Submission to the independent Senate inquiry into the occupational health and safety (OHS) and integrity regulation for upstream petroleum operations with a focus on the incident at the facilities operated by Apache Energy Ltd on Varanus Island

Summary

The submission is developed on an assessment of the systems and practices relating to governance of expert advice for regulation of the Australian offshore petroleum industry when compared to such governance for the US offshore petroleum industry as benchmark but not exemplar.  The assessment uses a model comprising strategic criteria of openness, transparency and accountability, and operational criteria of the use of expertise, timeliness and peer communication.  The assessment results for strategic criteria generally reflect the well known relative secretiveness of Westminister forms of government compared to the more ‘open’ Congressional government. Of particular relevance to this inquiry is the exposure to regulatory capture in the Australian system.  Australia does not have the advisory committee structure for stakeholder input as was legislated in the US as a result of an early history of regulatory capture. Capture is identified as a particular danger when costs and benefits are concentrated in industry and government.  The disruption to gas supply and the resulting economic effects from the Varanus explosion highlight that such a concentration occurs in the petroleum industry and the WA government.(See Senate Economic Committee Report 2008).  If a high level of regulatory capture exists whereby industry advocacy is accepted as government assessment, then it may be relevant to the standard of regulation surrounding facilities involved in this explosion and/or the Karratha Spirit and Castoro Otto incidents and to terms of reference 1,2 and 3 of this inquiry.   It should be noted that the assessment results for operational criteria generally reflect the younger and smaller Australian industry and the consequently smaller expert base to support technical advice for regulation. Of particular relevance to this inquiry would be a possible situation where competition for limited technical expertise left government not achieving quality management standards such that technical advice is signed off by someone with recognised technical expertise relating to that advice. If such a situation exists it may be relevant to the standard of regulation and to terms of reference 1,2 and 3.

 

Recommendation: Assess the operational and control standards of regulation and specifically the adequacy of documentation from government technical reviews of industry submissions relating to relevant Varanus, Karratha Spirit and Castoro Otto operations and OH&S.  The adequacy of the formally recognized level of technical expertise of the government officers signing off those reviews should also be studied in detail.

 

Projects

CARBON EMISSIONS AND STORAGE STRATEGIES AUSTRALIA

PETROLEUM TECHNICAL ADVICE AUSTRALIA