Maintaining future effective preparedness against oil spills
Nick Quinn
General Manager

Tel:+61 3 5272 1555
Fax:
+61 3 5272 1839
E-mail: amosc@amosc.com.au
Internet: www.amosc.com.au

As we enter the second financial and calendar year where the price of oil hovers
below USD$40 per barrel, the challenge of maintaining effective preparedness to
respond to oil spills looms over the petroleum industry who needs the specialists torespond and the spill response organisations and contractors that underpin theindustry’s licences to operate. But as response organisations, we have all been
through the lean times when historically, the 5 years after a major oil spill has been
the time when motivations to maintain interest and maintain support of ourcontractors and organisations typically wanes. However competition for thepreparedness funding is also shared with the regulatory and compliance regimes. I
it is interesting to note the results of a 2015 Deloitte report (Get out of your own way;Unleashing productivity) which identified the cost of meeting legislation in Australia(in all sectors) conservatively totalled AUD$250B/year with the oil and gas sector
being hit reasonably hard in the compliance basket. The report identifies that saving
10% of this $250B would equate to 1.6% of national income. Australia embarked on
a reform of sorts designed to eliminate duplication and streamline the rule makers
and compliance sector in 2014. The oil and gas sector has received somestreamlining but there are still areas where the right form of government streamlining
could achieve efficiencies at the right end of the scale and reduce the stress loadingson the response side of the industry that is so often required to find financial
efficiencies in hard times.
As the Australian industry’s Oil Spill Response Organisation (OSRO), AMOSC
AMOSC has asked 4 questions of itself in the last 12 months to provide its members
the best support it can within these exacting times;
1. So what is different in this situation?
2. Do we have the ability to maintain effective preparedness against oil spills?
3. Can history over the last 30 years provide some of the answers?
4. What can be made more efficient and maximise cost benefit?

For a number of years, OSRO’s have been at the front and centre of ‘feast or famine’– when just after major spill responses, large amounts of investment and motivation
have been injected into the spill response organisations to build the capacity of theseorganisations to best respond to the last oil spill. AMOSC most recentlyexperienced this investment just after the Montara spill and the Australian regime
successfully addressed the offshore spill response issues generated by bothMontara and Macondo. Similar to the global experience, this investment amounted
to greater training and education for companies, greater exercising and plannedpreparedness, mutual aid, more trained and experienced personnel available for spill
response, and a wider capability including oiled wildlife and subsea interventions.
The investment was mainly provided by the upstream exploration and production
sector with the downstream sector maintaining their consistent levels of support andfunding (Question 1). However and arguably, prior to this 5 year period, the spill
response capability in Australia was always built to respond to shipping based
responses. So in reviewing history, the original OPRC model has been sufficient tobuild the initial preparedness and response models, with the recent investment
enabling greater capability and capacity to be built up in Australia (Question 3). Thiscapability and capacity is however designed for crude or petroleum product (GroupII-V) response – Australia will need to look at the needs for gas
preparedness/response as the type of petroleum exploration/production changes.
This currently sits outside of the OPRC 90 intention (Article 2 Defn 1) of addressing
oil spill preparedness and response and perhaps questions the limited scope of theOPRC 90 being just for oil spill preparedness and response.
Observation 1; During the last 5 years, the upstream industry has been building
capacity in spill preparedness and response – the drop in oil prices has affected theability to keep funding this capacity building and the challenge is to keep the current
capacity building within cost efficiency and reasonable. The original architects ofspill response came from the shipping industry, so this ‘recent’ investment by theupstream industry has been a welcome injection of support to continue building
capacity for spill response.
The second AMOSC question of whether we are able to maintain effective
preparedness for spill response can be considered as offshore response and thencoastal/shipping based response needs. While the 2 sectors are reasonably closely
linked, the availability of funding from either has been seesawing at any given point
in time. For example, the frequency and tonnage of petroleum products carriedaround the Australian coast has increased in the last 5 years and positioned thedownstream industry well in terms of the current oil prices. This positioning has
coincided with the expansion in capability that the industry has made inpreparedness for the offshore sector. The expansion has benefitted both theupstream and downstream sectors and provided extra contingency capability thatwas previously lacking. But the key to maintaining this extra capability is financial
investment – with enhanced services, extra funding is needed. So to free up thefunding, some consolidation of services is required due to the current low prices ofcrude. For a while now, Australia has depended on equitable funding of strategic
projects such as aerial dispersant (where industry and government equally fund a24/7 capability) and collective industry funding of projects like trajectory modelling.
(Question 4) More recently the petroleum industry in Australia has been very
interested in collectively funding projects/capability such as;Joint exercising – to prove the overall industry activation and response
arrangementsScientific monitoring

Air quality monitoring

Water quality monitoringCommunications in remote areas

Labour response on shorelineSubsurface trajectory monitoring

Remote environmental sensing

With the value proposition being collective funding and therefore reduced individual
funding, the counter-proposition is to re-invest some of the saved expenditure intocurrent maintenance of preparedness and also the future preparedness for achanging sector.
Observation 2; efficiencies gained through collective funding of shared resources
needs to be reinjected into current and future preparedness. This needs to beagreed with all parties prior to sharing resources
In addressing the question of ‘maintaining future effectiveness’, the Australianemphasis will be on ‘funding current and future preparedness’ noting several
factors. These factors include the current oil prices, increase in downstreamshipping activity, relative change in crude production to gas production and for theOSRO to continue meeting industry’s needs. This requires funding and support inorder to maintain meeting industry’s needs. The simple analysis of how many fulltime personnel (less than 100) are involved with spill preparedness and response inAustralia becomes very revealing. Yet the risk of spills has not diminished. Global

teams do not replace regional/national teams – there is resistance in outsourcing
when government considers spills of national significance. Homogenous capability
is typically required in Australia to support the risk of spills. So the argument returns
to finding efficiencies in the competition for the funding and support arrangements forspill preparedness. This argument will become more prevalent over 2016 and until
the price of oil returns to a more profitable level.
In January 2014, AMOSC asked the PAJ Symposium “The quantum of change overthe last 4 years and since the 2 spill incidents of Montara and Macondo reinvigorated energy around response and preparedness issues to marine oil spills.
The familiar question arises; how long will this motivation and energy last?”
Compelled by the reduction of the price of crude, we are now seeking assurance thatinvestment by the oil and gas sector will remain funding of spill preparedness andresponse. In some ways and by reviewing recent history, we find that the initial
creation of the spill preparedness and response sector 30 years ago has beenadequately ‘topped’ up by the upstream sector over the last 5 years. So the current
thrust in Australia is to achieve collective savings to free up capital for re-use within
the preparedness