Michael Danby (Melbourne Ports, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Hansard source

In regard to the Offshore Petroleum and Greenhouse Gas Storage Amendment (Cash Bidding) Bill 2013, I think we have to understand that most of the oil that was released meant it was one of the biggest spills that could have endangered Australia and that this legislative amendment is an important change to the regulatory regime in relation to offshore petroleum management. A strong and updated regulatory regime in relation to offshore petroleum management was made clear by this spill. It is a necessity. This was from the blow-out of the Montara wellhead platform. The Montara development was owned and operated by PTTEP Australasia (Ashmore Cartier) PL and the area of this spill is located in the Timor Sea 690 kilometres west of Darwin in the Northern Territory and 250 kilometres north-west of Truscott in Western Australia. On the morning of 21 August 2009, there was a blow-out of oil and gas from the wellhead platform. Although 69 personnel on the platform were safely evacuated, a considerable amount of oil was released from the blow-out. Estimates vary but an inquiry observed that, if the worse-case scenario used in the initial response planning by PTTEP Australasia (Ashmore Cartier) PL meant 400 barrels a day were thought to have been spilt, the spill would have constituted 29,600 barrels or about 4,736 tonnes. This would have been Australia’s third largest oil spill after the Kirki spill of 17,280 tonnes in 1991 and the Princess Anne Marie one of 14, 800 tonnes in 1975. PTTEPAA advised the commission of inquiry that the initial release could have been as high as 1,500 barrels per day. If this figure had been the actual amount of oil released into the ocean per day until the well was 'killed', the spill would have been the largest in Australian history at 17,760 tonnes, larger than the Kirki spill which I have mentioned and which broke up off of the coast of Western Australia.

Most of the oil released from the blow-out remained within 35 kilometres of the Montara wellhead but some oil was observed 94 kilometres off the Indonesian island of Palau Roti and in the joint Petroleum Development Area off Timor Leste. The area of ocean where oil sheen or oil patches were observed was about 90,000 square kilometres. From 5 September 2009 through to 3 December 2009, two vessels were used to operate a 300-metre containment boom and skimmer around the oil well, which recovered an estimated 493,000 litres of oil or oil emulsion over 35 days of operation. Part of the response strategy was aimed at protecting Ashmore Reef, the Cartier Islands and the Western Australian coastline, because of their significant environmental features and the fact that trajectory models showed that the oil spill threatened Ashmore Reef and the Cartier Islands. A total of 184,000 litres of dispersants were used on the oil spill to accelerate weathering and breakdown of the oil on the sea over the period 23 August 2009 to 1 November 2009.

On 5 November 2009 Martin Ferguson, the then Minister for Resources and Energy—the former member for Batman now departed this place—announced a commission of inquiry into the uncontrolled release of oil and gas from the wellhead petroleum. The inquiry was undertaken and a number of recommendations proposed. The government has agreed to a large number of these recommendations. New regulatory bodies have been created and relevant legislation passed. I think that we have seen with the events in the Gulf of Mexico that we cannot be too careful with offshore oil spills. They can cause severe damage to the country if the activities are not properly regulated by governments, particularly in their relations with commercial organisations which are seeking to exploit oil and gas.

The purpose of this particular bill is to amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to provide a new model for allocating cash-bid exploration permits in the offshore petroleum regulatory regime. In November 2012 the government announced the decision to apply the cash bidding allocation method for select blocks as released in the prospective 2014 offshore petroleum exploration acreage release. An independent and expert review of the act was conducted. It identified weaknesses in the current model that posed risks to implementation of the effective cash-bidding model. It proposed amendments to the existing cash-bid exploration permit allocation model in the act to have the following key features: limiting the discretion to refuse an offer of a permit made by the joint authority; failure of highest bidder to accept offer results in the 10 per cent deposit paid by that bidder as part of cash bid being forfeited to the Commonwealth; full payment of the cash bid must be paid by the successful bidder within 14 days—previously 30 days.

The joint authority will set a reserve price for each of the areas being released. This price will reflect an estimate of the resource available. The reserve price will be determined in advance of inviting applications for the permit and, at the discretion of the joint authority, will be disclosed or undisclosed to bidders via the government Gazette. Where an offer is made below the reserve price, the permit will be offered at a reserve price.

Another of the regulations concerns the separate prequalification and bidding process. The prequalification assessment of potential bidders' technical and financial capacity to hold an exploration permit will take place prior to the applicants placing their cash bids. There will be a tie-breaker where two or more equal highest cash bids are received. In such cases, further cash bids will be invited from the tied applicants and the highest bidder will be offered the permit.

Oil spills threaten countries such as Australia. I commend the former minister for his inquiry. I obviously agree with the former government's inquiry and recommendations and am pleased that this current government is following up this issue, if not others.

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