Frequently asked questions

Montara Incident

Incident

Recovery process and future operations

Environment

Financial

Incident related

Q:   What was the cause of the oil leak in the Montara field?

A:   PTTEP Australasia (PTTEP AA) is not in a position to comment on the cause of the oil and gas leak from the H1 well on the Montara Wellhead Platform (WHP). The full facts will come out in the independent Commission of Inquiry announced by the Australian Government (5 November 2009). The inquiry has the powers and authority of a Royal Commission. Its first term of reference is to investigate and report on the likely cause (or causes) of the incident. The Commission of Inquiry is due to announce its findings by the end of April 2010.

Q:   What caused the fire?

A:   The cause of the fire will be one of the matters to be examined by the Commission of Inquiry.

Q:   Where did the leak come from? Was it from the sea bed, the surface, the wellhead platform or the West Atlas drilling rig?

A:   The leak occurred from the H1 well at the surface on the Montara WHP on 21 August 2009 – not from the West Atlas drilling rig.

Q:   How much oil leaked from the well between 21 August 2009, when the incident started, and the start of November when the leak was stopped?

A:   On the day of the incident, PTTEP AA provided an estimate on the flow rate to the Australian Maritime Safety Authority (AMSA) to assist with computer modeling of the slick of 400 barrels a day of oil within the stream of gas and water also venting from the well.

This was based on an initial visual assessment (visual observations at the scene are the most effective tool in dealing with spills).

Within a short period, visual assessments by AMSA indicated the rate of the flow of oil had reduced significantly.

Q:   Why did it take so long to stop the leak – why didn't PTTEP AA use the nearby rig offered by Woodside, instead of bringing the West Triton from Singapore, which took about three weeks?

A:   All options were looked at and considered fully. Following close cooperation and consultation with the relevant authorities, it was decided that bringing the West Triton drilling rig from Batam Island in Indonesia, near Singapore, was the safest and quickest option available to PTTEP AA.

Other rigs were not suitable for operational reasons to do the job safely and with the greatest chance of success.

Geoscience Australia's petroleum engineers advised the Australian Government that a jack-up drilling rig such as the West Triton was the most appropriate type of rig to drill the relief well. This is because the rig's legs could be securely pinned to the sea floor, making it more stable than the semi-submersible floating rig offered by Woodside for the demanding operation to find an intercept point 25cm in circumference, 2.6km below the seabed. Large volumes of heavy mud would be needed during the ‘well kill’ operation. The rig offered by Woodside was also unsuitable as it did not offer the same mud handling capacity as the West Triton needed to kill the well.

Recovery process and future operations

Q:   What will happen now to permanently plug the previously leaking well – does PTTEP AA know how bad the damage to the wellhead platform is?

A:   PTTEP AA has undertaken thorough planning to determine the best and safest way to permanently plug the H1 well after the damage caused by the fire. Close-in observations by the PTTEP AA drilling team and experts from ALERT Well Control engineers indicate the Montara WHP is in reasonable condition but the West Atlas is severely damaged.

The situation on the WHP and H1 well remains stable after the successful well kill operation (3 November 2009).

PTTEP AA does not underestimate the significantly increased technical complexity, logistical challenges and hazards of the work now required in the wake of the damage caused by the fire.

The National Offshore Petroleum Safety Authority (NOPSA) assessed revisions to the safety cases for the Montara WHP (from PTTEP AA) and for the West Atlas (from the owners Seadrill group) and lifted prohibition notices on 20 November 2009, allowing reboarding of both structures.

Q:   Can the H1 well on the Montara wellhead platform be used again? How many other wells are on the wellhead platform? Have they been damaged too?

A:   Yes, it is believed that the H1 well could be used again, although a decision about its future will not be made for some time. The well was not completed at the time of the incident.

There are three other wells and a gas re-injector well on the WHP.

Q:   When does PTTEP AA now expect the controlled production of first oil from the Montara field to start and how long will the field be in production?

A:   This will not be known until it is safe to reboard the Montara WHP, fully assess the damage and complete the plugging of the H1 well. The West Atlas rig must then be taken off the site.

The Montara project production plan is under review and will be finalised following a thorough assessment of the damage to the wellhead platform which will consider repair or replacement options.

Q:   Who owns the West Atlas drilling rig and what will happen to the rig now – can it be used again or is it a write-off?

A:   The West Atlas is a mobile offshore drilling unit owned by a subsidiary of Seadrill Limited – Atlas Drilling (S) Pte Ltd – and operated by Seadrill. It was under contract to PTTEP Australasia.

Q:   Can PTTEP AA operate without the wellhead platform?

A:   The Montara Project was originally planned to utilise a wellhead platform. A thorough assessment of the wellhead platform will take place once the West Atlas rig is removed. All options will be assessed at this time.

Q:   What is the likely risk that PTTEP AA's permits in Australia will be terminated as a result of the Montara incident?

A:   PTTEP AA has no reason to believe its licenses will be revoked as a result of the Montara incident.

Q:   How will PTTEP AA make sure that this will not happen again?

A:   The full facts will come out in the independent Commission of Inquiry announced by the Australian Government (5 November). The inquiry's terms of reference include investigating the likely cause, or causes, of the incident.

The outcomes of the Commission of Inquiry will enable lessons to be learnt and improvements to be made by all stakeholders, including Government and industry.

PTTEP AA will cooperate fully with the inquiry and welcomes the opportunity for all the facts to be placed on the public record.

Environment

Q:   Has the oil leak caused an 'environmental disaster' as has been claimed by some groups?

A:   An independent marine scientists' report into the environmental effects of the oil spill says a systematic, long-term monitoring effort is the only way to determine the true impacts of the spill on the region's biodiversity.

This supports the agreement between the Federal Government and PTTEP AA for a long-term monitoring plan.

Operational monitoring launched after the incident began found 29 seabirds were affected by oil and 19 of them died. Two sea snakes are also known to have died from ingesting oil, or oil waste. Biopsy tests on fish from the area have to date found no evidence of any oil contamination.

The monitoring program, carried out by the Department of Environment, Water, Heritage and the Arts, will provide a longer term understanding of the impacts of the spill on the marine environment, in addition to the operational monitoring, surveillance and wildlife program already under way.

To date there has been no evidence of Montara oil on the Australian or Indonesian coast.

Observation flights indicated oil released in the early stages of the leak formed patches of highly weathered oil sighted south-east of the Montara wellhead platform and in the Holothuria Banks area.

On 3 December, four weeks after the successful ‘well kill’ operation and as a consequence of no oil being found, the National Plan to Combat Pollution of the Sea by Oil and Other Noxious and Hazardous Substances was deactivated. As a result, the Australian Maritime Safety Authority (AMSA) demobilised all clean-up equipment.

PTTEP AA remains committed to working closely with all relevant authorities and investigations wherever possible.

Q:   PTTEP AA has said some of the scientific environmental studies will take up to seven years to complete – does this mean the environmental damage will last this long?

A:   No. It is likely that some studies will last two years. Other studies will only be launched if triggered by actual events, if actual damage or pollution is found in marine eco-systems.

Marine biologists have recommended a 'systematic, long-term monitoring effort.

PTTEP AA has made a commitment to the Australian Government to fund scientific studies for at least two years to provide information on marine life, wildlife and habitats, water quality and shoreline ecology, if triggered. This will ensure any environmental impacts in the region in years to come can be appropriately addressed. Components of the scientific monitoring program may continue for seven years.

Q:   Will any oil reach the Australian coast? Some media reports said oil was found in mangrove areas of the Northern Territory – is that true?

A:   The oil flow was stopped when the successful well kill operation was completed (3 November 2009). During the leak, the majority of the oil slick was located in Australian waters in an area close to the Montara WHP. The oil surface sheen extended over a much larger area.

The oil spill response was managed by Australian Maritime Safety Authority (AMSA). Aerial observations conducted 17 November showed isolated patches of weathered oil approximately 69km from the Australian coast, 283km from the Indonesian coast and 91km from marine parks.

Highly weathered oil that was seen in the vicinity of Holothuria Banks, appeared to have dispersed and concentrated observation flights over the area did not locate any oil. Marco oil recovery vessels intended to retrieve this oil are now on standby.

There is still no impact upon any shoreline areas.

Q:   Has any oil reached Indonesian waters and damaged fishing stocks and onshore seaweed crops? Will PTTEP AA compensate affected people?

A:   The latest information indicates the remaining surface oil is located approximately 283km from the Indonesian coastline. The majority of the oil was located in Australian waters in an area close to the Montara wellhead platform.

The Federal Government has been monitoring the movement of patches of weathered oil and sheen through regular daily overflights. The closest patch of weathered oil was observed on 21 September about 94km south-east of Roti Island. Overflights indicate primarily sheen within the Indonesian exclusive economic zone, with occasional small patches of weathered oil.

The sheen is a silver colour and is typically around 0.0001mm in thickness, posing no environmental hazard for shorelines, although it can be of concern to birdlife. Australian Maritime Safety Authority (AMSA) assesses that the type and amount of oil that has been observed in Indonesia's exclusive economic zone poses no significant threat to the marine environment.

Advice from Department of Foreign Affairs and Trade's Jakarta embassy is there is no evidence of oil contamination in fish samples from the Indonesian coastline or the vicinity of the oil spill in Australian waters.

PTTEP AA is prepared to look at any new evidence as it arises.

Q:   What will be the ongoing environmental impact?

A:   PTTEP AA has made a commitment to the Australian Government to fund long-term scientific studies to be implemented over the next two years to provide information on marine life, wildlife and habitats, water quality and shoreline ecology, if triggered. This will ensure any environmental impacts in the region in years to come can be appropriately addressed. Components of the scientific monitoring program may continue for seven years.

Q:   What is the nature of the oil that leaked?

A:   The type of oil which was spilt was mostly light oil. According to the Australian Petroleum Production and Exploration Association (APPEA), this kind of oil has a tendency to evaporate quickly, especially in the warm waters and up to two thirds may evaporate when spilt.

Financial

Q:   How much is the total cost of the oil spill, fire and clean up going to be?

A:   The third quarterly results posted to the Stock Exchange of Thailand put the figure at THB 5.2 Billion (A$177 million) with the net effect on net profit of THB 2.19 Billion after tax, however that was before the fire occurred. The cost is expected to increase as a result of the fire damage and will not be known until the damage assessment is complete.

Q:   Does the Australian taxpayer have to cover any of the costs caused by the spill and clean up?

A:   PTTEP AA will pay the full costs of the clean-up operation in the Timor Sea being undertaken by AMSA.

This commitment was given by PTTEP AA to the Australian Government at the time of the incident in August.

PTTEP AA has also reached agreement with the Federal Government for the company to fund an environmental monitoring program. A series of scientific studies will be carried out by relevant experts and managed by PTTEP AA in conjunction with the Department of Environment, Water, Heritage and the Arts.

Q:   Does PTTEP AA expect to be subject to lawsuits brought by third parties e.g. Indonesian government, environmental groups?

A:   In the event of a claim the company will follow proper processes to assess the validity of the claim.

Q:   What financial provision has PTTEP AA made for future legal action against the company?

A:   If legal action is commenced against the company, PTTEP AA will assess the associated contingent liability and make appropriate financial provision.

Q:   Does PTTEP AA expect all costs to be covered by insurance?

A:   The company has prepared insurance claims in relation to the incident. The claims are currently being assessed by PTTEP AA's insurers. The company's third quarterly results posted to the Stock Exchange of Thailand put the cost of the incident at approx. A$177 million, however that was before the fire occurred. The cost is expected to increase as a result of the fire damage.