Insights

In brief - Operator of petroleum lease prosecuted for safety breach

A coal seam gas (CSG) company was recently convicted and fined for a safety breach during underground drilling work which resulted in a fatality. In view of ongoing media scrutiny of the sector, it is more vital than ever for CSG companies to ensure that safety risks are being properly managed.

Attempts to dislodge underground pipe with chain attached to excavator lead to fatality

Recent decisions of the Industrial Court of NSW confirm the application of NSW safety laws to the coal seam gas industry.

In September 2013, in the matter of Nash v Eastern Star Gas Ltd [2013] NSWIRComm 75, the company (now known as Santos NSW Pty Limited) was convicted and fined $120,000 for a breach of the then Occupational Health and Safety Act which arose from an incident at a work site in August 2009.

The work crew undertaking underground pipe work was installing pipes using a horizontal directional drilling machine. During the process, a pipeline became stuck. Attempts were made to retrieve the pipe by using a chain attached to an excavator to drag the pipe free.

A number of attempts were made to retrieve the pipe, however the pipe sheared on a number of occasions. During the subsequent retrieval process, the chain between the excavator and the pipe failed. The pipe, whilst recoiling, came into contact with one of the workers, causing fatal injuries.

Mining regulator investigates incident and prosecutes coal seam gas operator

Eastern Star Gas was the nominated operator of a petroleum assessment lease and a petroleum exploration licence granted pursuant to the NSW Petroleum (Onshore) Act for land near Narrabri, in NSW. These activities are managed by the Department of Trade and Investment of NSW, which also investigated the incident and commenced these prosecution proceedings.

The investigation revealed that gas and water gathering pipelines were required to be installed at the Narrabri site and Austerberry Directional Drilling Services Pty Ltd was engaged by a related company to Eastern Star Gas to install a pipeline of 200mm high density polyethylene pipe for a distance of between 280 and 350 metres under the Bohena Creek.

Austerberry was also prosecuted for a breach of the then OHS Act and received a conviction and fine in the amount of $170,000 from the Industrial Court of NSW in May 2013. (See Nash v Austerberry Directional Drilling Services Pty Ltd [2013] NSWIRComm 37.)

Companies in the CSG industry must comply with safety requirements of the WHS Act

Business activities within the coal seam gas industry are now governed by the safety requirements as set out in the NSW Work Health and Safety Act. The WHS Act has broadened the application of the safety laws, so that the business or undertaking (PCBU) is required to ensure, as far as reasonably practicable, that the health and safety of persons are not put at risk from the work carried out.

Officers of a PCBU are also required to have an effective due diligence system in place to ensure that safety is being properly managed for the business activities of the PCBU.

The recent media attention focused on the coal seam gas industry will undoubtedly lead to a greater focus by the mining regulator upon PCBUs in this industry, to ensure that PCBUs and their officers are meeting their safety and environmental regulatory requirements.

CSG safety management systems should use current technology and follow current codes of practice

In light of the above incident, it is recommended that if you are a PCBU within the coal seam gas industry, you take steps to ensure that your safety management system will implement the appropriate risk management controls to manage the risks in retrieving pipes that become stuck underground.

Further, officers of the PCBU should be asking operational staff to advise if their safety management system is implementing best practice in the conduct of the business. That is, are the business activities utilising current technology, following current NSW codes of practice and assessing new codes of practice being released by Safe Work Australia and other safety regulators around Australia?

Bear in mind also that the WHS obligations apply to all worksites, even when work activities are not occurring. It is incumbent upon the PCBU in undertaking a worksite risk assessment that the risk of other persons entering the site outside work hours (both lawfully and unlawfully) is properly addressed.

It is recommended that PCBUs in the coal seam gas sector obtain legal advice to ensure that they are meeting best practice in this industry.

This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal advice. Please seek your own legal advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.​

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