Perth
*check against delivery
Good morning distinguished guests, ladies and gentlemen.
Let me start by thanking APPEA for once again hosting the petroleum industry’s premier safety event.
Belinda, as this will be your last safety conference as APPEA Chief Executive, let me also take this opportunity to thank you for your leadership, your commitment and your substantial contribution to this industry.
Your work has been central to the industry’s success in both meeting the challenges and seizing the opportunities for growth, never more so than over the past couple of years.
I extend a warm welcome to David Byers as incoming Chief Executive and look forward to continuing the Government’s frank, open dialogue and productive working relationship with APPEA when he takes up the reins next month.
Reforming regulation of the offshore industry
Effective collaboration between all parties in the offshore petroleum industry - government, regulators, exploration and production companies and their employees - has never been more important as we progress a range of measures to reform and strengthen safety in this all important industry.
To see so many of you gathered here today reflects your engagement in this process.
Looking back over my remarks to you from last year’s conference reinforced to me just how far we have come in the twelve months since then.
Of greatest consequence has been the Government’s release of, consultation on and response to the Montara Commission of Inquiry report and the Productivity Commission’s review of the regulatory burden on the upstream petroleum sector.
The package of Bills currently before the Parliament will deliver on a core recommendation of these reports by establishing a single national regulator for the offshore oil and gas industry from January next year.
The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) will remove significant unnecessary regulatory burdens and provide an integrated approach to the regulation of safety, the integrity of facilities and the environment.
It will see the Commonwealth assume responsibility for the regulation of petroleum activities within our jurisdiction – a responsibility that until now has been delegated to the states and territories.
Let’s not forget that over 90 per cent of all petroleum production in Australia occurs in Commonwealth waters.
The establishment of the National Offshore Petroleum Titles Administrator (NOPTA) side by side with NOPSEMA will facilitate state and territory governments continuing to have an appropriate role in the decision making process, as well as being kept informed of relevant developments off their coastlines.
Together NOPSEMA and NOPTA will deliver a regulatory approach suited to the needs of a mature and expanding offshore petroleum industry.
With Australia on course to be the world’s second-largest exporter of LNG in the next five years the need to finalise the implementation of these regulatory changes has never been more pressing.
Australia’s conventional gas reserves exceed 164 trillion cubic feet – that’s a huge resource to manage.
Any delay to reform will expose the petroleum industry to uncertainty and unacceptable risk.
As I said to you last year this process is one of continuous improvement.
There is no resting on our laurels and complacency is something we can never afford.
Events such as Montara and Macondo were a stark reminder of this.
That’s why at the same time as we are pursuing the broader reform agenda we have implemented other more immediate changes to the current system.
NOPSA now regulates non-OHS structural integrity for petroleum facilities including pipelines, wells and well-related equipment in Commonwealth waters.
We have clarified the imposition of an OHS duty of care on titleholders in relation to wells and extended NOPSA’s oversight role to cover Well Operation Management Plans.
Meanwhile, an Operational Review will assess NOPSA’s effectiveness in bringing about improvements in occupational health and safety among those working offshore.
That includes NOPSA’s engagement with stakeholders, particularly in relation to safety case development and the implementation and promotion of workplace safety culture.
The review will also consider NOPSA’s role in response to incidents involving the offshore petroleum industry.
I encourage stakeholders to make their submissions to the review panel, which will report to me by the end of November.
Through these inquiries, we’re learning from experience and pinpointing safety improvements.
Industry’s role
In addition to engaging in the regulatory reform process, industry is also undertaking its own work to deliver on our shared commitment to health and safety.
I commend APPEA for its continued leadership in this and also recognise the efforts of individual operators.
Sharing ideas is especially valuable at a time of rapid change for the industry; change that needs careful management to make the most of the opportunities.
There can be no secrets when it comes to finding the best solutions for improving health and safety outcomes.
When I was in Perth in June I had the pleasure of launching the new safe supervisor competency project.
This is yet another example of a practical, industry-led initiative to strengthen safety.
Industry leadership is essential to build a culture of safety, with real and sustained improvements in performance.
Safety, in short, belongs to all of us.
It’s not simply something that crops up in response to emergencies, or as part of a box-ticking exercise.
Training and communication right across the company – these are the factors that make safety a core practice.
It’s a visible commitment at every point in every operation, no matter where you go to work each day.
Safety systems should incorporate the ability to audit performance at all levels and to feed the results back to decision-makers.
And that’s not just for information’s sake, but to weave into the fabric of the whole organisation.
This industry is well-placed to allow for continual review of safety practices to feed back into the safety lifecycle.
The objective-based regulatory regime brings operational flexibility to meet the unique needs of each project.
Everyone with a stake in improving the safety of the industry should embrace this flexibility.
Its nature allows for changes in process and procedure whenever new technology comes along.
And this is critical for the petroleum industry where advances in technology continue apace.
There is no better reminder of this than Shell’s recent final investment decision on its Prelude floating LNG project.
The benefits of this project are many.
The potential opportunities it offers, not least for the development of remote or stranded fields that would otherwise be considered uneconomical, are truly exciting.
But this technological innovation also presents new challenges in terms of regulation and operating procedures.
However, in my view, the framework we are putting in place is designed to accommodate this.
It is a framework that will also go a long way to restoring public confidence in the safe operation of the industry – both in terms of workers and the environment.
The expanding onshore industry: CSG to LNG
Proper regulation and public confidence are equally important if we turn to the growth and development of the onshore petroleum industry.
Public expectations when it comes to human safety and environmental protection, when it comes to the coexistence of communities, agriculture, industry and the natural environment are as high, if not higher onshore than offshore.
The growing coal seam gas industry may be very different to its offshore counterpart, but the responsibility to maintain safe and environmentally-sound operations is just as important.
From a regulatory standpoint, onshore activities of course fall primarily within the jurisdiction of state and territory governments.
The role of the Commonwealth is limited to matters that trigger assessment under the Environmental Protection and Biodiversity (EPBC) Act.
To date three major CSG to LNG projects in Queensland have received approval by my colleague, Minister Burke, under the EPBC Act.
All are subject to a large number of additional conditions over and above those imposed by state approvals processes.
The recent final investment decision on the APLNG project brings total investment on the three projects to around $45 billion.
CSG activity in New South Wales, although currently significantly less than in Queensland, is also growing.
Both state governments are continuing work to settle the appropriate regulatory settings, with New South Wales recently outlining its policy in more detail.
Putting in place the proper framework will go a long way to addressing many of the pressing issues around land access, water management and land use.
As you know only too well a reputation for safety and best operating practice is both hard won and easily lost and industry faces a real challenge to secure community support for coal seam gas operations.
Providing comprehensive and detailed information is fundamentally important, as is transparency and constructive engagement with affected parties, not least the farming community.
I know much work is already underway in this regard under APPEA’s leadership and this must continue.
With a growing number of operators becoming active in the industry it is important also to never lose sight of the fact that the actions of individual companies can and do have an impact on the public’s perception of the industry as a whole.
While issues confronting the onshore industry are different to those confronting the offshore sector, the underlying principles are the same.
It all comes down to questions of proper regulation and effective oversight, operator adherence to best practice and ensuring the highest standard of safety.
Constitutional responsibility for the day to day regulation of the CSG industry rests with the states however the Commonwealth is supportive of approaches that deliver these objectives.
I encourage relevant state governments to co-operate in their efforts in relation to the development of this exciting new industry.
Conventional or unconventional, onshore or offshore, the Australian Government is committed to improving safety in the petroleum industry.
International cooperation
And it is an industry that is truly international in nature in terms of the corporations and people that participate in it.
When it comes to offshore operations in particular, any adverse impact from an incident has the potential to impact on multiple jurisdictions.
The commitment to safety and best practice must therefore be a global one.
All of us have an obligation to share insights to ensure the safety of the offshore petroleum industry.
The true test of whether we’ve learned from Montara and Macondo will be sustained improvement in safety performance.
Tomorrow, the Australian Government is hosting the International Offshore Petroleum Regulators and Operators Summit.
This is something I committed to at last year’s conference.
It will bring together key stakeholders across industry, governments and regulators to assess the impact of Montara and Macondo, and look in detail at the many changes in the global offshore petroleum industry since then.
Together we will discuss ways of improving safety through cooperation, commitment and prevention.
Conclusion
Reforming the safety landscape is necessary – for workers, the environment, the wider community and for the long-term viability of the petroleum sector.
Standards are higher than they have ever been.
Expectations have been raised.
The onus is on industry to demonstrate that safety planning, procedures and operations remain focussed on keeping the workforce safe and incident-free.
Co-operation underpins every measure we take.
Australian petroleum companies have made significant progress, both individually and collectively.
I applaud APPEA’s Montara Response Taskforce for its work on containment, mutual aid agreements, oil spill response preparedness and industry best practice.
But there is always room for improvement.
This is the goal – for governments, for regulators and for everyone who works in the petroleum industry.
I wish you all the best for this conference and for what is going to be a significant week for safety.
Thank you