APPEA - Montara & Gulf of Mexico Information | APPEA

On 21 August 2009, a blowout from the Montara wellhead platform in the Timor Sea caused an oil and gas leak off the northern coast of Western Australia. Sixty-nine workers were evacuated when the blowout occurred. The wellhead platform continued leaking until 3 November 2009 (a total of 74 days), when the leak was stopped following a successful subsurface interception and then by pumping mud into the well and the wellbore cemented thus "capping" the blowout.

On 22 April 2010, the Deepwater Horizon drilling rig sank 209 km southeast of New Orleans, following an explosion on 20 April. Eleven lives were lost and since then oil has been released into the Gulf of Mexico as the industry undertakes a range of efforts to slow the release of oil and finally and permanently cap the well and stem the leak.

Naturally, in light of these serious incidents, serious questions are being asked about the safety performance of the Australian industry, about the safety regulations governing offshore drilling, about the preparedness of the industry to respond to an oil spill and the way in which future clean-up costs and compensation would be financed.

This section of the website aims to provide background information on those issues.

A. Drilling Activity

B. Drilling Regulation

C. Hydrocarbon Releases

D. Blowouts

E. Environmental Effects of Oil Spills

F. Oil Spill Response

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A. Drilling Activity

Q1. How many rigs are active?
As at 10 July 2010, 12 offshore drilling rigs, are in operation in Australian offshore waters (source:Pex , Who’s Drilling). In Q1 2010, eight exploration wells, two appraisal wells and three developments wells were drilled (source: Pex, GA).

Q2. In what water depths does drilling taking place?
Wells are currently being drilled in water depths ranging from 20 metres to 1,400 metres.

Q3. How many wells have been drilled?
As at March 31, 2010, ,2,902 offshore wells have been drilled in Australian offshore waters since offshore drilling commenced in offshore Bass Strait over 40 years ago. (Source: APPEA, GA).

Q4. Where are the wells drilling presently?
The following website will give a listing of current drilling locations in offshore Australia.

http://www.amsa.gov.au/search_and_rescue/distress_and_safety_
communications/MSI/AUSMSI.htm

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B. Drilling Regulation

Q: In Australia, who regulates offshore drilling and well activities such as those undertaken in the Montara field?
A: Because Australia is a Federal System of Government, both the Commonwealth and the States have responsibilities for regulating offshore petroleum. An explanation of the Commonwealth/State regulatory arrangements for offshore petroleum is provided below.

Commonwealth/State Arrangements for Offshore Petroleum Regulation and Legislation

Ultimate responsibility for Australia's offshore areas, beyond three nautical miles from the territorial sea baseline, rests with the Australian Government, whereas onshore and as far as three nautical miles seaward of the baseline (referred to as 'coastal waters') petroleum operations are the responsibility of the individual state and territory governments.

Offshore petroleum operations beyond state and territory coastal waters –that is beyond 3 nautical miles- are governed by the Commonwealth Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGSA) and related Acts and regulations. Within this legal framework, the Australian Government together with the State and the Northern Territory governments jointly administer the regulatory regime and supervise industry activities through a Joint Authority/Designated Authority arrangement.

Joint Authority (JA)/Designated Authority (DA)

Offshore petroleum operations beyond coastal waters (greater than 3 nautical miles from the low low-tide coastline) are governed by Commonwealth legislation known as the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGSA).

Within the OPGGSA legal framework, the Australian Government and the States/NT jointly administer and supervise industry activities through a Joint Authority (JA) arrangement. Each JA comprises the Australian Government’s Resources and Energy Minister and the relevant State/NT Minister.

In addition, the OPGGSA makes the relevant State/NT Minister responsible for most day-to-day administration of the Act, as the Designated Authority (DA)

Approvals for drilling are considered to be a DA function and hence consents for drilling, including variations are assessed and issued on behalf of the JA, by the DA.

Additional Environment Regulation by the Commonwealth Environment Minister

In addition, the Commonwealth Environment Minister, through the Environment Protection and Biodiversity Conservation Act (1999), also governs and places strict conditions on those actions that will or are likely to have a significant impact on matters of National Environmental Significance.

The oil and gas industry has the potential to affect a number of these matters of national environmental significance, and so the activities of the industry, including exploration and production drilling are constantly evaluated as to whether or not they require the approval of the Environment Minister and conditions imposed under the EPBC Act.

Q: Who regulates Offshore Petroleum Safety?
A: The legislation and regulations are administered by the National Offshore Petroleum Safety Authority (NOPSA).

NOPSA regulates the occupational health and safety of people at or near offshore petroleum facilities in Commonwealth waters, and State/Northern Territory coastal and inland waters.

In 1991, in response to the 1988 Piper Alpha disaster in the North Sea, a tripartite Consultative Committee on Safety in the Offshore Petroleum Industry, recommended that key outcomes of the United Kingdom Committee of Inquiry into the Piper Alpha disaster chaired by Lord Cullen be implemented in Australia, and in particular that:

• a safety case regime be adopted in Australia
• performance-based regulations replace prescriptive safety rules.

The offshore safety case regime is implemented through the Offshore Petroleum and Greenhouse Gas Storage Act 2006.

The Federal Department of Resources, Energy and Tourism (RET) has responsibility for offshore petroleum legislation, and has consolidated and updated the safety-related regulations under the Offshore Petroleum and Greenhouse Gas Storage Act 2006. The new consolidated regulations are the Offshore Petroleum (Safety) Regulations 2009 and came into effect on 1 January.

NOPSA is accountable to Commonwealth, State and Northern Territory Ministers. NOPSA commenced operations on 1 January 2005.

The offshore petroleum industry safety regulations are supported by mirror legislation in the relevant State/Northern Territory and coexist with regulation by other agencies.

Q: What about Offshore Well Operations?
A: Offshore well activities are regulated by the Designated Authorities.

Offshore well activities are regulated through the Offshore Petroleum and Greenhouse Gas Storage Act (2006) (OPGGSA) and the Petroleum (Submerged Lands) (Management of Well Operations) Regulations 2004 (Well Operations Regulations) administered by the Designated Authorities – see above for an explanation of the arrangements between the Commonwealth and the States for regulation of offshore petroleum resources.

The Well Operations Regulations were developed to govern well activities (eg: drilling, working over of a well or wireline work) undertaken by an offshore facility on a well.

The Well Operations Regulations are an objective based means of managing the risks associated with offshore well activities to ensure that their design and management systems appropriately manage the identified risks in accordance with good oil-field practice.

The Well Operations Regulations require a company undertaking a well activity to submit a Well Operations Management Plan (WOMP) to the DA, for acceptance. In addition, the company may need to submit an Environment Plan (EP) to the DA, addressing environment issues relevant to the proposed well activity, outlining how they will be controlled and managed.

Figure 1 below illustrates the well operations acceptance process required under the objective based regulations and the interaction with the Designated Authorities and the National Offshore Petroleum Safety Authority (NOPSA) – see below for an explanation of NOPSA’s jurisdiction.

Q5. Is the safety regime more stringent than in the US?
The goal-setting regime used in Australia is a different type of regulation to that used in the US. The Australian Government (Department of Resources, Energy & Tourism) strongly supports the Australian duty of care safety case regime for best practice offshore petroleum industry regulation. This regime enables a more responsive approach because it allows companies to implement the latest technology as and when it becomes available rather than waiting for regulations to be updated.

Q6. Does Australia have regulations on blowout preventers?
There are no specific requirements for a certain type of blowout preventer to be used. However under the regulations that apply to the industry’s well operations, they work towards preventing well blowouts using well operations, the technology and the management practices they believe is most effective. This constitutes a risk-based approach to regulation rather than a prescriptive one. The Australian regulators do expect companies to follow current good industry practice on the use of preventative barriers (including blow out preventers), or else justify an alternative approach. Accepted good industry practice will often be based on standards such as those from the American Petroleum Institute (API).

Q7. Will safety regulations be changed?
This depends on the findings of the investigations into the Deepwater Horizon incident and the Recommendations of the Montara Commission of Inquiry. It will be for Governments and Ministers to consider whether any changes to the safety regime in Australia are required.

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C. Hydrocarbon Releases

Q1. What is a hydrocarbon release?
This is when oil or gas is unintentionally released into either the marine environment below sea level (eg. oil spill) or into the atmosphere above sea level. Liquid hydrocarbon releases, whether released into the marine environment or contained on the installation, are reported Australian regulators, including NOPSA.

Uncontrolled releases of hydrocarbons on a facility are classified as dangerous occurrences by NOPSA, and therefore, offshore petroleum facilities are required to notify NOPSA as soon as practicable after any such occurrence at or near the facility. Other dangerous occurrences that must also be reported by the industry as soon as practicable include:

• fire or explosion;
• collision of a marine vessel with the facility;
• an uncontrolled release of hydrocarbon vapour exceeding 1 kg;
• an uncontrolled release of petroleum liquids exceeding 80 litres;
• a well kick exceeding 50 barrels;
• an unplanned event that required the emergency response plan to be implemented; or
• damage to safety-critical equipment

Q3: Have there been many oil spills in Australian waters from oil and gas exploration and production activities?
Prior to the Montara incident in the Timor Sea, typically the industry accidentally released less than 2,500 litres of oil into the marine environment. The latest figures for the industry from 2005 are shown below, and as a percentage of overall production.

Q4. Could an oil spill like the one in the Gulf of Mexico happen in the UK?

As we do not yet know the exact causes or circumstances in the lead up to the Deepwater Horizon incident, we are not in a position to be able to comment on whether a similar accident could happen here in the Australia. However, it is clearly important that we closely follow the investigations into the incident, learn any relevant lessons and apply these learnings as quickly as possible.

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D. Blowouts

Q1. What is a blowout?
A blowout is an uncontrolled and undesired ‘kick’ of crude oil or natural gas (or a mixture of the two) in the well bore, which comes about following a failure in the pressure control systems. A blowout occurs when well pressure exceeds the ability of the wellhead valves to control it.

Q2. What barriers are put in place to prevent a blowout?
Wells are controlled using two basic components: an active component which uses drilling fluids to control the pressure within the well (this pressure is constantly monitored throughout the drilling process) and a passive component which, in the case of failure in the pressure control systems, is a “fail safe” method to prevent a blowout.

• Pressure control systems: the first line of defence in well control is to have sufficiently dense drilling fluid in the well bore to prevent reservoir fluids entering the well. During drilling, the strong upward pressure from the fluids in the reservoir such as gas, water or oil (the formation pressure) opposes the downward pressure of the drilling fluid (or mud). This pressure is known as the bottomhole pressure. If the formation pressure is greater than the bottomhole pressure, hydrocarbons could enter the well bore and, if uncontrolled, lead to a blowout. To prevent this from happening, when a rise in the formation pressure is recorded, the drilling fluid engineer increases the mud density to balance the pressure and keep the wellbore stable.
• Blowout preventer (BOP): the next line of defence is the blowout preventer. The blowout preventer or BOP is a large, mechanical device designed to seal off a well at the wellhead when there is imminent risk of a blowout. A number of different types of BOPs are used in an arrangement configuration, called a "BOP stack." Systems of rams (opposing pistons which move horizontally across the top of the well, creating a seal around the drill string, or shear rams to sever) and annular preventers (which deploy an elastomer cork-like device) are used to close off the well.

The diagram below shows a fixed installation blowout preventer (BOP). A BOP located on the seabed would have similar features.

Source: Schlumberger website

Q3. How is the BOP switched on and off?
The BOP is triggered remotely, using a hydraulic, electronic or acoustic signal. Once the well has been sealed, the drilling mud density within the hole can be increased until adequate fluid pressure is achieved and the BOP can be opened for operations to resume.

Q4. Can the signal that triggers the BOP be switched on automatically?
Some new drilling rigs incorporate a system through which BOPs can be switched on automatically, ie. without a driller needing to activate using a switch.

Q6. If the signal to trigger the BOP fails, is there another line of defence in place?
There are independent redundant control systems on subsea BOPs so there are back up controls in the event one system fails.

Q7. Have there been many blowouts in Australia?
Including the Montara incident in the Timor Sea, there have been 7 offshore well blowouts during Australian drilling and production operations. Until the Montara oil field incident occurred on 21 August 2009, there had not been a blowout in Australian waters in over twenty five years of operations. The last blowout occurred in 1984 in Bass Strait during a production drilling operation.

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E. Environmental Effects of Oil Spills

Q1. How can an oil spill occur?
Accidental discharges of oil can arise from equipment failure or from human errors during a range of offshore operations, e.g. the transfer of diesel from supply vessels, overfilling of tanks, well operations and incorrect operation of produced water treatment equipment.

Q2. How could an oil spill affect Australia’s marine environment?
The environmental impact of an offshore oil spill will depend on a number of factors including:

• The quantity and nature of the oil spilled and its behaviour at sea;
• The weather conditions and season;
• The type and effectiveness of the clean-up response;
• The ecological nature of the area;
• Its sensitivity to oil pollution.

Oil spilled at sea will break up and will disperse into the marine environment over time. This dissipation is the result of several weathering processes, including evaporation, dispersion, dissolution, emulsification, sedimentation and sinking and biodegradation.

Q3. How might an oil spill affect wildlife?
Possible environmental effects range from acute toxicity caused by low molecular weight hydrocarbons to smothering effects due to heavier oils and weathered products which find their way to the seabed. The presence of toxic components may induce temporary effects such as narcosis and tainting of tissues, which usually subside over time.

Marine bird populations can be particularly vulnerable during their moulting season since they tend to congregate on the sea surface. Oil exposure may cause drowning, starvation and loss of body heat following fouling of plumage.

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F. Oil Spill Response

Q1. In the event of an oil spill, how do operators respond?
As mentioned above, in all cases where there is a non permitted release of hydrocarbons on a facility , the operator is required to notify NOPSA as soon as is reasonably practicable.

In cases where there is a release of hydrocarbons into the marine environment, other stakeholders will be engaged as required, for example the Australian Maritime Safety Authority….

The National Plan to Combat Pollution of the Sea by Oil and Other Hazardous and

Noxious Substances (The National Plan) provides the umbrella arrangements for oil spill contingency planning and response for Australia. The National Plan is managed by the Australian Maritime Safety Authority (AMSA) on behalf of the Federal, State and Northern Territory governments and the oil and shipping industries.

The Australian oil industry is represented on the National Plan Management Committee and on the National Plan Operations Group, along with shipping industry and Federal, State and Territory government representatives. Full details of the National Plan and its related management arrangements are available on the AMSA website http://www.amsa.gov.au.

Depending on the level of risk and the spill modelling, the response will range from surveillance to monitor how a slick is behaving, through to the use of chemical dispersants and then to physical containment and recovery of the oil. During an actual event all of these are available should they be required.

What is AMOSC? Who funds it and what does it do?

• The Australian Marine Oil Spill Centre (AMOSC) was established in 1991 as a wholly owned subsidiary of the Australian Institute of Petroleum. AMOSC’s roles are to provide:
• Equipment and personnel on a 24-hour standby basis to respond to a major marine oil spill
• Oil spill response training for member companies and other interested parties
• Advice on use of oil spill equipment and response services.
• Operational links to international oil spill response organisations
• Administration of the oil industry mutual aid arrangements for responding to oil spills

The activities of AMOSC are fully integrated into ‘The National Plan to Combat Pollution of the Sea by Oil and Other Hazardous and Noxious Substances’, managed by the Australian Maritime Safety Authority on behalf of the Federal, State and Northern Territory governments and the oil and shipping industries.

Participating oil companies and other subscriber companies to AMOSC carry out the vast majority of the oil and gas exploration and production, offshore pipeline and terminal operations, and crude oil and petroleum product tanker movements around the Australian coast.

Q2. How is likely environmental damage gauged?
In the case of an acute oil spill, the response first involves aerial surveillance to determine the extent of the spill and the direction the oil is heading.

Oil spill model systems are used by industry and government to assist in planning and emergency decision making. Predicting the wind direction and sea current patterns are critical to the accuracy of such systems.

Q3. Is there a fund in Australia which can be used to pay for oil spills if a company is unable to meet its liabilities?
A levy is imposed on all commercial shipping using Australian ports to fund the National Plan arrangements. In addition, the oil industry in Australia contributes substantial funds and resources to these National Plan activities and the national spill response equipment stockpile through the AMOSC training and services programs, and the AMOSC equipment stockpile which are outlined below.

The Australian oil industry, through the Australian Institute of Petroleum (AIP) has signed an MOU with AMSA further elaborating the responsibilities and commitments of both parties to support and work together on key operational aspects of the National Plan.

Before a drilling program is approved, companies are required to have current insurance policy to cover expenses associated with pollution event in place.

Q4. Who provides the oil spill response services?
The National Plan sets out clear arrangements for oil spill contingency and response activities and responsibilities. There are clear divisions of responsibility between governments and industry for response to an oil spill. ‘Statutory Agency’ responsibilities are clearly defined in the National Plan, as are the roles of ‘Combat Agencies’ which have responsibilities for action in response to an oil spill.

The National Plan also sets out arrangements for contingency planning, including a comprehensive suite of training programs for personnel in preparation for responding to an oil spill, and a comprehensive stockpile of oil spill response equipment located around Australia for quick access when needed. These contingency arrangements provide for clear integration of Federal, State and industry training programs and equipment stockpiles.

Q5. What role is there for industry in an oil spill response?
AMOSC Involvement in Oil Spill Response Activities

Australian oil industry personnel also participate directly in National Plan activities.

Industry Advisers have been nominated by AMOSC members to provide a direct link between the government appointed Marine Pollution Controller and the affected company in the event of an oil spill; the Industry Adviser also provides the direct link between the affected company and the agency/organisation providing the oil spill response.

Selected industry personnel have also been nominated as members of the National

Response Team, a group of expert industry and government personnel available to assist the Combat Agency in responding to an oil spill.

Q6. Would other countries provide assistance?
Oil Industry Mutual Aid Arrangements – AMOSPlan

The co-operative arrangements for response to oil spills by the Australian oil and associated industries are set out in the AMOSPlan, which is managed by AMOSC. A copy of the AMOSPlan is available on the AMOSC website http://www.amosc.com.au

In recognition that oil spills may require response efforts beyond an individual company’s immediate capabilities, the Australian oil industry has developed over many years co-operative arrangements for mutual aid. These arrangements are brought together under the AMOSPlan and cover

• AMOSC Centre Rules which set out AMOSC operations and AMOSC relationships with the two classes of AMOSC members
• Various legal and contractual agreements between AMOSC and its member companies (most of which are put in place at the time a company joins AMOSC)
• Core Group Secondment Agreements covering arrangements for secondment of company staff to AMOSC, particularly to supplement
• AMOSC staff during an oil spill response
• Principal and Agency Agreements which set out the basis on which personnel and company equipment can be loaned by each company to AMOSC
• Master Service Contracts which set out the basic conditions for hire of resources from AMOSC (including equipment and personnel hired by AMOSC from other companies
• A Master Service Contract between AMOSC and AMSA to enable AMSA to hire equipment and personnel from AMOSC on behalf of the National Plan
• A Resources and Services Alliance between AMOSC and Oil Spill
• Response Ltd (OSR) to enable activation of international oil spill response services as needed on behalf of the Australian oil industry and the National Plan
• Mutual Aid Contacts who are nominated by all AMOSC member companies.
• The AMOSPlan can be activated by a company if it believes it requires additional resources to assist in responding to an oil spill. This may involve direct activation through AMOSC, or activation of resources from another specific company through
• AMOSC Mutual Aid Contacts

Q7. Does Australia have the oil spill response equipment to respond effectively to a significant, sustained oil spill?

Oil Spill Response Equipment
The National Plan takes an integrated approach to the acquisition, location and use of oil spill response equipment held by Federal and State/Territory government agencies, and the oil industry. Individual oil companies hold stocks of equipment to enable them to meet potential Combat Agency responsibilities in the event of an oil spill, and to assist other oil companies as part of mutual aid arrangements. AMOSC also holds a major stockpile of oil spill response equipment at its Geelong headquarters with secondary stockpiles in Broome and Exmouth.

AMOSC stockpile equipment is located in sites that facilitate rapid deployment of equipment by air and/or road to all parts of Australia likely to be impacted by a marine oil spill. AMOSC conducts regular annual reviews and maintenance of oil industry equipment stocks to ensure that all equipment is in a condition for immediate use and that it remains fit for purpose.

All oil spill response equipment available for use in responding to an oil spill is listed in the Marine Oil Spill Equipment System (MOSES) which is operated by AMSA.

The types of equipment held in the ’national’ stockpile include

• Oil spill dispersant
• Dispersant spraying equipment for use on vessels and on land
• Various types of floating booms and oil containment equipment
• Various types of surface skimmers and other devices for collecting oil floating on the water surface
• Equipment to support oil spill clean-up on the shoreline.

AMOSC and AMSA jointly fund a contract which provides for a number of agricultural industry aircraft to be available at very short notice to undertake aerial spraying of dispersant on marine oil spills. Aircraft are available for mobilisation with less than four hours notice from one of six locations around Australia, with additional aircraft available for mobilisation within 24 hours.

Additional oil spill response equipment is available to AMOSC through its relationship with Oil Spill Response Ltd, from the OSR bases in Singapore, Bahrain and Southampton. This includes access to very large stocks of dispersant and Hercules aircraft equipped to spray large quantities of dispersant.