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Monday, 21 March 2011
Page: 2471


Mr IAN MACFARLANE (5:53 PM) —I rise to speak to the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 and the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies (Consequential Amendments) Bill 2011 and to say from the outset that the coalition will be supporting this legislation. It is important that we do everything we can to ensure that we have ample resources to oversee the operation of the offshore oil and gas industry. This legislation is in direct response to that and also ensures that we learn the lessons from, particularly, the Montara incident up in the Timor Sea, which I will come back to in a moment. The coalition will support this legislation and will treat it as non-controversial.

The Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 seeks to impose a cost recovery levy on holders of offshore petroleum titles in respect of oil and gas wells and well related activities in those title holders’ title areas. This is to ensure that the people who own the title to the well, and therefore own the well and the contents of the reservoir it exploits, pay their way in terms of the overall monitoring of this industry.

The levies will recover the costs of the National Offshore Petroleum Safety Authority, otherwise known as NOPSA, in undertaking its assessment, monitoring and enforcement functions in relation to—and this is particularly important—the structural integrity of wells and well operations over their lives. Obviously, a well comes into being when an exploration licence is executed and the well is spudded, as they say in the industry. From that time on, the operation of the drilling exercise needs to be carefully monitored. The well needs to be monitored in particular by the company that has the responsibility of drilling it, the operator, but the owner of the title also has the responsibility to ensure that correct procedure is followed. The industry had an impeccable record for 25 years before, unfortunately, the Montara incident occurred off the coast of Western Australia. Due to poor practice and a lack of supervision, hydrocarbons, particularly light crude oil, escaped from that well, and it took a great deal of time to recover that situation.

We in the coalition will support the government on this bill. It is important to collect levies to ensure the complete operation of NOPSA and to ensure that those levies are collected right across the board, in terms of the title holders of the wells as well as the company operating the drilling platforms. Once oil, gas or both have been discovered and a well is capped, that well needs to continue to be monitored. Primarily that will be done by the company that owns the title, but NOPSA will also have an overseeing role. The main bill and the levy that goes with it will facilitate that oversight being performed to a high standard.

The cognate bill contains consequential amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006, which seems to be a recurring dream in this building. The act comes back to this chamber regularly for a minor tweaking here and there. The amendments to the act will enable NOPSA, which is funded on a cost recovery basis, to raise levies from the offshore petroleum industry to recover costs associated with undertaking its augmented integrity and other well related functions. We want to see this done properly, and in a way that ensures that there is no repeat of the Montara incident.

Amendments to the Offshore Petroleum and Greenhouse Gas Storage Act came into force in November 2010, augmenting NOPSA’s functions to include regulatory oversight of non-occupational health and safety structural integrity issues relating to wells and well related equipment and clarifying title holder duty of care in relation to wells and well related equipment. To give full effect to these augmentation legislative functions, regulatory functions and powers relating to management of well operations under part 5 of the Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations will be transferred to NOPSA in 2011.

As NOPSA is funded partially on a cost-recovery basis, levies imposed by the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act are required for NOPSA to carry out its functions and responsibilities. Current levies imposed by the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act are not appropriate in terms of either their purpose or the entities from which they are collected, and these bills ensure that NOPSA is able to collect levies relating to their augmentation well functions from the correct entity—in this case, the titleholder.

We have seen a very unfortunate incident off north-western Western Australia. The industry is now working hard with government, and in cooperation with experience from around the world, to ensure that well integrity and the exploration of petroleum resources in offshore Australia is done at the very highest of world standards. It is worth noting that, whilst for Australia the Montara well failure was a disaster, we were fortunate that there was no environmental damage. But from what happened next in the Gulf of Mexico we got an insight into just how serious a malfunction in a well can be. I do not think anyone will forget those graphic images from BP’s well in the Gulf of Mexico in which oil and hydrocarbons escaped uncontrollably and, unfortunately, were all washed up onshore, particularly on the southern shores of the United States. We need to learn from those events. There was a very significant environmental cost in that exercise, and a number of lessons can be learned from it.

I know that my colleague sitting to my left, the member for Dickson, occasionally accuses me of cooperating too much with the Minister for Resources and Energy, but the reality is that the consultation process enables the minister’s experience, his department’s experience and my experience as the minister for resources for six years to be used to ensure that we put in place processes that are not overly onerous and are still more than sufficient to do the job. The coalition supported the Minister for Resources and Energy when he asked that the Montara Commission of Inquiry into the uncontrolled release of oil and gas from the Montara wellhead platform in the Timor Sea be put in place, and that process has been pursued to its completion. Of course, there is still some more work to be done there, and the industry and the industry association, APIA, are working to ensure that the correct set of guidelines is put in place.

I should say that there will be more to come in relation to this issue, but we need to ensure that the oil and gas industry has the confidence of the Australian community as it goes about the challenge of recovering those resources in offshore situations. The community must have confidence not only that we have in place the right set of rules but also that those rules are overseen in a way that ensures that the rules and regulations are followed. I believe that, as we move forward on this issue, we will be able to do that. If we do not do that, the industry will become beset with uncertainty. This industry is not merely beset but besieged with uncertainty from the Gillard government.

This is one of those industries which produces in particular liquefied natural gas and exports it to the world. For every tonne of CO2 emitted securing LNG, we save around eight tonnes of CO2 from the replacement of a coal fired power station in China. So this industry is incredibly important when it comes to reducing carbon emissions. Yet we know that, here today and in previous weeks, the LNG industry is under threat from this government through the imposition of a very poorly thought out carbon tax. I was involved in a negotiation to try to ensure that the LNG industry was protected from the economic impact of the previous scheme—the CPRS—which the current Prime Minister abandoned for fear of a voter backlash. But yet again we see that none of those lessons have been learned and that this government is hell-bent on placing an impost on the liquefied natural gas industry which will make that industry uncompetitive in comparison to the rest of the world.

I do not know why the government is embarking on this role. Why would it impose a carbon tax against an industry that reduces emissions eightfold? It makes no sense to us, and it creates another area of uncertainty for this industry which has already been subjected to changes in government policy and increases in taxes. We saw several years ago the imposition of a tax on condensate—which is a product that comes out of gas wells—on this industry. All we have seen from this government is a series of legislative and regulatory changes causing further uncertainty.

We will work with this government to try to create some certainty for the industry as to where the regulatory process will go. We do not want to go down the extreme path that the government’s alliance partners want to go down—that is, basically to shut down the fossil fuel industry in Australia. The Australian Greens would be quite happy to see the coal industry shut down tomorrow, followed by the oil and gas industry. They are partners in government. Some would say that Senator Bob Brown is in fact the Prime Minister—that he is the one who is actually in power and that, while the Gillard government may be the government, the Greens are controlling the agenda. That level of uncertainty and regulatory potential is scaring the daylights out of the oil and gas industry. We want to make sure that we can produce legislation that gives the community confidence without letting the Greens control so much of the agenda that this industry ceases to exist.

As we learn from the experiences of Montara and read carefully the Commission of Inquiry’s report, we realise that there will potentially need to be further changes to the structure and operation of NOPSA. I have spoken in this chamber about that before. The Liberal and National parties support in principle the establishment of a national offshore petroleum regulator that includes the oversight of environmental impacts, but we see that only in the context of it being a national body, not a federal body—that is, it is a national regulator, not a federal regulator, made up of a partnership between the federal government and the various state governments represented on the Ministerial Council on Mineral and Petroleum Resources. We want to see a partnership formed. In saying that, there are concerns being expressed by my colleagues in Western Australia—more particularly by the Western Australian Minister for Mines and Petroleum, Norman Moore. I intend to have some further discussions with Minister Moore and I also intend to talk with my colleagues, as I am talking with the minister for resources, to ensure that we can move forward on a process which satisfies the Western Australians and the other states in Australia, for that matter. I hate to tell Western Australians, but Western Australia is not the only state with offshore gas, but it is the major state. We need to look at a process whereby we not only fund the current operations of NOPSA but actually expand NOPSA to NOPSEMA, the National Offshore Petroleum Safety and Environmental Management Authority.

We have a challenge in front of us. We need to ensure that we produce an optimal outcome that has the confidence of the community in how we regulate, how we monitor and how we ensure safety in terms of occupational health and safety and, just as importantly, the environment as this industry continues to produce not only the jobs and the exports that we need but also the raw materials that we use every day in operating our motor vehicles, heating our houses and running our power stations. Gas is becoming an increasingly important energy source in Australia and we need to ensure that we maintain our self-sufficiency.

One of the things that will also help in bringing certainty—and I would be remiss to not mention it in this speech—is of course the need for an energy white paper. Member for Dickson, where I differ very strongly with the Minister for Resources and Energy is the fact that the Gillard government, like the Rudd government before it, has failed to give any energy certainty to Australia. It has failed to deliver on an energy white paper and it has failed to give this industry any road map moving forward about where Australia is going to source its energy. In relation to offshore greenhouse gas storage legislation, we have also seen a complete halt in confidence and progress in relation to carbon capture and storage. In fact, we have seen a number of exercises aimed at getting a 30-second story on the news at night, but, in terms of actually offering a path forward for the coal industry to capture carbon and store it, we are seeing nothing from the government.

In conclusion, the opposition will continue to work with the government whilst ever reasonable proposals are put forward and whilst ever the industry is consulted on those proposals before they are brought to this chamber. It is important that we not only have the confidence of the community but also have a regulatory process that works—a regulatory process that is practical, allows all responsible parties to pay their way in terms of the operation of that oversight and ensures that, as we do that, we do not choke the industry with regulation to a point where the industry no longer has the confidence to invest in Australia. The reality is that, while Australia has a very stable geological structure, there are plenty of countries in the world that have oil and gas. We want that investment here. We want the billions of dollars that are currently being invested by Woodside, Chevron, Shell and BHP—the whole raft of companies that invest—to continue here, but we want it to continue on a basis where it is properly regulated and correctly oversighted and where the community has confidence in the overall process.