Govt spends $10M to look after Northern Endeavour for an extra month

The burden on taxpayers from the failed Northern Endeavour vessel continues to grow - $10M in one month - while the Government decides what to do next.

Govt spends $10M to look after Northern Endeavour for an extra month

The Federal Government will spend $10 million to look after the stricken Northern Endeavor oil vessel for just one additional month.

A contract for Upstream Production Solutions to operate the vessel has been increased in value by $10.34 million and extended one month to the end of November.

Boiling Cold asked the Department of Industry, Science, Energy and Resources if $10 million would be the monthly cost from now on, but did not receive an answer.

A DISER spokesperson said the Government remained committed to keeping the Northern Endeavour facility and the surrounding marine environment safe and secure.

Since assuming responsibility in February, DISER has contracted $73.6 million of services to manage the Northern Endeavor.

GR Engineering subsidiary UPS received $57.9 million, and the original vessel owner Woodside is charging $8.8 million for advice on decommissioning.

Taxpayers could also face a decommissioning bill as high as $360 million and ongoing costs until decommissioning occurs.

An exclusive Boiling Cold analysis revealed the full extent of mismanagement by the Federal Government and regulators that led to this mess while Woodside avoided a $US156 million ($220 million) decommissioning liability.

Federal Govt regulates poorly and gets $360M Northern Endeavor clean-up bill
The Northern Endeavor mess started with Woodside paying to rid itself of a rusty ageing asset, ended with a $362 million liability for the Government and in between was a regulatory shambles.

DISER had previously said it was pursuing opportunities to recover costs. Boiling Cold asked if this was still the case but did not receive an answer.

The Government plans to finalise its strategy to manage the Northern Endeavour this year, with complete decommissioning commencing in 2021 the most likely option.

This likely outcome was revealed in a Department of Industry, Science, Energy and Resources document changing the regulation of the Northern Endeavour.

The offshore safety and environmental regulator NOPSEMA no longer covers the Northern Endeavor, unlike all other Australian offshore oil and gas facilities.

The Federal Government became responsible for the Northern Endeavour and the Laminaria Corallina oil field in February after the owner Northern Oil and Gas Australia was placed into liquidation. The liquidator then "disclaimed" the assets.

Liquidators can disclaim property they do not want to keep if it is too onerous to keep or worth too little.

The Government effectively became the titleholder and, until appointing UPS, the operator of the Northern Endeavour.

However, the Offshore Petroleum and Greenhouse Gas Storage Act that NOPSEMA operates under cannot bind the Crown.

The Northern Endeavor then fell under the jurisdiction of the Environment Protection and Biodiversity Conservation Act that was not suitable as approvals would be too slow to match operational needs.

In July Minister for Environment Sussan Ley exempted the Northern Endeavor from the EPBC Act provided it remained in lighthouse mode when no production occurs.

Ley's reasoning included the need to "properly manage the FPSO in a timely way" and "critically, the risk of damaging Australia's international relations with Indonesia and Timor-Leste." The vessel is close to the maritime borders of both countries.

The vessel will be managed "with the advice and assurance of NOPSEMA that the operations are being undertaken in accordance with the previously-accepted Safety Case…and in compliance with good oil field practice."

Separate to the Northern Endeavor, the Government is reviewing its approach to offshore decommissioning and plans to release a revised framework for public consultation this year.

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Main image: Northern Endeavour floating oil production storage and offloading vessel. Source: Northern Oil and Gas Australia.