Sale of decaying petroleum wells puts taxpayers at risk of funding cleanup in iconic Kimberley bay

Community groups say the Cook Government must take urgent action to protect WA taxpayers from a multimillion dollar cleanup bill for stricken petroleum infrastructure within a heritage-listed Kimberley bay, after the responsible company was sold off for a fraction of its original value. 

For years, community groups have called on the WA Government to force Rey Resources to clean up its decaying and corroding petroleum well infrastructure on the shores of King Sound, part of the National Heritage listed West Kimberley National Heritage Place. 

Photos of the degraded and partially inaccessible wells are available here.

Point Torment. Photo: Supplied.

Rey Resources’ latest quarterly update (see page two) confirms that a $400,000 deal to “dispose” of subsidiary Gulliver Productions, which owned three petroleum tenements that included the stricken wells in and adjacent to King Sound, has been finalised. 

Rey’s December 2024 quarterly report suggested there were yet to be met conditions (Page 3) as part of the deal to sell Gulliver to little-known overseas company China Guoxin Investment Holdings. Gulliver Productions was once valued at $4.8 million.

Documents obtained from the WA Mines and Petroleum department by Environs Kimberley through freedom of information laws revealed that in 2021, the three King Sound gas wells were corroding, there was oil staining on the ground, and a blow-out preventer was incorrectly positioned. The department identified 44 possible breaches in total, however it is unclear what, if any, remediation work has occurred since inspection. The 2021 inspection report recommended issuing seven “directions notices” to Gulliver Productions, which were not issued at the time for unexplained reasons.

Media reports this morning that the department recently issued one “directions notice” requiring the company to conduct cleanup works.

Groups working to protect the Kimberley are now calling on the government to take much stronger action to protect the WA taxpayer, and King Sound itself.

Stokes Bay. Photo: Supplied.

Environs Kimberley Executive Director Martin Pritchard said, “The Minister for Mines and Petroleum David Michael needs to take charge of this before we get into a ‘Northern Endeavour’ type situation. His department has allowed an obscure overseas company to take over petroleum leases for $400,000 that have potential clean-up liabilities of millions of dollars.

“We’re calling on Minister Michael to explain how taxpayers will not become liable for the clean-up costs. His department has already said that taxpayer liabilities for onshore oil and gas well clean-ups at two abandoned sites in the Kimberley amount to $2.9 million which is a significant underestimate in our view. See background below.

“Oil and gas companies appear to have free rein in the Kimberley to undertake exploration but it looks like existing legislation is failing to ensure that industry cleans up its mess. Millions of dollars of public funds are being spent on cleaning up the damage done by onshore oil and gas companies. Minister Michael needs to take charge here and stop this waste of taxpayer funds.”

Lock the Gate Alliance WA spokesperson Simone van Hattem said, “West Australians don’t want to see oil and gas companies destroy the majestic Kimberley.

“Right now, fossil fuels including fracking threaten the Kimberley, but this is a really good opportunity for the Cook Government to begin righting the wrongs that put this iconic region at risk.

“With the stroke of a pen, the Cook Government could make sure the threat of oil and gas in the heritage-listed King Sound environment is removed forever. It could make sure oil and gas never again threatens the water, land, and communities in this part of the Kimberley. It could be an important first step to banning fracking in the Kimberley altogether. 

“The Cook Government should permanently remove these tenements. They never should have been approved in King Sound region in the first place.”

West Kora. Photo: Supplied.

Background: A $1.5 million estimate for the ex-New Standard Energy well in the southern Kimberley was made in 2021 (source here) and $1.4 million for the Vienta-1 and Waggon Creek-1 wells near Kununurra (See page 44) Given the three wells that are now owned by Guoxin are located in a sensitive and relatively inaccessible coastal environment, it’s logical to assume rehabilitation costs will be much greater.

The Kimberley $67.5 million resilience package announced today by the WA Premier fails to get to grips with the ruinously expensive costs of climate change, according to Broome-based conservation group Environs Kimberley.

The WA State Government's mid-term performance review in December revealed that the January 2023 floods in the Kimberley, induced by climate change, will cost taxpayers over $869 million. This extra $67.5 million brings the costs of climate change close to a billion dollars in just over a year.

Environs Kimberley Director of Strategy Martin Pritchard said:

“The Cook Government has described the Fitzroy Crossing floods as the worst in WA’s history but has yet to acknowledge that this is exactly what’s been predicted for the Kimberley with climate change. The amount of taxpayer funds going into climate change disasters is only going to increase — and we’re already looking at a billion dollars from 2023/4 alone.”

"Even as the impacts of climate change get worse, the Cook Government is sleepwalking into one of the biggest polluting industries in the world – oil and gas fracking – right here in the Kimberley.

Climate change scientists have estimated that if the oil-and-gas fracking industry in the Kimberley takes off, it could unleash three times Australia’s emissions of climate-changing CO2 into the atmosphere than our estimated emissions budget under the Paris Agreement[1].  

“The Premier Roger Cook is playing around the edges, while the Kimberley heads to becoming unlivable according to the climate modeling the WA Government itself uses.” [2]

“The Premier is pouring taxpayer money to fix up climate-change disasters, while at the same time allowing an oil-and-gas fracking industry to operate, which would produce globally significant climate-changing carbon pollution. This is wrong. If we want a resilient future, then these types of industries must be banned.”

Photo: Fitzroy River bridge, 2023 floods - Andrea Myers

[1] Climate Analytics Western Australia's gas gamble - implications of natural gas extraction in WA

[2] WA Government Western Australian Climate Change Projections (2021)

The WA state government's mid-term performance review has revealed that the January 2023 floods in the Kimberley will cost taxpayers over $869 million dollars. 

The announcement comes on a 45C day in Fitzroy Crossing. 

Broome-based conservation group Environs Kimberley (EK) is calling on the State and Federal governments to recoup the cost from fossil fuel companies who have made billions in profits over the past year, while driving worsening climate impacts. EK is also calling on the WA and Commonwealth governments not to approve new gas projects in the Kimberley, including proposals by Buru Energy and Woodside. 

EK Director of Strategy Martin Pritchard said, "The January 2023 floods have had a devastating impact on communities in the Kimberley’s Fitzroy Valley with many people losing all their possessions and homes. It’s now been revealed that this flood has come at a cost of what's likely to be over a billion dollars to taxpayers and private businesses. 

"The State and Federal governments need to recognise that fossil fuel-driven climate change comes at an enormous cost to communities, taxpayers, private businesses and the natural environment and we know what and whom is causing this – oil, gas and coal companies."

The revelation of the enormous cost of the flood comes on a 45C day in Fitzroy Crossing with the next 10 days predicted to be above 40C. Fitzroy Crossing will be unliveable in the next 50 years with CSIRO and BoM data projecting 225 days over 40C a year if we continue on the current emissions trajectory.

“Catastrophic climate events like floods and heatwaves have been predicted for years and now we are bearing the enormous costs of burning fossil fuels while oil and gas companies like Woodside make billions in profits. There’s something very wrong with this picture and it’s clearly not sustainable for the environment nor taxpayers.

“We are calling on governments to firstly stop the damage by preventing new fossil fuel projects like Buru Energy's Kimberley onshore gas proposal and Woodside’s offshore Browse project and second, to instigate a ‘Climate Change Disaster Levy’ on fossil fuel companies that can be used to plan for climate change disasters as well as fund recovery work.

"Woodside has put a measly $750k towards flood recovery while making billions in profits and wants to open up more gasfields that will fuel climate change for another 50 years. They are throwing spare change at Western Australians suffering from floods, heatwaves and fires while pocketing enormous profits for themselves. 

“We cannot open up any new oil and gas fields if we want a safe climate.”

Photo of Fitzroy Crossing bridge collapsing in 2023 flood: Andrea Myers