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Pipeline abandonment: what you need to know

Australia’s transition away from refineries to a reliance on imported crude oil and petroleum will lead to decommissioning associated infrastructure, including pipelines.

Australia’s transition away from refineries to a reliance on imported crude oil and petroleum will lead to decommissioning associated infrastructure, including pipelines.

We have seen some examples of this recently, and early consideration of post abandonment requirements by a pipeline operator can help to avoid some potentially complex legal issues.

Learning from overseas experience

The US has identified that it has some issues with regard to the exact locations and extent of abandoned pipelines.

An American Planning Association (AICP) article “˜What to do about aging and abandoned energy infrastructure’ by Tom Burns, notes that “Records (easement agreements, deeds, quitclaims) and maps associated with abandoned pipelines are unorganised, fragmented, or simply lost, exacerbated by ownership changes, mergers, and acquisitions in the US energy community.”

In the light of this, it is important to have a clear picture of the regulatory environment during post-abandonment of pipelines in Australia.

Pipelines are constructed and operated pursuant to legislation designed for the purpose of protecting public safety and the environment, among other things.

A regulatory body exercises powers under the relevant legislative regime.

Abandonment can change the legal control and responsibility and may lead to the termination of that regulatory oversight.

An abandonment plan is adopted to ensure that risk of an undesirable future event related to a pipeline abandoned in place from the perspective of public safety and environmental protection are managed and controlled.

Existing rules and regulations

There is a host of rules and responsibilities facing the pipeline owner and land owner when it comes to pipeline decommission.

AS2885.3 – 2012, Pipelines – Gas and Liquid Petroleum Part 3: Operation and Maintenance provides the rules for decommissioning a pipeline.

This standard has been adopted in Queensland by the Petroleum and Gas (Production and Safety) Act 2004 (QLD) and associated regulations.

AS2885.3 provides that when a pipeline is to be abandoned, an abandonment plan, including an environmental rehabilitation plan, shall be compiled.

The pipeline must be disconnected from all sources of hydrocarbons and purged of all hydrocarbons and vapour with a non-flammable fluid, and any aboveground sections of the pipeline must be removed.

With regard to any sections of the pipeline that are below ground, a complete segment analysis is undertaken with continuous stakeholder discussion in order to determine whether to abandon in-place in such a way to ensure that ground subsidence and the risk of contamination of the soil groundwater is minimised or abandoning by removal.

In accordance with AS2885.3, all fences and equipment must be removed as must all signage associated with the pipeline on completion of any post-abandonment maintenance period.

The easement that the pipeline operator has over the land will be relinquished where there is no future or continuing use of the easement, with the land owner then providing a release for the complete abandonment.

The pipeline operator must continue to maintain records, which includes abandonment drawings, that identify and locate sections of abandoned pipeline and these records must be made publicly available.

In Queensland, under the Petroleum and Gas (Production and Safety) Act 2004 the pipeline is taken to be personal property despite having become part of the land and this continues to apply at the end of the petroleum tenure.

The pipeline can be sold, but if it is not, the pipeline operator continues to own it as personal property.

What issues may arise?

If we consider the scenario where a pipeline is abandoned: the petroleum tenement and environmental authority are surrendered; the ownership of abandoned pipeline is retained by the pipeline owner/operator.

Also, sections of the pipeline are abandoned in the ground in consultation with the stakeholders, and the easement is surrendered due to the absence of continuing use for the easement.

We must also consider the following during the post-abandonment phase:

    • The means of ensuring that signage of pipeline locations is retained;

 

    • The mechanism to ensure continued land access for ongoing monitoring;

 

    • The location and maintenance of records regarding the residual pipeline equipment;

 

    • The means of dealing with unforeseen contaminates found after abandonment; and,

 

  • The means of dealing with a change in land use, such as a new development or house is to be put over a pipeline or the creation of a road over an abandoned pipeline.

It is a requirement of AS2885.3 that signage associated with the pipeline is removed on completion of the post-abandonment maintenance period.

However, a pipeline owner must consider what the risk may be if there is a change in use of the land in the future by a new landowner that includes excavation.

The pipeline owner must also consider whether they retain any authority to retain signage over the pipeline land after abandonment.

If the abandoned pipeline complies with the abandonment plan and the provisions of AS2885.3, then the easement would have been relinquished if it has no future or continuing use.

The pipeline operator must consider its ongoing monitoring requirements and its residual risk alongside any rights it may have at general law to continue to access the abandoned pipeline.

The pipeline owner must also consider that the landowner may wish to have the easement discharged as early as possible if the pipeline easement affects the value of the land, in which case the termination rights under the easement will be very important.

If the easement is no longer registered on the land title system, it is less clear how to record the location of the abandoned pipeline in such a manner as to draw it to the attention of the public.

The registration of a discharge of a right of way or easement would rid the title of the registration and the existence of the abandoned pipeline may not come to the attention of a purchaser through its review of the land titles system.

Such knowledge may rely on disclosure by the vendor, which may become particularly relevant where the land has changed hands a few times and, in particular, the change of use that may come from the change in ownership of the land.

The abandoned pipeline will have met the obligations for its abandonment under the plan and the regulator will have been satisfied that any risk to public safety and environmental protection has been managed and controlled.

In the event of an unforeseen environmental incident, if the previous regulatory regime has been removed, the pipeline owner must consider its position at general law.

One of the issues that has arisen in the US is the change in use of land, where once rural areas where pipelines were located become urbanised.

Such change in use of the land will mean that the public records and any restrictions required on the future use of the land will become very important.

Plan early to reduce risk

It is appropriate for any pipeline operator to consider a post-abandonment mitigation strategy early, and most likely while considering operational land access issues.

Pipeline operators and land owners that breach their responsibilities can face prosecution and ultimately significant fines. Navigating the complex legal landscape can be a difficult process so seeking professional legal assistance from the outset is vital.

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