Securities for onshore petroleum

The Northern Territory (NT) Government requires financial assurance from the onshore petroleum industry before any works are carried out.

Interest holders must pay securities for petroleum infrastructure decommissioning, and environmental rehabilitation and remediation.

Examples of acceptable security may be a cash bond posted to the government and held in trust, a bank guarantee or a surety bond.

The government holds securities to cover the costs of these works should a title holder fail to meet their legal obligations.

When an interest holder completes these works to the required standard, the relevant security will be returned.

Petroleum infrastructure decommissioning securities

When onshore petroleum infrastructure, including wells, is proposed for development in the NT, an appropriate security amount must be calculated and paid before works commence.

Wells

A decommissioning security must be paid before drilling activities commence.

The amount of security required for well decommissioning must be determined using a methodology approved by the Minister for Mining and Industry.

This will take into account the variable decommissioning costs required for different well types.

Well decommissioning requirements and standards must be identified in an approved well operations management plan (WOMP).

Infrastructure required to recover appraisal petroleum

Interest holders must pay security before any infrastructure is used for activities to recover the appraisal petroleum.

Appraisal production infrastructure is temporary or semi‑permanent surface infrastructure on an exploration permit area or retention licence area.

It is used for extracting, processing, refining, storing, transporting or using appraisal petroleum to allow for its beneficial use. It does not include a pipeline defined by the Energy Pipelines Act 1981.

The government retains the funds until the interest holder decommissions the facilities as required. The full security is then returned.

If the appraisal activity is successful and commercial production of petroleum is proven, the interest holder must apply for a range of approvals including a:

• production licence
• petroleum surface infrastructure plan.

At this time, the securities required will be revised. Petroleum surface infrastructure also requires a security.

Petroleum surface infrastructure

Interest holders must pay a decommissioning security before commencing construction of approved petroleum surface infrastructure such as a processing plant.

The amount of security to be held will reflect the scale and type of surface infrastructure and operations proposed.

This detail will be included in the application for approval of the holder's petroleum surface infrastructure plan.

The final amount of security required must be determined using a methodology approved by the Minister for Mining and Industry.

Environmental securities

Interest holders must pay environmental securities before commencing any regulated activities approved by an environment management plan (EMP). Read about EMPs on the Department of Environment, Parks and Water Security (DEPWS) website.

The security amount required must be determined using a calculator approved by the Environment Minister. Get the calculator on the DEPWS website.

Once any environmental impacts or damage resulting from a regulated activity has been fully remediated or rehabilitated, a petroleum interest holder can apply to the Environment Minister for release of the associated security.

Environmental securities can provide for:

• specific costs, liabilities and risks associated with environmental impact and harm resulting from activities in an approved EMP, including costs for remediation and rehabilitation
• costs to manage residual risk of environmental harm, including monitoring, after remediation and rehabilitation has been undertaken
• a contingency amount to reduce the risk that the value of the security is inadequate.

Payment of securities

The Minister for Mining and Industry holds all securities, including environmental securities. However, the amount of environmental security, and its use or release, is advised by the Environment Minister.

Security amounts

The government is required to publish security amounts online under the Petroleum Act 1984.

Read more about securities held for petroleum operations.

Insurance

The government requires that insurance is held in relation to all wells and petroleum surface infrastructure.

Insurance policies must be:

• issued by an appropriately regulated entity and
• contain a minimum level of coverage for each unexpected incident as determined by the Minister for Mining and Industry.

Interest holders must provide policies when submitting an application for a WOMP or revision and when submitting an application for a petroleum surface infrastructure plan or revision.

Evidence of ongoing and appropriate cover must be provided with every notification for drilling an additional well and annually as the policy is renewed.