Introduction
The Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGSA) and Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003 (Cth) (Safety Levies Act) have recently been amended by the:
- Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment Act 2009 (Cth) (OPGGSA Amending Act), and
- Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Act 2009 (Safety Levies Amending Act).
The amendments received assent on 8 October and provides for, amongst other things, broad-ranging powers for inquiries into significant offshore incidents which will be relevant for the recently announced inquiry into the Montara–West Atlas oil spill in the Timor Sea. These changes stem from the inquiry into the Varanus Island incident initiated in January 2009.
The amendments also:
- implement policy changes and typographical errors which have been identified following commencement of the OPGGSA
- correct omissions and clarify certain provisions of the OPGSSA relating to greenhouse gas that came into effect in November 2008
- increase safety offence provisions to an absolute liability such that there is no defence of an honest and reasonable mistake of fact, and
- substitute payment of a pipeline safety management plan levy with a safety case levy, to facilitate pipelines being covered under safety regulations rather than under separate pipeline regulations.
Key changes
Safety changes
Strict liability for OHS offences
The most significant of the changes imposed is the introduction of strict liability in relation to specific offences and the operator of a facility is required to take all reasonable steps to ensure the safety of the facility and work and activities done on the facility.
This removes the defence of honest and reasonable mistake of fact, with the effect that a responsible person is prevented from relying on the defence that they were unaware of their OHS responsibilities under clause 9 of Schedule 3 of the OPGGSA, even if this lack of awareness was reasonable in the circumstances.
Other amendments enable the National Offshore Petroleum Safety Authority (NOPSA) or an OHS inspector to bring proceedings for OHS offences committed under the now repealed Petroleum (Submerged Lands) Act 1967 (Cth) in the period beginning 1 January 2005 and ending immediately before the commencement of the OPGGSA on 21 November 2008.
Liability for design of unsafe facilities
The amendments also impose obligations on petroleum and greenhouse gas titleholders in relation to the design of facilities.
Although titleholders have always been responsible for the design of the facility, they can now be held responsible for contributing to an unsafe situation.
It is not intended that these amendments will shift responsibility to titleholders in circumstances where the facility operator is at fault.
Regulation of pipelines and levies
From 1 January 2010, the safety case levy for pipelines will replace the pipeline safety management plan levy. When this occurs, NOPSA will have an increased role in the regulation of offshore pipelines and in order to commence licensed pipeline operations, a pipeline licence holder will require:
- a safety case approved by NOPSA, and
- an environment plan approved by the Designated Authority.
In addition, from 1 January 2010 the pipeline safety management plan levy will become a safety case levy. Other fees established under the Safety Levies Act will continue to apply. The changes will mean that only one levy is payable to NOPSA in respect of the safety case and pipeline licenses combined.
Inquiries into significant offshore incidents
The amendments provide for the appointment of a Commissioner to undertake an inquiry into significant offshore petroleum or greenhouse gas storage incidents. This power is limited to where a significant offshore petroleum or greenhouse gas incident has occurred, and where it would be appropriate to consider operational, human and/or regulatory issues related to that incident.
Prior to the amendments, the responsible Minister could initiate two types of investigation under the Act, each limited in nature:
- an investigation by NOPSA which would be limited to OHS matters, and
- an investigation by the Minister as Designated Authority which would be limited to considering the appropriateness of existing statutory powers under the Act.
This amendment does not override the ability for a Royal Commission to be called if warranted by the severity and impact of an incident.
It was recently announced1 that Mr David Borthwick AO PSM has been appointed as a Commissioner to the Montara spill inquiry pursuant to these amendments. The terms of reference to the inquiry can be found on the Department of Resources, Energy and Tourism website.
Titleholder changes
Expedited process for petroleum access authorities
Prior to the amendments, section 245 of the OPGGSA provided that before the Designated Authority approved the grant of a petroleum access authority it had to give 30 days’ notice of its intention to approve the grant.
Now the 30-day notice period is no longer required if the titleholder of the adjoining offshore area has given written consent to the grant of the petroleum access authority, prior to the submission of the application. The expedited process applies for access authority applications made after 9 October 2009.
Declaration of locations
The declaration of locations will be now done by the Joint Authority, instead of the Designated Authority.
The change is designed to achieve consistency in the decision making process, particularly as the Joint Authority already determines retention lease and production licence applications.
Notification of discovery of petroleum
Section 284 of the OPGGSA formerly required immediate notification to the Designated Authority of petroleum discoveries in petroleum exploration permit and petroleum retention lease areas.
The amendments:
- extend the requirement for notification of discoveries to include petroleum production licence areas, and
- substitute the requirement for immediate notification with a 30-day period, commencing on the day the well resulting in the discovery was completed.
The extra time is intended to allow the petroleum company to obtain more detailed information about the discovery and its potential for commercial development.
Extension of Australia’s offshore area
The OPGGSA has been updated to reflect recent extensions to Australia’s offshore areas following recent findings of the United Nations Commission on the Limits of the Continental Shelf, which confirmed Australia’s claims.
Petroleum scientific investigation consents
The Joint Authority, not the Designated Authority, will have the power to grant petroleum investigation consents and impose conditions on consents deemed appropriate by the Joint Authority.
It is anticipated that these changes will enhance the Commonwealth Government’s ability to implement international obligations under the United Nations Convention on the Law of the Sea.
Data management plan
The requirement for a data management plan for petroleum titles has been removed. However, the obligations in relation to the collection and storage of this data remain unchanged.
Data management plans already in force will continue in force and may be varied. However, those plans can not be renewed on expiry.
Regulations requiring data to be collected, stored and provided will continue to operate. The Commonwealth Government has indicated an intention to include a revised set of data management regulations in a wider set of consolidated regulations, to be released in early 2010.
Greenhouse gas storage
The key changes in relation to greenhouse gas provisions are:
- release of a greenhouse gas assessment area cannot occur until the day after the end of 60 day notice period.
- removal of inconsistencies in the Act in relation to the permissible source of greenhouse gases that may be injected into greenhouse gas storage formations. The Commonwealth Minister may now grant (and impose conditions on) an injection licence in circumstances where some or all of the greenhouse gases to be injected are by-products of any petroleum production licence area, not only the production licence area(s) of the injection licence applicant.
Replacement of the Datum
Various amendments have been made to reflect changes to the replacement of the Australian Geodetic Datum with the Geocentric Datum of Australia to ensure compatibility with the Global Positioning System.
Effective date of changes
Most of the provisions of the OPGGSA Amending Act came into operation on 9 October 2009.
Provisions relating to the removal of the pipeline safety management plan levy and consent to operate a pipeline will commence on 1 January 2010.
The provisions of the Safety Levies Amending Act relating to the levy will commence on 1 January 2010.
Endnotes
1. Minister for Resources and Energy, the Hon Martin Ferguson AM MP, Press Release dated 5 November 2009
This article was written by Stuart Barrymore, Partner, Greg Smith, Consultant, Sharon Wilson, Senior Associate and Clancy Rudeforth, Solicitor, Perth.
More information
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