Review and proposed extension of the APPEA Method for estimating levels of financial assurance
David Horn A C , Kristina Downey A and Andrew Taylor BA GHD Pty Ltd, 999 Hay Street, Perth, WA 6000, Australia.
B APPEA, 190 St Georges Terrace, Perth, WA 6000, Australia.
C Corresponding author. Email: david.horn@ghd.com
The APPEA Journal 58(1) 1-10 https://doi.org/10.1071/AJ17043
Submitted: 17 December 2017 Accepted: 1 February 2018 Published: 28 May 2018
Abstract
In 2014, the Australian Petroleum Production and Exploration Association (APPEA) published the ‘Method to assist titleholders in estimating appropriate levels of financial assurance for pollution incidents arising from petroleum activities’, referred to as the APPEA Method. The APPEA Method provides a standard approach to quantifying the appropriate level of financial assurance required under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act). The National Offshore Petroleum Safety and Environment Management Authority (NOPSEMA) endorsed the APPEA Method for an initial period of 2 years (until December 2016) with the requirement that APPEA review the method against a broader range of case studies to confirm its validity.
In 2017, APPEA applied the APPEA Method to 18 case studies, comparing independently calculated cost estimates with the APPEA Method cost band for each case study. For 17 of the 18 case studies, the independent cost estimate was less than the APPEA Method cost band, confirming the validity of the APPEA Method for those case studies. For one of the case studies involving marine fuel oil, the APPEA Method cost band potentially underestimated the response and clean-up costs. The robustness of the APPEA Method can be improved by amending the hydrocarbon type impact score for fuel oils. Based on the review, NOPSEMA has since endorsed the APPEA Method until September 2018.
The APPEA Method is currently endorsed for incidents in which the total volume of hydrocarbon released is <1 000 000 m3 and the total volume of oil ashore is <25 000 m3. Based on an assessment of the response and clean-up costs from three additional case studies that exceeded these limits, amendments to the APPEA Method are proposed that would extend the range of incidents to which it could be applied.
Keywords: APPEA, APPEA Method, costs, financial assurance, NOPSEMA, oil spill, oil spill response, pollution incident, pollution response.
David Horn is a Chartered Professional Engineer and Fellow of Engineers Australia with a degree in civil engineering and a PhD in environmental fluid dynamics. He has over 30 years of professional experience and currently leads the GHD environment business in Western Australia. |
Kristina Downey is a marine scientist and commercial diver with a master’s degree in marine biology. With over 10 years of professional experience gained around the world, Kristina has been a key member of GHD’s Perth team since 2011. She has detailed knowledge of environmental regulations and approval processes in the offshore oil and gas sector, including financial assurance requirements. |
Andrew Taylor has an honours degree in political science and has over 10 years’ experience in policy roles in government and industry. Andrew has held several positions at APPEA since 2011 and is currently Associate Director – WA and Decommissioning. |
References
GHD (2014). Method to assist titleholders in estimating appropriate levels of financial assurance for pollution incidents arising from petroleum activities. Report for APPEA, Perth <www.APPEA.com.au >Horn, D., Harrison, F., Woodhams, A., and Taylor, M. (2015). Estimating appropriate levels of financial assurance for offshore petroleum activities in Australia. The APPEA Journal 55, 277–282.
| Estimating appropriate levels of financial assurance for offshore petroleum activities in Australia.Crossref | GoogleScholarGoogle Scholar |
Oil & Gas UK (2012). Oil Spill Cost Study – OPOL Financial Limits. Joint study commissioned by OPOL and Oil & Gas UK, published by Oil & Gas UK, London February 2012.
