Responding to Montara and Macondo Actions by Australia's oil and gas industry

1. Responding to Montara and MacondoActions by Australia's oil and gas industry International Offshore Petroleum Regulators and Operators Summit Eric Streitberg, Chairman of APPEA Australian Petroleum Production & Exploration Association (APPEA)

2. Montara Incident – 21 August 2009 2

3. History of Offshore Well Incidents in Australia 1964: First offshore well 1965: Barracouta well blowout 1966: Marlin well blowout 1968: Marlin well blowout 1969: Petrel well blowout 1971: Marlin well blowout 1984: Flounder well blowout 2009: Montara well blowout 1965 1970 1975 1980 1985 1990 1995 2000 2005 3

4. Australian Oil and Gas Industry’s Response • Strong and immediate action by industry - pulled together to provide peer review, specialist personnel and support. • Important to note that the emergency response to Montara at the time worked well, and saw 67 people evacuated without physical harm. • APPEA’s members have since carried out in depth reviews of design, integrity and operations of all their wells, their communication and verification protocols and emergency response preparedness. 4

5. Australian Industry Actions • A new self-audit tool to guide integrating permit holders’ and contractors’ well operations • A Memorandum of Understanding on Mutual Aid for responding to offshore well incidents • A commitment to designing and constructing a well capping solution for Australian conditions • Increasing collaboration within the Australian drilling industry • Expanding the Australian petroleum industry spill response capability including through AMOSC • Continuing to work closely with OGP’s Well Expert Committee on international recommendations 5

6. Self-audit Checklist • The Montara Inquiry Report identified the importance of effective and verified communication between the title holder and their contractors • Critical areas include planning, preparing and executing well activities, and emphasising the title holder has primary responsibility for well operations • The Australian industry has developed a self-audit tool to be used to assess/audit title holder’s management system; and clarify responsibilities between the title holder and the contractor 6

7. Memorandum of Understanding: Mutual Aid for Well Incidents • The Australian industry’s Mutual Aid Memorandum of Understanding sets up a framework for ‘best endeavours’ mutual assistance arrangements in drilling relief wells • The Parties to the Memorandum acknowledge that from time to time, emergency conditions arise that require drilling relief wells • This would necessitate an urgent response and assistance by industry to minimise adverse impacts • For timely response, the general principles of the MoU will form the basis for arrangements with the Drilling Operator, drilling unit(s) and contractor personnel, equipment, materials, consumables and other well-site services 7

8. An Australian Well Capping Solution • The Australian and international industry has been working on the development of a capping strategy that will incorporate a regional and local capability • Australia has been leveraging this work to identify the optimum option for Australia • The Australian industry has commenced scoping and designing a local well capping solution suited for Australian conditions • Construction work on an Australian capping system is expected to commence in early 2012  • This technology will form part of an integrated global, regional, and local approach 8

9. Industry Capacity to Respond - AMOSC • Through AMOSC, industry has improved response by: • reviewing spill response equipment requirements and pre-positioned equipment to sensitive locations • doubling the core group of spill responders from 42 to 84 and available to work in an offshore incident • developing new spill management response training • investigating benefits & limitations of dispersants • investing in a major program of trajectory monitoring • facilitating better access to international expertise. 9

10. Offshore Petroleum Regulation • Identified serious concerns with the regulatory disconnects between safety critical functions, including environmental management, well design and operation, and integrity of facilities. • As a result, the Commonwealth is establishing two new regulatory bodies: • NOPSEMA (a single integrated independent authority, responsible for safety, well integrity and environmental plans); and • NOPTA – responsible for the administration and regulation of petroleum titles in Commonwealth and State waters if State Governments chose to delegate this role to the Administrator. 10

11. Community Expectations • An increased industry led focus on environmental and safety management. • Essential for maintaining community support and access to existing and new areas. • Need to improve the performance of the industry, particularly around: • process safety; • drilling operations; and • integrity of ageing facilities. 11

12. Conclusions • We must always be prepared to challenge our performance and learn any lessons. • We can – and will – deliver the safe and sustainable energy and industry the Australian community demands. • We must also acknowledge the dedication and skills of so many in our industry, including you here today. 12