Marine oil and gas exploration and production

2016

Australia has large reserves of gas and substantial reserves of oil, with extraction activities producing 79.4 million barrels of crude oil in 2014 (APPEA 2015). Australian production of liquefied natural gas (LNG) has more than doubled since 1998, and the North West Shelf alone is expected to have an operating life of 45 years (APPEA 2015). In 2015, Australia exported 30.4 million tonnes of LNG with a value of $16.5 billion, and it is expected that Australia will become the world’s largest LNG exporter by 2018. In association with the expansion of LNG production and exports, offshore production facilities are also being developed, the first of which is under construction. Once completed, it will be towed onto site in the Browse Basin, around 475 kilometres north-east of Broome. The contribution of the oil and gas industry to Australia’s annual economic output is expected to more than double from $32 billion in 2012–13 to $67 billion by 2029–30 (APPEA 2015).

Activities that occur in the oil and gas industry can be largely divided into 4 categories:

  • exploration—seismic surveys and drilling
  • development—drilling, and construction of submarine infrastructure (including pipelines) and facilities
  • operations—production facilities
  • operations—decommissioning.

Pressures associated with ports, export facilities, onshore transport of marine oil and gas, and regional population growth associated with oil and gas industries can be found in the Coasts report.

Exploration and production

In offshore areas, the Australian Government manages the release of exploration acreages through a nomination process. In 2011–15, the number of offshore areas nominated ranged from 27 to 31 per year, with nominations primarily located in the North-west Marine Region. Smaller numbers were nominated in the South-east, South-west and North marine regions (Table MAR2). Acreages nominated are not always taken up and bid on; 4–10 acreages were re-released for nomination each year during 2011–15.

Table MAR2 Number of exploration acreage nominations released by the Australian Government in offshore areas across marine regions

Marine region

2011

2012

2013

2014

2015

North

2

3

3

3

2

Coral Sea

0

0

0

0

0

Temperate East

0

0

0

0

0

South-east

7

7

2

0

6

South-west

3

3

2

1

1

North-west

20

14

24

26

19

Total

32

27

31

30

28

The rising cost of oil and gas exploration, coupled with falling oil and gas prices, has resulted in overall reduced petroleum exploration activity across offshore and inshore waters, with the number of offshore exploration wells drilled falling by more than two-thirds since its peak in 1998. New submissions for environmental management approval, as a potential indicator of offshore oil and gas activity, decreased between 2012 and 2015, with a 33.3 per cent reduction in new submissions in 2015 compared with 2014 (NOPSEMA 2016). The greatest declines in the offshore sector were in drilling and construction activities, whereas operations, decommissioning and seismic activity remained relatively stable (see also Anthropogenic noise). As a result, the oil and gas industry can be considered to have a low impact on the marine environment with an improving trend.

Most extraction activities are currently concentrated in the North-west and South-east marine regions (Figure MAR14), although all regions contain leases with active exploration permits (Figure MAR15). Potential impacts on the marine environment from oil and gas activities are generally well known, and vary depending on the size, type and location of activity.

Oil and gas activities in the marine environment generally occur away from shallow-water nearshore environments; most activities in the nearshore environment are associated with processing and port facilities. Numerous habitats, communities and species groups in the marine environment may be affected by oil and gas activities, including coral reefs, seagrass communities, fish and invertebrate species, and some species that are protected under national and international legislation and agreements. Impacts can include:

  • seabed disturbance from the physical footprint of subsea infrastructure and drilling discharges (O’Rourke & Connelly 2003)
  • underwater noise from seismic surveys, support vessels, drilling or pile-driving (see Anthropogenic noise)
  • artificial light and air quality effects from operating facilities
  • seabed and water quality effects from discharges of drilling waste or production discharges (Holdway 2002).

The extent, duration and severity of impacts vary depending on the biological sensitivities of the marine environment near the activity (O’Rourke & Connelly 2003). In many cases, impacts are highly localised (e.g. Carr et al. 1996); however, the long-term chronic effects of many activities on the marine environment are unknown. Quantifying cumulative impacts from activities and separating these from other anthropogenic stressors continue to be challenges for the oil and gas industry, regulators and marine estate managers.

Risks to the marine environment also come from unplanned events such as oil spills. The impacts of unplanned events may be difficult to predict before the event, but have the potential to include significant physical and biological consequences. Knowledge of the risks and impacts of oil spills, and how to prevent or minimise them, has increased dramatically following significant spill incidents in Australia (DRET 2011) and internationally in recent years (see Lubchenco et al. 2012 and associated papers). Greater investment in marine baseline studies, and meteorology and physical oceanography studies has supported modelling and monitoring of activity discharges and their impacts, and increased preparedness for emergency response in the event of an oil spill.4

There are still areas for improvement in identifying the impacts and risks associated with oil and gas activities, including:

  • field studies that can verify modelled activity impacts
  • investigations into cumulative impacts at the appropriate temporal and spatial scales
  • improved facilitation of information sharing across common environmental risks
  • more consistent incident reporting to both state and territory agencies, and NOPSEMA.

Decommissioning of infrastructure

As offshore oil and gas structures age and approach obsolescence, they require decommissioning. If not properly managed, decommissioning of facilities may not always result in optimal environmental, societal and economic outcomes. Challenges associated with decommissioning are becoming particularly pronounced because of the ageing nature, and associated maintenance requirements, of facilities in some parts of Australia.

Typically, once a well has come to the end of its useful life, it is plugged to prevent fluids and gases from leaking. Generally, regulations require that a well must be abandoned in accordance with good industry practice, to the extent that this practice is consistent with the regulations. Regulations vary in detail across and within jurisdictions, but generally require that remediation uses noncorrosive fluids and plugs that are ‘fit-for-purpose’ based on industry standards. Effective remediation isolates oil-producing and gas-producing zones from aquifers, and remediates the surface to meet the relevant regulatory standards. Platform structures and pipelines may be removed and used elsewhere, or hauled to shore for scrapping or recycling (Schroeder & Love 2004).

Policies of complete removal assume that ‘leaving the seabed as you found it’ represents the most environmentally sound decommissioning option. However, some structures (including well structures, and associated pipelines transporting oil and gas from the well) can develop abundant and diverse marine communities during their production lives, and can support communities of regional significance (Macreadie et al. 2011). This produces a conundrum whereby removal of structures is unlikely to represent best environmental practice in all cases (Fowler et al. 2014). Some approaches to this situation have resulted in obsolete structures being left in place as artificial reefs (‘rigs-to-reefs’). Such programs are actively debated, and the general view is that decommissioning activities, rather than being directed under general regulations, should be considered on a case-by-case basis (Schroeder & Love 2004, Fowler et al. 2014).

Evans K, Bax NJ, Smith DC (2016). Marine environment: Marine oil and gas exploration and production. In: Australia state of the environment 2016, Australian Government Department of the Environment and Energy, Canberra, https://soe.environment.gov.au/theme/marine-environment/topic/2016/marine-oil-and-gas-exploration-and-production, DOI 10.4226/94/58b657ea7c296