House of Representatives

Explanatory Memorandum

Circulated By Authority of the Minister for Resources and Energy, the Honourable Martin Ferguson Am, Mp

GENERAL OUTLINE

This Bill has three main elements. Firstly, to make some minor policy changes to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (the Act) arising from various reviews. These are:

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Providing an 'expedited' consultation process for the granting of an access authority to titles in adjoining offshore areas where the title holders have consented to the access.

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Changing the decision to declare a location from the Designated Authority (DA) to Joint Authority (JA).

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Changing the decision to grant scientific investigation consents (SIC) from the DA to the JA.

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Amending the Act to require notification of discovery of petroleum in a production license area, as is required for other titles and to extend the period of notification of discovery of petroleum from immediately to within 30 days from completion of the well that led to the discovery.

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Changing datum provisions to directly empower the DA to issue instruments to allow relabelling of title areas, blocks etc, using coordinates corresponding to the current datum rather than providing this power through regulations as occurs currently.

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Amending the Act to state in unequivocal terms that the fault element for duty of care offences is negligence and not intent.

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Removing the requirement for a consent to operate a pipeline.

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Removing requirements for Data Management Plans.

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Clarifying titleholder's responsibility for matters within their control in relation to a drilling safety case.

Secondly, the Bill adds a new Part 9.10A to the Act. These amendments provide for a standing power enabling the responsible Commonwealth Minister to appoint a Commissioner to undertake a Commission of inquiry into the operational, human and regulatory matters specific or incidental to a significant offshore petroleum or greenhouse gas storage incident, from time to time as required. 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.

The purpose of the amendments is to correct an administrative gap in the provisions of the Act for the investigation of these matters. Currently, the responsible Commonwealth Minister may initiate two types of investigation under the Act, each limited in nature: an investigation by the National Offshore Petroleum Safety Authority (NOPSA) which would be limited to occupational health and safety matters pertaining to an incident; and an investigation by the Minister as Designated Authority for the offshore area which would be limited to considering the appropriateness of existing statutory powers under the Act.

Recent incidents involving uncontrolled release of hydrocarbons jeopardising human and environmental health, have demonstrated that the existing investigatory powers are insufficient. An inquiry for the purposes of determining operational, human and regulatory factors would inform regulators and operators of causal factors contributing to significant incidents relating to offshore oil and gas exploration, development, production, greenhouse gas storage and/or decommissioning. This power will enable the Government and industry to learn from incidents, and be better prepared to prevent similar incidents occurring in the future.

The amendments will enable the responsible Commonwealth Minister to appoint a Commissioner to conduct a Commission of inquiry into the operational, human and regulatory factors surrounding the uncontrolled release of oil and gas at the Montara offshore oil field in the Timor Sea. The inquiry will enable governments, regulators and the industry to be fully informed of all matters surrounding this incident, and will enable all stakeholders to initiate appropriate changes (legislative and operational) to prevent similar future incidents.

It is intended that the findings of any such Commission of inquiry will be made public, subject to the disclosure and privacy provisions of other legislation. This will enable lessons learned from the incident to be considered and understood by the widest possible range of stakeholders both in Australia and overseas.

The only statutory mechanism currently available to the responsible Minister for a comprehensive investigation would be a Royal Commission appointed by the Governor-General under the Royal Commissions Act 1902 (Cth). This mechanism is not always appropriate, timely or cost effective. A specific investigatory mechanism, within the offshore oil and gas context of the Act, is a more appropriate, timely and cost effective avenue to investigate significant incidents such as uncontrolled hydrocarbon releases. This amendment does not override the ability for a Royal Commission to be called if warranted by the severity and impact of an incident.

The amendments also define a Commissioner's powers by reference to the powers and offences in the Royal Commissions Act 1902, including the relevant enforcement and penalty provisions relating to powers under the Act, and the provision of the same protection and immunity as a Justice of the High Court to the Commissioner, those assisting the Commissioner, witnesses and others.

The amendments focus on determining the causal factors contributing to a significant offshore incident, rather than on seeking evidentiary material for prosecution, and require the results of an inquiry commissioned under these powers to be made public, consistent with the Royal Commissions Act 1902.

Minor amendments of a technical nature are proposed to the Archives Act 1983, the Freedom of Information Act 1982, and the Privacy Act 1988.

Thirdly, the Bill amends the greenhouse gas provisions of the Act that provide for approval and registration of transfers of, and dealings in, petroleum titles. The affected parts of the Act are Part 4.3 (Transfer of titles), Part 4.6 (Dealings relating to existing titles) and Part 4.7 (Dealings in future interests).

The purpose of the amendments is to correct an oversight in the provisions establishing a process for enabling the responsible Commonwealth Minister to give a direction to the Designated Authority (DA) with respect to the exercise of the DA's powers to approve and register transfers of, and dealings in, petroleum titles.

The oversight was in not limiting the class of petroleum titles to which the new process was to apply. The greenhouse gas amendments made by the Offshore Petroleum Amendment (Greenhouse Gas Storage) Act 2008 applied the process to all petroleum titles, whereas the intention was that it would apply only to petroleum titles that had a specified geographical relationship to an existing greenhouse gas title.

These amendments:

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define the class of petroleum titles to which the process applies;

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confine the provisions that establish the process to transfers of, and dealings in, petroleum titles of that class; and

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reduce the numbers of copies required to be lodged with other applications.