Gary Gray (Brand, Australian Labor Party, Shadow Minister for Resources) Share this | Hansard source

I rise to speak in favour of these bills. They implement the work of the former federal government, in the main part. The Offshore Petroleum and Greenhouse Gas Storage Amendment (Regulatory Powers and Other Measures) Bill 2014 and the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Bill 2014 are in fact the culmination of a substantial body of work that commenced on the third week of August 2009, when the Montara oil and gas well exploded. Together, the bills respond to the incidents leading up to and consequent upon the explosion in the spring of 2009 of the Montara platform. Together, we in this place and through these bills will ensure the safest operating environment for our offshore hydrocarbons industry. Recommendations of the Montara inquiry created NOPSEMA as the single, unifying safety regulator in Commonwealth waters. I was pleased to announce at the APPEA conference in May 2014 that NOPSEMA would also become the single environment regulator in the offshore environment, an important initiative because it streamlined both safety regulation and environmental regulation. I would like to address some issues around safety regulation in the offshore hydrocarbons industry. It is a dangerous industry. It is an industry marked by great capability and great risk.

On 21 August 2009, the Montara wellhead platform in the Timor Sea experienced an uncontrolled release that continued until 3 November 2009. The affected area was estimated to be up to 90,000 square kilometres. It was considered at the time to be Australia's most significant offshore petroleum incident. And yet, just six months later on 20 November 2010, the Deepwater Horizon drilling rig located in the Gulf of Mexico experienced an uncontrolled release following drilling of the Macondo well. That release triggered an explosion, and a fire causing 11 fatalities and spilling an estimated five million barrels of oil into the sea. Over one-third of US federal waters in the gulf were closed to fishing during that incident. The release was contained finally on 15 July 2010. More recently—to demonstrate not only the extreme danger involved in offshore hydrocarbons work but also the importance of safety—on 27 August 2012, two workers were fatally injured on the Stena Clyde mobile offshore drilling facility located in the Otway Basin off the Victorian coast. Work on the offshore hydrocarbons environment is important for our country. It is important for economy. But it is not so important that it should bring with it unacceptable risk to the environment or to the health of our workers.

The explosion at Montara in 2009 had, in many ways, its cause many months earlier in March 2009, when the well completion was taking place. So, therefore, almost five months before the final blow-out, during the cementing operations on the H1 well, because of the practices on the primary cementing job, no-one had noticed the latent hazard associated with the wet shoe or failed primary cement job ,and the West Atlas rig was demobilised from the field. The correct well barriers were not in place to adequately secure the well. This was, in oilfield practice terms, a very basic failure—the failure of the process safety requirements that has at least a need for two effective and verified barriers in place of the well in the reservoir before removing the blow-out preventer and demobilising the rig. None of the essential good oilfield practices and safe oilfield practices were put in place in an adequate manner on that day in March 2009, meaning that in many ways by August 2009 the eventual explosion that took place was simply predictable.

Since 2009 around the world there have been in the order of 300 deaths in the offshore oil and gas industry—50 incidents in just over a two-year period. Those incidents have seen deaths occur around the world in the offshore hydrocarbons industry. Deaths in industry are never to be accepted. We are lucky that in the Montara incident no-one died, but that is the point—we are lucky. The de-manning of the facility that morning on 21 August 2009 placed men in their workplace at great risk. The de-manning of the rig took place in a dangerous gassy environment. It took place very early in the morning. It took place in an atmosphere known by the industry not to be safe. It was known by the industry not to be safe because it was known that there was an uncontrolled release of gas. No blow-out preventer was in place and the well was open to the atmosphere because the pressure containing cap had not been reinstalled. Indeed, since March of that year, there was no effective barrier in the shoe track. From March of that year there was no weighted completion brine, only sea water, in place. From March of that year there was no isolating cement plug in the upper well bore. The explosion that took place at Montara was entirely predictable.

The 2010 Borthwick commission inquiry found that the root causes of the Montara blow-out were failure to maintain two well barriers, no verification of barriers and poor management of change—limited competence led to deficient decision making. This is not the hallmark of the Australian hydrocarbons industry; this is the hallmark of a set of accidents, some predictable, and slack behaviour in a risky and dangerous environment.

It is the case that the explosion at Montara that led to the Borthwick inquiry that led to the creation of NOPSEMA has, in its final conclusions for the Australian offshore hydrocarbons industry, a happy ending in that we now have one of the best regulatory environments that we could have operating in our offshore hydrocarbons fields. What I mean by that is that we have great capability looking after the safety of workers and now looking after the environmental management and approval of activity in the offshore sector. It is my view that NOPSEMA, as the single offshore regulator for both environment and safety, should be extending its capability to the near shore, to the shoreline, in order to ensure that all of our offshore hydrocarbons are managed both in environmental approvals and in safety approvals in a consistent way—to ensure that they are managed in a manner that is efficient and effective and to ensure that our offshore safety environment is as carefully managed as we know our oil and gas industry would like it to be.

The offshore oil and gas industry is important to the Australian economy. It is important not just because it generates large dollar values of hydrocarbons; it is important because it also generates industrial activity in the onshore and it generates some of the best jobs that our young men and women in our universities could aspire to today. It generates work in maritime engineering and it generates work in subsurface geology that for the future will be extremely important to our economy. But in order to develop this highly sophisticated offshore industrial environment we do need to have a regulatory environment that is as good as it can be. I am conscious that a regulatory environment that follows the kinds of mistakes, the kinds of errors, that occurred at Montara is a regulatory environment cast in many ways in the most difficult set of circumstances. It is true that we are lucky that no-one was injured in that incident. It is true that in other incidents that I have named deaths took place. So while we count our blessings let us also be careful that the regulatory environment that we put in place in the offshore is fit for purpose and appropriate—is sufficiently capable to act quickly to situations as required by government but which also encourages the best possible offshore practices in the petroleum industry.

In this place we are committed to doing everything possible to avoid incidents and accidents like the leak of oil and gas from the Montara wellhead platform in 2009. Governments work hard to ensure that we achieve the best and safest offshore petroleum industry in the world and this bill ensures the commencement of the amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 that we have put in place. Industry, government and regulators must be absolutely committed to a culture of high safety standards and environmental protection within a framework of continuous improvement. We must work and learn together, applying the lessons from the incidents of the past, and that is vital for the effective regulation of the offshore petroleum industry and, frankly, its ongoing license to operate.

I have mentioned that around the world, in the past few years, there have been over 300 deaths in just over 50 incidents. In Australian waters, we have had two deaths on the Stena Clyde. We have also had, in the Surat Basin, a death last year. During the recent Minerals Week conference, at the dinner held in this building, we were told that in the last 12 months alone there had been 14 deaths in the Australian mining industry due to practices that we all know can be improved and that need to be improved. We all know that workers, when they turn up in a workplace, have a right to return home as safely as when they arrived at work. The hydrocarbons industry brings with it additional risk. It brings with it the risk of very large volumes of hydrocarbon potentially in uncontrolled environments; and brings with it the reward that is brought to our country through LNG exports, through condensate exports and through the export of crude oil.

The benefits, however, are outweighed by the 'disbenefits', if, in the process of pursuing the bounty of our hydrocarbon fields, we create environmental situations that are unacceptable or safety situations that create unacceptable levels of risk. These amendments operationalise good portions of the act, which grew from learnings from a situation that no-one foresaw but was entirely predictable. We hope in this place that these amendments and NOPSEMA itself will operate to make our offshore hydrocarbons environment not only as productive as it can be but also as safe as it can be—that is, safe for those working in it and safe for the environment in which it operates. I commend these amendments to the House.

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