Taxpayers face $500 million bill to clean up Chevron's WA oil field
In May, Chevron ended around 60 years of oil production on the operation that has run alongside its Gorgon gas project on Barrow Island off the Pilbara coast. It has begun dismantling the 800-plus wells and connecting pipelines spread over the Class A nature reserve.
Chevron and partners ExxonMobil and Santos have shipped 335 million barrels of oil and paid about $1 billion in royalties to the federal and WA governments.
But the royalty agreement requires governments to refund royalties equal to 40 per cent of clean-up costs in the four years after production ends. That means the higher the clean-up cost is, the more the governments must pay back.
In 2022, this masthead obtained a Chevron document estimating the clean-up bill at $2.3 billion, with $1.3 billion of that to be spent in the first four years, putting the state and federal governments on the hook for more than $500 million.
The split is 75 per cent federal and 25 per cent WA – as per the royalty income split – with WA to pay $125 million.
At the time of the first report, the magnitude of the bill was news to what was then known as the WA Department of Mines, Industry Regulation and Safety, which administers the royalty agreement and said it was 'carrying out preliminary calculations'.
Now, with decommissioning having begun and the refund imminent, documents obtained by energy news publication Boiling Cold under freedom of information laws, and seen by this masthead, indicated Chevron has told the government the clean-up cost would be even higher than the $2.3 billion reported in 2022.
A spokesperson for the department – now the Department of Mines, Petroleum and Exploration – said the official total would not be known until the final royalty returns were submitted, and Chevron's rehabilitation and decommissioning costs were reviewed and audited.
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