23 May, 2013

oil and gas Safety and Health Fee

I note a trend in State Governments where administrative costs are extracted from the industry sectors they oversee.

I am interested in your views on the changes in the oil and gas industry with the new fee structure.  What are the implications for your industry?

Will the proposed changes make environmental compliance simpler? Will fees provide a stable funding base to deliver critical safety and health functions?

The Petroleum and Gas Safety and Health Fee was introduced on 1 July 2010.

The fee system was designed to cover the cost of the State Government’s activities carried out for the purpose of safety and health for petroleum and gas operations in Qld.

There was a revision of the way the Petroleum and Gas Inspectorate was funded.

Since then, there has been a restructure the State Government departments.  Depending on where one is operating and what one is doing, Petroleum and Gas operators will also be subject to laws for:
·        environmental protection,
·        land protection,
·        native title,
·        strategic cropping land.

A discussion paper was circulated to stakeholders in early 2012 to allow industry to provide comment on whether there were any unintended overlaps in the fees, whether the fee system covered all industry sectors effectively and whether the fees could be more efficiently applied or administered. As a result of that consultation it is proposed to further amend the fee system.
The unprecedented growth in the size and complexity of Qld's onshore petroleum industry required the regulator to extend its regulatory operation to keep pace.

Now, Industry is encouraged to provide comment on a discussion paper, ‘Petroleum and Gas Safety and Health Fee - Post Implementation Review and Regulatory Impact Statement.

The consultation process is being used to assess the impacts of recommended amendments to regulations for the Petroleum and Gas Safety and Health Fee.  The adjustments to the Petroleum and Gas Safety and Health Fee were designed to better reflect the range and level of compliance checks required for various industry activities.

The Department of Natural Resources and Mines inspectorate carries out audits, inspections and investigations of petroleum exploration and production, pipelines, automotive LPG, gas users, and licensing for the installation and servicing of domestic, commercial and industrial gas devices. The following permits are governed by the Petroleum and Gas (Production and Safety) Act 2004 and Petroleum and Gas (Production and Safety) Regulation 2004:
·        authority to prospect,
·     petroleum lease (this lease is also governed by the Petroleum Act 1923 and Petroleum Regulation 2004),
·        petroleum potential commercial area,
·        petroleum survey licence,
·        petroleum pipeline licence,
·        petroleum facility licence,
·        data acquisition authority,
·        water monitoring authority.

So why has such new fees been introduced?  In brief: to cover revenue and allocation shortfalls.  The downside in this approach is if that industry sector shrinks, will the scale of the administration also shrink too?

The Petroleum and Gas Safety and Health Fee is expected to raise about $7.1 million next financial year.
The Qld Government’s proposed fee restructure aims to recover costs in proportion to the supervision & intervention required by the inspectorate in areas such as exploration, production and distribution. 

The fee restructure also aims to assist the industry to cover the full cost of running the specialist inspectorate as the Qld Government attempts to reduce the industry’s compliance costs.

The fee goes towards the employment of additional inspectors, continuous staff training and administration of the compliance services.

Inspectors conducted almost 3,500 audits and inspections last financial year.  Petroleum and gas inspectors investigated almost 530 accidents and incidents in 2011-12, involving more than 50 injuries but no fatalities.

Proposed measures include annual returns instead of quarterly reports and a better explanation of the 15 fee categories used to determine companies’ fees.

These changes are based on feedback to the Qld Government through consultation with industry operators.

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