10/10/2008 - 12:00

Varanus report critical of Apache

10/10/2008 - 12:00

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The rupture of a 12-inch gas sales pipeline has been found to be the immediate physical cause of the explosion at the Varanus Island gas facility operated by Apache Energy Ltd, which may have committed offences, a new report says.

Varanus report critical of Apache

The rupture of a 12-inch gas sales pipeline has been found to be the immediate physical cause of the explosion at the Varanus Island gas facility operated by Apache Energy Ltd, which may have committed offences, a new report says.

Mines and Petroleum Minister Norman Moore today released the full report into the gas explosion which cut the state's gas supply by a third and is projected to cost the state some $3 billion in lost turnover.

The report said the explosion was caused by ineffective anti-corrosion coating across a section of the gas pipeline, ineffective protection of a transition zone of the beach section of the pipeline and ineffective inspection and monitoring of the pipeline by Apache.

In a statement, Apache said that the pipeline was subject to more than 50 inspections by top international consultants and regulators, and no warning was given that the pipeline had a corrosion problem or any other issues that led to the explosion.

The report indicated that Apache, and its co-licensees, may have committed offences under two pipeline Acts.

However the report, as Mr Moore pointed out, focused on the technical issues rather than the regulatory system or its actions, which have been under fire since the explosion took place in early June.

The report was prepared for the Department of Industry and Resources by the National Offshore Petroleum Safety Authority.

Mr Moore said he was disappointed at the report's limited terms of reference and said he has not ruled out ordering an independent investigation into the issue.

"The Labor government chose the regulator (NOPSA on behalf of DoIR) to carry out the investigation," he said.

"The lack of leadership and direction from my predecessor meant that a comprehensive investigation into the causes leading to this disaster - rather than simply how it occurred - did not take place.

He added he would wait until the Senate inquiry into the economic impact of the gas crisis was wrapped up, expected in December, before ordering another review.

Apache said today that the report's conclusions were premature and based on an incomplete investigation.

"It is unfortunate that NOPSA has chosen to produce a 'Final Report,' and even goes so far as to assert that further information is unlikely to change its mind," Apache managing director Tim Wall said.

"Apache only received a copy of the report yesterday. After we have had some time to review it thoroughly, we will provide a more detailed response."

 

Below are both announcements from the Minister and Apache:

 

Minister announcement:

Mines and Petroleum Minister Norman Moore has released the final report into the Varanus Island offshore gas pipeline incident which occurred in June this year.

The report, prepared for the Department of Industry and Resources (DoIR) by the National Offshore Petroleum Safety Authority (NOPSA), reveals that the immediate physical cause of the gas explosion at the island's gas production facility operated by Apache Energy Ltd was the rupture of the 12-inch gas sales pipeline.

Mr Moore expressed disappointment that the investigation's limited terms of reference meant that it had not addressed issues relating to regulatory oversight of the safety regime on the Varanus Island facility.

"Interestingly, the Labor government chose the regulator (NOPSA on behalf of DoIR) to carry out the investigation," he said.

"The lack of leadership and direction from my predecessor meant that a comprehensive investigation into the causes leading to this disaster - rather than simply how it occurred - did not take place.

"The Labor government should have ordered a full and independent investigation into this issue. I have not ruled out ordering such an inquiry at a later date."

The Minister said the report identified the main causes of the Varanus Island explosion as:

- ineffective anti-corrosion coating at the beach crossing section of a 12-inch sales gas pipeline, due to damage and/or dis-bondment from the pipeline;
- ineffective cathodic protection of the wet-dry transition zone of the beach crossing section of a 12-inch sales gas pipeline on Varanus Island; and
- ineffective inspection and monitoring by Apache Energy of the beach crossing and shallow water section of the pipeline.

Mr Moore said the operator was responsible for maintaining a safe working environment under the safety case management system.

"Under the safety case regime, the operator is required to identify hazards and assess risks to health and safety and to implement control measures to reduce those risks," he said.

"The ongoing inspection, monitoring and maintenance of control measures are associated with those risks and the management regime.

"The report has indicated that Apache and its co-licensees may have committed offences under two pipeline Acts."

The Minister said there were a number of issues relating to the investigation still under way, to identify if any enforcement action would be taken.

Reiterating that the investigation had focused on the technical causes of the incident and not the regulatory system or actions of the regulators, Mr Moore said he was considering a further inquiry.

"I think it is important that we cover those aspects," he said.

"However, I would like to see what the Senate inquiry findings are before I commit to any further investigations."

The Senate inquiry is looking into the economic impact of the Western Australian gas crisis and the State Government's response to the incident.

Mr Moore said today that DoIR had already contacted NOPSA and the Department of Consumer and Employment Protection requesting advice about any changes to procedures that could be considered.

He said he publicly released the full detail of the report because the WA public had a right to know the cause of the Varanus Island gas pipeline explosion incident which cut 30 per cent of the State's gas supplies.

 

 

Apache release:

 

Apache Northwest Pty Ltd said today that conclusions in the Western Australia Department of Industry and Resources (DoIR) report on the June 3, 2008, Varanus Island explosion were premature and based on an incomplete investigation.

"Apache disagrees with any conclusions drawn at this time about this unforeseeable event because they are premature and misleading," said Tim Wall, Managing Director of Apache Northwest Pty Ltd.

"Since the explosion, Apache has worked with DoIR and the National Offshore Petroleum Safety Authority (NOPSA) in a cooperative effort to determine the cause of the explosion. The parties agreed on a rigorous protocol for metallurgical tests; all recognized that the tests would take several months to complete and thoroughly analyze.

"It is unfortunate that NOPSA has chosen to produce a 'Final Report,' and even goes so far as to assert that further information is unlikely to change its mind.

"Apache only received a copy of the report yesterday. After we have had some time to review it thoroughly, we will provide a more detailed response."

As stated in a 17 July, 2008 DoIR media statement: "The pipelines and Varanus Island facilities have been the subject of an independent validation report [by Lloyd's Register] which was received in August 2007. NOPSA has also undertaken a number of inspections between 2005 and the present."

On 7 September, 2008 Apache made a substantive submission in response to questions posed by DoIR and NOPSA. Apache's submission is available online at www.apacheenergy.com.au.

Apache is an independent oil and gas producer that has built a significant business in Western Australia. Apache provides energy supplies for the economy while operating in a safe and environmentally responsible manner.

"The explosion was an unforeseeable and unfortunate event, but it is important to remember that no one was injured, the environment was not damaged and - through Apache's efforts - operations have been restored ahead of schedule," Mr Wall said.

Pipeline explosions are rare and it typically takes months to determine the cause. Everything must be examined, from the manufacture and design of the pipe to its installation and numerous environmental factors.

All told, the pipeline was the subject of more than 50 inspections, audits or reviews conducted by top international consultants and regulators - with no warnings that the pipeline had a corrosion problem or other issues that could lead to its failure.

"Apache will work to determine the root cause of this explosion thoroughly and methodically - as we also continue to develop significant new gas resources for the Western Australia economy," Mr Wall said.


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