Wells Legislative Update

8 September 2011 - PERTH

DRILLSAFE

• Overview of wells regulations

• NOPSA’s approach to administering the regulations

• WOMP guidance

• Level of detail required – WOMP

• Reporting requirements – WOMP

• Developing issues

Legislation administered by NOPSA

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• Schedule 3 to C’th OPGGSA

• Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009

• Part 5 of the OPGGS (Resource Management and Administration) Regulations 2011 [Wells regulations]

Commonwealth Attorney-General’s

website: comlaw.gov.au

Commonwealth Offshore Petroleum and Greenhouse Gas Storage Act

2006

[OPGGSA]

Safety Regulations

Schedule 3 – OHS law

Wells regulations

Amended legislation

November 2010 – Extended NOPSA’s functions to structural integrity of facilities

and wells

– Clarified the titleholder duty (Cl. 13A) to reduce risk from wells to ALARP

April 2011 – NOPSA administers Part 5 of RMAR (Wells regulations)

• Titleholder to control well integrity hazards

• WOMPs and AAUWAs

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Regulatory framework

• Performance-based regime that requires the titleholder to control well integrity hazards or risks where integrity means: ‒ under control in accordance with an accepted WOMP

‒ able to contain reservoir fluids

‒ subject only to risks that have been reduced to a level that is as low as reasonably practicable

• Risks managed in accordance with sound engineering principles, standards, specifications and good oil field practice

5

Key regulatory changes

• The Safety Authority replaced the Designated Authority as the regulator for wells

• NOPSA decides: ‒ WOMP acceptance/rejection

‒ individual well activities approval / rejection

• Integrity definition includes that the well is subject only to risks have been reduced to a level that is as low as reasonably practicable

• Part 5 is a listed OHS law => NOPSA powers apply

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Titleholder requirements

• Accepted WOMP

• Undertake activities in accordance with accepted WOMP

• Approval of applications for specific well activities that change well bore

• Control well integrity hazard or risk

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Guidance

• Consult with industry regarding the ongoing interpretation and practical application of the regulations

• To outline a framework similar to that used for the SC guidance notes to develop a revised WOMP guidance document.

• To consider encapsulating ‘source control’ contingency planning within the WOMP

WOMP Regs. – Safety Case for Wells

• Be appropriate

• Explain philosophy and criteria; company policies and processes that are the basis of the design, construction operation and management of the wells

• Identify risks & controls - demonstrate well integrity risks are reduced to ALARP

• Include performance standards, objectives & associated measurement criteria

• Explain how a well integrity hazard or increase in risk will be managed => contingency planning.

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WOMP Guidance - Core Concepts

• WOMP is a permissioning document – Owned by titleholder;

– Binding commitments by titleholder

– Regulator role is assessment (acceptance/rejection decision) and subsequent compliance monitoring through inspection.

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WOMP Guidance - Core Concepts

• WOMP must: – be appropriate to the wells and well activities

contemplated

– be a stand-alone document that is sufficient to meet the contents & level of detail requirements of the regulations without need to refer to other documents external to the WOMP.

• Only by inclusion of a sufficient level of detail in the WOMP will the Safety Authority be able to make a judgement on the appropriateness of the WOMP in accordance with the regulations

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WOMP Guidance - Core Concepts

• WOMP to provide for: – Identification of hazards and assessment of risks;

– Implementation of measures to eliminate the hazards or otherwise control the risks to ALARP;

– A comprehensive and integrated system for management of the hazards and risks; and

– Monitoring, audit and review

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WOMP - ALARP & standards

• Adopted control measures for any particular identified risk must be shown to collectively eliminate, or reduce that risk to a level that is as low as is reasonably practicable. – by reasoned and supported arguments, that there are no

other practical measures that could reasonably be taken to reduce risks further.

• The ALARP argument will be underpinned by the adoption of appropriate performance standards, sound engineering principles, specifications, good oilfield practice and the implementation of a management system which supports and maintains them.

Reporting

• 5.09 (f) • Currently satisfied by description of internal reporting

and recording system • May evolve to require reporting of listed significant /

abnormal events to Regulator (c.f. Part 4 reg. 4.19) • Daily Drilling Reports

– In a performance-based regime, regulatory monitoring is achieved by verification through periodic planned inspection based on the duty of care and the commitments made in WOMPs + activity applications

– Continuous monitoring of operations and scrutiny of DDRs, logs etc..is the responsibility of the titleholder

NOPSA monitoring methodology

• Well integrity risk control commitments made by the titleholder in its WOMP will be verified by a program of planned inspections at offshore petroleum facilities and onshore regulated business premises

• Inspection of well integrity and OHS regulatory compliance will be integrated through examination of the titleholders OHS duty of care in relation to wells, similar to NOPSA’s existing planned inspection processes

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Managing your WOMP

• WOMP for one or more wells, not linked to a particular MODU

• WOMP for one or more activities – potential for one or more WOMPs for a single well – vary instead

• Variation: limited number of specific circumstances of geology or risk, not ‘change’ generally

• Complete replacement aspect, types & triggers, 5 year requirement – link to variation?

• Termination: conditions specified in 5.17, for 5.17 (5yr) – get in early

• Overview of regulation of wells currently on NOPSA website: http://nopsa.gov.au/

Applications

• WOMP is the primary document in legislation

• Applications for approval to undertake specific well activities are; subordinate; relate to activities that lead to a physical change of a well bore and must include: ‒ Description of specific activity

‒ Proposed timetable for activity

• Application as supporting notification?

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Applications

• Specific well activities –physical change of a well bore: • Activities proposed are encompassed by an accepted valid

WOMP

• Application as notification to trigger possible inspection or review of WOMP?

• Submission needs to be timely – maybe activity dependent

• Definition of intervention activities that physically change wellbore may be required.

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Vision

A safe Australian offshore petroleum industry

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Abnormal situations - Blind operations

• Where those conducting operations are unaware of the actual situations they are in – Tendency to interpret events in context of previous

experience despite evidence to the contrary (mind set)

– Management's failure to ensure that members of the workforce have the ability to identify, diagnose and respond to abnormal events

• One of the final barrier failures in the unfolding of large scale accidents

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Mind-set

• Organise in such a way that you are better able to notice the unexpected in the making and halt its development

• Use the WOMP – Clear performance standards & measurement

criteria

– Clear MOC triggers & risk assessment methodology

Incident response

• Minister has highlighted the importance of capabilities across the spectrum of prevention – intervention – mitigation

• Montara CoI Chapter 5 - Arresting the Blowout: – Implement an incident management framework

Proposed framework

• NOPSA is considering a Source Control Contingency Plan (SCCP) to be developed by the titleholder as part of such a framework

• SCCP to set out plausible scenarios and intervention options and supporting arrangements

• SCCP not submitted to regulator but described in the WOMP, similar to the way an ERP is described, but not necessarily included, in the Safety Case

• Regulatory response could include intervention to ‘implement the SCCP’

Montara CoI - response

• Commonwealth government response to some Montara CoI recommendations: ‘primarily a matter for industry and the Regulator’

• Work with the APPEA Committee or subgroup to identify possible relevant recommendations to consider and work towards plans to address their implementation

Areas for consideration

• Best Practice/Minimum well control standards. [4] • use of ‘hold points’ in the event of a change of circumstances [9] • licensee/operator consultation and ‘joint certification’ [13] • the development of standards to address the assurance of the

integrity of cement barriers [31] • the requirement for training programs and their currency [58] • functional line accountability for well control up to and including

the CEO [63] • consider the development of performance agreements which

place emphasis on process safety culture and the maintenance of well integrity [65]

Thank you

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Incident Type (Red = Major) 2005 2006 2007 2008 2009 2010Jan-Aug

2011 Trend

Accident - Death or Serious Injury 1 1 6 9 2 1 0

Accident - Incapacitation >3 days LTI 5 10 8 15 10 14 8

Could have caused Death or Serious Injury 9 7 25 22 18 14 10

Could have caused LTI 20 29 24 22 15 12 14

Fire or Explosion 3 4 3 7 1 2 3

Collision marine vessel and facility 4 4 0 3 4 2 1

Uncontrolled HC release >1 - 300 kg 0 0 0 0 1 0 0

Well kick >50 barrels 0 0 0 0 0 1 0

Unplanned Event - Implement ERP 5 0 4 6 6 8 0

Damage to Safety-critical Equipment 0 5 5 7 9 7 6

Other kind needing Immediate Investigation 8 9 12 16 9 8 1 TOTAL 55 69 87 107 75 69 43 2005-11

Number of MODU Incidents reported per year

51 MODU incidents and complaints up to 6 Sep 2011:

No. Types of Incidents - 2011 8 Incapacitation >3 days LTI

10 Could have caused Death or Serious Injury

14 Could have caused Incapacitation >3 days LTI

3 Fire or Explosion

1 Collision marine vessel and facility

6 Damage to Safety-Critical Equipment

1 Other kind needing Immediate Investigation

43 TOTAL INCIDENTS

8 COMPLAINTS

Incident Rates

Based on the International Regulators Forum (IRF) severity rating.

Major is considered more serious, followed by Significant as less serious.

0

5

10

15

20

25

30

2005 2006 2007 2008 2009 2010 Jan-Jun 2011

Rate

Incident Rates by severityper 100 Production /Drilling Facilities

Significant IncidentsMajor Incidents

Accidents & Dangerous Occurrences

Accident Rate

Dangerous Occurrence Rate

0

4

8

12

16

20

2005 2006 2007 2008 2009 2010 Jan-Jun 2011

Rat

e (p

er m

illio

n h)

MODU Incident Rates