Changes to safety regulations in the offshore oil and gas construction sector are likely to cause considerable delays to projects, impose levies on the industry and prompt contract renegotiations, according to industry insiders.
Changes to safety regulations in the offshore oil and gas construction sector are likely to cause considerable delays to projects, impose levies on the industry and prompt contract renegotiations, according to industry insiders.
The National Offshore Petroleum Safety Authority (NOPSA), which superseded the Department of Industry and Resources, implemented regulations on January 1 that broaden the previous definition of offshore oil and gas facilities for safety purposes.
Under the new definition, offshore oil and gas operators are required to submit safety cases for pipelay, accommodation and heavy-lift barges.
Safety cases are detailed risk analysis documents that identify hazards, describe how risks are controlled and what safety management policies are in place.
Work is prohibited until such a time as the safety case has been approved by NOPSA, which has up to 90 days to do so.
A senior health, safety and environment manager working for an offshore construction company in Western Australia told WA Business News he was worried about the potential for delays to existing and future projects the regulation may cause.
“These changes make it harder to effectively do a job because you might need three months of planning to submit your safety case and then you’re looking at a total of six months’ delay before the construction activities can commence,” he said.
Embedded in legislation, the authority has the power to recover costs in the form of an annual safety levy, collected quarterly on all submitted safety cases.
The problem for operators, however, is the cost recovery process is unclear and can be highly variable.
The International Marine Contractors Association calculated in October last year that the total annual safety case fee for Australian vessels would be between $102,000 and $490,000 each. A vessel operating for a week is charged the same amount as if it operated for six months, which is the minimum payment period.
“Basically we are facing a lot more work and additional fees, which has to be passed onto operators,” the HSE manager told WA Business News.
Another issue, according to sources, in the risk consultancy field is safety responsibilities of sub-contractors, since the NOPSA definition of an operator is the company that tends to the day-to-day operation at the facility.
“This adds a lot of responsibility to the contractor which a lot of them don’t want,” the source said.
“It also means that [an Australian operator] is faced with a bunch of contract renegotiations.”
A Federal Government spokesperson denied there were any significant changes to regulations affecting offshore operators.
NOPSA also declined to comment, stating the regulations are in place for the safety of all in the offshore petroleum field.
Safety cases have been in place in the offshore oil and gas industry worldwide since the 1988 Piper Alpha disaster off the coast of the UK, which claimed 167 lives.
