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Tuesday, 19 October 2010
Page: 742

Ms LIVERMORE (6:57 PM) —I join the debate here this evening on the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010. The purpose of these two bills is to make minor policy and technical amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003.

Listeners to this debate will not be surprised to hear the parliament discussing these measures to improve the safety of offshore oil and gas wells, their structural soundness and ways to make the regulation of the industry more efficient and effective. We have already seen a huge expansion in exploration and drilling activity off our coast as companies seek to unlock the enormous reserves of natural gas and, to a lesser extent, oil from the seabed. This will only continue and accelerate, as the demand for Australia’s abundant energy resources shows no sign of abating. Alongside these important industries is the emergence of technology to capture and store carbon dioxide in geological formations under the seabed as a means of reducing Australia’s carbon emissions. This has been recognised by the amendment in the previous parliament of the offshore petroleum legislation to include regulation of carbon storage. I certainly join the shadow minister, the member for Groom, in calling on all sections of the resources industry in this country to get on board in the development of the carbon capture and storage industry.

The projected phenomenal growth of these industries is one reason for the government to be focused on the regulatory regime that underpins the sector. The other reason is obvious to anyone who has switched on a television or read a newspaper in the last six months and seen the images of devastation coming from the Gulf Coast of the United States. Oil spilled into the waters off Alabama, Louisiana and Florida for 87 days at an estimated rate of 60,000 barrels a day. The unprecedented environmental damage caused by the explosion on BP’s Deepwater Horizon drilling rig has reinforced the need for all governments to be vigilant in the regulation of their offshore oil and gas industries.

Even before the Deepwater Horizon catastrophe in America, this government had already taken steps to apply the lessons coming out of the commission of inquiry which followed an underwater leak from the Montara drilling platform in the Timor Sea. The growth of the oil, gas and carbon storage activities in some of Australia’s most untouched and sensitive ocean environments places an enormous responsibility on all governments, but it is becoming increasingly apparent that it is the responsible Commonwealth minister who carries the political responsibility for the offshore industries and it is correct that this parliament, the federal parliament, consider these improvements to our regulatory regime.

These bills make a number of changes including: funding the establishment of a National Offshore Petroleum Regulator, NOPR; strengthening the functions of the National Offshore Petroleum Safety Authority, NOPSA; clarifying the operation of the titleholder provisions in situations of multiple titleholders; increasing the effectiveness of compliance through the application of strict liability to appropriate offences; and restoring the original policy intent by clarifying that a titleholder’s duty of care under the occupational health and safety provisions relates only to wells.

It has been the government’s intention for some time now to establish a new National Offshore Petroleum Regulator to commence on 1 January 2012. This initiative was recommended by the Productivity Commission following its inquiry into the regulatory burdens on the oil and gas sector. The national regulator was seen as a means to remove unnecessary duplication and to provide greater consistency in regulation across the country. It is important to note at the outset that this bill does not establish the National Offshore Petroleum Regulator but it does put in place another important step in its development by providing for an equitable means of funding its establishment. The bill does this by enabling the Commonwealth government to retain registration fees currently collected under the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Act 2006.

Until now those registration fees have been redistributed to the states and territories as joint administrators of the regulatory system. This measure was looked at in detail by the Senate’s economics committee, which heard that the retention of fees over just a couple of years will amount to over $20 million for the Commonwealth government to put towards the national regulator. The minister stressed, however, in his second reading speech that he does not anticipate amendments relating to the establishment of the National Offshore Petroleum Regulator to be brought to the House until next year to allow adequate time for the matter to be fully discussed with the states and territories. In the meantime it is prudent to give the industry certainty about the funding mechanism for those set-up costs.

Another part of these bills is the strengthened role of NOPSA. Previously, the states and territories were responsible for the regulation of safety in the offshore oil and gas industry. Following a review in 1999, NOPSA was established and since 2005 it has been the body responsible for regulating occupational health and safety matters that arise from petroleum, gas and greenhouse gas operations in Commonwealth waters. Those responsibilities extended to the structural integrity of facilities and also to wells that are part of those facilities only to the extent to which the structural integrity affects the safety of the offshore workforce at the facilities. Under these amendments, NOPSA’s role is now clarified and strengthened by extending its regulatory function to explicitly include non-occupational health and safety aspects of the structural integrity of offshore facilities.

According to the explanatory memorandum, the proposed amendments have the intent of strengthening the ability of NOPSA to carry out its existing regulatory responsibilities and augment its responsibilities by expressly including oversight of the whole structural integrity of facilities including pipelines, wells and well-related equipment. For achieving completeness of this oversight role the amendments include non-OHS structural integrity aspects to ensure complete coverage of this particular function. NOPSA needs to be able to effectively and fully regulate the structural integrity of petroleum and greenhouse gas facilities and wells, even where certain structures such as pipelines and wells may not have people at or near them for extended periods of time. Although these amendments do not extend NOPSA’s role beyond that of an occupational health and safety regulator, it nevertheless represents a step towards a more powerful and centralised regulator. This is a common sense recognition that the structural integrity of any part of a facility, including the well or pipeline, is an OHS matter as it is essential to the health and safety of any work crew that might have to work on those remote parts of the facility at some point in time.

The next set of amendments in part 4 of the bill will amend various offence provisions in the act to make the offences ones of strict liability. This again strengthens the regulatory regime and makes the job of the regulators in enforcing the laws more realistic. As they currently stand, the offence provisions in question require intent to be proved in order for a prosecution to be successful. As the explanatory memorandum points out, given the remote and complex nature of offshore operations and the prevalence of multiple titleholder arrangements, it is extremely difficult to prove intent on the part of any party. To date, this has left these particular offence provisions largely unenforceable. The intention of the application of strict liability is to improve compliance in the regulatory regime. NOPSA will no longer be required to prove what a titleholder did or did not intend to do with respect to a safety function but merely that a certain action took place or failed to be undertaken. The liability then follows from the proof of that fact, regardless of fault or intent on the part of the titleholder. After the Deepwater disaster in the US, we all appreciate the importance of regulators having the power to rigorously follow through on the regulations that protect the safety of workers and the state of our environment.

This bill will also clarify the situation when a title is held in conjunction by two or more titleholders, as is common in many offshore ventures. This amendment clearly provides that when two or more titleholders are jointly responsible for the administration of a facility then one can be nominated to act in the interest of all parties. Effectively this means that where the act imposes an obligation, the obligation is imposed on each and every titleholder in the consortium but can be discharged by any one of the titleholders. With this amendment, there will be one titleholder, one contact, to represent the interests of the joint titleholders. The act will now ensure that a single titleholder can be responsible for its applications, requests, nominations or notices. This amendment will reduce the complexity that existed in the previous act—complexity which has previously frustrated the government, industry titleholders and the NOPSA—and instead produce a more manageable and more efficiently functioning industry. This amendment does not seek to diminish the legal responsibilities of the titleholders. These will remain unchanged. The amendment does, however, seek to create a designated contact for each facility in order to streamline procedures.

The Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 also includes a section that corrects the definition of a titleholder’s occupational health and safety responsibilities. The current act contains a titleholder duty of care in relation to facilities. That reference to facilities is in fact broader than was intended and could have the consequence of making the titleholder responsible for facilities such as drill rigs over which the titleholder has no direct responsibility or control. Hence, this amendment makes it clear that the titleholder’s occupational health and safety responsibilities are narrower than that and relate to wells rather than facilities in general. The duty of care does, however, extend to all aspects of well design, construction, maintenance and operation.

The second bill that we are debating this evening is the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010. This bill provides transitional arrangements to ensure that appropriate levies may be collected for pipelines in designated coastal waters. An amendment in 2009 removed references to pipeline safety management plans and safety plan levies. Instead it introduced a safety case levy that includes pipelines. This amendment will provide transitional arrangements to allow the states and territories further time to amend regulations under their petroleum legislation to reflect these changes made by the Commonwealth.

The offshore oil and gas industry is undergoing enormous growth and will continue to underwrite Australia’s prosperity for many years to come. Through this legislation the government is continuing to refine the regulatory framework by which the industry is supervised and administered. The regulation of the industry needs to be strong because of the high stakes involved in terms of potential harm to workers and to the environment. A clear message has to be sent to companies operating in this sector that there can be no cutting of corners on occupational health and safety or environmental protection. At the same time the regulatory scheme needs to be made as efficient as possible and constantly updated and streamlined to keep up with developments in this burgeoning industry. This legislation gets that balance right and deserves the support of all sides of the parliament.