Committee view and recommendation

3.1        The committee commends the Australian government for its commitment to ensuring that offshore oil and gas activities are conducted in accordance with international best practice for safety, well integrity and environmental management.

3.2        The committee recognises the vital role that oil and gas exploration and production plays in ensuring Australia's energy security in the medium and longer term, and the contributions the industry makes to both national and state and territory economies.

Economic impact

3.3        If passed, the bill would require an immediate halt to operations in the Great Australian Bight (the Bight). The committee notes that this would affect 11 active exploration permits, managed by six different companies including BP Australia, Chevron, Statoil, Santos, JX Nippon, Murphy, Karoon Gas, and Bight Petroleum.

3.4        As noted by the Department of Industry, Innovation and Science, these companies have invested more than $200 million in exploration of the Bight since 2011. The revocation of permits would lead to significant costs to permit holders through the cancellation of contracts and unrealised income for service companies. It would also lead to the loss of local jobs for Australian workers at supply bases and through logistical and contract opportunities.

3.5        Further, if passed, the bill would result in the first offshore oil and gas moratorium in Australia. This would follow moratoria on onshore petroleum exploration in Victoria and the Northern Territory. Together, these measures place Australia's investment reputation at serious risk, and may impact the future viability of major investment projects.

3.6        Regulatory certainty is fundamental to Australia's appeal as an investment destination and this bill would create a perception of uncertainty. Australia's reputation as an investment destination for oil and gas companies would be severely damaged by the bill.

Regulatory regime

3.7        The committee notes that the bill is a response to concerns that the Great Australian Bight is at risk from oil and gas operations. However, the committee believes that the protections offered by the current regulatory regime are adequate.

3.8        The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) is the independent, expert regulator for the offshore petroleum sector. Its mandate comprises oversight for health and safety, structural and well integrity and environmental management for offshore petroleum activities undertaken in Commonwealth waters. The committee notes that the single national regulator model reflects international leading practice, and provides nationally consistent regulation for safety, well integrity and environmental management of offshore petroleum activities.

3.9        The use of an independent regulator is not limited to the oil and gas sector—independent regulators are a key component of the management of other industry sectors. Independent regulators are entrusted by government with ensuring industry members undertake activities in accordance with the law, and with accepted best practice.

3.10      If the bill passes, it would have the effect of overriding decisions previously made by NOPSEMA on exploration activities. This could undermine NOPSEMA’s regulatory independence and decrease certainty in its decision-making processes.

Marine reserves

3.11        Commonwealth Marine Reserves (CMRs) are areas established by proclamation under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) for the purpose of protecting and maintaining biological diversity in the reserves. The Director of National Parks is the statutory authority responsible for the administration and management of CMRs under the EPBC Act.

3.12      In 2014, the Australian government commissioned an independent review of the CMR network established in 2012. The review was undertaken by an expert scientific panel, which reviewed the science underpinning the current CMRs, and five bioregional advisory panels, which facilitated enhanced consultation with stakeholders.

3.13      The panel recommended zoning changes in the Great Australian Bight to exclude oil and gas activities from existing inshore special purpose zones. However, these zones do not overlap current petroleum titles, nor are titleholders or other companies prohibited from traversing the re-zoned areas.

3.14      The committee notes that the bill ignores the recommendations and work undertaken as part of the independent review, and proposes to prohibit mining activities within the whole Great Australian Bight marine area, regardless of CMR status.

Compensation provisions

3.15      Though the bill makes provision for reasonable compensation for the acquisition of property, it is unclear that the provisions as drafted would have meaning in law as the bill is unlikely to result in any acquisition of property.

3.16      This lack of clarity would add to an increased lack of regulatory certainty and could further risk Australia's investment reputation.

Recommendation

3.17      Noting the foregoing issues, the committee considers that the bill should not be passed.

Recommendation 1

3.18      The committee recommends that the Senate not pass the Great Australian Bight Protection Bill 2016.

Senator Linda Reynolds CSC
Chair

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