2nd UPDATE: Australia's Energy Minister Promises Swift Action On Montara Oil Spill Report

18th Jun 2010 08:20

(Adds detail, environmental group, APPEA comment) By Rachel Pannett Of DOW JONES NEWSWIRES CANBERRA (Dow Jones)--Australia's Energy Minister Martin Ferguson on Friday vowed to act swiftly on the findings of an official investigation into the cause and handling of PTT Exploration & Production PCL's (PTTEP.TH) 2009 Montara oil spill in the Timor Sea, off northern Australia. Although the leak was much smaller in scale, Canberra's response will be closely watched for signs governments are looking to impose tougher controls on deep sea drilling to prevent future environmental disasters as the U.S. government grapples with the massive BP PLC (BP) oil spill in the Gulf of Mexico. The energy minister received the report Friday but it won't be made public until the government is certain doing so won't prejudice further investigations into possible criminal offenses, or civil action, Ferguson said. "I will act promptly and appropriately on the report once I have had an opportunity to review its contents," he said. The Montara oil leak, which took more than two months to cap, was one of the worst in Australian history. Still, only around 400 barrels a day of crude escaped into the sea in a remote area between northern Australia and East Timor, according to PTT Exploration estimates, compared with the 35,000-60,000 barrels a day now gushing into the Gulf of Mexico. The Montara blowout happened about 250 kilometers off the Kimberley coast, at a shallower depth than the U.S. leak, which originates from a deep water wellhead around 1,500 meters below the ocean surface. It still took numerous attempts and 75 days to plug, highlighting the potential perils of underwater drilling. But in a sign Canberra could tread more softly in any action against PTT Exploration than U.S. lawmakers have in their inquisition of BP executives in recent days, Australia, unlike the U.S., hasn't suspended deep water drilling as it awaited the results of the Montara inquiry. In fact, Ferguson is offering 31 new drilling leases off the Australian coast in waters as much as two times the depth of the leaking BP well, despite calls from environmental groups for a halt to drilling until the industry can provide greater assurance any future incidents will be dealt with more swiftly than Montara. "We need to be better prepared to respond to future disasters in our precious marine environment," Greens Senator Rachel Siewert said. She is calling for the immediate public release of the Montara inquiry report. Ferguson has previously resisted calls for a moratorium on deep water drilling, saying shutting down the industry would put the country's energy security, jobs, and the economy at risk. Australia as recently as a decade ago was self sufficient in oil. But it now faces an annual import cost for oil and liquid fuels of A$16 billion, which, without major new discoveries, is tipped to grow to A$30 billion by 2015 according to industry estimates. The Montara spill began on Aug. 21 last year. PTT Exploration, the 100% owner of the project, stopped it briefly but then a fire broke out on its wellhead platform, resulting in a renewed escape of oil that wasn't plugged until Nov. 3. The oil company, one of Thailand's biggest companies, is expecting to be fined up to A$2 million (US$1.7 million) by Australian authorities, a drop in the ocean when compared with the US$20 billion BP is setting aside to compensate victims of the Gulf of Mexico spill. PTT Exploration recorded THB10.43 billion (US$321.8 million) in expenses for cleanup and fire damage costs during the second half of last year. "The inquiry was not about attributing blame, it was, and continues to be, about understanding and learning the lessons from Montara," Ferguson said Friday. "Industry has been very supportive of this process and has undertaken its own independent measures to improve safety in the wake of both Montara and the current incident in the Gulf of Mexico," he said. Analysts don't expect Canberra to revoke PTT Exploration's license to develop the oil field, which would result in an estimated THB20 billion in write-offs if it happened. The Montara inquiry focused on the likely cause of the spill, the adequacy of the response, and the effectiveness of the regulatory regime--including any changes that may be required to further strengthen existing arrangements. "I am focused on making our oil and gas exploration and production operations the best and safest in the world," Ferguson said. "This report will play an important role in keeping our workers safe, protecting our environment and safeguarding our energy security," he added. Belinda Robinson, chief executive of industry lobby the Australian Petroleum Production & Exploration Association, called for a program of action for both government and industry to minimize the risk of future oil spills. "Prior to Montara, more than 1,500 offshore wells had safely been drilled in Australian waters since 1984, but clearly, the Montara incident is a black mark on this record," Robinson said. "The safe and sustainable operation of Australia's oil and gas industry is extremely important for Australia's on-going economic and energy security," she said. -By Rachel Pannett, Dow Jones Newswires; 61-2-6208-0901; [email protected] (Oranan Paweewun in Bangkok and Ross Kelly in Sydney contributed to this article) (END) Dow Jones Newswires June 18, 2010 03:20 ET (07:20 GMT)