scope – penalties: compliance and enforcement review web viewinterested parties are invited to...

Issues Paper

December 2012

Review of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009

Table of Contents..................................................................................................................................................1

Chapter 1: Consultation process........................................................................................5Chapter 2: Introduction......................................................................................................6

Purpose.............................................................................................................................6Scope of review................................................................................................................7Regulating offshore petroleum and greenhouse gas storage operations in Australia.......7OPGGS (Environment) Regulations 2009........................................................................9Other Commonwealth legislation.....................................................................................9Recent offshore petroleum regulatory reforms...............................................................10Montara Commission of Inquiry (CoI)...........................................................................10

Chapter 3: Objectives.......................................................................................................11Current regulatory requirements.....................................................................................11Issues...............................................................................................................................11 Ecologically Sustainable Development (ESD).......................................................11 Acceptance criteria for an EP.................................................................................13Options............................................................................................................................14Potential impacts of proposed options............................................................................14

Chapter 4: Best practice & continuous improvement......................................................15Current regulatory requirements.....................................................................................15Issues...............................................................................................................................15 Objective based regulation.....................................................................................15 Performance objectives, standards and measurement criteria................................16 Performance objectives...........................................................................................16 Performance standards............................................................................................16 Measurement criteria..............................................................................................16 Acceptable & ALARP............................................................................................17 Consequence & risk................................................................................................17 Significance............................................................................................................18 Prescriptive regulation............................................................................................18 Application of Commonwealth laws and international obligations.......................19Options............................................................................................................................19Potential impacts of highlighted options........................................................................20

Chapter 5: Consultation & notification.............................................................................22Current regulatory requirements.....................................................................................22Issues...............................................................................................................................23 Consultation with stakeholders...............................................................................23 Consultation with, notification of, a State or the NT..............................................25 Notification of commencement and completion.....................................................25Options............................................................................................................................26Potential impacts of proposed options............................................................................26

Chapter 6: Reporting........................................................................................................28Current regulatory requirements.....................................................................................28 Reports provided to the Regulator..........................................................................28 Notifications provided to the State or NT Minister................................................28Issues...............................................................................................................................28 Incident Reports – recordable and reportable environmental incidents.................28Options............................................................................................................................29Potential impacts of proposed options............................................................................29

Chapter 7: Representation...............................................................................................30Current regulatory requirements.....................................................................................30Issues...............................................................................................................................30 Legality of petroleum activity................................................................................30

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Broad public consultation under the OPGGS Act regime......................................31Options............................................................................................................................31Potential impacts of proposed options............................................................................31

Chapter 8: Duties & responsibilities of parties.................................................................32Current regulatory requirements.....................................................................................32Issues...............................................................................................................................32 The operator............................................................................................................32 The instrument holder.............................................................................................33 The titleholder.........................................................................................................33 Multiple titleholder provisions...............................................................................34 Submission of an EP where there is no titleholder.................................................35 The agent................................................................................................................35Options............................................................................................................................35Potential impacts of proposed options............................................................................36

Chapter 9: Transparency..................................................................................................37Current regulatory requirements.....................................................................................37 Data published at time of submission.....................................................................37 Publication of summaries of accepted EPs.............................................................37 Other published information and sources...............................................................37 Information not published.......................................................................................37 Marine environmental data.....................................................................................38Issues...............................................................................................................................38 Public interest data..................................................................................................39Options............................................................................................................................40Potential impacts of proposed options............................................................................41

Chapter 10: Marine pollution incidents...........................................................................42Current regulatory requirements.....................................................................................42Issues...............................................................................................................................42 OSCP terminology..................................................................................................42 Relevance of OSCP to specific activity..................................................................42 Relevance of environment description to OSCP....................................................42 Oil spill response arrangements..............................................................................43 Consistency with the National Plan framework.....................................................44 Risk assessments relevant to the OSCP..................................................................44 Source control.........................................................................................................44 Operational and scientific monitoring....................................................................44 Testing of the response arrangements.....................................................................45 Mutual aid, insurance and cost recovery................................................................45 Implementing the ‘polluter pays’ principle............................................................45Options............................................................................................................................47Potential impacts of proposed options............................................................................49

Chapter 11: Alignment of terminology.............................................................................51Current regulatory requirements.....................................................................................51 Definition of the environment................................................................................51 Definition of performance......................................................................................51 Definition of a petroleum activity...........................................................................51 Time limit for accepting or not accepting an EP....................................................53Issues...............................................................................................................................53 Definitions – clarity and consistency......................................................................53 Cost recovery for non-title activities......................................................................53 Time limit for accepting or not accepting an EP....................................................55 Acceptance of an EP...............................................................................................56 Request for further written information..................................................................56 Carried out in accordance with an EP.....................................................................57

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Options............................................................................................................................57Potential impacts of proposed options............................................................................58

Chapter 12: Monitoring....................................................................................................60Current regulatory requirements.....................................................................................60Issues...............................................................................................................................60Options............................................................................................................................62Potential impacts of proposed options............................................................................63

Chapter 13: Life cycle.......................................................................................................64Current regulatory requirements.....................................................................................64Issues...............................................................................................................................64 Early engagement in design of new projects and technology.................................64 Decommissioning – planning for end-of-life.........................................................64Options............................................................................................................................65Potential impacts of proposed options............................................................................65

Chapter 14: Compliance, enforcement & penalties.........................................................66Current regulatory requirements.....................................................................................66Issues...............................................................................................................................66 Review of compliance & enforcement measures...................................................66Options............................................................................................................................67Potential impacts of proposed options............................................................................67

Chapter 15: Government policy & guidance....................................................................68Australian Government regulatory priorities..................................................................68Issues...............................................................................................................................69 Principles of good regulatory practice....................................................................69 Elements of good regulatory design.......................................................................69 Reform of the EPBC Act and other relevant regulatory reforms...........................70 EPBC Act policy statements...................................................................................70 Approved marine bioregional plans........................................................................71 Interaction with other regulations under the OPGGS Act......................................71Options............................................................................................................................71Potential impacts of proposed options............................................................................72

Chapter 16: Other relevant matters.................................................................................73Current regulatory requirements.....................................................................................73Issues...............................................................................................................................73Options............................................................................................................................73Potential impacts of proposed options............................................................................73

Chapter 17: Next steps.....................................................................................................74APPENDIX 1: Terms of Reference.....................................................................................75APPENDIX 2: Glossary...................................................................................................... 78APPENDIX 3: Abbreviations and Acronyms......................................................................81

Units and Scientific Terms.............................................................................................82APPENDIX 4: Useful references........................................................................................83Copyright notice................................................................................................................84

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Chapter 1: Consultation process

Interested parties are invited to make written submissions that address, but need not be limited by, the issues raised in this paper including supporting information such as examples and evidence where relevant.

Submissions may be lodged electronically or by post. Please direct submissions to:

Email: [email protected]

Environment Regulations ReviewResources DivisionDepartment of Resources, Energy and TourismGPO Box 1564CANBERRA ACT 2601

Closing date for submissions is 5pm, Thursday 28 February 2013.

Submissions will not be published on the Department of Resources, Energy and Tourism website unless with prior written consent or unless required by law.

Please indicate clearly if you would like your submission, or any part of it, to be treated as ‘confidential’. A request for a submission marked confidential to be made available will be determined in accordance with the Freedom of Information Act 1982 (Cth). Under this Act, agencies and ministers need to publish on their websites information that has been released in response to freedom of information access requests.

Further information is available at http://www.ret.gov.au/environmentregulationsreview

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http://www.ret.gov.au/environmentregulationreview

mailto:[email protected]

Chapter 2: Introduction

The Australian Government is undertaking a review of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (the Regulations), to ensure they meet and represent leading practice for objective-based regulation of environmental management.

The Regulations have been in place since 1999 when they were created under the Petroleum (Submerged Lands) Act 1967 (PSLA). These were originally enacted as the Petroleum (Submerged Lands) (Management of Environment) Regulations 1999 and were administered by the Designated Authorities (DA) in each state and the Northern Territory (NT).

Cumulative additions and amendments to the Regulations have ensued on an ad-hoc basis. The most recent amendments to the Regulations occurred in late 2011 and clarified the requirement for an environment plan to contain an oil spill contingency plan, the consultations to be undertaken by companies on their activities and made provision for transition of regulatory responsibilities to the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) (the Regulator).

With some twelve years of operation of the Regulations and 12 months since NOPSEMA has taken regulatory responsibility for offshore environmental management, it is an opportune time to undertake a more holistic review of their efficiency and effectiveness, check the justifications for the current Regulations, and propose changes to improve their operation.

The 21 August 2009 an uncontrolled release of oil and gas from the Montara Wellhead Platform in the Timor Sea and the 20 April 2010 disaster at the Macondo oil field in the Gulf of Mexico provide added impetus for a review of the Regulations. These incidents served as strong reminders to governments, regulators, the offshore petroleum industry and the broader community of the risks of complacency in the operation and environmental regulation of offshore petroleum activities.

This review of the Regulations will examine the fitness of the current regime to meet the objectives of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act) and implements aspects of Montara Commission of Inquiry (CoI) Recommendations 23-26, 28, 44, 48, 66, and 97.

Purpose

The purpose of this Issues Paper is to:

identify policy, legal and operational issues that could impact on the effectiveness of the Regulations as a basis for regulation of the environmental impacts of petroleum and greenhouse gas storage activities undertaken in Commonwealth waters;

discuss those issues and identify draft options to address issues identified; and

invite comment on the issues including on their impacts on the environment, industry and other parties, and identify other relevant issues and options.

This Issues Paper is broken down into chapters each addressing the Terms of Reference of the review (Appendix A). Each chapter includes a discussion of key issues and puts forward options for improving or amending the Regulations to provide greater clarity and deliver on the commitment to ensure the Regulations remain objective-based and best practise.

The options in this paper do not represent the government position, but are provided in order to assist stakeholders in preparing submissions in relation to the key issues.

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Submissions received will be considered in finalising the government position on amendments to the Regulations.

Scope of review

The objectives and scope of the Review are outlined in the Terms of Reference (Appendix 1). In general, the Review will not address:

other regulations under the OPGGS Act including safety, well integrity, or resource management and administration;

policy regarding cost recovery through environment levies;

changes to other legislation or regulations e.g. Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) or Protection Of The Sea (Prevention Of Pollution From Ships) Act 1983; or

decisions by States or the NT on the conferral of environmental functions to NOPSEMA.

It is not intended to anticipate or duplicate other higher level Australian Government review processes currently in progress for the offshore petroleum legislative regime. Relevant matters referred to the review from other policy processes will be considered. These include, for example, matters from the review of the compliance and enforcement regime for offshore petroleum activities within the OPGGS Act.1 Decisions already taken on issues explored through this or other separate policy processes are integrated into the discussion paper where relevant to a description of Government policy, but without the intention to further debate their merit.

Regulating offshore petroleum and greenhouse gas storage operations in Australia

Offshore petroleum and greenhouse gas storage operations beyond designated State and Territory coastal waters are governed by the Commonwealth OPGGS Act, associated fees and levies acts, and associated regulations. The legislation, regulations and guidelines provide for the orderly exploration for and production of petroleum and greenhouse gas resources, and set out a framework of rights, entitlements and responsibilities of governments and industry.

The legal framework within which petroleum exploration and production activity takes place in Australia is a result of the Offshore Constitutional Settlement and the division of responsibilities between the Australian Government and the State/NT Governments.

Ultimate responsibility for Commonwealth waters (i.e. beyond three nautical miles seaward of the territorial sea baseline) rests with the Australian Government. Petroleum operations which are conducted onshore and as far as three nautical miles seaward of the baseline (referred to as 'coastal waters') are the responsibility of the individual State and Territory Governments (unless powers for regulation of these activities have been conferred).

The arrangements for regulation of petroleum operations conducted in Commonwealth waters arise from a Commonwealth policy decision in the early 1990’s, following The Public Inquiry into the Piper Alpha Disaster by the Hon Lord Cullen, to adopt a safety case regime and new performance/objective based regulations. Today, Australia’s OPGGS Act is an objective-based

1 As part of its response to the Report of the Montara CoI, the Australian Government undertook a review of the legislation applicable to offshore petroleum activities and the marine environment in the first half of 2012, including a review of compliance and enforcement measures in Commonwealth petroleum legislation and associated regulations. In June 2012, the Government agreed to implement a number of the findings of this review. Amendments to the OPGGS Act were introduced into Parliament on 28 November 2012 to increase financial penalties for certain criminal offences and to introduce a civil penalty regime. Further consideration is being given to the introduction of a broader range of alternative enforcement mechanisms into the OPGGS Act in the first half of 2013. Further consideration is also being given to extending penalty increases and alternative enforcement mechanisms to the regulations under the OPGGS Act.

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regime, in which the operator of an offshore facility is responsible for the safe and effective operation of the petroleum facility. An important feature of such a regime is that it encourages continuous improvement rather than a compliance mentality. The regime ensures flexibility in operational matters to meet the unique nature of differing projects, and avoids a ‘lowest common denominator’ approach to regulation that can be observed in a prescriptive regime. The objective-based regime is not self-regulation by industry, as industry must demonstrate to regulators – and regulators must assess and accept or not accept – that it has reduced the risks of an incident to ‘as low as reasonably practicable’ (referred to as ALARP). These risks must also be acceptably low.

Within this legal framework, the Australian Government together with the State and the NT governments jointly administer the regulatory regime through a Joint Authority (JA) arrangement. The JAs make key decisions under the OPGGS Act concerning the granting of petroleum titles, the imposition of title conditions and the cancelling of titles, as well as core decisions about resource management and resource security.

Two other bodies also perform regulatory functions under the OPGGS Act and associated regulations, and the Responsible Commonwealth Minister (RCM) exercises some functions.

The National Offshore Petroleum Titles Administrator (NOPTA) administers titles; collects, manages and releases data; keeps registers of petroleum and greenhouse gas titles; and provides information, analysis and recommendations to the JA to support JA decision-making. The role of the JA (which comprises the RCM and the relevant State/NT Minister) ensures that state and territory governments continue to have an appropriate role in the titles and resource management decision making process, as well as being kept informed of relevant developments off state and territory coastlines.

The NOPSEMA provides a comprehensive and integrated approach to the regulation of offshore petroleum occupational health and safety (OHS), the integrity of facilities, wells and well-related equipment, and the environment in Commonwealth waters, and in coastal waters where powers are conferred on it by the relevant state or territory jurisdiction. NOPSEMA can appoint and deploy OHS inspectors and petroleum project inspectors to monitor and investigate compliance with the OPGGS Act. NOPSEMA is also responsible for regulating OHS matters in connection with greenhouse gas storage operations in Commonwealth waters.

Environmental regulation of greenhouse gas storage operations

The RCM, rather than NOPSEMA, currently administers the Regulations in relation to greenhouse gas storage operations in Commonwealth waters.

Environmental risks for an offshore greenhouse gas transport, injection and storage industry will be very similar to those for petroleum operations. However, there is a need to also specifically address issues relating to the safe and secure storage of carbon dioxide (CO2).

Accordingly, the RCM also administers the Offshore Petroleum and Greenhouse Gas Storage (Greenhouse Gas Injection and Storage) Regulations 2011, providing robust regulatory approaches for greenhouse gas-specific aspects including storage formation integrity, plume migration modelling, control and remediation strategies for leakages, monitoring the behaviour of the stored greenhouse gas formation, and processes for site closure.

The Australian Government also released Guidelines for Injection and Storage of Greenhouse Gas Substances in Offshore Areas in December 2011. These flagged the expectation that the RCM may call upon NOPSEMA to provide advice with respect to greenhouse gas operations, and that as regulatory practice develops the RCM will delegate at least some regulation of environmental impacts to NOPSEMA.

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OPGGS (Environment) Regulations 2009

The Regulations have the primary objective of ensuring any petroleum activity in Commonwealth waters is consistent with the principles of ecologically sustainable development (ESD). They require petroleum operators who want to conduct a petroleum activity in Commonwealth waters to prepare and implement an adequate environment plan (EP) for the period of the activity. The Regulator must assess and determine whether an EP is acceptable. The required content of an EP is detailed within the Regulations and an EP must address all elements specified.

The Regulations utilise a risk-based approach for managing environmental performance through the EP regime, which requires a demonstration that the environmental impacts and risks of petroleum activities are of an ‘acceptable’ level and are reduced to ALARP in order for a petroleum activity to proceed. These are two distinct and necessary requirements.

The Australian Government view of the concept of ‘acceptability’ in relation to these Regulations recognises the fact that, unlike for regulation of safety for petroleum and greenhouse gas operations, it may not be possible to envisage conducting an activity with zero impact on the environment (whereas for safety, the expectation is that activities should proceed without causing any harm to the health or safety of persons). While there is this recognition that there may be an ‘acceptable’ level of risk to the environment, the ALARP principle still applies.

The Australian Government view of the ALARP principle is that risks are reduced to ‘as low as reasonably practicable’, which is generally the point where the sacrifice required to reduce the environmental impacts and risks of the activity any further would be grossly disproportionate to the environmental benefit gained. The ALARP principle arises from the fact that infinite time, effort and money could be spent on the attempt of reducing a risk to zero, which is not practically feasible. Its application to offshore petroleum development allows means that the environmental impacts and risks of petroleum activities will be managed to ALARP, allowing operators to adopt environmental practices and technologies best suited to individual circumstances, activities and locations.

This approach enables operators to employ innovative environmental protection measures that are tailored to their specific circumstances to achieve good environmental practice and outcomes. The Regulations are, therefore, primarily objectives based and in the most part do not attempt to prescribe a particular environmental impact or risk reduction approach.

The Regulator is bound by legislation to refuse the EP if it does not adequately address the impacts and risks associated with the activity.

Other Commonwealth legislation

Australia’s national environmental law, the EPBC Act also plays a key role in the regulation of offshore petroleum activities. The EPBC Act establishes a national approach to the protection and conservation of Australia’s environment, and sets out a regulatory framework to protect those aspects of the environment considered to be matters of national environmental significance (MNES), which includes the Commonwealth marine area.

Offshore petroleum activities that are likely to significantly impact MNES matters require assessment under the EPBC Act and approval by the Environment Minister. The EPBC Act operates as a condition-setting regulatory regime under which the Environment Minister may attach specific conditions to a project’s approval. Whilst the OPGGS Act provides for the setting of conditions on EP acceptance decisions, the Regulator by practice only exercises this discretion

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in exceptional circumstances. The EPBC Act includes a wide range of investigative and monitoring powers as well as criminal, civil and administrative sanctions for breaches of the Act.

Some petroleum activities may also require approval under the Environment Protection (Sea Dumping) Act 1981, or other Commonwealth legislation such as the Protection of the Sea (Prevention of Pollution from Ships) Act 1983, which gives effect to international rules and regulations developed by the International Maritime Organization (IMO).

Other Commonwealth legislative requirements relating to the environment must be described in any EP with descriptions of how these requirements are to be met. For example, there may be a requirement for a Quarantine Management Plan as a condition of approval under the EPBC Act.

Recent offshore petroleum regulatory reforms

The Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Act 2011 and associated Acts received Royal Assent on 14 October 2011. These Acts gave effect to institutional reforms, leading to the establishment of a single national regulator for the offshore oil and gas industry, NOPSEMA, and a national titles administrator, NOPTA, from 1 January 2012. The Commonwealth has therefore effectively assumed responsibility for the regulation of all petroleum activities within Commonwealth waters (i.e. the waters beyond three nautical miles from the territorial sea baseline, extending to the outer limits of the continental shelf).

Montara Commission of Inquiry (CoI)

On 18 June 2010, the Montara CoI presented its report to the Australian Minister for Resources and Energy regarding the 21 August 2009 uncontrolled release of oil and gas from the Montara Wellhead Platform in the Timor Sea. The report contained eight chapters with 100 findings and 105 recommendations with wide-ranging implications for government, regulators and the offshore petroleum industry.

On 25 May 2011, the Australian Government released its Final Response to the Report of the Montara CoI. The Final Response accepts 92, notes 10, and does not accept three of the 105 recommendations. The Final Response also included an implementation plan for the accepted recommendations. The Australian Government Progress Report, released on 9 September 2012, revealed that implementation of the Final Response is on track for end 2013, concurrent with the finalisation of this review and other related processes.

The Australian Government has moved quickly to learn and implement the lessons arising from these incidents and is working to improve the protection of human health and safety and the marine environment so as to ensure that Australia continues to have a strong, safe and competitive offshore petroleum industry which is able to contribute to Australia’s ongoing energy security and economic prosperity.

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http://www.ret.gov.au/Department/responses/montara/report/Pages/Reports.aspx

http://www.ret.gov.au/Department/responses/montara/report/Pages/Reports.aspx

Chapter 3: Objectives

Terms of Reference 1

The appropriateness of the current object(s).

Current regulatory requirements

Regulation 3 states that the object of the Regulations is to ensure that any petroleum activity or greenhouse gas storage activity carried out in an offshore area is:

(a) carried out in a manner consistent with the principles of ecologically sustainable development; and

(b) carried out in accordance with an environmental plan that has:(i) appropriate environmental performance objectives and standards; and(ii) measurement criteria for determining whether the objectives and standards have been

met.

The Regulator assesses each EP against the acceptance criteria in Sub-regulation 11(1), which states:

The Regulator must accept an environment plan if there are reasonable grounds for believing that the plan:

(a) Is appropriate for the nature and scale of the activity or proposed use; and(b) Demonstrates that the environmental impacts and risks of the activity will be reduced to

as low as reasonable practicable; and(c) Demonstrates that the environmental impacts and risks of the activity will be of an

acceptable level; and(d) Provides for appropriate environmental performance objectives, environmental

performance standards and measurement criteria; and(e) Includes an appropriate implementation strategy and monitoring, recording and

reporting arrangements; and(f) For the requirement mentioned in paragraph 16(b)2 – demonstrates that:

(i) The operator has carried out the consultations required by division 2.2A; and(ii) The measures (if any) that the operator has adopted, or proposes to adopt,

because of the consultations are appropriate; and (g) Complies with the Act and the regulations.

Issues

Ecologically Sustainable Development (ESD)

The object of the Regulations is centred on ensuring activities are carried out in accordance with the principles of ESD. These principles are established under the National Strategy for Ecologically Sustainable Development 1992 and are further defined under the EPBC Act. This definition is reflected in other pieces of Commonwealth legislation such as the Fisheries Management Act 1991. The defined principles differ slightly depending on their context and there is currently no definition of these principles under the OPGGS Act or the Regulations.

For the purposes of this discussion, and for consistency, the definition of ESD in the EPBC Act will be utilised. The ESD principles under section 3A of the EPBC Act are listed below, with a

2 Paragraph 16(b) provides that an EP must contain a report on all consultations between the operator and any relevant person, for the purposes of the consultation requirements in Division 2.2A of the Regulations.

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description of relevant requirements of the Regulations to demonstrate how their implementation supports the ESD principles:

(a) decision-making processes should effectively integrate both long-term and short-term economic, environmental, social and equitable considerations;

The Regulations currently focus on decision making from an environmental and social perspective. Economic considerations are not taken into account as they are broadly captured under the OPGGS Act and other subsidiary legislation. The Regulations drive petroleum activity operators toward managing environmental and social impacts and risks to a level that is both acceptable and ALARP. Compliance with these requirements allows an operator to define what may be considered acceptable in the short term and to implement a system to ensure that opportunities for improvement in environmental management in the long term are identified and actioned.

Longer-term considerations include a requirement for the revision of an EP under Regulations 17, 18 and 19 to ensure that there is periodic review and resubmission of an EP for acceptance by the Regulator. This allows available technologies and improvements in environmental practice to be revisited over the life of an activity and implemented if practicable.

Consultation provisions within the Regulations work toward the concept of equity.

While the Regulations do not explicitly point to the integration of both short-term and long term considerations particularly with respect to cumulative impacts of multiple activities in similar locations, it does require that an EP assess all of the impacts and risks of a proposed activity and demonstrate that these are acceptable and ALARP. This must be demonstrated in the context of the receiving environment and should therefore include the additional environmental impacts and risks of the activity and surrounding existing activities.

The concept of cumulative impact assessment could be specifically referenced in the Regulations as a component of impact and risk evaluation under Regulation 13. For this purpose, cumulative impacts are considered to be (and could be defined as) the impacts of the proposed activities considered in the context of impacts associated with existing and approved activities with the potential to act in additive or synergistic ways with the impacts of the current activity.

In relation to short term exploration activities operators may be unaware of other activities in a similar location and therefore could not consider the cumulative effect that their activity may have. Whilst the Regulator may have knowledge of these activities as a part of the submission and assessment of EPs, the Regulations do not allow this to be taken into consideration when determining the acceptability of an EP. Significant additional modifications to the Regulations would be required to allow the Regulator to take this into account.

The concept of cumulative impacts may drive operators towards considering the longer-term implications of activities. However, there may be some issues with including reference to cumulative impacts in the content requirements of an EP as there may be a paucity of baseline and scientific data or issues with sharing of data between operators. These issues should be considered prior to referencing this concept in the Regulations.

Baseline data and monitoring is particularly important for the accurate assessment of cumulative impacts, not only from one operator but across a marine area that crosses multiple operators and titles. Operational and scientific monitoring baseline data requirements may go some of the way to ensure operators are aware of other activities and capable of including appropriate assessment of cumulative impacts in their EPs.

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(b) if there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation;

The Regulations require that an operator must demonstrate that environmental impacts and risks of an activity are acceptable and ALARP. This supports the precautionary principle above by requiring operators to implement management controls and measures to reduce the potential for environmental degradation to as low as practicable. Provisions for monitoring, recording and reporting on environmental performance under Paragraph 11(1)(e) drives operators to determine the impacts that an activity may be having on the environment whilst it is being undertaken and to implement measures to reduce those impacts.

(c) the principle of inter-generational equity — that the present generation should ensure that the health, diversity and productivity of the environment is maintained or enhanced for the benefit of future generations;

Management of environmental risk to acceptable and ALARP levels facilitates maintenance of diversity and productivity of the environment, although it does not facilitate enhancement. Implementation of objectives, standards and criteria, as set out in an operator’s EP, allows for environmental performance to be assessed and measured. Provisions for review and revision allow for improvements in management measures to be identified and implemented where practicable.

(d) the conservation of biological diversity and ecological integrity should be a fundamental consideration in decision-making;

Management of environmental risk to acceptable and ALARP levels facilitates conservation of biological diversity and ecological integrity. This principle reinforces the precautionary and inter-generational equity principles above by ensuring that activities are considered in the context of the broader biological environment.

(e) improved valuation, pricing and incentive mechanisms should be promoted.

This principle is not a focus of the Regulations.

As is evidenced above, the primary driving mechanisms toward the management of petroleum activities in accordance with the principles of ESD are reduction of environmental impacts and risks to acceptable and ALARP levels through implementation of appropriate environmental performance objectives, standards and measurement criteria. The current object of the Regulations captures environmental performance objectives, standards and criteria, but does not fully encompass the concepts of ALARP and acceptable impact and risk management.

Acceptance criteria for an EP

The distinct and necessary requirements of acceptable and ALARP environmental impact and risk management are currently captured under Sub-regulation 11(1) which lays out the criteria for acceptance of an EP. This regulation states that the Regulator must accept an EP if there are reasonable grounds for believing that the plan meets the criteria detailed in sub-regulations (a) to (g). The acceptance criteria provide a check and balance against which the overall acceptability of an EP can be assessed prior to making a final decision. The current acceptance criteria are sufficient to allow the Regulator to determine if an EP is appropriate and aligns with the object of the Regulations.

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Options

Option 1.1: The current object of the Regulations be expanded to specifically include reference to the concepts of acceptable and ALARP environmental impact and risk management.

Option 1.2: The principles of ESD be defined for the purposes of the offshore petroleum regulatory regime as in other Commonwealth legislation that refers to these principles.

A definition of these principles could be included in either (a) the OPGGS Act, or (b) the Regulations.

Option 1.3: Address the integration of short and long term considerations, inter-generational equity and the conservation of biological diversity and ecological integrity by including an explicit reference to evaluation of cumulative impacts and risks and a definition.

Consideration should be given to the limitations which may restrict the ability of operators to demonstrate, and the Regulator to take into account, cumulative impacts for acceptance decisions.

Potential impacts of proposed options

It is not anticipated that a modification to the object of the Regulations will have a significant impact on the environment or the community. Modifications may however provide greater clarity to industry on the expectations of government with respect to environmental management of petroleum and greenhouse gas storage activities.

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Chapter 4: Best practice & continuous improvement


The extent to which industry is encouraged to adopt best practice and to continuously improve its environmental performance.


Several regulations’ requirements are relevant to the terms of reference, including: Regulation 3 Object of Regulations – performance objectives and standards. Regulation 11 Acceptance of an environment plan - impacts and risks will be (1)(b)

reduced to ALARP, & (1)(c) of an acceptable level. Major environmental hazards and controls are required to be identified in the public summary EP as per Regulation 11(8)(a)(iv).

Sub-regulation 13(3) – requires details and an evaluation of impacts and risks. Sub-regulation 13(4) – requires environmental performance objectives and standards. Sub-regulation 14(2) – requires measures of performance objectives and standards. Sub-regulation 14(3) – requires systems, practices and procedures to ensure impacts

and risks are continuously reduced. Sub-regulation 13(3A) - requires “significant impacts and risks” and “potential

emergency conditions” to be described in an EP. Regulation 29 and 29A – deal with discharges of produced formation water (PFW),

including a specified concentration of 30mg/L of oil in water (OIW) in any period of 24 hours, and tests and reports of discharges.

Section 640 of the OPGGS Act provides that the Navigation Act 1912 (Navigation Act) does not apply in relation to a ‘facility’ located in Commonwealth waters.

Issues

Objective based regulation

The advantage of an objective based regime is that it allows operators flexibility in environmental management. Operators have the flexibility to adopt solutions that are fit for purpose. In particular they can employ the latest and most cost effective management or technological solution available suitable for the specific situation. Operators are encouraged to innovate rather than being tied to using standard, lowest common denominator solutions. Consistent with achieving improvements in ALARP outcomes, innovation is essential to encourage improvement in standards over time.

However, with this flexibility comes a risk that, without sufficient clarity in relation to what is required to achieve compliance in the regime, operators may misunderstand or fail to adequately demonstrate compliance, such as through failure to meet the acceptance criteria for an EP.

Uncertainty may be a result of the EP content requirements not adequately reflecting the acceptance criteria. Where there is uncertainty, the Regulator can provide greater clarity through general information sessions for the industry or the publication of guidance notes. These issues are discussed in greater detail below.

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Performance objectives, standards and measurement criteria

The Regulations currently require that an operator demonstrates how an adequate level of performance in protecting the environment will be achieved through the implementation of appropriate environmental performance objectives, performance standards and measurement criteria. These should capture the controls put in place by the operator for the management of environmental impacts and risks, allow operators to determine if impacts and risks are managed to acceptable levels and ALARP and provide parameters against which an operator can measure their performance in protecting the environment.

Performance objectives

The current definition of “environmental performance objective” in Sub-regulation 4(1) currently lacks clarity in that it refers to the goals of an operator as mentioned in an EP. The same is not the case for an “environmental performance standard” which, as defined, provides clear parameters against which environmental performance is to be measured. This has led to broad statements being used as environmental performance objectives in EPs which are not specific to the activity being undertaken or its attendant impacts and risks to the environment.

Paragraph 13(4)(b) provides that environmental performance objectives, against which performance by an operator in protecting the environment are to be measured, must be defined in an EP. In general an environmental performance objective and its associated measurement criterion should be specific, measurable, achievable, relevant, and time based and take into account any applicable international environmental standards, such as those adopted through the IMO. Setting of performance objectives and measurement criteria according to the aforementioned principles allows for an auditable record of environmental performance to be maintained.

The setting of environmental performance objectives should be linked to the concept of demonstration of acceptable environmental impact and risk. Objectives should capture acceptable levels as defined by the operator in the context of the activity and the receiving environment. Aligning acceptable levels of impact and risk and performance objectives allows for an incident to be recorded and reported if acceptable thresholds are exceeded. It also provides for greater integration of the acceptance criteria of the Regulations and the content of an EP.

The 2005 amendments to the Regulations inserted the definition of environmental performance objective with the intent of aligning this with international standards for environmental management systems (ISO 14001:2004). However, the current definition is insufficient in this regard.

Performance standards

The requirement for performance standards in Regulation 13(4) is currently being interpreted as referencing pieces of legislation or internal procedures in an EP and does not capture the intent of the definition as “a statement of performance required of a system, an item of equipment, a person or a procedure that is used as a basis for management of environmental risk.” Improving the definition could strengthen the linkage between control measures and the setting of performance standards.

Measurement criteria

Whilst Sub-regulation 4(1) provides a definition of environmental performance objectives and standards, the same is not the case for measurement criteria. Measuring performance, by definition, requires the systematic collection of information that would allow an assessment of

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performance to be made. Collecting relevant information involves some form and degree of monitoring – whether this be monitoring the implementation of controls or monitoring the response of the environment to an activity. Monitoring is discussed further in the context of marine pollution incidents and routine operations in Chapter 10: Marine pollution incidents, and Chapter 12: Monitoring, respectively. This data collection should be reflected in measurement criteria for an EP. Providing a definition of measurement criteria in the Regulations would more clearly set the expectations of Government with respect to measurement and management of environmental performance.

Acceptable & ALARP

As discussed in Chapter 2: Introduction of this paper the core concepts of the Regulations that drive best practice and continuous improvement are those of acceptable and ALARP environmental impact and risk management.

These concepts are captured within the acceptance criteria of the Regulations but are not adequately represented as items which must be included within an EP. Division 2.3 of the Regulations sets out the required contents of an EP, including Sub-regulations 13(3) and (3A) which require the details and an evaluation of environmental impacts and risks within an EP. However, demonstration of acceptable and ALARP impact and risk management, and thereby identification of best practice, is not currently explicitly detailed as a content requirement under Regulation 13.

The interpretation of this regulation has led to differing approaches to identification and management of environmental impacts and risks and the wording of the regulation does not necessarily drive the operator to achievement of the acceptance criteria of an EP as defined under Sub-regulation 11(1).

In order to demonstrate that an acceptable level of environmental impact and risk has been attained an operator, having first considered the internal and external context of the activity, must define what constitutes an “acceptable level”. A definition of “acceptable level” in the Regulations may assist operators in achieving this outcome.

Consequence & risk

The Regulations do not provide a definition of significant environmental impact and risk and do not provide criteria against which significance of environmental impacts and risks are to be assessed. Instead, all impacts and risks to the environment must be reduced to acceptable and ALARP levels.

There is a challenge for operators in ensuring that an excessive amount of effort is not expended in demonstrating that large numbers of relatively minor impacts and risks are ALARP. However, the analysis of each risk and the relevant consequences should inform the level of detail, attention and effort expended on that risk.

One approach to help industry tackle this issue may be introduction of the concept of a Major Environmental Event (MEE). A MEE could be defined as “an event connected with an activity having the potential to cause significant environmental impact”. The concept of a MEE may assist operators to identify where in an EP to place the greatest effort (significantly more) into explanation and demonstration of acceptable levels and ALARP.

A description of the major environmental hazards for an activity is currently required as a content requirement of an EP summary under Sub-regulation 11(8). If the concept of a MEE is introduced to the Regulations this should be aligned with the requirements for EP summaries and a definition of what constitutes a MEE included under Regulation 4(1).

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If it is determined that introduction of the concept of MEE’s is not an appropriate mechanism the wording of Sub-regulations 13(3) and 13 (3A) will still require review to make it explicit that all impacts and risks must be demonstrated to be acceptable and ALARP and they must all be evaluated in some way.

Significance

There is no "significance test" for an environmental impact that must be assessed in an EP. Industry has found this a challenge in ensuring that excessive attention is not given in an EP to the small impacts of activities, and that consequently the documentation doesn’t become excessive.

The level of attention in an EP should be based upon an assessment of risk and consequence, so that significantly more attention is given to the most significant impacts. Companies can simplify the assessment of minor impacts by means such as grouping similar risks and treating them jointly.

The inclusion of an environmental significance trigger would narrow the field of impacts from discharges or emissions that need to be addressed fully in the EP. If this trigger were in place, an EP would only be rejected on the basis that it is not adequate to address significant environmental impacts. It is more appropriate, however, that an EP should address all environmental impacts and risks appropriately.

Prescriptive regulation

Regulations 29 and 29A relate specifically to the measurement and management of petroleum discharged in produced formation water (PFW). These regulations are perhaps the most prescriptive in the Regulations and do not reinforce the principles of ALARP and acceptable environmental impact and risk management or continuous improvement.

This regulation appears to be a carryover from the Schedule of Specific Requirements as to Offshore Petroleum Explorations and Production 1995 and stems from an engineering specification utilised in the Gulf of Mexico in the 1970’s. This was considered to be the limit at which a visible sheen could not be observed and was as low as the available technology of the day could achieve.

At the time of producing the offshore schedule the limit for discharges in water of the North Sea was 40mg/l. This was later reduced to 30mg/l following recommendations put forward by the Convention for the Protection of the Marine Environment of the North-East Atlantic or OSPAR Convention as a result of a workshop on produced water held in 1997. The requirement was later enshrined through the OSPAR convention to which Australia is not a Contracting Party. No international agreement obliges operators in Australian waters to comply with this limit. It should be noted, however, where waste oil from machinery space discharges or contaminated sea water are added to PFW, the requirements of the International Convention for the Prevention of Pollution from Ships (MARPOL) are applicable.

OSPAR recommendation 2001/1 lays out procedures for the management of PFW from offshore installations. Several amendments to the PFW testing arrangements have taken place since the original recommendation (OSPAR Recommendations 2006/4 and 2011/8) with particular focus on improving testing methods and technologies. These modifications are not reflected in the Regulations. For example, measurements of OIW are typically used to quantify the total petroleum hydrocarbon content of a PFW discharge. However, unlike the OSPAR (Oil Pollution Prevention and Control) Regulations 2005, the prescriptive analytical requirement for OIW under Sub-regulation 29(1) does not make allowance for measuring other co-occurring contaminants of concern that are not directly quantified by the OIW parameter. OSPAR are

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reviewing requirements for discharges of PFW with a view to objective based regulation that does not prescribe particular discharge limits. Similarly a recent review of state legislation in Victoria removed prescriptive requirements for PFW discharge.

There are several issues to consider in interpreting Regulation 29(1) for environmental protection. These include, though are not limited to:

lack of consideration for all petroleum classed contaminants within PFWs which may underestimate the environmental risk from a PFW discharge;

the weighting of toxicity from exposure to 30 mg/L of OIW is incorrectly assumed to be equivalent;

other contaminants such as metals, nutrients and drilling muds, fluids and additives are not quantified or considered to be a contaminant of potential concern in the PFW discharge; and

co-occurring organic and inorganic contaminants frequently occur as complex mixtures that strongly influence bioavailability and toxicity.

It may be appropriate to consider removal of the prescriptive requirements of Regulations 29 and 29A and ensure that the management of PFW is effectively captured along with other emissions and discharges from offshore facilities. Chapter 12: Monitoring, discusses emissions and discharges and related options in further detail.

Application of Commonwealth laws and international obligations

Sub-regulation 13(5) requires an EP to describe the requirements that apply to the activity and are relevant to environmental management. This regulation requires operators to describe in the plan all relevant Commonwealth laws, conditions imposed on an activity, codes of practice and any other requirements.

Inclusion of these obligations within an EP drives operators to consider external factors when determining acceptable levels of environmental impact and risk. In many cases obligations imposed under these requirements contribute to the development of environmental performance objectives and standards in an EP. Inclusion of these requirements allows the Regulator to secure compliance against both the requirements of the Regulations and other instruments which drive best practice and continuous improvement.

This contributes to a holistic approach to environmental management and allows for a single Regulator to ensure adherence all requirements applicable under Commonwealth Law.

Options

Option 2.1: The definition of “environmental performance objective” under Sub-regulation 4(1) be aligned more closely with AS/NZS ISO 14001:2004 i.e. the definition in the Regulations could be a hybrid of the definitions of “environmental performance” and “environmental objective” in the standard. The definition should be linked to the concept of an acceptable level of impact and risk such that performance objectives allow an operator to demonstrate that their performance will meet or better the defined acceptable level.

Option 2.2: Include a definition of “acceptable level” in the Regulations. This definition would focus on the magnitude of impacts and risks and the point at which they become acceptable after consideration of the internal and external context of the activity. The context of the activity includes the principles of ecologically sustainable development, legislative and other requirements, the receiving environment, operator policies, and the views of stakeholders.

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Option 2.3: In order to make more explicit the link between performance standards and control measures several options may be considered. These options are not mutually exclusive.

Sub-option 1: Redefine performance standards so they explicitly link to control measures. A definition could be:

Environmental performance standard means a statement of performance required by a control measure that is used as a basis for managing environmental risk, for the duration of the activity as set out in an environment plan accepted under these regulations.

Sub-option 2: If Option 1 is adopted, include a definition of control measure in the Regulations. This could utilise the current performance standard definition and state;

Control measure means a system, an item of equipment, a person or a procedure that is used as a basis for managing environmental risk.

Sub-Option 3: Maintain the current definition of an environmental performance standard but integrate the concept of control measures in this definition.

Option 2.4: Amend the regulations to include the concept of a Major Environmental Event (MEE): “an event connected with an activity having the potential to cause significant environmental impact”. This concept should be aligned with the requirements for EP summaries and a definition of what constitutes a MEE included under Regulation 4(1).

Option 2.5: Amend the Regulations to provide a greater focus on the identification and evaluation of major environmental hazard events and controls measures, which at present are only specifically identified as major environmental hazards in Sub-paragraph 11(8)(a)(iv) in relation to a summary EP, and indirectly by Sub-regulation 13(3A) which refers to “significant impacts and risks” and “potential emergency conditions”.

Option 2.6: Ensure the wording of Regulations 13(3) and 13(3A) is clear that all risks are to be evaluated and that all risks must be demonstrated to be acceptable and ALARP.

Option 2.7: Include a definition of measurement criteria in Sub-regulation 4(1). Measurement criteria must allow an operator to determine if performance objectives and standards have been met. Measurement criteria may consist of parameters or methods used to determine the achievement of an objective and standard. Any measurement criterion should result in production of a record to verify that the stated level of performance has been attained.

Option 2.8: For clarity, split Paragraph 13(4)(a) so the concepts of legislative controls and control measures are more clearly required to be separately communicated and captured in performance objectives and standards.

Option 2.9: Remove Regulations 29 and 29A from the Regulations so the requirements of these regulations are incorporated with the management of all environmental risks and impacts to ALARP and acceptable levels.

Potential impacts of highlighted options

The impacts on the community and industry of these options should be minimal as most changes clarify or more effectively capture requirements in the current framework for the Regulator and industry or better explain the expectations of the community and the Regulator.

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The enhanced clarity regarding requirements should improve the content of EPs and ultimately outcomes. The suggested changes may also allow increased flexibility for an operator to demonstrate that impacts and risks are being reduced to appropriate levels.

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Chapter 5: Consultation & notification


The effectiveness of the consultation (including notification and other mechanisms) requirements.


Section 280 of the OPGGS Act requires that a person carrying out activities in an offshore area under a title3 must not interfere with the rights of other specified users of the offshore area, such as navigation or fishing, to a greater extent than is necessary for the reasonable exercise of the person’s rights and performance of their duties. The Regulations contain provisions for relevant stakeholders whose interests may be directly affected by a proposed petroleum activity to be consulted prior to commencement of the operations during the course of preparing an EP (Regulation 11A).

Regulation 11A(1) of the Regulations describes the entities and persons that must be consulted in the preparation or revision of an EP:

(a) each Department or agency of the Commonwealth to which the activities to be carried out under the environment plan, or the revision of the environment plan, may be relevant;

(b) each Department or agency of a State or the Northern Territory to which the activities to be carried out under the environment plan, or the revision of the environment plan, may be relevant;

(c) the Department of the responsible State Minister, or the responsible Northern Territory Minister;

(d) a person or organisation whose functions, interests or activities may be affected by the activities to be carried out under the environment plan, or the revision of the environment plan;

(e) any other person or organisation that the operator considers relevant.

Sub-regulations 11A(2) and (3) respectively require the provision of “sufficient information to allow the relevant person to make an informed assessment of the possible consequences of the activity on the functions, interests or activities of the relevant person” and “a reasonable period for the consultation.”

Sub-paragraph 16(b) requires the EP to include a report on all consultations undertaken in accordance with Regulation 11A that contains:

(i) a summary of each response made by a relevant person; and(ii) an assessment of the merits of any objection or claim about the adverse

impact of each activity to which the environment plan relates; and(iii) a statement of the operator’s response, or proposed response, if any, to

each objection or claim; and(iv) a copy of the full text of any response by a relevant person.

3 In this context, a “title” refers to a petroleum exploration permit, petroleum retention lease, petroleum production licence, infrastructure licence, pipeline licence, petroleum special prospecting authority, petroleum access authority, or petroleum scientific investigation consent.

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One of the criteria for acceptance of an EP (in paragraph 11(1)(f)) is that there are reasonable grounds for believing that:

(i) the operator has carried out the consultations required by Division 2.2A4; and

(ii) the measures (if any) that the operator has adopted, or proposes to adopt, because of the consultations are appropriate.

Sub-regulation 15(2) creates an obligation for the EP to contain arrangements for the operator:

to notify the Department of the responsible State Minister, or the responsible Northern Territory Minister, before the proposed date of commencement of drilling operations or seismic survey operations that are being carried out under the authority of the title if:(a) there is a community in the area where the drilling operations or seismic survey

operations will be carried out; and(b) the drilling operations or seismic survey operations may have an effect on the

community.

In addition to consultation required prior to submission of the EP, the implementation strategy within an EP must provide for appropriate consultation with relevant authorities of the Commonwealth, a state or territory, and other relevant interested persons or organisations, whilst conducting the petroleum activity (Sub-regulation 14(9)).

The Regulations also include notification requirements, such as the requirement for an operator to notify NOPSEMA, NOPTA and the relevant state or NT department if there is a reportable incident. These obligations are explored in Chapter 6: Reporting.

Issues

Consultation with stakeholders

There is no hierarchy of rights in the Commonwealth marine zone, rather there are a number of stakeholders each exercising or having been granted private rights that need to be accommodated. Other rights might exist within a petroleum title area for use of the water column or sea floor as diverse as extraction of minerals, storage of carbon dioxide, harvesting fish or other biota, and deployment of facilities e.g. to capture energy in the form of ocean wave movement, to lay pipeline or telecommunication cable in easements, or to construct petroleum production facilities. Exercise of rights in the Commonwealth marine zone may also have material impacts on private rights in state waters.

The Regulations require the operator of an activity to consult with relevant persons and, under Paragraph 11A(1)(e), to determine which of those stakeholders is relevant to the preparation or revision of an EP. The Regulations then require an operator to report on all consultations they have had with any relevant person under sub-regulation 16(b). In order for an EP to be accepted, operators need to seek comment from relevant persons and address feedback to a level considered ‘reasonable’ by the Regulator.

Consultation should help ensure stakeholder awareness, inform the proponent’s risk identification process and understanding of the proposed activities’ impacts on stakeholders, and enhance transparency in relation to the approval petroleum activities.

Under the current Regulations, the operator identifies and notifies persons it considers relevant to a proposed activity for its consultation process. There is no requirement that the operator

4 i.e. the consultation requirements discussed earlier in this chapter.

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publish any details in relation to the activity on its website or elsewhere, so stakeholders are reliant on this notification in order to be aware of a proposed activity. This creates the possibility that some stakeholders may not be made aware of the activity, and that some stakeholders who would wish to be consulted are not afforded the opportunity.

This risk is offset in the Regulations by requiring that the operator demonstrate the appropriateness of its consultation process in its EP, and the Regulator be satisfied with that process in order to accept the EP. However, there is scope to consider measures to improve awareness and consultation: the Regulations could provide for a public disclosure of proposed activities for which EPs are in development, and add a provision allowing persons or organisations to identify themselves to the operator as a ‘relevant person’. The operator would then assess the merits of any objection or claim raised by self-nominating persons or organisations.

Following the consultation process, the Regulations require that the operator prepare a summary of the consultations for an EP. This measure assists the risk identification and analysis process and helps the operator demonstrate that it has conducted an appropriate consultation process. In practice, an operator’s summary will reflect the level of engagement it has received from stakeholders. If certain stakeholders do not have the capacity or interest to consult meaningfully, however, there is little that can be done in the Regulations to address that issue.

Currently, there is no requirement under the Regulations for the publication of the consultation – including response to concerns raised. Stakeholders are concerned that without publication of the consultations their views may be misrepresented or ignored without adequate explanation.

Part of this concern is that the Regulator may not receive all of the information when an EP is submitted. In practice there are cases where stakeholders have not had confidence in this process and have sought to engage directly with the Regulator in relation to particular activities. However, there is no mechanism for a third party to raise these concerns directly with the Regulator because, under the Regulations, the Regulator is unable to take into account any information not included in the EP for its assessment of that EP, so cannot engage with these stakeholders to address their concerns.

Instead, the Regulations provide that the operator must include the entirety of all comments received from identified stakeholders during the consultation process in their EP. Through this requirement, the Regulations provide that the Regulator should have the same information that was provided to the operator during the consultation process, obviating the need for a third party to provide input directly to the Regulator. There may be value in considering whether to allow stakeholders to engage directly with the Regulator as a means to provide greater certainty to stakeholders. This would also require a change to the assessment provisions of the Regulations.

Stakeholders have also raised concerns that they may not have the right to follow up on their consultation response in light of the proponents proposed action in relation to that response. Requiring the public disclosure of a summary report detailing consultation and the issues raised by stakeholders could enhance transparency. This report could be published as part of the disclosure of a proposed activity and EP preparation. It would also provide an incentive to avoid any perceived bias in dealing with the issues raised and help maintain public confidence in the regime. This would not necessarily delay the assessment process. Any further comment on the published report should be conducted so that the operator has the opportunity to see and respond to any comments received prior to submission of an EP and to give stakeholders an opportunity to contact the operator if they feel their views are not adequately represented. This must occur before the Regulator commences its assessment of the EP.

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The operator would need to take into account additional factors if the option to publish a report prior to submission is pursued. For example, the Regulations require that a relevant person be provided with a reasonable period for consultation. If a relevant person engages with an operator just prior to submission of an EP the operator will need to ensure that a reasonable period for consultation has been provided to that stakeholder prior to EP submission. If an operator has conducted a thorough and robust consultation process and has identified all relevant persons and consulted them appropriately in the preparation of an EP this should not be a significant issue.

Consultation with, notification of, a State or the NT

On 1 January 2012, the regulatory reforms to set up a new national regulator came into effect. NOPSEMA and NOPTA were established and the former regulators of petroleum activities, the DAs, were abolished. The regulatory functions and powers of DAs were allocated to either NOPSEMA or NOPTA. NOPSEMA retained all of the existing functions and powers of the former National Offshore Petroleum Safety Authority (NOPSA) and also received regulatory responsibility for environmental management and day-to-day operations of petroleum activities. NOPTA became responsible for the administration of titles, resource management and data management.

As a result of these reforms, states and the NT do not have access to all the information they had previously. They still have information on titles, resource management, field developments and related data subject to the confidentiality provisions in the OPGGS Act and OPGGS (Resource Management and Administration) Regulations 2011 (RMA Regulations) as part of their on-going JA role. However, they no longer have access to information regarding environmental management and, in particular, advance notice of the timing of petroleum activities.

Recent amendments to the Regulations require operators to include in their EP arrangements to notify state/NT agencies before the commencement of drilling operations or seismic survey operations where there may be an effect on a community. The states and NT advise that notification of commencement of all drilling and seismic activity is required to facilitate state/NT economic and social planning, and on public interest grounds. The Commonwealth Resources Minister has agreed that Sub-regulation 15(2) will be amended to address this request. An option for this provision is included at the end of this chapter.

Notification of commencement and completion

Whilst a requirement will exist under Sub-regulation 15(2) for an operator to notify the department of the responsible state or NT minister prior to the commencement of all drilling or seismic survey operations, there is no requirement within the Regulations for an operator to inform NOPSEMA at commencement and completion of an activity. This has ramifications for compliance inspections, planning, tracking of performance reports and the issue of levy notices, as well as resulting in NOPSEMA not receiving important information about the timing of activities in Commonwealth waters.

For example, in relation to levy notices, operators are required to pay a compliance levy in equal annual instalments for the period of the EP. If there is no capacity in the Regulations to finalise an activity and close out an environment plan, the EP technically remains in force for 5 years and a compliance amount could be due for each of those years regardless of whether the activity was being undertaken. In practice NOPSEMA issues a notice requiring payment of compliance levies when they become due during the period of the activity. If an activity is finalised and NOPSEMA is not notified a request for payment of a levy may be issued to an operator incorrectly.

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This provision should be worded such that once an operator has notified NOPSEMA that an activity has been completed the EP for that activity ceases to be in force and any subsequent activities will require a new EP to be submitted.

Options

Option 3.1: At least 10 business days prior to submission of an EP a proponent must provide the Regulator with the following details for public disclosure:

(i) Coordinates of the activity(ii) A summary description of the receiving environment(ii) A summary description of the activity(iii) Details of title numbers(iii) Details of consultation already undertaken and plans for ongoing consultation(iv) Contact details for the nominated liaison personnel for the activity.

This should include provisions that the Regulator may decline to consider a submission if this information is not provided within the required time frame or delay their commencement of assessment until the required timeframe has passed. To prevent vexatious claims by persons seeking to delay activities, this addition could also include a time limit for inclusion of information in an EP by the operator i.e. if correspondence is received after the 10 day comment period has closed this does not need to be addressed in the subsequent submission.

This option will improve the transparency of the consultation process and ensure that concerns raised by stakeholders are adequately addressed prior to submission of an EP.

Option 3.2: Modify Sub-regulation 11A to allow a person or organisation to identify themselves to the operator as a ‘relevant person’ as their interests or activities may be affected by the activities to be carried out. The operator must then assess the merits of any objection or claim raised by self-nominating persons or organisations and present the results of this assessment in an EP or a revision to an EP. The obligation of the operator to consult with other relevant persons would be retained.

Option 3.3: Modify the consultation and EP assessment provisions of the Regulations to enable stakeholders to engage directly with the Regulator in relation to a consultation process.

Option 3.4: As per the Commonwealth Minister for Resources and Energy’s decision, amend Sub-regulation 15(2) to include a requirement of advance notification to the department or agency of the responsible state or NT minister for all seismic and drilling activities (and not just when they may have an impact on the community in the area where the drilling or seismic survey will be carried out).

Option 3.5: Expand Regulation 15 by including a requirement for notification of start and end dates of activities to the Regulator. Notification of completion of an activity should have the clear effect that an EP is no longer in force.


There are not expected to be any significant adverse impacts on OPGGS Act titleholders as these options improve transparency and ensure that stakeholder related issues are identified and addressed as part of the planning process for an EP submission.

Option 3.1 will ensure interested parties are aware of a proposed activity and provide the community with greater transparency regarding that activity. This option will assist operators in

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the identification of any remaining stakeholders that may have concerns about an activity and allow for engagement with these stakeholders to occur. This process is not expected to have a significant impact on activity timeframes as the information required to be submitted to the Regulator prior to submission will be known by the operator well in advance.

Option 3.2 is complementary to option 3.1. It will enable members of the public or organisations to identify themselves as a ‘relevant person’ whose functions, interests, or activities, may be affected by the activity. The onus will be on the operator to determine the relevance of these claims and to present an assessment of any objections or claims in an EP.

Option 3.3 will provide additional assurance to stakeholders by allowing them to engage directly with the Regulator in relation to a consultation process for an EP.

Option 3.4 to broaden the requirement of advance notification to the department or agency of the responsible state or NT minister to all seismic and drilling activities will allow these governments to better undertake their planning and coordination roles with little additional burden on operators, as they are already obliged to advise the community in the area where the drilling or seismic survey will be carried out. Further clarification of what this notification involves could be provided either in the Regulations or guidance.

Option 3.5: Requiring notification of start and end dates of activities to the Regulator will impose a minor additional burden on industry but assist in ensuring that EP levies and other regulatory functions are executed appropriately.

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Chapter 6: Reporting


The effectiveness of reporting arrangements.


Operators are required to provide the following reports under the current Regulations.

Reports provided to the Regulator

Incident reports – recordable & reportable environmental incidents (Part 3 of the Regulations);

Performance reports (Sub-regulation 15(1));

Notifications provided to the State or NT Minister

Notification of a reportable environmental incident under Regulation 26AA; and

Notification of commencement and completion are provided to the Department of the State or NT Minister under Sub-regulation 15(2).

Issues

Incident Reports – recordable and reportable environmental incidents

The Regulations currently do not provide a clear definition of what constitutes a “recordable incident”. Under Sub-regulation 4(1):

recordable incident, for an operator of an activity, means an incident arising from the activity that:

(a) Breaches a performance objective or standard in the environment plan that applies to the activity; and

(b) Is not a reportable incident.

Operators define incidents differently depending on severity and type and this leads to a wide range of ‘environmental incidents’ being reported. Clarity on what is meant by a ‘reportable incident’ would help minimise uncertainty in interpretation of the Regulations.

Paragraph 26(4) outlines notification requirements that operators must follow in the event of a reportable environmental incident. Currently, operators can notify reportable incidents either orally or in writing. They must provide this notification within two hours, as a written report within three days. To ensure that reportable incidents are addressed in a timely manner, the Regulations should clearly state that any reportable incident must be notified orally. This will ensure quick and appropriate action in the event of a reportable incident, which will in turn provide the public with confidence that an incident is being managed appropriately.

Paragraph 26(4)(c) outlines what is required in a written reportable incident report: material facts and circumstances concerning the reportable incident; and any corrective action taken or proposed to be taken. Often corrective actions taken at the time of the incident are appropriate to stop the immediate cause of an incident but do not include preventative actions. There is currently no provision in the Regulations requiring operators to provide further information

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following the initial reporting to close-out an incident that would include detailing preventative actions which will to secure improved environmental outcomes in the future.

In addition, there is no provision in the Regulations for the operator to provide periodic reports in the event of a significant and ongoing incident such that the Regulator, the Minister and the public can remain informed. Regular and periodic reporting during and beyond the Montara incident response phase, while not required by regulations or legislation, was essential for public and Ministerial awareness of the ongoing response effort. Whilst this may be done under a direction given to a titleholder under the OPGGS Act, it may be more expedient to provide a mechanism in the Regulations.

Regulation 26AA includes further notification requirements associated with reportable environmental incidents, namely that NOPTA and the relevant state/NT resources department must be provided with a copy of a notification that has been given to NOPSEMA, but this regulation does not assist in addressing the gaps identified above.

Options

Option 4.1: The definition of a recordable incident under sub-regulation 4(1) is clarified to require that any breach of a performance objective or standard resulting from the activity must be reported to the Regulator.

Option 4.2: Paragraph 26(4)(c) be modified to state that an operator must notify a reportable incident orally within 2 hours, with a written report to follow in accordance with the requirements of Regulation 26A. Consequential amendments would also be required to Regulation 26AA.

Option 4.3: Amend the Regulations to require the operator to provide further reports and/or analysis of environmental incidents, following the initial notification and receipt of the written report.

Option 4.4: Amend the Regulations to require the operator to provide periodic reports in the event of a significant incident.

Option 4.5: The requirements under Regulations 26 and 26A be clarified to ensure that operators provide both corrective and preventative actions in written reports. A notification under Regulation 26 should include details of corrective actions undertaken to address the incident, whilst a follow up report should also contain detail of preventative actions to stop similar incidents from occurring in future.


None of these options is likely to have a significant negative impact on the community or industry. They will help to clarify the relationship between the Regulator and operators, which may assist both to meet their obligations appropriately and at least cost. The clarified reporting requirements on operators are not expected to create a significant additional burden, but are expected to assist operators to better understand their reporting requirements, and to assist the Regulator to satisfy itself that appropriate action has been taken to protect the environment, thereby improving environmental outcomes.

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Chapter 7: Representation


The scope for representation of interest groups and stakeholders.


This chapter considers the scope for representation by interest groups on matters of policy, such as the legality of offshore petroleum activity and difference in public consultation undertaken under the OPGGS Act and the EPBC Act. This is distinct from interests included in the consultation processes captured in the Regulations described in Chapter 5: Consultation and notification, and from decisions around the right to know discussed in Chapter 9: Transparency.

Issues

Legality of petroleum activity

The grant of an offshore petroleum title gives the holder of the title the exclusive right to undertake petroleum operations in the title, subject to the requirements of the OPGGS Act and associated regulations, including the Regulations.

Prior to award of title, there is extensive consultation across government (Commonwealth and state) in determining areas for potential acreage release (undertaken by the Commonwealth Department of Resources and Energy (RET), and then again in the granting of petroleum titles (undertaken by NOPTA). This includes with the Commonwealth Department responsible for administering Australia’s national environment policy, Department of Sustainability, Environment, Water, Population and Communities (SEWPaC).

While the grant of title under the OPGGS Act gives the holder of that title the right to undertake petroleum operations, it does not give it the authority to proceed with operations. Various permissioning documents, including a Safety Case, Well Operations Management Plan, and EP are required to be submitted and accepted by the Regulator before operations commence. These documents help determine how petroleum activities will proceed. In this context, the scope of an EP is limited to ensuring the petroleum activity is undertaken in accordance with the Regulations, but the document is part of a larger puzzle.

The OPGGS Act also operates within the Government’s broader environment protection framework. A proposal referred under the EPBC Act determines if the action will have, or is likely to have, a significant impact on any of the matters of MNES. If referred, the referral documentation will be published for comment by the public, and if a higher level of assessment, such as an environmental impact statement, is judged to be necessary this will also be a public process.

Finally, once a proponent has the relevant regulatory approvals, they must then undertake the petroleum activities in accordance with all acceptances, approvals and conditions under these arrangements.

The legislative check and balances under the regime, from acreage release to NOPSEMA’s acceptance of an EP, are designed to provide interest groups with opportunities to put forward objections before the activities commence.

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Broad public consultation under the OPGGS Act regime

Under the OPGGS Act regime, consultation and decisions on how to respond to issues raised in the consultation process are the responsibility of the proponent. These are discussed in detail in Chapter 5.

This approach is different to that of the EPBC Act where the regulator (SEWPaC) undertakes consultation on behalf of the proponent. The EPBC Act sets out a regulatory framework to protect matters of national environmental significance (MNES), which includes the Commonwealth marine area. Offshore petroleum activities that are likely to significantly impact MNES matters require assessment under the EPBC Act and approval by the Environment Minister. The Environment Minister may attach conditions to an approval to protect, repair or mitigate damage to MNES matters. Activities referred as not controlled actions under the EPBC Act regime have their referral documents published on the SEWPaC website with an opportunity for public comment.5

Both processes, although different in their approach, achieve equivalent environmental outcomes. The approach of mandating the proponent to undertake the consultation process under the OPGGS Act regime can be argued as more efficient for the much larger number of activities addressed under the Regulations, as it provides proponents with the impetus to actively consult rather than relying on interested parties to be aware of a project in order to respond to proposed activities.

Option 3.1 proposed in Chapter 5 would provide an opportunity to enhance transparency by requiring public disclosure of proposed activities in the Regulations.

Options

Option 5.1: Enhance transparency by requiring public disclosure of proposed activities in line with the discussion in Chapter 5: Consultation and notification.


No change is proposed to the Regulations in this chapter.

5 If a proponent refers a proposal as a “controlled action”, there is no opportunity for public comment unless the assessment is a higher level, such as an Environmental Impact Statement or higher.

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Chapter 8: Duties & responsibilities of parties


The duties and responsibilities of the operator, agent and instrument holder.


The Regulations require that an EP is in force for every ‘petroleum activity’, and that the activity be carried out in accordance with that EP. The Regulations place responsibility for ensuring that these and the other requirements of the Regulations are complied with on the ‘operator for the activity’ and not on the titleholder. The term ‘titleholder’ is not used in the Regulations; references are instead to an ‘instrument holder’ which, while defined similarly to a titleholder, is not consistent with the OPGGS Act or other OPGGS Act regulations. A further category of persons mentioned in the Regulations is an ‘agent’ appointed by an operator, whose responsibility is undefined.

Issues

The operator

Sub-regulation 31(1) of the Regulations requires the instrument holder to ensure that, at all times, there is an operator of the activity. Sub-regulation 31(2) then states that:

The operator of an activity is the person responsible to the instrument holder for the overall management and operation of the activity.

This provision seems to make the described person ‘the operator’, whether or not the titleholder has notified the Regulator of the name and contact details of the person, as required by Sub-regulation 31(3). This is confirmed by paragraph (b)(i) of the definition of ‘operator’ in Regulation 4. Where the instrument holder has not made a nomination under Regulation 31, it will therefore be a matter for the Regulator to determine, as circumstances make it necessary, who is responsible to the instrument holder for the overall management and operation of the activity. This could be quite difficult to do in the absence of cooperation from the instrument holder, and the Regulator’s identification of the person could be challenged if the Regulator were to take enforcement action against the person.

There is also no requirement in the Regulations that the operator will have any particular technical or financial capability and so have the capacity to comply with the requirements of the Regulations. This is significant, because the Regulations do not impose any responsibility on the instrument holder to provide technical or financial backup to the operator, if the operator falls short in any respect.

In addition, since the operator is responsible to the instrument holder for the overall management of the activity, the operator will not in practice have the independent capacity to ensure that operations comply with the EP, as it will always be the instrument holder (i.e. titleholder) that exercises ultimate control.

This appears to be a major design weakness in the regime established by the Regulations. The titleholder is not made responsible by the Regulations, even though it is the titleholder’s activities that create the environmental risk. The person who is, instead, made responsible by the Regulations will not necessarily have either the resources or the level of control over the carrying out of the activity to enable that person to comply with the person’s responsibilities under the Regulations.

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The instrument holder

The terms ‘greenhouse gas instrument’, ‘petroleum instrument’, ‘instrument holder’, ‘greenhouse gas instrument holder’, and ‘petroleum instrument holder’ are defined in the Regulations in a manner that is largely consistent with the definition of the terms ‘title’ and ‘titleholder’ (for petroleum and greenhouse gas activities) in both the OPGGS Act and the RMA Regulations.

The term ‘instrument’ is, on the other hand, employed differently in the OPGGS Act such that the use of the term in the Regulations may be problematic; for instance, in the event that multiple titleholder provisions in the OPPGS Act are extended to regulations under the Act.

It would be preferable, therefore, to refer to ‘title’ and ‘titleholder’ in the Regulations to ensure consistency with and applicability to the OPGGS Act.

The titleholder

Under the OPGGS Act, the titleholder is required to comply with the Act and regulations. For example, the rights conferred on a titleholder by a petroleum exploration permit, a petroleum retention lease, or a petroleum production licence, are expressed to be ‘subject to this Act and the regulations’ (Sub-sections 98(4), 135(4), 161(6)). The right of the holder of a petroleum exploration permit or petroleum retention lease to be granted a renewal of the permit or lease is predicated upon (among other things) there having been compliance with the Regulations (Paragraph 125(2)(c) and Sub-paragraph 154(2)(a)(iii)). See also Sub-paragraph 270(3)(b)(v) in relation to consent to surrender a title.

Most importantly, non-compliance with regulations is a ground for cancellation of title (Sub-paragraph 274(c)(v)).

At present, this is in practice the most effective incentive to comply with the regulatory regime as, until amended ,the penalties in the Regulations are relatively low.

The Explanatory Memorandum to the OPGGS Act indicates, in relation to the provisions referenced above, as well as others, that the titleholder must comply with the Act and regulations to the extent that they place obligations on the titleholder as a titleholder. Therefore, this link to the regulations only has effect when there are obligations placed directly on the titleholder by the regulations, which is not the case currently in relation to all regulations under the Act.

For the current Regulations, as for the Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009 (Safety Regulations), it is not the titleholder who is responsible for the overall management and operation of the activity – it is the “operator” as defined in those regulations. Even if the operator in these instances happens to be the titleholder, there is still disconnect between the responsibility of the titleholder in the OPGGS Act and regulations i.e. the Regulations do not apply directly to that titleholder as a titleholder.

This is an undesirable outcome in policy terms. The operator will in most cases be an employee or a subsidiary of the titleholder or will have been appointed under a joint venture agreement, and be subject to the environmental management process dictated by the titleholder. It will be under the effective control of the titleholder. However, the titleholder will not be made responsible for non-compliance, either directly under the Regulations or indirectly through the provisions of the OPGGS Act discussed above, because the Regulations place obligations on the operator rather than the titleholder.

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Even more significant is the proposal to include an express ‘polluter pays’ principle in the OPGGS Act, which will expressly make the titleholder responsible for the cost of mitigation and clean-up following a significant release of petroleum into the environment. It will be peculiar, to say the least, if the OPGGS Act expressly imposes this liability on the titleholder when the Regulations place related responsibilities (including in relation to the oil spill contingency plan) on someone other than the titleholder.

It is difficult to find a good policy argument for making someone other than the titleholder responsible under the Regulations. This is not a case such as the Safety Regulations where there are considered to be good policy reasons for making the facility operator responsible for the OHS of the workforce at a facility, given the facility operator’s direct control of facility design and operation. Even then, responsibility for the OHS of well operations at a facility is imposed on the titleholder by Schedule 3 to the OPGGS Act, because the titleholder is in practice the person who controls those particular operations at a facility.

Multiple titleholder provisions

The OPGGS Act (Sections 774-775E) deal with situations where there are two or more registered holders of a petroleum or greenhouse gas title (multiple titleholders). In particular, these sections include provisions whereby multiple titleholders may, by joint notice to NOPTA and NOPSEMA, nominate one of them to be the person upon whom documents may be served in relation to the title. This nomination is not compulsory.

These sections also include provisions whereby multiple titleholders must, by joint notice to NOPTA, nominate one of them to be the person who is authorised to take eligible voluntary actions on behalf of the group of registered titleholders. An “eligible voluntary action” means an application, nomination, request or notice that is permitted, but not required, to be made or given to the JA, NOPTA or the RCM Minister under the OPGGS Act.

Finally, these sections also provide that, where there are multiple titleholders, they are jointly and severally liable in relation to their title-related legal obligations under the OPGGS Act, but once one of the titleholders has discharged the legal obligation, the remaining titleholders are discharged from that duty.

These provisions currently only apply to the OPGGS Act and do not apply to applications, nominations, requests or notices to NOPSEMA. However, there is a strong case for these provisions to be extended to the Regulations. Not applying these in the Regulations causes an inconsistency and potentially confusion.

In order to achieve this, the “titleholder” must be made responsible for matters under the Regulations, and minor/technical amendments to the OPGGS Act would be required to extend the scope of the provisions to regulations, and to applications, nominations, requests and notices given or made to NOPSEMA.

Applying the multiple titleholder provisions to the Regulations will require NOPSEMA to apply due diligence in ensuring that applications they accept are from the validly nominated titleholder for EPs. The nomination of the titleholder for eligible voluntary actions is handled by/a responsibility of NOPTA, and a procedure between NOPTA and NOPSEMA would need to be agreed to facilitate the checking required as part of the quality assurance process adopted by NOPSEMA.

The current provisions under Regulation 17 require an EP to be revised if there is a change in the instrument holder for, or operator of, an EP.

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Submission of an EP where there is no titleholder

Currently, for some petroleum activities, there is a necessity to submit an EP prior to the granting of a petroleum title and therefor there is no titleholder. The OPGGS Act prohibits the conduct of a petroleum activity unless authorised by the appropriate petroleum title or authorisation. However, there are circumstances whereby there are timing differences between the grant of titles and the date on which EPs are submitted to the Regulator for assessment. For instance, some EPs are submitted for assessment and acceptance prior to the grant of titles by the JA or NOPTA (as applicable). This is particularly relevant for speculative seismic surveys and petroleum pipelines where the grant of a Petroleum Special Prospecting Authority (SPA), Petroleum Access Authority (AA) or Pipeline License (PL) may be pending although in parallel an EP for the activity may have been lodged with NOPSEMA for assessment and acceptance.

To shorten the lead time before conducting such activities, there may be a case for ensuring flexibility in the process of EP assessment and grant of title to occur concurrently. In this instance, a requirement could be introduced that, in the event that a title has not yet been granted, the person submitting an EP must demonstrate that they have lodged an application for a title with NOPTA. The provisions for acceptance of an EP under the Regulations could then include the requirement that a title has been granted. This would allow NOPSEMA to assess the EP, but only accept (where appropriate) once NOPTA has granted the title.

For this to occur, consequential amendments would also be required to levies arrangements. The most likely occurrence where a person may seek to submit an EP without yet holding a title is where that person is awaiting the grant of an SPA, AA or PL. From a policy perspective, it may be preferable not to introduce a complicated set of amendments where they are not required for the majority of cases, and in particular are not required for complicated cases (most complicated applications will relate to exploration or development activities for which there will already be a title at the time of submission of an EP.

The agent

If the operator appoints an ‘agent’, they must notify the Regulator of the appointment within seven days, in accordance with Regulation 32. It is unclear what purpose the appointment of an agent serves in the context of the Regulations, given that no regulatory responsibilities are placed on the agent of the operator. RET is not aware of any instance where appointment of an agent has been notified to the Regulator.

Reference to the ‘agent’ would be unnecessary if obligations are placed on the titleholder, rather than an operator, under the Regulations.

Options

Option 6.1: To fix the disconnect between the title-related provisions of the OPGGS Act and the obligations contained in the Regulations, and to ensure multiple titleholder provisions in the OPGGS Act are able to be extended to the Regulations, it is proposed to remove references in the Regulations to instruments, instrument holders, the operator and agent, and make the titleholder responsible under the Regulations for all matters currently the responsibility of these parties.

A consequence of this option would be that no EP for any activity could be submitted to the Regulator until an appropriate title has been granted and that any activity that does not require a title will no longer require an EP.

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Option 6.2: Consider options for the process of EP assessment and grant of title to occur concurrently, reviewing both the costs in added complexity and industry views on potential benefits.


Although the concept of an operator fits with petroleum industry practice, as described above the concept raises a number of legal difficulties for the Regulator in fulfilling its duties.

Community expectations will be better met and the environment better protected as the proposal will:

remove the current scope for doubt regarding who is responsible for the overall management and operation of the activity and make enforcement action simpler as it will always be the titleholder that exercises ultimate control; and

help to ensure that the person held responsible by the Regulations will have both the resources and the level of control over the carrying out of the activity to comply with their responsibilities under the Regulations.

The options will also ensure that compliance or non-compliance by the titleholder with the Regulations can be taken into account in title-related rights and decisions, such as renewal of a petroleum exploration permit or petroleum retention lease or cancellation of a title, and align financial obligations of the titleholder under proposed ‘polluter pays’ obligations in the OPGGS Act for the cost of mitigation and clean-up following a significant release of petroleum into the environment with oil spill responsibilities under the Regulations.

Similar arguments apply to the proposal to remove the capacity to appoint an agent, noting that there seems to be no use made of this provision in any event.

Making the titleholder responsible for all matters under the Regulations would mean that only a titleholder may submit an EP to NOPSEMA. This would constrain proponents of speculative seismic surveys from lodging until they had been granted a title (an SPA or AA) by NOPTA, lengthening the process by up to 30 days (the time dictated in the Regulations within which the Regulator must assess an EP), or potentially longer if the Regulator requires further information from the titleholder prior to accepting or refusing to accept the EP.

The definition of a petroleum activity and issues associated with this are further discussed in Chapter 11: Alignment of terminology.

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Chapter 9: Transparency


The transparency of current arrangements and the publication/provision of information provided by the regulator (NOPSEMA) and those with responsibilities under the Regulations (operators and instrument holders).


Data published at time of submission

There is no requirement in the Regulations for the publication of information relating to an EP at the time of submission. The Regulator publishes a limited amount of high level information at the time of acceptance of the EP including the name of a submitted EP, the region in which the activity is taking place (i.e. offshore from which state), the location of the activity (basin only) and the instrument under which the activity is taking place (if an instrument is required). The name of the operator and any further information on the content of the plan is not published.

As discussed in Chapter 5: Consultation and notification, the consultation process prescribed in Regulation 11A requires the operator to undertake consultation prior to lodgement of the EP with the Regulator, such that each relevant person is to make an informed assessment of the possible consequences of the activity on their functions, interests or activities. This necessarily involves providing that person with sufficient information regarding the proposed activity, environmental risks, and proposed mitigation measures.

Publication of summaries of accepted EPs

Sub-regulation 11(7) provides that an operator must submit a summary of an EP to the Regulator for public disclosure within 10 days of receiving notification that the Regulator has accepted the EP. Under Sub-regulation 11(8), the summary must include seven types of specified material, including a description of the receiving environment, a description of the activity, and details of major environmental hazards and controls, and must also be to the satisfaction of the Regulator.

Other published information and sources

Pre-exposure of proposed Acreage Release areas occurs through their publication by RET in the Australian Petroleum News in December each year, several months prior to the formal Acreage Release, which usually occurs around April the following year.

The winning bidder and their work-program commitments for the title area are published in the Australian Petroleum News (also published is the number of bids received).

Information not published

Information currently not published by the Regulator includes: The full EP, although a summary including key information is published following

acceptance by the Regulator; investigation and inspection report findings and actions arising from these; reports of reportable and recordable incidents provided to the Regulator (Regulations

26A and 26B, respectively); and the identity of those with responsibility for ensuring that these and the other

requirements of the Regulations are complied with.

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Marine environmental data

The offshore petroleum and carbon storage industry acquires a range of marine data to fulfil legislative requirements under the OPGGS Act and the EPBC Act. This includes exploration data (seismic and well data) and environmental and geotechnical data that are used to inform environmental plans, assessments and monitoring, and for oil spill response. Of the data collected, only seismic and well data and biological samples are required by legislation to be submitted to central repositories (Geoscience Australia (GA) and Australian museums) for archiving. The majority of other marine data types collected remain with petroleum companies or their contractors.

Issues

EPs and associated Oil Spill Contingency Plans (OSCPs) for offshore petroleum activities are not prepared in a manner targeted at the general public and may contain information rightly regarded by the proponent as commercial in confidence and subject to a statutory duty of confidence between the operator and the Regulator. Currently, the Regulations prohibit the Regulator from releasing the EP or OSCP without the permission of the operator concerned.

The Productivity Commission’s 2009 Research Report, Review of Regulatory Burden on Upstream Petroleum highlighted concerns about impediments to approvals due to the limited public availability of environmental data obtained either in previous assessments, or as a condition of previous approvals.

It is difficult for the public to be well informed about petroleum activities unless they are directly approached by an operator as a relevant person. While an EP summary is published for public access, this is post-acceptance of an EP, and there is little scope for interested members of the public or stakeholders to engage with the operator or the Regulator regarding any concerns.

There is no specific requirement for publication of information on environmental performance or environmental incidents in the Regulations. There are statutory reporting requirements that relate to the publication of information on environmental performance and environmental incidents and the Regulator’s performance under the OPGGS Act (in addition to other commonwealth legislative requirements). Additionally, the Regulator publishes voluntary information such as Safety Alerts and incident reporting in public newsletters.

Publication of more data would provide greater transparency in the EP process and lead to greater public confidence in the industry’s ability to manage its environmental impacts and risks appropriately. Publication of more data would also provide stakeholders with greater opportunities to have their concerns addressed.

In deciding what forms of publication might be beneficial it will be necessary to weigh-up many issues including:

the types of information or reporting that is produced or could be produced; whether some information is commercially sensitive or strategic information with a

case for protection, or whether there is a larger public benefit to its publication; whether there are any privacy, security or other relevant concerns in relation to

publication of information; the purpose to which the information might be put and the reasonableness of

collecting it – value to the public versus cost to companies and capacity of the Regulator;

which party is most appropriate to publish – NOPSEMA, NOPTA or company; and issues of procedural fairness.

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Option 3.1 proposed in Chapter 5 would provide an opportunity to enhance transparency by requiring public disclosure of proposed activities in the Regulations.

There may be some scope for expansion of the information published by the Regulator prior to, or post submission of an EP. However, there are some risks associated with this approach. For example, if additional information is published after EP submission, the statutory assessment timeframe will have commenced and there may be limited opportunity for interested parties to express their concerns to operators and in particular for those concerns to be addressed in a submission that is already under assessment.

The Montara CoI Recommendation 97 recommended that OSCPs should be made publically available as a condition of acceptance. In accepting the recommendation the Government Response noted that the Commonwealth in consultation with the offshore petroleum industry would consider whether OSCPs could be published without commercial prejudice to the operator. As noted above, OSCPs may contain a variety of information including personal contact information, contract rates, reservoir predictions and other information that could be considered sensitive by operators. However, there is merit in providing the public with a suitable level of information on oil spill preparedness and response arrangements such that confidence in the industry’s ability to respond to a major incident can be built and maintained.

Public interest data

Centralised management of industry environmental data has been identified as having great potential benefits to the Australian Government and the offshore industries through open access to a larger volume of well-managed marine data. The need for improved data management to better inform government regulation, environmental oversight and management of key national assets has been recommended by recent Australian Government reviews of the regulation of Australia’s offshore oil and gas industry67.

Providing for discovery of, and access to, industry-collected environmental data is also an important step in improving the social license of industry operating offshore. Centralising marine data management will provide benefits to the offshore oil and gas industry and the Australian Government through access to consistent, robust environmental data to:

increase the transparency of government decisions to the public and industry; expand the available evidence base for prediction of environmental impacts and risks,

decision making and environmental management; streamline management, delivery and analysis of environmental data; enhance the national marine information base; reduce regulatory burden on industry and government through open access to a

common set of marine environmental data; improve national oil spill planning and response; and contribute to the assessment of cumulative impacts, in line with recommendations

from the Montara CoI, the Hawke Review of the EPBC Act, and the Oceans Policy Science Advisory Group (OPSAG), A Marine Nation: National Framework for Marine Research and Innovation, March 2009.

One option is for GA to lead an industry and government discussion on environmental data management to design a program to actively manage in the public interest, the submission and receipt, storage, discovery, access and distribution of marine data. A component of this work

6 Hawke, 1999, Independent Review of the EPBC Act, for the Department of the Environment, Water, Heritage and the Arts, Canberra; http://www.environment.gov.au/epbc/review/index.html7 Productivity Commission, 2009, Review of Regulatory Burden on the Upstream Petroleum (Oil and Gas) Sector, Research Report, Melbourne; http://www.pc.gov.au/projects/study/upstream-petroleum

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http://www.pc.gov.au/projects/study/upstream-petroleum

http://www.environment.gov.au/epbc/review/index.html

would include development of and funding options to facilitate decisions on the appropriate level of functionality the data management system would incorporate.

This proposal would introduce a legislative requirement for the submission of data that industry already acquires; no additional data collection would be required; and there would be no retrospective submission of data (although industry would be able to voluntarily submit their legacy data for archival by GA).

The common types of marine data collected by industry to meet requirements under the OPGGS Act and targeted in this proposal could include:

seabed sediment and rock samples and geotechnical data; acoustic shallow sub-seabed data; remotely sensed (acoustic, laser, video) seabed (bathymetry, habitat) and water-column

data; marine biological data and sea-surface and water-column sample data.

To effectively collate, archive and distribute these additional datasets, GA would expand its current industry data (seismic, wells) archival and management facility to accommodate industry environmental data and collaborate with other marine science agencies e.g. Australian Institute Marine Sciences (AIMS), Commonwealth Scientific and Industrial Research Organisation (CSIRO), with specialist marine data management experience to ensure best-practice management of the wide range of data types.

Options

The above discussion suggests several options for enhancing transparency at different points in the regulatory process. The following are identified for comment:

Option 7.1: The publication requirements at the time of submission of the EP be expanded to include the information listed in Paragraph 11(8)(a) (to be caveated by a declaration that the information was correct at the time of submission, but the accepted activity may differ in some respects).

Option 7.2: That the proponent must provide the Regulator with certain details for public disclosure in line with option 3.1 in Chapter 5.

Option 7.3: Once the EP has been accepted, the contents of summary EPs be made more comprehensive and include additional content requirements in the Regulations. These additional content requirements should include a summary of oil spill response arrangements, a summary of monitoring to be undertaken and the existing requirements of regulation 11(8).

Option 7.4: Include a provision for the Regulator to require modification and resubmission of a summary in a timely manner if the document does not meet the requirements outlined in the Regulations.

Option 7.5: The Regulations be amended to require operators to publish reports of environmental performance which are currently required to be submitted to the Regulator under Section 15.

Option 7.6: Investigation and enforcement provisions under the OPGGS Act and/or Regulations be amended to allow the Regulator to publish the results of an investigation.

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Option 7.7: The OPGGS Act and/or associated regulations be amended to require (from a date to be proclaimed) the submission to GA (or another specified data management agency) of environmental data acquired for environmental assessment, monitoring, and oil spill response under the Regulations by the titleholder or a contractor on their behalf. This requirement would not be activated until the facilities are in place for environmental data to be processed effectively.


Options 7.1 to 7.4 and options would enhance the transparency of current arrangements, providing the scope for a better informed community by greatly increasing the publication of information. Information would be provided by the Regulator and those with responsibilities under the Regulations (operators and instrument holders). Titleholders and the industry as a group would become more accountable to the community for their performance, with a benefit to the industry if the overall performance is shown to be good. More transparent information about performance should be treated with less suspicion by the public and environment groups than poorly supported industry statements. It is likely that the current limited transparency in many arrangements creates suspicion and damages the credibility of the industry. If performance is demonstrated to be poor, the industry would have an additional incentive to respond quickly and effectively to protect its reputation.

Publication of information relevant to oil spill contingency planning and monitoring will increase public confidence in the ability of the industry to manage all risks associated with potential spills in line with the recommendations of the Montara CoI. Publication of this information may also provide industry additional impetus to ensure they are capable of managing oil spill risks and monitoring the environmental impacts of their activities.

Greater environmental data archival and management capability and additional coordination and collaboration with industry in the management of data, will help to promote sustained economic and social dividends from Australia’s coasts and oceans while protecting their ecosystem integrity.

The submission to government of industry-collected environmental marine data by companies engaged in offshore petroleum and carbon storage would represent a small additional cost in their overall data management process. However, once submitted, the data would become available to industry from GA, effectively representing a data archive service.

There has been initial discussion with the petroleum industry regarding residual commercial value and competitive advantage of marine environmental data. In general, this is believed to be low, as most data are not subsequently reused by petroleum companies. The preferred arrangement is that data be publicly available from GA after it has been archived and incorporated into an expanded industry data management system.

In limited cases where environmental data may offer some competitive advantage or residual commercial value subsequent to its use in fulfilling regulatory requirements, scope could be provided for negotiation of limited confidentiality periods. These are data that cross or are acquired in close proximity to other permits, such as pipeline assessments and oceanographic data. Companies need to consider that they are also potential beneficiaries of such data if industry can agree not to restrict access in this manner.

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Chapter 10: Marine pollution incidents


The effectiveness and completeness of the Oil Spill Contingency Plan (OSCP) provisions in the Regulations as a mechanism for requiring adequate preparation for and response to marine pollution incidents from petroleum activities.


Sub-regulation 14(8) requires that the implementation strategy of an EP must contain an OSCP and provide for the maintenance of an up-to-date OSCP containing emergency response arrangements. Regulations 14(8AA) and 14(8A) define the requirements for an OSCP.

The objective of this regulation is to ensure that all credible oil spill risks associated with the activity that have the potential for environmental impact have been adequately prepared for and that adequately tested response measures are in place.

Issues

This chapter addresses the ability of the OPGGS Act and the Regulations to appropriately address the social, environmental and economic impacts of any future significant offshore petroleum incident. Contingency planning is a key aspect to consider in this regard, but operational and scientific monitoring is equally important.

OSCP terminology

Sub-regulation 14(8) requires an EP to contain an OSCP. Article 3 of the International Convention on Oil Pollution Preparedness, Response and Co-operation 1990 (OPRC), sets out the requirements “that operators of offshore units … have oil pollution emergency plans.” The intent and purpose of this is consistent with the OSCP required under the Regulations, however the terminology is not consistent. Consequently the terminology in the Regulations could be updated to ‘Oil Pollution Emergency Plans (OPEP)’ to improve consistency with the OPRC terminology.

Relevance of OSCP to specific activity

Sub-regulation 13(1) requires the operator to describe their activity, which sets the scope and context for the remainder of the EP submission. Although a spill is not a planned activity, the response activities are part of the planned activity that controls the risk of a spill. Paragraph 13(1)(d) can be interpreted to include this information, however to ensure that the oil spill response activities are considered appropriately throughout the risk assessment and the development of the EP, Sub-regulation 13(1) could be amended to clearly include a description of the planned response activities that are to be implemented following the occurrence of an unplanned hydrocarbon release.

Relevance of environment description to OSCP

The Regulations currently require an EP to describe the existing environment that may be affected by the activity. This is interpreted as the environment that may be impacted by the planned activities as well as by any unplanned activities such as oil spills. Sub-regulation 13(2) could be amended to specify that the description of the environment must extend to areas that may be impacted by planned and unplanned (accidental) aspects of the activity. However, if the

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suggested amendment is made to Sub-regulation 13(1) this may achieve the intended outcome and may not require any additional changes to Sub-regulation 13(2).

Oil spill response arrangements

Sub-regulations 14(8AA) and 14(8A) which define the requirements for OSCPs could be more specific about the scope and content of an OSCP for acceptance and revision. The requirements could be made more explicit by requiring that submissions address both the preparedness and response aspects of pollution incidents through arrangements for responding offshore (combat activities in the field) and onshore (the shore based response coordination). This should address matters such as the spill mitigation actions, source control, operational and scientific monitoring, insurance, cost recovery and mutual aid arrangements.

An OSCP may be received in multiple formats and therefore there is no specified structure of an OSCP. Many of the content requirements for an EP are equally relevant to oil spill response risks and controls and therefore the intention is not to specify structure such that all oil spill matters, including risk assessments, become part of a separate OSCP document.

As the OSCP is a component of an EP, the EP content requirements are equally relevant to the oil spill matters described in an OSCP. Any new wording of Sub-regulations 14(8) and 14(8AA), should make a distinction between the overarching response arrangements (which may include preparedness) and the OSCP itself, which may be presented as an operational response document that details the specific response actions. Amendments should be worded such that they reflect the OSCP as an operational response document and enable all other relevant evaluations, justifications and demonstrations of preparedness to be provided elsewhere in the submission.

Examples of the content requirements for an EP that are equally relevant to oil spill response risks and controls include Sub-regulation 13(3) – 13(4). The wording of these regulations should avoid any doubt that these regulations are equally as applicable to oil spill risks and spill response activities. Key components of these regulations are the:

identification of potential spill sources, credible scenarios and resultant impacts;

identification of the environment that may be impacted and discussion of particular values, sensitivities and response priorities; and

development of performance objectives and standards for a response, with associated measurement criteria to determine whether performance objectives and standards have been met and define the termination criteria for response and recovery activities.

Sub-regulation 14(8), however, should elaborate on the ‘response arrangements’ to be addressed within the submission to encompass the arrangements for preparedness, response and recovery. As Sub-regulation 14(8) is a very complex component of Regulation 14 and, depending on the nature of the activity, may be a significant component of an assessment by the Regulator, the provision could be amended to clarify that the response arrangements should be described to the satisfaction of the Regulator.

The OPGGS Act uses the term ‘remediate’ in the context of oil spills however this term is not further defined. For consistency, the term ‘remediate’ should also be used in reference to the response arrangements required by Sub-regulation 14(8AA) and the term defined within the Regulations. The intent of ‘remediation’ is to mitigate negative impacts to the environment and achieve restoration to the extent practicable. In order to achieve this, operational and scientific monitoring programs will be necessary to quantify the impacts, demonstrate the efficacy of response activities and demonstrate when remediation has been achieved.

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Consistency with the National Plan framework

Article 3 of the OPRC states that “Each Party shall require that authorities or operators in charge of such sea ports and oil handling facilities under its jurisdiction as it deems appropriate have oil pollution emergency plans or similar arrangements which are co-ordinated with the national system established in accordance with article 6 and approved in accordance with procedures established by the competent national authority.” Consequently the content requirements of the OSCP should require titleholders to ensure that an OSCP submitted in accordance with Sub-regulation 14(8) is consistent with the national framework for oil spill response.

Risk assessments relevant to the OSCP

Regulation 13(3) requires a risk assessment and evaluation to be undertaken and included within the EP. The current definition is very broad and sufficiently encompasses all risks arising directly or indirectly from the activity. This could be clarified further however to specify that paragraph 13(3A)(b) requires an evaluation of impacts and risks arising directly or indirectly from the potential emergency conditions and associated pollution response activities, whether resulting from accident or any other reason. This would ensure that a submission assess the potential impacts associated with response activities such as application of dispersants.

In addition Sub-regulation 14(8) should be clarified to ensure that the response arrangements described are relevant and commensurate to the nature and scale of the range of credible spill scenarios evaluated in Sub-regulations 13(3) and 13(3A).

Source control

The Regulations are not explicit about the requirement for describing strategies to control the source of a hydrocarbon spill as a part of the response arrangements in an OSCP. This is one of the fundamental aspects of responding to an oil pollution emergency and consideration should be given to making this a specific content requirement of the OSCP.

Operational and scientific monitoring

There are no prescriptive requirements in the Regulations for how environmental monitoring should be applied to normal petroleum activity operations or during emergency conditions. A submission should demonstrate that the operator is appropriately prepared to deploy the monitoring capability required in response to a spill. With respect to environmental monitoring the response arrangements should include:

Operational monitoring to inform the response activities and

Scientific monitoring for environmental damage assessment including extent, severity and duration and arrangements for acquiring baseline environmental data to allow impacts to be detected and separated from natural variation.

Operational monitoring should function to assess the scale and nature of the spill, inform the selection of response strategies and evaluate the ongoing efficacy of response activities being undertaken. The performance objectives, standards and measurement criteria required by the Regulations should be defined so as to provide an adequate measure of the operational performance of the response activities and to define the criteria for termination of operational response activities.

An operational and scientific monitoring program (OSMP) appropriate to the nature and scale of identified credible spill scenarios should be required as a component of the response arrangements. This plan should be sufficient to achieve the scientific monitoring goals detailed above.

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Adequate baseline environmental data is an implicit prerequisite for achieving the goal of scientific monitoring. The Montara CoI found a lack of adequate baseline data was one of the major shortfalls associated with the scientific monitoring program implemented in response to the incident, as baseline studies are important to allow impacts attributable to an oil spill to be detected and separated from background levels of natural variation.

Testing of the response arrangements

Sub-regulation 14(8A) requires an operator to test the response arrangements but does not define the objectives or the complexity of a test. Testing arrangements required by the Regulations should be flexible enough to allow strategic testing of management arrangements in conjunction with more frequent activity specific testing. For avoidance of doubt, Sub-regulation 14(8A) should be amended to require that a test demonstrates capability to respond and meets defined objectives.

The requirement for an operator to conduct a planned test of the OSCP may not test the ability of the operator to respond without any notice, as would be the case in an incident. To provide confidence to the public, a test initiated by the Regulator or other independent third party should be considered in addition to the existing requirements of Sub-regulation 14(8A). A regulation which enables the Regulator to initiate a test without notice, so as to test response capability maintained by the operator would provide an alternative means for the Regulator to inspect compliance with an accepted EP.

Reporting arrangements required by Regulation 15 should require the operator to report on any tests undertaken in accordance with Sub-regulation 14(8A) sufficient to enable the Regulator to determine whether the operator as met the objectives of the test.

Mutual aid, insurance and cost recovery

As discussed below in the section titled Implementing the ‘polluter pays’ principle, the OSCP submitted with the EP should detail the arrangements in place for insurance, cost-recovery and other financial liabilities associated with impacts to the environment and remediation of those impacts to the environment. The definition of environment is sufficiently broad for this purpose as it explicitly includes ecosystems, heritage, social, economic and cultural features. The Regulations should be amended to require an EP to contain an independent validation of necessary insurance or other evidence that an operator is financially capable of funding a response commensurate to the risks of the activity.

Implementing the ‘polluter pays’ principle

This section discusses the ability of the OPGGS Act and of the Regulator to require titleholders to remediate pollution and ensure that the costs of government and third parties may be appropriately recovered from the titleholder. The matters of insurance, financial responsibility and cost-recovery can be considered under the concept of ‘polluter pays’.

The Attorney-General’s Department (AGD) reviewed relevant Commonwealth legislation applicable to offshore petroleum and the marine environment. The AGD Review found that the principle of ‘polluter pays’ is given effect to varying degrees in the offshore petroleum and marine environment legislative regime, but there is scope to clarify its application, particularly as it relates to ensuring that the social, environmental and economic impacts of a significant offshore petroleum incident are appropriately addressed in the legislative regime.

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Based on the AGD Review, the Australian Government has agreed that the following changes are necessary to comprehensively implement the ‘polluter pays’ principle.

Statutory duties

As part of the implementation of the 'polluter pays' principle (the details of which were developed and agreed as a whole of Government policy as a result of the final Government Response to the Montara CoI Report), it is proposed to amend the OPGGS Act to impose a new statutory duty on the titleholder to remediate the environment in the event of a pollution incident and if the titleholder does not fulfil its statutory duty to remediate, the costs incurred by a third party (e.g. a government agency) for the remediation are recoverable from the titleholder. Any breaches of the statutory duty to remediate the environment will be a strict liability offence.

Directions powers

In the context of the imposition of the new statutory duty to remediate the environment, it is also proposed to clarify the existing directions powers in the OPGGS Act to ensure they are sufficient and appropriate to use in conjunction with the statutory duty.

Cost recovery

Ensure that the cost-recovery arrangements in the OPGGS Act and associated regulations enable third-parties and government to cost recover from the titleholder where the titleholder does not comply with its statutory duty to remediate the environment, and the government needs to take action to remediate the environment.

Remediation orders

The OPPGS Act provides scope for the Regulator to issue remediation orders using its directions powers. It is not anticipated that any amendments are required to the Regulations to implement this policy. A definition of the term ‘remediate’ or ‘remediation’ should be provided within the Regulations.

Conditions

The condition setting powers are addressed in the OPGGS Act and associated Regulations. It is not anticipated that any amendments are required to the Regulations to implement this policy.

Insurance

Maintaining insurance allows titleholders to be prepared for potential compensation for damages and costs arising from damage to assets and remediation of the environment following a hydrocarbon spill.

As part of the implementation of the 'polluter pays' principle, amendments to Section 571 of the OPGGS Act are being considered to clarify that insurance would be a mandatory requirement imposed on titleholders and that the role of the Regulator would be to ensure these arrangements were in place and had been independently verified as adequate to cover the costs of clean-up and remediation after an oil or gas spill or other significant accident. Insurance would cover both the unplanned impacts of the spill and the impacts associated with the planned response activities undertaken.

There are differing views about whether, in the absence of this amendment, the titleholder has a duty to insure in circumstances where no direction has been given by the Regulator under Sub-section 571(1). The section as presently drafted appears to assume that there will be a

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direction on insurance in place. The amendment proposed would reflect the original policy intention that maintaining an adequate level of insurance is mandatory for holders of petroleum exploration permits, petroleum retention leases, and petroleum production, pipeline and infrastructure licences in order to cover eventualities such as blow-outs, pollution damage and clean-up costs associated with the distinct risks associated with the drilling of wells and laying pipelines. The amendments would also transfer the insurance supervisory role from the RCM to NOPSEMA. NOPSEMA may require third-party verification of the adequacy of proposed insurance.

In making this amendment clarity should be given to the form of insurance that the Act requires. For example, large companies may have the financial capability to fund a spill response and compensate those involved without the requirement for insurance by a third party. Consideration may need to be given to the Regulations requiring operators to demonstrate their financial capability through insurance or other means as opposed to restricting these requirements to insurance alone.

Securities

The OPGGS Act and the EPBC Act do not preclude the lodgement of a security. It is not anticipated that any amendments are required to the Regulations to implement this policy.

Liability and compensation schemes

Australia does not have a specific liability and compensation scheme for damage and loss caused by oil spills from operations on the continental shelf or anywhere in the offshore area. In the event of an offshore petroleum incident, parties affected by a spill may seek compensation either directly from the responsible titleholder/operator or in a court action brought under the common law, or State and Territory legislation. This way, there is no cap or limit to the damages that a titleholder may be liable for (provided all the required elements can be proved), unlike a compensation fund or other such mechanism, which could provide greater certainty and more rapid payments for those suffering loss but is constrained by the amount of funds contributed to it. In addition, the EPBC Act provides for liability for loss or damage caused by contravention of that Act or associated regulations.

Options

Amendments to the Regulations to implement the agreed recommendations of the inquiry and improve oil spill planning processes are proposed as follows:

Option 8.1: The terminology in the Regulations be updated to ‘Oil Pollution Emergency Plans (OPEP)’ so as to improve consistency with the OPRC terminology. Insert new definition of Oil Pollution Emergency Plans.

Option 8.2: Sub-regulation 11(8) be amended to add a requirement to summarise the OSCP or be more explicit about OSCP details and arrangements in the EP summary. This aligns with option 7.2 in the previous chapter of this paper.

Option 8.3: Sub-regulation 13(1) be amended to more clearly require a description of the planned response activities that are to be implemented following the occurrence of an unplanned hydrocarbon release.

Option 8.4: Any amended wording of Regulations 12-15 should be considered in the context of oil spill risk and response matters, to ensure they maintain and improve relevance where appropriate. The wording of Sub-regulations 13(3) and 13(4) should be amended to avoid any

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doubt that these regulations are equally as applicable to oil spill risks and spill response activities.

Option 8.5: Sub-regulations 14(8AA) and 14(8A) which define the requirements for OSCPs elaborate on the ‘response arrangements’ to be addressed within the submission by explicitly requiring that submissions describe:

a) the operational response activities to be implemented for the range of credible scenarios defined within the risk assessment;

b) the preparedness arrangements to ensure a response capability is in place and is maintained;

c) consistency with the national framework for oil spill response; andd) arrangements in place to control the source of a potential hydrocarbon spill in the event

of an emergency.

The details of these arrangements would be required content of the OPEP, but where this content is to be provided would not specified. The amendments to Sub-regulations 14(8) and 14(8AA) would reflect that the OPEP is an operational response document, and accordingly the relevant evaluations, justifications and demonstrations of preparedness are to be provided elsewhere in the EP.

Option 8.6: The OPEP to include arrangements for monitoring of response efficacy and the impacts on the receiving environment appropriate to the credible spill scenarios defined for the activity. With respect to environmental monitoring, response arrangements should include:

a) Operational monitoring to inform the response activities; and

b) Scientific monitoring for environmental damage assessment including extent, severity and duration and arrangements for baseline studies.

Option 8.7: Sub-regulation 14(8A) should be updated to clarify the intent of the Regulation. The Regulations should ensure that the oil spill response arrangements are tested and the objectives of the test:

a) assess the elements of response relevant to notification, communications, responsibilities, mobilisation and response operations.

b) demonstrate that the operator is adequately prepared to respond to a spill and mitigate impacts of a spill to ALARP.

Option 8.8: Sub-regulation 14(8) to require that the response arrangements described in the OPEP are relevant and commensurate to the nature and scale of the range of credible spill scenarios evaluated in Sub-regulations 13(3) and 13(3A).

Option 8.9: The EP is required to detail the arrangements in place for insurance, cost-recovery and other financial liabilities associated with impacts to the environment and remediation of those impacts to the environment, and include an independent validation of necessary insurance or financial capacity, commensurate to the risks of the activity.

Option 8.10: If specific content requirements of the ‘response arrangements’ are not amended into the Regulations, then the regulation could be amended to clarify that the response arrangements are described to the satisfaction of the Regulator. This would then provide further opportunity for the Regulator to elaborate on these requirements within guidance.

Option 8.11: Insert a new regulation to enable the Regulator to call a no-notice real-time spill response exercise requiring the operator to respond accordingly and deploy to a level directed by the Regulator and report back to the Regulator on completion.

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Option 8.12: For consistency, the term ‘remediate’ be used in reference to the response arrangements required by Sub-regulation 14(8AA) and the term be defined within the Regulations.


The proposed amendments to Sub-regulations 14(8) and 14(8AA) are intended to provide consistency in the content of OSCP for the offshore petroleum industry and elucidate the flexibility that is available to operators in the format of EP submissions and their associated OSCPs. The suggested inclusion of OSCP content requirements may result in a minor increase in effort during the development of OSCPs, however, would serve to instil public confidence in the industry’s capacity to respond to a spill event and the industry’s ability to integrate with the national response framework.

Transfer of responsibility for supervision of insurance and financial capacity from the Commonwealth Minister to NOPSEMA will place an additional requirement for the Regulator to ensure that insurance or other arrangements are appropriate to manage the potential costs associated with responding to an oil spill incident. Third party verification of insurance or financial capacity may assist in reducing this burden. Financial capacity of titleholders will be relevant only if they are will to have their financial arrangements scrutinised and reported on to a level that provides the Regulator with satisfaction that provisions are appropriate.

Amendment to wording of Sub-regulation 13(1), and Sub-regulation 13(2) if necessary, will provide clarity to these regulations but is not expected to result in any increased burden to industry, as these matters are generally addressed in submissions. In addition, all EP content requirements are proposed to be evaluated and amended if necessary to avoid doubt of their relevance to the risks of environmental incidents and associated response activities. Similarly, these amendments are intended to provide clarity but are not expected to result in a significant increase in effort in preparing an OSCP.

The change from ‘OSCP’ to ‘OPEP’ and the introduction of the term ‘remediate’ are not expected to have an impact on the industry but will serve to improve consistency with the terminology used by the OPRC and in the OPGGS Act.

The strengthening of testing requirements of Sub-regulation 14(8A), and amendment to Regulation 15 to require a report on testing, may increase the effort required by industry in testing of accepted response plans and a minor increase in the detail of compliance reports. However, this increased effort is considered necessary and appropriate to improve regulatory and public confidence in the capability of the industry to implement an OSCP in the manner described in an accepted submission.

Inclusion of matters relevant to the OSCP within the EP summary requirements of Sub-regulation 11(8) is intended to highlight the relevance and importance of oil spill preparedness and response matters to the publically release EP summary. This may involve a minor increase in industry effort in development of these summaries, but may serve to increase public confidence in response planning and improve transparency in potential spill impacts to stakeholders and in the consultation undertaken in preparation of the EP. This amendment will satisfy Recommendation 97 of the Montara CoI as accepted by Government.

The proposal to insert a new regulation to enable the Regulator to call a no-notice real-time spill response exercise has potential inconvenience to oil and gas operators. However, this will enable the Regulator to test the capability of an operator to respond in accordance with their accepted OSCP, especially in situations where the operator has not adequately demonstrated

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this capability through implementation and reporting against the testing requirements Sub-regulation 14(8A).

The occasional inconvenience to industry is considered necessary so as to provide the Regulator with confidence that an operator is capable of complying with the arrangements described in the OSCP, and to provide the public with confidence that the industry response capability is being independently tested by the Regulator. This inconvenience could be moderated through limitations on the Regulator as to the nature and extent of the exercises that may be initiated. A real-time exercise without notice will provide an alternative means for the Regulator to inspect compliance with the preparedness and response arrangements described within an accepted EP submission.

The impact of the inclusion of arrangements for operational and scientific monitoring on operators will be moderated by application of the nature and scale test, i.e. the level of scientific monitoring preparedness will be tailored to the specific oil spill risks and environmental sensitivities of a given activity.

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Chapter 11: Alignment of terminology


Alignment of the terminology between the OPGGS Act, its related legislation and the Regulations.


This chapter deals with alignment of terminology including clarification of key definitions within the Regulations.

Definition of the environment

The ‘environment’ is not defined in the OPPGS Act. Rather the definition of ‘environment’ is found in Sub-regulation 4(1) of the Regulations. The definition of ‘environment’ is drawn from the EPBC Act.

In the Regulations and the EPBC Act ‘environment’ means:

(a) ecosystems and their constituent parts, including people and communities; and

(b) natural and physical resources; and

(c) the qualities and characteristics of locations, places and areas; and

(d) the heritage value of places;

and includes:

(e) the social, economic and cultural features of the matters mentioned in paragraphs (a), (b), (c) and (d).

Definition of performance

The concept of performance is linked in Sub-regulation 4(1) of the Regulations to systems for managing environmental risk rather than the achievement of standards:

environmental performance means the performance of an operator in relation to the environmental performance objectives and standards mentioned in an environment plan accepted under these Regulations.

environmental performance objective means the goals of an operator that are mentioned in an environment plan accepted under these Regulations.

environmental performance standard means a statement of performance required of a system, an item of equipment, a person or a procedure, that is used as a basis for managing environmental risk, for the duration of the activity in accordance with the objectives of the regulations, as set out in an environment plan accepted under these Regulations.

Definition of a petroleum activity

There is no definition of a petroleum activity in the OPGGS Act. However, a definition is provided in the Regulations under Sub-regulation 4(1). The definition is described under two sub-clauses. If an activity meets the definition of any one sub-clause it is defined as a petroleum activity.

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(a)(i) any operations or works in an offshore area carried out under a petroleum instrument, other authority or consent under the Act or the regulations; and

Thus any operation that is authorised by an instrument, other authority or consent under the OPGGS Act is a petroleum activity. An instrument is any notice that is provided on a statutory basis. Most petroleum operations are authorised by an OPGGS Act petroleum title (see Table 11.1: Listed Petroleum Activities).

(a)(ii) any activity relating to petroleum exploration or development which may have an impact on the environment;

This sub-paragraph purports to capture any activities in some way related to exploration or development even if they are not instrument based, so long as they may have an impact on the environment. This may be a positive or negative impact on the environment and it cannot be said whether there is a minimum level of impact required to trigger this provision, therefore the scope of this requirement is broad and not easily defined.

Paragraph (b) of the definition provides a list of activities that are petroleum activities – reproduced in the left hand column of Table 11.1. The second column of this table indicates whether these activities may be instrument based or not.

Table 11.1: Listed Petroleum Activities

Listed activity type Type of authority (title) Conducted under a title, or not?

(i) seismic or other surveys; and

Petroleum Exploration Permit, Petroleum Retention Lease, Petroleum Production Licence, Petroleum Special Prospecting Authority, Petroleum Access Authority, Petroleum Scientific Investigation Consent

Not always8

(ii) drilling; and Petroleum Exploration Permit, Petroleum Retention Lease, Petroleum Production Licence

Yes

(iii) construction and installation of a facility; and

Petroleum Production Licence, Infrastructure Licence

Yes

(iv) operation of a facility; and


Yes

(v) significant modification of a facility; and


Yes

(vi) decommissioning, dismantling or removing afacility; and


Yes

(vii) construction and installation of a petroleum pipeline;

Pipeline Licence Yes

8 “Other surveys” under Paragraph (b)(i) are not always conducted under a title or authorised by a petroleum instrument. For example, petroleum pipeline surveys do not necessarily occur within a title area or may be partly in and partly outside the title area. There are also a wide variety of petroleum-related ‘shipping’ activities that the OPGGS Act does not regulate e.g. transport of petroleum by tanker, operation of a supply vessel or a MODU when it is under tow and not performing drilling operations.

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and

(viii) operation of a petroleum pipeline; and


(ix) significant modification of a petroleum pipeline; and


(x) decommissioning, dismantling or removing apetroleum pipeline; and


(xi) storage, processing or transport of petroleum.

Petroleum Production Licence, Infrastructure Licence, Pipeline Licence

Not necessarily9

Time limit for accepting or not accepting an EP

Regulation 10 lays out the time frame within which the Regulator must make a decision on an EP submission. It includes 3 possible decisions that the Regulator must

(a) accept the plan under Regulation 11; or

(b) refuse to accept the plan; or

(c) give notice to the operator stating that the Regulator is unable to make a decision about the plan within the period of 30 days and setting out a proposed timetable for consideration of the plan.

Acceptance of an environment plan

Sub-regulation 11(2) states that the Regulator must give an operator a reasonable opportunity to modify and resubmit an EP if the criteria of Sub-regulation 11(1) are not met. Issues with this are discussed below.

Issues

Definitions – clarity and consistency

The definition of ‘environment’ in the Regulations could be elevated to the OPGGS Act to improve clarity and consistency. This would also be consistent with the impending inclusion of ‘polluter pays’ provisions that will likely reference damage to the environment, NOPSEMA being charged with regulating environmental management in the OPGGS Act, and other environment related matters in the OPGGS Act including work practices and directions powers.

Cost recovery for non-title activities

While surveys not requiring a title may be “petroleum activities” under the Regulations, the Regulator is currently unable to recover assessment and compliance costs via the levy mechanism. A levy is imposed on submission of an EP if the activities to which the plan relates are authorised by one or more Commonwealth titles (see section 10F(1) of the Offshore 9 For example, a title is not required to operate the wide variety of petroleum-related activities that the Act does not regulate e.g. transport of petroleum by tanker, or operation of a supply vessel or a MODU when it is under tow and not performing drilling operations.

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Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 (the Regulatory Levies Act)).

Before cost-recovery issues become relevant, threshold policy decisions need to be made as to whether activities that do not require a title under the OPGGS Act and are nevertheless required by the Regulations to be covered by an EP should be removed from this requirement. If it is considered that some non-title activities are to require an EP, these activities (if feasible) should be expressly listed in the definition of ‘petroleum activity’ so that there is clarity for the industry and regulators.

Policy decisions about the appropriate regulatory mechanisms for particular activities should not be skewed by cost-recovery considerations. Nor should the EP levy arrangements in the Regulatory Levies Act which are title-based for reasons of simplicity and appropriate allocation of responsibility for payment, be dismantled and rendered unmanageable in order to accommodate a small number of activities with a potentially low environmental impact, which produce data inputs essential to acceptance of later title-based activities where any costs may be recovered.

Imposing a regulatory burden on activities with environmental impacts that do not exceed those of general maritime and aviation activities could be perceived to be discriminatory. On this basis of non-discrimination, some categories of other surveys could arguably be excluded from the need for an accepted EP.

Examining the surveys associated with petroleum exploration and development listed above (Table 11.2: Surveys), seismic surveys have well established environmental impacts to be managed, some other surveys involve the use of an energy source (categorised as non-passive other surveys) have potential impacts depending on the environment in which the activity occurs, but passive surveys (a receiver but no energy source) have little scope for significant environmental impact. Consequently, in accordance with Sub-paragraph 4(1)(a)(ii) there may be no requirement to submit an EP for a passive survey if an operator considers that no environmental impact will result from the activity. Other non-passive surveys may have environmental impacts to be managed in more sensitive habitats, but if conducted in deep ocean waters the impacts on the environment may be negligible.

Having a petroleum activity assessed and accepted by the Regulator provides some level of certainty to petroleum operators and the public that activities are acceptable. Consultation with industry on the proposal to remove some activities from the regime is required to ensure that operators are comfortable with activities falling outside the regulatory regime.

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Table 11.2: Surveys

Activity Activity descriptionA. Seismic surveys2D and 3D Marine Seismic Surveys.Used to analyse geology under sea bed.

Source and receiver towed through water column. Generates sound waves using pulses of compressed air.

B. Non-passive surveys (source and receiver)Controlled Source Electromagnetic Survey (CSEM)Used to evaluate high grade prospects, leads or reservoir resistivity for targets as deep as several thousand meters where 2D or 3D seismic data already acquired.

Vessel emits electro-magnetic waves from vessel with sensor array on seabed attached to concrete blocks that later release the sensors.

Airborne Laser Fluorescence (ALF) surveyUsed to detect hydrocarbon seepage to sea surface.

Airborne laser beam is reflected off sea surface.

Core or dredge sampling (when conducted as part of a petroleum pipeline surveys and surveys for a facility prior to grant of an infrastructure licence).Used for physical examination of sea bed material

Samples taken from sea bed.

Side scan sensor survey (when conducted with seismic surveys)Used to map sea bottom topography

Vessel based sound wave source and sensor.

Bathymetry survey (when conducted with seismic surveys)Used to map sea bottom depth.

Vessel based sound wave source and sensor.

C. Passive surveys (receiver only)Magnetic Impulse (MI) surveyUsed to high grade existing prospects or leads.

Airborne or vessel based sensor is towed to pick up fluctuations in the earth’s magnetic field.

Aeromagnetic surveys.Used for mapping sedimentary layers and their structure. Used in early stage exploration (frontier basins) to map basement volcanics.

Airborne sensor picks up earth’s magnetic field in a particular area.

Oil Seep Sampling SurveyUsed to detect oil in sea.

Sensor is towed at depth to pick up hydrocarbon traces.

Gravity surveyUsed to assess the basement structure.

Sensor towed by vessel at depth.

Magnetic surveyUsed to assess the basement structure.

Sensor towed by vessel at depth.

Time limit for accepting or not accepting an EP

The provisions of Regulation 10 detail the decisions that the Regulator must make within a 30 day timeframe. Separately, Sub-regulation 11(2) requires the Regulator to provide a reasonable opportunity for the operator to modify and resubmit an EP before a decision to refuse to accept the plan can be made:

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If the Regulator is not reasonably satisfied that the environment plan when first submitted meets the criteria … the Regulator must give the operator a reasonable opportunity to modify and resubmit the plan.

Regulation 10(c) refers to this sub-regulation, stating:

This regulation applies to an environment plan resubmitted under subregulation 11(2) in the same way it applies to the plan when first submitted.

This could imply that the 30 day timeframe must account for the Regulator’s assessment of an EP, the modification and resubmission of a plan if it does not meet the criteria, and the Regulator’s assessment of a modified plan. If this is the case, the 30 day limit under Regulation 10 may not provide adequate time for this process, and the Regulator may be forced to use Paragraph 10(1)(c) to inform the operator that they are unable to make a decision within 30 days, which also requires the Regulator to set-out a proposed timetable.

It is likely that Paragraph 10(1)(c) is intended to be used where the Regulator is unable to make a decision and requires more time to assess a submission, and is not intended to also encompass measures for the provision of additional information or amendment to the EP by the proponent. A separate mechanism may be required allowing the Regulator to advise that it is not reasonably satisfied that an EP submission complies with the Regulations, providing the operator an opportunity to modify and resubmit the EP in accordance with the requirements of Sub-regulation 11(2). Having a separate mechanism would improve transparency of the process, in particular regarding timeframes and decision-points.

Acceptance of an EP

Sub-regulation 11(2) states that if the Regulator is not reasonably satisfied that the EP when first submitted meets the criteria set out in sub-regulation 11(1), the Regulator must give the operator a reasonable opportunity to modify and resubmit the plan. This may be interpreted to mean that an operator should only be allowed one opportunity to modify and resubmit an EP, or that the Regulator must make the determination upon submission. In circumstances where a resubmitted EP may require only minor additional information or clarifications it is not reasonable to provide only one opportunity to an operator to modify and resubmit an EP. The safety case regime administered by NOPSEMA provides for two opportunities to modify and resubmit and as such the Regulator has adopted this as a reasonable policy position for environment plans. The sub-regulation could be clarified to ensure the Regulator has clear discretion to determine what is reasonable based upon the circumstances of the particular case.

Request for further written information

Complementary to the above, the Regulations do not specifically provide for the Regulator to request more written information when considering the acceptance of an EP. The mechanism is important in providing opportunities for interaction between the Regulator and the operator regarding minor administrative or clerical issues that will improve the EP and ensure it achieves the best environmental outcome for that specific circumstance.

The current Regulations are appropriate for allowing this avenue of communication with the operator without constituting a formal modification and resubmission under Sub-regulation 11(2).

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Carried out in accordance with an EP

Sub-regulation 3(b) states that activities must be carried out in accordance with an “environmental plan”, the only reference to an “environmental plan” in the Regulations. This should be consistent with all other sections which refer to an “environment plan”.

Options

Option 9.1: The definition of ‘environment’ in the Environment Regulations is elevated to the OPPGS Act.

Option 9.2: The Regulations include a provision to allow the Regulator to request further written information when considering the acceptance of an EP.

Option 9.3: Clarify what constitutes a petroleum activity in order to clearly define which activities require submission of an EP, particularly:

assess other surveys in Table 11.1: Listed Petroleum Activities, activity type (i) seismic and other surveys; and

to avoid confusion, delete or amend activity type (xi) storage, processing or transport of petroleum.

The latter may require revision and expansion of the definition of a facility in the Regulations to ensure that Floating Storage and Off-take (FSOs) vessels and any other facility types currently captured are included.

If feasible, a clear definition of what does and does not require an EP under law is the first best option. A second best option could be to leave the requirement for an EP to interpretation by the Regulator or self-assessment by the operator. The Regulator or operator would apply criteria around significance of potential environmental impacts to guide them in making this determination. Such judgements may shift over time as new technologies or knowledge come to hand, and this scope for inconsistency may be criticised as introducing uncertainty, however, the scope to adjust assessments to reflect new circumstances has the advantage of flexibility bounded by stable criteria.

With this in mind, views are sought on the necessity to classify as a petroleum activity requiring an EP, other surveys including surface core sampling or dredge sampling conducted as part of a petroleum pipeline survey and surveys for a proposed infrastructure facility prior to the grant of an infrastructure licence.

Some options for comment are detailed below, but there may be other worthy options:

Sub-option 1: Amend Regulation 4 Petroleum Activity: delete Subparagraph (a)(ii) from the definition of petroleum activity in Regulation 4 so that the OPGGS Act regime does not require submission and acceptance of an EP for an activity for which a title is not required.

No EP may be required for (e.g.) a petroleum pipeline survey or a survey for a proposed infrastructure facility conducted before a pipeline licence or an infrastructure licence was in place.

This option has the merit of simplicity and avoids the risks inherent in partially regulating an activity that is otherwise outside the scope of the OPGGS Act. For example, there are no applicable work practices requirements in the Act.

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On the other hand, some of these activities may be large scale with potentially significant environmental impacts. This could include activities such as drilling to obtain geotechnical information necessary for placement of a major production facility. Consideration needs to be given to whether it is appropriate for these activities undertaken by or for petroleum companies to be unregulated by the regime.

It may also be an option to amend the requirements of Subparagraph (a)(ii) to align with the wording of Section 98(1)(c) of the OPGGS Act i.e. a petroleum activity includes such operations and works as are necessary for the purposes of petroleum exploration or development. This may capture surveys for infrastructure placement but exclude surveys that are being conducted solely for the purposes of obtaining an approval to operate.

Sub-option 2: As with option 1, but bring non-passive surveys not conducted within a title within the OPGGS Act regime by creating a new title type (say a “Special Survey Authority”) based on a simplified Petroleum Special Prospecting Authority model.

Consideration will need to be given to whether requiring titles to be issued and administered by NOPTA is an efficient use of regulatory resources to achieve the desired outcome of requiring that an EP be in place for those surveys.

Sub-option 3: Give the Regulator the authority to determine that certain surveys do not require submission and acceptance of an EP, or that in specified circumstances they do not require submission and acceptance of an EP.

Any option adopted here must be considered in conjunction with Chapter 8: Duties & responsibilities of parties.

It may be necessary to amend the option in Chapter 8 such that an EP must be submitted by the titleholder for any activity authorised under a title. For any petroleum activity not authorised under title the person undertaking the activity is responsible for submission of an EP and compliance with the Regulations.

Option 9.4: Amend Regulation 10 to provide an additional mechanism, in relation to an EP that does not meet certain criteria in Subregulation 11(1), for the re-submission of an EP and clear requirements and timeframes for that resubmission of an EP.

Option 9.5: Clarify Sub-regulation 11(2) to ensure appropriate measures are in place to provide a proponent with reasonable opportunity to modify a submitted environment plan.

Option 9.6: Remove the reference in the object of the Regulations under Sub-regulation 3(b) to “an environmental plan” and replace with “an environment plan”.


The objective of these amendments is to only remove approvals for activities which present low (negligible) environmental impact and risk and where enforcement is problematic. This can remove unnecessary regulation, clarify the situations in which an approved EP is required, and remove current uncertainty about whether some activities are petroleum activities or not. As such, there is no significant impact on the environment or the community.

The proposal will reduce regulation for ‘other surveys’ (non-seismic surveys), which generally present low environmental impact and risk and where enforcement is problematic, and make it clearer that activities that occur outside of the OPGGS Act regime, such as associated petroleum activities that occur onshore or involve a vessel operating as a ship, are not regulated by the

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OPGGS Act regime. The extent to which these activities are excluded and the manner in which this is implemented is open for discussion, but as a starting point passive surveys seem to have no logical reason to be included.

Removal of all other surveys from the regime will leave some activities which present low (negligible) environmental impact and risk no longer regulated under the regime. Comments are invited on whether this presents any unacceptable risks to the environment or to operators which could justify a requirement to obtain an approved EP.

Other options in this chapter provide clarity and transparency to assessment and decision making processes which should also improve efficiency. These are not likely to have a significant impact on those submitting EPs.

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Chapter 12: Monitoring


The effectiveness and completeness of monitoring provisions to detect impacts of petroleum activities (in normal operations).


For the purpose of the discussion below, the term ‘environmental monitoring’ is used to describe monitoring activities that focus on measuring indicators of environmental condition in the receiving environment.

The Regulations currently require operators to describe the environment (Sub-regulation 13(2)), detail and evaluate impacts and risks (Sub-regulation 13(3)) and set appropriate performance objectives, standards and measurement criteria to measure performance in protecting the environment (Sub-regulation 13(4)). These steps in the environmental assessment process typically require some level of environmental monitoring, with baseline monitoring/surveys important in describing the environment (and future detection of impacts from activities) and environmental monitoring of routine operations important to measure performance in protecting the environment. However, environmental monitoring is not a specific requirement of the Regulations.

With respect to environmental performance objectives and standards, the EP must include arrangements for recording, monitoring and reporting information about the activity to enable the Regulator to determine whether the environmental performance objectives and standards (identified in the approved EP) are being met (Sub-regulation 15(1)(a)). However, environmental monitoring is only necessary to measure performance in meeting the environmental performance objectives and standards if these objectives and standards are related to the receiving environment.

The Regulations require operators to store and maintain particular documentation, including written reports about environmental performance or about the implementation strategy under the EP (Sub-regulation 27(2)).

Operators must also make records available to certain people with regulatory responsibilities (Sub-regulation 28(2)). The Regulations do not require operators to provide for the discovery of, and/or access to, environmental monitoring information/empirical data by the public.

Issues

The level of environmental monitoring, if any, implemented by operators to meet the requirements of the Regulations should be dependent on factors including the:

nature and scale of activities;

environmental setting of those activities;

degree of confidence that can be placed in predictions of impact;

likely effectiveness of proposed management measures for ensuring objectives are achieved; and

extent of relevant existing data/supporting studies.

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The Montara CoI indicated that the requirements for all types of monitoring (baseline, environmental monitoring of routine operations, and operational and scientific monitoring of oil spills) would be clarified through this review of the Regulations.

Monitoring of offshore petroleum activities is important in order to assess the effects of those activities on the environment and, in the event of a hydrocarbon spill, to assess the effects of the spill as well as any remediation/response measures on the environment. However, the Regulations are not explicit about requirements for environmental monitoring.

Operators may define performance objectives and standards that relate to performance of a management measure or control that is put in place to afford protection to the environment. As such objectives and standards are not always directly related to performance in protecting the receiving environment and environmental monitoring may not be proposed in order to verify that controls are effective in affording the anticipated level of environmental protection.

Chapter 4 discusses issues around enhancing clarity and improving the link between performance standards and controls. Chapter 4 also discusses that performance objectives should capture the notion of acceptable levels of impact and risk as defined by the operator in the context of the activity and the receiving environment. Operators will also monitor their overall compliance with their plan. Provided that the options in Chapter 4 to clarify the intended meanings of performance objectives and standards are adopted, this may point to three general types of monitoring:

1. Monitoring to evaluate performance of control measures as reflected in performance standards;

2. Environmental monitoring to evaluate performance in protecting the receiving environment to the degree reflected in the relevant performance objectives and/or to address predictive uncertainty associated with the effectiveness of a mechanical control; and

3. Monitoring of compliance against the plan.

As discussed in Chapter 10, adequate baseline environmental data is also a critical factor for success of environmental monitoring to evaluate the performance of routine operations.

The option in Chapter 4 to remove Regulations 29 and 29A serves as an example to highlight the importance of adequately and clearly reflecting different types of monitoring within the Regulations.

Limited publicly available environmental data is generally considered a key impediment to streamlining approvals and stifles the ability to learn from past experience. The Productivity Commission’s 2009 Research Report, Review of Regulatory Burden on Upstream Petroleum, highlighted concerns about impediments to approvals due to the limited public availability of environmental data obtained either in previous assessments, or as a condition of previous approvals. It made a recommendation that environmental data should be handled in a similar fashion to the current system for release of geophysical data and the data should be publically accessible after an appropriate fixed period. The Government response was to support this recommendation in principle, with consideration to be given to data storage, management and associated funding and procedures for release of data. This issue is discussed further in Chapter 9: Transparency.

For example, disclosure of chemicals utilised for supporting petroleum operations has been a topic of recent public concern, particularly with reference to chemicals used for hydraulic fracturing activities in onshore petroleum developments. The Western Australian Government has recently implemented a policy for full public disclosure of these chemicals so that issues

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surrounding potential contamination of drinking water, soil and sub-surface aquifers can be appropriately addressed.

These issues are not particularly relevant to the offshore petroleum regime where petroleum bearing formations are generally at great depth and the potential for aquifer contamination is non-existent. However, chemicals are essential for offshore petroleum activities and the potential risks of these to the marine environment are well characterised, understood and appropriately managed. This has particular relevance in the context of the proposal to remove the prescriptive requirements for PFW monitoring.

Adequate characterisation of materials to be emitted or discharged to the environment and an evaluation of their toxicity and potential impact is an essential component of an EP submission to ensure that issues surrounding chemical contamination are appropriately addressed. Subsequent monitoring of these emissions and discharges is required to ensure that they remain within acceptable and ALARP limits.

Options

Option 10.1: The requirements of the Regulations be reviewed to ensure that they capture monitoring activities to be undertaken. This may be achieved by ensuring that the EP:

adequately relates the stated performance objectives, standards and measurement criteria to the impacts and risks in the receiving environment identified in the EP;

includes appropriate arrangements for monitoring performance of control measures and the receiving environment if a degree of uncertainty associated with an impact or risk exists; and

includes an appropriate implementation strategy for the activities described within the plan and measures for monitoring, recording and reporting performance against the plan.

Option 10.2: Regulation 13 be amended to ensure that monitoring of environmental performance is adequately captured and to strengthen obligations to demonstrate information. Items to be considered include:

a requirement for operators to define the acceptable level of impacts and risks and to include a discussion on whether the environmental impacts and risks for the activity are of an acceptable level;

ensuring that performance objectives are set in accordance with the defined acceptable levels for impacts and risks to the environment and that achievement of performance objectives will allow an operator’s performance to meet or better the defined acceptable level.

Option 10.3: Regulation 14 be amended to achieve the following:

ensure that a characterisation of emissions and discharges is required under the Regulations, at intervals appropriate to the nature and scale of the activity. This should include PFW and other emissions and discharges relevant to the activity that create an environmental impact or risk (e.g what are the components and relative levels of toxicity of emissions and discharges as well as recording requirements (this would include PFW and other emissions and discharges relevant to the activity that create an environmental impact or risk); and

ensure that accepted tests of emissions and discharges are conducted at regular intervals, and the results of these tests are recorded and assessed to (a) assess the

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performance of monitoring equipment, and (b) monitor emissions and discharges and their effects on the receiving environment.

Inclusion of the above will ensure that requirements formerly only applied to discharges of PFW are applied to all emissions and discharges to the environment with equivalent rigour. This will ensure that deletion of regulations 29 and 29A as proposed earlier in this paper does not result in a reduction in environmental outcomes.

Option 10.4: Include a requirement that the implementation strategy provide for the discovery of, and access to, environmental monitoring data/information by the public, possibly after an appropriate fixed period of time.


Options put forward to increase the level of environmental monitoring undertaken by operators will impose a minor additional burden on the industry to ensure that adequate environmental information is available to assess the impacts of an activity on the receiving environment.

The implementation of a requirement for environmental monitoring of routine operations will initially require some additional planning and effort for industry, but the longer term benefit of greater certainty of petroleum activity impacts on the receiving environment should reduce the burden on operators (data will be available to demonstrate that impacts are acceptable and ALARP) and regulators (more rigour will be evident in the impact assessment process).

Facilitating the discovery of, and access to, environmental data by the public (including other operators) has the potential to benefit operators throughout the industry by reducing duplication of effort and associated delays in operators gaining future environmental approvals and reducing risks and uncertainties.

However, ownership of this data could be regarded by some companies as part of their competitive advantage, and they may not regard access to the data produced by others as sufficient recompense for the loss of this advantage. As data sets may not be easily comparable a standardised approach to data collection and storage may need to be considered. There will be an increased burden for any agency made responsible for collecting and holding this data and making it available to interested parties.

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Chapter 13: Life cycle


The appropriateness of the Environment Regulations for the regulator to make decisions across the offshore petroleum development life.


Regulation 9 requires submission of an EP to the Regulator before commencement of an activity.

Section 572 of the OPGGS Act requires removal from the title area all structures, subject to any other provision of the OPGGS Act, the regulations, a direction and any other law. The Regulations provide for an EP to be submitted for all petroleum activities, including decommissioning of facilities and pipelines.

Sub-paragraph 270(3)(c)(ii) of the OPGGS Act also provides a similar vehicle with regard to the final surrender of the title. For the surrender of a title, the titleholder/operator is required to demonstrate that the environmental risks are ALARP and acceptable.

Issues

Early engagement in design of new projects and technology

Early engagement between the project developer and the Regulator on design concepts at an early point in design, particularly when introducing new technology, can allow exchange of guidance on handling risks to the environment early in the lifecycle of a facility and before the submission of the EP. For instance, the first introduction of Floating Liquefied Natural Gas (FLNG) or Gas To Liquids (GTL) may be facilitated by achieving some common understanding of what standards are expected and therefore equipment installed. With mature technologies there is already experience of what is best practice.

Without early engagement there is a greater level of uncertainty about what may be acceptable on matters such as alternative site or route selections and the Regulator will ultimately be asked to accept or refuse to accept an EP based upon a design that is already finalised. Opportunity for the operator to engage with the Regulator early in the planning phase for an activity may assist in development of an acceptable EP for any particular activity.

The Regulations could be amended to allow an operator to include an account of the design notification in the EP would facilitate this early engagement. This obligation would ideally work as a backward obligation, with the operator required to include in the EP information on the comments received from the Regulator and how the operator has responded to these comments. This will establish an expectation that the operator will have taken into account and acted accordingly on comments from the Regulator or risk the EP being refused acceptance.

Consideration should be given to the work load aspects of these notifications to ensure that any regulatory effort on the part of the Regulator is appropriately levied and recovered.

Decommissioning – planning for end-of-life

Decommissioning is a petroleum activity alongside all other activities regulated by the OPGGS Act and regulations. A petroleum activity includes decommissioning and dismantling or removing a facility or pipeline. Decommissioning involves a range of issues including the

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environment, safety, and resource management and consequently requires the resolution of a number of other issues dealt with under the OPGGS Act regime and other Commonwealth legislation in a consistent manner with the framework for management of environmental impacts.

Section 572 of the OPGGS Act requires removal from the title area of all structures, equipment and property which is not being used nor will be used in operations, subject to other regulatory and legislative provisions which may provide exceptions.

The regulations provide for an EP to be submitted for the conduct of all petroleum activities, including decommissioning. This means that some structures may be left in situ as long as there is an accepted EP.

Therefore, the environmental regulation of a decommissioning activity is no different to any other petroleum activity in that an acceptable EP (which demonstrates risks are ALARP and acceptable) is required to be in place before the activity can occur. Decisions on what is ALARP and acceptable are made on a case-by-case basis. Guidance promulgated by the Regulator could in future outline what is considered ALARP and acceptable.

The end-point for the activity needs to be addressed by the operator when thinking about the scope of the EP e.g. a drilling campaign is not complete when the rig leaves if wellheads are still on the seabed, and the operations phase does not finish when oil production has stopped if decommissioning activities have not yet begun.

The current provisions are assessed as adequate to meet this requirement.

Options

Option 11.1: Create a design notification obligation for activities likely to have long term and or significant environmental impacts, aimed at promoting engagement between operators and the Regulator at the design phase of proposed facilities, particularly for site or route selection and adoption of innovative new technology, at a stage where guidance on the management of environmental impacts can be incorporated through early facility design planning.


The design notification option should be welcomed by both the industry and the regulator as it formalises an approach that has been requested by the industry, while dealing with the legal and practical impediments to the regulator responding to these requests. This proposal should result in improved environmental outcomes through a capacity for the Regulator to provide timely advice to industry.

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Chapter 14: Compliance, enforcement & penalties


The effectiveness of the compliance and enforcement framework, including penalties.


The OPGGS Act and regulations currently contain only criminal offences, and no civil penalties are applied.

Regulation 6 and Regulation 7 are strict liability offences, with penalties up to 80 penalty units for an individual. A penalty for a body corporate is ordinarily the penalty for the individual multiplied by 5: Crimes Act 1914, Section 4B.

Issues

Review of compliance & enforcement measures

It is important that compliance and enforcement measures are adequate and effective to prevent or deter parties from breaching their legislative obligations, potentially resulting in the occurrence of incidents with substantial and widespread implications for the receiving environment. It is also important that the Regulator has appropriate powers to enable them to adequately fulfil their compliance, monitoring and enforcement functions under the offshore petroleum legislative regime.

The Government Review of Compliance and Enforcement Measures that apply in the existing offshore petroleum legislative regime, including regulations, considered whether these measures are adequate and effective enough to prevent or deter parties from breaching their legislative obligations, potentially resulting in the occurrence of incidents with substantial and widespread implications for health, safety and the environment.

The Review commenced with the release of the Offshore Petroleum and Marine Environment Legislative Review Issues Paper: A rigorous compliance and enforcement regime for offshore petroleum activities in Australia for comment in October 2011 (submissions closed on 16 December 2011). The Issues Paper identified and proposed matters for consideration which may assist in the development of a more appropriate and effective civil penalties regime for the OPGGS Act.

The compliance and enforcement review was completed in mid-2012, with the Australian Government agreeing in June 2012 to improve compliance and enforcement in offshore petroleum regulation by providing a broader range of compliance and enforcement tools for the Regulator, by:

i. increasing the current criminal penalty levels under the OPGGS Act and associated regulations, consistent with major hazard industry legislation;

ii. introducing to the OPGGS Act a range of alternative enforcement mechanisms, such as infringement notices, enforceable undertakings, civil penalties, adverse publicity orders, injunctions, and orders for restoration, broadly consistent with those provided for in like legislative regimes, as a supplement to existing criminal penalties;

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iii. amending the penalties, including custodial penalties, for OHS offences under the OPGGS Act to be consistent with the Work Health and Safety Act 2011 (Cth) or greater, as appropriate, consistent with a major hazard industry;

iv. amending the OPGGS Act to allow for continuing penalties, for appropriate strict liability offences; and

v. redrafting NOPSEMA’s inspectorate powers to provide greater clarity and consistency between the inspectorial powers and roles and removing unnecessary procedural requirements that are likely to impede NOPSEMA’s ability to effectively perform its enforcement functions.

The issue of ensuring adequate compliance via graduated measures has been canvassed in a number of reports and inquiries, including the 2008 and 2011 NOPSA Operational Reviews and the Montara CoI. Graduated compliance was also discussed at the International Offshore Petroleum Regulators and Operators Summit in August 2011.

Options

As discussed in Chapter 8: Duties and responsibilities of parties, current penalties applicable under the Regulations are relatively low. The Australian Government has agreed to update the compliance tools available under the OPGGS Act. The Review of Compliance and Enforcement Measures has been completed and changes, accepted by the Government, are to be implemented in accordance with the Government’s legislative process. Changes will be consistent with the national Work Health and Safety Act 2011 (Cth).

Option 12.1: Adjust the level of penalties applying to Regulations 6 and 7 to ensure they reflect community standards and are appropriate to the nature of the offences with which they are associated.

Option 12.2: Where appropriate, additional offence and penalty provisions be included e.g. failure to comply with regulation 11(7).


Options and their impacts will be addressed as part of the process of implementing Government decisions on the Review of Compliance and Enforcement Measures under the OPGGS Act. The options to review the level of penalties applicable under the Regulations and to establish penalties for non-compliance in some new areas is a necessary step to ensure that penalties provide adequate incentive for the compliance with the Regulations. Operators who act in compliance with the requirements of the law will not be impacted by potential increases in applicable penalties.

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Chapter 15: Government policy & guidance


Other changes to align the Regulations with Australian Government policy and guidance on regulation.

Australian Government regulatory priorities

Best practice regulation is recognised as key to achieving the Australian Government’s objectives of improved productivity, increased competitiveness, economic growth and equity. It promotes safer workplaces, good public health, community welfare and environmental outcomes and ensures Australians benefit from the opportunities in our dynamic economy. Regulation that is poorly designed can impact negatively on productivity, growth and competitiveness by diverting resources away from more productive uses, raising barriers to entry and by producing disincentives to innovation and investment. An effective regulatory management system promotes confidence that regulation is necessary, fit for purpose and delivering a net community benefit.10

On 12 April 2012, the Business Advisory Forum with First Ministers and Australian business leaders discussed how to reduce red tape and reduce the impost of regulation on business. Council of Australian Governments (COAG) agreed to a series of new major regulatory and competition reform priorities, which include:

addressing duplicative and cumbersome environment regulation;

streamlining the process for approvals of major projects;

rationalising carbon reduction and energy efficiency schemes;

delivering energy market reforms to reduce costs;

improving assessment processes for low risk, low impact developments; and

lifting regulatory performance; and measures to reduce red tape and business compliance costs.

Particularly relevant to this review is the ambition for streamlined regulation that delivers strong environmental outcomes and better conditions for business. Consistent with the commitment to strong environmental outcomes, the Government is working on reforms to examine all Commonwealth legislation applicable to the offshore petroleum industry with the aim of reducing gaps and overlaps. This is part of the Australian Government’s response to the Report of the Montara CoI, which was established in response to the 21 August 2009 uncontrolled oil and gas release at the Montara oil field located in the Timor Sea.

A National Productivity Compact: Regulatory and Competition Reform for a more Competitive Australia has been agreed to between the Commonwealth and states and territories and business. The new national productivity-enhancing regulatory and competition reform agenda supported by the National Compact is to include commitments to:11

continued consultation with business as part of development of the new agenda;

include in the new agenda measures to ensure the hard won benefits of new national frameworks are sustained over time;

10 Commonwealth of Australia, Streamlined, effective, productive: an annual update on the Australian Government deregulation agenda, June 2012, p1.11 Prime Minister, Council of Australian Governments Business Advisory Forum Communiqué, 12 April 2012.

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the regulatory disciplines that business strongly supports, including cost-benefit analysis, to ensure high-value reforms are identified and greater attention is given to reform implementation and enforcement;

improved governance arrangements to ensure future competition and regulatory reform focus on the delivery of outcomes; and

improved regulatory processes at all levels of government to stem the emergence of new inter-jurisdictional regulatory burdens.

Issues

Changes in the Regulations will need to be assessed against general principles of good regulatory practice and broad elements of good regulatory design. Any changes will also need to be consistent with other relevant Australian Government regulatory policies.

Principles of good regulatory practice

In its 2006 report Rethinking Regulation12, the Regulation Taskforce enunciated six principles of good regulatory practice:

Governments should not act to address ‘problems’ through regulation unless a case for action has been clearly established. This should include evaluating and explaining why existing measures are not sufficient to deal with an issue.

A range of feasible options – including self-regulatory and co-regulatory approaches – needs to be assessed within a cost-benefit framework, including analysis of compliance costs and, where relevant, risk.

Only the option that generates the greatest net benefit for the community, taking into account all the effects, should be adopted.

Effective guidance should be provided to regulators and regulated parties to ensure that the policy intent of the regulation is clear, as well as what is needed to be compliant.

Mechanisms such as sunset clauses or periodic reviews need to be built into legislation to ensure that regulation remains relevant and effective over time.

There needs to be effective consultation with regulated parties at the key stages of regulation-making and administration.

Elements of good regulatory design

The Productivity Commission identified eight elements of good regulatory design in its 2007 report Performance Benchmarking of Australian Business Regulation13:

Clarifying objectives

Simplifying regulation

Reducing levels of prescription (unless this is necessary to clarify requirements or provide certainty about compliance, thereby potentially reducing unnecessary burdens)

Minimising reference to subordinate legislation

Minimising unnecessary inconsistencies between jurisdictions12 Regulation Taskforce 2006, Rethinking Regulation: Report of the Taskforce on Reducing Regulatory Burdens on Business, Report to the Prime Minister and the Treasurer, Canberra13 Productivity Commission 2007, Performance Benchmarking of Australian Business Regulation, Research Report Melbourne

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Including review mechanisms

Completing regulatory impact statements

Including sunset clauses – a sunset clause is likely to trigger a review or termination of a regulation, which may reduce unnecessary burdens.

Reform of the EPBC Act and other relevant regulatory reforms

On 24 August 2011 the Environment Minister released the Government response to the independent review of the EPBC Act as part of a broad package of reforms for Australia’s national environment law. Announcing the reform package the Minister said that these reforms would:

deliver better environmental protection focusing on whole regions and ecosystems and faster environmental assessments,

provide a consistent national approach to environmental impact assessments that removes duplication, cuts red tape, and

provide better upfront guidance on legislation requirements, with more long-term certainty and transparency.

As part of its work in implementing these reforms, the Australian Government is leading a national reform process through COAG. Most recently, on 7 December 2012 COAG reaffirmed its commitment to work to streamline environmental regulation that delivers strong environmental outcomes and better conditions for business, with a report on the outcomes of their further work to be considered at the next COAG meeting.

The Australian Government has also undertaken to consider opportunities for increasing regulatory efficiency in the interaction of the EPBC Act and the offshore petroleum legislation while retaining strong environmental outcomes by streamlining the legislative arrangements that relate to offshore petroleum activities.

The Australian Government noted that this reform is consistent with the findings of both the 2009 Productivity Commission Review of Regulatory Burden on the Upstream Petroleum (Oil and Gas) Sector14 and the 2010 Report of the Montara Commission of Inquiry15.

The Australian Government also noted there will be options under the amended EPBC Act to accredit the approval systems and processes administered by NOPSEMA. Accreditation would be subject to these systems and processes meeting a statutory test based on the concept of providing equivalent environmental protection outcomes to that of the amended EPBC Act.

EPBC Act policy statements

EPBC Act policy statements are SEWPaC public policy documents which provide guidance on the practical application of EPBC Act. The significant impact guidelines provide overarching guidance on determining whether an action is likely to have a significant impact on a matter of NES protected by the EPBC Act. Industry guidelines which provide specific guidance for industry sectors include the publication in May 2007 of the EPBC Act Policy Statement 2.1 – Interaction between offshore seismic exploration and whales. Guidelines on nationally threatened species and ecological communities provide guidance on specific threatened species and ecological communities.

14 Productivity Commission 2009, Review of Regulatory Burden on the Upstream Petroleum (Oil & Gas) Sector, Research Report Melbourne.15 Montara Commission of Inquiry 2010, Report of the Montara Commission of Inquiry, Canberra.

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Approved marine bioregional plans

The Australian Government is committed to improving protection of our marine environment, while also supporting the sustainable use of marine resources. The networks of new Commonwealth Marine Reserves have been proclaimed after a public consultation period. The marine reserves allocate ocean resources through identification of a representative system to be conserved through a range of zonings ranging from exclusion of industries to multiple-use. Marine bioregional plans are being developed for each of the regions with interim plans currently in effect.

Marine bioregional plans will help improve the way decisions are made under the EPBC Act, particularly in relation to the protection of marine biodiversity and the sustainable use of our oceans and their resources by marine-based industries. The Commonwealth marine reserves networks and marine bioregional plans provide a framework that provides increased certainty and long-term resource security for marine-based industries.

Interaction with other regulations under the OPGGS Act

Since 1 January 2012 NOPSEMA has become a single national regulator for safety, well integrity and environment in the Commonwealth marine area. This change may have created a situation in which overlapping provisions of regulations made under the OPGGS Act are being assessed by different divisions within the Regulator.

Consideration should be given to including a caveat in the Regulations that if information relevant to a particular aspect has been provided to the Regulator, assessed and accepted, then there is no requirement for a proponent to provide this information again. This may lead to proponents being able to reference other accepted documents within a submission and reduce duplication of effort on the part of proponents and the Regulator.

Options

Any amendments to the Regulations are to be consistent with the principles of good regulatory practice and the elements of good regulatory design including:

clearly identifying any issue needing to be addressed by amended regulation;

seeking consistency with legislation applying in state/NT jurisdictions and with applicable international environmental objectives;

conducting cost-benefit analysis of feasible options including assessing the impacts on the environment, community and industry;

liaising with the Office of Best Practice Regulation on any need for Regulatory Impact Statements;

consulting with industry, the community and other relevant stakeholders prior to implementation of amendments;

providing effective guidance to industry (e.g. such as preparation of suitable guidance notes on the NOPSEMA website); and

reviewing legislation and regulatory performance on a regular basis.

Amendments to the Regulations will also aim to be consistent with the accreditation of the Regulations and NOPSEMA assessment and approval processes under the EPBC Act.

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Consistent with COAG’s deadlines for implementation of key EPBC Act reforms, it is proposed that amendments of the Regulations be in place by July 2013 as a basis for finalising an agreement with the Environment Minister for accreditation under the EPBC Act of assessment and acceptance by NOPSEMA of the EPs (including all management plans, cetacean interaction procedures, OSCPs, operational and scientific monitoring programs, and decommissioning plans) for petroleum activities.

Option 13.1: Include a caveat in the Regulations that if information relevant to a particular aspect has been provided to the Regulator, assessed and accepted under other OPGGS Act regulations, the operator need only reference that other accepted document rather than duplicate this information.


Inclusion of a regulation stating that information provided to the Regulator need not be provided in multiple submissions across different divisions of responsibility may reduce the level of effort required by proponents in the preparation of submissions. The benefits of this approach would be maximised by adding such a concession in all OPGGS Act regulations.

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Chapter 16: Other relevant matters


Any other matter raised during the process considered relevant.


This term of reference is available to raise any other relevant matter outside the scope of the current Regulations and argue for its inclusion.

Issues

An example of an issue which might be addressed here is the scope for convergence with other OPGGS Act, Commonwealth and international regulation.

Options

There are no options identified at this point.


As there are no options identified at this point, there are no identified impacts to be assessed.

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Chapter 17: Next steps

RET will draw upon submissions to prepare a report for Australian Government consideration. The Department plans to make its recommendations to the Government second quarter 2013, with any amendments to legislation or regulations to proceed thereafter in accordance with applicable Parliamentary or Executive Council timetables.

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APPENDIX 1: Terms of Reference

Review of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009

Final 15 May 2012

Purpose:

To review the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (the Environment Regulations), to ensure they meet and represent leading practice for objective-based regulation of environmental management.

Background:

Regulations have been in place for regulation of the environmental impacts of petroleum activities in Commonwealth waters since 1999 when they were created under the Petroleum (Submerged Lands) Act 1967 (PSLA). These were originally enacted as the Petroleum (Submerged Lands)(Management of Environment) Regulations 1999 and were administered by the Designated Authorities in each state and the Northern Territory. In part the Environment Regulations replaced matters relevant to the environment in the “Schedule of Specific Requirements as to Offshore Petroleum Exploration and Production in Waters Under Commonwealth Jurisdiction”, so as to meet then new standards of Parliamentary scrutiny of regulations and ordinances.

Cumulative additions and amendments to the Environment Regulations have ensued to address: a rewrite of the PSLA to improve its structure and language; the addition of greenhouse gas storage activities; and changes to regulatory responsibilities and transition to the national regulator for

petroleum safety, well integrity and environment in the independent National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

Continuing changes to implement various reforms have resulted in the current Offshore Petroleum and Greenhouse Gas Storage Act 2006 (the OPGGSA) and Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009. The most recent amendments to the Environment Regulations occurred in late 2011 and clarified; the requirement for an environment plan to contain an oil spill contingency plan, the consultations to be undertaken by companies on their activities and made provision for transition of regulatory responsibilities to NOPSEMA.

With some twelve years of operation of the Environment Regulations, it is an opportune time to undertake a more holistic review of their efficiency and effectiveness, check the justifications for the current Environment Regulations, and propose changes to improve their operation.

Objective of Review:

The review will be conducted against the requirements of Australian Government policy and guidance on regulation including the Better Regulation Handbook (Australian Government 2010) and other relevant references.

The objectives of the review into the operation of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 will generally and in particular examine:

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1. The appropriateness of the current object(s).

2. The extent to which industry is encouraged to adopt best practice and to continuously improve its environmental performance.

3. The effectiveness of the consultation (including notification and other mechanisms) requirements.

4. The effectiveness of reporting arrangements.

5. The scope for representation of interest groups and stakeholders.

6. The duties and responsibilities of the operator, agent and instrument holder.

7. The transparency of current arrangements and the publication/provision of information provided by the regulator (NOPSEMA) and those with responsibilities under the Environment Regulations (operators and instrument holders).

8. The effectiveness and completeness of the Oil Spill Contingency Plan provisions in the Environment Regulations as a mechanism for requiring adequate preparation for and response to marine pollution incidents from petroleum activities.

9. Alignment of the terminology between the OPGGSA, its related legislation and the Environment Regulations.

10. The effectiveness and completeness of monitoring provisions to detect impacts of petroleum activities (in normal operations).

11. The appropriateness of the Environment Regulations for the regulator to make decisions across the offshore petroleum development life.

12. The effectiveness of the compliance and enforcement framework, including penalties.

13. Other changes to align the Environment Regulations with Australian Government policy and guidance on regulation.

And

14. Any other matter raised during the process considered relevant.

Scope:

The review will consider regulation of environmental management within the scope of the Environment Regulations.

The Review will, in general, not address: other regulations under the OPGGSA including safety, well integrity, or resource

management and administration; policy regarding cost recovery through environment levies; changes to other legislation or regulations e.g. Environment Protection and Biodiversity

Conservation Act 1999 or Protection Of The Sea (Prevention Of Pollution From Ships) Act 1983; or

decisions by states or the Northern Territory on the conferral of environmental functions to NOPSEMA.

It is not intended to anticipate or duplicate other higher level Australian Government review processes currently in progress for the offshore petroleum legislative regime. Relevant matters referred to the review from other policy processes will be considered. This includes, for

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example, from the review of the compliance and enforcement regime for offshore petroleum activities within the OPGGSA.16

Timing and Process:

The review will be completed in 2012, with the objective of commencement of any changes to the Environment Regulations by 1 January 2013.

Any proposed changes to regulation will be subject to parliamentary process applying to regulatory change. The following arrangements will be adopted to progress the formulation of proposed amendments:

Organisation: The review will be managed by Commonwealth Department of Resources Energy and Tourism (DRET) in conjunction with the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA). Inputs from other relevant government departments will be sought where appropriate.

Consultation: The review will seek input from interest groups and stakeholders at key points during the review process including the Terms of Reference, key matters for examination and proposed amendments.

Publication: Information relating to the review will be published on the DRET website. Amendments to the Environment Regulations will be approved and published in accordance with Australian Government parliamentary process on www.commlaw.gov.au.

References:

Australian Government 2010, Better Regulation Handbook, Department of Finance and Deregulation, June 2010. Available for download from: http://www.finance.gov.au/obpr/proposal/handbook/docs/Best-Practice-Regulation-Handbook.pdf.

Australian Government 2007, Administering Regulation – Better Practice Guide, Australian National Audit Office, Attorney-General’s Department, March 2007. Available for download from: http://www.anao.gov.au/uploads/documents/Administering_Regulation_.pdf.

Council of Australian Governments 2007, Best Practice Regulation – A Guide for Ministerial Councils and National Standard-Setting Bodies, October 2007. Available for download from: http://www.finance.gov.au/obpr/docs/COAG_best_practice_guide_2007.pdf .

16 In October 2011 the Commonwealth Departments of Resources, Energy and Tourism, and Finance and Deregulation, released an Issues Paper titled ‘A rigorous compliance and enforcement regime for offshore petroleum activities’. The Issues Paper identifies and proposes matters and issues for consideration in a review of compliance and enforcement measures (including penalties) in the Commonwealth petroleum legislation and associated regulations. Submissions on the Issues Paper closed on 16 December 2011 and the Commonwealth Departments intend to make recommendations to Government by June 2012, with any legislative amendments to proceed thereafter.

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http://www.finance.gov.au/obpr/docs/COAG_best_practice_guide_2007.pdf

http://www.commlaw.gov.au/

APPENDIX 2: Glossary

Basin - A dip in the earth’s crust usually filled or being filled with sediment.

Bathymetry – Relates to the measurement of ocean water depths.

Coastal waters - The area between the territorial sea baseline (generally situated at the lowest astronomical tide line along the coast) and the line that is three nautical miles seaward of the territorial sea baseline as well as any waters landward of the baseline that are outside the limits of the States and the Northern Territory.

Commonwealth Waters - The area between the outer limit of the coastal waters (three nautical miles from the territorial sea baseline) and the outer limit of the continental shelf.

Continental Shelf - The area extending from the outer limit of the territorial sea (12 nautical miles from the territorial sea baseline) for up to 200 nautical miles from the territorial sea baseline (subject to boundary delimitations with other countries). It can extend further if the physical continental shelf continues beyond 200 nautical miles in accordance with the United Nations Convention on the Law of the Sea.

Designated Authority (DA) – Prior to 1 January 2012, when the commencement of Part 6.10 of the OPGGS Act, the Designated Authority for an offshore area of a State or Territory was constituted by the responsible State or Territory Minister. DA may also be used to describe the State or Territory government officials who assist the DA and have powers delegated to them by the DA.

Infrastructure Licence - authorises the licensee to construct and operate an infrastructure facility in the licence area, which relates to petroleum or a greenhouse gas substance.

Joint Authority (JA) - The Joint Authority of an offshore area of a State or Territory is constituted by the responsible State or Territory Minister and the responsible Commonwealth Minister. The term JA may also be used to describe the Commonwealth and State or Territory officials where those officials assist the JA.

Joint Venture – a group of companies or individuals who share the cost and rewards of exploring for and producing oil or gas from a permit.

Liquefied Natural Gas (LNG) - Natural gas that has been cooled to below 160 degrees Celsius thereby rendering it a liquid. This reduces its volume by over 600 times, making storage and transportation viable.

Natural Gas - A mixture of light hydrocarbons (mainly methane) found naturally in the Earth’s crust, often in association with crude oil.

Offshore - The area extending seaward from the low tide mark on the coastline to the outer limit of the continental shelf. That is, it includes Commonwealth waters, coastal waters and some internal waters. (For the purposes of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cwlth), the offshore area is defined as Commonwealth waters only.)

Onshore - The area within the limits of a State or Territory including internal waters that are landward of the low tide mark, such as rivers and creeks.

Operator – the company which organises the exploration and production programs in a permit on behalf of all the interest holders in the permit.

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Permit – an area of specified size within a sedimentary basin which is licensed or allocated to a company or companies by the government for the purposes of exploring and producing oil and gas.

Petroleum Access Authority – authorises an existing petroleum titleholder (including a special prospecting authority holder) to undertake petroleum activities other than drilling a well outside the boundary of their existing titles.

Petroleum Exploration Permit - A permit or licence to explore for oil or gas in a particular area issued to a company by the governing jurisdiction.

Petroleum Production Licence - Licence to produce oil or gas in a particular area issued to a company by the governing state authority. Seismic survey A method of determining the sub-surface features by sending sound waves into the various buried rock layers in the earth and measuring the time they take to return to the surface.

Petroleum Retention Lease – A permit enabling a company to keep ownership of a hydrocarbon discovery that is not commercial at the time of discovery, but that may be in the future if parameters change, such as a higher oil price or the discovery of significant new fields nearby.

Petroleum Scientific Investigation Consent – authorises the holder to carry on petroleum exploration operations in the course of a scientific investigation.

Petroleum Special Prospecting Authority (SPA) – authorises a person to undertake exploration activities other than drilling a well in vacant acreage.

Pipeline Licence – is required to construct, reconstruct, alter and operate a pipeline in an offshore area for the purposes of conveying either petroleum or greenhouse gas substances, to construct and operate pumping stations, tank stations and valve stations associated with the pipeline; and to carry on other operations or works as necessary to the pipeline.

Produced Formation Water - The water that is produced along with the oil and gas.

Production Phase - of petroleum industry that deals with bringing the well fluids and gases to the surface and separating them.

Reservoir – A rock or formation which holds hydrocarbons within the pore spaces between individual grains.

Safety Case – Where the government sets broad safety goals to be attained at industrial facilities and the companies concerned develop the most appropriate methods for achieving those goals. The basic tenet is that the ongoing management of safety is the responsibility of the operator and not the regulator.

Seismic Survey – A method of determining the subsurface features by sending low frequency sound waves into the various buried rock layers in the earth and measuring the time they take to return to the surface.

2D Seismic Survey – A seismic survey method resulting in a two dimensional image of the subsurface. One streamer is towed behind the vessel.

3D Seismic Survey – A seismic survey method resulting in a three dimensional image of the subsurface to obtain greater detail. Up to 12 streamers are towed behind the vessel.

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Territorial Sea - The area between the territorial sea baseline and the line that is 12 nautical miles seaward of the territorial sea baseline.

Territorial Sea Baseline - Generally is the line of lowest astronomical tide along the coast, but it also encompasses straight lines across bays (bay closing lines), rivers (river closing lines) and between islands, as well as along heavily indented areas of coastline (straight baselines) under certain circumstances.

Upstream - The upstream petroleum (oil and gas) sector encompasses exploration and appraisal, development and construction, and production. For natural gas and LPG, the definition of upstream includes processing and delivery to export terminals or domestic gas transmission pipeline in take.

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APPENDIX 3: Abbreviations and Acronyms

AA Access AuthorityAGD Attorney-General's DepartmentAIMS Australian Institute of Marine ScienceALARP As Low As Reasonably PracticableALF Airborne Laser FluorescenceAS/NZS ISO Australian Standards/New Zealand Standards International Organization for

StandardizationCOAG Council of Australian GovernmentsCoI Commission of InquiryCSEM Controlled Source Electromagnetic SurveyCSIRO Commonwealth Scientific and Industrial Research OrganisationCth CommonwealthDA Designated AuthorityDRET Department of Resources, Energy and TourismEP Environment PlanEPBC Act Environment Protection and Biodiversity Conservation Act 1999ESD Ecologically Sustainable DevelopmentFLNG Floating Liquid Natural GasFPSO Floating Production storage and off-take (offloading) vesselGA Geoscience AustraliaGTL Gas To LiquidsISO International Organization for StandardizationJA Joint AuthorityLNG Liquefied Natural GasMARPOL International Convention for the Prevention of Pollution from ShipsMEE Major Environmental EventMNES Matters of National Environmental SignificanceMI Magnetic ImpulseMODU Mobile Offshore Drilling UnitNOPSEMA National Offshore Petroleum Safety and Environmental Management AuthorityNOPSA National Offshore Petroleum Safety AuthorityNOPTA National Offshore Petroleum Titles AdministratorNT Northern TerritoryOHS Occupational Health and SafetyOIW Oil In WaterOPEP Oil Pollution Emergency PlanOPGGSA Offshore Petroleum and Greenhouse Gas Storage Act 2006OPGGS Act Offshore Petroleum and Greenhouse Gas Storage Act 2006OPRC International Convention on Oil Pollution Preparedness, Response and Co-

operationOPSAG Ocean Policy Science Advisory GroupOSCP Oil Spill Contingency PlanOSMP Operational and Scientific Monitoring ProgramOSPAR The Convention for the Protection of the Marine Environment of the North-East

Atlantic (Oslo/Paris)PFW Produces Formation WaterPL Pipeline LicencePSLA Petroleum (Submerged Lands) Act 1967RCM Responsible Commonwealth Minister

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RET Department of Resources, Energy and TourismRMA Resource Management and Administration RegulationsSEWPaC Department of Sustainability, Environment, Water, Population and CommunitiesSPA Special Prospecting Authority

Units and Scientific Terms

mg/L milligrams per litreMtpa Million tonnes per annumCO2 Carbon Dioxide

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APPENDIX 4: Useful references

In considering appropriate amendments to the Commonwealth legislation and regulations, regard will be given to the principles developed in the general law and appropriate reviews and reports, including:

o Australian Government 2010, Better Regulation Handbook, Department of Finance and Deregulation, June 2010. Available for download from: http://www.finance.gov.au/obpr/proposal/handbook/docs/Best-Practice-Regulation-Handbook.pdf

o Australian Government 2007, Administering Regulation – Better Practice Guide, Australian National Audit Office, Attorney-General’s Department, March 2007. http://www.anao.gov.au/uploads/documents/Administering_Regulation.pdf.

o Council of Australian Governments 2007, Best Practice Regulation – A Guide for Ministerial Councils and National Standard-Setting Bodies, October 2007. http://www.finance.gov.au/obpr/docs/COAG_best_practice_guide_2007.pdf .

o Commonwealth Attorney-General's Department, Guide to Framing Commonwealth Offences, Civil Penalties and Enforcement Powers, http://www.ag.gov.au/Publications/Pages/GuidetoFramingCommonwealthOffencesCivilPenaltiesandEnforcementPowers.aspx

o Office of Parliamentary Counsel, Drafting Direction on Offences, penalties, self-incrimination, secrecy provision and enforcement powers

o Administrative Review Council, Report No. 48, The Coercive Information Gathering Powers of Government Agencies

o Australian Law Reform Commission, Report 95, Principled Regulation: Federal Civil and Administrative Penalties in Australia, http://www.alrc.gov.au/report-95

o For information about the Australian Government’s deregulation agenda, visit www.finance.gov.au/deregulation

o For information on the Council of Australian Governments reforms, visit www.coag.gov.au

o To see the latest Regulation Impact Statements or more about the Australian Government or COAG regulatory impact analysis processes, visit http://ris.finance.gov.au

o Rick Wilkinson for BHP Billiton Petroleum Pty Ltd 2006, Speaking Oil and Gas, http://www.spegcs.org/attachments/studygroups/5/2009_06_PFC%20-%20Expanding%20Knowledge%20Workshop%20Session%202%20-%20SpeakingOilGas.pdf

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http://www.spegcs.org/attachments/studygroups/5/2009_06_PFC%20-%20Expanding%20Knowledge%20Workshop%20Session%202%20-%20SpeakingOilGas.pdf

http://www.spegcs.org/attachments/studygroups/5/2009_06_PFC%20-%20Expanding%20Knowledge%20Workshop%20Session%202%20-%20SpeakingOilGas.pdf

http://ris.finance.gov.au/

http://www.finance.gov.au/deregulation

http://www.alrc.gov.au/report-95

http://www.ag.gov.au/agd/WWW/archome.nsf/Page/Publications_Reports_Report_Files_Report_No._48

http://www.ag.gov.au/agd/WWW/archome.nsf/Page/Publications_Reports_Report_Files_Report_No._48

http://www.opc.gov.au/about/drafting_series/DD3.5.pdf

http://www.opc.gov.au/about/drafting_series/DD3.5.pdf

http://www.ag.gov.au/Publications/Pages/GuidetoFramingCommonwealthOffencesCivilPenaltiesandEnforcementPowers.aspx

http://www.ag.gov.au/Publications/Pages/GuidetoFramingCommonwealthOffencesCivilPenaltiesandEnforcementPowers.aspx

http://www.finance.gov.au/obpr/docs/COAG_best_practice_guide_2007.pdf

Copyright notice

This work is licensed under a Creative Commons Attribution 2.5 Australia licence. To the extent that copyright subsists in third party quotes and diagrams it remains with the original owner and permission may be required to reuse the material.

This work should be attributed as: Issues Paper: Review of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (November 2012).

Inquiries regarding the licence and any use of Issues Paper: Review of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (November 2012) are welcome at:

ManagerEnvironment Regulations ReviewOffshore Resources BranchResources DivisionDepartment of Resources, Energy and TourismGPO Box 1564CANBERRA ACT 2601

Email: [email protected]

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