ENVIRONMENTAL REGULATION OF THE UPSTREAM PETROLEUM INDUSTRY IN SOUTH AUSTRALIA

Abstract

South Australia has adopted a regulatory framework for the upstream petroleum industry within which environmental objectives are established through a consultative process. A principal focus of the new regime is the building of community confidence in the environmental performance of the industry and the capability of its regulator. Without such confidence, restrictions on access to land can be expected to grow. Denial of access will result in resources lying undiscovered and undeveloped to the economic detriment of the industry and the community.

The development of the new legislative framework was underpinned by modern regulatory principles and practices with particular regard to applying the principles of certainty, openness, transparency, flexibility, practicability and efficiency. Transparency and consultative processes were considered particularly important in addressing concerns of conflict of interest and the risk of regulator capture.

The new Act provides that no activity can occur unless it is covered by a statement of environmental objectives (SEO), developed on the basis of an environmental impact report (EIR). SEOs also contain the methodology by which compliance with achievement of objectives is assessed. Once an SEO is in place, it can be used throughout the industry for like activities. Compliance costs for both government and industry will be reduced as a result. Approval time frames and the potential for delays will also be significantly improved. SEOs are now in place for all normal Cooper and Otway Basin seismic, drilling, pipelining and production activities, although some are in interim form and are under review.

Public consultation on the EIR and draft SEO is undertaken for significant activities. Criteria to assist determination of the degree of significance of proposed activities have been established. Based on the degree of predicability and manageability of the likely impacts of the activity, these criteria provide a useful framework within which the necessary value judgements can be made.

Consultation is confined within government for non significant activity proposals. Inter-agency agreements have been put in place to facilitate this process.

Copies of all EIRs, SEOs and significance assessments are made available via the World Wide Web. Company annual licence environmental compliance reports plus summaries of results of audits by inspectors are also made public in the same way.

The Act includes the concept of the enforcement pyramid in which a range of actions escalating in severity can be applied to suit any degree of non-compliance. In addition, companies who exhibit a history of compliance, plus a capacity to comply in the future, are rewarded by up to a 50% reduction in licence fees and do not need to seek approval for routine activities.