montara report

Montara Commission of Inquiry

17 June 2010

The Hon Martin Ferguson AM MP Minister for Resources and Energy Parliament House CANBERRA ACT

Dear Minister I hereby submit the Report of the Montara Commission of Inquiry in accordance with the Terms of Reference you announced on 5 November 2009. Yours sincerely,

David Borthwick AO PSM Commissioner

GPO Box 890, Canberra ACT 2601 Telephone (02) 6213 7777 Facsimile (02) 6290 8940 www.montarainquiry.gov.au

Report of the Montara Commission of Inquiry

Commissioner David Borthwick AO PSM June 2010

CommonwealthofAustralia2010 Thisworkiscopyright. PublishedbytheMontaraCommissionofInquiry. ApartfromanyuseaspermittedundertheCopyrightAct1968,nopartmaybe reproducedbyanyprocesswithoutpriorwrittenpermissionfromtheCommonwealth. Requestsandinquiriesconcerningreproductionandrightsshouldbeaddressedto: CommonwealthCopyrightAdministration AttorneyGeneralsDepartment RobertGarranOffices,NationalCircuit BartonACT2600 www.ag.gov.au/cca ISBN:9780980819014 June2010

TABLEOFCONTENTSACRONYMSANDABBREVIATIONS EXECUTIVESUMMARY 1. 2. 3. 4. 5. 6. 7. 8. INTRODUCTION PRELIMINARYMATTERS THECIRCUMSTANCESANDLIKELYCAUSESOFTHEBLOWOUT THEREGULATORYREGIME:WELLINTEGRITYANDSAFETY ARRESTINGTHEBLOWOUT ENVIRONMENTALRESPONSE REVIEWOFPTTEPAASPERMITANDLICENCEATMONTARAANDOTHERMATTERS FINDINGSANDRECOMMENDATIONS 2 5 31 41 49 161 235 279 318 343 376 387 389 391

GLOSSARY AppendixATermsofReference AppendixBSubmissionstotheInquiry AppendixCTheInquiryStaff

ACRONYMSANDABBREVIATIONS 2009regulations AIMS AFMA ALERT APASA APPEA AMSA AMOSC Atlas bbls BOP BOWD CoogeeResources CST DA DDR DEWHA DFAT DMP DOR DPI EEZ EPBCAct ERG ESC FPSO GA GI OffshorePetroleum(Safety)Regulations2009 AustralianInstituteofMarineScience AustralianFisheriesManagementAuthority ALERTDisasterControl(Asia)PteLtd AsiaPacificAppliedScienceAssociates AustralianPetroleumProduction&ExplorationAssociation AustralianMaritimeSafetyAuthority AustralianMarineOilSpillCentre AtlasDrilling(S)PteLtd Barrels(1barrel=approximately159litres) BlowoutPreventer BasisofWellDesign CoogeeResources(AshmoreCartier)PtyLtd CentralStandardTime DesignatedAuthority DailyDrillingReport DepartmentoftheEnvironment,Water,HeritageandtheArts (Commonwealth) DepartmentofForeignAffairsandTrade(Commonwealth) DepartmentofMinesandPetroleum(WesternAustralia) DailyOperationsReport DepartmentofPrimaryIndustries(Victoria) ExclusiveEconomicZone EnvironmentProtectionandBiodiversityConservationAct1999 EmergencyResponseGroup EnvironmentalandScientificCoordinator FloatingProduction,StorageandOffloadingfacility GeoscienceAustralia(Commonwealth) GasInjection(oneoffivewellsattheMontaraOilfield)

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H1,H2,H3,H4Wells H1ST1RW1Well HAZID HAZOP IADC IAP ICG IGA JA MLS MODU MOERegulations MOSOFRegulations/ 1996Regulations NationalPlan NEBA NES NOPR NOPSA NTDoR

ProductionwellsdrilledintheMontaraOilfieldbyPTTEPAA TheReliefWelldrilledbyPTTEPAA HazardIdentification Hazardandoperability InternationalAssociationofDrillingContractors IncidentActionPlan IncidentCoordinationGroup InterGovernmentalAgreement JointAuthority MudLineSuspensionsystem MobileOffshoreDrillingUnit Petroleum(SubmergedLands)(ManagementofEnvironment) Regulations1999 Petroleum(SubmergedLands)(ManagementofSafetyonOffshore Facilities)Regulations1996 NationalPlantoCombatPollutionoftheSeabyOilandother NoxiousandHazardousSubstances NetEnvironmentalBenefitAnalysis NationalEnvironmentalSignificance NationalOffshorePetroleumRegulator NationalOffshorePetroleumSafetyAuthority NorthernTerritoryDepartmentofResources(formerlyDepartment ofRegionalDevelopment,PrimaryIndustries,Fisheriesand Resources(DRDPIFR)) OccupationalHealthandSafety OffshoreInstallationManager OffshorePetroleumAct2006 OffshorePetroleumandGreenhouseGasStorageAct2006 OilSpillContingencyPlan ProductivityCommission Pressurecontaininganticorrosioncaps Poundspersquareinch Petroleum(SubmergedLands)Act1967

OHS OIM OPA OPGGSAct OSCP PC PCCC psi PSLA

ReportoftheMontaraCommissionofInquiry3

PTTEP PTTEPAA ReliefWell RET ROV RTTSPacker sg SIMOP TOC WHP WOC WOMP WST

PTTExplorationandProductionPublicCompanyLimited PTTEPAustralasia(AshmoreCartier)PtyLtd MontaraH1ST1RW1Well DepartmentofResources,EnergyandTourism(Commonwealth) RemoteOperatedVessel RetrievablePressureTesting,ChemicalTreatingandCement SqueezingPacker SpecificGravity Simultaneousoperations TopofCement WellheadPlatform WaitOnCement WellOperationsManagementPlan WesternStandardTime


EXECUTIVESUMMARY INTRODUCTIONPriorto21August2009,Australiahadnotseenanoilspillofthemagnitudeofthe uncontrolledreleaseofoilandgas(theBlowout)fromtheMontaraWellheadPlatform (WHP)inover20years.ThevolumeofoilspiltfromtheMontaraWHPmakesthe BlowoutAustraliasthirdlargestoilspillaftertheKirkioiltankerin1991andthePrincess AnneMarieoiltankerin1975.However,theBlowoutistheworstofitskindinAustralias offshorepetroleumindustryhistory. Intheearlyhoursof21August2009,asmallburpofoilandgaswasreportedashaving escapedfromtheH1WellattheMontaraWHP.Theoilandgashadtravelledadistance ofoverfourkilometresfromthereservoirbeneaththeseabed.Whilsttheinitialburp subsided,approximatelytwohourslatertheH1Wellkickedwithsuchforcethatacolumn ofoil,fluidandgaswasexpelledfromthetopofthewell,throughthehatchonthetop deckoftheWHP,hittingtheundersideoftheWestAtlasdrillingrigandcascadinginto thesea. Foraperiodofjustover10weeks,oilandgascontinuedtoflowunabatedintotheTimor Sea,approximately250kilometresoffthenorthwestcoastofAustralia.Patchesofsheen orweatheredoilcouldhaveaffectedatvarioustimesanareaaslargeas90,000square kilometres. Ensuringtheintegrityofoiland/orgaswells(thatis,preventingblowouts)isa fundamentalresponsibilityofcompaniesinvolvedinoffshorepetroleumexplorationand production. Blowoutsoffshorecanhavemajorandlonglastingeffects includingthelossofhuman life;thepollutionofmarineandshorelineecosystems;andsubstantialcommerciallosses bythecompaniesdirectlyinvolvedandthirdpartiesaffectedbythespill. Althoughthelikelihoodofamajorblowoutoccurringisrelativelylow,theconsequences canbeverygrave.However,thelikelihoodisrelativelylowonlybecausewellintegrityis (orshouldbe)scrupulouslyobservedbytheindustryandthosewhoregulateit.Ateach stage,fromexploratorydrillingthroughtoproduction,thesystemsandtechnologiesin placearedesignedtobefailsafe,withconsiderablebackupcapabilitybuiltintoprevent blowouts.Thesystemsandtechnologiesarenotnew;theyarewellprovenandtheydo work,ifcorrectlyapplied.


Gettingtothenubofwhathappened,andwhyithappenedandwhatcanbedoneto preventasimilarincidentoccurringinthefuture,iswhatthisInquiryhasbeentaskedto findout. Didtheowner/operatorsexercisetheirresponsibilitiesdiligently?Wastheoversightof theiroperationsbyregulatorsdiligent?ItisthetaskofthisInquirytoshedlightonthese questions,bothwithrespecttotheeventsleadinguptotheBlowout,andsubsequent measurestakentostoptheflowofhydrocarbons. TofindoutanswerstothesequestionstheInquiryinvitedsubmissions,issuednotices1 seekingdocumentsfromorganisationswithinbothindustryandgovernment,conducted apublichearingandreleasedpartsofitsdraftreport2forcomment,beforefinalisingthis report. TheInquiryhasconcludedthatPTTEPAustralasia(AshmoreCartier)PtyLtd(PTTEPAA)did notobservesensibleoilfieldpracticesattheMontaraOilfield.Majorshortcomingsinthe companysprocedureswerewidespreadandsystemic,directlyleadingtotheBlowout. WellcontrolpracticesapprovedbythedelegateoftheDesignatedAuthority(DA),the NorthernTerritoryDepartmentofResources(theNTDoR),mostlikelywouldhavebeen sufficienttopreventtheBlowoutifPTTEPAAhadadheredtothemandtoitsownWell ConstructionStandards.However,theNTDoRwasnotasufficientlydiligentregulator:it shouldnothaveapprovedthePhase1BDrillingProgramfortheMontaraOilfieldin July2009asitdidnotreflectsensibleoilfieldpractice;italsoadoptedaminimalist approachtoitsregulatoryresponsibilities.Thewaytheregulator(theNTDoR)conducted itsresponsibilitiesgaveitlittlechanceofdiscoveringPTTEPAAspoorpractices.Inthis case,theregulatorydogdidnotbark.

1

2

Pursuanttos2(3A)oftheRoyalCommissionAct1902,asappliedinrelationtotheInquirybyPart9.10A oftheOffshorePetroleumandGreenhouseGasStorageAct2006. Topartiesthat(a)wereauthorisedtoappearbeforetheInquiry;(b)whoseinterestsmayhavebeen adverselyaffectedbythepreliminaryfindingscontainedinthedraftsectionoftheInquirysreport; and/or(c)whotheInquiryconsideredmayhavebeenabletoprovideinformationorsubmissionsthat wouldbeofassistancetotheInquiryrelevanttopreliminaryfindingscontainedinthedraftsectionof theInquirysreport.


THECIRCUMSTANCESANDCAUSESOFTHEBLOWOUTTheresponsibilityofcompanies

ThesourceoftheBlowoutislargelyuncontested.WhiletheInquiryreceivedsubmissions advancingseveraltheories,itismostlikelythathydrocarbonsenteredtheH1Well throughthe9cementedcasingshoeandfloweduptheinsideofthe9casing.The Inquiryfindsthattheprimarywellcontrolbarrierthe9cementedcasingshoe failed. TheInquiryhasbeenaskedtodeterminewhatcausedtheBlowout.Inthiscontext,the InquiryhasfoundthatatthetimetheH1WellwassuspendedinMarch2009,notone wellcontrolbarriercompliedwithPTTEPAAsownWellConstructionStandards(or, importantly,withsensibleoilfieldpractice).Relevantly,the9cementedcasingshoe hadnotbeenpressuretestedinaccordancewiththecompanysWellConstruction Standards,despitemajorproblemshavingbeenexperiencedwiththecementingjob.In particular,thecementinthecasingshoewaslikelytohavebeencompromisedasithad beensubstantiallyoverdisplacedbyfluid,resultinginwhatisknownasawetshoe. NoneofthiswasunderstoodbyseniorPTTEPAApersonnelatthetime,eventhoughthe companyscontemporaneousrecords,suchastheDailyDrillingReport(DDR),clearly indicatedwhathadhappened.Themultipleproblemsinundertakingthecementjob suchasthefailureofthetopandbottomplugstocreateasealafterbumping,the failureofthefloatvalvesandanunexpectedrushoffluidshouldhaveraisedalarm bells.Thoseproblemsnecessitatedacarefulevaluationofwhathappened,theinstigation ofpressuretestingand,mostlikely,remedialaction.Nosuchcarefulevaluationwas undertaken.Theproblemswerenotcomplicatedorunsolvable,andthepotential remedieswerewellknownandnotcostly.Thiswasafailureofsensibleoilfield practice101. Compoundingtheinitialcementingproblemwasthefactthatwhiletwosecondarywell controlbarrierschosenbyPTTEPAApressurecontaininganticorrosioncaps(PCCCs) wereprogrammedforinstallation,onlyonewaseverinstalled.Further,thePCCCthat wasinstalled(the9PCCC)wasnottestedandverifiedinsituasrequiredbytheWell ConstructionStandards.ThemanufacturerofthePCCCs(GEOil&Gas)informedthe Inquirythatwhile:the PCCC may contain pressure upon installationit is not intended as a barrier againstan uncontrolled release ofhydrocarbons[and]GEhasnot designed and is not aware of a test that could verify the internal pressure containingcapability


TheInquiryfindsthatPTTEPAAsuseofPCCCsassecondarywellcontrolbarriersdidnot constitutesensibleoilfieldpractice,especiallyinlightofthesuspensionanddrilling programmesinwhichtheywereused. Furthermore,keypersonnelworkingforPTTEPAA,bothontherigandonshore,were underthemistakenimpressionthatthefluidleftinthecasingstringwasoverbalancedto porepressureandwouldthereforeactasanadditionalbarrier(eventhoughthefluidwas notmonitoredandoverbalancedsignificantlytoporepressureasrequiredbytheWell ConstructionStandardsinordertoberegardedasaproperbarrier). Insummary,asatApril2009whentheH1WellhadbeensuspendedandtheWestAtlas righaddepartedfromtheMontaraWHPtoundertakeotherwork,notonewellcontrol barrierintheH1Wellhadbeensatisfactorilytestedandverified,andonebarrierthat shouldhavebeeninstalledwasmissing.Inotherwords,theH1Wellwassuspended withoutregardtoPTTEPAAsownWellConstructionStandardsorsensibleoilfield practice. WhentheWestAtlasrigreturnedtotheWHPinAugust2009itwasdiscoveredthatthe 13PCCChadneverbeeninstalled.TheabsenceofthisPCCChadresultedincorrosion ofthethreadsofthe13casingandthis,inturn,ledtotheremovalofthe9PCCCin ordertocleanthethreads.ThiswasviewedbyPTTEPAApersonnelasamerechangeof sequencethatsimplyinvolvedbringingforwardthetimeoftheremovalofthe9PCCC. PTTEPAAsWellConstructionManager,MrDuncan,tookapositivedecisionnotto reinstallthe9PCCC.Thismeantthat,accordingtoPTTEPAAsoperationalforecastand drillingprogram,theH1Wellwouldhavebeenexposedtotheairwithoutanysecondary wellcontrolbarrierinplaceforsome4to5days,withsolerelianceonanuntested primarybarrier(thecemented9casingshoe)thathadbeenthesubjectofsignificant problemsduringitsinstallation. Afterthe9PCCChadbeenremoved,theH1Wellwasleftinanunprotectedstate(and relyingonanuntestedprimarybarrier)whiletherigproceededtocompleteother plannedactivitiesaspartofbatchdrillingoperationsattheMontaraWHP.TheBlowout intheH1Welloccurred15hourslater. Inthepetroleumindustry,wellintegrityisensuredbyalwayshavingbuiltinredundancies (secondarybarriers)tosafeguardagainstablowout.Unfortunately,intheH1Wellthere werenotestedandverifiedbarriersinplaceatthetimeoftheBlowout. Howdidthisparloussituationarise?


TheabsenceoftestedbarrierswasaproximatecauseoftheBlowout,yetthisitself reflectedsystemicerrorsofamoredeepseatedkindwithinPTTEPAA.Inthatsense,the Inquiryconsidersthefollowingsystemicandinterrelatedfactorsindirectlycontributedto theBlowout:a. PTTEPAAsWellOperationsManagementPlan(WOMP)fortheH1Welland

WellConstructionStandards(whichformpartoftheWOMP)were themselvesinadequate.Forexample,theydidnotadequatelysetouthow PTTEPAAwouldaddressrisksaffectingwellintegritythataroseduring drilling,suspensionandreentryoftheMontarawells.TheWOMPandWell ConstructionStandardswerealsoofagenerickindanddidnotadequately addressthewellcontrolconsequencesofabatchdrillingoperation,which involvedthederrickspendingsignificanttimeawayfromeachwelland thereforeconsiderableworkbeingundertakenoffline(whichwasnot alwayscapturedinessentialreportingformats,suchasDDRs).b. ThesedifficultieswerecompoundedbythefactthatseniorPTTEPAA

personnelhadonlylimitedexperienceofbatchdrillingandbatchtieback operationsanddidnotfullycomprehendtheimplicationsofsuchoperations.c. AnumberofaspectsofPTTEPAAsWellConstructionStandardswereatbest

ambiguousandopentodifferentinterpretations.Thefactthatanumberof PTTEPAAemployeesandcontractorsinterpretedaspectsoftheWell ConstructionStandardsdifferentlyillustratestheambiguityand inappropriatenessoftheWellConstructionStandards.d. IrrespectiveoftheadequacyofPTTEPAAsWellConstructionStandards,the

companyspersonnelontherigdemonstratedamanifestlyinadequate understandingoftheircontentsandknowledgeofwhattheyrequired(for example,therequirementthatallbarriersbetestedandverifiedinsitu).e. PTTEPAAsseniorpersonnelontherigandonshorewerealsodeficientin

theirdecisionmakingandjudgmentsinrelationtoanumberofimportant matters.Forexample,theyfailedtocomprehendthemanifestproblemsin thecementingjobforthecemented9casingshoe.Inparticular, MrTreasure(companyDrillingSupervisor),MrWilson(companyonshore DrillingSuperintendent)andMrDuncan(companyonshoreWell ConstructionManager)failedtoadequatelycomprehendthatthecementing operationwasseriouslycompromisedandrequiredtestingand,mostlikely, remedialaction.Themagnitudeofthisfailurereflectedafailureofjudgment andcompetence.TheassociatedfailureofWestAtlaspersonnel(therig


operatorhereafterreferredtoasAtlas)tosubsequentlyrecognisethe problemsinthecementingjobalsoreflectspoorlyonthem.Halliburton(the cementingcontractor)undertookthecementingjobbutthiswasat PTTEPAAsdirection.ItwasPTTEPAApersonnelthatcalledtheshots,anditis theywhomustbearprimaryresponsibilityforoversightingthisfailedtask.f. PTTEPAAsrecordsandcommunicationmanagementweredefective,

particularlytheexchangeofinformationbetweenrigandshore,between nightanddayshifts,betweenofflineandonlineoperationsandinrelationto milestonessuchastheinstallationofsecondarybarriers.Thismeantthatat crucialtimescriticalmatterswereeithernotattendedtoorfellbetweenthe cracks(forexample,thefailuretoinstallthe13PCCC).g. TherewasalsoasystemicfailureofcommunicationbetweenPTTEPAAand

Atlaspersonnel,particularlywiththeOffshoreInstallationManager(the OIM)andbetweenrigandonshorepersonnelofbothcompanies.Itisclear thatontwocriticalprocedures,thepoorcementingjobandtheremovalof the9PCCC,Atlaspersonnel,bothonrigandonshore,werenotinvolved intheactualdecisionmaking.ThedecisionswerealltakenbykeyPTTEPAA personnelandPTTEPAAneedstobearprimaryresponsibility.Atlasonshore personnel(MessrsGouldinandMillar)neverthelessconcededduringthe publichearingthatAtlaspersonnelshouldhavesubsequentlypickedup deficiencies,particularlyinthecementingjob.h. AfurthersystemicissueconcernstherelationshipbetweenPTTEPAAandthe

rigoperator,Atlas.Mattersrelatingtorigsafetyareultimatelythe responsibilityoftherigoperator.However,itwasclearlyPTTEPAAthat effectivelycalledtheshotsinkeyareasofthedrillingoperationsatMontara. Inthisinstance,therewereclearlyineffectiveexchangesofinformation betweenthetwoparties,withAtlasrigpersonneleitheroblivioustokeyand flaweddecisionsbeingtakenbyPTTEPAApersonnelorgoingalongwith them(particularlyonmatterspertainingtowellintegrity).Therelationship betweenPTTEPAAandAtlasneededtobemoreformalised,withmutual explicitsignoffonimportantdecisionsaffectingsafety,wellintegrityandthe environment.i. AcontributingfactortoPTTEPAAssystemicerrorsextendstoitsonshore

managementandgovernancestructure.TheInquiryheardthatthereisa directlineofreportingthroughtheCEOtotheparentcompanyinThailand. Underthismanagementstructuretherewasinsufficientattentionpaidto puttinginplacemechanismstoassessandmanageprojectrisks,the

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competenceofkeypersonnel,theadequacyofWOMPs,andtheinteraction withcontractors.Moreattentionneededtobepaidtohighlevelgovernance proceduresandtohowthistranslatedintofieldoperationsandprocedures. Moreover,PTTEPAAsdealingswiththisInquiry,asindicatedinChapter7, leftalottobedesired.j. AlthoughPTTEPAAinsistedinitsoralandwrittensubmissionstothisInquiry

thatitdidnotcutcornersorseektominimisecostswherethismight compromisesafetyorwellintegrity,thisclaimdoesnotbearscrutiny.The prevailingphilosophyrevealedbyPTTEPAAsactionsappearstohavebeento getthejobdonewithoutdelay.Forexample,PTTEPAAtookadecisionthatit wouldbeconvenientfromtimetotimetoparktheBlowoutPreventer(BOP) ontheH1Wellratherthantoinstallthe13PCCCasrequiredbythe regulator;andwhenthingswentwrong,suchasthedifficultywiththe cementingandthecorrosionofthe13casingthreadsontheH1Well leadingtotheremovalofthe9PCCC,PTTEPAApursuedanexpeditious butflawedresponse.TheevidencebeforetheInquiryrepeatedlyshowed thatriskswerenotrecognisedwhentheyshouldhavebeen,andnot assessedproperlywhenrecognised.Judgmentsweremadetopushonwith thePhase1BDrillingProgramwithoutacarefulevaluationofthe consequences.Furthermore,therewasnointernalauditorreviewprocessat criticalmilestoneswhich,ifinstituted,mayhaveraisedquestionsabout fundamentalissuesbearingonwellintegrity(suchaswhethertheapproach beingadoptedunderthePhase1BDrillingProgramwasinallrespectsinline withPTTEPAAsWellConstructionStandards).k. ThemanifestfailureswithinPTTEPAAextendedtotheinteractionsthatthe

companyhadwiththeregulator,theNTDoRwhich,intheInquirysview, hadbecomefartoocomfortable.TheInquiryisoftheviewthatPTTEPAA engagedwiththeregulatorasifitwereasofttouch. Inessence,thewaythatPTTEPAAoperatedtheMontaraOilfielddidnotcomewithina bullsroarofsensibleoilfieldpractice.TheBlowoutwasnotareflectionofone unfortunateincident,orofbadluck.WhathappenedwiththeH1Wellwasanaccident waitingtohappen;thecompanyssystemsandprocessesweresodeficientanditskey personnelsolackinginbasiccompetence,thattheBlowoutcanproperlybesaidtohave beenaneventwaitingtooccur.Indeed,duringthecourseofitspublichearing,the InquirydiscoveredthatnotoneofthefiveMontarawellscurrentlycomplieswiththe companysWellConstructionStandards.Indeed,sopoorhasPTTEPAAsperformance beenontheMontaraOilfield,theInquiryconsidersitisimperativethatremedialaction beinstituted.


TheInquiryconsidersthatthemannerinwhichPTTEPAAapproachedtheNational OffshorePetroleumAuthority(NOPSA),theNTDoRandtheInquiryitselfprovidesfurther evidenceofthecompanyspoorgovernance.PTTEPAAdidnotseektoproperlyinform itselfastothecircumstancesandthecausesoftheBlowout.Theinformationthatit providedtotheregulatorswasconsequentlyincompleteandapttomislead.Itsdealings withthisInquiryfollowedasimilarpattern. TheInquiryrecommendsthattheMinisterforResourcesandEnergyreviewPTTEPAAs licencetooperateattheMontaraOilfield.AtthisjuncturetheInquiryhaslittle confidenceinPTTEPAAscapacitytoapplyprinciplesofsensibleoilfieldpractice. However,theInquirynotesthatshortlypriortothefinalisationoftheInquirysreport PTTEPAAprovidedtheInquirywithanActionPlantopreventarecurrenceofthe Blowout.Itiscomprehensiveandimpressive.Asaplan,iteffectivelyaddressesthe shortcomingsinPTTEPAAsoperationsidentifiedbytheInquiry.TheActionPlanis, however,onlyaplan;itneedstobegivenrealsubstanceandbefullyandeffectively implementedacrossallofPTTEPAAsoperations.

ADEQUACYOFTHEREGULATORYREGIME,INCLUDINGCOMPLIANCEAND ENFORCEMENTTheresponsibilityoftheNTDoR

Thereareanumberofregulatorsinvolvedatvariousstagesinthedevelopmentof offshorepetroleumfieldsbut,inthisinstance,itwastheNTDoRthatwasresponsiblefor oversightingtherequirementsbearingontheintegrityoftheH1Well,includingthe generalrequirementthatgoodoilfieldpracticebefollowed. Thetermgoodoilfieldpracticeisdefinedinverygeneraltermsbythelegislation. However,thesystemsandprocedurestobefollowedinundertakingdrillingoperations shouldbesetoutfullyinadrillingcompanysWOMP(whichincludesthecompanysWell ConstructionStandards)andDrillingProgramswhichareapprovedbytheregulator.In practicetherearealsorequirementsfordetailedreportingtotheregulatoronwell operations,particularlythroughDDRs. Atitsmostbasiclevel,goodoilfieldpracticerequiresputtinginplacesystemsand proceduressothatawellisconstructed,operatedandmonitoredinawaythatis generallyacceptedaspreventingtheunintendedescapeofhydrocarbons.Thisrequires adequateprimaryandsecondarycontainmentbarriersasanintegratedsystemto securetheintegrityofthewell.


Therehasbeenatrendinrecentyearsfortheregulatoryframeworktomoveawayfrom prescriptiveregulationtowardobjectivebasedregulation,leavingittothe owner/operatortodeterminehowgoodoilfieldpracticeistobeapplied(subjecttothe regulatorsapprovaloftheWOMPandassociateddocuments). AsdescribedintheNorthernTerritoryssubmissiontotheInquiry:The legislative regime placesthe onus [to maintain safety to minimise the risk of a major accident event] on operators and provides them with flexibilityonhowbesttomanagehazardsandminimiserisk.

AstheNorthernTerritorygoesontodescribe:It is an interesting feature of this regime that industry assumes the obligation to operate responsibly in consideration of the flexibility it is afforded.3

TheNorthernTerritoryhasalsocontendedthatatallmaterialtimespriortothe [Blowout],theTerritoryappropriatelyadministeredthelicenceareawithinwhichthe MontaraWellheadPlatformislocated.TheInquiryhasnohesitationinrejectingthis contention.However,theInquiryfindsthatifPTTEPAAhadobserveditsownWell ConstructionStandardsandgiveneffecttothevariousapprovalsgivenbytheNTDoR,the Blowoutisunlikelytohaveoccurred.Inparticular,thecementingofthecasingshoeand annuluswouldhavebeenundertakenproperlyandthecementinthecasingshoetrack wouldhavebeenverifiedbyapressuretest.Moreover,theNTDoRshouldhavebeen notified(i)whenPTTEPAAdiscoveredinAugust2009thatthe13PCCChadnotbeen installed;(ii)beforetheremovalofthe9PCCC;and(iii)ofthesubsequentfailureto reinstallthe9PCCC.Thiswasnotamerechangeofsequencebutacrucialdecision affectingtheintegrityofthewellbore. TheNTDoRmadeamajorerrorwhenitapprovedthePhase1BDrillingProgramin July2009.ThePhase1BDrillingProgramsetoutthesequenceofeventstobatchdrillthe fiveMontarawells.ThisinvolvedleavingtheH1Wellopentotheairwithonlyone permanentbarrierinplacefornotlessthan36hours,whileotheractivitywasbeing undertaken.TheInquiryfindsthatthisapprovalwascontrarytogoodoilfieldpractice, whichshouldhaverequired,asaminimum,twotestedbarrierstobeinplace.TheNT DoRshouldhavesoughtmoreinformationorclarificationfromPTTEPAAtosatisfyitself thattherewereeffectivemeansofensuringwellintegrity.TheVictorianandWestern AustralianregulatorshaveindicatedtotheInquirythatitisunlikelythattheywouldhave approvedthePhase1BDrillingProgramasproposed.

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NorthernTerritory,SubmissiontotheInquiry.ThesubmissionparaphrasestheBillsKandAgostiniD 2009,OffshorePetroleumSafetyRegulationBetterPracticeandEffectivenessoftheNationalOffshore PetroleumSafetyAuthority,AustralianGovernment,June2009,p.xi. ReportoftheMontaraCommissionofInquiry13

Ifasecondarytestedbarrierhadbeeninplace,suchasacementplug,anRTTSpacker,or ifthe9PCCChadbeenremovedthroughaBOP,theBlowoutisunlikelytohave occurred.ThecausesoftheBlowoutwereunquestionablytherepeatedfailurestoensure wellintegritybyPTTEPAA;however,theNTDoRdidnotdoitsjobbyensuringthatthe companysWOMPorthePhase1BDrillingProgramcompliedwithgoodoilfieldpractice. Inshort,theNTDoRdidnottakeadequatestepstoensurethatPTTEPAAactually compliedwiththerequirementofgoodoilfieldpractice. TheInquiryhasbeenaskedtodrawlessonsfromthisincidentfortheregulatory arrangementsapplyingtotheoffshorepetroleumsector.Inthiscontext,theInquiry observesthattherehasbeenamovetoobjectivebased,ratherthanprescriptivebased, regulationoftheoffshorepetroleumindustry.Objectivebasedregulationrequiresthat:a. owner/operatorsofpetroleumfieldshaveinplacesystemstoassessand

managerisks,includingtheconsequencesofsomethinggoingwrong,which shouldbepartoftheoverallWOMPapprovedbytheregulator(PTTEPAA clearlydidnothaveadequateprocessestomanagerisk);b. approvedWOMPsandassociateddocumentation,includingdrilling

programs,reflectgoodoilfieldpractice.TheNTDoRdidnotappreciatethat withabatchdrillingoperationtheH1Wellandotherwellswouldbeexposed toair,ifthePhase1BDrillingProgramhadgonetoplan,withrelianceonly ononeprimarybarrierforsome36hoursormore;andc. theregulatorhasinplacearobustapproval,monitoringandenforcement

regimetoensurethatgoodoilfieldpracticeis,infact,beingobserved (forexample,thatanapprovedWOMPisbeingadheredto). AccordingtotheNorthernTerritoryssubmission[t]heauditoftherelevant documentationconfirmedthatallapprovalsmettherequirementsundertherelevant legislation.Again,theInquiryhasnohesitationinrejectingthissubmission.Asindicated above,particularlyinrelationtotheapprovalofthePhase1BDrillingProgram,the NTDoRshouldnothavegivenitsapprovalonthebasisofwhatwasbeforeit. TheInquiryisoftheviewthatnothingshoulddetractfromtheprimaryresponsibilityof PTTEPAAtoensurewellintegrity.However,theInquiryfindsthattheNTDoRsregulatory regimewastotallyinadequate,beinglittlemorethanatickandflickexercise.In particular,theInquirydoesnotagreewiththeNorthernTerritoryscharacterisation (beforetheInquiryspublichearing)thattheapproachtheNTDoRadoptedfollowed contemporaryregulatorypractice.TheinformationprovidedtotheInquiryindicates that,incontrasttotheapproachadoptedbytheNTDoR,theVictorianregulator


undertakesamonitoring,inspection,auditandcomplianceregime.Italsoappearsto assessWOMPsanddrillingprogramssubmittedtoitforapprovalmuchmorevigorously thantheNTDoR.Furthermore,theBestPracticeGuide(2007)forAdministering RegulationproducedbytheAustralianNationalAuditOffice(ANAO)makesitclearthat monitoringofcomplianceisanessentialtaskofallregulators.Itrelevantlysays(atp.51):Regulators have a responsibility to provide assurance to the Australian community that regulated entities are meeting mandated requirements. A systematic, riskbased program of compliance assessment activities provides a regulator with a costeffective approach to monitoring compliance,enablingittotargetavailableresourcesatthehighestpriority regulatoryrisksandtorespondproactivelytochangingemergingrisks.

TheANAObywayofexamplegoesontosay(atp.52):Aligning activities with regulatory requirements to be assessed increases the likelihood that relevant, reliable evidence will be collected. For example, onsite inspections are well suited to gathering evidence of compliance with manufacturing standards. A desk audit of a procedures manual would not adequately confirm that a manufacturer was achieving productionqualitystandards.

Theseconclusionsapplytotheregulationoftheoffshorepetroleumindustry.Indeed, whilethemovementtowardamoreobjectivebasedregulatoryregimeisappropriate,it demandsthatmoreeffortbedevotedtovalidatingtheapprovaloftheWOMPandthen followingthatapprovalupwithtargetedmonitoring,auditandcomplianceactivities.The regulatorneedstoactivelyprobeandinquire;itshouldnotbepassive;theregulator needstoaskquestionsoftheowner/operator;itshouldkeepowner/operatorsuptothe marktoensurethattherequirementsoftheWOMPareinfactmet;andtheregulator needstoalsomakesurethattheWOMPitselfisadequatereflectinggoodoilfield practiceinthefirstplace. MentionhasalreadybeenmadeofmultipledeficienciesintermsofPTTEPAAsownwell constructionmanagementsystemsandtonumerousspecificfailures.Yetthefactisthat noneofthiswasapparenttotheNTDoR.ItalsoappearsunlikelythattheNTDoRwould havebecomeawareofmostofthesedeficienciesifthisInquiryhadnotuncoveredthem. TheNTDoRregardedPTTEPAAasagoodoperator,althoughitisimpossibletosupport thatconclusiononanyobjectivebasisjudgingbythemultipleoversightsandfailingsin thedevelopmentoftheMontaraOilfield.ThefactofthematteristhattheNTDoRnever placeditselfinapositionsothatitcouldproperlyinformitself.Thisisnotnecessarilya callforonsiteinspectionsalthoughthatmightwellbejustifiedincertaincircumstances rather,itisacallforregulatorstoinquireandexaminetoensurethatowner/operators areactuallydoingwhattheyhavebeenapprovedtodo.


TherelationshipbetweentheNTDoRandPTTEPAAhadbecomefartoocomfortable. Indeed,onecontributoryfactortoPTTEPAAsownlaxstandardswastheminimalist approachtoregulatoryoversightbytheNTDoR. Inthisregard,theInquiryconsidersthatinassessingapplicationssubmittedtoitby PTTEPAA,theNTDoRwasnotsufficientlydiligentinensuringthatprinciplesofgood oilfieldpracticewouldbefollowedbyPTTEPAA.Bywayofexample,whenPTTEPAA submittedanapplicationtosuspendtheH1WellutilisingPCCCsratherthanacement plug,itreceivedpreliminaryapprovalin30minutes.However,astheInquiryheardfrom themanufacturersoftheparticularPCCCused,theywerenotintendedtobeusedas barriersagainstablowout.Inthisrespect,theinformationthathadbeenconveyedtothe NTDoRwasseriouslydeficient.HowevertheNTDoR,whichhadnorealpriorexperience withPCCCs,gavealmostimmediateapprovalfortheiruse. TheapproachtakenbytheNTDoRisinpartreflectiveofaprofoundmisunderstandingof whatisrequiredofaregulatorunderthemoderndayobjective(asopposedto prescriptive)approachtoregulatoryoversight.Whileitisthecasethatindustry,under thecurrentregime,hasagreaterlevelofresponsibilityforitselfthanexistsundermore prescriptiveregimes,aregulatormuststillensurethatacompanysproceduresmeetthe statutorystandardofgoodoilfieldpractice. UndertheoversightoftheNTDoRtherewas,inreality,nomeansofdiscovering inadequaciesinPTTEPAAsarrangements,sincetherewasanoquestionsasked approachandnoeffectivemonitoringorauditregimepursuedbytheregulator.The NTDoRneededtohaveamoreactiveapproachthancheckingtheDDRanddailyemail updates. TheInquiryformedtheviewthattheresourcesandexpertisethattheNTDoRdevotedto itstaskasdelegateoftheDAwereinadequate(effectivelyonlyoneperson,who appearedtohavealimitedabilitytofulfilthistask).TheMinistershouldconsider removingthisdelegationfromtheNTDoR.Theadequacyoftheoverallregulatoryapproach

Moregenerally,theInquiryisoftheviewthatwhilethemovetoobjectivebased regulationhasbeenadesirabledevelopmentoverall,moreattentionshouldhavebeen paidtoenforcingrequirementsoftheOffshorePetroleumandGreenhouseGasStorage Act2006(OPGGSAct)andtheregulationsastheyrelatetowellintegrity.WOMPsand associateddocumentsneedtobecarefullyscrutinisedandamendedifnecessary. Owner/operatorsneedtobekeptuptothemark.


TheInquirysexaminationofsomeoverseasjurisdictionsindicatesthattheypaymuch closerattentiontowellintegrityissuesand,tovaryingdegrees,theyissuedetailed guidelinesand/orsetoutminimumstandards.TheInquirydoesnotsupportareturntoa prescriptiveapproach.TheInquirysexaminationofthelevelofprescriptioninatleast oneprominentjurisdictionsuggeststhatitisunnecessarilycomplicated,obscureand may,ofitself,leadtodifficultiesininterpretationbytheregulatorandowner/operators alike.Greaterprescriptioncanalso,interalia,undulystifleinnovationandnew technologies.However,utilisingtheWOMPasthecornerstoneofgoodoilfieldpractice demandsthearticulationandobservanceofsomeminimumrequirements;theseneed notbeexcessivelyprescriptiveoronerous.Forexample,whenawellissuspendedthere shouldbearequirement,asaminimum,fortwobarrierstobeinplace,thathavebeen properlytestedandverified.Ifthereisanydeparturefromthat,orvariationfromwhat hasbeenapproved,theoperatorshouldhavetopresentaconvincingcasetothe regulatorthatthedepartureorvariationwouldenhance,oratleastnotdetractfrom, wellintegrity.Indeed,especiallywherepetroleumdevelopmentsareinsensitive environmentalareas,thereisastrongjustificationforinsistingonaminimumofthree barriersbeinginplaceatalltimes. Inadditiontoimposingbasicminimumstandardsinrelationtobarriers,theInquiry recommends,interalia,thatthefollowinglegislativeamendmentsbemade:4a. thedefinitionofgoodoilfieldpracticebeamendedsothatitisinclusionary

ratherthanexhaustive;b. regulation25ofthePetroleum(SubmergedLands)(ManagementofWell

Operations)Regulations2004(PSLA)beamended;c. apowerbeprovidedtosuspendtherightsconferredbyapetroleum

productionlicence;d. thepenaltiesapplicabletowelloperationsandsafetybreachesbereviewed;

ande. NOPSAsprohibitionpowersbeextended.

TheInquiryhasbeenstruckbythesubstantialdivergencewithinAustraliainregulatory practices,withalljurisdictionspurportingtofollowtheobjective,nonprescriptive approachtoregulation.TheInquiryisoftheviewthattheapproachoftheVictorian regulatorismoresearchingandrobustthanthatoftheNTDoR.TheNTDoRsapprovalof

4

SeeChapter3. ReportoftheMontaraCommissionofInquiry17

thePhase1BDrillingProgramofJuly2009whichreliedonasinglebarrierforan extendedperiodoftimeistheclearestexample.Attheveryleast,theVictorianregulator wouldhaveaskedprobingquestionstobetterunderstandwhatwasinvolvedinbatch drilling,andwouldhaverequiredthecompanytohavemanagedrisksaccordingly. Clearly,stepsneedtobetakenifthecurrentDAarrangementsaretocontinuein relationtoCommonwealthoffshoreareastoensureagreatermeasureandconsistency ofregulatoryoversighttoproperlygiveeffecttotheobjectiveapproachtoregulation nowinplace. TheInquiryisoftheviewbasedonitsexaminationofwhathasoccurredwithrespectto theregulatoryregimethatappliedattheMontaraOilfieldthat,asaminimum,the proposalintheProductivityCommissionResearchReport(ReviewofRegulatoryBurden ontheUpstreamPetroleum(OilandGas)Sector,April2009)toestablishaNational OffshorePetroleumRegulator(NOPR)shouldbepursued. TheInquiryconcurswiththeviewofotherrecentinquiriesthatresponsibilityforwell integrityshouldbemovedtotheNationalOffshorePetroleumSafetyAuthority(NOPSA) (seebelow).Ensuringtheintegrityofthewellisessentialforensuringsafetyand environmentaloutcomes.TheDesignatedandJointAuthority(JA)arrangements currentlyinplacepursueamixofobjectives:policy,promotingindustrydevelopmentand regulatory.TheInquiryisconcernedthatunderthesearrangementswellintegrityissues donotreceivenecessarypriority,therebyprejudicingsafetyandenvironmental objectives.TheregulatoryframeworkasitappliedtotheMontaraOilfieldmayhavebeen adequateifithadbeenadheredtobyPTTEPAA,butitwasnot.Thecurrentregulatory frameworkdoesnotbuildinasufficientmarginofsafetyandreliestoomuchonthe owner/operatordoingtherightthing.Theregulatoryregimewastootrustingandthat trustwasnotdeserved. OtherfacetsoftheregulatoryregimearetheapprovalfortheMontaraOilfield developmentundertheEnvironmentProtectionBiodiversityConservationAct1999(the EPBCAct)administeredbytheDepartmentoftheEnvironment,Water,Heritageandthe Arts(DEWHA),andtheoccupational,healthandsafetyregimeapplicabletooffshore installationsadministeredbyNOPSA. TheEPBCActapprovalwasgrantedtoPTTEPAAtodeveloptheMontaraOilfieldon 3September2003,subjecttosixconditionsrelatingtotheoperationofthedevelopment. Theseconditionsoperateastheonlycivilpenaltyregimeapplicabletothetitleholder undertheEPBCAct(amatterwhichtheInquiryrecommendsbereviewed).Oneofthe conditionsplacedonthedevelopmentrelatedtothepreparationofanOilSpill ContingencyPlan(OSCP)detailingthestrategytomitigatetheenvironmentaleffectsof anyhydrocarbonspills.


PTTEPAAsubmittedtwoenvironmentalplanswhichcoveredtheMontara,Skua,Swiftand SwallowFieldstotheNTDoRinaccordancewiththePetroleum(SubmergedLands) (ManagementoftheEnvironment)Regulations1999(theMOERegulations).Theseplans werecomplementarytotheoverarchingEPBCActapproval,essentiallydealingwith importantrig/WHPspecificenvironmentalissues,suchaswastemanagement,liquid discharges,hazardouswastesandthelike.Thisisimportantandusefulbutitdoesnot bearontherisksarisingfromalargescaleblowout. Thebiggestenvironmentalriskforoffshoredevelopmentsisthepossibilityoflarge blowoutsduetoafailureofwellintegrity.Theadequacyofwellintegritymeasureswas notexaminedbyDEWHAwithrespecttotheMontaraOilfielddevelopment,andnor shouldithavebeen.Regulatoryresponsibilityforoversightingwellintegrityrestedwith theNTDoR.ItwasreasonableforDEWHAtoexpectthatwellintegrityissueswouldbe properlyaddressedbytheNTDoR. ThesameconclusionsmaybedrawnforNOPSA.DuringtheInquiryitwassuggestedthat NOPSAsremitcouldandshouldhaveextendedtowellintegrityissues,essentiallyonthe basisthatsafetyandoperationsontheWestAtlasrigandWHPwereintegratedbyvirtue oftherelevantDrillingProgram.NOPSAdidnotexamineissuesrelatingtowellintegrityin theMontaraOilfield(orinotherfields),leavingthattotheDAswhohaveprimarywell controlresponsibility.Thiswasareasonablejudgmentgiventherespectiveregulatory rolesassumedbyNOPSAandtheDAs. NOPSAconsidersthatprimaryresponsibilityforoversightingwellintegrityissuesshould, infuture,bemovedfromtheDAs(orNOPR)toit.TheInquiryagreeswiththisview,which hasalsobeensupportedbytheProductivityCommissionResearchReport,whichinthis contextstated(atp.175)that:The legislated coverage of the National Offshore Petroleum Safety Authority should be extended to include the safety and integrity of offshorepipelines,subseaequipmentandwells

TheproposaltoextendNOPSAsroleinthisregardisnotonlysupportedbythe ProductivityCommission,butasNOPSAhaspointedoutinitssubmissiontheproposalis supportedbythreeotherreportsoverthelastthreeyears.5

5

Theseotherreportsare:WellIntegrityWorkingGroupreporttotheUpstreamPetroleumand GeothermalSubcommitteeoftheMinisterialCouncilonMineralandPetroleumResources;OgnedalM, GriffithsDandLakeB2008,ReviewoftheNationalOffshorePetroleumSafetyAuthorityoperational activities,FebruaryMarch2008:reportoftheindependentreviewteam;andBillsKandAgostiniD2009, OffshorePetroleumSafetyRegulation:BetterpracticeandtheeffectivenessoftheNationalOffshore PetroleumSafetyAuthority. ReportoftheMontaraCommissionofInquiry19

TheproposalstoformNOPR,andtogiveNOPSAprimaryresponsibilityforwellintegrity, wouldbeastarttofixingupcurrentsystemicdeficiencies. TheInquiryrecommendsthatafurtherstepalsobetaken:itrecommendsthatNOPSAs andNOPRskeyrolesbecombined.Thiswouldmeanestablishingasingleindependent authority,withaproperlyfunctioningBoard,whichwouldberesponsibleforsafety,well integrityandenvironmentplans.Industrypolicyandresourcedevelopmentand promotionactivitieswouldresideingovernmentdepartmentsandnotwiththe regulatoryagency.Theregulatoryagencycouldbeempoweredtoprovideinformationto assistdepartmentalpolicyadviceanddecisionmaking(forexample,ondecisionstogrant licencesandanyconditionsthatmightbeattachedtothem). ThecurrentarrangementsofhavingmultipleDAsacrossjurisdictionsisfarfromidealand willbecomemorefraughtasoffshoredevelopmentscontinueatpaceoverthenext decadeorso.SplittingregulatoryresponsibilitybetweenaNOPRandNOPSArisks divergentapproachesandconfusion,notleastforthepetroleumindustry.The independentauthoritycouldabsorbtheregulatoryrolesofNOPRandNOPSAwithout compromisingsafetyasaprimaryobjective.Therewouldbeasingleintegrated regulatoryagencyfordevelopmentsinoffshoreCommonwealthwaters.Thescaleof developmentsatthemoment,letaloneinthefuture,demandsamoreintegrated, rigorousandindependentapproach. Thisapproachwill,ofcourse,leadtootherboundaryissuessuchastheinterfacewith arrangementsinstatewatersorwithonshorepetroleumdevelopments.Suchinterface issuesneedtobedirectlyaddressedundertheauspicesoftheMinisterialCouncilon MineralandPetroleumResources.

ADEQUACYOFTHERESPONSETheBlowoutoccurredat7.23am(CST)on21August2009,althoughthiswasprecededby asmallunexpectedreleaseofhydrocarbonsfromtheH1Wellat5.30am.PTTEPAAand Atlaswereunabletorespondtothisasthederrick(includingtheBOP)wasoverthe H4WellatthetimeoftheBlowout.Therewasinsufficienttimetoassessthesituation andskidthederrickbackovertotheH1WelltostoptheBlowout(by,say,settinganRTTS packerintheH1Well).ActionsbyPTTEPAA

TheactionofPTTEPAAandAtlasinpromptlyevacuating69personnelfromthe WestAtlas/MontaraWHPwasundoubtedlyacorrectdecisiongiventheriskofmajor injuryandlossoflifefromignitionoftheH1Well.


PTTEPAAalsoimmediatelyactedtoinitiatemeasurestoinvestigatehowtostoptheflow ofhydrocarbons.ItcontactedALERTWellControl(Asia)PteLtd(ALERT),whichisan internationalspecialistinthisfield,andALERTcamefromSingaporetoPerthon 22August2009. AnissuetheInquiryhascarefullyconsiderediswhyittooksolongsometenweeksto stoptheflowofhydrocarbons.Inthisregard,theInquiryfindsthatPTTEPAAdidactwith vigourandasenseofurgency.Inparticular,theInquiryconsidersthat:a. securingtheWestTritonrig(whichleftSingaporeon27August2009and

arrivedonsiteon11September2009)wasareasonableoption,giventhe alternatives;b. PTTEPAAhadexploredanumberofotheroptionsandtherigswereeither

notsuitableorwereinthemidstofoperationswhichwouldnothave enabledthemtobereleased(withoutothercompaniesbeingcommercially compromised);andc. thedrillingofareliefwell(theReliefWell),utilisingtheWestTritonrig,

beganon14September2009andittooksomefiveattemptstosuccessfully intercepttheH1Well,thisbeingdoneon1November2009.TheInquiryis oftheviewthattheReliefWelloperationwasalwayslikelytotake considerabletime,inviewofthetechnicalchallengesofdrillingsome 2.6kilometresintotheseabedtointerceptacasingof9(or244mm) diameter,effectivelythroughatrialandcorrectionprocess. IftherewasanyfailurebyPTTEPAAinthisareaitwascreatingtheimpression,atleast initially,thatthewellinterceptionmighttakeaslittleasfourweeksoncetheWestTriton rigarrivedonsiteandcommenceddrillingactivities.Intheevent,ittookaroundseven weekstostoptheflowofhydrocarbons. WhenALERTassessedthesituation,itproposedthreeoptionstoassistincontaining theBlowout:delugingtherigtolessentheconsequencesshouldafireoccur;surface cappingoftheH1Well;anddrillingareliefwell.PTTEPAAalsoexploredbutdidnot pursuethepossibilityofinterceptingandeithercrushingorcappingthecasingbeneath theseasurface. OftheoptionsadvancedbyALERT,thedrillingoftheReliefWellandthesurfacecapping optionwerealternativeapproaches.TheoptionpursuedwasdrillingtheReliefWell whichtooksometenweekstostoptheflowofhydrocarbons.TheInquiryacceptsthat


thiswasthepreferableoption,althoughanissuedoesariseastowhetherthesurface cappingoptionshouldhavebeenpursuedintandemwiththeReliefWelloperation.ActionsbyNOPSA

On22August2009NOPSAissuedaprohibitionnoticewhichprohibitedpersonsfrom beingontherigorbeingonsupportshipsadjacenttotherigbecausesuchactivitywas consideredtoposeanunduethreattohealthandsafety.Theseprohibitionnotices wouldonlybeliftedbyNOPSAifitwassatisfiedthattheriskstosafetyhadbeen comprehensivelyassessedandthatcontrolmeasureswereinplacetoreducetherisksto alevelthatwasaslowasreasonablypracticable. Intheevent,NOPSAhadanumberofsignificantsafetyconcernswiththedelugeoption submittedtoitbyPTTEPAA.PTTEPAAdecidednottoproceedwiththedelugeoption. PTTEPAAitselfdecidednottopursuethesurfacecappingandsubseaoptionsbecauseof safetyandotherconcerns,withoutputtingacasetoNOPSA. TheInquiryacceptsthatsafetymattersmustbeofforemostconsideration.Forthe future,theInquiryconsidersthatNOPSAshouldworkwiththepetroleumindustrywitha viewtoexploringwellcontroloptions,sothatitandtheindustryarebetterpreparedto respond,acknowledgingthateachcircumstancewillneedtobeassessedonitsmerits. Nevertheless,theInquiryisoftheviewthatinthisinstancePTTEPAAandNOPSAacted defensiblyhavingregardtotherisks.ActionsbytheAustralianMaritimeSafetyAuthority

TheAustralianMaritimeSafetyAuthority(AMSA)wascentraltotheresponsetothe Blowout,assumingtheroleofCombatAgencyundertheNationalPlantoCombat PollutionoftheSeabyOilandOtherNoxiousandHazardousSubstances(theNational Plan),andtakingchargeofthecleanupoperations.AMSAwasquicktoenactthe NationalPlanandtodeployconsiderableresources,includingaircraft,vessels,equipment andothermaterials(suchasdispersants,markerbuoystotrackoil,a300metre containmentboomandaskimmertorecoveroil). Itisapparentthattheoverallresponseobjectiveofpreventingoilfromimpactingon sensitivemarineresources(inparticularthemarineparksofAshmoreReefandCartier Island,andthenorthwestcoastofWesternAustralia)waslargelyachieved. AnissueraisedbyanumberofsubmissionstotheInquirywaswhethertheuseofoil dispersantsbyAMSAwasappropriate.Inthiscontext,dispersantsacttodissipate hydrocarbonsonthesurfacetoaroundthefirstfivemetresofthewatercolumn. Dispersantsareoftenusedifshorelinesorshallowreefsarelikelytobethreatened.22ReportoftheMontaraCommissionofInquiry

However,dispersantsarenottypicallyusedinopenoceansituationswheresuchsensitive resourcesarenotatriskbecausetheyinvolveeffectivelyputtingmorepollutioninthe water. AMSAconductedaNetEnvironmentalBenefitAnalysis(NEBA)priortothedecisionto applydispersantsandthisanalysiswasregularlyreviewedandupdatedthroughoutthe response. TheInquiryhasconcludedthattheuseofdispersantswasappropriate,inviewof modellingwhichindicatedthatthemovementofuntreatedoilcouldhavethreatened sensitiveenvironmentalareasaroundAshmoreReefandCartierIslandaswellasthe WesternAustraliacoastline.AMSAactedexpeditiouslyandhadregardtotheavailable information. TheinformationprovidedtotheInquiryindicatesthatthedispersant/oilmixcouldhave hadanadverseeffectoncoralspawnandfishlarvaeandothershallowsubsurface species.ThesearepointsthatwereknownandacknowledgedatthetimebyAMSA.The effectsofthedispersantsandtheoilmaybeneverbefullyknown.Thisunderscoresthe pointthatthiswasamajorspillofhydrocarbonsandtheenvironmentalconsequences shouldnothavebeendownplayed.Thefactisthatthespillaffectedavastandremote areawithoilsightingsatvarioustimesinanareaofupto90,000squarekilometres.Inthe absenceofbaselinedata,itislikelytobeverydifficulttoassesstheongoing consequencesofthespill. TheInquiryconsidersthatAMSArespondedexceptionallywelltoanincidentthatwas beyonditsfirsthandexperienceandinaremoteanddifficultlocation.AMSAshouldbe commended.Nevertheless,therearelessonsthatcanbedrawnforthefuture,including:a. theneedtobetterintegrateOperationalandScientific(orenvironmental)

Monitoringefforts,includingensuringthatanyScientificMonitoringis adequate,peerreviewedandtimely(seebelowundertheDEWHAheading);b. theCommonwealthGovernmentshouldputinplaceeffectivearrangements

toensurethatpetroleumcompanies,intheeventofaspill,fullypayfor AMSAscleanupoperationsandallOperationalandScientificMonitoring andanyassociatedremedialoperations(consistentwiththeapplicationof thepolluterpaysprinciple);c. AMSAshouldensurethatenvironmentalissuesarefullycomprehendedin

theNationalPlan;


d. AMSAalongwithDEWHA(thelattertakingprimaryresponsibility)should

prepareofftheshelfenvironmentalmonitoringprogramswhichare scientificallypeerreviewedandaretailoredtoaccommodatethedifferent situationsthatmayariseinCommonwealthwaters,sothattheycanbe readilyadaptedandspeedilyimplementedintheeventofablowout;e. AMSA,alongwiththeAustralianMarineOilSpillCentre(AMOSC),should

continuetoexploreandassessthestateofreadinessintermsofequipment andotherresourcesintheeventofanotherblowout(havingregardtothe likelyexpansionoftheoffshorepetroleumindustryincomingyears);andf. fundingarrangementsundertheNationalPlanshouldbereviewedtoensure

thatcostsassociatedwithpreparednessandresponseareequitablyshared betweentheshippingandtheoffshorepetroleumindustries. PTTEPAAshouldbecommendedfornotonlyfullymeetingthecostsincurredbyAMSAin undertakingthecleanupprogram,butforprovidingAMSAwithconsiderableoperational andlogisticalassistance.ActionsbyDEWHA

InresponsetotheBlowout,DEWHAconductedwildliferesponseactivities,negotiateda ScientificMonitoringprogramwithPTTEPAA,andacted(from15September2009)asthe EnvironmentalandScientificCoordinator(ESC)withthetaskofprovidingAMSAwith adviceonenvironmentalprioritiesandresponseoptionsundertheNationalPlan. AnissuetheInquirycarefullyconsiderediswhyittooksolongtoputinplaceaScientific Monitoringprogram. DEWHAraisedtheneedforthiswithPTTEPAAon23August2009.However,therewere nolegislativeprovisionsavailabletoDEWHAtorequirePTTEPAAtoundertakeScientific MonitoringandthecostofScientificMonitoringwasnotrecoverableundertheNational Plan.Itneededtobeundertakenonavoluntarybasis,andtherewascertainlyno funding,resourcesorequipmentavailabletoDEWHAtoundertakeScientificMonitoring. AScientificMonitoringprogram(theMonitoringPlan)wasagreedon9October2009 throughamemorandumofunderstandingbetweenDEWHAandPTTEPAA. PTTEPAAistobecommendedforagreeingtocooperateinthedevelopmentof,andthen undertaking,theMonitoringPlan,whichitisnowfunding. Nevertheless,settlementoftheMonitoringPlanbetweenDEWHAandPTTEPAA,and gettingspecialisedinputfrombodiessuchasAMSA,theAustralianInstituteofMarine24 ReportoftheMontaraCommissionofInquiry

Science(AIMS),CSIROandtheWesternAustralianandNorthernTerritoryGovernments, contributedtothedelay.NotwithstandingPTTEPAAsgoodwill,theMonitoringPlan requireditscooperationandPTTEPAAwasandremainsinthedrivingseatintermsof undertakingandfollowingthroughwiththeScientificMonitoringaspectofthe MonitoringPlan. Thesearrangements,whilerepresentingareasonableattemptinthecircumstances,are farfromideal.TheMonitoringPlanneededtobeinplaceshortlyafter21August2009; thatitwasnotinplaceuntilOctober2009isunacceptable.DEWHAsresponseshould nothavebeendependantonPTTEPAAscooperationorwillingnesstofundthe MonitoringPlan.Inthefuture,thereneedstobearrangementsinplacethatrequire companiestofundScientificMonitoring(andanyremediation)programsandtheseneed tobeundertakenindependentlyofcompanies,withpeerreviewprocessesbuiltintothe developmentandevaluationoftheplan.ScientificMonitoringlikeAMSAscleanup operationsshouldnotbebeholdentothecooperationofatitleholder/licensee. Inthiscontext,theEPBCActasitcurrentlystandsisdeficient.TheEPBCActputsinplace anenvironmentalassessmentandapprovalregime,withtheonusbeingonthe proponenttoreferactionstotheMinisterthathave,willhaveorarelikelytohavea significantimpactonmattersofnationalenvironmentalsignificance(NES,whichincludes Commonwealthwaters).Inotherwords,theEPBCActprovideslimitedoversightof environmentalmattersbecause,whenitwasframed,itwasdoneonthebasisthatstate andterritorylegislation(suchasthatadministeredbyEnvironmentProtectionAgencies) alsoapplied. Inshort,thereisamajorgapintheapplicationofenvironmentallegislationapplyingto Commonwealthwaters.Theenvironmentalregulationneedstobeequivalenttothat whichwouldapplyiftheoilspillhadbeenonlandorinstatewaters.Thisshouldinclude acapacitytoissuefinesforpollutiononanofaultbasis. AMSAshouldhaveappointedDEWHAastheESCearlierthan15September2009.AsESC, DEWHAfeltitwasinabetterpositiontomobiliseequipmentandpersonneltorespondto affectedwildlifeandtoprovideadvicetoAMSAonenvironmentalprioritiesandresponse options.WithoutdetractinginanywayfromtheroleperformedbyDEWHA,thiswas newterritoryforthemandtheydidnothavetheoperationalcapacitytoundertake responseoperations.Inthecircumstances,DEWHAdidwell,asdidAMSA.Howeverthere arelessonstobelearnedfromthisincidentbybothbodies.Inthisregard,andasnoted above,theenvironmentalcomponentoftheNationalPlanneedstobebuiltup.


ENVIRONMENTALIMPACTSItisunlikelythatthefullenvironmentalconsequencesoftheBlowoutwilleverbeknown. Thisreflectsthevastandremoteareaaffectedbythespill;theabsenceofsolidreliable baselinedataonspeciesandecosystems;andtheslowresponseinputtinginplacethe MonitoringPlan.Thevolumeandextentofthespill

MentionwasrepeatedlymadethatthevolumeofoilthatwasreleasedfromtheMontara Oilfieldwasaround400barrelsaday.TherewasalsotestimonyfromMrJacob, PTTEPAAsChiefOperatingOfficer,totheeffectthattheinitialflowmayhavebeenas highas1,000to1,500barrelsperdaybeforedroppingtoaround400barrelsandpossibly less.Therearemethodsthatcouldandshouldhavebeenappliedtogetamoreinformed estimateoftheamountofoilthatwasreleased,withaviewtoinformingthepublic. Estimatesofthesurfacecoverageofthehydrocarbonshaverangedfrom6,000to 25,000squarekilometres.TheevidencebeforetheInquiryindicatedthathydrocarbons didenterIndonesianandTimorLestewaterstoasignificantdegree.AMSAsbest estimateofthetotalsurfaceareawithinwhichoilorsheenwasobservedatonetimeor anotherduringthespillwasaround90,000squarekilometres.However,asindicatedby AMSAinitssubmissiontotheInquiry,mostofthehydrocarbonsremainedwithin 35kilometresoftheplatformwithpatchesofsheenandweatheredoilreportedat variousdistancesindifferentdirectionsfromtheplatformascurrents,windand temperaturevariedoverthethreemonthperiod.Effectonwildlife

Notwithstandingthewatersamplingthatwasundertaken,thisneededtobebetter targetedandintegratedwiththeScientificMonitoringprogram(undertheMonitoring Plan).Tothisendtherealsoneededtobemonitoringofoil/dispersantmixbelowthe oceanssurface.Thiswouldhaveenabledabetterunderstandingoftheextentofthe spread(sincetheeffectofdispersantsistosinkthehydrocarbonsintothewatercolumn) andabetterunderstandingoftheimpactsofthehydrocarbons,especiallyonsubsurface ecosystemssuchasfishlarvaeandcoralspawn. Itisunfortunatethatanadequatewatersamplingregimewasnotimplementedasmany oftheeffectsoftheoilspillanddispersantsarelikelytobeonsubsurfacespecies.The lackofadequatewatersamplingcombinedwiththeabsenceofgoodbaselinedataon mostspeciesandecosystemsmeansthattheScientificMonitoringarrangementsunder theMonitoringPlanwillbeofsome,butlimited,value.


TheadequacyoftheMonitoringPlanboththeoperationalandscientificcomponents hasbeenlessenedbecause:a. OperationalandScientificMonitoringneededtobeundertakeninamore

integratedway,whilerecognisingtheinitialpressureofrespondingtothe Blowout;b. significantdelayinimplementingScientificMonitoringundertheMonitoring

Plancompromisedtheworthofsomeoftheevaluations;c. inadequatewatersamplingthatwasundertakencompromisedtheabilityto

measurethemovementofoil/dispersantsandtoformassessmentson speciesandecosystemsthatmightbeaffected;andd. theneedforDEWHAtoreachanagreementontheMonitoringPlanwith

PTTEPAAcausedsignificantdelaysandgivesrisetoquestionsaboutits overallefficacy. TheInquiryconsidersthat,evenatthislatestage,theMonitoringPlancouldbepeer reviewedbyindependentexpertstoestablishwhethertherearelikelytobenetbenefits frommodifyingitandtodeterminelessonsforthefuture. MentionhasbeenmadeinsubmissionstothisInquiryofverylimitedimpactsofthe Blowoutonwildlife.Itisunlikelythatthisreportingdepictstheextentoftheimpacton species.Theareaisvastandtheaerialandothersurveillanceundertakenisunlikelyto haverevealedwhatreallyhappened.

THEOFFSHOREPETROLEUMINDUSTRYSRESPONSETheoffshorepetroleumindustrysresponsetotheincidentwasviatheAMOSCanda numberofindustryparticipantswereinvitedbyPTTEPAAtoassesstheproposedRelief Welloperation. Membercompanies,throughAMOSC,provide(s)thecoordinationpointfortheprovision ofAMOSCandoilindustryequipmentandresourcestotheNationalPlan.6 SectionsofthepetroleumindustrywerealsoconsultedbyPTTEPAAintermsofthe availabilityofrigstodrilltheReliefWell.Therewasalsoapeerreviewmeetingwitha numberofpetroleumcompaniestoreviewtheapproachtointerceptingtheH1Wellto

6

AMOSC,SubmissiontotheInquiry,p.4. ReportoftheMontaraCommissionofInquiry27

stemtheflowofhydrocarbons.TheInquiryisoftheviewthatmembersofthepetroleum industryrespondedwellinthecircumstances,boththroughAMOSCandthepeerreview processes. TheInquiryconsidersthattheprocessofpeerreviewintermsofWOMPsandwellhead integrityinparticularwouldbeanavenueworthexploringintermsofthefuture interfacesbetweentheregulator(s)andtheindustry.TheInquiryreceivedinformation thatanumberofcompaniesutilisepeerreviewprocessesaspartoftheirqualitycontrol processes.Thismightbeausefulpracticetoadopt;itneednotcompromisecommercially confidentialconsiderations. MentionhasbeenmadeduringthecourseoftheInquiryastowhetherequipmentsuch asdrillingrigsshouldbeonstandbysothattheycanbequicklydeployedintheeventofa futurereleaseofhydrocarbons.Thiswouldbeacostlyandineffectiveresponse.Thetype ofrigthatwouldneedtobedeployedwoulddependontheparticularsituationand Australianoffshoreoilandgasfieldsareoftenremoteandsomedistanceapart.Abetter optionwouldbefortheresponsibleMinistertoreasonablyexercisecurrentpowersto secondasuitablerigandotherequipmentfromotherowner/operators,withthembeing fullyrecompensedbythepollutingcompany.Thereshouldalsobearegulatory requirementforanowner/operatortomakemeaningfulinquiriesastopotentialrig availabilityandtoundertakecontingencyplanningsothattheycanquicklyrespondinthe eventofafutureincident. AnumberoftheInquirysrecommendationsforpreventinganotherblowoutwillrequire carefulconsiderationbyindustry.TheInquiryconsidersthat,todate,industryhasnot participatedinselfregulationinaproactiveandcohesivemanner.

ADEQUACYOFINFORMATIONANDTHEAPPROACHTOTHEINQUIRYTheInquiryisoftheviewthattheprovisionofinformationtothepublicandtoaffected stakeholdersfollowingtheBlowoutshouldnothavebeenleft,tosuchalargeextent,in PTTEPAAshands.Thiswasamajorincidentofnationalandinternationalsignificance.As suchthereneededtobeareliableandauthoritativesourceofinformationcapableof pullingallthethreadstogether.Forexample:a. whywasitthattherewasnoauthoritativeinformationprovidedoneither

thevolumeoftheoilbeingspiltoritscoverage?b. whywasitthattheoptionstostoptheBlowoutwereleftentirelyto

PTTEPAAtoexploreanddevelop(althoughtheInquiryfindsthattheydidthis conscientiouslyandwellinthecircumstances),ratherthanforthe responsibleauthoritytheCommonwealthassuringitselfthatalloptions28 ReportoftheMontaraCommissionofInquiry

hadexhaustivelybeenpursued,withaviewtotakingactionifthatwas appropriateandtheninformingthepublic? Forthefuture,theCommonwealth(preferablytheregulatorwithexpandedpowers) needstotakecharge,ratherthanleavematterstotheowner/operators.Thatwould havesurelybeenthecaseifamajorindustrialincidentoccurredonshore.Andtoputthe issueinperspective,noonewouldsurelyhaveproposedthatwiththegroundingofthe coalcarryingshipintheGreatBarrierReefMarineParkinApril2010,keydecisionsbeleft totheshipownerastohowtoresolvethesituation.YetinthissituationPTTEPAAwas essentiallylefttoitsowndevices. PTTEPAAmadeitclearsubsequenttotheBlowoutthatitwouldfullycooperatewiththe Inquiry,ratherthanprovidecommentarytothepublicpriortotheInquiry,especiallyin relationtothecircumstancesandcausesoftheBlowout.ThusPTTEPAAprovidedvery littleinformationdirectlytothepublicinrelationtothecircumstancesandlikelycauses oftheBlowout. PTTEPAAssubmissiontotheInquiryofDecember2009wasseriouslydeficientinterms ofitsdepictionofwhathadoccurred.Subsequentstatutorydeclarationsprovidedby PTTEPAApersonnelshortlypriortotheInquiryspublichearingdisplayednoreal appreciationoftheissuesthattheInquiryneededtoaddress.InfactPTTEPAAseffortsin thisregardwereinimportantrespectsmisleadingandunhelpfultotheInquirystaskof determiningthecircumstancesandcausesoftheBlowout.PTTEPAAhadnotgoneback andevaluatedcontemporaneousinformation,suchasDDRsorforwardworkprograms,in ordertoproperlyinformitselfonessentialpoints(forexample,thepoorcementingjobin March2009andremovalofthe9PCCCinAugust2009). PTTEPAAseemstohavebeenunderthebeliefthatithadlittleornoresponsibilityto positivelyassisttheInquirytogettothenubofwhatreallyhappened.PTTEPAA approachedtheInquiryasalearningexercise.PTTEPAAspooreffortstoproperlyinform theInquiryreflectsbadlyonPTTEPAAsethicsandgovernance. Byitsownadmission,PTTEPAAmadenosubstantiveeffortsubsequenttotheBlowoutto trulyfindoutwhathappenedandwhy.Ittriedinitssubmissionstolimitresponsibilityto PTTEPAApersonnelontherig.Itfailedinthatendeavour,withsenioronshorepersonnel beingshowntobecriticallyinvolved,ordirectlyinvolved,inoversightingshonky procedures. PTTEPAAsapproachtothisInquirystandsinstarkcontrasttothewaythatAtlas approachedtheInquiry.AtlassubmissiontotheInquirywasinformative;itundertooka thoroughinvestigationofthecircumstancesandcausesoftheBlowoutandprovidedthat


totheInquiry;anditsseniorpeopleintheirstatutorydeclarationsandtestimonyreadily concededwhereAtlasasacompanyshouldhaveperformedbetter.Atlasthroughits representativesobservedahighstandardofethicsandcorporategovernanceintheway theyapproachedthisInquiry,whichistoitscredit. Inconclusion,whilstPTTEPAAseffortsinrespondingtotheBlowoutarecommendable, thiswasovershadowedby:a. widespreadanddeepseatedpoorpracticesthatnotonlycausedthe

Blowout,butmadeitlittlemorethanamatteroftimebeforesuchanevent occurred;andb. anapproachtotheInquirywhichreflectedpoorlyonitsethicsand

governance. Thesemattersraise,intheInquirysview,anissueaboutthedesirabilityofPTTEPAAs conductoffurtherdrillingoperationsattheMontaraOilfielduntilthesignificant shortcomingsinitsoperationshavebeensatisfactorilyaddressed.


1.

INTRODUCTION

TheInquiry1.1. TheMinisterforResourcesandEnergy,theHonMartinFergusonAMMP, announcedtheCommissionofInquiry(theInquiry)on5November2009with thefollowingTermsofReference.With respect to the uncontrolled release of hydrocarbons at the Montara Wellhead Platform that commenced on 21August2009, and subsequent events including the fire that commenced on 1November2009 (together theUncontrolledRelease)theCommissionofInquirywill: Investigate and identify the circumstances and likely cause(s) of the UncontrolledRelease. Review the adequacy and effectiveness of the regulatory regime applicable to operations at or in connection with the Montara oil field, including under the Offshore Petroleum and Greenhouse Gas Storage Act 2006, and including the adequacy and effectiveness of all safety, environment, operations and resource management plans, and other arrangementsapprovedbyaregulatorandinforceatrelevanttimes. Assess the performance of relevant persons7 in carrying out their obligationsundertheregulatoryregime. Reviewtheadequacyandeffectivenessofmonitoringandenforcementby regulatorsofrelevantpersons7,undertheregulatoryregime. Assess theadequacy oftheresponsetotheUncontrolled Release by the current titleholder of AC/L7, the owner and/or operator of the Montara Wellhead Platform and the owner and/or operator of the West Atlas drillingrig. Assessthe adequacy ofregulatoryobligationsapplicabletothetitleholder of AC/L7, the owner and/or operator of the Montara Wellhead Platform, and the owner and/or operator of the West Atlas drilling rig in relation to the response to the incident and make any recommendations necessary to improve the regulatory obligations that may be applicable to any futureincidents. Assess and report on the environmental impacts following the Uncontrolled Release using available data and evidence including the outcomes from monitoring activities already underway, review any proposed environmental monitoring plans, and make recommendations

1. 2.

3. 4. 5.

6.

7.

7

Forthepurposesofparagraphs3and4,relevantpersonsarepersonswhohaveengagedatanytime inpetroleumrelatedoperationsattheMontaraWellheadPlatformthatmayhavecontributedtothe cause(s)oftheUncontrolledRelease,includingbutnotlimitedto:thetitleholderoraformertitleholder ofAC/L7permit,apresentorformerowneroroperatoroftheMontaraWellheadPlatform,apresentor formerowneroroperatorofadrillingrig,adrillingcontractororasupplierorinstallerofplantor equipment. ReportoftheMontaraCommissionofInquiry31

8. 9.

10.

11.

on whether any further measures are warranted to protect the environmentfromtheconsequencesoftheUncontrolledRelease. Consider and comment on the offshore petroleum industrys response to theUncontrolledRelease. Consider and comment on the provision and accessibility of relevant information regarding the Uncontrolled Release to affected stakeholders andthepublic. Make recommendations to the Minister for Resources and Energy, and through the Minister for Resources and Energy, other relevant CommonwealthMinisters,regulators and industry,asappropriate,onany measures that might help to prevent similar incidents occurring in the future and any measures that might mitigate the safety, environmental, andresourceimpactsarisingfromsuchanincident.Measuresmayinclude improvements to industry practices or applicable regulatory regimes and theiradministration. Consider, assess and make recommendations in relation to any other mattertheCommissionofInquiryconsidersrelevanttoorarisingfromthe Uncontrolled Release and the prevention of similar events occurring in thefuture.

1.2.

TheInquirywasestablishedunderPart9.10AoftheOPGGSAct.Thismeant thattheInquiryhadnearlyallthepowersofaroyalcommission,includingthe powertorequirecompaniesandindividualstoproviderelevantdocumentsto theInquiryandthepowertosummonswitnessesandtakeswornevidence. Part9.10AwasaddedtotheOPGGSActasaresultofamendmentsintroduced intoParliamentbyMinisterFergusoninSeptember2009.TheInquiryconsiders that,inthelightofwhathastranspired,thepowersprovidedbythe amendmentswereessentialtotheconductoftheInquiry.Intheabsenceofthe Part9.10Apowers,theInquirywouldnothavehadaccesstotheinformation thatwasnecessarytounderstandwhatoccurredontheMontaraWHPineither MarchorAugust2009whencriticaleventstookplace.NorwouldtheInquiry havehadaccesstootherinformationonwhichitsfindingsand recommendationsalsorely. AttheoutsetinNovember2009theInquiryinvitedsubmissionsfromall interestedpartiesthroughadvertisementsplacedinthenationalpress.During thecourseoftheInquiryaround40submissionswerereceivedfromcompanies, governmentagencies,organisationsandindividuals.Toassistpublic understandingoftheInquiryandtheissuesbeforeit,theInquiryposted submissionsonitswebsite(www.montarainquiry.gov.au).Throughoutthe periodfromDecember2009toJune2010,thewebsitewasusedtoprovide publicaccesstoinformationaboutthecourseoftheInquiry.

1.3.

1.4.


1.5.

Inadditiontosubmissions,theInquiryreceivedmostoftheinformationwhich underliesthisreportfromtwosources.TheInquiryissuedNoticestoProduce Documentsto15companiesandgovernmentagencieswhichresultedina considerablevolumeofrelevantdocuments.Secondly,theInquiryconductedits publichearingfor21daysovertheperiodbetween15Marchand16April2010. TheInquiryheardevidencefrom15witnessesinrelationtoinformationin statutorydeclarationstheyprovidedtotheInquiry.Thetranscriptsofthepublic hearingwerealsomadeavailablethroughtheInquiryswebsite,wherethey attractedconsiderableinterestbothfromwithinAustraliaandinternationally. TheproceedingsoftheInquiryhaveattractedincreasinginterestbothbecause ofthemorerecentincidentinvolvingtheDeepwaterHorizonrigintheGulfof MexicoandbecauseoftheimplicationsoftheBlowoutforthewayinwhich offshoredrillingis,orshouldbe,regulated.Thelessonstobelearnedby regulatorsandcompaniesaboutprudentoilfieldpracticeare,ofcourse,the essentialfocusofanInquiryofthiskind.Thereisnorelationshipbetweenthe Inquiryandthenormalregulatoryprocesseswhicharetaskedwithestablishing whetheroffenceswerecommittedandwhetherpenaltiesshouldbeenforced. TheInquirywasscheduledtoreporttotheMinisterbytheendofApril2010. AttheCommissionersrequestthiswasextendedto18June2010becausethe timerequiredtoconducttheInquiryspublichearingwaslongerthan anticipatedandbecauseoftheneedtoensurethatproceduralfairnesswas affordedtopersonsandorganisationsthatwerementionedadverselyinthe Inquirysproposedfindings. Itistimelythatthereshouldbesomeattentionfocusedontheoperationand regulationoftheoffshorepetroleumindustrygiventheexpansionthatisin prospect.TheBlowoutservesasanimportantreminderoftheveryrealrisks thatcomewiththesubstantialeconomicbenefitsofpetroleumdevelopments, andtheneedforaneffectiveregulatoryandemergencyresponseframeworkto ensurethatsustainabledevelopmentobjectivescanbeachieved,whilstalso ensuringwellintegrityandmaintaininghighstandardsofoccupationalhealth andsafety(OHS)andenvironmentprotection. Australiasenergysectorbringssignificanteconomicbenefitstothenation,both intermsofenergyusageandbycontributing20percentofthecountrystotal exportvalue.Australiahasaverylargeanddiverserangeofenergyresources,

1.6.

1.7.

1.8.

1.9.


includingapproximately38percentoftheworldsuraniumresources, 9percentofcoalresourcesand2percentofnaturalgasresources.8 1.10. Theupstreampetroleumsector,consistingofexploration,developmentand productionofoilandgas,issmallbyglobalstandardsandrelativetoAustralias largereservesofuraniumandcoal.Theupstreampetroleumsectoris,however, animportantcomponentoftheAustralianeconomy,withoilandgasextraction representingaround2.5percentofGDP.9Theindustrycontributessignificantly toregionalandstateeconomiesandsupportsnewinvestment,infrastructure development,employment,andarangeofothersocioeconomicbenefits.10 Australiahassignificantreservesofnaturalgaswhichareuseddomesticallyand exported.Australiahasabout0.3percentofworldoilreservesandis increasinglyreliantonimportsforitstransportfuels.Australianoilstendtobe lightcrudeoils,whichyieldpremiumproductsincludingtransportfuels,andare valuedhigherthanheaviercrudes,whichyieldfueloilsandbitumen.11Around 70percentofAustraliascrudeoilandcondensateproductionoccursoffthe northwestcoast,andmorethanhalfofAustraliasproductionisexportedgiven theproximityofthisregiontoAsia.12 Worldproductionofoilfellin2009asaresultofthedropinpricesassociated withtheglobalfinancialcrisis,butbothproductionandpricesareforecastby theAustralianBureauofAgriculturalandResourceEconomics(ABARE)togrow inthemediumterm.13Australianoilproductionandexportsareforecastto increaseinthenextfewyearsasnewoilfieldscommenceoperation,andthen declinegraduallyinthemediumterm.14Demandforoilisforecasttocontinue togrow,andtheoffshorepetroleumindustryisandwillcontinuetobea significantcontributortoAustraliaseconomy.GivenAustraliaslargelyunder exploredoffshoreareasandimprovementsinexplorationandproduction technologies,thereisthepotentialforgrowthinAustraliasoilreservesin

1.11.

1.12.

8 9

10

11 12

13 14

GeoscienceAustralia(GA)andABARE2010,AustralianEnergyResourceAssessment,p.2. AustralianBureauofStatistics2009,AustralianNationalAccounts:InputOutputTablesElectronic Publication,200506Final,CatNo.5209.0.55.001. DEWHA2008,NorthwestMarineBioregionalPlan,BioregionalProfile, ,p.139. WilkinsonR2006,SpeakingOilandGas,p.116. GAandABARE,AustralianEnergyResourceAssessment,p.47. ABARE2010,AustralianCommodities:Marchquarter2010,pp.135139. ABARE2010,AustralianCommodities:Marchquarter2010,p.142.


existingfields,andfornewoildiscoveriesinbothexistingfieldsandthepoorly exploredfrontierbasins.15

Source:www.amsa.gov.au

15

GAandABARE,AustralianEnergyResourceAssessment,p.74. ReportoftheMontaraCommissionofInquiry35

TheMontaraDevelopmentProject1.13. TheMontaraDevelopmentProjectisownedandoperatedbyPTTEPAA,a subsidiaryoftheThaicompanyPTTExplorationandProductionPublicCompany Limited(PTTEP).TheDevelopmentislocatedinaremoteareaoftheTimorSea, approximately250kmnorthwestoftheWesternAustraliancoast,andalmost 700kmfromDarwin.ThelocationoftheMontaraWHPisshownabove. TheMontaraDevelopmentProjectislocatedintheoffshoreareaofthe TerritoryofAshmoreandCartierIslands,whichisanareaofCommonwealth waters,andisaround100kmand150kmfromCartierIslandandAshmoreReef respectively.TheDirectorofEnergy,fromtheNTDoR(formerlytheDepartment ofRegionalDevelopment,PrimaryIndustries,FisheriesandResources)regulates wellcontrolinthisareaonbehalfoftheCommonwealthGovernment. Geologically,theMontaraDevelopmentProjectislocatedintheVulcansub basinoftheBonapartebasin,whichcontainssignificantoilandgasfieldsunder variousstagesofoperation,constructionandconsideration,includingthe Blacktip,Tern,andPetrelfields.Montaraislocatedinthewesternsectionofthe BonaparteBasin,withintheAC/L7andAC/L8ProductionLicenceareas,inwater depthsrangingbetween76and90metres. InSeptember2003,CoogeeResources(AshmoreCartier)PtyLtd(Coogee Resources)acquiredtheNewfieldAustraliagroupofcompanies,includingthe RetentionLeaseoftheMontaraOilfield.CoogeeResourcessubmitteda MontaraFieldFinalDevelopmentPlan,withanapplicationforaProduction LicencefortheAC/L7fieldinOctober2006,whichwasapprovedinMarch2007. CoogeeResourcesreceivedapprovalfromtheNTDoRtobatchdrillthree developmentwellsintheMontaraOilfield,andlaterreceivedapprovaltobatch drilltwoadditionalwells.InFebruary2009,CoogeeResourceswasacquiredby asubsidiaryofPTTEPandrenamedPTTEPAustralasia(AshmoreCartier)PtyLtd. TheMontaraOilfieldincludesfourproductionwells(H1,H2,H3andH4)anda gasinjection(GI)well.Inaddition,therearetwoproductionwellsintheSkua OilfieldandthreeproductionwellsintheSwift/SwallowOilfield.Facilities includeaWHPattheMontaraOilfield,andareintendedtoincludeaFloating Production,StorageandOffloading(FPSO)facilityforprocessing,16as illustratedbelow.

1.14.

1.15.

1.16.

1.17.

16

PTTEPAA,SubmissiontotheInquiry,TermofReference1.


Source:NorthernTerritoryOilandGas200817

17

NorthernTerritoryDepartmentofResources2009,NorthernTerritoryOilandGas2008, ReportoftheMontaraCommissionofInquiry37

1.18.

PTTEPAAengagedAtlas,aSingaporebasedcompany,todrilltheMontarawells, usingtheWestAtlasjackupdrillingrig.TheWestAtlascommenceddrillingthe fivewellsbetweenJanuaryandApril2009andthenreturnedinAugust2009in ordertocompletedrillingandtotiebackthewellstotheplatform.

TheBlowout1.19. Atapproximately7.30am(CST)on21August2009,therewasablowoutfrom theH1Well.TheWellleakedpossiblybetween400and1500barrelsofoilper day,andunknownamountsofgas,condensateandwater,untiltheReliefWell operationsweresuccessfulinkillingthewellovertenweekslater. Basedontheestimateof400barrelsperday,thevolumeofoilspilledfromthe MontaraWHPmakestheBlowoutAustraliasthirdlargestoilspill.Onlytwooil spillsfromthetankerKirkiin1991andthePrincessAnneMariein1975were larger.TheBlowoutcausedtheworstoilspillinAustraliasoffshorepetroleum industryhistory.Previously,therehadbeensixoffshoreblowoutsinAustralian watersbetween1965and1984.Theseinvolvedeithernooilspillorspillsofonly negligibleamounts.18 Itisfortunate,inviewofthehighlyflammablenatureofthematerialreleased, thattheimpactoftheBlowoutwasnotmoresevereanddidnotincludetheloss ofhumanlives.DisasterssuchastheexplosionandfireonthePiperAlphagas productionplatformintheNorthSeain1988,whichclaimed167lives,andthe DeepwaterHorizonrigintheGulfofMexicoin2010,whichclaimed11lives, remindusofthepotentiallycatastrophicconsequencesoffailuresinequipment orproceduresintheoffshorepetroleumindustry. ThecircumstancesandlikelycausesoftheBlowoutarediscussedinChapter3of theReport.

1.20.

1.21.

1.22.

Regulation1.23. InAustralia,theoffshorepetroleumindustryissubjecttoacomplexregulatory regimewithpowersandresponsibilitiessharedbetweentheCommonwealth andthestateandNorthernTerritorygovernments.Regulationoftheindustryis basedonalessprescriptiveandmoreoutcomesbasedframeworkinwhich primaryresponsibilityforsafetyandthemanagementofhazardslieswith operators,enablingthemtohaveflexibilityinhowtheyminimiserisks.

18

AdvicefromGAtoRET,24August2009,RET.0017.0001.0497.


1.24.

Thereareanumberofrecentreviewsoftheregulatoryframeworkandother relatedissuesincludingareviewbytheProductivityCommissionofthe regulatoryburdenontheoffshorepetroleumsector.19TheInquiryhashad regardtothesereviewsandthepotentialregulatorychangesthatmayfollow fromthem.TheregulatoryframeworkisaddressedinChapter4ofthereport, whichdiscussestheregulatoryregimeapplyingtowellintegrityandsafety,and Chapter6whichdiscussestheenvironmentalregulatoryframeworkand response.

Response1.25. IntheimmediateaftermathoftheBlowout,PTTEPAAandAtlassafelyevacuated all69personnelfromtheMontaraWHP.AMSAbecametheCombatAgencyand commencedcleanupoperationslateronthatday.NOPSAissuedprohibition noticestoPTTEPAAandAtlastoensurehumansafetywasnotputatunduerisk ontheMontaraWHPandtheWestAtlasrig. TheInquiryhasheardthatPTTEPAAconsideredanumberofoptionsfor stoppingtheBlowoutfromtheH1WellbeforedecidingtodrillaReliefWellto intercepttheH1Well.TheWestTritonrigwasengagedbyPTTEPAAto undertakethisdrillingandthentokilltheH1Wellbypumpinginheavymud andpluggingitwithcement. Afterseveralattempts,theleakingH1Wellwasinterceptedon1November 2009.Thisallowedthepumpingofheavymudtocommence.Nevertheless,fire brokeoutontheMontaraWHPandWestAtlasrig.Thefirecontinuedtoburn athightemperaturesuntiltheH1Wellwaskilledwiththefurtherpumpingof heavymudon3November2009.Furtherinformationonthearrestingofthe Blowout,includingtheresponsebyregulatorsandtheoffshorepetroleum industry,isprovidedinChapter5. TheenvironmentalimpactsfromtheBlowoutaredifficulttodetermineand areunlikelytoeverbeknown.ThelocationoftheMontaraWHPisremote andthereislittlebaselinedataaboutspeciesandhabitats.Therewasalsoa delaybeforethecommencementofScientificMonitoringofthe environmentalimpactsoftheoilspill.Chapter6discussesthespreadof thepollution,thecleanupledbyAMSAandtheregulatoryframeworkfor environmentalprotection.

1.26.

1.27.

1.28.

19

ProductivityCommission2009,ReviewoftheRegulatoryBurdenontheUpstreamPetroleum(Oiland Gas)Sector,ResearchReport. ReportoftheMontaraCommissionofInquiry39

FindingsandRecommendations1.29. Chapter7oftheReportreviewsadditionalaspectsoftheperformanceof PTTEPAAwhich,astheoperatoroftheMontaraWHP,isthecompanythat hasbeencentraltotheInquirysconsiderationoftheBlowoutandits consequences.Chapter8assemblestheInquirysfindingsand recommendationsagainstthevariousTermsofReferenceaddressedby theInquiry.


2.2.1.

PRELIMINARYMATTERS PriortopresentingtheInquirysfindingsandrecommendationsinrelationtoits TermsofReference,anumberofissuesraisedinthecourseoftheInquiryare addressedinthisChaptersothattheInquirysapproachinsubsequentChapters ofthisReportcanbeunderstood.

Sensibleoilfieldpracticeasaframeofreference2.2. DuringthepublichearingPTTEPAAobjectedtowitnessesbeingquestionedby referencetogoodoilfieldpractice,onthebasisthatthisexpressionhada definedlegalmeaningundertheOPGGSAct.Itwasnotedthat: a. thedefinedmeaningoftheexpressionmightnotbeunderstoodby witnesses;and,inanyevent, b. confusionmightariseastowhetherevidencewasgivenbyreferencetothe definedorordinarymeaningofthatexpression. 2.3. Further,astheInquirywasnottaskedtomakefindingswithrespecttoanycivil orcriminalliabilityofanypersonorentity,itwasconsideredpreferabletosteer clearoftheexpressiongoodoilfieldpracticeasaframeofreferencewhen assessingtheactsandomissionsofthosepersonsorentities. Accordingly,witnesseswereusuallyaskedquestionsbyreferencetowhether actsandomissionsconformed,intheirview,tosensibleoilfieldpractice.That is,theywereaskedtoexpressviewsbyreferencetotheirunderstandingofthe ordinarymeaningofthatexpression.20Basedontheirexperience,wasthedoing ofanactsensible?Basedontheirexperience,wasthenonperformanceofan actsensible?Thiscoursewasadoptedasaprudentprecaution,eventhough somePTTEPAArelatedwitnessesanddocuments(includingitsownWell ConstructionStandards)themselvesusedtheexpressiongoodoilfieldpractice. InsubmissionsputtotheInquiryafterthepublichearing,PTTEPAAthenraised variousfurtherobjections: a. PTTEPAAobjectedtouseoftheexpressionsensibleoilfieldpracticeasa frameofreferenceinthisReportonthebasis,interalia,thatthisexpression wasnotintheOPGGSActanditsmeaningwasunclear;

2.4.

2.5.

20

Onsomeoccasionswitnesseswereaskedquestionsastowhetheractsoromissionswerereasonable. ReportoftheMontaraCommissionofInquiry41

b. PTTEPAAsubmittedthattheInquirysquestioningofwitnessesbyreference tosensibleoilfieldpracticewasunfair,despite(i)notobjectingtosuch questionsatthetime;and(ii)witnessesbeingreadilyabletoanswer questionsbyreferencetothatstandard includingMrJacobwhogave evidenceonbehalfofPTTEPAA;and c. PTTEPAAalsosubmittedthatitwasnotopentotheInquiryonthesolebasis oforalevidencetomakeafindingastowhetherPTTEPAAspracticeswere goodorsensibleoilfieldpractices. 2.6. TheInquiryrejectsPTTEPAAsobjectionsandsubmissionsconcerninguseof sensibleoilfieldpracticeasaframeofreferenceinthisReport. Indeed,itissurprisingthat,inthecontextofthispublicinquiry,PTTEPAAwould assertthatitisunsurewhatsensibleoilfieldpracticemeans particularlywhen itsownpersonnel(whohadconsiderableexperienceinoilfieldpractice)had littleornodifficultyunderstandingthatexpression,noranydifficultyexpressing viewsastowhethervariousactsandomissionsconformedtothatstandard. Further,theverylastdocumentstheInquiryreceivedfromPTTEPAAwere inconsistentwithitsstatedoppositiontotheInquirysuseoftheconceptsof sensibleoilfieldpracticeandgoodoilfieldpractice.Thosedocuments consistedofawrittensubmissionunderthehandofPTTEPAAsCEOdated 25May2010,andanattachedconsultantsreport.PTTEPAAsoughttorelyupon thosedocumentstodemonstratethestepsitproposedtotaketoensurethat infuturePTTEPAAoperatesatthehighestlevelofgoodoilfieldpractice.Some oftheidentifiedstepsreferredexplicitlytogoodoilfieldpractice,andthe consultantsreportrelieduponbyPTTEPAAcontainedmanyreferencestogood oilfieldpractice.Indeed,theconsultantsreportitselfexpressedviewstothe effectthatvariousactsandomissionsdid,ordidnot,conformtogoodoilfield practice.HowtheInquirywasmeanttoassessthecontentofthosedocuments withoutreferencetotheverystandardinvokedinthemwasnotexplained. Inanyevent,theInquiryissatisfiedthat(i)theconceptofsensibleoilfield practiceisausefulframeofreferencewhenassessingtheactsandomissionsof personsandentitiesinthisReport;and(ii)thelegislativeconceptofgood oilfieldpracticemustnecessarilybereferredtowhenassessingfeaturesofthe regulatoryregimeandtheperformanceofregulatorsunderthatregime. TheInquiryrejectsPTTEPAAssuggestionthatthereisnotaproperevidentiary basistoallowtheInquirytoexpressfindingsbyreferencetosensibleoilfield practice.AlargeamountofmaterialwasobtainedinthecourseoftheInquirys

2.7.

2.8.

2.9.

2.10.


publichearinginsupportofthesefindings,includingfrommanyPTTEPAA relatedwitnesses. 2.11. However,theInquiryemphasisesthatanyfindingtotheeffectthatparticular actsandomissionsofpersons/entitiesdidnotconformtosensibleoilfield practiceshouldnotbeinterpretedasafindingthattheperson/entityin questionbearsanycivilorcriminalliabilityunderthelegislativeregime.The TermsofReferencedonotcontemplatefindingsbeingmadebytheInquiryasto theexistenceofcivilorcriminalliability.

WhetheradversefindingsareprohibitedbytheInquirysTermsofReference2.12. AnotherrelatedargumentraisedbyPTTEPAA(onseveraloccasions)wasthat theInquirysTermsofReferencedidnotpermitadversefindingstobemade againstanyindividualorentity,includingPTTEPAA. On8February2010theInquiryreceivedaletterfromPTTEPAAssolicitors whichdealt,amongstotherthings,withthescopeofparagraph3ofthe InquirysTermsofReference.Intheletterof8February2010PTTEPAA submittedthat: a. TermsofReference2and3wererestrictedtowhetherPTTEPAAcomplied withitsdutiestosubmitrequiredplans,whetherregulatorsappropriately assessedthoseplans,andwhetherregulatorsconductedsufficientauditsof PTTEPAAsactivitiespriortotheincident;and b. discussionswiththeMinistersOfficepriortotheTermsofReferencebeing releasedindicatedthattheInquirywasnotmeanttodealwithPTTEPAAs actualcompliancewithitsplansasthatwouldresultintheCommission gatheringevidenceforuseinaprosecution. 2.14. TheSolicitorAssistingtheInquiryrespondedasfollowsbyletterdated 11February2010:This Inquiry proposes to give the terms of reference their ordinary and naturalmeaning.TheInquirydoesnotpresentlyconsiderthat[PTTEPAA]s understanding of the scope of terms of reference 2 and 3 is consistent with the ordinary and natural meaning of these terms of reference. The Inquiry presently considers that whether or not [PTTEPAA] complied with its management system and plans is relevant to terms of reference 2 and 3,andprobablytermsofreference1,4and10aswell

2.13.

2.15.

TheInquiryinvitedPTTEPAAtorevisitthescopeoftheTermsofReference,ifit wished,atthepublichearing.Itdidnotdoso.


2.16.

However,subsequenttothepublichearingPTTEPAAssolicitorsentanemailto theInquirydated22April2010.ThatemailexpressedsurprisethattheInquiry mightmakeadversefindingsagainstparticularindividuals.Inthisregard, PTTEPAAreferredtothefollowingstatementmadebytheMinisterwhenhe announcedtheInquiryinamediareleaseon5November2009:Consistent with well established practice such as for the Australian Transport Safety Bureau, the Commission of Inquiry will receive evidence onanoblamebasis.21

2.17.

PTTEPAAssolicitorwentontostateasfollows:If the Commissioner is tofollowthe intentthe Ministeradvised thepublic he was to follow in conducting the Commission of Inquiry, we would anticipatethathisreportwillnotbemakinganyadversecommentsabout any entity and, in particular, in relation to any individual and will be limitedtofactualmatterssothatfuturelearningsmaybetakenfromthat.

2.18.

TheSolicitorAssistingtheInquiryrespondedtothissubmissionbyletterdated 22April2010.Inthatletteritwasexplainedthat,totheextentconsidered necessaryorappropriatetoproperlyaddresstheInquirysTermsofReference, adversefindingsagainstentitiesand/orindividualsmaybeexpressedinthefinal report. InthisReportadversefindingshavebeenexpressedagainstentitiesand individuals.Inthisregard,theInquirynotesasfollows: a. theMinistersmediareleaseexpresslyreferredtothebasisuponwhichthe Inquirywouldreceiveevidence.Incontext,theMinisterwasreferringtothe factthatevidencegivenbywitnessescouldnotbeusedagainstthemto establishanycivilorcriminalliability; b. thisviewofthelegislationunderpinningtheInquiryissupportedbythe statementsmadebytheMinisterinaspeechtotheHouseof Representativeson17November2009.InthatspeechtheMinisterreferred totheInquiryreceivingevidenceonanoblamebasisandimmediatelythen stated:Independent of the Commission of Inquiry, the relevant regulatory processes will determine whether any noncompliance with the laws has occurredandwhetheranymeasurestoseekpenaltiesandothersanctions shouldbepursued.

2.19.

21

Mediareleaseavailableat: .


c. theMinistermusthaveknownthattheInquirysfocushadtobefulfilmentof itsTermsofReferenceinaccordancewithrelevantprovisionsoftheOPGGS ActandtheRoyalCommissionsAct1902.Thosepiecesoflegislationdonot prohibittheInquiryfromexpressingadversefindings.Indeed,theyobligethe InquirytodosototheextentnecessarytofulfilitsTermsofReference;and d. theMinistermusthaveknownthatTermsofReference1,3and11,for instance,mightwellresultinadversefindingsbeingincludedinthe InquirysReport. 2.20. Accordingly,theInquiryconsidersthattheMinistersmediareleaseof 5November2009wasnotintendedto(norcouldit)prohibittheInquiryfrom expressingadversefindingstotheextentnecessaryorappropriatetoproperly addresstheInquirysTermsofReference. Ultimately,theInquiryhasconsidereditbothnecessaryandappropriateto includeadversefindingsinitsReport,soastoproperlyaddresstheTermsof Reference.22Forinstance: a. theInquirysfindingsandreasoningwithrespecttothecircumstancesand likelycausesoftheBlowoutcouldnothavebeenadequatelystatedwithout adversefindingsbeingexpressedagainstPTTEPAAanditspersonnel; b. likewise,theInquirysfindingsandreasoningwithrespecttothe performanceofrelevantpersonsincarryingouttheirobligationsunderthe regulatoryregimecouldnothavebeenadequatelystatedwithoutadverse findingsbeingexpressedagainstPTTEPAAanditspersonnel;and c. theInquirycouldnothaveproperlyassessedandmadearecommendation aboutanotherrelevantmatterwithoutreachingandexpressingadverse findingsagainstPTTEPAAanditspersonnel:namely,theInquirys recommendationthattheMinisterreviewPTTEPAAspermitandlicence(see Chapter7). 2.22. Thisisparticularlythecasehavingregardtothefollowing: a. PTTEPAAandAtlascontestedanumberoffactualmattersconcerningthe circumstancesandlikelycausesoftheBlowout;

2.21.

22

TheInquiryhasbeencarefultoavoidexpressingadversefindingsintermswhichasserttheexistenceof anycivilorcriminalliability.TheInquiryhasnotmadefindingsthatparticularsectionsofrelevant legislationhavebeenbreachedbyanyparty.TheInquiryhasnotgatheredasinglepieceofevidencefor prosecutorialpurposes. ReportoftheMontaraCommissionofInquiry45

b. initsownsubmissiontotheInquiryinDecember2009,PTTEPAAexplained thecircumstancesandlikelycausesoftheBlowoutintermswhichwere adversetovariousonrigpersonnel; c. subsequently,PTTEPAAanditspersonneladvancedaconsiderableamount ofevidentiarymaterialtotheInquiryconcerningTermsofReference1and3. Thatmaterialwaslargelyexculpatory,particularlywithrespecttoPTTEPAAs onshorepersonnel.Atthesame