The Australian government is facing a significant financial burden to support the cleanup of oil wells on Barrow Island, off of Western Australia, under an agreement made in the 1980s with the American oil and gas company Chevron. The proposed cost of this operation is expected to reach hundreds of millions of dollars, with the Western Australian government also facing a substantial bill, estimated to be around $129 million, for repairing an offshore nature reserve that has seen extensive drilling over the past six decades.
Chevron claims to have paid over $1 billion in royalties for oil and gas extracted from beneath the island, situated approximately 70km off the state’s northwest coast. Legislation specifically crafted for this project mandates that federal and state taxpayers will need to repay nearly half of this amount to defray remediation costs.
A document obtained by independent news site Boiling Cold under freedom-of-information laws indicates that it will cost Chevron and its venture partners more than $2.3 billion to rectify the site, which has produced 335 million barrels of oil.
Oil production ceased at the site in May. At that point, according to recently released documents, the WA Department of Mines, Industry Regulation and Safety had not estimated the expected cleanup cost. In 2022, it was suggested that Chevron might spend $1.3 billion on the cleanup within the allotted timeframe, which would result in a state cost of around $129 million.
Following the end of production, the deal’s conditions stipulate that Chevron and its partners—ExxonMobil and Santos—will be refunded 40% of their spending on decommissioning the oilfield infrastructure over the following three years. Federal and state governments will cover 75% and 25% of the refund, respectively.
The final cost could be higher if Chevron decides to spend more on the cleanup before 2028, as the move will maximize their royalty refund. In response to inquiries about the anticipated cost, a WA department spokesperson stated that the refund cost wasn’t included in the state’s budget estimations but was recognized as a non-quantifiable contingent liability in the annual report on state finances.
The federal Department of Industry, Science and Resources declined to comment, awaiting a WA government evaluation of the refund required by state law.
The cleanup cost might include addressing a May-reported gas leak near Chevron’s old Barrow Island oil wells. In recognition of an environmental risk due to subsurface gas migration, the company is collaborating with regulators to develop a comprehensive investigation program.
Chevron’s spokesperson emphasized the company’s commitment to the responsible management of environmental impacts and risks in adherence to relevant laws and
Source: https://www.theguardian.com/business/2025/jul/23/barrow-island-western-australia-taxpayers-chevron-oil-wells
