Origin Energy executives raised concerns about oil leaking into underground aquifers from its wells in Queensland more than a year and a half ago, documents obtained by The Australian show.
The revelation appears to contradict repeated statements by Origin to The Australianthat it did not know of any oil leaks into aquifers in Queensland’s Surat Basin, which sits atop Australia’s largest underground water supply, the Great Artesian Basin.
The revelation comes amid mounting speculation by analysts that Origin will write down the value of its separate APLNG coal- seam gas joint venture, also in the Surat Basin, as the energy sector continues to suffer from relentlessly low oil prices.
The documents show the problem was raised at a meeting, attended by more than 20 executives including general manager of production John Rodda, to discuss abandoning Origin facilities in Queensland, Western Australia and Victoria.
“Oil contamination in aquifer” was identified as one of the “issues, barriers, risks and uncertainties” at Surat, according to minutes of a “project framing workshop” held on May 22, 2014 and obtained by The Australian.
However, it appears the meeting decided the problem was “outside scope” and not to be addressed as part of the shutdown project.
The meeting heard that Origin’s large number of unused wells were an “increasing risk” and expensive to maintain.
“Business is being consumed by increasing risk & incidents, large burden on limited resources,” the minutes record.
Doubts were raised as to whether Origin had set aside enough money to cover the shutdown cost, with executives told that “financial abandonment provisions appear to be inadequate”.
The poor state of the Surat oil and gas wells was also a major topic of conversation.,Attendees were told that 24 of 76 wells surveyed “have a form of leak at wellhead (valves or seals)”.
This does not necessarily mean any oil or gas escaped, as all but one well had at least one valve still working.
The meeting was told Origin did not know exactly how many wells in Surat had been plugged and abandoned, or “P&A’d”.
“The number of Surat P&A’d wells is thought to be in the region of 200 wells, but not confirmed,” executives were told. Dealing with those wells had “been firmly out-of-scope” of the decommissioning project, “but recently the potential requirement for ongoing inspection and monitoring has been raised”.
Attendees were also shown photos of rusty wellheads, including one apparently tied up with string.
Oil leaking into an aquifer was among allegations made against Origin by former compliance manager Sally McDow in a wrongful dismissal lawsuit she has filed against the company.
Asked about the allegation on December 30, an Origin spokeswoman told The Australian: “There has been no known oil leak to an aquifer in the Surat fields.”
An Origin spokesman repeated that statement in response to further inquiries last week.
“Origin has robust compliance processes and rejects any inference to the contrary,” the spokesman said. “We engage openly and regularly with regulators via dedicated teams and we are confident that there has been no breach of an external compliance reporting obligation.”
In the Federal Court lawsuit, which sparked investigations by mining authorities here and in New Zealand when revealed by The Australian in December, Ms McDow alleges Origin has a culture of covering up health, safety and environment breaches.
However, this week New Zealand’s Taranaki Regional Council, which had been looking into Ms McDow’s claims of gas leaks at Origin’s Kiwi wells, said it found no evidence to support the allegations.
In its defence, filed with the Federal Court this week, Origin denied Ms McDow’s claims of bullying and a cover-up of compliance failures.
The company denied Ms McDow’s redundancy in October was a sham and said it was the result of a company-wide restructure that cost 800 jobs, including seven in the compliance team.
It admitted that an internal compliance audit produced in December 2013 and relied on by Ms McDow to support her allegations “identified shortfalls against the Origin internal standards and identified action items for achieving those standards over time”.
No trial date has been set.
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