Equinor and the Great Australian Bight:
Frequently asked questions
We agree that any oil spill in the Great Australian Bight would be totally unacceptable. And although we are investing heavily in renewable energy, consumers still demand products based on oil, world energy consumption is rising, and production from existing fields is falling. Even in a low-carbon future, there will still be a need for new oil fields.
In the vocal opposition to our project, boundaries between fact and fiction are becoming blurred. We are committed to transparency and truthful communication. Here, we offer our responses to common questions. We don’t expect you to agree with us, but we hope that a few facts won’t hurt.
"What is the risk of an oil spill?"
Many people voice concerns about the risk of an oil spill, but we have long experience from our home waters and around the world with exploration in rough seas and deep waters, having drilled nearly 3000 wells in 50 years. Our Environment Plan shows that the risk of a spill is extremely small, and we are taking every possible precaution to minimise risk.
Q: "Just one accident and you could be responsible for destroying an entire ecosystem and pristine wilderness area, full of unique marine life, including the breeding ground for whales."
A: Major oil spills are extremely rare. In approximately 59,000 offshore wells drilled around the world since 1980, there have been only two major oil spill incidents. The likelihood of an oil spill for this well is extremely low, and Equinor has an excellent track record, always putting safety first.
Furthemore, the scientific research carried out by independent marine biologists for our Environment Plan shows that our exploration well can be drilled with minimal risk to the marine environment, wildlife and coast.
Q: "It is highly irresponsible for you to be drilling in a Marine Park."
A: Oil drilling is permitted by Australian authorities in this part of the marine park which is zoned as "Multiple Use". We understand our responsibility to protect the environment, and our environment plan shows that we can conduct this activity safely.
Q: "An oil spill there would be devastating to that pristine and important whale habitat."
A: As part of our preparations, we helped to fund the Great Australian Bight Research Program, which found that most important areas for whales are closer to shore, but there may be individuals migrating through our operations area.
Q: "Why is Equinor the first company to drill in the Great Australian Bight?"
A: We are not the first to explore here. There have already been 13 exploration wells drilled in the Great Australian Bight, with the first ones dating back more than 40 years.
For more facts, figures and background information, see the Government of South Australia fact sheet on oil drilling, below.
“You will spill oil covering 3,000 km of the coast…”
"How would people be compensated if there were a spill?"
Q: "What’s going to happen if there is a spill in the Great Australian Bight? How are you going to support the economy and the tens of thousands who rely on tourism if a spill was to occur?"
A: Firstly, any spill is unacceptable to us, and prevention is better than cure. Therefore, we are taking unprecedented measures to avoid an oil spill in the first place, as described in our Environment Plan that has been accepted by NOPSEMA.
Secondly, we plan for the fishing and tourism industries to continue to operate alongside us, just as they do where oil and gas has been explored and produced for 50 years in other parts of Australia — like the North West Shelf and Bass Strait, and just as they have done for the last 50 years in Norway.
And thirdly, we have addressed the issue of financial loss in the unlikely event of a spill.
Page 33 of our full Environment Plan states the following:
“We acknowledged these concerns and have established a process to compensate anyone in the unlikely event that they suffer a financial loss caused by our operations. In developing this scheme, we looked locally and internationally for comparable arrangements to inform our approach. However, there was no existing scheme that met the specific needs of our stakeholders.
We invested time and resources to design a bespoke arrangement. The scheme has been developed in collaboration with Australian legal experts. We have worked hard to ensure the process is fast, transparent and independent from Equinor Australia B.V. The scheme effectively clarifies how the risk shifts from the stakeholder to Equinor Australia B.V. and was well received by most of those who raised such concerns."
For more information, see the compensation fact sheet below:
About our Environment Plan
We were the first company to voluntarily publish our Environment Plan before submission to the regulator, and the first to invite public comment. Here, we explain the current status.
Q: "I see that your application to drill in our Australian Bight has been rejected and you have a few weeks to resubmit your application."
A: The regulator NOPSEMA did not reject our EP, but requested additional information, before accepting it. In a scientific and technical document totalling over 5000 pages, it was only natural that some information needed to be clarified.
The request for more information was a standard step in the assessment process. We took the necessary time to submit the additional information to NOPSEMA to progress the assessment process, which was paused to allow us time to provide more information. This was part of the normal regulatory process, and our EP has now been accepted.
Q: “Does this lessen Equinor's commitment to drilling in Australia?”
A: Not at all. Planning for exploration activities demands detailed and careful work, and our EP has now been accepted.
Based on industry experience, we knew that NOPSEMA accepts fewer than 10 % of plans on first submission. We have always expected to work through an iterative process of resubmission before NOPSEMA accepted our EP.
We are committed to meeting all regulatory requirements to demonstrate that we can conduct this activity safely as we do in other parts of the world. We remain committed to the opportunity to explore the Great Australian Bight.
Our EP in brief
To facilitate understanding of the full EP, we have prepared this 52-page booklet, available for download below.
The need for energy
World energy demand continues to increase, increasing by 2 % in 2018 alone, and fossil fuels still accounting for 80 % of the energy mix. Equinor is actively developing renewable energy in many countries around the world, but it is simply not possible to replace oil in the short term.
Q: "If you are shaping the future of energy then you need to get out of fossil fuels, full stop. They are fully replaceable with renewable sources."
A: The world population is growing significantly, and at the same time, standards of living are increasing around the world. Almost every aspect of modern lives requires energy, as well as oil for plastics, building materials and medicines.
While we are investing in both wind and solar as fast as we can, every realistic energy scenario for the future still requires new investments in oil and gas to provide energy. Renewable energy is growing significantly but it is currently quite unrealistic to see renewables replacing the use of fossil fuels.
Q: "Why can’t you produce and sell solar panels to Australians instead, or make solar farms, or wind farms for us?"
A: We are investing up to USD 200 million in offshore wind, solar energy, carbon capture and storage, and we are accelerating our actions to reduce CO2 emissions from our operations.
We are applying our extensive experience offshore and in the energy sector to create industrial strength solutions that will enable us to build renewable energy solutions at scale.
However, it is simply not possible to switch to renewable energy in the short term, and demand for oil worldwide continues to grow.
Q: "Why are you looking for oil in the Great Australian Bight? Why can't you go elsewhere?"
A: We are working on reducing the carbon footprint from our oil and gas production. Not all oil is created equal, and lighter types of oil have fewer emissions in the production phase. It therefore matters which oil is produced, and we are one of the world’s most CO2-efficient producers of oil and gas.
Our geological studies show that the Great Australian Bight could hold light, high-quality oil that aligns with this approach.
Energy consumption per capita in South East Asia and Oceania are also among the highest in the world.
Q: “You will destroy the fishing industry and tourist industries...”
A: No, this is not true. We plan for the fishing and tourism industries to continue to operate alongside us, just as they do where oil and gas has been explored and produced for 50 years in other parts of Australia — like the North West Shelf and Bass Strait. And just as they have done for the last 50 years in Norway.
Our comprehensive, technical and scientifically-based Environment Plan shows that our plan to drill one exploration well almost 400 km off shore can be done to the highest environmental standards and with minimal risk to the environment, fisheries and tourism.
Q: "Will you compensate businesses if there’s an oil spill?"
A: We developed a compensation scheme after some organisations told us they were concerned that our operations could threaten their financial interests. The scheme is available to anyone who suffers a financial loss as a result of a major spill from our operations. The scheme is designed to be fast, independent and transparent process.
Q: "The Australia Institute has issued a report that states that the Norwegian Government would receive 27 times higher profits from the Great Australian Bight than tax revenues to the South Australian Government. Is this true?"
A: No, that is not correct. Regrettably, the report from the Australia Institute contains significant factual flaws. It was prepared without consultation with us and was presented to the media and reported on as though it were fact. Its conclusions are based on false assumptions.
The Norwegian government does not receive 67% of Equinor’s profits from international operations; nor is Equinor owned by the Norwegian Sovereign Wealth Fund. The Norwegian Ministry of Petroleum and Energy’s only income from Equinor’s international assets is a proportional share of the dividends. Not all profits are distributed to shareholders, but much is reinvested in the business.
Furthermore, Norway’s 78% tax rate on domestic oil and gas production is offset by the opportunity to write off 78% of exploration costs, in a symmetric system intended to reduce economic risk for operator companies within Norway only.
Finally, if we do find oil in the Great Australian Bight, tax will be just one element of the value creation of the project — goods, services and jobs will also be key drivers for local value creation.
Dispersants and sea conditions
What is a capping stack, and will Equinor use one?
Many people have voiced concerns about whether we plan to use a capping stack in the unlikely event of a blowout. A capping stack is a large device wieighing up to 100 tons that can be used to stop a well. Our priority is to ensure that a capping stack is never needed, by installing a 400-ton blowout preventer (BOP) before we even start to drill. Here, we explain the use of this techology.
Q: "What is a capping stack and how does it work?"
A: A capping stack is a large well closure device (see illustration) that is capable of sealing off a well in the event of a well controll incident. Its valves can be closed to slowly reduce the flow until the well is closed off completely.
Capping stacks are engineered to withstand the high pressure of a flowing well, and can therefore weigh up to 100 tons.
They are deployed from a subsea construction vessel, which will remain on location during our operation.
Q: "Will there be a capping stack in place?"
A: For us and everyone else, any oil spill is completely unacceptable. Our priority is therefore to ensure that a capping stack is never needed. We will prevent any well control incidents from happening in the first place by careful planning, and by installing a 400-ton blowout preventer (BOP) before we drill.
Q: "What is a blowout preventer and how does it work?"
A: A BOP is fitted to the top of the well before we even start to drill, and it remains in place throughout the operation. It can shut in the well in minutes, and is a highly effective device for any loss of well control. In the extremely unlikely event of the blowout preventer failing, we will fly in a capping stack. By having a construction vessel onsite, we reduce the response time to 15 days compared to a typical 30-40 days in the industry.
A Blowout Preventer (BOP), left, shown next to a capping stack, to scale. We will install the 400-ton blowout preventer before we drill, and it will remain in place throughout the operation.
Q: "Why would it take 15 days to deploy a capping stack and why isn’t there a capping stack in Australia?"
A: A capping stack is a specialised piece of equipment and there are a limited number of capping stacks and teams of people capable of deploying them. They are kept in readiness at a central hub with suitable storage and mobilisation facilities.
At least two capping stacks are maintained and tested in Singapore for urgent deployment across the region. The capping stack would be airlifted to the location as fast as possible with its trained crew.
By having a construction vessel onsite, we reduce the response time to deploy a capping stack to 15 days compared to a typical 30-40 days in the industry. A capping stack would only be needed in the highly unlikely event of a failure with the BOP.
Q: "How would a capping stack be transported to the well location if there is a loss of well control?"
A: In the highly unlikely event of a loss of well control in the Bight, Equinor will mobilise a capping stack from Singapore by air. To avoid delays on arrival in Adelaide, a large crane vessel and remotely operated vehicles will be on standby. Due to its size and weight, a capping stack would be packaged into multiple parts for air transport to Australia, where it would be assembled and tested. It would be transported to the well site using a large crane vessel already in the Bight, that would also lower it onto the well.