30 July, 2015
Key messages
- The number of Health, Safety and Environment (HSE) inspections conducted by the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) continues to increase. This trend is likely to continue.
- For the past two years the top three basic root causes for accidents and dangerous occurrences were design, preventive maintenance and procedures.
- NOPSEMA has publically stated that it will continue to monitor ‘as an issue of priority’ any linkage between subdued market conditions and the prevalence of deficient preventive maintenance as a root cause of HSE incidents.
- NOPSEMA has issued a blunt public reminder that duty holders should keep in mind that their decisions must prioritise protecting the offshore workforce and minimising the environmental impact of their activities over other competing business considerations.
Results of NOPSEMA’s annual report: increase in number of inspections
In May 2015, NOPSEMA released its Annual offshore performance report1 for the year ending 31 December 2014. The Report sets out key performance indictor data for the offshore petroleum industry, gathered by NOPSEMA throughout the year.
A key trend emerging in the Report is a continued increase in the number of occupational health and safety and environmental management inspections carried out by NOPSEMA.
A total of 146 inspections were carried out in 2014, which is a marked increase on the 127 carried out in 2013 and the highest number of inspections carried out in any year to date.
The increase is most evident in respect of environmental management inspections, which have increased from 7 in 2012, to 23 in 2013 and then to 30 in 2014.
NOPSEMA CEO, Mr Stuart Smith, has said that he expects this trend to continue throughout 2015, with NOPSEMA setting a target of 60 environmental management inspections – that is a target of 100% increase year on year from 2014 to 2015.
NOPSEMA’s powers on inspections
With the number of inspections on the rise, it is timely to consider the powers that NOPSEMA inspectors have when conducting those inspections.
The Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGSA) gives NOPSEMA inspectors the power to conduct inspections to monitor compliance with the requirements of the OPGGSA, subordinate regulations and risk management systems.
Generally, when conducting an inspection a NOPSEMA inspector is entitled to:
- enter and search the workplace,
- take a thing, or a sample of a thing,
- examine, copy and take extracts from any record, book or document,
- take photos, films, videos or audio recordings,
- require a person to give reasonable help in exercising the powers,
- require any person to answer any question to help the inspector ascertain whether legislative compliance has occurred,
- seize evidence, and
- issue directions or other notices.
Upon completion of the inspection, NOPSEMA issues a report detailing its findings and conclusions to the operator. Where an inspection identifies deficiencies in implemented systems, regulatory non-compliance or opportunities for improvement, it is open to NOPSEMA to make recommendations for improvement or take enforcement action.
Increase in regulatory powers
The increased number of inspections comes off the back of a suite of legislative reforms implemented in 2013 and 2014. These reforms expanded the powers of NOPSEMA inspectors and introduced a range of new enforcement powers. Key reforms for industry to note include:
- The merging of Petroleum Project Inspectors and occupational health and safety (OHS) Inspectors into a single NOPSEMA Inspector, responsible for carrying out both environmental and OHS inspections.
- Increased scope for OHS Prohibition Notices. Specifically OHS Prohibitions Notices may now be issued when a NOPSEMA Inspector believes on reasonable grounds that risks to health and safety may occur, rather than when a risk is actually occurring
- Increased criminal penalties for OHS and environmental offences.
- A new civil penalty regime which can be used in addition, as a supplement to or in the alternative to criminal sanctions.
- The introduction of a range of alternative enforcement mechanisms including infringement notices, adverse publicity orders, injunctions and continuing penalties.
- Enabling NOPSEMA inspectors to issue Environmental Prohibition Notices and Environmental Improvement Notices requiring titleholders to take specific action to address significant threats to the environment.
- The mandatory publication of environmental and OHS notices on the NOPSEMA website.
Current economic environment
NOPSEMA has publically stated that it is considering international anecdotal evidence that there is a linkage between a depressed oil price and a drop in maintenance performance 4-6 months following the price drop. The data from NOPSEMA does not support a finding that this link has been replicated in Australia. However, NOPSEMA clearly has this issue on its radar and has been blunt about the fact that it will monitor maintenance issues closely to ensure that standards do not fall in a depressed market.
What does it mean
With NOPSEMA set to continue its current focus on monitoring offshore compliance and performance throughout 2015, and the broader consequences of non-compliance, petroleum operators should be prepared for the prospect of increased attention in the form of inspections. The latest public announcements from NOPSEMA make it clear that a focus of these inspections will be to ensure that HSE standards do not fall in the current depressed market.
Endnotes
For further information, please contact:
Anthony Longland, Partner, Herbert Smith Freehills
anthony.longland@hsf.com
