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Wednesday, 19 March 2008
Page: 2356

Mr ADAMS (10:10 AM) —The purpose for, and the background to, the Offshore Petroleum Amendment (Miscellaneous Measures) Bill 2008 are as follows. The Offshore Petroleum Act 2006 has been the primary legislation for the administration of Australia’s offshore petroleum resources for 40 years or more. The act is a rewrite of the Petroleum (Submerged Lands) Act 1967, to bring the language and the structure up to modern standards. The act will result in reduced compliance costs for government and industry.

Since the rewrite, technical amendments have been identified as necessary before the act can be proclaimed and come into effect and the Petroleum (Submerged Lands) Act can be repealed. These amendments are necessary to ensure that the regulatory regime continues to support the efficient exploration and development of our oil and gas reserves. We just heard from the previous minister for resources about the need to make sure that we are at the forefront of encouraging that to happen. The amendments were introduced into the last parliament and the bill passed the Senate as noncontroversial but did not pass the House of Representatives prior to the parliament being prorogued. The Senate Standing Committee on Economics examined the bill and recommended that it be passed due to its primarily technical nature.

The amendment bill, which is of an important but largely technical nature, has three main elements: first, a clarification of the provisions to ensure that they operate in the way that they were intended to, so it is a qualification showing what is actually meant; second, a policy change repealing section 327 of the act, which gives the minister certain emergency powers in Bass Strait, and I think we have improved that security now so the power need not be with the minister; and, third, to convert geodetic data references of the area descriptions in the act from Australian Geodetic Datum to the current Geocentric Datum of Australia. I will explain that a little bit later on.

The technical amendments include the following proposals. The territorial sea amendments correct an inadvertent technical error in the act and ensure that the legislation gives proper effect to the Offshore Constitutional Settlement. Due to an anomaly in the Petroleum (Submerged Lands) Act, licensees applying for a first renewal were entitled to indefinite duration licences. If amendments are made, the affected companies will only have 21-year licences. In terms of the definition of ‘workforce representative’, the act allows federal unions to serve as workforce representatives in an occupational health and safety scheme. The proposal amends the definition of ‘workforce representative’ to allow a transitionally registered association recognised under the Workplace Relations Act 1996 to be appointed. The amendment ensures that all unions recognised under the Workplace Relations Act can be workforce representatives. Those provisions are unlikely to be affected by the government’s election commitments on the changes to the industrial relations system of Australia.

In terms of the geodetic data upgrade, the bill converts the data references of area descriptions to the Geocentric Datum of Australia, or GDA94. GDA94 more accurately reflects global positioning systems, which are increasingly being used for surveying and navigation, and brings new technology into play in the descriptions within the act. In a minor policy amendment, the bill repeals section 327 of the act, which deals with certain emergency powers in Bass Strait, as a more comprehensive and broader security regime is now in place under the Maritime Transport and Offshore Facilities Security Act 2003. In relation to the geodetic data upgrade, the bill upgrades the geodetic datum used in the Offshore Petroleum Act.

To explain this technical matter further, a geodetic datum is a mathematical model of the world. I am sure that Dr Washer would be well aware of that and would have full knowledge of this, whereas some of us laypeople would not have as much of an understanding of it. The Australian Geodetic Datum, or AGD66, was a mathematical model that was designed to fit well with the Australian mainland. As such, its centre was not the centre of the earth. Fortunately, Australia is not at the centre of the earth; it is only that some of us feel that it probably should be. The advent of global positioning systems, such as GPS, added justification for the adoption of an international geocentric—or earth centred—datum. This became the Geocentric Datum of Australia 1994, or GDA94. The change in datum means that the same point on the earth now has slightly different coordinates. The conversion, which is to the accuracy of two decimal places of a second of latitude and longitude, will have an almost negligible effect on the actual position of these points. On the seabed, this would physically represent no more than a plus or minus 0.15-metre shift. There will also be no impact on the existing titles. Timing and other factors prevented its inclusion in the original act, so it is good that we can tidy that matter up.

The bill also does not impose any new regulatory burdens on the petroleum industry and will not have any financial impact on the Australian government’s budget. I am sure that the Treasurer will be pleased that that is the case. The oil and gas industry is critical to the effective operation of the Australian economy. Oil and gas currently account for around 33 and 21 per cent respectively of Australia’s primary energy consumption, which is a 54 per cent total combined share of primary energy consumption; that is a fair lump of the Australian economy.

The oil and gas industry is a creator of significant wealth in the Australian economy, accounting for about 2.5 per cent of Australia’s gross domestic product. The value of oil and gas produced in Australia in 2007-08 is estimated to be in excess of $27 billion, with exports valued at around $16 billion, so this industry is an enormous bringer-in of money for Australia from exports. The industry employs around 15,000 people and will pay about $3.6 billion in resource taxation to the Australian government in 2007-08, so I guess the Treasurer will be pleased about that. The member for Werriwa would be well aware of that too because he worked in this industry in different ways over many years. The industry in Australia consists of more than 200 small, medium and large companies. Exploration spending for oil and gas exceeded $2 billion in 2006-07. In mid-2007 there were 220 active exploration permits, 49 retention leases, 65 production licences and 52 pipeline licences in Australian government waters.

Australia is very well endowed with gas, with 110 years of gas reserves at the current production rate, according to the International Energy Agency. Australia is expected to become the third largest exporter of LNG in the world within the next decade. The big challenge, however, is to find major new oilfields. I think some of us in the chamber at the moment would be well aware of that; I know the member for Kalgoorlie certainly would be. The Minister for Resources and Energy, Martin Ferguson, is currently discussing with the industry possible responses to this challenge. I know he is very keen to do whatever is possible to make sure we are out there doing what we can to find these oilfields. For more than 30 years Australia’s main oil-producing area was Bass Strait, off the Victorian coast. We do have a little gas off the Tasmanian coast and we have infrastructure running down the middle of Tasmania and to the north-west coast, so maybe sometime, with the infrastructure in place, some of that gas might be able to be brought ashore. Of course, we have lots of hydro energy in Tasmania, and there are a couple of companies drilling holes looking for hot rocks as well. Hopefully, they will be successful and the diversification of energy use for Tasmania will be increased. Then we could sell some into the eastern grid, now that we have the big cable between Tasmania, at George Town, and the Victorian coast, which is of great advantage to the state of Tasmania.

Oil and gas have been found in commercial quantities in the Carnarvon Basin, off the coast of Western Australia, which now supports Australia’s principal oil and gas producing region, accounting for 63 per cent of total Australian production. In 2006-07, 67 per cent of Australia’s oil production and 67 per cent of our gas production came from the Carnarvon Basin, while 18 per cent of oil production and 19 per cent of gas production came from Bass Strait. Total production of crude oil and concentrate in 2006-07 was 28,844 million litres or 504,000 barrels per day, while total production of natural gas was 39.4 billion cubic metres. Australia is underexplored by world standards, and most undiscovered petroleum resources are thought to exist in the frontier offshore areas. It is harder to get out there, and it is costly, but it is important that we are out there endeavouring to find those resources. There are currently 11 development projects worth more than $20 billion in total being constructed. One development project, worth more than $2 billion, has been committed to and more than $58 billion worth of projects are under consideration.

According to the Australian Petroleum Production and Exploration Association, development of the industry in line with the association’s vision to 2017 could deliver the following benefits for Australia: a quantum improvement in Australia’s balance of trade—an extra $20 billion a year by 2017; lower greenhouse gas emissions, with 180 million tonnes per year of carbon dioxide equivalent avoided globally; general energy security; a more skilled workforce, with up to 52,000 new jobs at the peak of expansion; increased regional development, particularly in Western Australia, Queensland and the Northern Territory—the northern parts of our great nation; reduced water usage in electricity generation—people understand that water is becoming more valuable and are using it in different ways, and pricing it is becoming a reality; development of Australia as a leading gas research centre; and increased revenues to government, which the Treasurer would be very pleased to have.

Looking at Australia’s national energy security, we have only about eight years of known oil reserves remaining at today’s consumption rates, presuming we are going to continue to use oil at the same rate that we do. There are a lot of interesting opportunities emerging through hydrogen technologies which could drive other transport modes, so that will play a part in it, but I am sure the great gas reserves we have in this country will play a very interesting and important part in all that as well. We have a greatly skilled workforce which needs to continue and we need to help it expand, so that is another challenge for us. We have very good management skills in coordinating and making some of these things happen, and we need to make sure that remains so. I think the state governments need to encourage exploration for new oil wells and do everything they can to make sure that happens, and as a nation we need to endeavour to make sure that that comes together.

Australia is looking down the barrel of a $27 billion trade deficit in oil and concentrate by 2015 if we do not find new oil reserves. This is why we have to open up more oil frontiers—make sure that we are out there looking for and finding these reserves—and why we have to continue to develop the potential of those alternative fuels, as I mentioned. There are a lot of great opportunities in that area and we should not let ourselves fall behind as a nation.

We have to make sure that what we do for the future of the car industry is along the right lines—lines that will take Australia in a new direction. We need to make sure that people are aware that there might be massive changes in how we use fuel and that the combustion engine may have to change. I was talking to somebody only the other day who said that, when petrol pumps came in the 1920s, it was a bit different to the technology we use now to fill up your car. I said, ‘Yes, it would be a bit different from chopping up the chaff and feeding the horse in the manger.’ We just have to make sure that people are aware that change is coming in many ways. I am keen to make sure that the public do not get the wrong perception. It would be difficult to have to turn around false perceptions, something I have seen happen in some industries. It serves no purpose at all.

I am very pleased to support this bill, and it is very good that it has been finalised. It will put in place the changes that are necessary and make sure that our nation moves forward.