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Timor Sea Oil Spill

Timor Sea Oil Spill

Hansard, Wednesday 9 February 2011

Senator SIEWERT (Western Australia) (1.14 pm)— I rise to speak about the fallout from the oil spill in the Timor Sea—the PTTEP and Montara spill—the need for ongoing improvement in our oil and gas regulations and concerns I have around the granting of further leases before the improvements that have been promised by the government to our regulations have been made.

In November last year the government released the commission of inquiry report into the Montara oil spill of the year before. They also released the government response to the commission of inquiry. Many of the recommendations the government have picked up and they have made a number of commitments. One of those was that they would ensure that there was an independent review of PTTEP Australasia’s action plan about how they would improve their operations and the management of their operations in Australian waters. The government said that they would commission an independent review of that action plan. This was in response to the recommendation of the commission of inquiry report that in fact PTTEP should be forced by the government to show cause as to why their leases should not be resumed. The government undertook to release that independent review within seven days of receiving it and they anticipated that would be before the end of the year or early in the new year. In fact the government released the review, as I understand it, within seven days of them having received it just at the end of last week, last Friday.

The report of the independent review is quite a comprehensive document. It makes some very strong statements on the significant and sweeping changes in governance and oilfield practice that PTTEP needs to make to reach the kind of safety and risk management standards that the community expects if it is to operate in Australian waters. In doing so it has reinforced the findings of the Montara commission of inquiry, which found conclusively that the widespread and systemic shortcomings in PTTEP’s governance and procedures were a direct cause of the Montara disaster. The report suggests that if PTTEP complies precisely with the Montara action plan then it can meet industry best practice standards in all of its Australian and Australasian operations. But that is a big if, and the report was really clear on that. The report concludes that the success of this program of cultural and practice change will depend entirely on the quality of its execution, and it bolded that statement in its report.

The government in response to this said that they would put in place an 18month monitoring plan to ensure that the plan was being implemented. As I understand it, they are saying that that monitoring plan will be comprehensive. It is critical that this monitoring plan is done properly and it is critical that it is intensive and comprehensive. The reporting from the monitoring plan we believe needs to be made publicly available and if PTTEP is not sticking to its action plan the government should not wait 18 months to take any action necessary to resume those leases.

I continue to have reservations about PTTEP being allowed to operate in Australian waters given the findings of the Montara inquiry. We will continue to pursue this issue. We will continue to pursue the monitoring plan and in fact I will be putting to government that the monitoring needs to be done at least once a month and that those monitoring plans must be released through parliament and tabled in parliament so that the public can be absolutely assured that this company is meeting every requirement of its action plan. We note that the independent review concludes that until the action plan is completed and fully implemented questions remain about whether PTTEP will be effective in meeting industry standards for good governance and good oilfield practice. This means it has to complete the action plan before it is operating at the kind of standard the Australian community rightfully expects for it to be able to tap our shared oil and gas resources. This is why the report stresses that ongoing government oversight will be critical to ensure PTTEP’s compliance with the action plan.

We believe that until PTTEP has fully complied with and completed the action plan and very clearly demonstrated it has achieved industry best practice in governance and oilfield practice it should not be granted any additional licences to establish any new operations in Australian waters. What this independent review says is that PTTEP is not there yet; it has to implement its action plan. In other words, it has not yet met industry best practice. It has not demonstrated it can meet that. It has now demonstrated it can write an action plan but not that it has been implemented yet. So we question why the government thinks it would be acceptable to grant this company more licences in Australian waters when it is yet to demonstrate it can meet industry best practice.

We note in the independent review report that was released last Friday that it took PTTEP two goes to develop an appropriate action plan. Its first action plan focused entirely on technical issues without addressing the many systemic and governance issues that led directly to the Montara disaster, which is clearly pointed out in the review. We are concerned that that again highlights the fact that PTTEP needs to demonstrate it can improve both its technical performance and its governance performance in a sustained manner. We note that PTTEP will be required to sign a binding agreement to implement the action plan if it is not asked to show cause as to why it should not have its leases taken off it, enabling it to continue in Australian waters. We believe that the minister should be able to issue a show cause notice at any time if this company fails to meet the milestones in its action plan.

The independent review also makes a number of important recommendations concerning the offshore petroleum industry as a whole. One message that came through to me during this entire Montara disaster and the subsequent inquiry was that PTTEP was unlikely to be the only offshore operator which was cutting corners on good governance, environmental risk and worker safety, that there have been a number of near misses in the past and that stronger regulation to achieve better governance and oilfield practices is required right across the industry. I note this has been acknowledged by government. To this end, we will continue to pursue this better regulatory practice to put in place a worldclass regulatory regime to ensure that all companies operating off our shores comply with the highest standards of safety and risk management. We believe that there is a significant cultural change required across the offshore oil and gas industry to ensure the safety of our workers and the protection of our precious environment.

That brings me to the issue of the granting of new licences during January—licences that were granted to BP, the company that was responsible for the disastrous oil spill in the Gulf of Mexico from the Deepwater Horizon well. That incident was eerily the same as the Montara disaster. This company has been granted four leases in the frontier area in the Ceduna Subbasin, which is within the Great Australian Bight, off the South Australian coast. It has been granted leases over 24,000 kilometres of the Great Australian Bight in water that is three times deeper than the Deepwater Horizon well—4,500 metres. No matter what safety measures are put in place, deepsea drilling is incredibly risky. I will go into that in a bit more detail later and provide some findings of the inquiry into that particular disaster.

This area is a key feeding, breeding and migratory site for a number of threatened species. It also happens to cover a large area of the Great Australian Bight Marine Park. These are important areas for the southern right whale, the humpback whale, the great white shark and the southern bluefin tuna, to mention but a few. And the minister says, ‘It’s okay—we’ve put some extra conditions on BP.’ But BP have not clearly demonstrated that they have addressed the very significant issues that were raised by that gigantic disaster in the Gulf of Mexico.

When you look at the findings of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling report it makes very scary reading. I will say again that many of the findings and recommendations of the US inquiry mirror many of the findings of the Montara inquiry. The following is a conclusion in chapter 4 of the very extensive commission of inquiry findings on the Deepwater Horizon spill; it relates to deepwater drilling:
… it is an inherently risky business given the enormous pressures and geologic uncertainties present in the formations where oil and gas are found—thousands of feet below the ocean floor.

Notwithstanding those inherent risks, the accident of April 20 was avoidable. It resulted from clear mistakes made in the first instance by BP, Halliburton— as an aside, I understand that Halliburton does around 50 per cent of the cementingin of wells in Australia, so they are a significant player in our industry here in Australia— and Transocean, and by government officials who, relying too much on industry’s assertions of the safety of their operations, failed to create and apply a program of regulatory oversight that would have properly minimized the risks of deepwater drilling. It is now clear that both industry and government need to reassess and change business practices to minimize the risks of such drilling.

William Reilly, who was the chair of that inquiry, also made a number of very significant comments, one of which was:
To my shock it quickly became clear that while the industry has devoted billions to the technologies required for deepwater drilling it has devoted essentially nothing to creating a plan B to deal with the utterly foreseeable consequences of a major spill. Neither has the government.

Mr Reilly has also been quoted on a number of occasions outlining his concerns about what happened in the leadup to that spill. He is quoted as saying:
They have uncovered a culture of complacency, costcutting and systematic failures and companies were unprepared to deal with accidents and their consequences.
The report outlines the systemic failures that occurred not only in industry but in government. Those failings need to be addressed.

The failings by BP need to be addressed. Where has it been demonstrated to the Australian community—in fact to the world community, because this company is an international one—that this company has addressed the major failings that have been identified in its operations in the Gulf of Mexico? We have to bear in mind that these new wells in Australian waters will be three times the depth of that well in the Gulf of Mexico.

The minister has put some additional conditions on the company, but we are yet to see how they are overcoming these systemic failures. At least PTTEP has been required to develop a comprehensive action plan, which the government is going to be monitoring for an 18 month period of time to ensure that the company can manage its existing operations. Here we have a company whose actions and systemic failures have led to the biggest oil spill, with disastrous consequences. It has taken lives and its social, economic and environmental impacts are untold.

That company has been granted leases in our waters before it has been required to demonstrate it can meet industry standards in the same way that PTTEP has been required to demonstrate that it can now meet those standards, and it will be monitored for the next 18 months. BP has not done that.

Nor do we have the government’s promised amendments to oil and gas regulation. We do not yet have in place the single national regulator. At the same time, we have the Western Australian government saying it will not sign up to it; it does not support it. So how can we be granting a company that has not yet demonstrated that it can manage its operations in deep water four leases in Australian waters? That is not adequate management of our oil and gas industry. It is not industry best practice. We expect better from this government in protecting our marine environment. (Time expired)

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