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Brief Counsel

New health and safety regime for petroleum sector

14 March 2013

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​Significant changes to the health and safety regime for the petroleum and minerals sector will be introduced through amendments to the Crown Minerals Act 1991 and new petroleum regulations.

The Select Committee will report back on the Crown Minerals (Permitting and Crown Land) Bill (CMPC Bill) on 19 March 2013. The Health and Safety in Employment Act (Petroleum Exploration and Extraction) Regulations (HSE (PEE)) come into effect in June 2013.

Although the legislation is still to be finalised, we provide an overview of what these new requirements may mean for operators.  

Applying for a permit

Petroleum activities will be Tier One under the new permit regime, making them subject to an initial higher level of health and safety assessment. 

Under the CMPC Bill and related Petroleum Programme, before granting a permit, the Minister must be satisfied that the applicant is likely to have the capability and systems necessary to meet New Zealand health and safety requirements.  In doing so, the Minister must seek the views of the Health and Safety Regulator.

Permit operators will be considered likely to meet the required health and safety standards if they:

  • are currently undertaking similar activities in New Zealand or in comparable jurisdictions, or
  • can demonstrate that they will have appropriate safety systems, processes and capabilities in place with appropriately qualified and experienced personnel.

In addition, the exercise of a permit will be conditional on clearance from the Health and Safety Regulator.  This will be given if the Regulator is satisfied that any health and safety requirement that must be met before an activity can be commenced, has been met.

Understanding New Zealand health and safety requirements

New Zealand’s cornerstone health and safety legislation is the Health and Safety in Employment Act 1992 (HSE Act).  For petroleum exploration, the HSE Act will be supplemented by the HSE(PEE) regulations. 

A core principle of the HSE Act is that the employer is responsible for identifying and assessing hazards and for taking “all practicable steps” to manage them, including:

  • ensuring plant and equipment is arranged, designed, made, and maintained so that it is safe for employees to use
  • ensuring employees are not exposed to hazards in their place of work or near their place of work under the employer’s control
  • developing procedures for dealing with emergencies that may arise while employees are at work, and
  • ensuring that no action or inaction of any employee while at work harms any other person.

Employers must also maintain a register of accidents and serious harm sustained at work. Broadly, serious harm refers to an injury or illness arising from a work related activity that causes severe permanent or temporary loss of bodily function.

The Ministry of Business, Innovation and Employment (MBIE) must be notified in writing of all serious harm accidents within seven days of the employer becoming aware of them. 

Special requirements in the oil and gas sector

The CMPC Bill introduces a new requirement that a permit holder has a designated permit operator who is responsible for the day-to-day management of activities under the permit. 

From June 2013, the HSE(PEE) regulations will require operators of petroleum installations (both onshore and offshore) to:

  • consult with the workforce in the preparation of a “safety case” which must be accepted by MBIE before operations commence.  Safety cases must provide measures to control all potential hazards and must demonstrate that the risk to workers has been minimised as much as is reasonably practicable
  • establish goals that will apply over the whole life cycle of the well, specifying how it will be designed, modified, commissioned, equipped, operated, maintained, suspended and abandoned
  • arrange independent and competent persons to examine the wells to verify that they comply with the goals, and
  • report as soon as practicable “near miss” incidents that could have led to a major accident.

Permit operators of smaller scale, lower risk onshore installations will be required to prepare an overview of their health and safety measures rather than submitting a full safety case.

MBIE will charge between $70,000 and $100,000 to assess safety cases.  It can accept, reject or impose conditions on a safety case and can also require operators to make subsequent revisions to safety cases or withdraw acceptance if there is a failure to comply.  

Compliance

Having robust health and safety policies and systems in place will make the application process easier and will establish a good safety culture that will help to ensure ongoing compliance.

On the horizon is the report (due on 30 April 2013) of the Government-commissioned Independent Health and Safety Taskforce.  The Taskforce is considering making it a statutory duty for directors and officers to ensure that their business is health and safety compliant, and increasing the sanctions for non-compliance to include manslaughter.

Also an Expert Reference Group made up of national and international mining, regulatory and emergency management experts has been set up to advise MBIE on how to develop an effective regulatory framework for all mining in New Zealand.  The Group will consider, and consult on, the proposals from the Pike River Royal Commission, many of which will be relevant to petroleum operators.

We will be reviewing the final form of all the proposed changes and we encourage you to look out for our updates in the coming months.

Our thanks to Olivia Stewart for writing this Brief Counsel. For more information please contact the lawyers featured.

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