Senate debates

Tuesday, 28 February 2006

Offshore Petroleum Bill 2005; Offshore Petroleum (Annual Fees) Bill 2005; Offshore Petroleum (Registration Fees) Bill 2005; Offshore Petroleum (Repeals and Consequential Amendments) Bill 2005; Offshore Petroleum (Royalty) Bill 2005; Offshore Petroleum (Safety Levies) Amendment Bill 2005

In Committee

6:01 pm

Photo of Richard ColbeckRichard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Hansard source

Senator Milne refers to a number of issues that were raised last night. I do have some information for both Senator Milne and Senator Brown, particularly given the unfortunate circumstances that surrounded us not having the same copies of the second reading speech, which we have fortunately now resolved. I will go over some initial points that relate to this piece of legislation and then I will deal specifically with the issues that Senator Milne has just raised. The Offshore Petroleum Bill is a rewritten and renamed version of the Petroleum (Submerged Lands) Act. The bill provides for the grant of exploration permits, retention leases, production licences, infrastructure licences, pipeline licences and special prospecting authorities and access authorities. The management regime for offshore petroleum exploration, production, processing and conveyance that is proposed by this bill is unchanged in all its essential features from what is set out in the Petroleum (Submerged Lands) Act.

For every one of these activities authorised under the act, an environmental management plan is required as set out in the regulations made under the act—the Petroleum (Submerged Lands) (Management of Environment) Regulations 1999. We discussed those last night. The act works in concert with the Commonwealth’s overarching environmental law—the EPBC Act. These environmental regulations were developed and continue to be reviewed separately to the rewrite exercise of which we are speaking today. The key objective of the regulations is to ensure that operations are carried out in a way that is consistent with the principles of ecologically sustainable development. The amendments proposed by Senators Milne and Brown are primarily to add environmental obligations to the act that, in the government’s view, are not needed as they are handled in the regulations.

I will now go to the questions raised by Senator Milne. Senator Milne is correct in that, annually, potential areas for petroleum exploration are nominated by industry, state governments or Geoscience Australia and, after a process of short-listing, details of the remaining areas are circulated to Commonwealth agencies, including DEH, AFMA, AMSA and Defence, in order to ascertain information on other rights and interests. At the same time, there is a similar consultation process at the state government level, particularly in relation to environment and fishing issues. The state governments also consult with representative bodies in relation to native title interests. As a result of those consultations an area may be modified or withdrawn completely. However, it is more likely that special notices would be prepared to inform potential bidders for an area of issues they will need to address in planning or undertaking exploration activities. The special notices are included in the annual acreage release information pack. After an acreage release is announced by the Minister for Industry, Tourism and Resources, exploration companies have either six months or 12 months, depending on the area, to evaluate existing information on the area and to prepare a bid. Bidding is on a work program basis—in other words, companies bid on the basis of the amount and type of exploration work they are prepared to do in the area over the first three years of any exploration permit granted over the area.

After assessment of bids by the relevant Commonwealth-state-Northern Territory joint authority, the top ranked bidder is made an offer of an exploration permit over the area. The company has one month to consider the offer. If a company accepts an offer, a permit is granted and the work proposed in its original bid becomes an obligation that must be met. However, before any on-site exploration can take place, a specific operational approval is required for each activity, such as a seismic survey or a well. An approved environmental plan pursuant to the management of environment regulations is a prerequisite for obtaining an operational approval. The explorer is also under obligations to meet the requirements of the EPBC Act, particularly in relation to matters of national environmental significance. A circumstance of national environmental significance brings on obligations in relation specifically to other stakeholders.

Specifically in relation to the precedence issue that Senator Milne raised—what has precedence: the EPBC Act or the MOE regulations?—the answer is neither because both have different functions. The management of environment regulations look after the day-to-day management of petroleum activities. The EPBC Act is triggered if an activity has a significant impact on a matter of national environmental significance as defined in the act. The EPBC Act is triggered when an activity takes place in national heritage areas, World Heritage areas, wetlands of international importance, areas where there are threatened species or ecological communities, areas where there are listed migratory species and Commonwealth marine areas.

I will go to a couple of other matters that Senator Brown raised yesterday in relation to a quotation from the second reading speech, including the comment about ‘explicitly requiring consultation with relevant parties before certain adverse decisions are taken’. This was not referring to stakeholder consultation but to a step in the administrative process where the joint authority has to consult with a titleholder before making a decision to either cancel, refuse, renew or terminate a title. Consultation with a titleholder provides the best opportunity for ensuring that the JA process is a correct finding.

The second point was another item in the second reading speech where Senator Brown asked what is meant by the term ‘recovering petroleum on an appraisal basis’. When a discovery is made either with an exploration well, the first well drilled into a structure that is found to contain petroleum, or an appraisal well, an additional well drilled into a structure known to contain petroleum in order to determine things such as the size of the reservoir or the properties of a petroleum pool, the titleholders may wish to bring petroleum to the surface to help assess the commercial potential of the field. This recovery of petroleum will help to determine things such as composition and quality of the oil or gas and flow rates through the reservoir, thus giving an indication of possible production rates. The Offshore Petroleum Bill 2005 has merely made express what was previously implied, that a holder of an exploration permit or retention lease is able to drill a well for the purposes of appraisal.

Thirdly, there was a question in relation to the meaning of disapplying the Navigation Act 1912 and Occupational Health and Safety (Maritime Industry) Act 1993. The OH&S (MI) Act when read together with the Navigation Act establishes an occupational health and safety regime for the maritime industry. The machinery amendment disapplying the abovementioned maritime legislation has been made to avoid the duplication of OH&S regimes while the vessel is deemed to be a facility under the OPB for the purposes of schedule 3 of the bill. A facility includes some vessels that would ordinarily be covered by the maritime legislation such as a vessel used for processing, storing and offloading of petroleum, a drill shop or a pipelay barge. Once the vessel ceases to be a facility for the purposes of the OPB, the maritime legislation will apply again immediately.


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