Enforcement of compliance

The compliance and enforcement priorities of the Energy Regulation Branch within DEM are driven by the objectives of the the Energy Resources Act 2000. The key concept underlying the enforcement of the Act is that the basic responsibility for detecting and rectifying non-compliance lies with the licensee or individual, not the regulator. A range of enforcement tools are available to DEM for various key requirements of the Act, Regulations, licence conditions and Statement of Environmental Objectives, and are outlined in the Energy Resources Act Compliance Policy.

The Compliance Policy is grounded on the principle of an enforcement pyramid, shown in Figure 1. The type of Enforcement action(s) taken by DEM depends on the seriousness and repetitiveness of the offence(s), in accordance with the policy.

Figure 1: DEM compliance and enforcement pyramid under the Energy Resources Act.

The pyramid details a series of steps and measures available to DEM for facilitating, monitoring and, where necessary, enforcing compliance. The Energy Regulation Branch of DEM aims to maintain its regulatory activities at ‘Step 1: Preventative measures’, shown as the base of the pyramid. In cases where industry fails to adequately and appropriately respond to detected noncompliance, ‘Step 2: Persuasive measures’ is instigated. Only in extreme and exceptional cases would DEM utilise Steps 3 and 4, ‘Compulsive’ and ‘Punitive’ measures, respectively, to enforce compliance and achieve acceptable environmental or administrative outcomes. Note, DEM contemplates the concurrent use of compliance measures.

Energy Resources Act annual compliance reports

Annual  Energy Resources Act compliance reports are prepared by DEM for the purpose of:

• outlining the compliance monitoring and surveillance activities carried out by DEM during each year for activities regulated under the Energy Resources Act 2000; and
• providing an overview of the regulatory performance of the petroleum and geothermal industries in accordance with the requirements of the Energy Resources Act 2000.

The most recent Energy Resources Act (formerly Petroleum and Geothermal Energy Act) compliance report is available to download:

Compliance Report 2023 (PDF)

Previously released compliance reports

• Compliance Report 2022 (PDF 4.8 MB)
• Compliance Report 2021 (PDF 5.7 MB)
• Compliance Report 2020 (PDF 5.5 MB)
• Compliance Report 2019 (PDF 2.3 MB)
• Compliance Report 2018 (PDF 2.6 MB)
• Compliance Report 2017 (PDF 3.1 MB)
• Compliance Report 2016 (PDF 5.0 MB)
• Compliance Report 2015 (PDF 3.6 MB)
• Compliance Report 2014 (PDF 4.4 MB)
• Compliance Report 2013 (PDF 3.7 MB)
• Compliance Report 2012 (PDF 2.9 MB)
• Compliance Report 2011 (PDF 2.2 MB)
• Compliance Report 2010 (PDF 2.1 MB)
• Compliance Report 2009 (PDF 2.3 MB)
• Compliance Report 2008 (PDF 753 KB)
• Compliance Report 2007 (PDF 584 KB)
• Compliance Report 2006 (PDF 464 KB)

These annual reports satisfy the requirement to publish information on authorised investigations carried out during the course of a year, as per Section 123 of the Energy Resources Act 2000.

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Incident reporting

Under the Energy Resources Act 2000 and the Energy Resources Regulations 2013, incidents are classified into either Immediately Reportable or Reportable.

As required under section 85(3) specific events or incidents that may occur during a regulated activity must be defined as either immediately reportable or reportable within the relevant statement of environmental objectives. All current and approved SEOs are publicly available on the Environmental Register.

Regulation 32 outlines the requirements for reporting incidents to the Energy Regulation Branch. Reportable incidents are to be reported to the Energy Regulation Branch on a quarterly basis within 1 month after the end of each quarter.

Any immediately reportable incident must be reported to the Energy Regulation Branch immediately and then followed up, within three months, by a detailed report explaining the root cause and corrective actions taken to prevent its recurrence. Furthermore the Act requires licensees to take appropriate action to ensure that any long-term damage is avoided (i.e. breach to relevant Statement of Environmental Objectives), and that adequate corrective action is taken to minimise the likelihood of the recurrence of such an incident.

Guidance documents

In accordance with good governance principles DEM has articulated its expectations for the various requirements under the Energy Resources Act 2000 and Energy Resources Regulations 2013 and to that end provides the following guidance documents:

Incident Reporting Guidance Note - Energy Resources Act 2000 (PDF)

Company annual reports

Under Regulation 33 of the Energy Resources Regulations 2013, and to ensure the transparency and openness principles of the Energy Resources Act 2000 are applied in terms of the performance of the industry, licensees are required to report their level of compliance with the Act and any relevant statement of environmental objectives. The main purpose of this requirement is to ensure licensees assess and review their performance regularly, and through this process proactively take corrective actions where required to rectify any identified deficiencies, and improve their performance on a continuous basis. Company annual reports are available on the annual reports page.

For some objectives, which cannot readily be measured through quantitative assessment, particularly in relation to land and vegetation disturbance such as the restoration of well sites and seismic lines, techniques such as Goal Attainment Scaling have been adopted to provide such measurement. Guidelines outlining this process are under Policies and Guidelines.

Process safety management framework

To aid in the assessment of the compliance of submissions made by licensees under relevant requirements of the Energy Resources Act and regulations, and development of effective surveillance strategies, DEM has adopted the principles of process safety management. The regulatory guideline, process safety management framework for assessing compliance (ERRG 007), explains DEM's process safety management philosophy regarding its assessments, to ensure there is line of sight between threat, event and consequence, together with associated controls in place for prevention and mitigation. The framework provides more detail on expectations of licensee submissions under relevant requirements of the Energy Resources Act and regulations.

Of particular relevance to this process safety management framework and DEM's assessments of compliance are submissions under:

• Regulation 16A (management system elements): the adoption and implementation of an effective management system for identifying and maintaining effective controls for both the prevention of hazardous events and mitigation of the potential consequences of any such events.
• Regulation 30 (fitness-for-purpose assessments): the assessment of the fitness for purpose of the controls in place for both the prevention of hazardous events and mitigation of the potential consequences of any such events.
• Regulation 32 (incident reports): an assessment of the systemic causes resulting in the impairment of the controls in place, which have led to an incident.

Outcomes from these assessments and other sources inform DEM's ongoing surveillance of regulated activities, for compliance with the Act, regulations, and relevant statement of environmental objectives.

Process safety and environmental management system

From 2006 to 2018, DEM encouraged Licensees to complete a Health, Safety and Environmental Management System self-assessment tool in alternate years. This exercise served a dual purpose of confirming and informing regulatory surveillance plans and activities, and assisting Licensees to identify components of their management systems requiring improvements or enhancements to deliver greater overall system effectiveness. Furthermore, these assessments provided consistency and certainty in the process by which Licensees can achieve and maintain low level supervision (surveillance) status in accordance with Section 74 of the Energy Resources Act 2000.

In 2020, DEM completed a review of this tool to shift the focus to Process Safety and Environmental Management Systems, to better align with the objectives of the ER Act and the SEO, and to reflect the change in focus in industry best practice. The 15 Elements that make up this new framework have been based on a selection of industry recognised process safety management frameworks, that were then mapped to the requirements of Regulation 16A management system elements. In particular, DEM have focused on the Energy Institute High level framework for process safety management (EI - Publishing (energyinst.org).

The intent is to provide a clear line of sight to between areas of focus for surveillance activities and the requirements of the Regulations. This assessment framework focuses on 3 tiers as shown below:

• Tier 1: The Regulation 16A requirements;
• Tier 2: Industry recognised process safety and environmental management elements; and
• Tier 3: Company specific systems, policies, procedures and guidelines used to deliver the Tier 1 and 2 requirements

The objective of this framework is to assist Licensees and operators to self-assess the effectiveness and maturity of their management systems in delivering acceptable Process Safety and Environmental (PSE) performance, specifically in the context of the Energy Resources Act 2000 (the Act) and Regulation 16A—Management system—section 73A.

A guidance document is available with more information on the tool, and a proforma is available for use by both DEM and Licensees to complete the self-assessment process, and encourages assessors to accompany their scores with supportive comments where relevant.

Interpretation of the results, such as industry wide trends, strengths and weaknesses, are published by DEM in the Energy Resources Act annual compliance reports. Individual results are not published, nor any licensee specifically identified.

Fitness-for-purpose assessments

In accordance with Section 86A of the Energy Resources Act 2000 and Regulation 30 of the Energy Resources Regulations 2013, a licensee must undertake a fitness-for-purpose assessment of prescribed facilities every 5 years.

The assessments must assess the risks of the facilities on public health and safety; the environment; and the security of supply of natural gas (so far as this may be relevant).

The report must also detail the grounds on which the statement was made, including the physical condition of the facility; the effectiveness of management systems for the operation and management of the facility; and any other factors which may adversely affect or compromise the fitness-for-purpose of the facility, including environmental factors and the adequacy and reliability of utilities.

A report on the assessment must be prepared in accordance with Regulation 30 and submitted to DEM. The fitness-for-purpose assessment reporting guidelines (ERRG 008) outline the manner and form required for the FFP report, provide guidance to licensees on how the requirements of the regulations can be met, and include a fillable checklist that must be completed and submitted with the final FFP report.

Notices of availability for submitted fitness-for-purpose reports that may be provided upon request are listed on the Environmental Register.

Emergency response exercises

A key component of the preventative measures of DEM's compliance and monitoring strategy is to ensure appropriate plans are in place for emergency incidents. Under the Energy Resources Act 2000, measures must in particular focus on the prevention of environmental, public safety and security of gas supply incidents. Regulation 31, of the Energy Resources Regulations 2013, requires that licensees maintain effective response procedures to be followed in the event of such emergencies. It also requires that these procedures be tested for effectiveness by conducting a practice drill at least once every two years, with a report into the findings of the exercise prepared and provided to DEM. Emergency response exercises are summarised each year in the annual compliance reports .

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High and low surveillance classification

Section 74 of the Energy Resources Act 2000 requires a mandatory licence condition which divides regulated activities carried out under a licence into those requiring 'high level surveillance' by the regulator and those requiring 'low level surveillance'.

Flexibility is one of the key regulatory principles of the Energy Resources Act 2000. DEM aims to ensure that the level of intervention needed to ensure compliance is appropriate to the specific company or individual being regulated and the outcomes that need to be achieved.

The degree of regulatory intervention for a specific activity will be dependent on the extent to which a licensee demonstrates its capability to achieve compliance with the Energy Resources Act 2000 and Statement of Environmental Objectives relevant to that activity, through implementation of effective management systems and processes, and past compliance record.

As a result of classifying activities to be conducted by each licensee as either low or high surveillance, the most cost effective level of regulatory scrutiny needed to ensure compliance can be selected. To reflect the lower level of surveillance and hence lower cost needed to ensure compliance of low surveillance activities, the Bill allows for up to 50% reduction on annual licence fees for such activities.

The key difference between a high and low surveillance operator is the extent of regulatory scrutiny given by the regulator in the approval process and the surveillance level of the activities undertaken by the licensees.

High surveillance activities

For high surveillance operators (predominately new entrants with no proven track record) the regulatory scrutiny is higher.  Activities where a licensee cannot demonstrate a high level of compliance will be classified as high surveillance. For high surveillance activities in addition to establishing, monitoring and enforcing company performance against the environmental objectives, the regulator will also need to assess and monitor on an activity basis the likelihood of the licensee achieving the regulatory objectives and take the appropriate corrective action if required. Before being able to undertake activities, high surveillance licensees are required to provide a notice for activities, which is required to be approved by DEM, and must have work-programs formally approved.

Low surveillance activities

Activities for which a licensee demonstrates a high level compliance culture – ability to comply with regulation - will be classified as low surveillance. For these activities the regulatory role will basically involve establishing the environmental objective in consultation with other stake holders; monitoring the achievement of the objectives; facilitating reporting of company performance against those objectives to other stakeholders; and enforcement of company compliance when needed.

More information on the differing requirements of licensees to provide activity notifications can be found in the activity approvals process.

Determination of the level of surveillance

All licensees are initially high-level official surveillance operators for all activities, unless specifically classified as a low-level official surveillance operator for specific activities by the Minister.

To assess whether a licensee is able to be granted low level surveillance classification, DEM will consider a number of factors, including the adequacy of the operators management systems as required under Regulation 16A of the Energy Resources Regulations 2013. The management system must demonstrate the adequacy of the operator's policies, procedures, systems and resources for achieving compliance. Past demonstrated performance and history of compliance are also necessary for classification as low surveillance.

Low level official surveillance status has been given to a few operators which have extensive experience with a particular regulated activity and operations in a given region, and which have demonstrated their capability to continually perform in a manner which achieves the approved Statement of Environmental Objectives and other regulatory requirements.

DEM has prepared guidelines on criteria used to classify level of licensee surveillance required (ERRG 010) to provide guidance to licensees for the preparation of applications for low level official surveillance status and outline the criteria that will be used to assess a licensee’s management system, in line with Section 74 and Sub-regulation 17(1). This guideline is published as required by Sub-regulation 17(2).

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