Creating a New Offshore Petroleum Safety Regulator
Authors: Wilkinson Peter 
Published: October 2008

The Federal Government of Australia is developing a new national offshore petroleum safety authority, NOPSA. The policy is set, concept selection has been made, detailed design almost finished and construction about to start. This paper will describe the background, the problems encountered and how they are being solved in consultation with stakeholders including the offshore industry and its workforce. The goal is an effective and efficient offshore petroleum safety regulator that is respected for its professionalism by all stakeholders.

Offshore Oil and Gas in Australia

In world terms Australia has a small offshore oil and gas industry. It has around 60 facilities in production but with large proven hydrocarbon reserves, especially gas. By world standards Australia is relatively unexplored. The industry is of great importance to Australia and is important regionally with a long standing LNG export industry to Japan. The recent signing of a A$ 25 billion LNG export deal with China is Australia's largest ever export order.

Constitutional Background

Government regulation inevitably reflects the political context. Australia has a Federal structure. The States and Territories, (Western Australia, Victoria and the Northern Territory are the most important from an oil and gas perspective) have their own governments, and substantial sovereign rights. In the offshore context, the States/Northern Territory have title and power to make laws up to the three mile limit and the Federal Government has "title" to all petroleum seaward of the three mile limit, but in practice authority is exercised jointly with the relevant State or Territory, which is empowered to exercise all day to day regulatory powers, including safety. This agreement called "The Offshore Constitutional Settlement" has generally served Australia well.

Offshore Petroleum Safety Regulation

The States and the Northern Territory carry out day to day offshore petroleum safety regulation using a mixture of State and Federal law. Until the 1990s this law was of the traditional prescriptive type. After the Piper Alpha disaster, Australia carefully considered what lessons could be drawn from this disaster that were applicable to Australia. It was decided to introduce a safety case approach and the law was modified although some prescriptive aspects remain. This approach was judged a success by all parties and will be maintained.

Administration of the offshore petroleum law

Although the law was changed in the 1990s to introduce the safety case approach, the administrative arrangements to implement it were not. In the Joint Authority of the Federal and State/Northern Territory Governments, the States/Northern Territory are responsible for day to day safety regulatory decision taking, the systems and procedures they use and for recruiting and employing the staff applying them. The Federal Government has legal and political accountability but does not have the authority to determine how the laws are applied on a day to day basis.

Problems with this system

The Federal Government was concerned about the quality of offshore petroleum safety regulation and was committed to reviewing the success or otherwise of introducing safety cases, following the Piper Alpha disaster.