Review-of-Part-5-of-the-RMAR-Issues-PaperThe word “well” is defined in the ... it is not unknown for such wells to leak recognising that the risk is ... Review-of-Part-5-of-the-RMAR-Issues-Paper

Issues Paper

January 2014

Review of Part 5 of the Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulations 2011

Table of Contents

Consultation Process…………………………………………………………………………………………………………3

Chapter 1: Introduction…………………………………………………………………………………………….………4

Chapter 2: Background……………………………………………………………………………………………………..6

Chapter 3: Objectives………………………………………………………………………………………………….....15

Chapter 4: The Framework for the Regulation of Wells…………………………………………………..19

Chapter 5: Approval for Specific Well Activities………………………………………………………………34

Chapter 6: Inactive Wells…………………………………………………………………………………………...…..37

Chapter 7: Well Accidents…………………………………………………………………………..…….…………...39

Chapter 8: Compliance, Enforcement and Penalties……………………………………………..…….….43

Chapter 9: Next Steps……………………………………………………………………………………………………..45

APPENDIX 1: Abbreviations and Acronyms……………………………………………………………………..46

Copyright Notice…………………………………………………………………………………………………………….47

Issues Paper: Review of Part 5 of the Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulations 2011 (January 2014) Page 2 of 48

Consultation Process

Interested parties are invited to make written submissions that address, but need not be limited by, the issues raised in this paper including supporting information such as examples and evidence where relevant.

Submissions may be lodged electronically or by post. Please direct submissions to:

Email: [email protected]

or

The ManagerEnvironment, Safety & Security SectionOffshore Resources Branch Resources DivisionDepartment of IndustryGPO Box 1564CANBERRA ACT 2601

Closing date for submissions is COB, 28 March 2014.

Submissions will not be published on the Department of Industry website unless with prior written consent or unless required by law.

Please indicate clearly if you would like your submission, or any part of it, to be treated as ‘confidential’. A request for a submission marked confidential to be made available will be determined in accordance with the Freedom of Information Act 1982 (Cth). Under this Act, agencies and ministers need to publish on their websites information that has been released in response to freedom of information access requests.

Further information is available at the Department of Industry website .


http://www.industry.gov.au/

mailto:[email protected]

Chapter 1: Introduction

The exploration and production of hydrocarbons from under the sea is susceptible to very rare but serious incidents. The “blowout” of hydrocarbons from a well in the Montara offshore oil and gas field in the Timor Sea in 2009 was one such example. This incident and the subsequent inquiry, the Montara Commission of Inquiry, combined with the need to keep the regulatory system for controlling the inherent risks of oil and gas exploration under review, has led to this public consultation on Part 5 of the Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulations 2011 (“Part 5 of the RMAR” or simply “Part 5”).

Part 5 represents one part of the Australian regulatory system for offshore petroleum and greenhouse gas storage. A summary of the overall system is presented in Chapter 2 to show where Part 5 of the RMAR fits into this system. Persons considering making a submission should familiarise themselves with this material, noting in particular that, despite the location of the Part 5 provisions in the RMAR, Part 5 is concerned solely with the regulation of wells and well operations by the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA). The regulatory requirements in Part 5 relate to structural integrity of wells and not to resource management.

The objective of this review is to ensure that the regulation of well operations in Australian waters reflects leading practice, objective-based regulation of the structural integrity of wells and well activities.

Purpose, Scope and Approach

The purpose of this Issues Paper is to:

identify policy, legal and operational issues that could impact on the effectiveness of the regulation of wells and well activities for petroleum and greenhouse gas storage activities undertaken in Commonwealth waters;

discuss those issues and identify options to address them; and

invite comment on the identified issues and options, including on their impacts on the industry and other parties, and identify other relevant issues and options.

This Issues Paper is broken down into chapters addressing the framework for the regulation of wells and the key tools and processes for that regulation. Each chapter outlines current arrangements, includes a discussion of key issues and seeks comment on appropriate approaches to regulating well operations.

The options in this paper are provided to assist stakeholders in preparing submissions in relation to key issues. Submissions received will be considered in developing and finalising the Government position on how best to regulate well operations.

It is not intended in this process to anticipate outcomes or duplicate other Australian Government review processes currently in progress for the offshore petroleum legislative regime; however relevant matters referred to in the review from other policy processes will be considered. This includes, for example, matters that arose from the review of the compliance and enforcement regime for offshore petroleum activities within the OPGGS Act1 and the recent

1 As part of its response to the Report of the Montara Commission of Inquiry, the Australian Government undertook a review of the legislation applicable to offshore petroleum activities and the marine environment in the first half of 2012. In June 2012, the Government agreed to implement a number of the findings of this review. The Offshore Petroleum and Greenhouse Gas Storage Amendment (Compliance


review of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (the Environment Regulations). Decisions already taken on issues explored through this or other policy processes are integrated into this paper where relevant, without the intention to further debate their merit.

In general, the review and this Issues Paper do not address:

other regulations under the OPGGS Act, specifically the Environment Regulations and the Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009 (the Safety Regulations);

policy regarding cost recovery through levies;

any resource management implications of changes to the regulation of well operations, noting some discussion of this point in Chapter 3.

This Issues Paper does not assess the adequacy of each regulation in Part 5 but is a policy assessment of an objective-based approach to the regulation of wells. The intent is that the Issues Paper addresses the key matters for regulating well operations from a holistic perspective.

Measures) Act 2013 received Royal Assent on 14 March 2013. This Act amended the OPGGS Act to increase financial penalties for certain criminal offences and to introduce a civil penalty regime. The Offshore Petroleum and Greenhouse Gas Storage Amendment (Compliance Measures No. 2) Act 2013 received Royal Assent on 28 May 2013. With respect to compliance and enforcement measures, this Act introduced additional alternative enforcement mechanisms that may be used by regulators or the courts, including infringement notices, cumulative penalties for continuing breaches of the OPGGS Act, adverse publicity orders and injunctions.


Chapter 2: Background

Compared to many countries internationally, Australia has a strong history of continuous improvement in the regulation of offshore petroleum operations.

Objective-based regulation

On 6 July 1988, an explosion and fire on the North Sea production platform Piper Alpha destroyed the platform and killed 167 men. In 1991, a tripartite Consultative Committee on Safety in the Offshore Petroleum Industry recommended that key outcomes of the United Kingdom Committee of Inquiry into the Piper Alpha disaster chaired by Lord Cullen, be implemented in Australia.

The Australian Government made a policy decision to adopt a safety case regime and new objective-based regulations to replace the then prescriptive regulations. The objective-based approach is typical of most modern occupational health and safety regimes2. Objective-based (or goal setting) regimes, including the safety case regime, are based on the principle that the legislation sets the broad safety (or environmental) goals to be attained and the operator of the facility develops the most appropriate methods of achieving those goals.3

An objective based approach imposes general duties on parties to the regime. In the case of the offshore petroleum regime, this includes titleholders (typically oil companies), operators of facilities (such as oil companies and rig owners), other contractors, suppliers and all those who work on or near facilities. This responsibility ensures flexibility in operational matters to meet the unique nature of differing projects and technological advances and encourages a mentality that goes beyond compliance and acceptance of minimum standards to one of continuous improvement and innovation in safety and risk management.

Key to an objective-based regime is the unambiguous assigning to the creator of the risk (the duty holders) the responsibility for evaluating and managing the risk and reducing risk to ‘as low as reasonably practicable’ (ALARP). The ALARP principle is now widely understood in the international oil and gas industry. Further discussion on the ALARP principle is in Chapter 3. Applying the principle recognises that ‘as low as reasonably practicable’ is generally the point where the sacrifice required to reduce the risks of an activity any further would be extraordinarily disproportionate to the benefit gained and may not be practically feasible. The application of ALARP to offshore petroleum operations allows the duty holder to adopt practices and technologies best suited to individual circumstances, activities and locations.

The introduction of the safety case strengthened the duty of care regime to require a comprehensive and integrated risk management system describing how the duty holder will fulfil their obligations. An important aspect of the safety case approach is that the dutyholder is required to document the hazards and risks and how these will be managed to reduce the risks to ALARP. This safety case is then subject to examination by the regulator. Unless the regulator accepts the safety case following review the activity cannot proceed. Once accepted the regulator carries out checks to ensure that the dutyholder is doing what they said they would do in the safety case.

This approach has now been extended in Australia to include environment plans for petroleum activities and well operations management plans (WOMPs) for well activities.

2 NOPSEMA's Offshore OHS Legislative Framework Information Paper3 NOPSEMA's safety case approach


http://www.nopsema.gov.au/safety/safety-case/safety-case-approach/

http://www.nopsema.gov.au/assets/Information-papers/Information%20Paper%20-%20Offshore%20OHS%20Legislative%20Framework%20Overview%20July%202010.pdf

Regulating offshore petroleum and greenhouse gas storage operations in Australia

The legal framework within which offshore petroleum exploration and production activity takes place in Australia had its origins in the 1979 Offshore Constitutional Settlement (OCS) and the division of powers and responsibilities between the Australian Government and the State/Northern Territory Governments.

Petroleum and greenhouse gas storage operations that are conducted onshore are not relevant to this paper. Petroleum and greenhouse gas operations offshore up to three nautical miles from the territorial sea baseline (referred to as ‘coastal waters’) are the responsibility of the individual State and Territory Governments under state/territory legislation. Offshore petroleum operations beyond state and territory coastal waters but within Australia’s 200 nautical mile Exclusive Economic Zone lie within Commonwealth waters with legislative responsibility resting with the Australian Government. Initially, the Commonwealth legislation conferred powers on State and NT Ministers (the “Designated Authorities”) to regulate offshore petroleum operations, including occupational health and safety, environmental management and well integrity.

Following implementation of the outcomes of the Cullen Inquiry, a safety case regime was adopted in Australia, and performance-based regulations replaced prescriptive safety rules. In 1992, the Petroleum (Submerged Lands) Act 1967 (PSLA) was amended to provide for regulations to require the preparation and submission of a safety case for every offshore petroleum facility.

On 1 January 2005 the independent National Offshore Petroleum Safety Authority (NOPSA) was established to regulate the safety regime in Commonwealth waters and in state and territory coastal waters where jurisdictions conferred powers. This followed a review of offshore safety in Australia amid concerns over the adequacy of regulatory arrangements undertaken by the states and the Northern Territory, who had been using a combination of the safety case approach and prescriptive legislation. In 2006, the PSLA was replaced by the Offshore Petroleum Act 2006 (OPA), which was renamed the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (the OPGGS Act) in 2008, with the addition of a system of offshore titles for the injection and storage of greenhouse gas substances in deep geological formations under the seabed.

The OPGGS Act and associated regulations and guidelines govern offshore petroleum and greenhouse gas storage operations in Commonwealth waters. The Act, regulations and guidelines provide for the orderly exploration for and production of petroleum resources and injection and storage of greenhouse gas substances, and set out a framework of rights, entitlements and responsibilities of government and of industry.

Despite the abolition of the state/territory Designated Authorities as regulators of offshore operations, the Australian Government together with the State and the Northern Territory governments jointly administer the regime of petroleum titles in Commonwealth waters through a Joint Authority arrangement. The Joint Authority makes key decisions under the OPGGS Act concerning the granting of petroleum titles, the imposition of title conditions and the cancelling of titles, as well as decisions about petroleum-related resource management and resource security.

The Montara Commission of Inquiry and Government Response

On 18 June 2010, the Montara Commission of Inquiry presented its report to the then Australian Minister for Resources and Energy regarding the 21 August 2009 uncontrolled release of oil and


gas from the Montara Wellhead Platform in the Timor Sea. The report contained 100 findings and 105 recommendations with wide-ranging implications for government, regulators and the offshore petroleum industry.

The Australian Government moved quickly to implement the lessons arising from this incident. On 25 May 2011, the Australian Government released the Final Response to the Report of the Montara Commission of I nquiry . The Final Response accepted 92, noted 10, and did not accept three of the 105 recommendations. The Final Response also included an implementation plan for the accepted recommendations.

Many of the Montara Commission of Inquiry recommendations refer to matters of well integrity or the regulation of wells under Part 5, including: objective-based regulation, the ‘good oilfield practice’ concept, WOMPs, notification and reporting of increased risks and incidents, well barrier requirements, and activity approvals. It would be excessive to list the recommendations relevant to this review in this Paper, however links to the full papers are available here:

The Montara Commission of Inquiry Report The Final Government Response to the Montara Commission of Inquiry Report The Australian Government Progress Report on implementation of the

recommendations of the Montara Commission of Inquiry

In implementing the accepted recommendations from the Montara Commission of Inquiry, the Australian Government acted to augment the functions of the safety regulator, NOPSA, to include regulatory oversight of non-occupational health and safety structural integrity for facilities, wells and well-related equipment. To give effect to NOPSA’s augmented functions under the OPGGS Act, Part 5 of the RMAR was amended to provide NOPSA with regulatory functions and powers relating to the management of well operations, which took effect on 21 April 2011. This amendment transferred regulation and oversight of structural integrity of petroleum facilities (including pipelines), wells and well-related equipment in Commonwealth waters from the state and Northern Territory Designated Authorities to NOPSA.

In addition, the Government implemented broad institutional reforms, accepting recommendation 73 of the report of the Montara Commission of Inquiry, that “A single, independent regulatory body should be created, looking after safety as a primary objective, well integrity and environmental approvals. Industry policy and resource development and promotion activities should reside in government departments and not with the regulatory agency.”4 The Government agreed to “separate offshore regulation and titles administration to avoid any potential or perceived conflicts of objectives”. The Government’s policy in this respect recognises that the explicit separation of resource development and management on the one hand from the regulation of risks to the health and safety of people and management of the environment on the other hand is a fundamental tenet of modern, leading practice offshore petroleum regulation. Well integrity is a core element of the management of risks to health and safety and the environment.

On 1 January 2012, the Government established a single national regulator for the offshore oil and gas industry, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA or the Regulator), with additional responsibility for environmental management as well as existing functions relating to safety and well integrity. A National Offshore Petroleum Titles Administrator (NOPTA) was also established, with responsibility for day-to-day petroleum titles administration and data management functions.

4 Report of the Montara Commission of Inquiry, June 2010, p. 362


http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/MIR/Progress-Report-Sep-2012.doc

http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/MIR/Progress-Report-Sep-2012.doc

http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/FinalMontaraCommissionInquiryReport.pdf

http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/Montara-Report.pdf

http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Pages/Reports.aspx

http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Pages/Reports.aspx

The regulator for the environmental management and offshore greenhouse gas storage operations in Commonwealth waters is the responsible Commonwealth Minister. However, NOPSEMA remains responsible for regulating occupational health and safety in both petroleum and greenhouse gas storage-related activities.

Importantly, the Government also amended the OPGGS Act to clarify and strengthen the compliance, monitoring, investigation and enforcement powers of NOPSEMA, and ensure that enforcement measures for contraventions of the OPGGS Act are appropriate for a high-hazard industry.

NOPSEMA functions and responsibilities

NOPSEMA was established as the single national regulator to enforce compliance with occupational health and safety, well integrity, environmental management, and day-to-day operations of offshore petroleum facilities in Commonwealth waters, and in coastal waters where state and Northern Territory powers have been conferred. The single national regulator model reflects international leading practice for the regulation of offshore petroleum.

The legislative framework and objectives and functions of NOPSEMA are set out in the OPGGS Act. Where powers have been conferred, NOPSEMA’s functions in designated coastal waters of the states and the Northern Territory are governed under the relevant Petroleum (Submerged Lands) Acts of 1982.

NOPSEMA has the following legislated functions:

The functions conferred on it by or under the OPGGS Act or under a State or Territory Petroleum Submerged Lands Act in relation to occupational health and safety matters, structural integrity of facilities, wells and well-related equipment and environmental management, in connection with offshore petroleum operations or offshore greenhouse gas storage operations in Commonwealth waters

promote the occupational health and safety of persons engaged in offshore petroleum operations

develop and implement effective monitoring and enforcement strategies to secure compliance under the OPGGS Act and Regulations

investigate accidents, occurrences and circumstances relating to occupational health and safety, well integrity and environmental management

advise on matters relating to occupational health and safety, well integrity and environmental management

make reports, including recommendations, to the responsible Commonwealth minister and each responsible state/Northern Territory ministers

cooperate with other Commonwealth and state/ Northern Territory agencies or authorities having functions relating to regulated operations.

The role of the regulator in an objective-based regime is to provide independent assurance that risks are properly controlled by challenging the operator or titleholder’s risk management arrangements during the assessment of safety cases, environment plans and WOMPs. The regulator then verifies by planned inspections that the operator or titleholder has implemented its risk management commitment documented in the safety case, environment plan and WOMP.5

5 NOPSEMA's Offshore OHS Legislative Framework Information Paper


http://www.nopsema.gov.au/assets/Information-papers/Information%20Paper%20-%20Offshore%20OHS%20Legislative%20Framework%20Overview%20July%202010.pdf

As discussed earlier, under an objective-based regime, the law sets the broad safety or environmental goals to be attained and the duty-holder develops the most appropriate methods of achieving those goals. The requirements for acceptance by the regulator are set out in the following regulations:

Part 5 of the RMAR for a WOMP; the Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009 for a safety

case; the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 for

an environment plan.

The objective-based model is under-pinned by comprehensive guidance by the regulator. NOPSEMA provides guidance to industry in relation to what is acceptable in meeting the intent of the regulations. Guidance is not law; rather, it sets out the regulator’s own interpretation of the law, as an aid to understanding by the industry. It is not legal advice, and should not be treated as such. Importantly, guidance also sets out the manner in which the regulator proposes to apply the law in practical day-to-day circumstances. Guidance notes therefore are an important tool for both the regulator and for industry in developing a common understanding of legislative obligations and requirements.

Industry-wide guidance and standards for well operations are also produced by other organisations and are developed to provide leading-practice guidance to the industry. This guidance has a different purpose to that issued by the regulator.



Duty holders and their obligations

Occupational health and safety (‘safety’)

The OPGGS Act and related safety regulations impose duties and obligations on a range of specific entities including persons, titleholders, facility operators, manufacturers, suppliers and, employers and other persons. The approach adopted under the OPGGS Act goes beyond general duties to require every operator to document in a safety case the hazards and risks to people at or near the facility, as well as how these risks will be controlled and managed.

In relation to well integrity matters, clause 13A of Schedule 3 (and 13B in relation to greenhouse gas storage injection wells) of the OPGGS Act places an express duty on the titleholder in relation to wells and well operations. This duty means that titleholders are subject to the obligation to ensure that wells are designed, constructed, maintained and operated so that risks to health and safety are reduced to as low as reasonably practicable. Under Part 5 of the RMAR titleholders must, in order to undertake a well activity, apply to the regulator for acceptance of a well operations management plan and seek approval from NOPSEMA for specific well activities. While assessment of a WOMP is not confined to matters of safety, since structural integrity of a well has implications for environmental management and potentially other aspects of a titleholder’s compliance with the OPGGS Act regime, safety of the workforce will always be the predominant concern of the regulator in assessing a WOMP.

In relation to safety matters, obligations are imposed on the operator of a facility in recognition of their responsibility for the day-to-day management and control of a petroleum facility. Operators are subject to occupational health and safety obligations and duties described in Schedule 3 of the OPGGS Act and are required to take all reasonably practicable steps to secure the health, safety and welfare of persons at or near relevant petroleum facilities. Under the Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009 (the Safety Regulations), operators are also required to prepare a safety case for submission to NOPSEMA in consultation with members of the workforce (including those working or likely to be working on the relevant facility). General duties of care under the occupational health and safety regime are also imposed on any person who is in control of any part of a facility or of any particular work carried out at a facility, employers, manufacturers and suppliers.

The regulation of wells

Drilling and well operations are characterised by considerable complexity, involving a number of players and driven by rapid technological development and deeper wells. That complexity is best addressed through an objective-based regulatory approach.

Objective-based regulation of offshore petroleum well activities was introduced with the Petroleum (Submerged Lands) (Management of Well Operations) Regulations 2004, administered by the Designated Authorities in each state and the Northern Territory. Prior to this, offshore well activities were regulated through directions given by the Designated Authority under the authority of the then Petroleum (Submerged Lands) Act 1967 (the precursor to the OPPGS Act). The WOMP was conceived to specify acceptable methods of conducting well operations in accordance with sound engineering principles and good oilfield practice. It requires a company to identify potential hazards and risks to the integrity of its well activities and consequently implement measures to remove or control those hazards and reduce the risks as consistent with international best practice for petroleum regulation.6

On 29 April 2011, several legislative instruments, including the Petroleum (Submerged Lands) (Management of Well Operations) Regulations 2004 and remaining active aspects of the Schedule of Specific Requirements were consolidated to make Part 5 of the Offshore Petroleum

6 Petroleum (Submerged Lands) (Management of Well Operations) Regulations 2004; Statutory Rules 2004 No. 244, Explanatory Statement


Duty holders and their obligations (continued)

Environmental management

In relation to environmental management, the OPGGS Act places a number of environment-related duties on the titleholder. In particular, where there is a release of petroleum in Commonwealth waters, the titleholder is obliged to control the spill at source, clean up the environment and carry out environmental monitoring of the effects of the spill. Alternatively, the titleholder must pay the costs of NOPSEMA in contracting with others to carry out this work. Where the spill reaches state coastal waters, including beaches or other coastal environments, the titleholder must pay any costs incurred by the state in doing or contracting for the same kinds of work.

The Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (the Environment Regulations) require that an environment plan be in force before any person carries out a ‘petroleum activity’ and that the activity be carried out in accordance with the environment plan. The environment plan is comparable to a safety case in that it sets out the manner in which the duty-holder will ensure that environmental impacts of a ‘petroleum activity’ will be as low as reasonably practicable.

In relation to environment matters, obligations are currently imposed on the petroleum activity ‘operator’ (different from the concept of operator for safety matters) however this concept is subject to change (with a shift to placing the obligation on the titleholder, which is consistent with the OPGGS Act) under the general review of the Environment Regulations which is currently underway – with completion in the form of revised regulations in February 2014.

and Greenhouse Gas Storage (Resource Management and Administration) Regulations 2011 (RMAR). The placement of these wells regulations in the RMAR may have given rise to some misconceptions. Part 5 has no resource management content and the regulator, NOPSEMA, has no resource management functions. The wells regulations were located in the RMAR for reasons of administrative convenience, not because of any similarity of content.

Part 5 of the RMAR

The RMAR currently has three primary objectives (set out in full in regulation 1.04 of RMAR Part 1):

1. Ensure that operations in an offshore area are carried out in accordance with good oilfield practice and compatible with the optimum long-term recovery of petroleum and long-term safe storage of greenhouse gas;

2. Ensure that administrators of the OPGGS Act are informed in a timely and consistent manner of exploration for petroleum and greenhouse gas storage formations; discovery of petroleum and potential storage formations; the appraisal of discoveries; development and production operations in relation to petroleum, and injection operations in relation to greenhouse gas substances; and the result of those operations, and

3. Provide for various matters in relation to data collection and management.

Currently the first of these objectives relates to Part 5 of the RMAR and provides for the regulation of ‘well activities’, where a well activity includes all drilling activities, testing a well, wireline and workover operations, completion or recompletion of a well, maintenance of a well, and abandonment or suspension of a well.

Part 5 of the RMAR require titleholders7 who want to conduct a well activity in Commonwealth waters to both prepare and implement an adequate WOMP for the period of the activity, and also to seek further ‘activity approvals’ for specified individual well activities.

Under Part 5 of the RMAR, it is an offence to conduct well activities without an accepted WOMP in force for undertaking those well activities (Regulation 5.04).8 The RMAR provides for the process of submitting a WOMP (including contents requirements), acceptance of a WOMP, the requirement and process for variations of a WOMP, and withdrawal and termination of a WOMP.

The Regulator must assess and make a decision to accept or reject a WOMP that has been submitted by the titleholder, and must also decide whether to approve or reject a submitted individual activity approval. The required content of a WOMP is detailed in Part 5 and the WOMP must address all elements specified.

Part 5 also requires that the titleholder ‘control hazards or risks’, in particular ‘well integrity hazards’. The outcome is the application of a risk-based approach for management of wells and well activities through the WOMP regime.

Historically the RMAR were regulated by the Designated Authorities in each state and the Northern Territory regulated the RMAR as the administrators of resource development/management and titles administrators. With the separation of offshore regulation from resource development/management and titles administration, the regulatory landscape

7 See regulation 5.01 for the exact listing of titleholders to whom Part 5 applies.8 Subject to an exception in the event of an emergency in which there is a likelihood of injury, significant discharge of fluids or damage to a natural resource (regulation 5.05(3)).


has changed significantly and the continuation of Part 5 within the RMAR is an anachronism. As an example, the words in Objective 1 of the RMAR: “compatible with the optimum long-term recovery of petroleum and long-term safe storage of greenhouse gas” are appropriate to resource management, not the regulation of well integrity.

Regulation of wells for greenhouse gas storage operations

As mentioned above, the responsible Commonwealth Minister is the regulator of greenhouse gas storage-related well operations in Commonwealth waters and of greenhouse gas storage WOMPs under Part 5 of the RMAR.

Risks to the structural integrity of a well or well-related equipment for the offshore greenhouse gas injection and storage industry will be very similar to those for petroleum operations. There may be scope, therefore, for NOPSEMA to become the regulator of well integrity for greenhouse gas injection wells, as it is for petroleum wells.


Chapter 3: Objectives

Objectives of the RMARThe Australian Government supports the objective-based regulation of offshore petroleum and greenhouse gas storage activities and notes that an objective-based regime sets out objectives and requires the duty-holder to demonstrate the means by which the duty-holder proposes to meet those objectives. For example, under Schedule 3 to the OPGGS Act, clause 9 requires that the operator of a facility take all reasonably practicable steps to ensure that the facility is safe and without risk to the health of any person at or near the facility. It also requires that all work and other activities carried out on the facility are carried out in a manner that is safe and without risk to the health of any person at or near the facility. The actual obligation here is ‘to take all reasonably practicable steps’. The safety case, which is accepted by NOPSEMA under the Safety Regulations must provide for the reduction of the risks of harm to persons at or near a facility to ALARP. Similarly, in order to accept an environment plan under the Environment Regulations (as per impending amendments), NOPSEMA must be reasonably satisfied that amongst other things, the plan demonstrates that the environmental impacts and risks of the petroleum activity are reduced to ALARP.

As noted in Chapter 2, the current objects of the RMAR are listed in regulation 1.04. Relevant to Part 5 of the RMAR, subregulation 1.04(1) states that:

An object of these Regulations is to ensure that operations in an offshore area are:

a) Carried out in accordance with good oilfield practice; andb) Compatible with the optimum long-term recovery of petroleum and safe storage

of GHG.

What is an appropriate objective for the regulation of wells and well activities?

There are several considerations in relation to an appropriate objective for the regulation of wells and well activities.

The current objective of Part 5 focuses on resource management with reference to the ‘optimal long-term recovery of the resource’ (and long-term greenhouse gas storage storage). However, the entities who are responsible for resource management are the Joint Authority and NOPTA (who advises the joint Authority). Resource management in respect of a title area is initially dealt with in a Field Development Plan, which is accepted by the Joint Authority under Part 4 of the RMAR. Reporting requirements and data management for well activities are also contemplated elsewhere in the RMAR, including daily drilling reports under Part 7 (and Part 9 for greenhouse gas storage) of the RMAR. The matters contained within Parts 4 and 7 of the RMAR require reporting to NOPTA.

These reporting requirements arise in the context of well activities, and it is possible that the reporting might trigger the giving of a direction by NOPTA to the titleholder requiring, for example, the carrying out of a test or provision of further information. However, the resource management objective of Part 5 pre-dates the provision of well integrity functions to NOPSEMA, when the Designated Authorities were regulators of well integrity and resource development/management. There is now a clear institutional separation between the structural integrity objectives of a WOMP as accepted by NOPSEMA, and the resource management activities and responsibilities of NOPTA and the Joint Authority. NOPSEMA does not have any obligation to take resource management considerations into account in deciding whether to accept a WOMP. (Note, however, that in the event that a direction given by NOPTA was to be


inconsistent with an approved WOMP, the titleholder would have to vary the WOMP and submit the variation to NOPSEMA for acceptance.)

The Explanatory Statement for the Petroleum (Submerged Lands) (Management of Well Operations) Regulations 2004 provides a statement of the original intent behind the regulation of well activities. The Explanatory Statement specifies that the aim of the regulations is to “ensure that offshore petroleum well activities are performed in a way that maintains well integrity over the operational life of wells”.

NOPSEMA’s statutory function in relation to wells is set out in paragraph 646(ga) of the OPGGS Act as follows:

(ga) the functions conferred on (NOPSEMA) by or under this Act in relation to the structural integrity of:

(i) facilities (within the meaning of Schedule 3); or

(ii) wells; or

(iii) well-related equipment;

located in Commonwealth waters.

‘Structural integrity’ is defined in section 7 of the OPGGS Act, in so far as it relates to wells, as follows:

structural integrity includes the following:

(a) structural soundness;

(b) structural strength;

(c) stability;

(d) fitness for purpose;

(e) mechanical integrity;

(f) systems integrity;

in connection with:

(g) the containment of:

(i) petroleum; or

(ii) a greenhouse gas substance; or

(iii) any other substance.

As such, NOPSEMA’s function in relation to wells is to be the regulator of well integrity, with ‘integrity’ referring to the containment of fluids in the well. While the conferral of that function is incomplete without the making of the regulations, the regulations are required to confer the functions and powers that the OPGGS Act envisages. The core purpose of the regulations in Part 5 RMAR is therefore to ensure that structural integrity of wells is maintained over the period during which the regulations apply to the wells. (This period is not necessarily limited to the productive life of a well.)

There is a question whether the objectives of the wells regulations should also include both safety and environmental management.


Maintenance of well integrity is crucial to the safety of all persons in the vicinity when well operations are taking place, and also of the workforce on board a production facility whether well operations are taking place or not. For this reason, the regulations in Part 5 RMAR are a ‘listed OHS law’ under section 638 of the OPGGS Act, ‘to the extent to which that Part relates to occupational health and safety matters’. There is accordingly a strong argument for including occupational health and safety in the objects of the wells regulations.

Maintenance of well integrity is also essential for the prevention of the release of fluids from the well into the environment. Therefore, this would also be an appropriate objective for the wells regulations. Note that the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 include ‘natural and physical resources’ in the definition of ‘environment’. Both petroleum and the storage capacity of a greenhouse gas storage formation are ‘physical resources’ in this sense. In the case of greenhouse gas storage capacity in particular, the physical state of pre-existing and new petroleum wells is an important factor in assessing the storage capacity of a geological formation. Section 586 of the Act, for example, requires that in deciding whether to give a direction to remediate the seabed, NOPSEMA may or must have regard to the principle:

that plugging or closing off of wells should be carried out in a way that restores or maintains the suitability of a part of a geological formation for the permanent storage of greenhouse gas substances.

Should the ALARP principle be applied as an objective for the regulation of well activities?

The Australian Government’s Final Response to the Report of the Montara Commission of Inquiry commented on the Australian objective-based regime, recognising that the onus is placed “on industry to ensure and demonstrate to regulators that the risks of an incident relating to oil and gas operations are reduced to ‘as low as reasonably practicable’.“9 ALARP is consistent with the objectives in the Act and has received significant legal consideration in higher courts. It is used internationally in a number of other occupational health and safety and high-hazard regulatory systems, including international leading practice petroleum regulatory regimes in the United Kingdom and Norway. It is also used by global petroleum industry bodies such as the International Association of Drilling Contractors and the International Association of Oil and Gas Producers. As a result it is a well-known and widely used concept and is understood legally and in practice, including in Australia.

The RMAR currently does not include the concept of reducing risks to ALARP in relation to the regulation of wells, other than in the definition of “integrity” in regulation 5.02. Consistent with the objective-based approach to offshore petroleum and greenhouse gas storage operations in Australia, it may be appropriate to amend Part 5 to include this concept as an objective for the regulation of wells.

Should ‘good oilfield practice’ continue as an objective for the regulation of well activities?

In implementing the final Australian Government Response to the Report of the Montara Commission of Inquiry (recommendation 68), the Government agreed to retain the definition of

9 Final Government Response to the Report of the Montara Commission of Inquiry , Commonwealth of Australia, 2011 p.2


http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/FinalMontaraCommissionInquiryReport.pdf

good oilfield practice in the OPGGS Act. In April 2013, additional guidance was published to assist the upstream petroleum industry to understand the meaning associated with ‘good oilfield practice’ as used in the Act and its associated regulations. The Good Oilfield Practice guidelines can be found on NOPTA's website.

Good oilfield practice is defined in section 7 of the OPGGS Act:

Good oilfield practice means all those things that are generally accepted as good and safe in:

(a) the carrying on of exploration for petroleum; or(b) petroleum recovery operations.

The assumption in referring to ‘good oilfield practice’ in the context of the RMAR is that if activities are carried out in accordance with ‘good oilfield practice’, good and safe operations will result and serious adverse events will be avoided. This includes maintaining isolation and integrity, where appropriate, between individual petroleum pools and aquifers, and during well construction, suspension and abandonment. However conducting operations in accordance with “good oilfield practice” does not necessarily require that everything reasonably practicable is done to reduce the risks that are relevant to well operations under Part 5 of the RMAR. The ‘good’ and ‘safe’ practices to which it refers relate, rather, to economically efficient and effective recovery of resources and preservation of resources. There is therefore a strong argument that ‘good oilfield practice’ has no place either as an objective or as a requirement in Part 5 RMAR

Regulatory Impact Considerations

The intent of clarifying the objective of Part 5 of the RMAR should not present a new or additional regulatory burden, and will assist industry to understand the overarching purpose of the regulation of well operations.


Submissions to this Issues Paper may wish to consider and comment on the following:

3.1 What is an appropriate objective for the regulation of well operations?

3.2 Should the regulation of well operations have the same standard as the remainder of the regulatory system, namely reducing risks to ALARP?

3.3 If ALARP were not chosen what alternatives could be used?

http://www.nopta.gov.au/legislation/guidelines

Chapter 4: The Framework for the Regulation of Wells

This chapter discusses the duties and requirements on titleholders in relation to wells, as well as a framework for the regulation of wells. That framework reflects the requirement on titleholders to submit a WOMP to NOPSEMA prior to carrying out well activities (Regulation 5.04), unless there is an emergency which could injure people, damage a natural resource, or result in a discharge of fluids. As such, this Chapter discusses:

What are the appropriate contents for a WOMP?

What is the appropriate process for submitting and assessing a WOMP?

When should a WOMP be revised and what would trigger a variation?

When should a WOMP be terminated, or acceptance withdrawn?

What are the appropriate duties and requirements for titleholders?

The duties and requirements imposed on titleholders in relation to wells help determine the framework for the regulation of wells.

Clause 13A and 13B of Schedule 3 to the Act impose an occupational health and safety duty on the petroleum titleholder/greenhouse gas titleholder in respect of wells. These state that the titleholder must ensure that the risks to the health and safety of persons at or near a facility from a well are as low as reasonably practicable.

In addition, Regulation 5.26 of the RMAR imposes a requirement on titleholders to “control well integrity hazards or risk”:

A titleholder commits an offence if:

a. the titleholder is operating a well in a title area; andb. either:

i. a well integrity hazard has been identified for the well; orii. there has been a significant increase in an existing risk for the

well; andc. the titleholder has not controlled the well integrity hazard or risk.

Penalty: 80 penalty units

As noted above, titleholders are subject to an occupational health and safety duty under Schedule 3 to the OPGGS Act. This duty does not need to be repeated in Part 5 of the RMAR, although an option may be to reference the duty in relation to acceptance criteria for a WOMP and the possible application of the ALARP principle to the regulation of well operations.

An additional consideration is the relationship between the titleholder and the drilling contractor or other contractors who are undertaking well activities. As discussed above, Clause 13A and 13B of Schedule 3 to the Act impose an occupational health and safety duty on the petroleum titleholder/greenhouse gas titleholder in respect of wells. This duty means that titleholders are subject to the obligation to ensure that wells are designed, maintained and operated so that risks to health and safety are reduced to as low as reasonably practicable. Under the Part 5 of the RMAR titleholders must, in order to undertake a well activity, apply to the regulator for acceptance of a WOMP and seek approval from NOPSEMA for specific well


activities. However, it is not necessarily only the titleholder who will be involved well activities. Other parties typically involved include drilling contractors and other “third party” contractors. As such, the policy question remains as to whether there is a need for a general duty of care for wells in the OPGGS Act and whether such a duty should be an occupational health and safety duty (which are largely covered by Schedule 3, clauses 10 and 11) or a duty to ensure that well integrity is maintained.

Are the definitions of “well” and “well activity” appropriate?

Before considering the scope and purpose of the framework for regulating wells, it is necessary to understand the meaning of “well” and “well activity” as they currently apply under the OPGGS Act and Part 5 of the RMAR.

The word “well” is defined in the OPGGS Act (section 7) to mean “a hole in the seabed or subsoil made by drilling, boring or any other means” in connection with a range of petroleum and greenhouse gas storage activities, but not including a seismic shot hole. For the purposes of Part 5 of the RMAR, “well” is defined to include “all equipment located downhole from a well” (regulation 5.02).

While the definition of “well” includes abandoned or suspended wells, the provisions of Part 5 of the RMAR focus on well activities or the operation of a well. Wells that have been abandoned or suspended are therefore not currently covered by the requirements of Part 5. For example, the current Part 5 of the RMAR provides that a titleholder must have an accepted WOMP in order to conduct a well activity (regulation 5.04), and that it must conduct the activity in line with the accepted WOMP (regulation 5.05). A “well activity” is defined (regulation 5.02) as “an activity relating to a well that is carried out during the life of the well.” A list of examples accompanies this definition:

1. Exploratory drilling2. Production drilling3. Appraisal drilling4. Testing a well5. Well drilling6. A wireline operation7. A workover operation8. A well completion or re-completion



4.1 What are the appropriate duties and requirements for titleholders in relation to the management of well operations?

4.2 Should titleholder requirements be extended to include inactive wells?

4.3 Should there be a general duty of care requirement in relation to wells in the OPGGS Act?

9. Maintenance of a well10. Abandonment or suspension of a well

As such, a WOMP is not currently required for wells that have been abandoned or suspended. Further discussion on abandoned and suspended (known as inactive) wells follows in Chapter 6.

Although this list of examples is included, the definition of well activity itself is vague and, in practice, substantially similar to the list of well activities that currently require specific activity approvals under regulation 5.22, if the activity would lead to a physical change to the well bore. These are:

i. well drillingii.well testingiii. well completioniv. abandonment or suspension of a wellv.well intervention

The similarity of the definition of “well activity” and the list of activities currently requiring specific activity approvals has created some confusion. A discussion on specific activity approvals is in Chapter 5, however it is worth noting that the Government is considering removing the requirement for specific well activity approvals.

Is the scope and purpose of the framework for the regulation of wells appropriate?

Recommendation 2 of the Montara Commission of Inquiry is that WOMPs should continue to be the “primary framework document” for achieving well integrity, and recommendation 3 is that WOMPs should be comprehensive and freestanding rather than cross-reference many other documents.

As a ‘primary framework document’, a WOMP would be an overarching, permissioning document which, when accepted, would allow the titleholder to undertake a range of activities according to the scope of the plan. These activities may span several weeks or several years, and several stages of an offshore petroleum project. This reflects the approach taken in the Safety Regulations with respect to safety cases.

Requiring a WOMP in relation to wells, rather than well activities, would also remove the regulatory burden on titleholders and also on NOPSEMA associated with the requirement for



4.4 Are the definitions of “well” and “well activity” appropriate?

4.5 If not, what would be an appropriate alternative definition?

4.6 Is it useful to have a separate term “well-related equipment” in the definition in the OPGGS Act, or should this be part of the well definition?

specific well activity approvals in regulation 5.22. It would also mean that a WOMP would be required to be in force whether or not there was any specific well activity taking place.

If WOMPs are to continue to be required for undertaking “well activities”, the scope of the WOMP remains unclear; for example, how many well activities, across how many wells and/or how many title areas should appropriately be covered by a WOMP? Part 5 does not specify that a well activity must only be covered by one WOMP however logic implies that a well activity undertaken for a specific well would be included in a single WOMP. Indeed the Regulator could not approve a WOMP for an activity if there is not sufficient detail to meet all content requirements, which is likely to be the case if the plans for the well activity are spread across more than one WOMP. In addition, Part 5 implies that there should be one WOMP per title, as paragraph 5.04(1) (b) refers to “an accepted well operations management plan in force for undertaking the well activity in the title area.”

As a starting point, a well activity should not be subject to more than one WOMP, as this could create ambiguity as to which WOMP is the prevailing plan for a well. From that premise, the scope may consider the inclusion in WOMPS of wells that have similar hazards and risks and a similar purpose or basis of design and construction as an appropriate approach to managing wells. Consideration may be given as to whether the acceptance criterion in regulation 5.08(1)(a) that “the plan is appropriate for the nature and scale of the well activity” gives NOPSEMA sufficient ability to refuse to accept a WOMP that purports to cover too many wells, or wells that are too disparate in their characteristics or location, with the result that there is insufficient detail or analysis of any individual well operation.

Stages of the activity

The RMAR provide that a titleholder may submit a WOMP “in parts for particular stages of the activity” (5.06(3)c). The concept is similar to a concept in the Safety Regulations regarding “stages” in the life of a facility, but the application of the idea to a WOMP has caused confusion. In particular, while identifying stages in the life of a facility may be possible, identifying stages in a well activity is less obvious. It may provide greater clarity to refer to stages in the life of the well, which could refer to particular well activities or types of well activities. Allowing a titleholder to submit a WOMP for stages in the life of the well may provide flexibility for a titleholder who wishes to prepare a WOMP that only provides for a limited number of activities. In practice, however, this flexibility already exists because the titleholder decides how many or few activities to describe in its WOMP. Stakeholder views on the concept of ‘stages’ is welcome.


What are the appropriate content requirements for a WOMP?

Currently, the minimum contents requirements for a WOMP are described in sub-regulation 5.09(1) with acceptance criteria under Regulation 5.08. Regulation 5.07 also provides that the Regulator may impose conditions on an acceptance.

As discussed, the WOMP should be a permissioning document recognising its equivalence to a safety case for well operations. As such, a WOMP would be subject to the same conceptual considerations regarding content, detail, referencing of other documents and the acceptance process as a safety case.

The content requirements for a WOMP should provide clear parameters of the information necessary to be provided by the titleholder to the Regulator to enable it to make an informed decision about acceptance, and provide assurance to the Australian Government and the community that well activities will be undertaken appropriately and in line with the identified objectives.

Following on from this concept, the requirements for a WOMP should include:

The intended purpose of the well

A description of the hazards and risks throughout the lifecycle of the well

The basis of design of the well to address the hazards and risks, with a view to suspension and abandonment, and

The arrangements for managing the hazards and risks, including the parties involved in managing them.

The contents of a WOMP should provide an adequate context and level of detail for the Regulator to understand the well activities covered by the WOMP and judge the credibility of the demonstration that risks will be reduced to ALARP. The contents may include descriptions of the wells and equipment, the management of the wells and the well activities themselves (including the proposed schedule of activities and operational work). The contents may identify the hazards that have the potential to cause a well accident, and include an assessment of the



4.7 What is the most appropriate scope for WOMPs and how should the scope be determined?

4.8 Should the WOMP be the sole permissioning document in relation to well activities, retaining the linkage between a WOMP and the conduct of well activities?

4.9 Should there be no more than one WOMP in relation to each well?

4.10 What clarification would be appropriate for provisions in relation to ‘stages’ of activities or ‘parts’ of a WOMP? Is the concept of ‘stages’ of well activities useful?

risk associated with each of these hazards. This could include the likelihood and consequences of each potential accident, the risks that could lead to foreseeable unplanned events and well accidents, and controls that will reduce the risks to ALARP.

The requirements for WOMP contents should be objective based and flexible, and avoid prescriptive elements as far as possible. This allows the titleholder to prepare a WOMP that is tailored and fit for purpose for the well activities covered in that WOMP, and that will demonstrate that risks are reduced to ALARP. That being said, there may be some matters in relation to wells and well activities that will be universally required, and it may be appropriate to include them in the contents requirements. For example, a WOMP should include details of the titleholder’s organisation, a description of critical tasks for the well activities, competence assurance, systems of work (including work planning/review and procedures) and change management.

Part 5 of the RMAR provides that the Regulator may give the titleholder permission not to include certain matters in the WOMP on the grounds that those matters “are regulated in the title”. In the past, where the Designated Authorities regulated wells and also performed some title administration functions, this provision would have allowed for some streamlining in regulation of wells. However, since 1 January 2012 these functions have been performed by separate agencies. As such, it is no longer appropriate to allow for an exemption of this type.

Basis of design

In terms of the basis of design of the well or wells described in the WOMP, the current wording in regulation 5.09(b) is somewhat convoluted:

an explanation of:

(i) the philosophy of, and criteria for, the design, construction, operational activity and management of the well; and

(ii) the possible production or injection activities of the well;

showing that the well activity, and all associated operational work, will be carried out in accordance with good oilfield practice…”

Given the nature of the basis of design of the well as a key component of the WOMP, a more appropriate approach may be to require the titleholder to describe the:

intended purpose of the well

the basis of the design to achieve the purpose, and

how the design and the well activities will be carried out to ensure the risks to people and the environment are as made as low as is reasonably practicable (ALARP).

In this respect, there may be scope to require an independent review of the well design, noting the essential nature of appropriate design for the future safe drilling, completion, operation and abandonment or suspension of the well. In some cases, the capacity to restore the geological formation to its original state may also require that the well have certain construction features from the outset. Third party verification is discussed later in this chapter.


Notification, reporting and record-keeping

Currently, Part 5 of the RMAR provides that the WOMP contents include in regulation 5.09 details of when and how the titleholder will notify the Regulator, and give reports and information and an explanation of the way that the titleholder will keep information required by the well operations management plan.

The effect of these requirements is that notification, reporting and record keeping may be determined on a case by case basis. This is not very transparent or consistent, and it would be more appropriate to have clear requirements for notification and reporting to the Regulator, especially in the event of a well accident. Notification and reporting is discussed further in Chapter 7 in relation to well accidents and later in this chapter and in Chapter 5 in relation to reporting on the status of a well. It is worth noting however that currently the initial and final well completion reports and daily drilling reports go to NOPTA and not NOPSEMA.

In relation to record keeping, the details of the documents to be kept may differ between WOMPs depending on the nature of the well activity. However the Safety Regulations require the operator of a facility to keep documents required by the safety case in force for the facility in the manner set out in the safety case. It seems appropriate to reflect this approach in relation to WOMPs.

Contractor relationships

As discussed earlier, an additional consideration is the relationship between the titleholder and the drilling contractor or other contractors who are undertaking well activities, recognising it is not only the titleholder who will be involved in well activities. Other parties typically involved include drilling contractors and other “third party” contractors. These relationships are often managed through bridging documents or agreements between the titleholder and contractor in control of day-to-day activities. These documents are relevant to the arrangements the titleholder has in place for managing hazards and risks where other parties are undertaking the activities. An option may be to include in the WOMP a description of the titleholder’s systems for managing contractors, particularly where a contractor is in control of day-to-day activities.

What are the appropriate control measures in relation to a well activity?

Recognising that a well is a pressure-containing envelope, the question at the heart of appropriate control measures is how well safety is maintained. Well control requires an effective pressure containment system that includes cement plugs, the casing, cement between the casing and the open hole, packers and other elements, as well as the pressure containing equipment on the top of the well such as blow out preventers.



4.11 What are the appropriate content requirements for a WOMP?

4.12 What elements of the WOMP content should be prescriptive, if any?

4.13 Should the regulations provide that the WOMP include a description of the titleholder’s systems for managing contractors?

Barriers, defined as something that comes between the hazards and the surface, and as articulated in the Montara Commission of Inquiry’s recommendation for a two-barrier policy, are one part of the pressure containing system. The necessary pre-condition for barriers to be effective is a competent pressure containing system. As such, legislating a prescriptive requirement for a minimum of two barriers may not of itself ensure appropriate controls measures are in place to maintain well safety. It may however be appropriate to propose a guideline to articulate a two-barrier policy.

Key to determining appropriate control measures is the responsibility on titleholders to manage risks to ALARP. As such, there should be a requirement on titleholders for sufficient and suitable barriers in place, as part of an effective pressure containment system, to prevent an unplanned release of fluids. If fewer than two barriers are in place, careful consideration, risk assessment, mitigation and approval to deviate from a proposed guideline of two barriers is needed. A possible example of where two barriers may not be needed is during top hole drilling. In this instance, the requirement to demonstrate that risks are ALARP remains.

In this respect, the approach described above allows industry to come up with different solutions to meet the objective of the regulations whilst setting a high bar without the need for prescribing particular control measures. The oil and gas industry has seen rapid technological change and a key reason for having a goal setting approach is the historic inability for prescriptive legislation to keep up with changing standards.

Third party involvement in the regulation of wells

Drilling and well operations are characterised by considerable complexity. In line with the requirements for a safety case, it may be appropriate to consider the incorporation of third parties in the regulation of well operations. This approach was adopted in the United Kingdom in 1996 with the introduction of the 1996 Offshore Installations and Wells (Design and Construction, etc.) Regulations. These regulations introduced a requirement on the well operator (titleholder in Australian law) to appoint an independent and competent person to examine a well and to make reports and recommendations. The intent was to require the well operators to assure themselves that a well was designed and constructed properly. Furthermore the regulation requires that this examination should be done by a person with sufficient independence and competence.

Third-party examination may apply to well barriers, including blow-out preventers, other well control equipment and/or down-hole pressure containing equipment. Generally this type of examination utilises expertise external to the company.



4.14 What are the appropriate control measures in relation to a well activity?

4.15 Should third-party assurance be incorporated into the regulation of well operations and if so, to what extent and in relation to which safety critical elements?

What is the most appropriate submission and assessment process for a WOMP?

Regulations 5.06 and 5.07 of the RMAR outline the process of submission and assessment of a WOMP. These regulations require that the titleholder submit a proposed WOMP at least 30 days prior to the proposed commencement of the activities included in that WOMP. The Regulator must then, within 30 days, accept the WOMP, reject the WOMP, or notify the titleholder (in writing) that the Regulator is unable to make a decision without further assessment of the WOMP. A notification requiring further assessment also presumes that the Regulator may request further information from the titleholder, and outlines the timeframes for that process.

Timing and decision making process

The requirement for a titleholder to submit a WOMP for acceptance at least 30 days before the commencement of any planned well activities included in the WOMP is consistent with the requirements under the Environment Regulations for the submission of an environment plan. The requirement is also consistent with the provision in Regulation 5.04, that it is an offence to conduct a well activity without an accepted WOMP for that activity.

The provisions in relation to the decision-making process by the Regulator, and the Regulator’s ability to request more information, however, are less clear. Under paragraph 5.07(1)(c), the Regulator is able to advise the titleholder within 30 days of receiving the WOMP that it is “unable to make a decision without further assessment of the plan.” Subregulation 5.07(3) then specifies that the notice to the titleholder must include “a description of any further information the Regulator requires to be included in the plan”. An option may be to provide for separate mechanisms in relation to (a) the need for further assessment prior to making a decision, and (b) a requirement for more information prior to making a decision. Similar considerations maybe applied with respect to a WOMP variation submitted to the Regulator.

A specific provision for the Regulator to request, or receive, additional information as part of its assessment is applied in the Safety Regulations and will be applied to the Environment Regulations on completion of amendments following the review of the Environment Regulations. Creating this consistency with the Safety and Environment Regulations will improve the efficiency of regulatory processes for industry. As such, a new regulation, similar to regulation 2.25 of the Safety Regulations, may be applied. This would enable the Regulator to request additional information at its discretion on occasions where clarification is required in order for an acceptance decision to be made. The information will be required to be provided within a reasonable period and will be considered as part of the submitted plan. This will, where appropriate, enable the Regulator to avoid taking steps to seek a modification and resubmission of the WOMP, avoiding potential delays in the timeframe to accept the plan.

‘In force’ vs. date of commencement

The current RMAR include a provision for the Regulator to specify a date on which the accepted WOMP commences (paragraph 5.07(7) (c)). That is, a plan can be accepted but not in force for a time. In practice, it is not clear what is meant by the terms ‘in force’ and ‘accepted’, and what either of them means for the titleholder (e.g. Regulation 5.04 makes it an offence to undertake a well activity without an “accepted” WOMP “in force” for undertaking the well activity). It may be simpler to define the term ‘in force’ by providing that a WOMP is in force from the date that the Regulator advises the titleholder that it is accepted.


What are appropriate acceptance requirements for a WOMP?

The acceptance requirements for a WOMP should, in part, reflect the contents requirements for a WOMP. There are four key factors relevant to WOMP acceptance: whether the plan addresses the contents requirements, whether the plan and the description of activities is appropriate, whether the plan demonstrates that risks are reduced to ALARP, and whether the Regulator is satisfied the titleholder will meet its duties and the requirements of the OPGGS Act and regulations.

Accepted WOMPs in the past have been high-level documents, often including references to other, more specific documents that are not in the WOMP or that are only incorporated by reference, and do not relate to any particular well or particular well operations. This approach is unlikely to meet ALARP requirements. It is important that a WOMP fully demonstrates that it meets regulatory requirements and the Regulator is able to make a reasonable decision on the basis of the information submitted to it.

There may be scope to refer to some form of assurance that the WOMP is in line with other legislative and regulatory requirements in relation to the extraction of the resource, such as the Field Development Plan. However as discussed in Chapter 3, there is a clear delineation in the intent and objectives of a Field Development Plan and a WOMP and an equally clear delineation between the role of the Titles Administrator and the Regulator.

Finally, Part 5 of the RMAR currently allows the Regulator to impose conditions when accepting a WOMP. This ability is not consistent with the requirement that the Regulator only accept the WOMP if it is satisfied that the plan is appropriate and risks will be reduced to ALARP. If the Regulator feels the need to impose conditions on acceptance, then it infers that it is not satisfied. Currently this provision is consistent with regulatory powers under the Safety and Environment Regulations, which allows the Regulator to impose limitations and conditions on acceptance. Stakeholder views on implications across the safety, environment and RMA regulations are welcome.



4.16 What is the most appropriate submission and assessment process?

4.17 Should the regulations provide for the Regulator to request or receive additional information in respect of its assessment of a WOMP in order to make a decision, and to request that information, separately from the provision in relation to being ‘unable’ to make a decision?

4.18 Should the regulations provide that a WOMP is in force on the date it is accepted, such that ‘in force’ and ‘accepted’ have the same meaning in the regulations?

What are appropriate reporting requirements for Part 5 of the RMAR?

Part 7 of the RMAR requires daily drilling, initial well completion and final well completion reports to be provided to the Titles Administrator. There is no requirement under Part 7 or Part 5 of the RMAR to provide these reports to the Regulator. Part 5 of the RMAR does require the titleholder to also give copies of documents provided to the Regulator under that Part or in relation to an accepted WOMP, to the Titles Administrator. The exception is in relation to the reporting of emergency events.

A number of the Montara Commission of Inquiry recommendations related to reporting, including recommendations 9, 14, 17 and 19. The recommendations focussed on reporting as a means to providing a status of those barriers or controls critical to preventing major accident events. That is, reporting on things that are precursors to more serious incidents. From a regulatory perspective, reports such as Daily Drilling Reports are not reliable as a predictor of potential problems. In a leading practice-objective-based regime the onus remains on the titleholder to manage risks to ALARP. The analysis required to identify an issue from a Daily Drilling Report is highly specialised and forensic in nature and the provision of these to the Regulator and the resulting need for regulatory scrutiny would introduce an increase in the work of the Regulator, without necessarily resulting in an improvement in regulatory outcomes. Daily Drilling Reports remain essential for the company undertaking the well activity and for the Titles Administrator in managing the resource. Reporting and notification of potential incident precursors is addressed further in Chapter 5.

There remains a potential information gap in relation to the type and intensity of monitoring of well operations, the level of assurance sought and the associated efficient and effective use of the regulator's resources. In this respect, it may be useful to require a report or notification to the Regulator on the state of the well at the completion of each well activity. This could include when no work is underway, in the case of a well that is suspended pending further work in the future or is permanently abandoned. This is discussed further in Chapter 5.

Is a variation or revision of a WOMP more appropriate? What would trigger this process?

A titleholder may apply to the Regulator for acceptance of a variation of an approved WOMP on its own initiative (Regulation 5.11). The RMAR also requires that the titleholder must apply to the Regulator for a variation of the WOMP if:

there is a change in the understanding about characteristics of the geology or reservoir that may have significant impact on a well activity

a significant new or increased detrimental risk or effect to a well activity occurs or has the potential to occur (Regulation 5.12)

the Regulator or the Responsible Commonwealth Minister issues a direction under the OPGGS Act that is inconsistent with the accepted WOMP (Regulations 5.30 and 5.30A)

or the Regulator requires a variation (Regulation 5.14).



4.19 What are appropriate acceptance requirements for a WOMP?

The RMAR also provide that a titleholder may object to a requirement to vary the WOMP that is given by the Regulator under Regulation 5.14, and set out a process for the Regulator’s consideration of that objection (Regulations 5.15 and 5.16). Once the titleholder has submitted the WOMP variation, the process for consideration and acceptance/rejection by the Regulator is similar to that for a new WOMP (Regulation 5.13).

Part 5 of the RMAR currently only provides for the variation of a WOMP (Part 5 Division 4). In practice, a ‘variation’ is taken to mean a submission that can be appended to the existing document while a ‘revision’ would require a re-submission of the entire document. A ‘revision’ process may help ensure that all impacts of any changes are considered. Applying a ‘revision’ process may also mean there is reduced possibility of an accepted WOMP containing contradictory information. An option may be to expand the grounds for requiring a variation to include revision of a WOMP in certain circumstances. For example, a variation may be triggered:

Where the WOMP no longer accurately describes the well activity or systems in place to reduce risks to ALARP, even if the risk hasn’t changed (i.e. through error or omission, where there has been a change in titleholder, or where unexpected conditions are encountered in a drilling campaign);

Where there is a new or increased risk to the well; Where the titleholder intends to make a change in respect of the well activity described

in the WOMP that would add or increase risk to the integrity of that well; Where the Regulator or the Responsible Commonwealth Minister has issued a direction

in relation to a well activity that is in contradiction with the WOMP.

However, a revision may be triggered:

Where the Regulator requires the titleholder to revise the WOMP; Where the Regulator becomes aware of factors such as a significant change to oversight

systems.

Like the current regulations, where the Regulator requires the titleholder to vary the WOMP, the Regulator should inform the titleholder of the reasons for the imposition of this requirement and an appropriate timeframe for the submission of the revised WOMP.

The current regulations provide for the titleholder to object to a notice from the Regulator requiring a variation to the WOMP. This provision is consistent with similar provisions in the OPGGS Safety and Environment regulations, although the language is different.

Part 5 of the RMAR (5.13) provides that if a titleholder gives a variation to the Regulator, the Regulator must within 30 days accept or reject the variation or notify the titleholder that the Regulator is unable to make a decision without further assessment. As with the assessment process for WOMPS discussed above, Part 5 does not provide for information to be given to proponents to clarify the specific aspects of the WOMP that require further assessment. An option is to provide a specific provision consistent with that proposed for assessment of WOMPS, for the Regulator to request, or receive, additional information as part of its assessment prior to making a decision.


When should a WOMP be terminated, or acceptance of the WOMP withdrawn?

Terminating a WOMP

Part 5 of the RMAR provides for the termination of a WOMP (Regulation 5.17):(a) when the titleholder withdraws the well operations management plan; and(b) when the Regulator accepts another well operations management plan that replaces

the well operations management plan; and(c) when the Regulator withdraws its acceptance of the well operations management

plan under Division 6 [i.e. the process for withdrawal outlined above]; and(d) the end of the period of 5 years starting when the well operations management plan

was accepted, whether or not the well operations management plan has been varied since being accepted.

Termination of a WOMP should be an automatic process in certain specific situations, such as where the titleholder withdraws the WOMP or where that WOMP is superseded by a new WOMP. It could also be argued that a WOMP be terminated, suspended or require variation in the event that there is a change in the composition of the titleholder/titleholder group in relation to a particular title. This is because a WOMP describes many things that are specific to the titleholder such as the titleholder’s organisation and management systems. Generally, the WOMP is a demonstration that the titleholder has developed a fit-for-purpose document for its project. However, in practice there are often multiple titleholders for projects and there may be changes in the exact title arrangements from time to time. An option may be to require revision of a WOMP as soon as practicable in this circumstance, while allowing the existing WOMP to continue during the revision process. In this circumstance the titleholder will need to conduct well activities in accordance with the existing WOMP until a revised WOMP has been submitted and accepted.

Currently, Part 5 of the RMAR provides that a WOMP is terminated after five years from the date it is accepted – whether or not it has been varied since the date of original acceptance. This may not be necessary, as the variation requirements for a WOMP should ensure that it is always up to date, and it is likely that a titleholder will have revised its WOMP in this five year timeframe. One option may be to provide for a five-yearly revision of a WOMP, but only if it has not been comprehensively revised in the previous five years. This would, however, bring with it substantial difficulties in determining what constitutes a ‘comprehensive revision’ in the context of a particular WOMP. An alternative option may include expiry of the WOMP when all well



4.20 Should the variation of a WOMP be expanded to include circumstances where the Regulator may require a revision? What would trigger a revision?

4.21 Should the regulations provide for the Regulator to request or receive additional information in respect of its assessment of a WOMP revision in order to make a decision, and to request that information, separately from the provision in relation to being ‘unable’ to make a decision?

activities covered by the WOMP in question have been completed. Both these options will need to consider monitoring requirements for abandoned or suspended wells which is addressed in Chapter 6.

Withdrawing acceptance of a WOMP

Part 5 of the RMAR provides that the Regulator may withdraw acceptance of a WOMP. Regulation 5.18 outlines the reasons the Regulator may withdraw its acceptance; if:

(a) the titleholder has not complied with the Act [i.e. the OPGGSA], this Part [i.e. Part 5 Regulations] or a direction given under section 574, 574A, 580, 586 or 586A of the Act; or

(b) the titleholder has not complied with the accepted well operations management plan; or

(c) the Regulator is satisfied for any other reason that its acceptance of the well operations management plan should be withdrawn.

Regulations 5.19 and 5.20 of the RMAR provide that the Regulator must notify the titleholder of its intent to withdraw acceptance of a WOMP at least 30 days before it proposes to take this action, and allows for the titleholder to provide additional information for the Regulator to take into account before making its final decision.

The provisions for the Regulator to withdraw acceptance of the WOMP focus on compliance with the WOMP, Part 5 of the RMAR and the OPGGS Act. There may also be scope to require compliance with other regulations under the OPGGS Act, in a similar way that the OPGGS Environment Regulations includes that an Environment Plan must comply with the Act and regulations (paragraph 11(1)(g) of the Environment Regulations).

Sub-regulation 5.18 (c) provides a very broad power whereby the Regulator may withdraw acceptance for a WOMP for almost any reason. It may be more reasonable to provide instead that the Regulator may withdraw acceptance of a WOMP where it believes there is a new or increased risk to the well. This would prompt a requirement to revise the WOMP in light of the new or increased risk.

Given the serious consequence of withdrawing acceptance of a WOMP, it is appropriate that there is a process whereby the Regulator gives the titleholder notice of its intentions, and the titleholder is able to provide additional information that the Regulator must consider before reaching its final decision. It may also be appropriate that, where the Regulator makes a final decision to withdraw acceptance, it issues a statement of reasons with the decision. This is the situation currently under regulation 5.19 and 5.20 of Part 5 of the RMAR.

It is also appropriate that withdrawal of a WOMP is not impacted by, nor does it impact, decisions in a court (current regulation 5.21 refers).

Finally, the current Regulations (regulation 5.19) provide that the Regulator may provide a copy of its notice that it is considering withdrawal of the WOMP to a third party if it considers this appropriate, and if “the titleholder agrees in writing”. It seems unlikely that the titleholder would agree to such information being provided to a third party, even if that third party is a legitimate stakeholder such as the Australian Government. The Regulations should allow, in particular, for provision of information and documents by NOPSEMA to NOPTA in relation to well activities, WOMPs, and any other matters as appropriate under Part 5.

Stakeholders should note that the Offshore Petroleum and Greenhouse Gas Storage Amendment (Compliance Measures) Act 2013 received Royal Assent on 14 March 2013. The amendments


include enabling offshore petroleum regulators, and other relevant Commonwealth, State and Northern Territory agencies to share regulatory information obtained during the exercise of powers and functions under the Act and regulations under appropriate circumstances. The circumstances under which the information sharing provisions may apply include for the purposes of a joint investigation to comprehensively investigate an incident and pursue a successful prosecution of companies at fault, or to educate other regulators about potential operational risks that have been discovered during the course of compliance monitoring or investigations.

Relevant agencies include NOPSEMA, NOPTA, the responsible Commonwealth Minister, and the members of the Joint Authority and their delegates. In addition, the NOPSEMA CEO has the ability to share information with other appropriate Commonwealth and State/Northern Territory agencies where the information will assist those agencies to exercise their powers or functions under legislation.


The proposed actions in this chapter are designed to provide greater transparency, clarity and consistency in the regulation of wells (e.g. providing for the same assessment and acceptance process for WOMPs and varied WOMPs).

The introduction of the ALARP principle in respect of WOMP contents requirements and acceptance criteria would not create an additional burden for industry as this principle is well-known in relation to safety and environment matters.

Possible inclusion of ‘revision’ of a WOMP may result in increased effort on the part of the titleholder, given that a revision will need to take into account how changes will affect the WOMP as a whole. However, this may be necessary in order to ensure any variation or revisions



4.22 When should a WOMP be terminated, or acceptance of the WOMP withdrawn?

4.23 Should Part 5 of the RMAR provide for a five-yearly revision of a WOMP, but only if it has not been comprehensively revised in the previous five years?

4.24 Should Part 5 of the RMAR include terminating the WOMP when all well activities have been completed?

4.25 Should Part 5 of the RMAR require compliance with other regulations under the OPGGS Act?

4.26 Under what conditions should the Regulator be able to withdraw a WOMP?

4.27 In what circumstances should the Regulator be allowed to provide notice that it is considering withdrawing a WOMP to a third party without the titleholder’s consent? Should third parties be specified?

of a WOMP fully meets the acceptance criteria at all times and provides assurance that the management of well activities is appropriate and comprehensive.

The requirement to have a WOMP and prepare information for the Regulator would not change and in fact may result in a reduced regulatory burden for industry with respect to assessment processes. The possibility of an additional requirement to advise the Regulator of the status of a well at the end of each well activity would be new.

A requirement for third-party validation may result in an additional cost to industry as systems are established to meet this requirement. However, these costs may be offset by the removal of other regulatory requirements, such as the requirement for specific activity approvals discussed in Chapter 5. This requirement may also result in improved risk management and, particularly, improved planned maintenance systems and practices which implicitly indicate an improved level of safety.


Chapter 5: Approval for Specific Well Activities

Under the current RMAR, it is an offence to conduct certain specific well activities without the necessary additional “activity approval” (regulation 5.22). These specific well activities are well drilling, testing, well completion, abandonment or suspension of a well, and well intervention where the well activity leads to the physical change of a well bore. Regulation 5.23 provides that a titleholder may apply to the regulator for an activity approval for these specified activities. The application must include a description of the well activity and the titleholder’s proposed timetable for carrying out the well activity. The assessment and decision-making process for the regulator is set out in regulations 5.24 and 5.25.

As discussed in Chapter 1, international best practice in objective-based regulatory regimes apply duties of care on those creating the risk to manage those risks to ALARP. In doing so the regulations for safety, environment and wells require a comprehensive and integrated risk management system describing how the duty holder will fulfil their obligations. As such, facilities require a safety case, petroleum activities require an environment plan and it is entirely consistent that the drilling of a well should be subject to a similar requirement.

In the case of WOMPs however, this approach has not been fully implemented in the wells regulations. One of the anachronisms is the requirement for specific well activity approvals. As discussed in Chapter 4, the WOMP should be the “primary framework document” for achieving well integrity, and should be a comprehensive, freestanding, overarching, permissioning document which, when accepted, would allow the titleholder to undertake a range of activities according to the scope of the plan. In that context, the titleholder must manage all risks from all activities to ALARP. As such, additional approvals for specific well activities does not meet the policy intent of implementing an objective-based regime or of establishing the WOMP as the primary framework document for well operations.

The rationale for specific well activities has been that there are certain well activities that pose greater risks than others, and that oversight is prudent for these activities to ensure the integrity of the well. The Explanatory Memorandum for the WOMP Regulations of 2004 says that: ‘As the specified activities would lead to the physical change of a well bore they could alter the well configuration. Given that, it would be undesirable to conduct these activities without the Designated Authority’s approval.’ This reflects the historic objective of the regulations in relation to resource management prior to the establishment of NOPSA when there was a schedule of specific requirements and ‘approval’ was the norm.

Recognising that a WOMP may contain a number of activities over the lifecycle of the well, there remains a potential information gap in relation to the type and intensity of monitoring of well operations, the level of assurance sought and the associated efficient and effective use of the regulator's resources. An alternative approach to approvals therefore may be that notification at least is required. It may be useful to require a report or notification to the Regulator on the state of the well at the completion of each well activity. This could include when no work is underway, in the case of a well that is suspended pending further work in the future or is permanently abandoned. In this context, a case can be made for notifications to help the regulator plan and time its regulatory activities effectively.

Notifications are required as part of the UK safety case based regulatory system Information to be provided could be similar to that provided in the UK Offshore Installations and Wells (Design and Construction etc.) Regulations 1996 (see the text box below).



UK Offshore Installations and Wells (Design and Construction etc.) Regulations 1996

An approach that may be considered as a model is the oil and gas wells notifications administered by the UK Health and Safety Executive. In the UK, the HSE requires notification of specified well operations, either 21 or 10 days in advance, depending on the nature of the operation. The purpose of the notification is to inform HSE of the forthcoming operation and demonstrate that the planned operation will be carried out safely. Notifications include detail on the well and site specific hazards.

Key to this approach is that well notifications do not form part of the consent process. As such, consent from HSE is not provided for notified well operations to commence. HSE will acknowledge receipt of the notification and the well operator may commence operations after the notification period has passed, unless HSE has taken enforcement action to prevent commencement. The onus remains on the well operator to proceed only if it is safe to do so.

While there is not consent required to commence notified operations, well notifications are inspected by the HSE, as are supporting reports including weekly well operations reports, thorough review summaries, and combined operation notifications.

In the UK well notifications are a subset of the safety case. However, the approach may provide a model that could be adapted to the Australian regulatory regime.

Regulation 19 requires the well-operator to report the following information to the UK Health and Safety Executive.

Provision of drilling etc. information

19. (1) Where an operation to which this paragraph applies is being carried out on a well, the well-operator shall cause to be sent to the Executive, at such intervals as may be agreed or, failing agreement, at intervals of one week calculated from its commencement, a report comprising the following information:

(a) the identifying number, and any slot number of the well;(b) the name of any installation or vessel involved;(c) a summary of the activity in the course of the operation since its commencement, or the previous report;(d) the diameter and true vertical and measured depths of –

(i) any hole drilled; and(ii) any casing installed;

(e) the drilling fluid density immediately before making the report; and(f) in the case of an existing well, its current operational state.

(2) Paragraph (1) applies to – (a) a drilling operation;(b) a workover operation;(c) an abandonment operation;(d) an operation consisting in the completion of a well;(e) any other operation of a kind involving substantial risk of an unplanned escape of fluids from a well.

NOPSEMA’s Responsibilities under the OPGGS Act

Quite apart from the question of the regulatory model that should be adopted in Australia (eg notification versus approval of well activities), the OPGGS Act imposes certain responsibilities on NOPSEMA in relation to wells that relate to the rights and obligations of titleholders that stand outside the WOMP process. For example, the Joint Authority can only give consent to the surrender of a title under section 270 if the titleholder has:

to the satisfaction of NOPSEMA, plugged or closed off all wells made in the surrender area by any person engaged or concerned in the operations authorised by the [title]; and

to the satisfaction of NOPSEMA, made good any damage to the seabed or subsoil in the surrender area caused by any person engaged or concerned in the operations authorised by the [titleholder].

There are various other provisions of the Act that require NOPSEMA to have the means of ascertaining whether the titleholder has complied with regulations under the OPGGS Act, including Part 5 of the RMAR. NOPSEMA simply writing to the titleholder seeking an assurance that, in the titleholder’s estimation, the titleholder has complied with the regulations cannot be supported in relation to the period since NOPSEMA became the responsible regulator in relation to the particular matter. NOPSEMA therefore needs to have the means of ascertaining from its own records whether the titleholder has acted in a way that constitutes a significant and unremediated breach of the wells regulations. Consideration therefore needs to be given to whether the various reporting requirements that are proposed will yield the kind of information that NOPSEMA needs to fulfil its responsibilities under the Act.


The requirement for specific activity approvals currently exists in Part 5 of the RMAR. Removing specific activity approvals and moving to a notification approach would remove some burden on industry and the Regulator. The intent of a notifications approach would address a potential information gap in relation to the status of the well at the completion of each well activity.



5.1 Is there an information gap in relation to providing advice to the Regulator regarding the status of the well at the completion of each well activity?

5.2 Should the requirement for additional oversight of specified planned well activities, contemplated in an accepted WOMP, be maintained or should the well regulations move to a notification regime for certain activities?

5.3 Should the current definition of ‘specific’ well activities in regulation 5.22 be used as a basis of the general definition of ‘well activities’?

5.4 What would be an appropriate process and timeframe for specific activity approvals or an activity notification?

5.5 What would be the appropriate process for notifications where the nature of planned activity changes?

Chapter 6: Inactive Wells

There are currently no requirements under Part 5 of the RMAR in relation to wells that are not in use by the titleholder and for which there is no immediate likelihood of being worked on. This Paper refers to these wells as ‘inactive’. However, it is not unknown for such wells to leak recognising that the risk is generally low. Wells that are suspended or temporarily abandoned are currently included in the regulatory regime through the requirements for the approval of the activity to abandon or suspend the well.

WOMPs are currently required for the undertaking of “well activities”, which means that a WOMP is not required in relation to wells that have been suspended or abandoned, even though there may be risks to the integrity of such wells. One option is to broaden the requirement for a WOMP to “wells” generally to ensure that, abandoned suspended and inactive wells must continue to be monitored and maintained in accordance with the accepted WOMP, with consideration of timeframes for this approach if appropriate.

It should be noted that the Regulator has wide powers to direct titleholders and former titleholders under the OPGGS Act. In particular, Part 6.4 of the OPGGS Act (Restoration of the Environment) includes provisions that may be relevant to inactive wells. The simplified outline of that part explains the provisions:

NOPSEMA may give remedial directions to petroleum titleholders or former petroleum titleholders about the following matters:

1. The removal of property;2. The plugging or closing off of wells;3. The conservation and protection of natural resources;4. The making good of damage to the seabed or subsoil.

What is the most appropriate way to manage inactive wells?

As noted above, inactive wells do not require a WOMP as there is no “well activity”. A key reason for this is that much of the content requirements for a WOMP may not be relevant for an inactive well. In particular, much of the management in relation to an inactive well is in the form of ongoing monitoring and, where necessary, maintenance to reduce the risk of loss of containment to ALARP. The management of an active well is much more involved as it includes physical changes to the well which requires a heightened level of focus and regulatory scrutiny.

This is not to say, however, that inactive wells should not be subject to regulation. In light of the reduced risk of loss of containment of a well, the level of regulatory oversight required is likely to be much less than for a WOMP. Options may include introducing a new regulatory tool for the management of inactive wells or in WOMP content requirements. Both these options would provide greater assurance regarding the integrity of abandoned, suspended and inactive wells.

If the requirements of a WOMP were extended to cover inactive wells, and the definition of a WOMP was altered to cover this situation, a titleholder would then be required to provide sufficient information to the regulator on whether or not the titleholder had left the well in a safe condition. This would require the following sort of information:

What method was used to render the well in such a condition that the risks to the safety of people and the environment were reduced to as low a level as was reasonably practicable (ALARP)? This would require information on:


o the basis of design of the chosen method of suspension or abandonment

o how the well was plugged

o what the well was plugged with, e.g. plugs, caps, packers etc.

for example if cement plugs were set, how many, where are they, how was the effectiveness of the cementing job verified etc.

What ongoing monitoring for leaks was deemed appropriate and the rationale for this?

What method of surveillance was planned to be used? e.g. cameras on remotely operated vehicles, and at what frequency.

Given the nature of the plan, an option may be to have one general plan per title, which includes all the inactive wells in that title.

Where there is a change of title, a new titleholder would be expected to continue to implement the existing well maintenance plan, with a requirement to review it and confirm or submit revisions to the Regulator within a reasonable timeframe, such as 30 days.

Providing for the monitoring and maintenance of inactive wells in a titled area does not address the monitoring and maintenance requirements of inactive wells where there is no title or titleholder (i.e. where the title may have been relinquished). Within reason, it may be possible and desirable to require a management plan of a former titleholder, in line with NOPSEMA’s powers under Part 6.4 of the OPGGS Act in certain cases. For example, NOPSEMA may give remedial directions to former titleholders in relation to restoration of the environment where that title has been cancelled or has expired (section 587), but it is doubtful that this section would provide the necessary power for the Regulator to require an on-going well maintenance plan from a former titleholder.

There may also be situations where the former titleholder no longer exists as a body corporate, in which case the Regulator would not be able to exercise its power under Part 6.4 of the OPGGS Act.


If implemented, this would be a new requirement of the petroleum industry and may extend to former titleholders as well as current titleholders. However, this requirement is consistent with Australian Government policy to hold the titleholder responsible for the potential impacts of its activities. Furthermore, although this is a new requirement it is a lesser burden than requiring a full WOMP for all wells.



6.1 What is the most appropriate way to manage abandoned, suspended and inactive wells? Should a new regulatory tool be introduced for the management of inactive wells? In both titled and untitled areas? Should ‘monitoring of inactive wells’ be included in the definition of a well activity?

6.2 Who is responsible for managing inactive wells?

Chapter 7: Well Accidents

The current RMAR do not outline specific requirements for the notification or reporting of unplanned events, incidents or accidents. Instead, paragraphs 5.09(1)(e) and (f) in relation to the contents of a WOMP require a description of arrangements for notifying the Regulator and providing the Regulator with information about ‘well integrity hazards’, significant increases in risks, and other matters.

A well integrity hazard is defined (regulation 5.02) as:

(a) an event that:i. may compromise the integrity of a well; and

ii. would, if it occurred, have the consequence of a significant threat to the safety of individuals; or

(b) an event that may involve a risk of significant damage to the environment or the well reservoir of a well

In the absence of a clear set of requirements, there is scope for each titleholder to create different notification and reporting obligations in each WOMP, or even to omit such details from their proposed WOMP. In addition to this, where there is not a well activity there may not be a WOMP in force. In the absence of a set of requirements independent of the WOMP, there would be no way to ensure adequate notification or reporting of unplanned events, incidents or accidents in relation to that well.

Definitions

Well accident

A ‘well accident’ has a place in the proposed regulations equivalent to that of ‘accident’ in the Safety Regulations. Such a definition is required in order to inform the timely and appropriate reporting of such accidents to the Regulator. A definition of ‘well accident’ would replace the existing ‘well integrity hazard’ definition. A well accident is a notifiable event but distinct from all other notifiable events because it involves a significant actual threat to a person or risk of damage to the environment. Notifiable events are of regulatory interest because they may indicate that control of risk was inadequate or degraded without it having failed completely.

The definition is required in a regulatory regime that imposes a duty to take measures to control the risks of the events described in the definition; to underpin the definition of performance standard in relation to critical elements; and as an event requiring notification to the Regulator so that the Regulator can respond appropriately.

The definition of well accident should capture any unplanned loss of containment including a release of well fluids to the environment. A deliberate release into the environment would not be considered an accident as it would either be an activity described in the accepted WOMP – and so presumably acceptable to the Regulator – or it would be an activity not described in the plan, which makes it both a notifiable event and possibly an offence.

The definition should incorporate any failure of containment (i.e. unplanned events), and risks of and actual deaths, serious injuries and serious illnesses connected with the well or well-related equipment. It is important in this respect not to include harm arising from any activity related to the well where this would create duplication of the Safety Regulation requirements regarding notification of accidents and dangerous occurrences by facility operators.


An example definition of a well accident could include any of the following:

a failure of containment in any part of the well or well-related equipment resulting in a release into the environment of more than:

o one kilogram of gas; or

o one kilogram of two-phase fluids; or

o 40 kilograms of liquid; or

any death, serious injury or serious illness to any person caused in whole or part by, or which may reasonably be believed or suspected to be caused in part or whole by:

o the well or well-related equipment; or

o fluids released from the well into the environment; or

o any other notifiable event concerning the well.

Notifiable event

A definition of ‘notifiable event’ would be analogous to ‘accidents and dangerous occurrences’ used in the Safety Regulations and the Act for provisions concerned with notification and reporting of such events on facilities. A proposed definition is below.

The notifiable event categories should ensure the Regulator is made aware of any event that could require regulatory intervention leading to possible enforcement. For that reason it should avoid requiring any notification of failures of critical elements that are part of normal operations and have been predicted so that the risks are addressed by the WOMP and are being dealt with by control measures in an acceptable way. This would include activities such as routine examination, testing, maintenance and repair of critical elements.

The quantities proposed below are identical to the quantities used in the proposed definition of ‘well accident’ and are those used for categorising hydrocarbon releases by the International Regulators Forum. It will remain up to the titleholder to specify monitoring systems for wells and containment that are appropriate to the risks. The point of the quantified limits is simply to distinguish between uncontrolled flows which are notifiable once they are discovered and those which are not notifiable.

This definition, and the related ‘well accident’ definition, should include specific references to well kicks. Under the Safety Regulations a facility operator must notify NOPSEMA of a well kick exceeding 50 barrels or 8 cubic metres as a ‘dangerous occurrence’. For the wells regulations such well kicks would be also notifiable by a titleholder in addition to a range of smaller well kicks notifiable by the titleholder only.

The proposed definition also takes account of a recent suggestion from the International Regulators Forum that regulators should be notified when a blow-out prevention or diverter system is operated under particular circumstances. However, in reality this may relate to an event that is notifiable under other categories in the proposed definition.

The proposed definition does not include a fire or explosion as a notifiable event in its own right because such an event must involve a loss of containment that would be notified anyway.


That notifiable event, in relation to a well and well-related equipment, be defined as any of:

a well accident; or

an event that did not cause, but could reasonably have caused, a well accident; or

a failure of containment, including a well kick, in any part of the well or well-related equipment resulting in a release into another part of the well or well-related equipment of more than:

o one kilogram of gas; or

o one kilogram of two-phase fluids; or

o forty kilograms of liquid; or

a failure of a primary barrier of fluid hydrostatic pressure leading to

o a pressure build-up; or

o a positive flow check;

and the operation of a blow-out prevention or diversion system; or

a failure of a critical element to meet its performance standard in any way other than a failure identified by a planned test or planned maintenance undertaken for the purpose of detecting and rectifying such a failure and so described in the well operations management plan.

Exemptions

Three requirements under the current Part 5 of the RMAR, the requirement to have an accepted WOMP, to comply with an accepted WOMP, and to have approval for an activity, do not apply in an emergency (subregulation 5.04(3)) if:

(a) there is an emergency in which there is a likelihood of any of the following:injury;significant discharge of fluids from the well;damage to a natural resource; and

(b) the titleholder undertakes an activity to avoid the injury, discharge or damage; and(c) as soon as practicable, the titleholder gives the Regulator notice of the emergency; and(d) as soon as practicable, but within 3 days, the titleholder gives written notice to the

Regulator about the activity undertaken.

It is reasonable to exempt the titleholder from certain requirements in the event of an emergency, as is currently the case under subregulation 5.04(3). A clear and transparent way to do so would be to link these exemptions to the concept of a ‘well accident’, or ‘notifiable event’ rather than the more imprecise emergency. In addition, the impact should be reconsidered in the context of risks to people or the environment.

What are the options for notifying and reporting unplanned events, incidents or accidents?

For a well accident or a notifiable event a report should be provided to the Regulator outlining the nature of the event. For a notifiable event, a report should be provided to the regulator, in writing, within 3 days of the event occurring, and should include all material details relevant to the event, and the titleholder’s planned response to the event.


Well accidents should be reported to the Regulator, as soon as possible. Consistent with the Environment and Safety Regulations, well accidents should be reported to the Regulator verbally within two hours of the accident taking place, and should include all material information reasonably available at the time to the titleholder.

In the case of a well accident, the report to the Regulator would provide further information following the initial verbal notification. It would also be appropriate to provide that the Regulator may request additional or periodic reports in the event of a well accident. Regular and periodic reporting during and beyond the Montara incident response phase, while not required by the RMAR or OPGGS Act, were essential for public and Ministerial awareness of the ongoing response effort.


The options proposed are consistent with the Safety and Environment Regulations, providing transparency in reporting which will reduce the overall regulatory impact.



7.1 What definitions of ‘well accident’ or a ‘notifiable event’, are appropriate?

7.2 What are the appropriate reporting requirements in terms of timing and responsibility?

7.3 What exemptions are appropriate as a result of an emergency?

Chapter 8: Compliance, Enforcement and Penalties

Australian Government Review of Compliance and Enforcement Measures

It is important that compliance and enforcement measures are adequate and effective to prevent or deter parties from breaching their legislative obligations, potentially resulting in the occurrence of incidents with substantial and widespread implications. It is also important that the Regulator has appropriate powers to enable them to adequately fulfil their compliance, monitoring and enforcement functions under the offshore petroleum legislative regime.

The Government Review of Compliance and Enforcement Measures that apply in the existing offshore petroleum legislative regime, including regulations, considered whether these measures are adequate and effective enough to prevent or deter parties from breaching their legislative obligations, potentially resulting in the occurrence of incidents with substantial and widespread implications for health, safety and the environment.

The Review was an outcome of the Government Response to the Report of the Montara Commission of Inquiry. It commenced with the release of the Offshore Petroleum and Marine Environment Legislative Review Issues Paper: A rigorous compliance and enforcement regime for offshore petroleum activities in Australia for comment in October 2011 (submissions closed on 16 December 2011). The Issues Paper identified and proposed matters for consideration which may assist in the development of a more appropriate and effective civil penalties regime for the OPGGS Act.

The compliance and enforcement review was completed in mid-2012, with the Australian Government agreeing in June 2012 to improve compliance and enforcement in offshore petroleum regulation by providing a broader range of compliance and enforcement tools for the Regulator, by:

i. increasing the current criminal penalty levels under the OPGGS Act and associated regulations, consistent with major hazard industry legislation;

ii. introducing to the OPGGS Act a range of alternative enforcement mechanisms, such as infringement notices, enforceable undertakings, civil penalties, adverse publicity orders, injunctions, and orders for restoration, broadly consistent with those provided for in like legislative regimes, as a supplement to existing criminal penalties;

iii. amending the penalties, including custodial penalties, for OHS offences under the OPGGS Act to be consistent with the Work Health and Safety Act 2011 (Cth) or greater, as appropriate, consistent with a major hazard industry;

iv. amending the OPGGS Act to allow for continuing penalties, for appropriate strict liability offences; and

v. redrafting NOPSEMA’s inspectorate powers to provide greater clarity and consistency between the inspectorial powers and roles and removing unnecessary procedural requirements that are likely to impede NOPSEMA’s ability to effectively perform its enforcement functions.

Legislative amendments

The Offshore Petroleum and Greenhouse Gas Storage Amendment (Compliance Measures) Bill (Spring 2012 Bill) received Royal Assent on 14 March 2013. The Spring 2012 Bill measures included streamlining NOPSEMA monitoring and investigation arrangements, introducing civil


penalties, increasing some criminal penalties, and enabling the sharing of regulatory information between authorities within the regime.

The Offshore Petroleum and Greenhouse Gas Storage Amendment (Compliance Measures No. 2) Bill 2013 (Autumn 2013 Bill) received Royal Assent on 28 May 2013. The Autumn 2013 Bill includes measures to:

Implement a range of alternative enforcement mechanisms to implement the findings of the review of compliance and enforcement mechanisms conducted as part of the Government Response to the Report of the Montara Commission of Inquiry;

Implement the agreed recommendations in the whole-of-Government ‘polluter pays’ report developed as part of the Government Response to the Report of the Montara Commission of Inquiry, including an express polluter pays obligation in the OPGGSA and a third party cost recovery mechanism;

Clarify insurance requirements in the OPGGSA to ensure that maintenance of sufficient financial assurance is compulsory and to clarify the compliance role of the regulator;

Enable NOPSEMA inspectors to issue environmental prohibition notices and environmental improvement notices to require petroleum titleholders to take action where required to remove significant threats to the environment;

Require NOPSEMA to publish OH&S and environment improvement notices and prohibition notices on its website; and

Implement multiple titleholder arrangements in the regulations


Changes to the compliance and enforcement regime should not result in a change from current practice.


The Australian Government has agreed to update the compliance tools available under the OPGGS Act. The Review of Compliance and Enforcement Measures has been completed and changes, accepted by the Government, are being implemented. Noting this, penalty and offence offence provisions in relation to the regulation of well operations will be consistent with the legislative amendments from the two OPGGS Compliance Measures Bills.

Chapter 9: Next Steps

The Department of Industry will draw upon submissions to prepare a report for Australian Government consideration. The Department plans to make its recommendations to the Government in the second quarter 2014, with any amendments to legislation or regulations to proceed thereafter in accordance with applicable Parliamentary or Executive Council timetables.


APPENDIX 1: Abbreviations and Acronyms

ALARP As Low As Reasonably Practicable

CoI Commission of Inquiry

Cth Commonwealth

DA Designated Authority

EP Environment Plan

FDP Field Development Plan

GA Geoscience Australia

HSE Health Safety and Environment

IRF International Regulators’ Forum

JA Joint Authority

MODU Mobile Offshore Drilling Unit

non-OHS non-Occupational Health and Safety

NOPSEMA National Offshore Petroleum Safety and Environmental Management Authority

NOPSA National Offshore Petroleum Safety Authority

NOPTA National Offshore Petroleum Titles Administrator

NT Northern Territory

OHS Occupational Health and Safety

OPGGS Act Offshore Petroleum and Greenhouse Gas Storage Act 2006

RCM Responsible Commonwealth Minister

RMAR Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulations 2011

UK United Kingdom

WOMP Well Operations Management Plan


Copyright Notice

This work is licensed under a Creative Commons Attribution 2.5 Australia licence. To the extent that copyright subsists in third party quotes and diagrams it remains with the original owner and permission may be required to reuse the material.

This work should be attributed as: Issues Paper: Review of Part 5 of the Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulations 2011 (January 2014).

Inquiries regarding the licence and any use of this Issues Paper are welcome at:

ManagerEnvironment, Safety and Security SectionOffshore Resources BranchResources DivisionDepartment of IndustryGPO Box 1564CANBERRA ACT 2601

Email: [email protected]


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