Shutting down an oil field could cost nearly half a billion dollars, and taxpayers will foot the bill.
What happens?
The Tui oil field in New Zealand was abandoned by Tamarind Taranaki in 2019, and now that the offshore wells have been capped, Kiwis are facing the bill: NZ$443.4 million.
That’s almost three times as many as a 2015 estimate, but that’s only an estimate and the actual number could be much lower, Radio New Zealand reported in March.
The Malaysian company went bankrupt because of an unsuccessful drilling operation, the New Zealand Herald reported at the time, and the Ministry of Business, Innovation and Employment has been working on a safe decommissioning plan since 2020, RNZ said.
The final pieces of the field’s subsea infrastructure were removed in late February, completing the project pending environmental investigations and regulatory reporting, the MBIE said.
“The government has always downplayed the true environmental costs of the extractive industries,” Catherine Cheung, researcher at Climate Justice Taranaki, told RNZ. “They create havoc and then they pull out.”
Why is oil field decommissioning important?
Just as in the United States, oil and gas companies in other countries can evade their responsibilities without facing any significant accountability.
This is a concern as wells are being abandoned or “orphaned.” These “zombie wells” leak petroleum, sewage, and even deadly gases, polluting groundwater and air and causing sinkholes.
Colorado residents have sued a company they say was “designed to go bankrupt.” In Texas, another company is focused on plugging wells in underrepresented communities that disproportionately suffer the negative effects of our dependence on dirty energy, including the “Wilmington cough.”
Although the industry is fighting against the green energy transition, this hope will soon have to give way as workers find new opportunities in wind farms and similar renewable energy projects.
What is being done about abandoned wells?
In New Zealand, lawmakers amended the Crown Minerals Act 1991 after Tamarind Taranaki went bankrupt. Now, holders of petroleum permits and licences must shut down their own wells and infrastructure. If they sell their rights and the new owner cannot finance the shut-in work, the previous owner “is next in line,” RNZ reported.
Cheung told the broadcaster that with temperatures rapidly rising due to the burning of fossil fuels, we need to take further steps to protect ourselves and the planet, and called for a ban on new permits for oil, gas, coal and seabed exploration.
“This is irresponsible. We cannot continue to do this for economic growth,” said Cheung. “Making money from nature, from the environment, is economically suicidal.”
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