Submission to the Montara Commission of Enquiry by Annabelle Sandes

Submission to the Inquiry into the Montara Platform Uncontrolled Hydrocarbon Leak. KIMBERLEY WHALE WATCHING

22 December 2009

1.!

Introduction

1.1! Kimberley Whale Watching is a private research organization which carries out independent marine research along the Kimberley coast. We have been working along the Kimberley coast for the past 30 years. On the 28th August 2009 I accompanied Senator Rachel Siewert on a flyover of the Montara Platform and West Atlas rig. 1.2! We note that the commission has announced the Terms of Reference parts 1-11 and that no opportunity has been provided to consider the environmental and economic impact of the spill in Indonesian territorial waters. 1.3! The comments and information in this submission shall be focussed primarily towards points 5-11 as we are not in a position to comment on points 1-5.

Turtle Reef, Talbot Bay - photo Annabelle Sandes | Kimberley Whale Watching

Submission The Montara oil field is located in the Ashmore Cartier offshore petroleum development area close to the globally significant marine reserves of Ashmore and Cartier Islands and reefs. The oil field is located close to the Halimeda Beds, and associated coral and sponge gardens, and the Holothurian Banks adjacent to the Kimberley coast. The Kimberley coast has recently been recognized as one of Australia始s biodiversity hotspots with globally significant fringing reefs.1 The Kimberley coast is home to the largest population of Humpback whales in the world. 2 The Breeding Group D population feed, mate and calve in these waters.

Source: DEWHA

Five out of a pod of nine humback whales sighted off James Price Point, August 2009 - aerial survey (Kimberley Whale Watching)

Humpback whale pods without calves Cow and calf pairs Bottlenose Dolphins Australian Snub Fin Dolphins

Kimberley Whale Watching始s 2009 Cetacean Survey results.

Oil and gas exploration and development areas in Australian Territorial waters.

The Australian Government 3 and NT and WA State Governments4 are now facilitating the rapid expansion of the offshore oil and gas industry in some of the most unique and sensitive marine ecologies in the world. Development of the oil and gas industry was blocked in the Great Barrier Reef area in the 1970s. The environmental risks were considered too great to allow development to take place. The isolation of the Browse Basin, Ashmore-Cartier and the Bonaparte Basins has allowed for their development without adequate public scrutiny. Generous tax arrangements5 and subsidies have created an internationally competitive environment for foreign investment in Australiaʼs offshore oil and gas industry. The Australian government is also supporting and protecting its own investment in the oil and gas industry. In 2008-2009 the value of Australiaʼs exports of petroleum products, which included crude oil and other feedstocks and LNG wa 18.9 billion dollars.6 Royalty income from the same period to the commonwealth government was only 1.57 billion dollars. In 2007-2008 77% of crude oil processed in Australiaʼs refineries was imported. Australiaʼs domestic oil production is declining. The Australian Petroleum Production and Exploration Association (APPEA) has estimated that Australiaʼs trade balance shortfall because of the decline in domestic oil production could be 25 billion per annum by 2015.7 The rapid expansion of the offshore oil and gas industry is unlikely to reverse the decline in Australiaʼs domestic oil production or contribute to securing Australiaʼs energy future where new projects are locked into long-term export contracts. The economic benefits to Australia from developments like the Montara oil field should be carefully weighed against the potential risk and cost to the marine environment in the Timor Sea and along the Kimberley coast. Australia should be considering a shift away from fossil fuels to the rapid development of ecologically sustainable renewable energy resources.

Development of the Montara Oil Field The Montara oil field is located in the territory of Ashmore and Cartier Islands offshore petroleum area covered by production licences AC/L7 and AC/L8. The Montara development is a multi-field project incorporating four different oil pools - Montara, Swift, Swallow and Skua. The Swift, Swallow and Skua pools are sub-sea developments to be linked by pipelines to the Montara oil pool well head platform, where the oil will be connected via a floating FPSO.

Source: NT Department Regional Development, Primary Industry, Fisheries and Resources.

The Montara oil field was originally developed by Coogee Resources Ltd. Coogee Resources also operated the Challis and Jabiru oil fields just to the north of Montara. In February 2009 Coogee Resources was acquired with all of its assets by Thai Company PTTEP and renamed PTTEP Australasia Ltd. The Montara well head platform was built between January 2007 and June 2008 with a nominal launch weight of 2192 tonnes.8

Source: NT Department Regional Development, Primary Industry, Fisheries and Resources.

West Atlas rig Source: NT Department Regional Development, Primary Industry, Fisheries and Resources.

Oil stain from burst pipe on Puffin front end FPSO. The Platform was installed by Clough Engineering in May 2009.9 When in production the Montara oil field is expected to produce approximately 30,000 barrels of oil per day. The development of the Montara field and the operation of oil fields in the Ashmore Cartier area by Coogee Resources has not been without incident. A leak at the Jabiru-8ST1 well head was repaired between January and March 2008.10 The Challis 3 umibillical had to be replaced due to a leak and was offline for 44 days. The West Atlas jack rig was contracted to drill the Skua-10 production well in ACL8. Drilling problems and mud losses forced the well to be abandoned. A side track well was drilled between 13 April 2008 and 29 April 2008. This was also abandoned due to collapsing and well losses.11 Other spills were reported in 2008. The coupling on the crude oil exporet hose for the Front Puffin FPSO parted resulting in spillage of approximately 800 litres of oil.12 A sump tank at the Meerinee oil and gas field overflowed during a severe rainstorm, releasing more than 4,500 litres.13 In October 2009 the Puffin oil field 50km northwest of Montara reported a leak that had been releasing gas and condensate for more than 9 weeks. Other oil leaks occurred on the front end Puffin FPSO in 2009 (see photos). Aging infrastructure or lack of maintenance increase the risk of accidents. Many spill incidents may go unreported. There have been six major oil spills in Western Australia since 1975.14 Many rig incidents have occurred around the world.15 Each year US drilling operations discharge an average of 3.3 million litres of oil into the ocean.

Aging pipework Puffin front end FPSO (source undisclosed)

In 2005 Hurricanes Katrina and Rita damaged 457 pipelines and destroyed 113 oil platforms in the Gulf of Mexico. The category 5 storm caused 124 spills totalling over 17,700 barrels of petroleum products. 16 The Ashmore Cartier, Bonaparte Basin and Browse Basin petroleum development areas also lie in a region of severe intensity storms. The risk of damage to rig and production platforms is likely to increase as more infrastructure is put in place and the severity of storms increases. On the 15 December 2009 Tropical Cyclone Laurence (category 5) passed approximately 200km southeast of the Montara platform.

The Montara Oil Spill

Image courtesy John Amos / Skytruth December 2009.

The Montara West Atlas oil rig disaster has highlighted the huge risks to the marine environment posed by the rapid expansion of the offshore oil and gas industry in NW Australian waters and the Timor Sea. Oil, gas and condensate from the Montara platform discharged unabated into the Timor Sea for 73 days. Estimates of the amount of oil discharged between August 21 and November 1 2009 vary widely. PTTEP始s estimate of 400 barrels per day 17 were unsubstantiated. Geoscience Australia estimated 2,000 barrels per day.18 The WA Greens estimated 3,000 barrels per day.19 Estimates of total spill volumes range from 4.6 million litres to 23.2 and 34.8 million litres respectively. The EXXON Valdez spill in Prince William Sound, Alaska, in 1989 released an estimated 40.8 million litres.20

Heavy oil and sheen around the Montara platform August 28 2009 Photo: Chris Twomey - office of Senator Rachel Siewert

The Montara oil disaster is regarded as Australia始s worst production related spill.21 On the 28th August I accompanied Senator Rachel Siewert on a flight over the Montara platform, one week after the rig was evacuated. The flight path tracked from the Mitchell Plateau airstrip to Cape Voltaire then on to the West Atlas rig, and in a line 40 nautical miles to the West of the Montara rig. A heavy continuous sheen of oil covered the sea surface around the rig from horizon to horizon (photos 1 & 2). Oil was still evident in tide and wind lines 40nm from the rig (photo 3). Surface residue from the oil slick was sighted within 30km of Cape Voltaire. (map 3). This was similar in appearance to oil residue near the rig that had been sprayed with dispersants (photos 4 & 5). There was some speculation that these observations were an algal bloom, which was impossible to verify without taking surface samples. Senator Siewert was hesitant about reporting the nearshore sightings.

Heavy oil smoothed out the Timor sea around the Montara rig. Photo: Chris Twomey - office of Senator Rachel Siewert.

I was shocked to see the extent of the oil spill and to see that no effort was being made to contain the oil around the rig or to recover the oil. Sea surface conditions around the rig were smooth because of the continuous heavy sheen of oil on the surface. Boom equipment could have been successfully deployed to contain the oil under these conditions. Observations made on the 28th August did not support claims by PTTEP, AMSA , the Federal Minister for Resources22 and the Federal Minister for Transport23 that the spill was being contained by dispersants and that the light oil would evaporate naturally.

Oil sheen in tide lines 40nm west of Montara platform 28 August 2009 Photo Chris Twomey - office of Senator Rachel Siewert.

Image by AMSA - spraying dispersants on oil residue

Oil residue partially dispersed by chemical dispersant - photo AMSA

Oil residue or algal bloom? 30km from Cape Voltaire 28 August 2009 photo Chris Twomey (office of Senator Rachel Siewert)

Satellite images taken by NASA and analyzed by SkyTruth (photos 9 & 10) showed slick and sheen spread across an area of 6475km2 (fig.1). NASA satellite imagery analyzed by SkyTruth between 30 August and 1 November showed the oil slick and sheen cumulatively ranged over more than 62,000km2 of the Timor Sea.24 The slick and sheen was recorded within 64nm of the Timor coast, 32nm of the Kimberley coast and up to 360km away from the Montara platform.

SkyTruth image 20 August 2009 Courtesy John Amos

SkyTruth image 24 September 2009 Courtesy John Amos

A detailed account of the spill can be accessed on SkyTruthʼs website26, in a testimony to the US Senate Committee on energy and natural resources, 19 November 2009 titled “Offhore oil and gas development still poses major risks”, and presented by John F Amos, President of SkyTruth. I hope that the Montara Commission of Inquiry will acknowledge the efforts of John Amos in tracking and analyzing the spill, and in making that information publicly available.

SkyTruth image 21 October 2009 Courtesy John Amos

Preliminary surveys of the spill environment have been conducted by WWF27 and Dr James Watson on behalf of the Australian Government.28 The Indonesian Environmental Agency is conducting independent studies to determine the extent of the impact in Indonesian territorial waters.29 These surveys confirmed the extent of the oil spill and that the oil was having a serious impact on marine and bird life in the Timor Sea. The cumulative impacts of the oil and dispersants on the marine environment will only be determined by long term scientific studies and monitoring in the region. The Australian Government has entered into an agreement with PTTEP Australasia to carry out an environmental monitoring programme over an unspecified period. PTTEP has committed to funding the monitoring programme for a 2 year period. This has been agreed to by the Australian Government in a memorandum of understanding negotiated with PTTEP. This would seem to be totally inadequate when consideration is given to the EXXON Valdez spill in Alaska where serious impacts on the marine environment are still being seen 20 years after the event.30 31 The implementation and co-ordination of the scientific monitoring studies are to be approved by DEWHA. However the individual studies will be managed by and co-ordinated by PTTEP. There may be a serious conflict of interest if a situation arises where legal action is taken against PTTEP for potential losses from the Australian and Indonesian fisherman operating in the Timor Sea. The scientific data collected may be the only evidence that will be relied upon in a court of law. The University of Indonesia tested water samples that confirm high concentrations of oil in water from Indonesian Territorial waters. Indondesian fishermen have reported dead fish and a marked deterioration in fish catches.32 The response of the Australian government to the Montara Oil Spill needs to be questioned. The failure of both PTTEP and AMSA to contain the spill is illustrated by the massive extent of the oil slick and sheen over the Timor Sea. Australiaʼs response to the oil spill has been co-ordinated by the Australian Maritime Safety Authority, which manages the “National Plan to combat pollution of the sea by oil and other noxious and hazardous substances”.33 PTTEP and the Australian government were totally unprepared for the scale of this disaster. No effort was made to contain the oil around the Montara platform. The use of chemical dispersants was not effective in containing the spill and may have had a toxic effect on the marine environment.34 No comprehensive environmental monitoring of the spill was carried out by DEWHA or the Northern Territory government. The NT Governmentʼs resource agency is the designated authority responsible for overseeing the operation of the offshore oil and gas industry in

the Ashmore-Cartier Frntier exploration area. The Western Australian Department of Environment and Conservation had no authority to monitor the spill outside the 3nm limit of state waters.35 Considerable resources from the Australian Institute of Marine Science could have been mobilized to monitor the cumulative impact of the oil and dispersants on the marine environment. No comprehensive studies were conducted to examine the effects on benthic communities or to do a comprehensive analysis on the water column. Australia has an international legal36 and moral obligation to protect the marine environment in the Timor Sea and along the Kimberley coast. Part of that obligation is to obtain baseline data on marine ecosystems in NW Australia and to understand the risks posed by the development of the oil and gas industry in one of the most bio-diverse and sensitive marine environments in the world.

The Environmental Standards and the Cumulative Impact of the Oil and Gas Industry on the Kimberley Coast. The cumulative impacts of all the drilling, extraction and processing of oil and gas along the Kimberley coast has the potential to seriously threaten the marine ecology of the region. The Montara disaster has highlighted the potential risks. Pollution is associated with all activities of oil and gas exploration, extraction and production.37 Typical discharges during oil and gas production include: 1. 2. 3. 4. 5. 6. 7. 8. 9.

Produced formation water, which includes fossil water that is part of the oil and gas mix in the reservoir, and injection water that is pumped into the reservoir to increase pressure and enhance recovery rates. Production chemicals that are introduced with the injected water. These include biocides, corrosion inhibitors and emulsifiers, and contain a range of substances including arsenic and compounds, lead and compounds, zinc and copper and compounds, and mercury. Ballast water from tankers, displacement water deck drainage. Drilling mud and cuttings, produced sands, cement residues, blow out prevention fluids, sanitary and domestic wastes. Gas and oil processing wastes, slop oil. Cooling water for generators, compressor and processing systems, desalination brine. Atmospheric emissions including flared gasses. Oil spills, gas explosion blow-outs, and chemical spills. Introduced marine species in ballast water.

Produced formation waters, including injection waters and solutions of chemicals used to intensify hydrocarbon extraction and separation of oil water mixes are one of the main sources of pollution in areas of offshore oil and gas production. In Australia 100,000m3 of produced formation water is discharged into the ocean every day (Neff 1998). In 2005-2006 approximately 22,000,000kl of formation water was reportedly discharged into northwest Australian waters.38 This does not include produced formation water re-injected into the reservoir. Under existing Australian standards, the oil and gas industry are allowed to discharge up to a concentration of 50mg/litre of oil in water, or an average of 30mg/litre over a 24 hour period.

The Jabiru venture and the Challis venture have been producing oil in the Ashmore Cartier area for the past 22 years. They are now owned and operated by PTTEP Australasia. The combined production of produced formation water for both production platforms has averaged approximately 11 million litres per day for the past 22 years.39 By applying the allowable limits of 30mg/l, the potential oil pollution from both facilities could have been around 375 litres per day. The annual pollution could have been around 135,000 litres of oil discharged into the ocean. This would equate to oil discharges of around 2.9 million litres over the past 22 years (estimate only). The potential cumulative impacts from oil and gas production in NW Australia is enormous.

NT Department Regional Development, Primary Industry, Fisheries and Resources.

The industry is required to report its production of oil, gas, condensate and produced formation water to the designated state authority. The Emissions of National Pollution Substances are reported through the designated authority to the National Pollution Inventory.40 The reporting of oil spills and discharges of NPI substances to air, water and land by the oil and gas industry appear to be self-regulating. The reporting standards and threshold levels may not be adequate to provide reliable data that can be used to carry out regional risk assessment and to give accurate information to compare the performance of different operators in the industry at both regional, national and international level. Australia始s reporting standards are below those of the USA, Canada and United Kingdom.41

Montara rig on fire - photo PTTEP.

Recommendations. 1.! The Australian Government should establish an oil spill liability trust fund similar to that established in the United States.42 The emergency fund would allow for a national rapid response to major oil disasters during normal operations, or in the event of an oil spill caused by natural disasters similar to Hurricanes Katrina and Rita in the Gulf of Mexico in 2005. The fund would allow for a few degrees of separation between the oil and gas industry and the Australian Federal and State Governments. The fund could also provide emergency relief for 3rd parties such as fishermen affected by oil spills. 2.! Review the 150% tax deductability for exploration expenditure in Frontier Acreage Release areas. An increase in the Petroleum Resource Rent Tax receipts could be used to provide funding for independent baseline studies in the Timor Sea and along the Kimberley coast. 3.!

Establish oil spill response centres in Darwin and Broome.

4.!

Review the environmental standards that apply to the offshore oil and gas industry in Australia.

5.!

Review oil spill contingency plants for all operators.

Implement spot checks for all operators.

Review the operating standards for the offshore oil and gas industry.

Review and amend the Offshore Petroleum and Greenhouse Storage Act (2006). Remove confidentiality provisions that inhibit the disclosure of oil spill pollution details and operational plans for operators in the oil and gas industry.

Review public reporting standards to require designated authorities to provide details of all discharges of oil and NPI substances from all operators in their annual reports and on their websites.

10.

Develop a rapid deployment large scale boom system to contain oil in the spill zone and facilitate clean-up operations without the use of dispersants.

References 1.

http://www.environment.gov.au/coasts/mpa/ashmore/index/html!

2.!

Kimberley Whale Watching - 2009 Kimberley Cetacean Report

3.!

http://www.perthnow.com.au/business/exploration-crucial-to-reduce-foreign-reliance-ferguson/story-e6frg2qc-1225719378467

4.!

http://www.mediastatement.wa.gov.au/lists/statements/Dipform.aspx?ID=132549

5.!

Guidance note for applicants/Taxation arrangements - www.industry.gov.au/petexp

6.!

http://ret.gov.au/resources/fuels/ap/pages/default.aspx

7.!

Submission to Senate Rural and Regional Affairs and Transport references committee SG62 7 April 2006.

8.!

http://www.rigzone.com/news/article.asp?a_id=64979

9.!

2008 Annual Report - NT Department Regional Development, Primary Industry, Fisheries and Resources.

NT Department Regional Development, Primary Industry, Fisheries and Resources.

www.amsa.gov.au/marine-envrionment-protection/major_oil_spills_in_Australia/!

http://home.versatel.nl/the_sims/rig/losses.htm

http://www.mm.gov/ooc/press/2006/press0501.htm

http://www.watoday.com.au/wa_news/oil_spill_is_now_one_of_Australias_worst_20091022_hagd.html!

Senate Estimates Wed.21 October 2009 E8

http://www.news.com.au/perthnow/story/0,21498,25996354-2761,00.htm?from=public_rss

http://www.sciencentral.com/video/2009/03/24/exxon_valdez_anniversary/

http://www.bloomberg.com/apps/news?pid=20601130&sid=asc4pluyueue !

http://petroleumnews.net/storyview.asp?storyID=1033767

Environmental news service August 24 2009 (ENS)

http://flickr.com/photos/skytruth/sets/7215762226354812

http:Blog.skytruth.org/search?q=timor

http://www.wwf.org.au/publications/montara-oil-spill-report

http://www.environment.gov.au/coast/publications/pubs/montara-rapid-survey.pdf

Narelle Towie, Sunday Times, 31 October 2009

http://www.time.com/time/lhealth/article/0,8599,1902333.00.html

Long Term Ecosystem response to the Exxon Valdez oil spill, www.sciencemag.org Vol 302 Science 19/12/2003

http://www.radioaustralia.net.au/pacbeat/stories/200912/s2779154.htm

http://www.amsa.gov.au/marine_environment_protection/national_plan/

http://www.abc.net.au/news/stories/2009/08/24/2665191.htm coast/publications/pubs/montara-rapid-survey.pdf

http://www.ga.gov.au/oceans/mc_amb-bndrs.jsp !

! Appendix A. International conventions and agreements on the marine environment - http://www.environment.gov.au/coasts/mbp/publications/north-west/ bioregional-profile.html! 36

â&#x20AC;&#x153;The Environmental Impacts of the Oil and Gas Industryâ&#x20AC;?, Stansilave Patin (webmaster@offshore_environment.com

Questions on notice WA Legislative Council April 2008

Annual Report , NT Department Regional Development, Primary Industry, Fisheries and Resources.

www.npi.gov.au

GS Fraser et al - Marine Pollution Bulletin 56 (2008) 9-13