http://www.businessweek.com/news/2010-06-17/bp-gulf-spill-fuels-australian-opponents-to-drilling-update1-.html
(Update1)
June 17, 2010, 3:15 AM EDT
By James Paton
June 17 (Bloomberg) — BP Plc’s Gulf of Mexico disaster is generating opposition to deepwater drilling off Australia, where the government is opening new exploration areas less than a year after the country’s third-worst oil spill.
Resources Minister Martin Ferguson will receive the results tomorrow of an investigation into last August’s Timor Sea oil spill, he said in a phone interview. A month ago, he invited companies to bid for permits to explore new “frontiers” as Australia faces an import cost for oil and liquid fuels that may double in five years to A$30 billion ($26 billion). The country was self sufficient in oil as recently as 2000.
Ferguson, who today ruled out suspending exploration, is offering 31 drilling areas in waters as deep as 3,750 meters, more than twice the depth of BP’s leaking well. Australia’s expanded search for oil and gas comes as BP’s spill, the worst in U.S. history, focuses attention on petroleum industry safety.
“We should hold off on exploring in some of the deeper basins,” said Tina Hunter, an assistant law professor at Bond University in Queensland state who studies offshore oil regulation. “The last thing we need is to go into deeper waters and risk something like what happened in the U.S.”
Chevron Corp., Royal Dutch Shell Plc and ConocoPhillips are among companies planning more than $185 billion of oil and gas projects in the country, according to the Australian Petroleum Production and Exploration Association.
‘Accidents Will Happen’
Increased drilling adds to the risk a disaster the size of the BP Gulf spill could occur off Australia, said Justin Marshall, a professor at the University of Queensland.
“The public needs much greater assurance accidents can be dealt with effectively, because they will happen,” Marshall, a former president of the Australian Coral Reef Society, said by phone yesterday. “Safety measures need to be enforced at a much higher level, the risks to the environment are huge.”
The U.S. probe into the BP spill and what caused the Deepwater Horizon drilling rig to explode on April 20, killing 11 workers, will focus on safety lapses and equipment failures.
Oil producers around the world are bracing for stricter regulation. Norway will ban any deepwater drilling in new areas until the cause of the BP spill is known, Oil Minister Terje Riis-Johansen said June 8. Russia may tighten its rules, Energy Minister Sergei Shmatko said May 24.
Obama Response
BP’s spill was initially overseen by the U.S. Minerals Management Service. The agency, faulted for lax regulation, was broken into three by President Barack Obama on May 19, creating bodies to oversee leases, drilling safety and fee collection.
When Ferguson opened the new areas on May 17, he said the country must streamline rules to make a single agency responsible for safety, well operations and the environment.
“There is no intention by the government to scale back the development of the oil and gas industry in Australia,” Ferguson said today. “It is very important in terms of the nation’s energy security, jobs and the overall economy, but I am totally focused on the need to ensure we have the absolute best practices in place.”
The National Offshore Petroleum Safety Authority, the Australian Maritime Safety Authority and the Northern Territory Department of Resources are among bodies that had oversight of the Montara spill.
Moratorium Needed
Australia needs a yearlong moratorium on deepwater drilling to study the Montara report and the BP spill, Bond University’s Hunter told Bloomberg Television today.
Companies drilled 1,500 wells off Australia in the 25 years before the Montara accident without any blowouts, the petroleum group said. Explorers face stringent environmental conditions before drilling, Chief Executive Officer Belinda Robinson said in an e-mailed response to questions.
Last year’s spill, about 250 kilometers (155 miles) off the Kimberley coast, shows Australia needs a single agency to monitor well safety, protect the marine environment and oversee spill response, according to Hunter.
Calls to strengthen Australian regulations began before the Montara incident when a 2008 explosion at Apache Corp.’s Varanus Island gas plant caused fuel shortages in Western Australia, source of a third of the nation’s exports.
‘Consistent Approach’
“Some of the issues that have arisen as a result of the Varanus and Montara incidents mean we need to revisit our regulatory system and make sure we have the strongest possible national, consistent approach, rather than allowing potential differences to develop,” Ferguson said.
Montara may have spilled about 30,000 barrels of oil between Aug. 21 and Nov. 3, based on estimates by Bangkok-based PTT. That would make it the third-biggest spill in Australian history, according to figures from the Maritime Safety Authority.
The Timor Sea accident and a Chinese coal carrier that ran aground in April on the Great Barrier Reef have already damaged the marine environment, University of Queensland’s Marshall said.
“The ocean is full of life, and when that oil sinks to the bottom it’s going to be killing things,” he said.
Australian Greens party Senator Rachel Siewert urged the government to scrap the latest set of new drilling permits, concerned about the threat to whales, seals, turtles and other marine life in one area marked for exploration off the Western Australian coast. Parts of this block are “extremely deep,” as much as 3,750 meters, the Resources Department said.
“If a Montara-size spill occurred there, you’d see oil on the coast,” Siewert said in a telephone interview. “There are dangers inherent in deepwater production, and the government should put a hold on exploration that we have control over.”
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–With assistance from Rishaad Salamat in Hong Kong. Editors: John Viljoen, Peter Langan.
To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.
To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.
Special thanks to Richard Charter