this requirement narrowly, carving out the costs of decommissioning infrastructure after production ceases. The Wilderness Society will argue that NOPSEMA’s narrow application of this requirement is wrong and that the regulator should have assured itself that Santos has a dedicated arrangement in place to ensure the costs of decommissioning and remediation can be covered.

The cost of decommissioning Australia’s offshore oil and gas industry is estimated at $60 billion over the coming decades, with more than $10 billion in the next decade alone.

The Wilderness Society fears that without strong regulation from NOPSEMA to ensure offshore oil and gas companies have the means to pay for the coming wave of oil and gas clean up activities, we could see the global pattern of fossil fuel companies cutting and running from clean up obligations repeated in Australia. When that happens, taxpayers are left to foot the bill and oceans are exposed to hazardous wastes and various, poorly understood, risks. 

Fern Cadman, Fossil Fuel Industry Campaigner for the Wilderness Society, said, “Oil and gas companies have exploited Australia’s resources for 60 years. They’ve made enormous profits, paid minimal taxes, damaged the climate and put vast quantities of toxic infrastructure in the ocean.

“In being given this right to exploit Australia’s resources, they make a promise to clean up after themselves. We believe the law currently requires companies to demonstrate they have the means to clean up after themselves, but that this isn’t being enforced by Australia’s oil and gas regulator.”

Tim Beshara, Manager of Policy and Strategy for the Wilderness Society said, “We’ve taken this case because it’s one way to ensure the toxic legacy of the oil and gas industry will be cleaned up and the environment will be protected from a cocktail of hazardous wastes.

"The oceans around Australia are too precious to leave to a game of chance. Australians shouldn't be left wondering will these or won’t these companies do the right thing, and will this or won’t this mountain of rusting industrial refuse cause enduring harm."

David Hertzberg, Principal Lawyer at Equity Generation Lawyers, said “This is the first time that an Australian Court will consider whether oil and gas companies are required to maintain adequate financial assurance to cover the costs of decommissioning.

"The Wilderness Society argues that the law requires Santos to maintain adequate financial assurance to cover the costs of cleaning up the infrastructure at the Reindeer field, and that NOPSEMA failed to satisfy itself that Santos has done so.

"If our client is successful, it will set a precedent that oil and gas companies need to demonstrate that they can pay to clean up after themselves once they cease production. That’s important because our client wants to see offshore infrastructure properly cleaned up and oil and gas companies, not taxpayers, footing the bill.”

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