Apache: 'Australia DOIR's Varanus Incident Report Premature, Misleading'

Apache said today that conclusions in the Western Australia Department of Industry and Resources (DoIR) report on the June 3, 2008, Varanus Island explosion were premature and based on an incomplete investigation.

"Apache disagrees with any conclusions drawn at this time about this unforeseeable event because they are premature and misleading," said Tim Wall, Managing Director of Apache Northwest Pty Ltd. "Since the explosion, Apache has worked with DoIR and the National Offshore Petroleum Safety Authority (NOPSA) in a cooperative effort to determine the cause of the explosion. The parties agreed on a rigorous protocol for metallurgical tests; all recognized that the tests would take several months to complete and thoroughly analyze.

"It is unfortunate that NOPSA has chosen to produce a 'Final Report,' and even goes so far as to assert that further information is unlikely to change its mind.

"Apache only received a copy of the report yesterday. After we have had some time to review it thoroughly, we will provide a more detailed response."

As stated in a July 17, 2008 DoIR media statement: "The pipelines and Varanus Island facilities have been the subject of an independent validation report [by Lloyd’s Register] which was received in August 2007. NOPSA has also undertaken a number of inspections between 2005 and the present."

On September 7, 2008 Apache made a substantive submission in response to questions posed by DoIR and NOPSA. Apache's submission is available online at www.apacheenergy.com.au.

"The explosion was an unforeseeable and unfortunate event, but it is important to remember that no one was injured, the environment was not damaged and -- through Apache's efforts -- operations have been restored ahead of schedule," Wall said.

Pipeline explosions are rare and it typically takes months to determine the cause. Everything must be examined, from the manufacture and design of the pipe to its installation and numerous environmental factors.

All told, the pipeline was the subject of more than 50 inspections, audits or reviews conducted by top international consultants and regulators -- with no warnings that the pipeline had a corrosion problem or other issues that could lead to its failure.

"Apache will work to determine the root cause of this explosion thoroughly and methodically as we also continue to develop significant new gas resources for the Western Australia economy," concluded Wall.


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