Madeleine King (Brand, Australian Labor Party, Minister for Northern Australia) Share this | Link to this | Hansard source

I rise today to update the House on the future of the offshore oil and gas industry decommissioning in Australia. Throughout our history, Australia's prosperity has been closely tied to the success of our resources sector. The contribution of the sector to our national prosperity is unequalled, and it continues to play an essential role in supporting our economic wellbeing today. Australia's resources sector will only become more important as we pursue our commitment to reach net zero emissions by 2050. The sector will be integral to the development of clean energy supply chains not only in this country but in our region and around the world. As I've said before in this place, the road to net zero runs through the Australian resources sector.

The government will always support a strong and resilient resources sector, but, in supporting this sector, we also have a responsibility to future generations to ensure that industry rehabilitates the natural environment once a project reaches the end of its productive life. For Australia's maturing offshore oil and gas industry, this means spending approximately $16 billion to remove, dismantle, scrap and recycle ageing offshore infrastructure. While this is an extraordinary task for the offshore resources industry, it is also an extraordinary economic opportunity for Australia. With the right policies and regulatory settings, and by harnessing the expertise of our existing offshore resources workforce, we can capture this economic opportunity and build a vibrant maritime decommissioning economy.

Decommissioning, in basic terms, involves removing and dismantling oil and gas infrastructure permanently, securely plugging disused wells and rehabilitating the surrounding seabed. The removal of all offshore oil and gas property once it is no longer in use is the default decommissioning requirement under Australian law. Alternatives to full removal of infrastructure may be considered where that approach delivers equal or better environmental outcomes. Australian law obligates the oil and gas industry to pay all costs associated with decommissioning offshore oil and gas infrastructure, and the Australian community expects nothing less. Decommissioning expenditure will ramp up in the decades ahead, as a number of offshore oil and gas projects in Victoria, Western Australia and the Northern Territory come to the end of their productive life.

The government's objective is clear: as industry starts investing to decommission $60 billion of offshore infrastructure, we want as much of that investment as possible to be spent backing Australian industry and Australian jobs. But, more than that, we want to build an enduring decommissioning industry that is equipped not just to service ageing oil and gas assets in Australia and our region but also to capture a solid pipeline of activity to meet future decommissioning demand for new industries, like offshore wind. We are thinking that far ahead. Australian hands have built a multibillion dollar offshore resources industry from the ground up. We want to harness their expertise and deploy their know-how to build a vibrant domestic maritime decommissioning economy.

As many in this place will recall, in February 2020 the then Australian government stepped in to take responsibility for the Northern Endeavour, a 274 metre-long floating production storage and offtake facility. The government was forced to take responsibility for the Northern Endeavour because the owners of the vessel entered into administration, defaulting on their decommissioning obligations. The Northern Endeavour illustrated that inadequate maintenance, regulatory gaps and poor planning pose a significant risk to the safe management of aging oil and gas infrastructure in this country. Such gross mismanagement also had the potential to cause an environmental disaster. We aren't alone in this. Other countries, like the UK, New Zealand and the US, are facing similar challenges. Today I'm glad to update the House that the Northern Endeavour decommissioning program continues to progress. We are taking a deliberate, responsible and diligent approach to a project that is technically complex and extraordinarily difficult. This difficulty was underscored just yesterday when the contractor aboard the Northern Endeavour temporarily suspended the sub-sea flushing campaign currently underway, due to unforeseen technical issues.

Safety will always come first. This work cannot be rushed, and it must be done properly. Doing so sends a strong signal that Australia remains a responsible country for safe and sustainable offshore development. Phase 1 of the Northern Endeavour decommissioning program commenced last year and is focused on making the vessel safe and disconnecting the vessel from its surrounding oilfields. Work is now underway to prepare for the next stage of the program, which involves the plugging of existing oil wells and the removal of infrastructure on the seabed. The government is also preparing a disposal strategy for the physical Northern Endeavour vessel, which will include all necessary measures to protect the environment during disconnection, towing and dismantling. In working to decommission the Northern Endeavour, the Australian government's first priority has always been the safety of workers undertaking this difficult task. Nothing is more important than the safety and security of the Australians working offshore, many of whom operate in some of the most dangerous workplace conditions anywhere in this country.

The decommissioning of the Northern Endeavour is an expensive undertaking and not something the federal government should have to do. In 2022, the parliament legislated a levy on the offshore oil and gas industry to pay for the decommissioning of the Northern Endeavour. The Australian government remains committed to ensuring that taxpayers are not left to pick up the cost of industry's decommissioning obligations. The levy was a bipartisan effort, and I thank the former minister, the member for Hinkler, for his sustained engagement with Labor to progress that important piece of legislation. I also thank Adrian Evans, Penny Howard and others from the Maritime Union of Australia for their constructive engagement with Labor as parliament legislated the levy and for their longstanding advocacy for the establishment of a decommissioning industry in Australia.

While the process of decommissioning the Northern Endeavour is complex and difficult, we have learnt some important lessons that have translated into stronger and more resilient regulations. In 2021 parliament passed reforms with bipartisan support that prevented companies from selling off aging oil and gas assets unless the Commonwealth can be assured that the new owners of those assets have the capacity to meet their decommissioning liabilities. These reforms helped to clamp done on a practice that allowed big oil and gas companies to sell off aging assets to junior resources companies who may not have had the financial capacity to fund a decommissioning program. The parliament also expanded the circumstances in which a former title holder could be held responsible for decommissioning costs, even if they had already sold off an asset to a separate company that was unwilling or unable to pay. The Australian government is now considering how we can strengthen the existing financial assurance regime for offshore oil and gas title holders to better insulate taxpayers against future decommissioning liabilities. Over time, we want to improve the government's ability to monitor and assess the financial mechanisms that the offshore resources industry has in place to pay for future decommissioning activity.

It is important to ensure that the offshore resources industry continues to meet its obligations to responsibly and safely decommission offshore projects. The decommissioning of the Northern Endeavour has provided valuable insights into what a future offshore decommissioning industry in Australia could look like. We have the expertise, the capacity and the willingness to decommission large offshore oil and gas infrastructure in this country, and that is why I'm working with Australia's offshore industries, the offshore workforce, state and territory governments and my ministerial colleagues to develop a road map for a future Australian offshore decommissioning industry. The road map will examine how we can capture the significant economic opportunity in the years and decades ahead. It will examine infrastructure requirements, explore regulatory best practice and map the services that we will need to help underpin such an industry in this country.

The road map will identify opportunities to create high-paying, high-skilled jobs in the regions, supporting the transition of our existing offshore workforce. The road map will explore how our decommissioning industry can provide services to adjacent industries like offshore wind, and it will identify opportunities to export our expertise across the Asia-Pacific. The road map will also explore how such an industry could facilitate onshore reuse and recycling opportunities. Norway and the United Kingdom see up to 97 per cent of the steel from offshore projects recycled and reused in things like offshore wind turbines. So rather than strip down old steel and export it as scrap, there is an opportunity to reuse and recycle the steel from offshore oil and gas infrastructure onshore.

In addition, the road map will look at different ways to build opportunities for First Nations people and businesses as well as boosting the participation of women in offshore industries. To support the development of the road map, the Australian government is launching an issues paper today and will shortly commence public consultations. With the right settings in place, Australia is well placed to scale up a viable domestic offshore decommissioning industry in this country. We can do it here, we should do it here and we can export our expertise to our region. I thank the House.

David Littleproud (Maranoa, National Party, Shadow Minister for Agriculture) Share this | Link to this | Hansard source

I rise to respond to the minister's statement on decommissioning. I'd first like to thank the minister for recognising that the previous coalition government did much of the work in relation to reforming Australia's offshore oil and gas decommissioning industry, and I acknowledge that the government is continuing this work. In 2021, the former coalition government passed strong reforms to ensure stability and responsible management of offshore decommissioning following extensive consultation with industry to ensure that negative impacts were mitigated, and just last year the coalition successfully negotiated a deal that would ensure the long-term management of Northern Endeavour's decommissioning whilst ensuring the Australian taxpayer would not bear the costs of the project. However it is concerning that the government appears to be more focused on the process of shutting projects down rather than getting on the job with new ones.

The minister is right. Australia does have a mature oil and gas industry. It's mature because Australia has been known for its predictable and fair regulatory environment that allowed investors and resource companies to get on with the job of investing in and developing our extensive and high-quality oil and gas reserves, creating jobs and wealth for Australians in the process. However, recently this has become increasingly uncertain thanks to the government's poor and rushed policy decisions. The minister highlights that Australia is a responsible country for sustainable offshore development, but who will continue to invest in our offshore developments when Labor has decided to wage war against the gas industry since coming to office? Market interventions, changing regulatory goalposts, funding green lawfare, damaging industrial relations legislation, and profound indecision and a lack of clarity following important court decisions have made Australia a much riskier place to try to get new oil and gas projects off the ground. Despite calls from industry and foreign partners that these decisions are making Australia an increasingly unreliable investment destination, the government seems completely content to continue undermining this multibillion dollar sector.

On Monday, the Premier of Western Australia, the minister's home state and a resource powerhouse, was forced to come out to bat publicly on behalf of the sector. It's clear that this industry has very few allies in the ranks of federal Labor. In fact the state Labor Premier had to remind this federal Labor government that no-one will thank us if the economy goes backwards. No-one will thank us if you don't have enough gas and love electricity. Yet the Albanese government is doing just that, driving our economy backwards and increasing the risk of gas shortfalls across the country. The WA Premier also said that the resource sector kept New South Wales and Victoria afloat when they were in lockdown. The fact of the matter is that this industry plays and will continue to play a significant role in our economy, but today we are presented with a statement on a significant matter on decommissioning. It is an important topic, no doubt, but, just like the government's future gas strategy, the focus appears to be more on managing a decline in supply rather than boosting supply through new development.

Where is the statement on the importance of commissioning new oil and gas projects? What about a statement that points to a single new project that will go towards solving Labor's energy supply problem, which is of their own making? What about an acknowledgement that union activism at Western Australian gas projects now risks destabilising global LNG markets, activism that will only get worse under Labor's proposed industrial relations changes because, when reports of potential union strikes first emerged, global gas prices soared? Where are the statements on the significance of that from the government? What about the Middle Arm Sustainable Development Precinct, a national infrastructure project that the Northern Territory Labor government deem so critical to the north? Shamefully, Labor decided to make a backroom deal with the Greens to grant them an inquiry in order to attack the future of the precinct and of the gas industry in the Northern Territory—all to try and protect the Prime Minister from the dodgy decisions around Qatar Airways as a favour to Alan Joyce.

It's revealing that—while our shadow minister for resources and for northern Australia, Senator McDonald, is currently at the Northern Territory Resources Week conference, confirming the coalition's commitment to Middle Arm, and supporting infrastructure for carbon capture and storage and blue hydrogen and the north's entire resource sector—the minister is here in the chamber delivering a significant statement on decommissioning. Obviously, the Labor government has formed their own list of priorities for the future of oil and gas in Australia, because this is the stark difference between the Labor government and the coalition. While the coalition is out on the ground, genuinely engaging with industry and the communities that benefit from the resource sector, Labor is playing politics in Canberra, trying to ram through ill-thought legislation to protect their own interests. If left to their own devices, Labor would ensure that, once all the jobs had gone and all the investment had been pulled, the only thing left for the oil and gas industry to do would be to be decommissioned.