The considerable ramifications arising from the recent oil spills in Australia and the United States has led both respective governments to carry out large scale inquiries into the safety regulations in place for offshore operators.

Introduction

The Montara oil spill is considered one of Australia’s worst oil disasters. The oil and gas leak took place in the Montara oil field in the Timor Sea, off the northern coast of Western Australia. The spill was the result of a blowout from the Montara wellhead platform on August 21, 2009. The slick from the blast continued to leak for 74 days until it was contained in November 3, 2009.  

The Macondo Oil Spill (also known as the Deepwater Horizon Oil Spill) took place off the Gulf of Mexico and flowed for three months in 2010. It is considered the largest accidental marine oil spill in the history of the petroleum industry Both incidents, which occurred only 8 months apart, resulted from a failure of the Blow Out Preventer (BOP), which was the primary contamination prevention measure.  

Key findings from the inquiries

The Governmental agencies responsible for both the US Macondo inquiry and the Australian Montara inquiry were critical of the lack of co-ordination and proactivity displayed by various regulatory authorities.  

Each inquiry found systemic faults in drilling practices in both Australia and the US, in particular the overreliance on a single layer of protection provided by current BOP’s.  

Drilling technology for deep water operations was noted to be some 30 years ahead of safety and environmental techniques and practices.

It was identified that in Australia there was duplication of authorities and legislation between the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPA) and the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act). To some extent there are also duplications and inconsistencies between State and Federal bodies involving maritime safety and environmental agencies.  

Each inquiry made numerous and specific recommendations for changes to industry practices.

Likely outcomes and effects on operators

It is likely that there will be an extension of the “safety case approach” to environmental approvals. Operators will be familiar with safety cases presently used by the National Offshore Petroleum Safety Authority (NOPSA) which were subsequently adopted in the United Kingdom since the 1988 Piper Alpha Disaster in the North Sea to ensure Occupational Health and Safety compliance.

The Australian Government recognised that the safety case approach was the most appropriate form of regulation for the offshore petroleum industry to deliver world class safety by developing appropriate behaviour from within the industry.

An environmental safety case will likely involve a document or series of documents required to be prepared by the Applicant (or its consultants) identifying:  

  • probable or significantly possible environmental risks and providing strategies for avoiding, minimising or dealing with those risks, and  
  • providing demonstrable and measureable criteria as to how environmental controls are to be implemented and their implementation verified.  

The benchmark for the compliance standard is likely to be high and measured by reference to the prevention of any avoidable contamination or environmental harm by oil spills.

Safety cases are an existing tool in a safety management process. They are not an “approval” as such. A safety case is never actually approved but is either accepted or not objected to by the relevant Authority.

As a new feature safety cases assessed by National Offshore Petroleum Safety Authority and Environmental Management Authority (NOPSEMA) as the successor to NOPSA, will have to detail alternatives and strategies to deal with failures of primary safe guards to prevent the recurrence of a loss of oil control for an extended period, with no immediately effective containment or rectification technique able to be implemented.

Changes in Authorities

It is likely that NOPSA will acquire “environmental management” as one of its key responsibilities and consequently be renamed NOPSEMA.

It is anticipated that there will be the creation of a separate Authority (but reporting to the same Minister) responsible for the granting and renewal of petroleum titles and leases and the collection of royalties so as to prevent the appearance of a conflict of interest between safety and environmental concerns on the one hand and the generation of revenue on the other. The new authority is foreshadowed to be called the National Offshore Petroleum Titles Authority (NOPTA).  

New powers are proposed to be given to NOPSEMA to direct actions to be taken if perceptions or indications of unsafe or unsound practices may be occurring. These powers are likely to include powers to suspend or to require suspension of operations including a power to intervene and directly take action at the cost of the operator where circumstances warrant the same.

In the USA it is expected that much greater security will be required. In particular the present US$75 million cap on liability is likely to be abolished subject to approval.  

Previous industry acceptance of single level BOP protection will no longer be likely to be regarded as sufficient and additional layers of well control protection will be required together with improved technical drilling and well maintenance procedures.

It is likely that the environmental conditions set out in the EPBC Act will be merged with OPA title conditions.  

Conclusion

The repercussions of the offshore petroleum operation safety regulation inquiries are yet to be tabled in any amendment legislation. What is known is that there is a significant public incentive for the US and Australian Governments to respond and implement new more stringent and onerous offshore petroleum safety regulations in a timely and proactive manner.