Politics slows the safety regulation process in Australian oilfields

On 8 August 2011, the Australian Financial Review (not available online) reported on a letter from the head of the National Offshore Petroleum Safety Agency (NOPSA), John Clegg, that criticised the Western Australian government’s regulatory regime for offshore petroleum exploration.  The crux of the letter was that WA does not require energy companies to develop a “safety case” for their offshore operations.

The letter referred specifically to the Varanus Island pipeline explosion under the control of Apache Corporation.  The AFR paraphrased the letter:

“…Clegg said….that given WA legislation at the time of the Varanus Explosion it was “doubtful” that Apache Corporation, the US operator of Varanus, had any obligation to adhere to a “safety case”, the crucial tool for management of oil and gas field safety.”

The “safety case” requirement for complex processing industries originated after the inquiry into the Piper Alpha disaster of 1988 and has become a default safety management process in many jurisdictions around the world. (UK’s Health & Safety Executive has some excellent background resources on this)

The political arguments between State and Federal jurisdictions will be a major impediment to safety reforms in this industry sector – a tension to which few in the Eastern Australian States may give adequate attention.  The tension echoes the continuing conflict over OHS harmonisation laws.

In a speech to the APPEA National Oil and Gas Safety Conference on 9 August 2011, Resources Minister Martin Ferguson, made no mention of the “stoush” but emphasised NOPSA’s increased regulatory role:

“The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) will remove significant unnecessary regulatory burdens and provide an integrated approach to the regulation of safety, the integrity of facilities and the environment.

It will see the Commonwealth assume responsibility for the regulation of petroleum activities within our jurisdiction – a responsibility that until now has been delegated to the states and territories.”

[It is reasonable to ask why the Australian Government will unite safety laws under one national regulator in one industry sector but categorically reject the application, and it’s “integrated approach to the regulation of safety”, for the rest of the Australian business community.]

The tension is being noted by independent Senator Nick Xenophon who told AFR (not available online) on 9 August 2011 that Clegg’s letter may be sufficient to cause a review of a report into offshore resources regulations.

And while this may seem a case of tit-for-tat, the WA Greens have pointed out Western Australia’s Minister for Mines and Petroleum Norman Moore continues to refuse to release its report into the Varanus Island pipeline explosion.  The Australian Broadcasting Corporation has reported Minister Moore saying:

“I know what this report has concluded and I think it’s a good report that goes into the detail of the situation, and will show people exactly what happened…. But, I’m not at liberty now to comment what’s in it or release it for fear of jeopardising our prosecution against Apache and that’s the last thing I want to do.”

His reluctance to release the report only after legal action against Apache Energy is concluded is understandable, technically, but the explosion was three years ago and the court case has yet to begin.  The significance of the prosecution in financial penalties has also been questioned.

The AFR is likely to keep digging on this issue as the 8 August 2011 article states that although two Freedom of Information officers have approved the release of supplementary documents to Clegg’s letter and other related documents, Federal Resources Minister Martin Ferguson, the WA government and “a third party business, very likely Apache Energy” have objected to the release.

Minster Ferguson is opening the International Offshore Petroleum Regulators and Operators Summit in Perth tonight.  His opening speech includes the following positive, but telling, statements:

“…while different nations have their own regulatory frameworks the objective of each is identical, and that is the protection of human health and the environment…”

“Parallels in the findings and recommendations from the inquiries into both Montara and Macondo provide the impetus for this summit.

Most importantly both inquiries found that Montara and Macondo were preventable.

Failures by operators were systemic and a culture of complacency – by industry and regulators – came at an unacceptable cost .

The two inquiries found that substantial cultural, regulatory and operational reform were required if we were to prevent such incidents from recurring.”

Later he states that:

“…continuous improvement reduces risk.  A culture of safety and environmental protection is every bit a part of a good business strategy as any other.”

It can be argued that transparency and accountability are also essential elements of a business strategy, even a strategy of governments.

Kevin Jones

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