Streamlining environmental approvals for offshore petroleum projects

In brief

A new regime that streamlines the environmental approvals process for petroleum activities in Commonwealth waters will place a greater responsibility on the titleholder of a tenement rather than the operator. Partner Chris Schulz and Senior Associate Eve Lynch provide an overview of the changes.

Background

From 28 February 2014, a new environmental approvals process applies to petroleum activities carried out in Commonwealth waters. The new process will be administered by the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) and, subject to certain limitations, replaces the environmental assessment and approval process under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (the EPBC Act).

Strategic assessment

Under the new regime, an 'offshore project proposal' is now required for major offshore petroleum projects, in addition to an environmental plan under the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (Cth) (the Environment Regulations).

Introduction of the new regime follows the finalisation of a strategic assessment of the environmental authorisation process carried out jointly by the Ministers for Industry and Environment and the CEO of NOPSEMA under the EPBC Act. The strategic assessment culminated in the endorsement by the Minister for Environment, the Hon. Greg Hunt MP, of a Program Report (Program) on 7 February 2014 and a decision last Thursday to approve, subject to limitations, all petroleum activities in Commonwealth waters under the EPBC Act.

The effect of the Minister's decision is that an approval under the EPBC Act is no longer required for offshore petroleum activities (including petroleum recovery, infrastructure facilities and pipelines) covered by the Minister's decision and which are taken in accordance with the endorsed Program. These activities will still need to be authorised by an environment plan and may be subject to the new 'offshore project proposal' process under the Environment Regulations.

Limits on the new process

The new streamlined process under the endorsed Program and Environment Regulations does not apply to certain classes of petroleum activity excluded by the Minister, including activities that may impact on Commonwealth land or the heritage values of the Great Barrier Reef Marine Park or activities that are taken within the Great Barrier Reef Marine Park or in the Antarctic.

The process also does not apply to activities that conflict with the endorsed Program, which specifically excludes activities conducted in any part of a declared World Heritage property under the EPBC Act.

For these excluded activities, the standard referral, assessment and approval requirements under the EPBC Act continue to apply.

New offshore project proposal process for development projects

An offshore project proposal must be submitted to NOPSEMA for all offshore activities (including operations or works) undertaken for the recovery of petroleum, unless the activity has already been approved under the EPBC Act, or determined by the Minister for Environment not to be a 'controlled action' under that Act. An offshore project proposal is not required for drilling for exploration or appraisal purposes or seismic surveys, although a proposal for these activities may be voluntarily submitted by a titleholder.

An offshore project proposal must be supported by detailed information regarding the environmental impacts and risks of the project on a 'whole of lifecycle' basis (analogous to the referral requirements under the EPBC Act) and will be subject to mandatory public notification for a period of at least four weeks. NOPSEMA will undertake an assessment in accordance with the Environment Regulations, and must either accept or refuse the proposal.

Environment plans

An environment plan is still required under the Environment Regulations for all petroleum activities and the assessment and approval process is largely unchanged. However, under the new regime, it is the titleholder (and not the 'operator') that is required to submit and comply with the environment plan for the period of the activity. This change is aimed at shifting the compliance burden to the party responsible for overall management of the activity, consistent with other compliance measures in the principal.¹ Failures to submit or comply with an environment plan are strict liability offences, and significant financial penalties will apply to titleholders.

For offshore projects involving petroleum recovery, an environment plan may only be submitted by the titleholder where an 'offshore project proposal' has been submitted to NOPSEMA or the proposal has already been considered by the Environment Minister under the EPBC Act. The Environment Regulations have been amended to clarify that, subject to NOPSEMA approval, one environment plan may relate to activities (such as seismic surveys) to be carried out on two or more titles held by different titleholders.²

Transitional arrangements

Environment plans in force before commencement of the new regime on 28 February 2014 are not affected by the changes, and continue in force under the amended Environment Regulations.³ However, titleholders will need to take responsibility for managing compliance and reporting under the plans developed and submitted by their operators from now on. Where titleholders wish to change the way impacts and risks are managed under their environment plans, revised plans must be submitted to NOPSEMA no later than 31 August 2014 under special transitional arrangements.⁴

Plans submitted by an operator (but not accepted by NOPSEMA) prior to 28 February 2014 are deemed to have been submitted by the titleholder.⁵ Following acceptance of the submitted plan by NOPSEMA, titleholders will have a transitional period of six months during which to submit a revised plan.⁶

What next?

For new petroleum developments, titleholders will need to consider whether their projects fall within the new streamlined assessment process and, if so, whether an 'offshore project proposal' will need to be submitted to NOPSEMA. This will involve a consideration of whether the new development has previously been assessed under the EPBC Act.

For existing operations, titleholders should ensure that they are positioned to maintain compliance with the environment plans in force for their activities and consider whether revisions to those plans are necessary to reflect the manner in which environmental impacts and risks will be managed in the future.