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The Federal Government is seeking a contractor to safely tow away the Northern Endeavour oil vessel by mid-2023 as it starts what could be a $1 billion decommissioning effort.
The Department of Industry, Science, Energy and Resources today invited expressions of interest to disconnect and tow away the Northern Endeavour that sits in 380m of water 550km northwest of Darwin.
Northern Endeavour location in the Timor Sea. Source EOI document, annotated by Boiling Cold
The Federal Government's invitation said "schedule is imperative" and that it intends the project "will set the standard for future similar activities in Australian waters."
A requirement for both speed and quality usually involves great expense that, in this case, will be borne by Australia's offshore oil and gas producers through a 48c a barrel production levy announced a week ago.
The Government seemed cautious of complex joint ventures that are common in the offshore construction industry.
"Due to the complexity of the Project and the short timeframes, we do not want EOIs from consortia, joint ventures or alliances unless each member is prepared to collaborate effectively and do everything possible to ensure the project is delivered," the invitation said.
"We do not want EOIs from entities that cannot commit to an expedited timeframe."
Vessel, wells and subsea equipment to be made safe and removed. Source: EOI document.
The tight schedule is driven by the Government's desire to minimise operating costs of about $130 million in 2021.
DISER plans to award the vessel removal contact by March 2022 and for the work to be complete by mid-2023.
The second phase of work will plug and abandon the wells and remove wellheads. Other subsea equipment will be either removed or left on the seabed in a third and final phase.
These scopes do not include the sale or disposal of the vessel.
Is the Nothern Endeavour fit to tow?
The first phase of work ends with the Northern Endeavour towed unmanned to a designated location.
Towing the vessel with no one onboard will reduce the regulatory requirements for a safe tow.
This may mean less work is required on a vast list of overdue maintenance, including corroded water ballast tanks identified by Lloyds.
Castleton Commodities International, a lender to failed vessel owner Northern Oil and Gas Australia owed $124 million, took action in the NSW Supreme Court last year to take possession of the vessel in the hope of selling it to offset some of its loss.
The Commonwealth's defence lodged in January 2021 said the vessel had structural issues in multiple areas due to advanced corrosion, with about "6200 structural anomalies being actively managed and 138 recommended for repair."
The claim also listed numerous safety, utility and power systems with issues that had to be addressed before the Northern Endeavour could be disconnected and towed away.
Boiling Cold understand some of the maintenance on structures and systems work is underway by Upstream Production Solutions that is operating the vessel for the Government.
Read the full story of how a quick deal by Woodside resulted in an embarrassing fiasco for the Australian Government and oil and gas industry.
Woodside sold the Northern Endeavour to Northern Oil and Gas Australia in 2016. The small one-man company new to offshore oil and gas was liquidated in early 2020 after safety issues shut down production in 2019.
The sale was legal, but Woodside, which reduced its decommissioning liabilities by $US156 million after the sale, regulators NOPSEMA and NOPTA, and the Federal Government have faced heavy criticism for their roles.
Main image: Northern Endeavour oil vessel in the Timor Sea. Source: Anon.
I worked in oil & gas in commercial and engineering roles for 20 years. Since 2016, I have written for The West Australian, WAtoday and Boiling Cold, winning five WA Media Awards.
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