High and Low Surveillance Classification

Section 74 of the Petroleum and Geothermal Energy Act 2000 (external site - opens in new window) requires a mandatory licence condition which divides regulated activities carried out under a licence into those requiring 'high level supervision' by the regulator and those requiring 'low level supervision'. 

To accommodate the flexibility principle, for varying levels of internal commitment by companies in complying with the regulatory requirements, the Act provides a flexible degree of regulatory intervention. The degree of regulatory intervention is selected on an activity and individual company basis. The level of intervention chosen will be dependent on the degree to which a company demonstrates its competence in achieving compliance through the implementation of effective internal management systems and processes.

Regardless of the level of supervision, the primary regulatory focus is on the achievement of the objectives as documented in the statement of environmental objectives, and only in the case of high supervision activities does the regulatory focus also extend to the practices and procedures adopted by the company to achieve the objectives.

As a result of classifying activities as either low or high supervision, the most cost effective level of regulatory intervention needed to ensure compliance can be selected on a company by company basis. To reflect the lower cost to the regulatory intervention needed to ensure compliance of low supervision activities, the Bill allows for up to 50% reduction on annual licence fees for such activities.

Determination of Level of Supervision

The factors considered by DMITRE in determining whether a licensee is an operator of high or low level official supervision are detailed under Regulation 16 of the Petroleum and Geothermal Energy Regulations 2000 (the Regulations). These factors address a number of capabilities in terms of the licensee's available work practices, procedures, systems and resources for achieving compliance including where possible past demonstrated performance. All licensees are automatically high-level official supervision operators unless specifically classified as a low-level official supervision operator by the Minister. 

Low official supervision status has been given to only a few operators such as Santos Ltd, Origin Energy and Epic Energy which have extensive experience operating in this region and which have demonstrated their capability to continually perform in a manner which achieves the approved Statement of Environmental Objectives (SEO) and other regulatory requirements.

The criteria used are outlined in the Guidelines for Operator Classification (.PDF) 

Key Difference between High and Low Supervision

The key difference between a high and low supervision 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. 

  • For high supervision operators (predominately new entrants with no proven track record) the regulatory scrutiny is higher and focuses in greater detail on the operator's management processes and practices.  In addition to establishing, monitoring and enforcing company performance against the environmental objectives, the regulator will also need to access 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 supervision licensees are required to provide greater notice for activities than low supervision operators and must have work-programs formally approved. 

  • Activities for which a licensee demonstrates a high level compliance culture - ability to comply with regulation - will be classified as low supervision. 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.

Low Supervision Activities

Activities for which a licensee demonstrates a high level compliance culture - ability to comply with regulation - will be classified as low supervision. 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.

High Supervision Activities

Activities where a licensee cannot demonstrate a high level of compliance will be classified as high supervision. For high supervision activities in addition to establishing, monitoring and enforcing company performance against the environmental objectives, the regulator will also need to access and monitor on an activity basis the likelihood of the licensee achieving the regulatory objectives and take the appropriate corrective action if required.

High Supervision Activity Approvals 

All new licensees, until such time that they have demonstrated their capabilities with respect to the operator assessment factors under Regulation 16 remain classified as high-level official supervision operators. As high supervision operators pursuant to Regulation 19 requirements, in addition to the detailed activity information required under Regulation 20, licensees are required in their activity notifications to provide sufficient information to demonstrate their capabilities against the various operator assessment factors under Regulation 16. A series of guidelines have been developed to assist licensees in demonstrating that they are able to meet each operator assessment factor.

Surveillance

Surveillance plans are developed to identify the risks involved in an activity, and therefore determine the level of surveillance required.

The Surveillance Plan Proforma (.PDF) 18KB  lists risks that might be considered for activities undertaken (including seismic survey, well drilling, well production, pipeline construction, pipeline operation, facilities construction, facilities operation).

Operator Assessment Guidelines

Related Links

Petroleum and Geothermal Energy Act 2000 (external site)

Petroleum and Geothermal Energy Regulations 2000 (external site)

Low level surveillance classifications