Fuel Stupidity Australia

Fuel Stupidity Australia, by David Archibald.

Australia’s fuel security position is parlous to the extent of being an existential threat. We signed up to the International Energy Agency treaty in 1979 but we are the only country that is delinquent with respect to our obligations under that treaty to hold at least 90 days of imports as stocks. In November 2018, Australia had 53 days of stocks. The Federal Liberal government intends to get to its treaty obligation of 90 days in 2026, so it says. …

Credit: crudeoilpeak.info

Instead of encouraging Australian oil exploration, our current government is making it more difficult. Offshore oil exploration is now administered by an entity called NOPSEMA, which has 124 staff in the following categories:

  • 82 environmental officers
  • 5 well integrity engineers
  • 20 offshore installation inspection staff
  • 20 admin staff.

There is need for the environmental officers, because there is a not a single instance of long term environmental damage done by an oil spill in Australia. The earth’s surface is just too oxidising for any oil molecule to last long.

It is the well integrity engineers that did the most damage recently. A company called Cooper Energy was drilling a well called Annie-1 in the Otway Basin off Victoria. The rig broke a couple of anchor chains during a storm, which can happen with a deep water rig operating in shallow water. While off location, the rig decided to change out the drilling line. During that process the line broke and hit a deckhand in the shoulder. The injured worker didn’t want to be taken off the rig, so it was not a completely serious lost-time accident.

Nevertheless NOPSEMA decided to get involved and shut down operations on the rig until they inspected it. They didn’t come out to the rig for 10 days. Meanwhile the rig was costing Cooper Energy of the order of $1.0 million per day. When they resumed operations they missed a weather window for moving back on location to complete the well abandonment. In all, NOPSEMA’s action is thought to have cost Cooper Energy in the range of $12 to $15 million. Cooper Energy had planned to drill a well called Elanora-1 after Annie-1, but the cost overrun caused by NOPSEMA meant that they had run out of money to drill it. Elanora-1 is now scheduled for the 2021 drilling campaign.

When you have a major fuel security problem the last thing you want to do is discourage oil and gas exploration by acts of stupidity. All companies operating in oil exploration offshore Australia would be aware of what NOPSEMA did to Cooper Energy, and would be adding a 20% NOPSEMA-stupidity contingency to their well costs.