An embattled energy company in WA's Kimberley region has gone into liquidation, ending a 10-year decline and leaving significant questions over who will pay their rehabilitation and decommissioning costs.
New Standard Onshore, a subsidiary of New Standard Energy (NSE), drilled four exploratory wells in the region in a bid to tap the Canning Basin, which has the largest shale gas reserve in the country.
Riding a wave of speculation, the company partnered with oil refiner ConocoPhillips in a $110-million deal in 2011, only for the energy giant to pull the plug after NSE failed to find commercial quantities of gas.
An economic downturn saw NSE's share prices slide to almost nothing in 2015, and in 2019 the company was suspended from the ASX for not including environmental rehabilitation liabilities in financial reporting.
According to information tabled in state parliament in 2020, the company had capped and decommissioned three of their sites, but was yet to commence work on their Nicolay-1 site.
The Department of Mines, Industry, Regulation and Safety (DMIRS) confirmed the site still had not been decommissioned and another three well sites had not been rehabilitated.
"NSO has decommissioned three wells and the department is investigating methods to plug and close off the fourth well, Nicolay-1, and the rehabilitation of the sites previously occupied by New Standard Onshore," a department spokesperson said.
New Standard Energy goes to ground
Creditors have since come knocking and NSE was put into liquidation, with the Supreme Court of Victoria tasking David Quin of PCI Partners with determining its remaining assets.
Mr Quin said he had only found $17,000 in company bank accounts, could not reach directors despite multiple attempts and had not received any cooperation from the company.
"At this stage it is unknown whether there will be any recoveries in the liquidation to enable a dividend to be paid to creditors," he said.
DMIRS executive director resource and environmental compliance Karen Caple said the department had also been unable to contact the company.
"Since March 2021, all attempts to contact New Standard Onshore in relation to the rehabilitation of the site [Nicolay-1], via its website, telephone, email and/or agent, have failed," she said.
"Subsequently, DMIRS attempted to issue New Standard Onshore with notices of intent to issue directions in June 2022, however, all three notices were undeliverable."
The ABC attempted to contact the company but a phone number on its website had been disconnected.
Insurance critical to working out who will pay
In 2019 DMIRS estimated the cost of capping and rehabilitating would be around $1.5 million, but who will foot the bill is still unclear.
The department said it "is not currently in a position to comment on likely funding sources" or whether taxpayers would have to pay for the clean up.
"DMIRS is investigating methods to plug and close off the Nicolay-1 well and the rehabilitation of the sites previously occupied by New Standard Onshore," a DMIRS spokesperson said.
Environment and resources lawyer, Professor Alex Gardner, said NSE's insurance arrangements would likely determine who footed the bill.
"It's some years since the well was drilled," he said.
"The permit, as I understand, has expired. The company has been liquidated. Would that insurance policy still operate in those circumstances?
"If that insurance policy wasn't there in the first place or isn't now operable, then you really are left with the West Australian government having to pay to have the site decommissioned [and rehabilitated]."
Environmental damage 'profound'
Professor Kingsley Dixon, director of Curtin University's Centre for Mine Site Restoration, said just rehabilitating certain species at the site would likely cost hundreds of thousands of dollars.
"If we find, for example, the dominant grass species is spinifex, that it's one where we can't get the seed or the seed has complex dormancy, then that suddenly becomes a $100,000 additional problem," he said.
Professor Dixon said the environmental damage at the site would be "profound", with abandoned desert sites like Nicolay-1 becoming "infection points" for invasive species when resources companies failed to meet their obligations.
"There's a very good chance since the company probably didn't follow all the standards, that there is already the introduction of weeds into a pristine environment," he said.
Professor Dixon said the sites would always be a "wound on the landscape" and he believed the companies who drilled the holes were "duty bound" to restore them back to the natural ecosystem.
"I think it is the promise all companies make to the public, and the Indigenous people of Western Australia, but almost never deliver it."
