On 3 September 2015 the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Well Operations) Regulation 2015 (Cth) (Well Regulation) was made. The Well Regulation will commence on 1 January 2016 and will primarily amend the Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulations 2011(Cth) (RMA Regulations).
The Well Regulation resulted from a review of Part 5 of the RMA Regulations (Part 5), which was instigated, in part, by the Montara well blowout in the Timor Sea in 2009 and the subsequent Montara Commission of Inquiry.
The key amendments made to Part 5 by the Well Regulation are outlined below.
Application and objectives of Part 5
Part 5 will be amended so that it no longer applies to a well that is drilled for the purpose of geotechnical drilling or construction of a facility. The rationale for this is that such wells are shallow and carry relatively low risk. Part 5 will continue to apply to the titleholders to which it currently applies.
The objective of the amended Part 5 will be the maintenance of the integrity of offshore petroleum wells, by ensuring that risks to well integrity are reduced to as low as reasonably practicable (ALARP). Currently, the objectives of the RMA Regulations include ensuring that petroleum operations are carried out in accordance with good oilfield practice and are compatible with the optimum long-term recovery of petroleum. Those objectives largely relate to the economic optimisation of petroleum recovery.
The ALARP principle is directed at ensuring that a titleholder undertakes well activities, over the full life of a well, in a manner so that no further practicable measures can reasonably be taken to further reduce risk. It has been suggested that ALARP “is the point where the sacrifice required to reduce the impact and risk of the activity any further would be grossly disproportionate to the benefit gained”.1 The introduction of the ALARP principle into Part 5 aligns it with the objectives-based regulatory approach under the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (Cth) (Environment Regulations) and the Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009 (Cth).
Well integrity and well integrity hazards
Part 5 will be amended so that a reference to a ‘well’ includes a reference to all associated ‘well-related equipment’, and both those terms will have the meaning given in the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth). The effect of this is that a ‘well’ under the amended Part 5 will include any thing used for containing pressure in a well.
Well integrity, for the purposes of the amended Part 5, will be concerned with the capacity of a well to contain petroleum and any other substance, including drilling or formation fluids. The definition of ‘integrity’ in Part 5 will be amended to facilitate this, and the amended definition will ensure that a controlled release of substances during the course of normal operations will not constitute a loss of integrity.
The amended Part 5 will not contain the current requirements relating to controlling a well integrity hazard or a significant increase in an existing risk for a well. Under the amended Part 5, the events that are currently the subject of such requirements will necessitate revision of a WOMP (subject to the operation of certain transitional provisions).
Well Operations and Maintenance Plans (WOMP)
Part 5 will be amended so that a WOMP will be the “sole permissioning” document for a well and undertaking well activities over the full life of a well.2 The result is that the only regulatory approval that a titleholder will require under the amended Part 5 to conduct a well activity, regardless of the stage of the well life, will be to have a WOMP covering the activity which has been accepted by NOPSEMA and which is in force.
In this regard, the offences under the amended Part 5 will include a titleholder undertaking a well activity and not having a WOMP in force for the activity, failing to undertake a well activity in accordance with the requirements of a WOMP and/or any conditions related to its acceptance or failing to take a positive action in relation to a well required by a WOMP.
The amended Part 5 will allow a titleholder to apply to NOPSEMA for its consent to undertake a well activity otherwise than in accordance with a WOMP. However, this process is only intended to allow a titleholder to deal with the consequences of an emergency or other circumstances where revision of a WOMP is not practicable.
A number of the procedural requirements and other matters in Part 5 relating to a WOMP will be amended, including in relation to the timing for submission of a WOMP, the content requirements of a WOMP, NOPSEMA’s acceptance of a WOMP and revision of a WOMP. Two matters of note are that a WOMP may apply to multiple wells if the integrity of each well is subject to similar risks and NOPSEMA will not be able to reject a submitted WOMP without first giving a titleholder the opportunity to modify and resubmit it.
Under the amended Part 5, a WOMP will only end after a titleholder has permanently abandoned each well to which it applies and given NOPSEMA a report on the abandonment and NOPSEMA has notified the titleholder that it is reasonably satisfied that abandonment has been undertaken in accordance with the WOMP. It is expected that this process will give NOPSEMA greater regulatory oversight over well abandonment.
Information about specific well activities
The provisions of Part 5 requiring a titleholder to seek approval from NOPSEMA prior to undertaking a well activity will be replaced with provisions requiring a titleholder to give notice prior to commencing a well activity. The period of prior notice that must be given is dependent on the type and risk of the well activity and is either 21 days (unless otherwise agreed by NOPSEMA) or any time before the commencement of the activity. NOPSEMA may request additional information about a well activity and a titleholder must provide updated information if the information in its notice is no longer accurate. A titleholder must also notify NOPSEMA upon completion of a well activity.
The amended Part 5 will contain provisions requiring a titleholder to inform NOPSEMA of the happening of a ‘reportable incident’, which will include specified well-related incidents such as certain well kicks and unplanned occurrences. A titleholder will be required to give NOPSEMA both oral notice and a written report of a reportable incident and the amended Part 5 will set out the timing and content requirements for such notices and reports. Those requirements are similar to the reportable incident notification and reporting requirements under the Environment Regulations. A failure to comply with the notification or reporting requirements under the amended Part 5 in respect of a reportable incident will be an offence of strict liability.
The amended Part 5 will contain a number of transitional provisions in order to facilitate the amendments made by the Well Regulation. In particular, an accepted WOMP that is in force immediately prior to 1 January 2016 will be taken to be in force for the relevant well under the amended Part 5. However, certain revision requirements will apply to such a WOMP. The amended Part 5 will also contain transitional provisions relating to a WOMP or variation of a WOMP that was submitted for acceptance prior to 1 January 2016 but not accepted or rejected by that time and the continuation of certain provisions of Part 5 amended by the Well Regulation in their current form.