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.
The Crown is committed to working collaboratively in partnership with Māori in line with Te Tiriti o Waitangi. MBIE is working with Ngā Iwi o Taranaki on the Tui Project to ensure the views of iwi are represented.
The project is being coordinated by the Energy, Resources and Markets (ERM) branch, with support from other areas of MBIE such as New Zealand Government Procurement.
This page will be regularly updated to ensure the latest information on the Tui Project is available.
(As at 30 November 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 to provide technical advice to ensure that there were no urgent issues to address in the near term and to inform planning for the demobilisation phase of the decommissioning project. This is not a contract for any decommissioning planning or services.
This contract 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.
MBIE is working with BW Offshore, owners of the FPSO Umuroa, and regulators to determine the best way forward.
MBIE will use the information provided in a Request for Information to the market to support the development of the procurement strategy and plan for decommissioning activities.
The FPSO Umuroa is currently moored over the Tui oil field and connected to its wells via flowlines as shown below.
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.
Cabinet has agreed to fund the Tui decommissioning and set aside $155 million for the project. This figure was a best estimate of costs at the time and the actual cost may differ due to a range of factors many of which are outside of the Crown’s control.
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 FPSO Umuroa 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.
Contracts and recruitment
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.
MBIE has had approval for a small number of fixed-term roles. These will be advertised openly and also listed on the MBIE website. Additional advertisements may be utilised and the jobs will be referenced in the ‘Contracts’ section on the website.
For information on recently filled positions or awarded and upcoming contracts:
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.
A Bill will be introduced in 2021 and a discussion document on the supporting regulations will be released for public consultation at the same time.
Documents related to the Tui Project are available here:
For more information on the Tui decommissioning process please email email@example.com