South Australia’s risk-based approach to the

Transcript:South Australia’s risk-based approach to the:
South Australia’s risk-based approach to the efficient and effective management of environmental liabilities from petroleum and geothermal activities Scott Cawrse, Dominic Pepicelli, Nick Panagopoulos, Piotr Sapa and Daniel Broadbridge Are bonds the answer to managing environmental liabilities? Environmental liability management requires balance Environmental liabilities Financial security Environmental liability management requires balance are created by regulated activities that need to be rehabilitated Financial security Environmental liabilities Environmental liability management requires balance Financial security increase with more regulated activities Environmental liabilities Environmental liability management requires balance offsets the rehabilitation costs from regulated activities Environmental liabilities Financial security Financial assurance for environmental liabilities If an operator becomes bankrupt, the security can be used by the regulator The regulator uses the security to pay for rehabilitation works So the challenge is… To consider if bonds are enough or if there better ways to manage environmental liabilities by: determining the size of the total liability assessing which activity has the greatest liability examining how environmental liabilities change over time assessing how liabilities are distributed amongst different operators considering operator risks to meet rehabilitation costs looking at how other regulators manage environmental liabilities Which activities have the greatest environmental liability in South Australia? Access roads $82.2m Wells $572.8m Seismic lines $75,000 Facilities $23.1m Flowlines $73.6m Pipelines $33.6m * Data as at 31 December 2019 So how many wells need to be rehabilitated? How many wells need to be rehabilitated in South Australia? ? 2,077 regulated wells 1,145 active wells 932 idle wells * Data as at 31 December 2019 How are wells and liabilities distributed by operators? How are wells and liabilities distributed by operators? How are wells and liabilities distributed by operators? How are wells and liabilities distributed by operators? * Data as at 31 December 2019 Effective regulation requires incentives to minimise impacts and progressively rehabilitate Regulators focus on managing wells Regulators distinguish between the different status of wells The different classification status of wells helps to understand its value to offset its liability Active wells Exploration wells Production wells Injection wells Inactive wells Future use wells Expired wells Dead wells Legacy wells Orphan wells How other regulators tackle environmental liabilities Wells where operator has become bankrupt Typically, the average production of wells declines over time Wells with low and declining production present a risk to finance rehabilitation as revenues decline Operators may justify deferring rehabilitation on the possibility of wells becoming profitable from: