Three weeks ago, a power failure forced the evacuation of the crew on a disused oil vessel owned by the Federal Government in the Timor Sea, and the cause of the problem is not yet known.
It is another setback in cleaning up after Woodside sold the ageing oil vessel Northern Endeavour to an inexperienced one-man company that failed, imposing a $1 billion-plus cost on Australia's offshore oil and gas producers.
The remote 274 m-long vessel situated 550km northeast of Darwin, "went black" on April 22.
First, the emergency diesel generator, and then hours later, the battery backup failed. The next day, 59 crew were evacuated by helicopters to Truscott Airbase in the far north Kimberley.
The Northern Endeavour has not produced oil for six years and became the responsibility of the Federal Government in 2020 when its owner, Northern Oil and Gas Australia, went into liquidation.
In 2022, the government awarded UK oil and gas contractor Petrofac the contract for the first phase of decommissioning the vessel, wells and subsea equipment.
The Northern Endeavour produced oil from the Laminaria and Corallina fields. Image: DISER.
A Petrofac spokeswoman said that after the power outage it activated emergency response procedures and notified the offshore safety regulator NOPSEMA.
"The FPSO, which is free from hydrocarbons, is secure and there is no threat to people or the surrounding environment," she said.
"We are working closely with our client to understand the cause of the initial power loss."
It is understood that the 43,000 tonne vessel now has a generator to support a crew of six working on the power problem and to operate essential navigation lighting.
NOPSEMA does not have its usual regulatory powers over the Northern Endeavour as the Federal Government owns it, but acts as though it does with the agreement of the government.
A NOPSEMA spokeswoman said it was investigating the power loss.
Spiralling clean-up costs
Three years ago, when Petrofac was awarded the contract to operate the Northern Endeavour and prepare it for towing away, this "Phase 1" work was estimated to cost $325 million.
That cost has now increased to $504 million, and the total cost of contracts awarded to deal with the Northern Endeavour is now $851 million.
No contracts have yet been awarded for the Phase 2 work to plug and abandon the wells or for Phase 3 when all equipment is removed from the seabed.
The total cost for cleaning up after the failed Northern Endeavour will inevitably exceed $1 billion.
However, the burden will fall on the offshore oil and gas industry, not the Australian taxpayer, through a special production levy that has collected an estimated $1.15 billion by June 2024.
Woodside's legacy
Woodside, Australia's largest oil and gas company, has won no friends among its competitors over its handling of the Northern Endeavour.
US giant Chevron told a parliamentary inquiry that it was obvious that the company Woodside sold the Northern Endeavour to did not have the resources to run it properly and eventually decommission it.
Woodside and its partners produced an estimated $16 billion of oil from the Northern Endeavour up to 2014, when it announced it would decommission the vessel by 2016 for a then-estimated cost of $230 million.
Its engineers began reducing maintenance on the reasonable assumption that the vessel did not have to last long. This move proved disastrous when Woodside switched plans and sold the vessel, and it contributed to a near-fatality under the new owner in 2017.
In the wake of the Northern Endeavour, the Federal Government introduced trailing liabilities that make previous owners liable for decommissioning costs if the new owners cannot afford them.
The provision has killed plans of major companies including Italian ENI and ExxonMobil in the Bass Strait to sell ageing assets and escape clean-up costs.
Globally, Petrofac has bigger problems than the Northern Endeavour. After a string of losses related to legacy contracts and payment delays, it agreed on a financial restructuring with its creditors in December 2024.
For the past 12 months, it has been delaying interest payments on $600 million in debt that expires in 2026.
This followed an earlier 2021 financial restructuring triggered by its difficulty in winning contracts in key Middle East markets after the UK Serious Fraud Office imposed a £70 million fine for bribery.
When the Federal Government awarded Petrofac a $325 million contract in October 2022, the company's shares traded for £106 on the London Stock Exchange. They are now worth £4 and have been suspended since 1 May after the company failed to lodge its annual report on time.
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.
There are serious concerns about lifting equipment and procedures on McDermott's offshore construction vessel DLV 2000 which is decommissioning the Stybarrow oil field near Ningaloo Reef.
Peter Milne
