NOPSEMA endorses updated financial assurance estimation method
To help titleholders calculate their financial assurance needs in the event of an oil spill, NOPSEMA recently endorsed the Australian Energy Producers’ (AEP) 2024 Method for Estimating Levels of Financial Assurance (the 2024 FA Method).
Under the Offshore Petroleum and Greenhouse Gas Storage Act 2006, titleholders are required to have sufficient financial assurance to meet the costs, expenses and liabilities that may arise in connection with carrying out petroleum activities, including those associated with responding to a major oil spill. This requirement is a prior condition of acceptance of an environment plan, and applies to new and revised environment plans.
“The 2024 FA Method is a suitable form for demonstrating financial assurance when used in conjunction with NOPSEMA's process for making financial assurance declarations and confirmations,” Acting Chief Executive Officer, Charmain FitzGerald, said.
“It provides a methodology, verified by a third party, for calculating the remediation costs of any potential marine oil pollution.”
The new method consists of two parts, with its usage limitations now extended for the general method part to encompass oil spill incident scenarios in which the total volume of hydrocarbon released is less than 1,750,000m3 and the total volume of oil ashore is less than 30,000m3.
Indicative cost bandings have been revised following an update in costings for well control and operational response, which has the potential to affect the level of financial assurance required to be held.
A second part of the method has been introduced for estimating financial assurance needs for marine diesel or gas oil incidents arising from vessel-based activities. This part of the method will cover such releases up to 1,250m3 which may occur during the petroleum activity itself.
The Financial Assurance for Petroleum Titles guideline on NOPSEMA’s website has been updated to reflect this endorsement, with the AEP’s 2018 APPEA Method no longer applicable. Transitional arrangements for 2024 AEP Methods are in place until 31 March 2025, which provides titleholders time to implement the new method.
The 2024 FA Method was developed by GHD Pty Ltd, on behalf of AEP, in consultation with NOPSEMA and independently validated by Vysus Group.
“We are supporting a flexible transition to the updated method, however titleholders retain responsibility for the costs of cleaning up pollution events, regardless of the estimation method used,” Ms FitzGerald said.
To obtain the method or for more information regarding the review, please contact AEP.