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Good morning ladies and gentlemen, thank you for the opportunity to address you today.
It is good to be back in Perth for another APPEA event. You will be seeing a lot more of me in Perth because the government is committed to returning the Budget to surplus and the gas industry in Western Australia will be very important to achieving this.
Events such as this are a demonstration of this industry's commitment to workplace safety and duty of care to its workforce.
As it is for you, a safe and secure working environment is a top priority for the Government.
And while Australia has one of the safest offshore petroleum industries in the world, we must continually strive for improvement to maintain world's-best safety practices.
The first annual Offshore Health and Safety Performance Report prepared by our National Offshore Petroleum Safety Authority (NOPSA) which I launched at the June APPEA Conference- provided an analysis of incidents and noted that there is room for improvement.
Specifically, increased gas releases, facility integrity and lifting operations are highlighted as areas of concern.
This Report reminds us that these areas can be addressed by industry by ensuring that all procedures, maintenance and workforce training reflect a commitment to compliance.
These must be accompanied by a strong and embedded safety culture.
NOPSA also has a critical role to play in this regard.
I'm pleased to see the Acting CEO of NOPSA and a number of members of the NOPSA Board in attendance here today.
As many of you would be aware, the term of the inaugural Chief Executive Officer, Mr John Clegg, expired on 30 June 2009.
In five short years, John has built the Authority into a world-class regulatory organisation.
The Australian offshore petroleum industry has benefited greatly from his in-depth knowledge, leadership and experience in occupational health and safety matters.
I'm sure you will all join me in thanking John for his dedication and substantial contribution he has made to the establishment of NOPSA.
Reports
I would also like to take this opportunity to talk to you about the two reports arising from what was initially a joint independent inquiry into Australia's offshore petroleum regulatory regime, with the Western Australian Government.
Better Practice and the Effectiveness of NOPSA; and
Marine Issues
As you are no doubt aware, the original terms of reference required the panel members, David Agostini and Kym Bills, to focus on the June 2008 gas pipeline rupture at the Apache Energy Ltd operated facilities on Varanus Island, as well as the two maritime incidents that occurred during Cyclone Billy.
However, despite legal action initiated by Apache Energy in the Federal Court, the Offshore Petroleum Regulatory Inquiry was able to present two reports.
I extend my thanks to both David and Kym for their commitment to conducting the inquiry and producing these important reports that go towards improving the regulatory framework for offshore petroleum safety.
These reports investigate the effectiveness of NOPSA and the regulatory interface between the Authority and the Australian Maritime Safety Authority (AMSA).
They also reflect how governments and industry can work together to deliver worlds best practice health and safety outcomes.
In general, the reports found that since its commencement in 2005, NOPSA has developed many creditable systems, competencies and publications.
Yet over this period, we have seen significant growth in the industry which has placed additional pressure on NOPSA as our national offshore safety regulator.
A number of recommendations are specific to NOPSA's operational activities.
These are targeted at NOPSA being able to better meet the needs of the changing commercial and operating environment for the offshore petroleum industry.
Adding to this pressure is what the inquiry has termed a 'confusing mishmash' of cross jurisdictional and regulatory boundaries.
To this end, the report clearly indentifies the need for all governments to work closely to address these regulatory issues and provide clarity before another serious incident occurs.
This point is particularly pertinent with respect to the integrity of facilities and pipelines that cross both Commonwealth and State waters.
As noted in the report, the integrity of all facilities and equipment is a fundamental component of a safe working environment.
Serious integrity failures, even at facilities where people are not normally present, can create long-lasting supply and economic implications.
Since the mid-1990s, the safety case regime in Australia has provided an assurance to the community, governments and industry that risks to health and safety are identified and appropriately addressed.
However there is always room for improvement.
In working towards implementing an improved monitoring and reporting process for all offshore facilities, a number of important changes need to be considered.
This includes clarifying responsibilities between the designated authorities and NOPSA.
Complication of responsibilities is inefficient and confusing.
The Reports identify this as an area that should be addressed as a matter of priority.
I encourage governments, regulators and industry to work closely together to build a safety regime and culture that is well supported and flexible enough to cope with the evolving nature of the Australian offshore petroleum industry.
To this end, NOPSA also has an important operational role in interacting with, supporting and educating operators through the safety case process.
The onus is on the operator to make certain that risks are appropriately managed and to ensure that all legislative requirements are adhered to.
The Regulator also has a role in providing appropriate guidance and support structures to assist the operator in understanding and providing them with confidence in the safety framework that they are working within.
An operator should be able to utilise NOPSA's expertise in determining all associated health and safety implications throughout the whole lifecycle of a facility.
An example is the issue of safety and environmental impacts.
Australia is a beautiful country with many pristine and diverse landscapes.
To protect this heritage there are strict environmental approval processes in place.
Consideration of environmental impacts should be undertaken concurrently with those relating to health and safety.
While I have the upmost confidence in the industry's ability to make decisions that do not knowingly jeopardise the safety of their workforce, any environmental requirements imposed after the safety case has been approved, should be considered in parallel with the safety case requirements and prior to any operational changes being made.
Understanding the integrated nature of environmental and safety impacts is critical when devising plans and new ways forward to ensure major incidents do not occur.
For the safety of our industry's workforce, it is important that we learn the lessons of major incidents and, importantly, move forward with recommendations arising from major reviews such as this.
Further to this point, the recommendation for a no-blame investigative capacity is timely for the Government's consideration.
In relation to the Marine Issues Report, I am pleased to be able to say today that the Government has already announced a re-write of the Navigation Act 1912, as recommended by the Inquiry.
The re-write will help clarify the occupational health and safety and regulatory coverage responsibilities between NOPSA and AMSA.
I know that the Inquiry panel consulted closely with government agencies, industry, and the maritime unions and I would like to thank you all for your cooperation and support of the Inquiry.
Next Steps
In releasing both the NOPSA and Marine Issues Reports last month I stated that a response to the findings and recommendations will be prepared by the end of November 2009 with a view to introducing appropriate legislative amendments in early 2010.
To meet this timeframe, my Department will undertake a comprehensive consultation process with industry to determine the practical implications of some of the recommendations, as well as understanding any concerns they may have with respect to implementation.
The Government is committed to initiating change to assist in the emergence of safety improvements within the industry, however, the Government cannot work alone.
Decisive change requires strong leadership and support at all levels, which include governments, industry and NOPSA.
Our decisions need to be timely and I reinforce the seriousness of my intent to meet the early 2010 timeframe for amendments to the legislation.
We must learn from accidents and ensure that our safety case regime is the best in the world.
We were very lucky there was no loss of life on Varanus Island.
Building on the outcomes of the Offshore Petroleum Regulatory Inquiry, the incoming CEO of NOPSA will have an opportunity to take forward those recommendations aimed at further advancing Australia's offshore petroleum safety culture.
I expect to announce the new CEO in the coming weeks.
I would also like to thank you all for your patience in waiting for the Government's response to the 2008 NOPSA Operational Review.
Given the regulatory review of the offshore petroleum industry had been announced, it was the Government's intent to wait and combine its response.
Complementing the Offshore Petroleum Inquiry and its findings are the recent recommendations and findings of the Productivity Commission's Report into the Regulatory Burden on the Upstream Petroleum (Oil and Gas) Sector.
The proposal for a Productivity Commission reference on the industry had been around for a long time and when I became Minister I gave it my full support and guaranteed its progress.
As the Chair of the Ministerial Council of Minerals and Petroleum Resources, I will be working with my State and Territory counterparts to develop an all-of-governments' response to the Commission's recommendations.
At the same time, this will require strong leadership to harness the potential billions of dollars in productivity gains that reform will bring.
The Commonwealth is minded to support all the recommendations of the Productivity Commission report with a view to reducing regulatory approval timeframes and creating consistency in administration nationally.
A working group of officials is being established and that group will consult closely with industry on the way forward.
A response and an implementation plan will be submitted to the Council of Australian Governments (COAG) in early 2010.
COAG has already identified the upstream petroleum sector as one of its deregulation priorities to reduce the level of unnecessary regulation and inconsistent regulation across jurisdictions. The Commission has noted these reforms could increase the present value of petroleum extraction by billions of dollars each year.
I am very keen to progress reform to capture these potential benefits by moving to a single national regulator for offshore petroleum, minerals and greenhouse gas storage by 1 January 2012.
I thank you all for the opportunity to talk to you today on these very important issues and I look forward to working with you throughout 2009-2010 in taking forward the outcomes of these important Reports.
We want to work with you, it's important that industry is part of the reform process, and we iron out any differences on the way through.