**Check against delivery
Introduction
Good morning, ladies and gentlemen.
It's a great pleasure to be opening this conference today.
It is APPEA's 50th anniversary conference and it is good to be celebrating it with you.
It is particularly appropriate to be holding this event in Queensland where first gas was discovered during water bore drilling at Roma more than a century ago, in 1900.
On the back of this discovery and subsequent testing in 1901 and 1904, the citizens of Roma erected a gasometer, laid pipes and set up lamps in the main street.
And - for a whole ten days in 1906 - the main street blazed with light supplied by natural gas - until the well ceased to flow due to a blockage.
Not to be deterred, the pioneer explorers persisted with the search for oil and gas in the region, and while there were a number of discoveries and the industry had a few false starts, it was another 60 years before success truly arrived when AAR Ltd flowed gas from the Pickanjinnie formation at 182,000 cubic metres a day in 1961.
It was in this same period that discoveries were made at Rough Range, heightening interest in Western Australia, and of course, there were a string of discoveries in Bass Strait that took Australia to a position of oil self-sufficiency in less than a decade.
It is worth reflecting on Rick Wilkinson's words in "Where God Never Trod", and I quote:
"What amazes me most about Australia's upstream oil industry is that commercial production of indigenous oil reserves is such a recent occurrence. So swiftly and completely did success come during the 1960s that the toil of 150 years prior to that decade has been erased from many memories..."
I don't think there would be any argument here if I described Rick as the "official historian" of the Australian petroleum industry and I must say I am looking forward to reading his latest book, "Knights, Knaves and Dragons", released here today to commemorate APPEA's 50th anniversary.
But Rick's words are worth remembering because the energy security the Australian community takes for granted today was actually very hard won.
It is overwhelmingly through the ingenuity of your geoscientists and engineers and the advances they made in exploration and production knowhow, that it all came together in the 1960s.
Of course, the faith of investors in Australia and the expertise they brought - largely from the United States - was also vital.
It may surprise you that successive governments - of all persuasions - played a role too.
According to Rick's new book, it was Prime Minister Billy Hughes who drew attention to Australia's precarious liquid fuel position during World War One - leading to a reward in 1920 for the discovery of commercial oil fields anywhere in Australia - the first exploration incentive.
The next 20 years or so saw a variety of other policies to encourage exploration, but with wartime emergency measures in force in the 1940s, the Commonwealth was again very focussed on Australia's vulnerable energy security position.
So in May 1946, Prime Minister Ben Chifley created the Bureau of Mineral Resources, Geology and Geophysics - now Geoscience Australia - an initiative that has served Australia very well for the last 65 odd years - and one which I remain firmly committed to.
Interestingly, by 1959, the industry itself had become very concerned about the decline in exploration activity and regarded the Menzies Government's incentives for exploration as insufficient.
That was the catalyst for the formation of this very longstanding - and I might say, very highly respected - industry association, now known as APPEA.
APPEA has played a very important role in helping all Australian governments formulate policy for petroleum exploration and development for half a century.
That's quite an achievement.
In my time as Minister, I have personally appreciated the way APPEA and its members have participated in some very difficult debates.
That's not to say we have always agreed, but as it should be, we have been able to sit down quietly and calmly - and resolve our differences in a mature way.
Which takes me to the elephant in the room.
Resource Super Profits Tax (RSPT)
I know there is considerable concern here today about the Government's new tax plan, particularly for onshore producers, the emerging coal seam gas industry and the North West Shelf producers.
So let me clarify a few things first:
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Those resources offshore Australia that are already covered under the Petroleum Resource Rent Tax (PRRT) - such as Bass Strait or Pluto - and those that would be covered under the PRRT - such as Browse or Wheatstone - will continue to be covered under the PRRT.
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Projects covered under the PRRT will also have the option to be covered under the RSPT. I know that may not be attractive to many of you today, but let's not forget, that after consultation with the industry in the 1980s, the PRRT was refined so that in fact Esso/BHP elected to move to that taxation regime in 1990/91 following its introduction in 1988.
This is important because it demonstrates that - inevitably - governments and industry find a middle ground with these reforms that accommodates both the best interests of shareholders - and - the national interest.
That is the very nature of democratic governments and free and open societies.
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As was the case back then, the Rudd Government today is committed to a genuine consultation process about the RSPT.
And as I have said many times in recent weeks - around every reform there is room for negotiation about the finer detail.
That is why I encourage all of you to engage with the Resources Tax Consultation Panel.
It is open for business and it is listening.
I have been assured of that not only by the Panel, but by many of you who have already engaged in the process.
In fact, I am pleased to say the coal seam gas companies were the first people in the door on the Monday morning after the new tax plan was announced on Sunday 2nd May.
This is an emerging industry in which Australia is the world leader, signing the first ever fully termed gas sales agreement for LNG from coal seam methane with China in March this year.
With economically demonstrated reserves of around 100 years, this is an industry that both the Australian and Queensland governments see as part of the nation's future - the next generation of our great petroleum industry.
I note that we are also world leaders in floating LNG technology.
And as we have always done - for Bass Strait, for the North West Shelf - we are committed to putting in place a stable fiscal regime, competitively neutral with the rest of the industry, that will get coal seam methane and floating LNG off the ground.
But I say to all of you - whether you are in coal seam methane, conventional onshore oil and gas, or the North West Shelf - engage in the process, share your views, explain your concerns.
This is a genuine consultation process, we are listening and we share a common goal - a stable fiscal regime that delivers both a fair return for your shareholders and a fair return for the Australian community from the nation's resources.
But taxation and regulatory regimes are not the only factors which will determine your industry's future prosperity and security.
We all need to recognise that the Australian community's level of trust in, and goodwill toward your activities - will inevitably shape your future license to operate.
Which brings me to the second elephant in the room.
The Impact of Montara and the Gulf of Mexico Blowouts
With Varanus Island on 3rd June 2008, Montara on 21st August 2009, and the Deepwater Horizon in the Gulf of Mexico on 21st April this year, the industry has had a very unfortunate 2 years.
The blowout at Montara in the Timor Sea last year has had an impact on the national psyche.
And it will take a long time to rebuild confidence in the industry as a result.
The Deepwater Horizon incident in the Gulf of Mexico, in which 11 men tragically lost their lives, has served to deepen this crisis of confidence.
The community is entitled to expect governments, regulators and the industry to ensure that exploration and production activities are carried out safely and in a manner that protects the environment.
Collectively, we have let the community down and we must act to ensure the mistakes of the past don't occur again.
That is why I launched the Varanus Island and maritime incident inquiries in early 2009 and subsequently amended the offshore petroleum legislation to provide for a wide-ranging independent investigation power into significant incidents.
This week I will be releasing the Government's formal response to earlier inquiries - on which we have already acted, with a number of amendments currently before the parliament to enhance safety and integrity regulation and the amendment to provide a wide-ranging incident investigation power already enacted.
In addition, the Government has announced its intention to rewrite the Navigation Act 1912.
My colleague Anthony Albanese is leading this.
Working together, we'll address any unintended consequences from the disapplication of the Navigation Act to offshore petroleum regulation.
In finalising the response to previous inquiries, my Department will now consult with you to determine the practical implications of the recommendations and understand any concerns you may have with implementation.
The Montara Commission of Inquiry will report in mid-June and will also provide recommendations for government, industry and regulators to help us lift the safety and environmental performance of the industry.
I intend to act appropriately and promptly on its recommendations.
There have been calls from some parts of the community for a moratorium on acreage release and industry activities.
In my view, Australia has to learn the lessons of Montara and the Gulf of Mexico, and ensure firstly, that we have a world-class regulatory system in place and secondly, that we have competent and professional operators in the industry.
Our approach must be to ensure our oil and gas exploration and production operations are the best and safest in the world.
Shutting down the industry and putting the nation's energy security, jobs and the economy at risk does nothing towards achieving any of these goals.
I note that the industry is taking important steps forward and I congratulate you on the launch of the new and innovative Common Safety Training Program which is now required for all new entrants to offshore drilling and production facilities.
The Program, with a requirement for both training and workplace demonstration of key safety practices is a global first.
My current priority is to move forward with a single national regulator.
A New National Regulator
It is clear that regulatory overlaps and inconsistencies in the application of the offshore petroleum legislation across jurisdictions must be addressed if we are to improve safety and environmental performance.
The Productivity Commission also identified benefits in streamlining industry regulation.
I am working closely with my colleagues on the Ministerial Council of Mineral and Petroleum Resources to deliver a single national regulator.
My preferred model is consistent with the industry's view that the safety of people, the integrity of facilities, the protection of the environment, and day to day operations must be regulated in an integrated way, with resource management issues regulated separately.
As I have always said, I will also take into account the Montara inquiry before finalising a view, but I am determined that the strongest model for regulating safety, integrity and the environment will prevail.
New Acreage Release
As I said earlier, there have been calls to place a moratorium on acreage release, however, that will do nothing to improve industry safety.
I also note that once acreage is awarded, all petroleum exploration and development activities are subject to stringent environmental standards, approvals and reporting requirements set out in petroleum-specific environmental legislation and the Environment Protection and Biodiversity Conservation Act 1999.
Importantly, the nation's energy security - that we have taken for granted for the last 50 years - is something we cannot take for granted for the next 50, particularly in oil, and in Western Australia, access to domestic gas is also a hotly debated issue.
We need only to consider that Australia presently has a $16 billion trade deficit in crude oil, refined products and LPG, and that could grow to $30 billion by 2015.
Today we have 220 offshore exploration permits, 39 retention leases and 80 production licences - with the offshore industry providing 90 per cent of Australia's oil and gas production.
So today, I'm delighted to launch the 2010 Offshore Petroleum Exploration Acreage Release.
There are 31 areas across five basins on offer this year, providing a range of investment opportunities.
They vary in size, known prospectivity, water depth and level of existing geological data and knowledge.
As always, data is available to you at little or no cost - something that sets Australia's acreage apart from others - and highlights the important contribution Geoscience Australia makes to this industry.
Geoscience Australia's focus over the next year will be to mine and reprocess the significant data it has now collected to extract as much value as possible and strategically target future work programs to enhance Australia's long-term energy security.
John Hartwell from my Department will provide more detail on the Acreage Release in the session after lunch.
Conclusion
In closing, let me say that last year was, despite its problems, also a good year for the industry in Australia.
Offshore petroleum activity expenditure in 2009 alone exceeded $3 billion - a figure I expect will increase this year as we move beyond the global economic downturn.
LNG production capacity has nearly tripled in less than a decade to almost 20 million tonnes per year, with another four million tonnes expected from Pluto in early 2011.
And we saw the giant $43 billion Gorgon project come to fruition, more than 30 years after its discovery - Australia's biggest ever resources project.
The pioneers from the past half-century have laid the groundwork for those yet to come.
Ladies and gentlemen, this is one of the most important periods of change that our resources sector will face.
By working together we can achieve a stronger, more resilient, more competitive industry for the next 50 years and beyond.
I congratulate APPEA for what is shaping up to be another excellent conference and I look forward to talking with many of you and visiting the exhibition during the day.
Thank you.