Rough seas ahead for offshore energy despite demand boom

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In 2014, NOPSEMA became responsible for administering the federal Environment Protection and Biodiversity Conservation Act in Commonwealth waters. The Act explicitly includes Indigenous heritage value as part of the environment to be protected.

The Act also requires the consideration of indirect consequences of any proposal, and recently that has been interpreted as including the carbon emissions produced by the customers of an oil or gas project.

Consideration of so-called Scope 3 emissions that dwarf the already massive direct carbon pollution from LNG projects is now a paramount concern.

In February Coalition resources minister Keith Pitt wrote to Smith setting out his expectations that the independent regulator ignore Scope 3 emissions and consider the “economic and commercial environment” when making decisions about safety and the environment.

NOPSEMA did not respond to Pitt before the election, but Smith is clear about his position.

“We will apply the law first and foremost, the law is going to override a ministerial expectation,” he said.

The offshore industry, which includes smaller projects and ExxonMobil’s Bass Strait assets as well as the LNG exporters, has more to worry about than a repeat of the Barossa decision striking out approval for an environment plan needed to build a new project.

Every offshore project also needs an environment plan to operate, so legal action citing lack of consultation that could threaten current production cannot be ruled out.

Projects under construction – Santos’ Barossa and Woodside’s $17.6 billion Scarborough – have additional concerns beyond whether they have consulted widely enough.

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Both have high-level offshore project proposals (OPP) accepted by NOPSEMA, but that is no guarantee that subsequent more detailed environment plans required before any offshore activity happen will be accepted.

“You can get an offshore project proposal based on one set of science, which might be overtaken by new science going forward,” Smith warned.

Barossa’s project proposal is almost five years old, while Woodside’s Scarborough plan was accepted in April 2020. Since then, the case for a quicker phase-out of gas has strengthened, which could affect NOPSEMA’s assessment of Scope 3 emissions.

The International Energy Agency called for no gas projects in 2021, and a major Intergovernmental Panel on Climate Change report in April called for significant emissions reductions this decade.

And what if the gas companies start screaming ‘regulatory risk’ due to moving goalposts?

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“They understand the system when they start,” Smith said. “If they don’t know, then they’re not being well advised by their staff.”

NOPSEMA’s consideration of Indigenous heritage and indirect consequences could worry Woodside due to concerns that emissions from the Pluto LNG plant where gas from Scarborough will be processed may damage the adjacent ancient Murujuga rock art.

Smith said the regulator would look at the latest scientific studies.

“Some of them will say the rock art is being eroded faster because of greater emissions, and others will say it isn’t,” he said.

“We’ll do an assessment and form a decision.”

Since the Scarborough OPP was accepted scientists led by University of WA Professor of world rock art Benjamin Smith have published two peer-reviewed papers concluding industrial emissions are damaging the rock art. However, one other study reached the opposite conclusion.

Revised environment plans for projects in production must be revised every five years and submitted to NOPSEMA for acceptance, so no projects can escape assessment against the latest science.

Smith said this could sometimes work in the industry’s favour if for example research on the environmental benefits of old infrastructure as artificial reefs could justify expensive removal when production ends not being required.

Smith, who will leave NOPSEMA in February, said the challenge for the industry was to manage these new issues without “dropping the ball” on safety and the environment, causing a major accident event – industry parlance for something that kills several workers.

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