Mr Chester (Gippsland) (12:50): I welcome the opportunity to make a contribution in relation to the Offshore Petroleum and Greenhouse Gas Storage Amendment (Titles Administration and Other Measures) Bill 2021 and the associated bill. As I join the debate, I note its particular relevance to the people of Gippsland. That is not news to you, Mr Deputy Speaker Andrews; as a Rosedale boy who went to school at St Patrick’s College, I’m sure you’re very familiar with the role that the joint venture partners in the Bass Strait have played in creating the wealth of our nation and supporting the great community of Gippsland. I wouldn’t be surprised if some of your classmates from St Patrick’s College from the seventies ended up working on the Bass Strait fields.
Gippsland is home to Australia’s first offshore oil and gas producing wells in the Bass Strait. More than 50 years later the Gippsland Basin joint venture partners, Esso and BHP, have helped to transform the Australian economy. I can’t think of any way to overestimate the role that those offshore oil and gas producing wells have played in the development of the Sale community but in Gippsland more broadly in terms of jobs, social benefits and the skills development that we’ve seen with young people in the community.
The facts are quite staggering. I don’t know who takes the time to come up with facts quite like this, but, according to ACIL Allen Consulting, between 1967 and 2015 the Gippsland Basin joint venture produced more than half of Australia’s crude oil and hydrocarbon liquids, and, in that same time period: provided enough fuel to fill every car currently on the road in Australia 500 times; provided enough gas energy to power the MCG’s lights for 3.3 million years; improved the real income of Australians by more than $640 billion—which is $780 per year for every person in this country; and contributed an average of 2.5 per cent of all Commonwealth government tax receipts—that’s over $220 billion in 2016 terms—making it one of the largest Commonwealth sources of revenue in history.
I say to the men and women who have been part of that incredible story in the Bass Strait: thank you for the work you’ve done, sometimes in perilous conditions. The joint venture partners take safety as absolutely paramount but there have been occasions where we’ve lost lives onshore, such as during the Longford gas explosion. Week after week we’ve had men and women flying out to those platforms on helicopters, doing their job in sometimes very difficult circumstances and continuing to provide energy for our country. I thank them for the work they’ve done.
Australia’s offshore oil and gas regime is regarded globally as international leading practice. The Commonwealth recognises that, as our offshore industry matures, the regime must adapt to meet the needs of the industry and regulate the development of our resources safely and responsibly. I commend the minister on these bills, which strengthen Australia’s offshore oil and gas regulatory regime to ensure that the emerging decommissioning challenges facing the industry are able to be managed effectively.
As the previous speakers have indicated, and as others will as well, decommissioning is a normal stage in the lifetime of an offshore petroleum project that should be planned from the outset and matured throughout the life of the operations. Decommissioning involves the timely, safe and environmentally responsible removal of, or otherwise satisfactorily dealing with, infrastructure from the offshore area that was previously used to support oil and gas operations. For petroleum wells this is permanently plugging the well to ensure it can be safely left, and for other offshore subsea infrastructure, like wellheads and pipelines, it may mean removal or being able to leave in an environmentally safe way. There have been conversations in Gippsland already about what assets can remain on the sea floor in terms of artificial reefs.
The main bill mitigates the risk of oil and gas companies walking away from their responsibilities to decommission these facilities safely and effectively. It ensures entities demonstrate their suitability and financial and technical capacity to undertake petroleum activities. As the previous speaker indicated—and I agree wholeheartedly—the costs of decommissioning cannot fall to Australian taxpayers.
The bill amends the OPGGS Act to provide for oversight of changes of control of titleholders; expand existing powers to call back previous titleholders to decommission infrastructure and remediate the marine environment in the title area where the current or immediate former titleholder is unable to do so, which is known as a trailing liability; and provide for specific decision-making criteria and expanded information-gathering powers to assess the suitability of entities wishing to enter into or progress through the regime. This came about, in some ways, in response to the failure of the company Northern Oil and Gas Australia, and NOGA were reliant on the offshore regime. As a result, there is heightened interest in the implementation of the decommissioning framework. These amendments aim to ensure that, as projects reach their maturity, titleholders will manage their assets and infrastructure responsibly as they reach the end of life, and it includes how assets may be onsold by the companies and how decommissioning is included in the planning.
I go back to the experience in Bass Strait. The previous speaker referred to the need for responsible corporate citizens. From my experience in dealing with the joint venture partners and, in more recent times, with Esso itself, I have found the company to be acting in a responsible way, and I am pleased to report that the Bass Strait operations are aware of their decommissioning responsibilities. In fact, they have already spent in the order of almost $500 million on this work. Over the last few years there’s been significant progress on the well plug and abandonment work, which puts non-producing platforms in a safer state until the final decommissioning actually occurs. There’s been a detailed and extensive program of works, which has seen the successful plugging and abandonment of the Blackback, Whiting, Seahorse, Tarwhine and Mackerel wells, in a campaign that cost in the order of $300 million. Even this work is not without its perils.
Plugging and abandoning wells involves extensive planning and careful execution by specialist vessels, by people involved in the technology and having the right equipment to get the job done safely. It includes engaging crews who are trained and competent in the operation of semisubmersible, jack-up and platform based rigs and remote operated vehicles. Again, we are talking about a workplace in Bass Strait where it’s a challenging remote environment, subject to weather and rough sea conditions, and all that work is taken in close consultation with regulators and the other relevant stakeholders. There’s also work underway. Esso has mobilised a second platform based rig in Bass Strait, and the two platform based rigs will allow the company to plug and abandon wells at Kingfish B and Fortescue fields as well as remove platform based conductors from the Mackerel platform, in a campaign that will again cost a very sizable amount—$160 million. We will see in the following years Esso continuing to progressively plug and abandon wells as they reach the end of their production life, while they continue to progress the extensive planning and preparation for the final decommissioning program.
From a Gippsland perspective, the legislation before the House is very significant. Energy production is synonymous with the Gippsland and Latrobe Valley region. I would like to take the opportunity today to briefly update the House on another energy initiative in the Gippsland Latrobe Valley region, which is of great significance. The minister at the table would be well aware of the role the Latrobe Valley has played and its rich heritage in energy production. As much as the Latrobe Valley has a rich heritage and proud history of being an energy powerhouse, we are also ambitious as a community for a significant future role in energy production. Still, today, we have the brown coal production of Loy Yang A and Loy Yang B at Yallourn, very significant contributors to the National Energy Market.
We are now seeing a great deal of interest in new energy projects. The Hydrogen Energy Supply Chain pilot project, the HESC project, is underway at Loy Yang power station, turning brown coal into hydrogen. This project has been co-funded by the Australian government, and I thank the minister and acknowledge the minister’s work in that regard, along with the Victorian state government, the Japanese government and the joint venture partners of some Japanese companies involved. The HESC project produces hydrogen from the valley’s abundant resource of brown coal, and it’s the world’s first demonstration of hydrogen supply chain from the fuel source. The pilot will turn the brown coal into hydrogen to continue to diversify our energy sources for use in cars, electricity generation and industry. I was there last week to meet with some of the operators, and they are very optimistic about the work they’re doing and the role it will play in meeting our future needs. We expect to see great opportunities for the Latrobe Valley region and the nation more broadly, creating 400 jobs both in the Latrobe Valley and the port of Hastings, and we believe there’s potential to create more.
In concert with the work that’s occurring with HESC, the federal government has also invested over $95 million in the CarbonNet project, which is involved in carbon capture and storage. Again, these are bold new initiatives, technology-led solutions to the challenges we face as a nation in meeting our future energy needs. When I talk to people in my community, they are very focused on the need for reliable and affordable energy, but also maintaining our role and continuing to contribute to the global challenge of reducing emissions. The CarbonNet project, our commitment to carbon capture and storage, is an initiative that has the potential to allow the future use of some resources that would otherwise not be able to be used if we have a emissions constrained environment going forward. The HESC project and the work with carbon capture and storage are very exciting for the Gippsland and Latrobe Valley region and we see a huge upside for our community.
The final point I’ll make as I wrap up my contribution on this bill is that we are incredibly thankful for the work of the people involved in the oil and gas industry and also those involved in the brown coal industry in the generation of power in Latrobe Valley. As a community we are incredibly grateful for the contribution they have made to the wealth of our nation. Victoria would not be the state it is today and would not have the manufacturing base it has today without the energy production that has occurred within my electorate over more than 50 years. In terms of Latrobe Valley power stations, I am incredibly proud to represent the blue-collar workers in that industry and appreciate their ongoing commitment to keep the lights on at an affordable price for Australian industry and for the mum and dad householders of our nation. Again, I take the opportunity to thank the workers in the energy industry in Latrobe Valley, Bass Strait and onshore at the Longford gas plant. You have helped to power our state for generations. I look forward to continuing to work with you as the industry transforms—and, in the case of the Bass Strait oil field, that the decommissioning occurs in a safe manner—and we look for future opportunities to ensure the Gippsland and Latrobe Valley region maintains its strong economic contribution to the wealth of our nation. I thank the House.