The Wilderness Society is taking the offshore oil and gas regulator to court, claiming it should ensure Santos has enough money to decommission the Reindeer gas field off the Pilbara coast, which it will close in coming months.
The environmental group is seeking a judicial review in the Federal Court of a decision in May by regulator NOPSEMA to allow Santos to delay decommissioning the field while it considers whether to use the offshore infrastructure for carbon storage.
In the meantime, a 2000-tonne platform remains in the Indian Ocean, with three wells 60m below water and a 91 km-long pipeline to shore, half of which is in WA waters, outside the jurisdiction of NOPSEMA.
To approve Santos' plan to ensure the environment is protected while the Reindeer infrastructure lies idle, NOPSEMA must be satisfied that the Adelaide-based company has the financial capacity to do anything required of it under the Offshore Petroleum and Greenhouse Gas Storage Act.
The Wilderness Society will argue that the legislation also requires NOPSEMA to ensure Santos can afford to decommission the Reindeer field.
Wilderness Society fossil fuel campaigner Fern Cadman said it is running the case to ensure Santos sets aside the funds for decommissioning so that it gets done if the carbon storage project does not go ahead.
"Our analysis of the financial reports of companies, including Santos, is that these companies aren't setting aside sufficient funds, or planning to deliver their decommissioning," she said.
"There's a big risk that they'll cut and run and leave all of this infrastructure and mess in the ocean."
Cadman told Boiling Cold that if the case was successful, Santos would have to submit a revised environment plan that demonstrated its financial capacity to decommission Reinder.
"But the much broader implication is that any future environment plan being assessed would require NOPSEMA to assess that companies have the money to do their decommissioning at the end of life," she said.
Such a result would concern Australia's offshore oil and gas sector, as revised environment plans must be submitted for NOPSEMA's approval every five years, even for ongoing projects where operations have not significantly changed.
A NOPSEMA spokeswoman said the regulator was aware that the Wilderness Society had launched the action, and it was not appropriate to comment further on the proceeding.
Offshore carbon storage - a business or an excuse?
Santos's plan to store carbon dioxide under the seabed at Reindeer is not unique.
The company is also considering using the Bayu Undan gas reservoir in Timor Leste waters; Woodside is promoting its Angel field in WA's north west; north of Perth, ASX juniors Triangle Energy and Pilot Energy want to repurpose their Cliff Head platform near Dongara; and ExxonMobil is chasing an opportunity in the Bass Strait.
Cadman said some of the carbon capture and storage (CCS) proposals may go ahead, but she suspects many will not.
"In the meantime, while decommissioning is delayed, while companies think about CCS, all this infrastructure is left corroding and degrading in the ocean," she said.
"We believe we're seeing companies systematically using CCS to delay decommissioning."
Santos has signed a memorandum of understanding with an ammonia manufacturer, understood to be Yara, to develop a carbon storage project at Reindeer.
According to its approved environmental plan, Santos plans to complete sufficient engineering and approvals work to be ready to make a final investment decision on Reindeer CCS in 2026, while in parallel studying how to decommission Reindeer.
If Reindeer CCS does not go ahead, Santos will decommission the field in 2030 or 2031, according to its approved plan.
The Reindeer legal action comes to light in the final week of ADNOC, the Abu Dhabi National Oil Company, performing due diligence on Santos ahead of a possible $36 billion takeover.
In a few years, actions similar to the Wilderness Society suing NOPSEMA may not be required to give the community greater confidence that the ocean will be cleared at the company's expense.
The Federal Government plans to implement financial assurance requirements and more closely monitor the finances and operations of companies to ensure they can pay for their decommissioning obligations, according to a 2024 plan from the Department of Industry, Science and Resources.
Such a change may align the oil and gas sector with the much more stringent obligations imposed on offshore wind farm developers, who must assure the Federal Government that they can cover decommissioning costs before installing anything in the ocean.
The bar is set high for offshore renewable energy, with the Federal Government seeking cash, bank guarantees, or an insurance policy. Less onerous mechanisms seen in other regulatory structures, such as self-insurance and parent company guarantees, have been ruled out.
Santos did not respond to an invitation to comment.
I worked in oil & gas in commercial and engineering roles for 20 years. Since 2016, I have written for The West Australian, WAtoday, The Guardian and Boiling Cold, winning five WA Media Awards.
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