Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

I rise today to speak on the Offshore Petroleum and Greenhouse Gas Storage Amendment (Significant Incident Directions) Bill 2011. I signal from the outset the coalition's ongoing support of the measures being put in place in response to the 2009 Montara oil leak and the subsequent commission of inquiry. Incidents of this nature are always intricate and, as a result, the response should be multifaceted. Also as a result, related issues have come before this place several times as the Commonwealth government, the opposition, the state governments and the industry have worked through the details of the national response and how best to implement a suite of measures to safeguard the oil and gas industry, the people who work within it and, just as importantly, the environment in which it operates.

The provisions of this bill are the next step in ensuring Australia's regulatory regime is as robust as possible, with a clear view to taking all appropriate precautionary measures to prevent such an incident from occurring again. The purpose of the bill is to amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006, the OPGGS Act, to specifically enable the National Offshore Petroleum Safety and Environmental Management Authority, known as NOPSEMA, to issue a direction to a petroleum titleholder in the event of significant offshore petroleum incident occurring within the title area that has caused or might cause an escape of petroleum. The direction would require the titleholder to take an action or not take an action in relation to the escape or possible escape of petroleum and its effects, and may apply either within or outside the titleholder's area.

The bill will therefore insert new provisions into the OPGGS Act that will clearly enable NOPSEMA, as the regulator for the offshore petroleum industry, to issue a direction to a petroleum titleholder if a significant offshore petroleum incident has occurred in the titleholder's area that causes or might cause the escape of petroleum. The direction may, among other things, require the titleholder to take action to prevent or eliminate the escape of petroleum or potential escape of petroleum and/or to mitigate, manage or remediate the effects of an escape of petroleum. The proposed amendment will help ensure that the Commonwealth has the full ability to provide for the remediation of the effects of all escapes of petroleum in the event of an oil spill incident and is one of a number of legislative amendments being introduced to improve the regulation of the offshore petroleum industry following the Montara incident.

This issue has been the subject of an intensive and extended consultation with industry and its representative bodies as part of the Montara investigation. As I have indicated, there is full bipartisan support for the government's response to this incident. Indeed, there is a public expectation that the parliament will take all appropriate and necessary steps to preserve the balance between the important economic sector of the oil and gas exploration and extraction industry and the protection of workers and the environment.

To date Australians have generally viewed the expansion of the gas industry as a positive thing or at the very least have considered it as a benign development that does not adversely affect their own way of life. However, the Montara incident, which I should say was the first incident of its type in Australia for 25 years, and the disaster in the Gulf of Mexico have changed the way offshore oil and gas exploration and development is viewed in Australia. This industry is now subject to a greater level of public scrutiny and concern than ever before. But this intensified scrutiny is not something the industry or the government should shy away from. Rather it is an opportunity to enhance an industry that is fundamental to the energy and resources sector. Just as people are more aware of the nature of the oil and gas exploration and extraction industries, they are also increasingly aware of the scale of the projects, the level of investment they attract, the economic benefits and the job opportunities they create. Thousands of jobs and billions of dollars of investment are at stake, which is why it is essential to get things right.

In the wake of the Montara and Gulf of Mexico spills there is a compelling need for improvements to the regulation and oversight in the offshore oil and gas industries both here and globally. The response of the parliament should be guided by the fact that the public demand and deserve to have the confidence that authorities responsible for the oil and gas sector and the wider resources industry in general are able to perform. Offshore exploration and drilling is something that is essential to Australia's future and to our economic growth but also to our energy supplies. It will continue to play that fundamental role, which is why a solid and comprehensive national framework for regulation and response is absolutely essential.

As I have made clear, the coalition supports the government in making sure that a robust and reliable set of measures is put in place to regulate the offshore oil and gas sector. The objective is not to unnecessarily shackle the sector but to ensure that it can grow and develop in a way that does not harm the workers in the industry nor the environment. The coalition have taken a cooperative and constructive approach to this issue and on this issue at least so has the government. That is why the coalition will support the government on this measure. I commend the bill to the House.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

It is always a pleasure to speak after the member for Groom and with you in the chair, Mr Deputy Speaker Sidebottom. I am pleased to rise in support of the Offshore Petroleum and Greenhouse Gas Storage Amendment (Significant Incident Directions) Bill 2011. Around 95 per cent of Australia's petroleum resources are found offshore and some of it has been found offshore from the member for Corangamite's electorate. The search for oil offshore is very difficult, very expensive and often fruitless but it is obviously vitally important to our economy. And it is dangerous work, as anyone who has been to an offshore oil rig knows. That is why the isolated workers who work on these rigs are appropriately remunerated for that extra risk.

Since 1965, 3,000 oil and gas wells have been drilled in Australian offshore waters. During the last 15 years we have averaged about 110 new wells drilled offshore per year. It is difficult and very complicated work and I commend the incredible expertise of our miners, drillers, offshore engineers and the like and the people who support them. The industry employs about 11,000 people and generates more than $22 billion in export income. Australia is the world's fourth-largest LNG exporter and in 2009 produced 559,000 barrels per day of crude oil. Australia also has an excellent safety record and a strong regulatory framework, but we have not been without incident. Most recently, many people will recall the Montara oil spill. Back in August 2009, petrochemicals began spewing into the Timor Sea from the West Atlas rig off the Western Australian coast. For more than 10 long weeks, the well leaked at least 400 barrels of crude oil and gas every day. The well owner, PTTP Australasia, finally plugged the leak by pumping 3,400 barrels of heavy mud down a relief well. Last year, in the United States, that shoreline also faced a major offshore disaster with the BP oil spill in the Gulf of Mexico, when 11 men were killed in an explosion and oil leaked from the well for three months. It is estimated that at least 4.9 million barrels of oil leaked into the Gulf of Mexico.

The risks in this very important industry are high and any major incident can cause significant harm to people and the marine and coastal environment. While Australia's offshore industry has a very good reputation, world leaders in fact when it comes to safety, we must do whatever we can to further minimise the risk in such a highly hazardous industry. After the two significant spills in the United States and in Australia that I previously mentioned, the community needs greater confidence in the industry to undertake offshore petroleum exploration in a safe way. Our marine and coastal environments are especially vulnerable to major oil leaks and we must do whatever we can to prevent these events. I note when looking at the North West Shelf particularly, the north-west area, that only about one per cent of this area has highly protected marine sanctuaries. The east coast of Australia, obviously with the Great Barrier Reef and down around Tasmania, has many more protected marine sanctuaries. Whilst it is not the Minister for Mines and Resources' job to look after these, I am sure he would agree that this is a very special region and more needs to be protected with marine sanctuaries. At the same time, it complements the safety legislation that we have before the chamber tonight.

This bill amends the Offshore Petroleum and Greenhouse Gas Storage Act to enable the National Offshore Petroleum Safety and Environmental Management Authority to better respond to significant offshore petroleum incidents. It empowers the authority to direct a petroleum titleholder to take action in relation to the escape or possible escape of petroleum. These actions include steps to prevent, to mitigate, to manage or to clean up the effects of a petroleum spill. The current powers available to the authority only concern power to direct actions within the titleholder's title area. Obviously, currents being what they are, if there was an incident again, the pollution would not be confined to the title area. This amendment will ensure that titleholders will be held responsible for cleaning up damage beyond the title area—all of the damage. This bill makes certain that if a significant event occurs, such as the uncontrolled leak of oil into the ocean, the offshore petroleum regulator, the independent referee, has a clear and unambiguous power to direct petroleum titleholders to clean up and remedy the impacts of a petroleum leak. These new powers also come with tough enforcement muscle. Failure of a petroleum titleholder to comply with a direction will be an offence under the Offshore Petroleum and Greenhouse Gas Storage Act. However, I would suggest to the minister that the penalties should be higher on top of the actual making good.

The measures in this bill give the community greater confidence in the safety of the offshore petroleum industry and they will ensure greater protections for the marine environment and complement the work of environment minister Tony Burke in terms of making sure the marine areas surrounding Australia are as pristine as possible. I commend the bill to the House.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I will speak briefly on this bill, because in fact it is a matter that I spoke on in the House only yesterday, when I presented the advisory report on the Offshore Petroleum and Greenhouse Gas Storage Amendment (Significant Incident Directions) Bill 2011 to the House after the Standing Committee on Climate Change, Environment and the Arts had in fact inquired into this bill because it had been referred to the committee for inquiry. So most of what I need to say I said when I was presenting that report. But I just want to highlight a couple of matters in relation to it. Firstly, this bill arises as a result of both the Productivity Commission report and the commission of inquiry into the Montara incident. Both those reports recommended the establishment of a single national regulator to regulate offshore mining operations in this country. Both the member for Groom and the member for Moreton, I believe, have quite adequately talked about the importance of this mining sector to our nation, and there is no question that it is important and that it is growing. But both of them also, quite rightly, highlighted that not only are there huge opportunities in respect of offshore mining but there are also huge risks attached to those opportunities. Again, they referred to both the Montara incident and the incident in the Gulf of Mexico only a couple of years ago. Both of them highlighted not only the risks that are there but also the damage that can be caused as a result of those incidents not being properly managed at the time. The damage was indeed extensive in both cases and more so in the Gulf of Mexico incident where the livelihoods of the local fishermen were affected for a long time after those events and perhaps are still being affected as a result of damage to the fish breeding in the area.

This bill is one of five bills which are associated with amending the Offshore Petroleum and Greenhouse Gas Storage Act 2006. It responds to those matters and responds to them in a way which I believe in the future will ensure that, when an incident does occur, it will indeed be much better managed and much clearer directions will be issued in the shortest possible time. The shortest possible time is of significance because sometimes, when these incidents occur, time is of the essence and each day of delay causes additional damage. As we saw with Montara, each day of delay in plugging the well was adding to the damage being caused.

I want to finish by talking about one matter that was brought to the attention of the committee in the course of its inquiry and that is the submission from the Western Australian Department of Mines and Petroleum. The Western Australian government believed that having a statutory authority managing the process was not necessarily the best way to do it and that perhaps it should have been a Commonwealth minister or that there should have been a joint arrangement between the Commonwealth and the state ministries.

The committee wrote to the Department of Resources, Energy and Tourism in respect to that very matter. I want to read into the Hansard the response that is relevant to this particular matter because it was, in my view, the only issue of any significance that was brought to the committee's attention in the course of the inquiry. The department, quite rightly and I think quite properly, pointed out as follows:

The Commonwealth considers NOPSEMA, as the regulator for the offshore petroleum industry, the most appropriate body to determine whether a significant offshore petroleum incident has occurred and whether a direction is required. As the day-to-day regulator for the safety and environmental matters, and also for structural integrity of facilities and wells, NOPSEMA will have expertise in understanding potential risks to environment and human health and safety that may result from an incident, and actions that may be required to prevent, as far as possible, significant impacts from such an incident.

I would also note that there are provisions in the OPGGS Act that establish accountability of NOPSEMA to the responsible Commonwealth Minister.

It goes on to talk about how the responsible Commonwealth minister can in fact issue directions if the need arises. Having responded to that submission from the Western Australian government, I support the bill in its current form. On behalf of the committee that inquired into it, I feel comfortable in saying that the bill should be supported by the parliament.

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

I welcome the opportunity to say a few comments on behalf of the government in response to the contributions to this brief but all-important debate on the Offshore Petroleum and Greenhouse Gas Storage Amendment (Significant Incident Directions) Bill 2011. I extend my appreciation to the members for Groom, Moreton and Makin for their valuable contributions and their thorough understanding of the importance of this bill.

The bill delivers on the Australian government's commitment to improving the protection of human health and safety and the protection of the marine environment to ensure that Australia's offshore petroleum industry is the best and safest in the world and is able to contribute to Australia's ongoing energy security and economic prosperity.

Following the uncontrolled release of the hydrocarbons from the Montara Wellhead Platform in August 2009, which has been referred to by all those who have contributed to the debate, it became evident to the Commonwealth that a clear and specific power is required in the event of a significant offshore petroleum incident resulting in the escape or possible escape of petroleum to enable the regulator to give directions to a petroleum titleholder to deal with the escape of petroleum and the effects of that escape. In particular, a direction would require action to be taken either within or outside the title area.

This bill will therefore amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to specifically enable the National Offshore Petroleum Safety and Environmental Management Administrator to issue directions of this nature. This will provide a clear legal basis on which to issue directions following a significant offshore petroleum incident that extends to requiring action outside the title area.

With those few words, can I not only commend the bill to the House but also clearly indicate that great progress has been made with respect to the establishment of a single national regulator, side by side with the formation of NOPTA, the National Offshore Petroleum Titles Authority, in Perth, with effect from 1 January 2012.

I extend my appreciation to my department, to NOPSA and to the industry for their valuable support, enabling us to make great progress over a very short period following the Montara incident. I am very mindful of the need for a strong regulatory environment and therefore I am confident that, from 1 January 2012, NOPSEMA, the new agency in place with extended responsibilities, together with an additional person appointed to the advisory board with special skills with respect to environmental management, we will potentially be better placed than we have previously been to handle similar incidents to Montara. Obviously, our objective is to avoid another incident similar to Montara, but I think we have a strong regulatory environment in place to ensure that we achieve that objective. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.