Tui Project: decommissioning the Tui oil field

The NZ Government has commenced work to manage the Tui oil field assets and plan for decommissioning of its wells in the wake of the financial problems affecting the permit operator Tamarind Taranaki Ltd.

The Crown is committed to ensuring that the field is decommissioned in the right way, in accordance with the law and good industry practice. 

The Crown is committed to comply with all environmental protection standards and other regulatory requirements in its management of the Tui oil field. The Crown is working closely with the various regulatory agencies to ensure that the assets are being managed appropriately.

There is regulation in place to ensure that offshore decommissioning is completed in an appropriate way.  This occurs across a number of regulators and government, including the Ministry of Business, Innovation and Employment, the Environmental Protection Authority, Maritime New Zealand and WorkSafe New Zealand. 

Environmental and safety regulation is administered by the Environmental Protection Authority, Maritime New Zealand and WorkSafe while MBIE is taking the lead on dealing with the Tui assets, and keeping the Minister of Energy and Resources closely informed of developments.

MBIE is engaging closely with Te Kāhui o Taranaki (Taranaki Iwi) to review details of the decommissioning plan as it develops, and is keeping other iwi groups informed.

This page will be regularly updated to ensure the latest information on the Tui Project is available.

Current status

(As at 6 August 2020)

The liquidators of the Tamarind companies have disclaimed the Tui assets to the Crown and the Crown has commenced work to manage the assets and plan for decommissioning. 

MBIE contracted Petrofac, a company that specialises in the operation and decommissioning of petroleum facilities, to establish the current condition of the Tui wells and to determine options to demobilise the floating production and storage vessel Umuroa. MBIE has received this report and is working with BW Offshore, owners of the FPSO Umuroa, and regulators to determine the best way forward.

This report was limited to a stocktake of the assets. Other contracts covering the broader work programmes, including the actual decommissioning of the infrastructure, will be subject to a tender process (see Tui project contracts).

A Request for Information to the market seeking feedback to help understand what information prospective suppliers may need in order to tender for and provide a full turnkey solution for the decommissioning of the Tui oil field has now closed.

MBIE will use the information provided to support the development of the procurement strategy and plan for decommissioning activities.

MBIE will be shortly going to the market for a Head Contractor to arrange and deliver the demobilisation of the FPSO Umuroa. This is related only to the demobilisation of the FPSO, not wider decommissioning works of the oil field.

The FPSO Umuroa is currently moored over the Tui oil field and connected to its wells via flowlines as shown below.

tui permit image
Diagram of the FPSO Umuroa connected to Tui oil field wells via four main flowlines.

The decommissioning process

The decommissioning of the Tui field is expected to be conducted in two phases; the demobilisation of the FPSO Umuroa coupled with works to ensure that the subsea assets are left safe and secure, followed by longer-term plugging and abandonment of the wells and permanent removal of the subsea infrastructure.

It is currently expected that the demobilisation phase of decommissioning will commence in 2020.

The second phase of work requires detailed planning and environmental approvals.  It will also likely require an appropriate drill rig (or Light Well Intervention vessel) to be located in New Zealand. It is anticipated the decommissioning phase will take several years.

The total cost of the decommissioning work will depend on a number of factors, and MBIE needs to obtain a range of advice from technical specialists to determine this.  Until that information has been received it is premature to assess, with any confidence, the costs associated with decommissioning but best estimates available currently assess Tui oil field decommissioning costs at approximately NZ$155 million.

Tamarind Taranaki Ltd (in receivership and liquidation)

Tamarind Taranaki Ltd – permit operator of the Tui oil field – was placed in receivership and liquidation in December 2019.

Its parent company, Tamarind Resources Private Limited (Singapore) went into receivership in March 2020 and into liquidation in April 2020.

The Crown is an unsecured creditor in respect of Tamarind Taranaki Ltd (TTL).

The liquidators of the Tamarind companies have disclaimed the Tui assets to the Crown, but the petroleum mining permit currently remains with the liquidators.

Treaty partners and stakeholders

The Crown is committed to continued meaningful engagement and consultation with Te Kāhui o Taranaki (Taranaki Iwi) and other Treaty partners throughout the entire decommissioning process.

The ultimate decommissioning of the Tui oilfield will entail the removal of the subsea infrastructure, with the challenges arising from details of how this is best achieved. In the short-term, efforts are also underway to enable the FPSOUmuroa to demobilise and depart New Zealand.  Te Kāhui o Taranaki (Taranaki Iwi) are aware of the complexities of the demobilisation and decommissioning and are actively contributing to ensure the infrastructure is safely removed and in a timely manner.

Stakeholders, including the oil and gas industry, service companies, local government, non-government organisations and other interested parties will be kept informed of developments and consulted where applicable.

Tui project contracts

MBIE does not have staff who are specialists in the decommissioning of offshore petroleum assets so it needs to procure external technical advice to perform this role.

The project will involve multiple stages, from monitoring, demobilisation, through to decommissioning. The works will be procured in accordance with Government Procurement rules. It is likely that a number of tenders will be offered during the multiple phases of the project.

A Request for Information to the market seeking feedback to help understand what information prospective suppliers may need in order to tender for and provide a full turnkey solution for the decommissioning of the Tui oil field has now closed.

MBIE will use the information provided to support the development of the procurement strategy and plan for decommissioning activities.

We will be shortly going to the market for a Head Contractor to arrange and deliver the demobilisation of the FPSO Umuroa. This is related only to the demobilisation of the FPSO, not wider decommissioning works of the oil field.

MBIE expects that the eventual decommissioning of the Tui assets will be fully outsourced by way of an open market procurement process, and the successful contractor will then be responsible for delivering the finished product.

MBIE has received a report from Petrofac looking at the state of the assets and options for demobilising the FPSO and has recruited a HSE & Compliance Manager for the Tui assets.

When it is available, details of tenders related to the Tui decommissioning work will be available here:

NZ Government Electronic Tender Service (GETS)

Procurement information will be updated on this page as new opportunities are offered.

Contracts awarded to date

Supplier Contracted area
Petrofac Specialist technical advice/expertise for the demobilisation and shut in of the Tui Oil Field
Elemental Group Advice on regulatory requirements for Tui assets
Buddle Findlay Decommissioning, demobilisation and environmental legal advice
Bell Gully Demobilisation services contract
Martin Jenkins Consultant resource
ArcBlue Consultant resource
SLR Consenting services and advice
Audit NZ One-off probity services

Anticipated immediate pipeline open market procurements (note these activities and dates are subject to change):

Services Approximate market release period
Head Contractor services (demobilisation) August 2020
Benthic monitoring August 2020
Probity services (life of project) August 2020
Assurance services - departmental (life of project) August/September 2020

Legislative change

The Government intends to amend the Crown Minerals Act 1991 in the wake of the issues affecting Tamarind Taranaki and its ability to fund the decommissioning of the Tui oil field.

The planned amendment will to reduce the risk of the taxpayer or other third parties bearing the cost of decommissioning petroleum fields.

The changes will work as a package and apply to apply to current permit and licence holders, as the fiscal risk to the Crown and other third parties is greatest from the existing, rather than future, oil fields requiring decommissioning.

It will impose a statutory obligation on all current and future petroleum permit and licence holders to decommission their infrastructure and will extend this obligation to former permit and licence holders in the case of a transfer.

It would also enable the regulator to periodically assess permit and licence holders’ financial capability to meet their decommissioning obligations, require permit and licence holders to maintain adequate financial security for decommissioning purposes, expand enforcement powers and make other minor changes.

It is intended a Bill will be introduced to the House later this year and the Act is expected to be amended in 2021.

A Minerals and Petroleum Resource Strategy (MBIE website).

Further information

Documents related to the Tui Project are available here:

Contact

For more information on the Tui decommissioning process please email decommissioning@mbie.govt.nz

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