Josh Wilson (Fremantle, Australian Labor Party, Shadow Assistant Minister for the Environment) Share this | Hansard source

I am glad for the opportunity to speak in support of the Offshore Petroleum (Laminaria and Corallina Decommissioning Cost Recovery Levy) Bill 2021. It's another instalment in the government's response to the Northern Endeavour fiasco, which, if unaddressed, would have left the taxpayer picking up a bill of the financial kind of several hundred million dollars that should have been met by the operator Woodside.

This levy is a supportable and sensible means of ensuring the taxpayer does not pay for a very expensive mess that was created by some risky and I would say questionable corporate conduct. The department and the minister deserve some credit for resolving both the trailing liability that was dealt with in an earlier piece of legislation and for bringing along this cost recovery levy. But, based on what we now know, it is a shame that the rigour of our regulatory arrangements wasn't sufficiently good to prevent what occurred.

Unfortunately, when you have a government that is reflexively or, some would say, ideologically dismissive of the regulatory systems that are required to guarantee the public and national interest and that deliver safety and environmental protection and good corporate conduct, this is exactly the kind of thing that will occur: regulatory failure with harmful consequences. We're fortunate that, so far, the mess is only administrative and economic in nature, rather than a mess that could well have involved very real hazards to worker safety and to the marine environment. No-one in the Australian community would be unaware of the kinds of things that have happened in the past that have involved offshore oil spills by Deepwater Horizon and Exxon Valdez and other disasters. In addition to causing costs in the tens of billions of dollars, they left awful environmental legacies across hundreds and hundreds of kilometres that have lasted decades and, in most cases, continue today.

The member for Brand has done some very important work on this bill and in response to this issue more generally and, as the shadow minister just described, worked with the government to particularly address some aspects of the government's response that raise questions about whether we had the right occupational health and safety settings in these measures. The shadow minister already described those, but their importance cannot be underestimated.

I also want to acknowledge that the industry peak body, APPEA, ultimately came on board in supporting the measures required to ensure that companies take appropriate responsibility for their decommissioning obligations and that the taxpayer is therefore protected from picking up the tab. In essence what occurred with the Northern Endeavour was a sale or transfer of an end-of-life offshore oil production asset from Woodside to a small company with insufficient operating experience and capability and with completely insufficient financial standing. Woodside essentially transferred the asset for what was a relatively tiny sum and by providing some financial assistance to the purchaser. The reason Woodside did that is there was significant value in them not having to bear the decommissioning cost. It's not surprising that within a very short time the company that received the asset proved incapable of operating the Northern Endeavour, and we should be grateful that NOPSEMA was relatively quick off the mark and resolute in holding the operator to account and in preventing what may have escalated towards something fatal in human terms or environmentally disastrous.

One of the things that NOPSEMA considers is the adequacy of the spill response arrangements and preparations, which are critical when it comes to offshore oil and gas. In this case I think it's notable to record that when NOPSEMA carried out some inspections on the Northern Endeavour it determined that the new operator had:

… an inadequate capability and capacity to support and sustain a protracted response resulting in short and long term biological, ecological and social harm in the event of an uncontrolled hydrocarbon release.

In other words, they weren't in any position to safely respond if there had been some kind of oil spill. There would have been short- and long-term biological, ecological and social harm if that had occurred. NOPSEMA also found:

…failure to maintain the oil spill response arrangements provided for by the current TSA would result in an immediate and significant threat to the environment.

So what happened next? Operations were stopped. Not that much further down the track, the Timor Sea Oil & Gas Australia company—that's the company that received the asset—went into administration and liquidation. It left the Australian government to step in and arrange for the Northern Endeavour to be operated in lighthouse mode and then to arrange a proper decommissioning. That process continues and will take some time, as the shadow minister has described. Some tenders were actually issued earlier this year, and the government has already provided something like $230 million for the expected work. I don't think that will be the end of it. The $230 million includes $8 million paid to Woodside for their expert advice. I reckon some people in the community would think that payment is pretty rich in all the circumstances.

I said 'questionable' earlier in terms of the whole arrangement. I think this is an important point to make and certainly for people in the community to understand. I said 'questionable' because it is quite hard to look at the circumstances around the disposal of the Northern Endeavour and take the view that Woodside disposed of the infrastructure while giving due and reasonable consideration to the possibility that the receiving entity was not in a solid position to safely and properly operate the rig and was in no position to safely and properly decommission it. It is hard to believe that an operator of the capability and scale and experience of Woodside didn't foresee that possibility. In any case, this bill helps fix a serious and costly problem, but we know there's further work to be done to ensure this kind of thing doesn't occur again.

On the upside, we should ensure that the considerable volume of decommissioning work in prospect is undertaken by an Australian decommissioning industry and by Australian workers. On that front, I welcome the establishment of CODA, the Centre of Decommissioning Australia, and I'm grateful to have met with the general manager, Dr Francis Norman, on a couple of occasions. It's pretty incredible to reflect on the fact that $60 billion of offshore decommissioning will be required in the next 30 years—that is by 2050—and half of that in the next 10 years. It's a very substantial and important piece of work. If it's not done well there will be unacceptable risks in terms of worker safety and in terms of harm to our marine environment. If it is done well there's the potential for a state-of-the-art Australian decommissioning industry to be created, supporting investment, innovation, infrastructure and Australian jobs that are all relevant to our broader maritime capability in shipbuilding, marine science and offshore renewable energy, and—with my recycling hat on—in resource recovery and recycling. That is what we should all hope for. That is what we should aim for. It's entirely possible and it's the right way to go, but it will require some concerted and rapid work from government in partnership with industry. As we have seen, there really is no time at all to waste. I'm glad to support this bill.

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