Managing orphan wells

All onshore petroleum wells in the Northern Territory (NT) must be monitored and managed, either by the relevant petroleum interest holder or the government. This includes decommissioned wells that have been permanently plugged and abandoned.

The NT Government is responsible for monitoring and managing wells which are no longer associated with a petroleum title. These are called ‘orphan wells’.

Orphan well levy and fund

Under the Petroleum Act 1984, interest holders must pay a non‑refundable orphan well levy for the long-term monitoring, management and remediation of orphan wells in the NT.

Money collected under the orphan well levy is held in the orphan well fund and can only be used for orphan wells.

This means that while the government manages the work program associated with orphan wells, the ongoing cost of the work is funded by petroleum interest holders in the NT.

The orphan well levy must be paid from 1 July 2023.

More information will be made available on an annual basis from 30 September 2023 on:

• how much orphan well levy has been collected
• associated balance of the orphan well fund
• work and activities funded by the orphan well levy.

Existing orphan wells

There are 113 known orphan wells in the NT, dating back to the 1960s.

The NT Government has undertaken a comprehensive historical analysis of each of these wells and calculated a risk rating for each one.

The risk rating considers the depth of the well and the nature of the underlying reservoir. Some exploration wells were unsuccessful because they never intercepted petroleum bearing layers. These wells pose very limited to no risk.

An assessment of historical construction and decommissioning was also undertaken, where records existed. This process included an analysis of evidence of well barriers placed during construction and abandonment, including casings and cement operations.

Each orphan well has been located and inspected in the field to confirm the risk rating. Gas detectors are used on site to test for methane. The monitoring process used has been informed by the CSIRO.

Orphan wells were then classified as high or low risk.

For high risk orphan wells, a barrier analysis and further assessment will be undertaken to determine if remedial work is necessary.

Future orphan wells

Strict laws have been introduced to ensure that any future orphan wells accepted by the government when a title is surrendered will have been decommissioned to a very high standard.

As a result, future orphan wells will be unlikely to require management interventions.

Interest holder responsibilities

When a well is no longer required, the interest holder is required by law to decommission those wells. For example, if there is insufficient hydrocarbon potential (exploration wells), or when production has drained the reservoir (production wells).

The interest holder is also responsible for the ongoing monitoring of decommissioned wells to ensure the process was successful and there are no leaks from the disused well.

If a loss of integrity is detected after a well has been decommissioned, the holder must notify the department as per the approved well operations management plan (WOMP).

If necessary, the WOMP will be reviewed to include appropriate diagnostics, repairs and monitoring. Once appropriate remedial works are approved, the interest holder is obligated by law to conduct all the works required to make the decommissioned well safe.

The holder remains responsible for decommissioned wells until their title, or part of their title, is surrendered. However, no decommissioned well can be relinquished to government until it has been successfully repaired.

Security

The Petroleum Act 1984 also establishes the requirement for petroleum infrastructure decommissioning securities.

This means that, in the unlikely event that a petroleum interest holder goes into liquidation, the minister can draw on those securities to decommission wells or make them safe.