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Subject:                          Environmental Manager 1002: Oil & gas leak rise 'serious'; Hunt's dredging back flip; Vic EPA review


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Thomson Reuters Australia

Issue 1002 , Tuesday 26 May 2015

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In this issue

Rise in offshore oil leaks 'a serious concern', NOPSEMA CEO says


Quarry directors 'more culpable'


Vic EPA review starts June


Tas EPA leadership changes


Hunt go-ahead for Abbot Point EIS


Coral Sea protection increased


$US45m to retire Alcoa site


Draft CFI to ERF intentions released


Water commission abolished


Editorial team



Rise in offshore oil leaks 'a serious concern', NOPSEMA CEO says

A 25% increase in uncontrolled hydrocarbon leaks in Australian waters over the past two years was a "serious concern" and a fall in the oil price no excuse, head of the national offshore oil & gas watchdog says.

The National Offshore Petroleum Safety and Environmental Management Authority's (NOPSEMA) latest offshore performance report showed most leaks in Commonwealth waters were in the lower category (1-300kg).

But the jump from 20 leaks in 2013 to 25 in 2014 was a "serious concern due to the risk of ignition and potential safety and environment consequences", NOPSEMA CEO Stuart Smith said.

"Anecdotal evidence from other jurisdictions internationally suggests industry maintenance performance often drops around four to six months after a large fall in the oil price," he said. There was no evidence "of a correlation in Australia with the current downturn in prices" but "duty holders should keep in mind that any changes in processes made as a result of reduced budgets should not compromise safety and environmental outcomes in any way", Smith said. NOPSEMA would continue to monitor the issue, he said.

While most uncontrolled hydrocarbon releases were in the lowest mass category, the rate per 100m barrels of oil equivalent was consistently higher than the reported international regulators forum (IRF) average, the report said. Most occurred at fixed platform facilities.

Of the 25 releases, 13 were at normally attended platforms, six were from floating production, storage and offloading vessels, four were at "not normally attended" platforms and two were from pipelines.

Six hydrocarbon vapour releases were due to flares being extinguished. Other causes included a crude oil leak from a subsea pipeline, well fluids leaking from a subsea control module and leaks of petroleum-based liquids or gas from topside equipment. The report said while environmental impacts from the releases were not significant, they showed a need to improve prevention measures.

'Ageing facilities need robust management'

The data suggested "a significant number of unplanned events occurred on ageing facilities", Smith said. Deficient preventive maintenance, the second largest cause of occupational health and safety (OHS) incidents in 2014, also had "the potential to create environmental impacts, as has been seen with unplanned hydrocarbon releases from ageing pipeline infrastructure".

Ageing facilities placed an increased burden on project resources and often required more maintenance and repair, he said. "It is crucial that operators of aged or ageing facilities ensure that integrity management systems and processes are applied robustly together with regular audits to ensure their continued quality and effectiveness," Smith said.

In 2014, NOPSEMA did 146 inspections covering 202 facilities, titles, wells and petroleum activities. Its environmental assessment time frames were reduced by 40% due to higher quality titleholder submissions and regulatory amendments, the report said. Smith said environmental management inspections would increase in 2015.

A total of 119 petroleum activities were authorised through accepted environment plans in 2014, 38% down from the 192 authorised in 2013, the report said.

Of those approved last year, 42% were production facilities or pipelines, 19% were activities like repairs to subsea installations, production cessation and non-production phases before decommissioning, 16% were drilling activities, 14% were seismic surveys, 7% were geophysical or geotechnical surveys and 2% were construction activities.

In December 2014 the Federal Government tabled a Bill to dramatically expand NOPSEMA's jurisdiction to streamline regulatory arrangements. (EM 09/12/14).


Quarry directors 'more culpable'

A NSW north-coast rock quarry company's capacity to pay fines ordered by the Land and Environment Court (LEC) is "questionable" as it has "no assets", has multiple creditors and "is no longer a going concern".

At the Corinda quarry's height of production Wyanga Holdings Pty Ltd extracted 368,363 tonnes of gravel and/or rock from February 1, 2012, to January 31, 2013. However, that was more than seven times its environmental protection licence's (EPL) annual limit of 50,000 tonnes. Wyanga delivered almost all the extracted material to Leighton Contractors Pty Ltd and Fulton Hogan Pty Ltd's Pacific Highway upgrade for the then NSW Roads and Traffic Authority. Some tonnage was supplied to Coffs Harbour City Council. The highway upgrade between Sapphire and Woolgoolga finished in late 2013.

On May 15, NSW LEC Justice Terry Sheahan fined Wyanga and its two directors a total of $106,500. Wyanga and directors Joseph and Louise Cauchi pleaded guilty to nine of 12 charges and agreed to pay $90,000 for the Environment Protection Authority's (EPA) legal costs. Justice Sheahan sentenced Wyanga and the Cauchis on all 12 matters after they exceeded the EPL annual extraction limit over 2.5 successive licence years and gave misleading information to the EPA (EM 17/06/14).

Justice Sheahan held Joseph Cauchi "more culpable" than Louise for the EPL exceedances, fining him a total of $76,000 for four breaches of the Protection of the Environment Operations (PEO) Act 1997. He fined Louise Cauchi a total of $27,000 and found her "primarily culpable" for supplying "false and misleading" information in a 2012 annual return to the EPA. He was satisfied the failure to disclose the exceedance was "at least negligent, and really quite reckless". He noted the prosecutor conceded it couldn't establish the "criminal onus" that Wyanga and its directors "deliberately misled" the EPA and it remained a "rational hypothesis" the breach was "inadvertent". However, the prosecutor submitted there was "no satisfactory explanation" for the omission because the defendants disclosed other breaches in the return. Those were unrelated to the proceedings before Justice Sheahan.

The judge said Joseph and Louise were Wyanga's "directing mind and will". He ordered Wyanga to pay a total $3,500 for its four PEO Act breaches. Justice Sheahan apportioned the fines among the three defendants to avoid "possible triple" punishment.

Outside the court on May 21, EPA north branch director Gary Davey said Wyanga's EPL was revoked after the court case. Earlier, in August 2013, the EPA had suspended the licence after issuing repeated warnings about the exceedances, "which the company continued to ignore", Davey said. (Environment Protection Authority v Wyanga Holdings Pty Ltd; Environment Protection Authority v Cauchi [2015], NSWLEC 78, 15/05/2015)


Vic EPA review starts June

The Vic Environment Protection Authority's powers to ensure environmental justice principles are adhered to and "the environment is protected for the benefit of the community" will come under scrutiny in a new review.

Vic environment, climate change and water minister Lisa Neville announced the inquiry last week, saying the relevant legislation was almost 46 years old and the regulator needed to "keep up with the times". The review would start in June and report in March 2016, she said.

Former state justice department secretary Penny Armytage will chair the review. Former 2009 Bushfires Royal Commission CEO Jane Brockington and NT EPA non-executive director Janice Van Reyk will join the review committee. Its terms of reference include examining the scope and adequacy of the EPA's statutory powers; the EPA's role in public health issues; community and industry expectations; and its "appropriate" role in protecting the environment. Whether the EPA's governance and funding allow it to "effectively and efficiently" discharge its powers and perform its duties would be studied.


Tas EPA leadership changes

The Tas Government has appointed a new Environment Protection Authority (EPA) director and three new board members, including a new chair and deputy chair.

Former resources director at the state Department of Primary Industries, Parks, Water and Environment (DPIPWE) Wes Ford has been appointed as EPA director to replace retiring director Alex Schaap. Ford has held several senior govt positions, most recently AgriGrowth acting deputy secretary.

Warren Jones has been elevated to EPA chair after serving as deputy chair since 2012. Jones was DPIPWE's environment/EPA division GM. The new board deputy chair is Anthony Ferrier, Kingborough Council's current deputy GM. Professor Colin Buxton, a former director of the University of Tas's Fisheries, Aquaculture and Coasts Centre was appointed to the EPA board. He joins new member Catherine Murdoch, Tasmanian Irrigation Pty Ltd environment manager.


Hunt go-ahead for Abbot Point EIS

Federal environment minister Greg Hunt has asked the Qld Government to produce an environmental impact statement (EIS) to support its plan to dump dredge material from its Abbot Point Port's expansion proposal on industrial land next to an existing coal terminal (EM 31/03/15, 29/04/14).

Renamed the "Abbot Point growth gateway project", the new Qld Govt wants to dispose of project dredge material on unused industrial land instead of on nearby protected wetlands or undersea within the Great Barrier Reef (GBR) marine park, as the former state govt had proposed and the Federal Govt had approved.

Hunt on May 14 decided he would assess the proposal by an EIS under the federal Environment Protection and Biodiversity Conservation (EPBC) Act. That was despite a new bilateral agreement with Qld under s45 of the EPBC Act allowing the state govt to assess development projects on the Federal Govt's behalf.

The new Qld Govt's coal terminal expansion project would dredge about 61ha of seabed within the port's limits, outside the GBR park, it said. It would increase the port's capacity to handle coal exports from 50m to 120m tonnes a year to cater for planned Galilee Basin coal exports, including Adani Mining Pty Ltd's proposed $16.5m Carmichael Mine.

"The full cost of the EIS will be paid for by mine proponent, Adani, not taxpayers, under an agreement with the govt," Qld state development minister Dr Anthony Lynham said. Meantime, the legality of Hunt's 2014 approval for the Carmichael mine is being challenged for a third time in the Qld Land Court (EM 20/01/15).

In a statement of reasons, Hunt said he'd reviewed Qld Govt advice and found the project "was not eligible" to be assessed under the bilateral agreement. Given that, plus a lack of detail on the project's final design and mitigation measures, and uncertainty about "the nature and scale" of its impact on matters of national environmental significance (the GBR world heritage protected area) Hunt said he'd accepted advice he assess it with an EIS. He agreed, "in particular" with his "department's view assessment by EIS would provide a robust and thorough assessment … and the opportunity for public engagement" to help him make an informed decision on whether to allow the port's expansion to proceed.

GBR reg change to formalise dredge backflip

Hunt's decision (above) was a backflip on his October 2014 decision to not require an EIS for dredge material to be disposed on Canley Vale wetlands next to the GBR marine park. It triggered a Federal Court challenge during which Hunt promised the court he would provide one days' warning to the Qld Environment Defenders Office of any decision on the former Qld Govt's project application. (EM 20/01/15).

But on May 17, Hunt said he'd "formally approved" an amendment to GBR regulations to prevent any dredge material being disposed "in the entire 344,400km2 park". "This covers 100% of the area under Commonwealth legislative control and 99% of the world heritage area." The Qld Govt had committed to a dredge disposal ban in the remaining 3,000km2 area under its jurisdiction which included port areas, he said. The regulatory change has yet to be registered.

Hunt's GBR protection decisions precede a UNESCO World Heritage Committee (WHC) decision on whether to list the GBR world heritage area as "in danger" at a meeting in June.


Coral Sea protection increased

Roughly 12% of the Coral Sea will be covered if the Federal Government expands the Great Barrier Reef (GBR) and Torres Strait "particularly sensitive sea area" (PSSA).

The International Maritime Organisation (IMO) had agreed to the proposal to protect the south-west Coral Sea, which expanded the PSSA from 403,000km2 to 958,000km2, the govt said. Designation as a PSSA covered areas with "significant ecological, socio-economic or scientific attributes [that] may be vulnerable to damage by international shipping", the govt said. The GBR was declared the world's first PSSA in 1990.

About 430 ships navigate the PSSA waters annually, with certain areas deemed challenging because of reefs, cays, islets, sandbars and shoal patches. There are 341 species listed for conservation in the area.

There will also be three new associated protective measures (APM) to support the PSSA, a new area ships must avoid and with supporting two-way routes. They would enhance ship safety, reduce the risk of groundings and allow more time for intervention in developing situations like a ship suffering a mechanical breakdown.

Deputy Prime Minister and infrastructure and regional development minister Warren Truss said the move showed the govt was implementing measures outlined in the north-east shipping management plan released in October 2014. It's expected the PSSA measures will come into effect in June and the APMs in January 2016.


$US45m to retire Alcoa site

Alcoa of Australia Ltd says closing and rehabilitating its Anglesea coal mine and power station on August 31 will cost up to $US45m.

In February 2014 Alcoa put the plant up for sale but when it didn't sell the company decided to close the entire operation in August. The Anglesea power station had previously supplied 40% of power for the Port Henry aluminium smelter in Geelong which closed on August 1, 2014.

An Alcoa spokesperson told EM discussions with the Vic Government on rehabilitating the site were ongoing. The company expected restructuring-related charges for asset retirement obligations and environmental remediation would be about $US40-45m, he said.

Vic energy and resources minister Lily D'Ambrosio told EM "Alcoa is responsible for the rehabilitation of the site and there are a number of regulatory measures that ensure this". Alcoa would prepare a mine rehabilitation plan for the govt's "earth resources regulator" within Vic's new economic development, jobs, transport and resources department. The Vic Environment Protection Authority would regulate the power station site's remediation. Rehabilitation was "not a quick process", D'Ambrosio said. "Work is expected to take a number of years to complete, following closure at the end of August 2015."

Alcoa's spokesperson said the company didn't have any long-term plans for the site. "We will work through the details of the decommissioning and rehabilitation plan over the coming months in consultation with the relevant govt authorities."


Draft CFI to ERF intentions released

It's been proposed nine carbon farming initiative (CFI) determinations covering agriculture, vegetation management & landfill and alternative waste treatment be updated and shifted to the emissions reduction fund (ERF) from July 1.

Methodology determinations on using covered anaerobic ponds and engineered biodigesters to destruct methane generated from dairy cow manure and piggeries are among those targeted. So too are determinations on reducing greenhouse gas (GHG) emissions, managing regrowth of native forests, measurement-based methods for new farm forestry plantations, sequestering carbon in soils and using environmental or mallee plantings for reforestation.

The federal environment department last week sought submissions by June 2 on its proposals to update CFI "transitioning methods". It would ensure all transitions methods "are consistent with the ERF legislation, easy to use and more streamlined", the dept said. The proposals were foreshadowed in an energy white paper before the Federal Government's first auction of Australian carbon credit units in April.

A draft explanatory statement issued under environment minister Greg Hunt's authority said the carbon credits (CFI-ERF) methodology determination variation 2015 would make "minor" amendments. The dept consulted the Clean Energy Regulator in developing the variation.

Proposed amendments were "primarily" to ensure CFI determinations continued to operate as "originally intended" in light of changes made to the Carbon Credits (CFI) Act 2011, the statement said. They were also aimed at ensuring there were "no unintended consequences for eligible offsets projects wanting to apply the determinations".

It's proposed 17 other CFI determinations will be revoked because new methods covering the same activities have "superseded" them. The dept said existing projects "will not be affected or disadvantaged". Projects could continue to use methods in place when they were registered or transition to a new method "if more advantageous".


Water commission abolished

A year after the Federal Government moved to abolish the National Water Commission by axing its funding in the 2014-15 budget, a National Water Commission (Abolition) Bill was passed by Parliament on May 14. The Bill transferred the commission's key responsibilities to the Productivity Commission (PC).


Editorial team

Editor: Deborah Nesbitt. Email: deborah.nesbitt@thomsonreuters.comJournalist: Kim Berry. Managing Editor: Helen Jones. Twitter: @EnviroManagerTR




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