Environmental Regulations in Australian Offshore Oil and Gas Industry

National Profile

This profile has been produced with the assistance of Carolyn Hinde and Chris Lloyd of the Petroleum and Electricity Division of the Department of Industry, Science and Resources [DISR] Australia.

Summary of Australian offshore regulatory measures

There is an emphasis on legislation to regulate the industry

• Environmental legislation applies specifically to the offshore petroleum industry through the Petroleum (Submerged Lands) Act 1967 and the complementary State and Territory legislation

• Environmental legislation applies generally under the Environment Protection and Biodiversity

• Conservation Act 1999 to any activity that triggers its operation

• Coastal waters are subject to State and Territory legislation

• The State and Territory resource departments administer legislation for both coastal and Commonwealth waters

• A negotiated agreement exists between the Environment Department and the leading Industry Association

• International agreements do apply

• Economic incentives are not in place

• Voluntary measures do apply in the form of codes of practice and formal alliances

• Reporting and monitoring of environmental performance is required

• Industry has voluntary reporting instruments in place for Climate Change

The regulatory process in Australia relies on legislation with considerable use of co-regulatory approaches.

An interesting feature is that the Commonwealth (national) environment agencies have developed strong relations with the leading industry association, to develop sustainable multiple use solutions to the whole question of competing resource interests. Through the use of informal agreements, this is laying the basis for increased cooperation and awareness of the needs of both parties in achieving the objectives of sustainable development.

Contact Information:

Ms Chrys Papadopoulos, General Manager, Offshore Petroleum, Safety, Environment and Taxation Branch, Petroleum and Electricity Division. Department of Industry, Science and Resources, GPO Box 9839, Canberra ACT 2601 e. mail: chrys.papadopolos@isr.gov.au Fax [612] 6213-7945

Mr Chris Lloyd, Manager, Environment Section, Petroleum & Electricity Division, Department of Industry, Science & Resources, GPO Box 9839, Canberra ACT 2601 e. mail: chris.lloyd@isr.gov.au Fax [612] 6213-7945

Mr. Karl Heiden, Environment Assessment and Approvals Branch, Environment Australia (Federal Department of Environment), PO Box 787 Canberra ACT 2601 e. mail: karl.heiden@ea.gov.au Fax [612] 6274 1620

Other contact persons for further details:

Mr Peter Taylor, Director, Industry Operations, Australian Petroleum Production and Exploration Association, GPO Box 2201, Canberra ACT 2601
e. mail: ptaylor@appea.com.au Fax [612] 6247 0548

Ms Robyn Bromley, Director, Marine Protected Areas East, Marine & Water Division, Environment Australia, PO Box 787, Canberra Act 2601
e. mail: robyn.bromley@ea.gov.au Fax [612] 6274 1771

Ms Hilary Sullivan, Acting Director, Marine Protected Areas West, Marine & Water Division, Environment Australia, PO Box 787, Canberra ACT 2601
e. mail: hilary.sullivan@ea.gov.au Fax [612] 6274 1771

For information about the state regulatory process contact:

Graham Cobby, Manager Environment, Petroleum Division, Department of Mineral and Petroleum Resources, 100 Plain Street, East Perth WA 6004
e. mail: g.cobby@dme.wa.gov.au Fax [618] 9222 3799

Mr Horacio Haag, Manager, Petroleum Operations, Safety and Environment Division, Department of Natural Resources and Environment, PO Box 500, East Melbourne Victoria 3002
e. mail: Horacio.Haag@nre.vic.gov.au Fax [613] 9412 5152

Mr Tony Waite, Petroleum Adviser, Energy Division, Department of Mines and Energy, GPO Box 2901, Darwin NT 0801
e. mail: Tony.Waite@dme.nt.gov.au Fax [618] 8999 5530

Related Websites:

The Department of Industry, Science and Resources website which outlines all environmental approvals necessary for activities in Commonwealth waters: http://www.isr.gov.au/resources/petr_envr/

The Environment Australia website which outlines environmental legislation:
http://www.ea.gov.au

The Australian Petroleum Production and Exploration Association
website details guidelines and codes and is located at http://www.appea.com.au

Western Australian Department of Mineral & Petroleum Resources:
http://www.dme.wa.gov.au/

Victorian Department of Natural Resources & Environment:
http://www.nre.vic.gov.au/

Northern Territory Department of Mines & Energy
http://www.dme.nt.gov.au/

1. Major bodies that exercise regulatory control over environmental aspects of offshore operations, either directly or indirectly

• Department of Industry, Science and Resources [DISR]- through the Petroleum (Submerged lands) Act 1967 [PSLA] in offshore areas under Commonwealth jurisdiction and delegates administrative responsibility for adjacent Commonwealth waters to the States and Territories.

• Environment Australia - through the Environment Protection (Sea Dumping) Act 1981 and the Environment Protection and Biodiversity Conservation Act 1999 [EPBC Act]. State and Territory agencies exercise control over operations in coastal [within the first three nautical miles of the territorial sea] areas under their jurisdiction.
  The EPBC Act is not limited to Commonwealth territorial waters, and the Sea Dumping Act applies within State waters, but not within waters 'internal' to a State (ie enclosed bays and river estuaries etc).

The Coastal Waters (State Powers) Act 1980 (Commonwealth), the Coastal Waters (State Title) Act 1980 (Commonwealth) and the Offshore Constitutional Settlement (OCS) between the Commonwealth and the State power relating to petroleum resources effectively gives the States full legislative powers in the first 3 nautical miles of the territorial sea zone and administrative responsibility over adjacent Commonwealth waters.

The Commonwealth PSLA applies to the continental shelf beyond the 3 nautical mile limit, while the relevant State Petroleum (Submerged Lands) Act applies in areas landward of the 3 nautical mile limit. Commonwealth marine pollution and environmental laws apply to the environmental performance of the petroleum industry in all offshore areas. Within the 3 nautical mile limit, the relevant State marine pollution and environmental laws apply and these areas include some gulfs and waters inside fringing islands, ports and rivers.

2. Major industry associations with instruments for environmental performance of offshore oil and gas activities

The Australian Petroleum Production and Exploration Association (APPEA) is the national representative organization of the upstream oil and gas industry in Australia. It has over 50 member companies engaged in oil and gas exploration and production activities in Australia and over 80 associate member companies who provide services to the exploration and production parts of the industry.

The aim of the Association is to promote an efficient and effective policy, legislative and administrative framework for a competitive, safe, socially responsible and environmentally responsible petroleum exploration and production industry in Australia. Although some 90% of the oil and gas production occurs offshore, largely in Commonwealth waters, there is very significant onshore exploration and production, mostly in Queensland, South Australia and Western Australia.

APPEA regularly updates its Code of Environmental Practice, which provides the Australian petroleum industry with clear guidance on management practices and measures to protect the environment during onshore and offshore exploration, development and production.

APPEA have entered into a voluntary Greenhouse Challenge Agreement under which the organization submits an annual report on emissions.

3. National Regulatory Frameworks

i) Major environment legislation applying directly to offshore operations

Under the current regulatory regime, environmental performance of the Australian offshore petroleum industry is regulated primarily through various provisions of the PSLA 1967 in areas under Commonwealth jurisdiction [and similar State legislation in areas under State jurisdiction]. In implementing the requirements of this legislation there is considerable use of co-regulatory approaches.

The PSLA contains general environmental provisions. For example, all title operators and companies operating in Commonwealth waters are required to carry out operations in accordance with 'Good Oil-Field Practice' i.e. do all things that are generally accepted as good and safe in carrying out exploration for the recovery of petroleum. Work practices under the PSLA cover the control of flow and prevention of waste or escape of petroleum or water and prevention of the escape of any mixture of water or drilling fluid with petroleum or any other matter.

Objective based Regulations for Management of the environment came into force under the PSLA in 1999. The key objectives of this regulation include:

• Encouraging continuous improvement in environmental performance by the industry

• To adopt best practice in achieving agreed environmental protection standards in industry operations

• To ensure operations are carried out in a way consistent with the principles of ecologically sustainable development

The regulations require the operator to submit an Environmental Plan before commencing petroleum activity. This plan is to provide for appropriate environmental performance standards and measurement criteria and appropriate implementation strategy, monitoring, recording and reporting arrangements. Details and guidelines are available on the DISR website:
http://www.isr.gov.au/resources/petr_envr/approvals.html

The EPBC Act, which replaces the Environmental Protection [Impact of Proposals] Act 1974 [and related legislation such as the Whales Protection Act 1980, the Endangered Species Protection Act 1992, the National Parks and Wildlife Conservation Act 1975 and the World Heritage Properties Conservation Act 1983], may be triggered if the proposed action will or is likely to significantly affect matters of national environmental significance [NES]. Matters of NES are identified as World Heritage properties, Ramsar wetlands, nationally threatened species and ecological communities, migratory species, Commonwealth marine areas and nuclear actions. The Act requires that such actions will require the environmental assessment and approval of the Minister for the Environment and Heritage. This is independent and in addition to the Environmental Plan required under the Petroleum (Submerged Lands) (Management of Environment) Regulations.

The States and Territories apply similar regulatory frameworks in offshore areas under their jurisdiction.
The Environment Protection (Sea Dumping) Act 1981 may apply to a defined set of offshore operations. Section 5 of the Sea Dumping Act specifically excludes the dumping of wastes directly arising or related to the exploration, exploitation and associated off-shore processing of seabed mineral resources. To date, the Sea Dumping Act has only been applied to the disposal of facilities at the decommissioning stage.

Other Relevant Commonwealth Acts

• Aboriginal and Torres Strait Islander Heritage Protection Act 1984

• Australian Heritage Commission Act 1975

• Fisheries Management Act 1991

• Historic Shipwrecks Act 1976

• Industrial Chemicals (Notification and Assessment) Act 1989

• Navigation Act 1912

• Ozone Protection Act 1989

• Protection of the Sea (Prevention of Pollution from Ships) Act 1983

State Waters

In coastal state waters the regulatory situation differs in each state and territory. The Western Australian policy on the environmental aspects of the offshore petroleum industry is largely regulated by the WA Department of Mineral and Petroleum Resources (MPR). MPR refers about 10-20% of petroleum proposals to the Environment Protection Agency for a determination on the type of environmental assessment required for the activity. For areas outside State Waters, the EPA cooperates with MPR and with Commonwealth authorities to manage for the protection of the environment. The MPR will refer all offshore petroleum proposals within WA coastal waters that are likely to have a significant impact on the environment. The following criteria are used by the MPR to determine whether a proposal has the potential for significant impacts:

• character of the receiving environment and the use and value which society has assigned to it;

• magnitude, spatial extent and duration of anticipated change;

• resilience of the environment to cope with change;

• confidence of prediction of change;

• existence of policies, programs, plans and procedures against which the need for applying the environmental impact assessment process to a proposal can be determined;

• existence of environmental standards against which a proposal can be assessed; and

• degree of public interest in environmental issues likely to be associated with a proposal.
  

Another feature of the WA model relates to ecological risk assessment which is required for new drilling proposals in areas where sensitive environments (e.g. areas of mangroves, inter-tidal coral reefs, sensitive fisheries habitats) are present. The risk assessment should consider the probability of crude oil spill, fuel or drilling mud, the potential ecological consequences and the proposed management measures.

ii) National regulatory environmental regulations which indirectly apply to offshore operation

Ozone Protection Act 1989

iii) Negotiated agreements on environment between industry and government

The Department of the Environment and Heritage (Environment Australia) and APPEA have signed an agreement, which aims to increase co-operation on conservation in the marine environment. This memorandum of understanding commits both parties to early consultation on the development of proposals, exchange of information such as environmental research or monitoring projects, co-operation in joint research and co-operation in management arrangements in Commonwealth waters.

An example of how the agreement is being implemented is in Western Australia in the Montebello Region through the implementation of a regional multiple use conservation strategy. The strategy is a collaboration between the Western Australian Government (state government) and petroleum companies facilitated through APPEA. The region is considered important for conservation and biodiversity values and is covered by exploration and production licenses. The strategy will implement an integrated approach to biodiversity, heritage conservation and industry development and provide a practical regional framework for future similar strategies.

iv) Management instruments incorporated into national legislation

The Environment Plan required under the Petroleum (Submerged Lands) (Management of Environment) Regulations establishes a legally binding environmental management system that must be met. The plan includes a demonstration of the environmental effects and risks of the activity, appropriate environmental performance standards and measurement criteria and implementation strategy, monitoring, recording and reporting arrangements.

Where the EPBC Act is triggered the Commonwealth Minister for the Environment and Heritage decides that an activity requires assessment by one of:

• Assessment on preliminary documentation

• Public environment report

• An environment impact statement

• Public enquiry; or

• An accredited process

The Commonwealth is currently examining the interaction between the PSLA [and its environmental regulations] and the EPBC Act, to streamline environmental approval processes.

4. International agreements applied to offshore operations

• International Convention for the Prevention of Pollution From Ships (MARPOL)

• 1996 Protocol to the London (dumping) Convention through the Environment Protection (Sea Dumping) Act 1981 (the London Convention has been superseded by the 1996 Protocol to the London Convention which rather than listing substances that can not be dumped, lists seven things that can be dumped at sea).

• Japan Australia Migratory Birds Agreement (JAMBA)

• Chinese Australia Migratory Birds Agreement (CAMBA)

• Montreal Protocol on Substances that Deplete the Ozone Layer

Much of the Commonwealth marine pollution and environmental law is based on international conventions and agreements to which Australia is a signatory. International conventions apply to all offshore waters within and beyond the 3 nautical mile limit. Obligations are effected through amendment to existing acts where appropriate, for example the Petroleum (Submerged Lands) Act incorporates the relevant requirements of the International Convention for the Prevention of Pollution From Ships (MARPOL). In general, mirror legislation has been enacted by the States to implement the obligations of international conventions within the 3 nautical mile limit and where this is not the case, the Commonwealth laws will apply in these areas.

5. Major economic instruments applying directly to offshore environmental performance

No economic instruments are applied. The environment regulations under the PSLA and EPBC Act include penalties for breaches of environmental and other title conditions including fines and suspension or cancellation of titles.

6. Voluntary environment measures adopted by the national oil industry

The APPEA Code of Practice recognizes and promotes three basic recommendations to its members including that:

• environmental planning should be integral in the planning process,

• industry should ensure minimum impact on the environment, public health and safety by using the best technology, and

• industry should consult with communities about their concerns regarding industry activities.

The Code includes guidance on the development and application of environmental management systems consistent with ISO 14000 standards and a checklist for consideration when conducting petroleum exploration and production activities. (see APPEA Code of Practice in question 2)

APPEA have entered into a Greenhouse Challenge Agreement with the Federal Government. (see question 2)

See memorandum of understanding between the Department of the Environment (Environment Australia) and the Australian Petroleum Production and Exploration Association. (see question 3 iii)

Environmental Regulations for Australian Oil and Gas Industry-
Which instrument is used to deal with selected environmental issues.