New Report says Apache Varanus Gas Blast was 'Foreseen'

Investigators examining the catastrophic 2008 Varanus Island gas explosion which crippled Western Australia's (WA) gas supply have contradicted claims by plant operator Apache that the disaster was unforeseen and unforeseeable.
The long-awaited report into the explosion was tabled in State Parliament this morning.
Apache, a subsidiary of American energy giant Apache Corporation, has waged a long legal battle to keep secret the June 2009 report into the explosion. The company took full advantage of Mines Minister Norman Moore's undertaking that he would not release the 470-page report until Apache had responded.  Apache provided him with c.5000 pages of documents which he painstakingly reviewed.
Addressing the legislative council this morning, Mr Moore said it was finally time for the WA public to be fully informed about the disaster. More than $60 million damage was caused to the plant and $3 billion to the WA economy.  A high-pressure 30cm gas pipeline, critically weakened by external corrosion, ruptured and exploded on the beach of Varanus Island, setting off a string of other explosions.
The report, authored by David Agostini and Kym Bills found there was "a range of documentation that should have alerted the operator (Apache) to serious risks involving external corrosion around the shore crossing of the 12 inch(30.5cm) pipe where it ruptured".
A third of WA's energy supply was cut after the explosions. "We believe that the risk of this occurring was not only foreseeable but to some extent foreseen," the report reads. It found hazard mitigation measures were inadequate and did not properly assess risks inherent in the pipeline system on the island, especially in the vicinity of the shore.
The Department of Mines and Petroleum commenced prosecution action against Apache after receiving the report in 2009 for breaching the Petroleum Pipelines Act, alleging it failed to maintain the pipeline in good repair. But the prosecution was dropped because of legal technicalities including that a 700m section of the gas hub was called "pipeworks" instead of a "pipeline" under a 1992 variation document. The tabling of this morning's report is expected to give rise to possible civil action against Apache.
The report labelled Apache's understanding of the protection systems of the 30cm pipeline "confused and confusing". It says "We also examined Apache's safety culture and found that it was probably best seen as in the middle rank within some well-known [five step] hierarchies and was generally not at the level of being proactive or generative".
In a damning comparison, Messrs Agostini and Bills drew links between Apache and the American space program prior to space shuttle disasters. "NASA's adoption of a policy of 'better, faster, cheaper' prior to the space shuttle accidents may have parallels with Apache's focus on cost and 'a sense of urgency' and suggest that Apache needs to better consider human and organisational factors and 'resilience engineering'.
Apache said in a statement it was disappointed Mr Moore had not also released its detailed critique of the Bills-Agostini report and foreshadowed further legal action to ensure it and two other reports were tabled. The statement said the critique referred to material not available to Messrs Bills and Agostini at the time of their report which "cast new light" on it. "Apache is mystified at the Minister's failure to release these additional materials at the same time, in order to put the Bills-Agostini report in proper context," the statement reads. "These additional materials completely vindicate the decision to dismiss the charge against Apache. "A careful review of the evidence leads to the conclusion that Apache had reasonable grounds to believe that the pipeline was in good repair. "Apache is aware that Minister Moore has in his possession two reports and a statement that Apache believes support its view that in all the circumstances Apache acted reasonably. If Minister Moore elects not to table the Apache response and the additional reports, it plans to ask the Magistrates Court to authorise their release."
"It has long been known that the accident was the result of unusual, isolated, highly accelerated external corrosion on a sales gas pipeline carrying clean, dry gas. Apache spent more than $150 million to complete repairs in a safe and environmentally responsible manner with regulatory oversight. Apache's Australian team remains focused on the important task of developing natural gas resources and infrastructure for Western Australia."
Mr Moore told Parliament today that the report had been "a long time coming for myself and the people of WA". "I believe they have a right to know the cause of that incident, the level of effectiveness of the State's regulatory systems at the time and the safety and energy security implications for the State," he said. The investigation was also critical of regulators at the time, highlighting that there was significant confusion between the-then Department of Industry and Resources, the National Offshore Petroleum Safety Authority and the industry with regard to the regulatory boundaries within, and between, the agencies. The Minister said litigation by Apache had lasted two years which had "hindered every effort by the State" and a joint State and Federal Government effort to publicly release the findings of the report. The report also found "the legislative environment was a contributing factor to regulatory ineffectiveness and needs to be simplified as soon as possible".
"We believe it is inappropriate to use a pipeline licence under the Petroleum Pipelines Act 1969 to regulate the Varanus Island particularly given the shortcomings of that legislation with respect to safety case and penalties," it said. Mr Moore said the investigation had revealed Apache's 2007 revision of a safety case for the Varanus Island hub included as a major accident hazard "the possibility of external corrosion causing a pipeline rupture and jetfire escalating to a major accident event with multiple lives lost".
Mr Moore said that since the incident, Apache had maintained that "the Varanus Island explosion was 'neither foreseeable, nor foreseen'". The Minister said the Varanus Island incident highlighted that whilst streamlining regulatory requirements for resources projects, the State Government "must also act to improve regulatory systems, expertise and enforcement" . "This incident has also highlighted for Western Australia that the South West of the State is an integral part of our future gas security," he told Parliament. "It is a fraught perception to think the delivery of the majority of the State's gas supply can maintained reliably with a single pipeline from the North West region." Mr Moore said the Barnett Government had taken significant steps to improve regulatory services and delivering resources safety for WA's resources sector. "The State Government's commitment to continuous improvement of DMP has also initiated a review of the offence and penalty regimes in all petroleum and mining legislature, " he said. "I am committed to take steps necessary to ensure the safety and security of this vital sector."
Apache made WA legal history this month by being the first entity to take a freedom of information request to the Court of Appeal. In a separate matter to the Agostini and Bills report, Apache is fighting the release of documents on the disaster by the Department of Mines and Petroleum to Melbourne law firm Lander and Rogers. Mr Moore also this morning tabled the DMP response to the Agostini and Bills report recommendations, which said significant petroleum reform actions had been undertaken to prevent a similar accident in future.