Joe McHugh (Donegal North East, Fine Gael) | Oireachtas source

Molaim an Bille seo don Teach. Before I introduce this new Bill to the House, I would like to convey my apologies to Senators for the short notice in bringing this Bill before them today. I know this was the subject of debate last week and I hope Senators got an opportunity to brief themselves on the information at their disposal since then. As a former Senator myself, I am aware of the commitment and effort required by Senators to deliver robust legislation. I wish to thank Senators for their forbearance and co-operation in endeavouring to meet the tight transposition deadline required in this instance.

I am pleased to introduce the Petroleum (Exploration and Extraction) Safety Bill 2015 for the consideration of this House. The purpose of this Bill is to transpose directive 2013/30/EU, known as the offshore safety directive, which is focused on safety of offshore oil and gas operations. Transposition of the directive will further strengthen the safety regulation of offshore oil and gas exploration and production in Ireland's offshore area. The offshore safety directive, which was agreed under the Irish Presidency of the EU in June 2013, is the European Union response to minimise the risk of offshore accidents throughout the Union following its review of offshore oil and gas operations in Europe prompted by the Deepwater Horizonincident in the Gulf of Mexico in April 2010. The offshore safety directive seeks to ensure a consistent implementation of best regulatory practices in all European jurisdictions with offshore oil and gas activities and to strengthen the Union’s preparedness and response capacity to deal with an emergency that would potentially affect Union citizens or the environment.

It is an exciting time for the petroleum exploration sector in Ireland. In the past three to four years we have witnessed strong momentum in exploration interest, with the number of exploration licences in place currently at its highest level ever. This increased level of interest has resulted in a significant increase in the level of acquisition of new seismic data in the Irish offshore. In 2013 and 2014, more new seismic data were acquired in the Irish offshore than in the previous ten years. It is a positive indicator that acquisition of new seismic data is continuing at a high level again this year. We now need to see the this effort translate into increased drilling levels, as it is only through exploration drilling that the true potential of Ireland’s offshore area can be proven.

In September of this year, the 2015 Atlantic margin licensing round will close. While the drop in oil prices is having a worldwide impact on investment decisions by exploration companies, feedback remains positive about industry interest in the licensing round. A successful round would be important to maintaining the positive momentum that has been established in recent years. It is also positive that the Corrib gas development is expected to come on stream later this year. Corrib will provide over 40% of peak demand for the island of Ireland in its first year of production.

The Government’s strategy for the exploitation of the State’s natural hydrocarbon resources is premised on industry rather than the State bearing the risk for exploration investment. In this context, it is important that the State provides the right environment to encourage the industry to take the risk associated with investing in exploration. One of the key components to creating a robust and transparent regulatory regime in Ireland is the implementation of the Government’s decision in June 2014 that Ireland’s oil and gas fiscal terms should be revised along the lines recommended by Wood Mackenzie. The key central conclusions of the Wood Mackenzie report were that there is scope for strengthening the current fiscal system in terms of providing for an increase in the overall State take, ensuring an earlier share of revenue for the State, and addressing what Wood Mackenzie consider to be inconsistencies in the current fiscal system.

Other initiatives in this sector include the conclusion of Ireland’s first strategic environmental assessment of the entire Irish offshore exclusive economic zone. This assessment will help to inform applications for both the current and future licensing rounds in Ireland’s Atlantic margin basins. This process will provide exploration companies working offshore Ireland with an environmental operational baseline against which they can conduct their work and ensure the protection of the marine environment.

In this context, I would also briefly like to mention the ObSERVE programme. This programme, which is being undertaken by my Department in partnership with the National Parks and Wildlife Service, is unique to Ireland in its proactive approach to ensuring that the best possible information is available with respect to protected marine species. This will mean that both regulatory authorities and the petroleum industry are well placed to make decisions in an environmentally robust and sustainable manner. It is particularly satisfying that the two international consortia that successfully tendered for this work were led by Irish research institutions and that Ireland’s national research vessel operated by the Marine Institute will play a key role. The ObSERVE programme will see extensive aerial surveys being undertaken by a team of researchers led by University College Cork. In parallel, a research team being led by Galway-Mayo Institute of Technology will deploy special underwater acoustic devices from the RV Celtic Voyagerin Ireland’s offshore canyon systems, to explore their importance for whales and dolphins. I am pleased that this innovative Government initiative has been so positively received by industry.

Returning to regulatory robustness with regard to safety, the offshore safety directive specifically provides for the institutional separation of regulatory functions relating to offshore safety and the environment from those functions that are focused on the economic development of offshore resources, such as licensing and revenue management; a goal-setting approach in major accident prevention based on thorough risk assessment and reliable management systems; clarity on environmental liability in the event of a major accident; and emergency preparedness and response arrangements. The deadline for the transposition of the directive is 19 July 2015. This Bill is a relatively short one as the approach to transposition involves integrating the directive requirements with the safety regulatory system for oil and gas exploration, and production activities in Ireland introduced under the Petroleum (Exploration and Extraction) Safety Act 2010.

The 2010 Act conferred the Commission for Energy Regulation, the CER, with responsibility for the safety regulation of petroleum exploration and extraction activities in Ireland, including a requirement for the CER to establish and implement a petroleum safety framework. The petroleum safety framework is the system that the CER uses to regulate the safety of petroleum activities carried out by petroleum undertakings licensed to carry out petroleum exploration and extraction activities. The framework was designed In line with best international practice with petroleum undertakings required to reduce all safety risks to the internationally accepted level that is as low as is reasonably practicable, ALARP. In conferring this new responsibility on the CER, the 2010 Act gave effect to a key recommendation of the report produced by Advantica following its safety review of the Corrib gas pipeline. At that time, Advantica had recommended that a new risk assessment-based safety framework with respect to gas pipelines, in line with best international practice, should be developed and implemented in Ireland.This approach is now the commonly accepted methodology for managing safety worldwide. The Commission for Energy Regulation has successfully operated the petroleum safety framework since December 2013.

The key requirements of the directive are broadly analogous with the provisions of the 2010 Act. These requirements are the institutional separation of safety regulation from the economic development of oil and gas resources and a goal-setting approach to major accident prevention. A significant element of the transposition of the directive involves the introduction of consistent terminology and language. The main regulatory implications of the directive that are required to be addressed in this Bill are the establishment of a national competent authority, provision for the assessment of potential major environmental hazards offshore within the scope of the safety case regime, clarity on industry liability in the event of a major accident, and specific obligations to be placed on both operators and owners of petroleum infrastructure.

Before turning to the detail of the Bill, I refer to hydraulic fracturing, an issue about which Deputies might be concerned in the context of these proposals To clarify, the directive the Bill seeks to transpose relates only to oil and gas activities offshore. As such, it is concerned solely with the safety regime applying to petroleum exploration and production activities in the offshore area and has no implications whatsoever for unconventional gas exploration and exploitation.

I shall now outline the detail of this quite technical Bill. For the convenience of the House, a detailed explanatory memorandum has been published, which provides a synopsis of the Bill’s provisions. There are 24 sections in the Bill. Part IIA of the Electricity Regulation Act 1999, as amended by the Petroleum (Exploration and Extraction) Safety Act 2010, relates exclusively to the regulation of petroleum activities by the commission. Almost all of the sections of this Bill amend Part IIA of the Electricity Regulation Act 1999, save for section 23, which amends the Petroleum and Other Mineral Development Act 1960, and section 24, which amends the Continental Shelf Act 1968. I will deal first with all the sections amending Part IIA of the Electricity Regulation Act 1999 before dealing with sections 23 and 24.

Section 1 is a standard provision concerning definitions. Section 2 replaces section 13A of Part IIA of the Electricity Regulation Act 1999 with a new interpretation section that is consistent with the terminology and language of the directive. Key new definitions include those for "operator" and "owner". Currently, under Part IIA ,statutory safety responsibilities are placed on petroleum undertakings as licensee only. The directive provides for three related regulated entities, namely, the licensee, operator and owner, each of which has different responsibilities. The definitions of "operator" and "owner" in the Bill enable the obligations under the directive to be placed on the relevant entity and integrated with the existing safety regulatory framework for petroleum safety. These obligations are reflected in various sections throughout the Bill.

Section 3 inserts a new section 13GA, which establishes the CER as the independent competent authority under the directive where it prescribes the functions of the competent authority. The principal objective of the CER as competent authority is the effective safety regulatory oversight of operator and owner compliance in reducing the risk and potential consequences of major accidents offshore to a level that is as low as reasonably practicable.

Section 4 replaces the existing section 13H with a new section 13H which integrates the competent authority functions under section 5 and the directive requirements within the context of the CER's general petroleum safety functions. The matters to be considered by the CER in carrying out its functions are also set out and include minimising the potential for overlap or duplication of effort. Emergency preparedness and response constitute an important element of the directive. In accordance with the Sea Pollution (Amendment) Act 1999, the Minister for Transport, Tourism and Sport is responsible for preparing a national contingency plan which specifies the measures to be taken by the State resulting from discharges of oil from ships, offshore units and oil-handling facilities. Offshore units operating in the State are required to have in place a plan for the prevention and minimisation of damage arising out of an oil pollution incident occurring on an offshore unit or oil-handling unit facility. This plan is called the oil pollution emergency plan. Responsibility for administration of the national contingency plan and assessment of oil pollution emergency plans is a matter for the Irish Coast Guard.

Section 5 further strengthens the existing emergency preparedness and response arrangements through inserting a new section 13HA, which provides the CER with the power to direct industry to conduct emergency exercises and tests and take adequate measures to ensure the continuing safety of designated petroleum activities. Section 6 amends section 13I to align with the terminology and language of the directive. Section 13I requires the CER to establish and implement a risk-based petroleum safety framework through which it will exercise its petroleum safety functions. As set out earlier, the CER has successfully operated the petroleum safety framework established under the 2010 legislation since December 2013.

Section 7, which deals with obligations on petroleum undertakings, operators and owners, inserts three new sections, 13KA, 13KB and 13KC, to reflect the general and specific obligations of each of the three related regulated entities under the directive. These are: the licensee, described in the 2010 Act as the "petroleum undertaking"; the operator, who is appointed by the licensee to carry out oil and gas operations; and the owner, who is the legal entity with operational control of the non-production installation. Key obligations on petroleum undertakings include the appointment of an operator prior to the carrying out of any designated petroleum activity and financial liability for the prevention and remediation of environmental damage caused by offshore petroleum activities carried out pursuant to a petroleum authorisation. Key obligations on operators include ensuring the risk of all major accident hazards in carrying out designated petroleum activities is reduced to a level that is as low as is reasonably practicable. Key obligations on owners include ensuring the risk of all major accident hazards related to the non-production installation carrying out designated petroleum activities is reduced to a level that is as low as is reasonably practicable.

Section 8, concerning safety case guidelines, replaces section 13L with a new section that requires the contents of the safety case guidelines published by the CER to be consistent with the specific information requirements of the directive.

Sections 9 to 11, inclusive, replace the existing sections 13M, 13N and 13O with new sections 13M, 13N and 13O which impose an obligation to submit a safety case. Section 12, which concerns notifications, sets out the regulatory process for the submission, assessment and acceptance or refusal of design notifications and combined-operation notifications by operators to the CER in accordance with the offshore safety directive. Sections 13 and 14, on safety permits and the refusal or revocation of those permits, amend the existing sections 13P and 13Q to reflect the CER's assessment of safety cases submitted by operators and, where relevant, owners, and the capacity of the operator or owner, as appropriate, to carry out a designated petroleum activity.

Sections 15 to 18, inclusive, amend the existing sections 13S, 13T, 13U and 13V and relate to the notification of petroleum incidents to the CER by operators or owners, the further investigation and-or taking of enforcement action by the CER regarding the notified petroleum incident, and the issuance of a report by the CER to the Minister with respect to each petroleum incident that results in the loss of human life, serious personal injury, damage to third-party property or a major accident. This section also makes it an offence for an operator or owner not to comply with its obligation to notify the CER of a petroleum incident.

Section 19, which deals with improvement plans and notice, amends the existing sections 13Y and 13Z to extend the existing power of the CER to issue a direction requiring the submission of an improvement plan or the serving of an improvement notice upon petroleum undertakings to apply to operators and owners. Section 20, concerning access to safety case information, amends the existing section 13AC to put the obligation on the relevant operator to provide a mechanism by which a copy of the accepted safety case can be made available to any member of the public who requests it.

Section 21, which sets out miscellaneous amendments, makes a number of consequential amendments to the Act of 1999 to, among other things, extend the CER's existing enforcement powers to apply to operators and owners in addition to petroleum undertakings and enable the CER to charge operators and owners a safety case fee. Section 22 amends the Petroleum and Other Minerals Development Act 1960 to require an assessment by the Minister for Communications, Energy and Natural Resources of the technical and financial capability of applicants for an offshore petroleum authorisation in line with the offshore safety directive. This section also makes provision for ministerial approval of the appointment of an operator proposed by a petroleum undertaking.

Section 23, an amendment to section 6 of the Continental Shelf Act 1968, modifies the definition of a "designated area" under that Act to align with Article 6(7) of the directive, which requires the establishment of a safety zone in the vicinity of an offshore installation. Section 24 makes the usual provision for Short Title and citation.

This Bill is an important measure in the continued strengthening of the overarching regulatory framework governing offshore exploration for oil and gas and the production thereof in Ireland. The Bill comprehensively transposes the relevant directive in a manner that will enhance the safety of the Irish offshore oil and gas sector, build upon the regulatory model successfully implemented in December 2013 under the 2010 Act and operate at least cost to the industry and the public service.This legislation will contribute to the achievement of the policy objective of a safe offshore petroleum exploration and extraction industry in Ireland.

I hope this outline of the provisions of the Bill has been of assistance. I look forward to listening carefully to the views of the Members of this House on this important legislation and to their assistance in progressing this Bill into law prior to the directive transposition deadline of 19 July 2015. Táim ag súil go mór le ceisteanna agus le moltaí na Seanadóirí.