FEDERAL COURT OF AUSTRALIA

Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd (No 7) [2021] FCA 237

ORDERS

THE COURT ORDERS THAT:

1.    The proceeding be listed for the purpose of receiving further submissions on Common Questions 3 and 4 referred to in the reasons for judgment published today, and on the question of interest up to judgment in relation to the damages to be awarded to the applicant, if that question is in dispute.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

YATES J:

Introduction

1    This proceeding is a representative proceeding brought under Pt IVA of the Federal Court of Australia Act 1976 (Cth). It concerns alleged damage to seaweed farming activities in Indonesia. This damage is said to have occurred from an oil spill at the Montara oil field operated by the respondent, PTTEP Australasia (Ashmore Cartier) Pty Ltd.

2    In early 2009, the respondent set about suspending an oil well, referred to as the H1 Well, in the oil field. There were certain failures in this process which led, in August 2009, to a well blowout and the uncontrolled spill of hydrocarbons from the well, which remained unabated for more than 10 weeks.

3    The applicant’s case is that the respondent owed him and the Group Members a duty of care in respect of the suspension and operation of the H1 Well, and that it breached that duty. He says that oil from the blowout reached certain areas in Indonesia, including the southern coastal area of Rote, an island where he lives and carries on his occupation as a seaweed farmer. He alleges that the oil killed, and caused a drop in the production of, his seaweed crop and the seaweed crops of the Group Members.

4    The cause of action on which the applicant relies is common law negligence. He claims damages. He commenced this proceeding after the expiration of the applicable limitation period. On 15 November 2017, the Court made an order pursuant to s 44 of the Limitation Act (NT) 1981 extending the limitation period in respect of his claim: Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd (No 3) [2017] FCA 1272. At the present time, the limitation period has not been extended in respect of any Group Member.

5    The respondent denies liability. It accepts that it was negligent in suspending and operating the H1Well, but it contends that it did not owe the alleged duty of care to the applicant or the Group Members. Further, it contends that even if a duty of care was owed and breached, the evidence before the Court does not establish that any oil spilled from the H1 Well reached the areas in Indonesia, which the applicant specified in Schedule 1 to the further amended statement of claim as areas that were reached by the oil. It also contends that, even if any of the spilled oil reached any of those areas, it would not have been in a concentration or form that would have been toxic to the seaweed crops in place at that time. Finally, it contends that the applicant’s claim of loss is not supported.

6    The applicant originally pleaded and advanced a case that dispersants applied to the oil at the time of the spill also reached Indonesian waters and killed, and caused a loss in the production of, the seaweed crops. In the course of oral closing submissions, the applicant made clear that he no longer advances that case.

7    For the reasons that follow, I am satisfied that the respondent owed a duty of care to the applicant and the Group Members, and that it breached that duty. I am satisfied that oil spilled from the H1 Well blowout reached certain areas of Indonesia (which areas are in a region conveniently described as the Rote/Kupang region), including the area where the applicant grows his seaweed crop. I am satisfied that this oil caused or materially contributed to the death and loss of his crop. I am satisfied that, although difficult to assess, and although attended with uncertainty, the applicant’s loss can be calculated, and that he is entitled to an award of damages.

How the Montara oil spill occurred

8    The Montara oil field is located within the offshore area of the Territory of Ashmore and Cartier Islands, approximately 250 km northwest of the Western Australian coast and approximately 700 km from Darwin, within Australian territorial waters in the Timor Sea. It is about 100 km from Cartier Island and 150 km from the Ashmore Reef, within an area characterised by significant oil and gas reserves known as the Bonaparte Basin.

9    In September 2003, the respondent (which at the time was known by the name Coogee Resources (Ashmore Cartier) Pty Ltd) acquired the retention lease for the Montara oil field. Between September 2003 and August 2009, it developed the field for oil production. As part of this process, it engaged Atlas Drilling (S) Pte Ltd (Atlas) in early 2009 to drill four production wells (referred to in these reasons as the H1 Well, the H2 Well, the H3 Well and the H4 Well), as well as a gas injection well. The H1 Well is the oil well with which this proceeding is concerned.

10    The procedure for drilling the H1 Well was as follows. A drilling rig (here, the West Atlas rig operated by Atlas) was moved to the position at which the well was to be constructed. A drill from the rig was used to bore a hole into the sea bed, to access the hydrocarbon reservoir from which oil was to be produced. A steel pipe casing (being lengths of steel pipe joined together, usually by screws, and often referred to as the casing string) of a slightly smaller diameter than the resulting hole was inserted into the hole. In the H1 Well, the first casing string was 13 3/8” in diameter (the 13 3/8” casing string). Cement was pumped into the lowermost joints of the 13 3/8” casing string to form a casing shoe. The cement occupied the joints, and the bottom part of the area between the hole that had been bored and the casing string (the annulus). A narrower hole was drilled through the cement in the casing shoe and further into the sea bed, and a second casing string was inserted into the hole to create a new casing string of narrower diameter. In the H1 Well, this second casing string was 9 5/8” in diameter (the 9 5/8” casing string).

11    As at 18 January 2009, the respondent intended to suspend the H1 Well. The suspension of an oil well involves a process of capping (that is, effectively “plugging”) the well to prevent the release of hydrocarbons, pending later completion of the work required for actual production of oil through the well. The respondent intended to suspend the well by using cement in the 9 5/8” casing shoe as the primary control barrier, and a shallow set cement plug from 160 m to 115 m as the secondary control barrier.

12    However, at some point between January and March 2009, the respondent determined to use a pressure-containing anti-corrosion cap (PCCC) on each of the casing strings as the secondary control barrier rather than the concrete plug. This decision was made notwithstanding the fact that the manufacturer of the PCCCs, which the respondent proposed to use, did not intend that PCCCs be used as a barrier against the uncontrolled release of hydrocarbons and did not design the PCCCs for that purpose; there was no practicably available test that could verify the internal pressure-containing capability of a PCCC; and, unlike other forms of secondary barriers (including concrete plugs), PCCCs were required to be removed prior to a casing string being tied back to a wellhead platform. “Tying back” a casing string involves adding more casing string to extend the well back up to the mezzanine deck on the wellhead platform. The fact that the PCCCs were required to be removed meant that no secondary barriers would be in place during the tying back process.

13    On 6 March 2009, the respondent applied to the Director of Energy, Department of Regional Development, Primary Industry, Fisheries and Resources of the Northern Territory (Director of Energy), who holds the responsibilities of the Designated Authority under the Offshore Petroleum Act 2006 (Cth) and the Petroleum (Submerged Lands) (Management of Well Operations) Regulations 2004 (Cth) in respect of the area within which the Montara oil field is located, for approval to suspend the H1 Well, on the basis that the planned suspension would occur in two stages. The first was to involve the cementing and pressure testing of the 9 5/8” casing string, followed by the installation of a PCCC on that casing string. The second was to involve the installation of a second PCCC on the 13 3/8” casing string. The Director of Energy gave the respondent preliminary approval for suspension of the H1 Well in response to this suspension application.

14    On 12 March 2009, the respondent made a further application to the Director of Energy for approval to suspend the H1 Well. Also on that day, the respondent issued a formal change control order to Atlas, which specified that the shallow set cement plug which had been proposed to be used as a well control barrier in the process of suspending the H1 Well was to be replaced by PCCCs on each of the casing strings.

15    On 13 March 2009, the Director of Energy granted the respondent approval to suspend the H1 Well consistently with the applications it had lodged on 6 and 12 March 2009.

16    Between 2 and 7 March 2009, the H1 Well was drilled to a depth of approximately 3,796 m, with a total vertical depth of approximately 2,654 m.

17    At this time, the foot of the 9 5/8” casing string was in the reservoir for the well, at a point that was 3 m above the point where oil and water came into contact. The 9 5/8” casing string shoe was in a horizontal position. The effect of this arrangement was that the casing string provided a potential pathway for hydrocarbons to enter the H1 Well.

18    On 7 March 2009, the respondent installed a float collar. This comprised two float valves, which were to act as one way valves to allow cement to be pumped beneath the float collar without the cement returning up the casing string, to create the cement shoe that was intended to be the primary barrier controlling the release of hydrocarbons from the H1 Well. The float collar made provision for two plugs (a bottom plug and top plug) which were intended to lock, following the pumping of cement into the 9 5/8” casing string shoe, to create a seal within that casing string. The respondent then pumped cement into the 9 5/8” casing string shoe. The cement travelled through the end of the 9 5/8” casing string and up into the annulus of that casing string. Some of the cement remained in the casing string to fill the space between the float valves. This cement formed the cement shoe. Following the pumping of the cement, approximately 9.25 barrels (bbl) of displacement fluid (consisting of inhibited seawater) were pumped into the 9 5/8” casing string for the purpose of pressure testing. The pressure in the casing string was held at 4,000 psi for approximately 10 minutes.

19    It is convenient at this point to note that when a casing string shoe is cemented, two forms of cement are usually used in concert: lead cement, which is pumped into the casing string first, followed by tail cement, which has a higher density and thickening time than the lead cement.

20    In the case of the H1 Well, the respondent’s Well Construction Standards provided that, in cementing the 9 5/8” casing string shoe, tail cement be placed within the annulus outside the casing string to a height of 100 m above the top of the hydrocarbon reservoir. However, in this case the respondent determined to place tail cement within the annulus to a height of only 69 m above the top of the hydrocarbon reservoir. To achieve this, the required volume of tail cement was 199 bbl. In addition, when cementing the shoe, the respondent incorrectly pumped only 132 bbl of tail cement, causing the cement to reach a height of only 61 m below the top of the hydrocarbon reservoir. As a result of this failure, hydrocarbons in the reservoir for the H1 Well were permitted to leach into the annulus outside the 9 5/8” casing string and compromised the integrity of the cement shoe.

21    At around 2.40 pm on 7 March 2009, the pressure in the 9 5/8” casing string was released and 16.5 bbl of fluid were returned up the casing string, comprising the 9.25 bbl of displacement fluid which had been pumped into the casing string and approximately 7.25 bbl of fluid consisting of a combination of cement and leached hydrocarbons. This return of fluid indicated that both the float valves in the 9 5/8” casing string shoe and the plugs in that shoe had failed.

22    At around 2.45 pm on 7 March 2009, the 16.5 bbl of fluid which had been returned from the 9 5/8” casing string were pumped back into that casing string. The casing string was then closed while the cement set. The effect of pumping the returned fluid back into the 9 5/8” casing string was that approximately 9.25 bbl of inhibited seawater and approximately 7.25 bbl of cement and leached hydrocarbons were forced beneath the float collar within the 9 5/8” casing string, thereby displacing cement from the 9 5/8” casing string shoe. This caused a situation known as “wet shoe”, meaning that the areas within the casing string shoe that should have consisted of cement were partly cement and partly other material, including inhibited seawater and leached hydrocarbons. The displaced cement was forced into the annulus of the 9 5/8” casing string. The top and bottom plugs in the 9 5/8” casing string shoe did not lock. The cement shoe was then subjected to pressure at 1,350 psi while the cement set.

23    Later on 7 March 2009, the respondent was provided with a report that set out the events that had occurred during the course of the attempt to install the cement shoe. Further reports detailing the process of the cement shoe installation were prepared by the Day Drilling Supervisor and provided to the respondent. No further testing or assessment of the cement shoe was undertaken by the respondent or any other person on its behalf.

24    It is clear that the respondent was informed of the process by which the cement shoe had been installed on 7 March 2009. The respondent knew, or ought to have known, that the cement shoe lacked integrity and could not be relied upon to control the release of hydrocarbons from the H1 Well. Despite this, from the period March 2009 to August 2009, the respondent relied on the cement shoe as an effective primary control barrier against the release of hydrocarbons from the H1 Well.

25    In addition to the cement shoe, the respondent’s application to suspend the H1 Well was approved, as I have said, on the basis that it put in place a secondary control barrier, being the installation of one PCCC on the 9 5/8” casing string and one PCCC on the 13 3/8” casing string.

26    Sometime in March 2009, presumably after 12 March 2009, the respondent determined not to install a PCCC on the 13 3/8” casing string. Following the installation of the cement shoe on the H1 Well as described above, the respondent removed the upper section of the 9 5/8” casing string and installed a PCCC on that casing string. That PCCC was not tested or verified in situ. The respondent also removed the upper section of the 13 3/8” casing string, but did not install a PCCC on the remaining casing string. Nevertheless, during the period March 2009 until August 2009, the respondent relied on the PCCC installed on the 9 5/8” casing string as an effective secondary control barrier against the release of hydrocarbons from the H1 Well.

27    The “overbalancing” of fluid in a casing string, in which the hydrostatic pressure of the fluid in the casing string is greater than the pressure of the hydrocarbon reservoir (with an appropriate safety margin), may be used as a control barrier against the uncontrolled release of hydrocarbons.

28    During the period from March to August 2009, the fluid used in the 9 5/8” casing string consisted of seawater, the normal pressure of which is 1.02 – 1.03 sg. The pore pressure within the hydrocarbon reservoir for the H1 Well was 1.04 sg. As a result, the H1 Well was not overbalanced and was not capable of providing a pressure-based barrier to the release of hydrocarbons from the reservoir. Further, neither the respondent nor any person on its behalf had tested or monitored the pressure of the fluid inside the 9 5/8” casing string, and the fluid inside the casing string had not been verified as being in overbalance. Nevertheless, the respondent mistakenly relied on the fluid inside the 9 5/8” casing string as an effective barrier against the release of hydrocarbons from the reservoir.

29    In sum, in suspending the H1 Well in March 2009, the respondent relied upon three control barriers to prevent the uncontrolled release of hydrocarbons from the reservoir under the well: the cement shoe; the PCCCs; and the fluid inside the 9 5/8” casing string. None of these control barriers had been tested. Each of them was deficient. One had not even been installed (the PCCC which was to have been installed on the 13 3/8” casing string).

30    On 21 April 2009, the West Atlas rig left the Montara oil field.

31    Around 7 July 2009, the respondent applied to the Director of Energy for approval of its drilling program in respect of the Montara oil field. Among other things, the application included a diagram which indicated that PCCCs had been installed on both the 9 5/8” casing string and the 13 3/8” casing string. The application was approved on 13 July 2009.

32    On 19 August 2009, the West Atlas rig returned to the Montara oil field to allow the respondent to tie back the casing strings for each of the five wells (the H1 Well, the H2 Well, the H3 Well, the H4 Well and the gas injection well), so as to complete the wells to the point of production.

33    At around 4.30 am on 20 August 2009, the West Atlas rig moved over the H1 Well. Upon examination by the respondent, it was discovered that the PCCC for the 13 3/8” casing string had not been installed, and as a result the inner threads of the uppermost portion of that casing string had rusted or corroded. In order to tie the corroded casing string back to the Montara wellhead platform, it was necessary for the threads on that casing string to be cleaned, which necessitated the removal of the PCCC on the 9 5/8” casing string. The removal took place at around 11.30 am on 20 August 2009. It was determined by the respondent that the PCCC should not be reinstalled. The PCCC was correspondingly not immediately re-installed, as it should have been. At this point, the only remaining control barrier against the release of hydrocarbons from the H1 Well reservoir was the cement shoe.

34    At around 5.00 pm on 20 August 2009, the West Atlas rig left the H1 Well.

35    At approximately 5.30 am on 21 August 2009, the cement shoe at the H1 Well failed and there was a release of hydrocarbons from the H1 Well, the volume of which the respondent estimated to be between 40 and 60 bbl. At around 7.23 am on 21 August 2009 there was a further, larger release of hydrocarbons from the H1 Well.

36    In response to the two releases of hydrocarbons from the H1 Well (together, the Montara oil spill), the respondent and Atlas evacuated 69 personnel from the West Atlas rig and the Montara wellhead platform.

37    The uncontrolled release of hydrocarbons from the H1 Well flowed for a period in excess of 10 weeks from August 2009 until around 3 November 2009. The volume of oil released into the environment from the wellhead is a contested question about which a large body of evidence was adduced. I will return to the question of volume later in these reasons.

The OSCP

38    The development of the Montara oil field required approval under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (the EPBC Act). This approval was given on 3 September 2003. It was a condition of the approval that the respondent submit an oil spill contingency plan detailing the strategy that the respondent had in place to mitigate the environmental effects of any hydrocarbon spills.

39    On 5 June 2009, the Assistant Secretary of the Environmental Assessment Branch of the Department of the Environment and Water Resources approved an oil spill contingency plan submitted by the respondent on 19 May 2009 (the OSCP). The OSCP was a revision (Version 5, dated 1 April 2009) of earlier plans that the respondent had prepared.

40    At the time, the Australian regulatory framework did not prescribe the contents of oil spill contingency plans. The Petroleum (Submerged Lands) (Management of the Environment) Regulations 1999 (Cth) simply required the maintenance of an up-to-date emergency response manual that included an oil spill contingency plan: reg 14(8).

41    The respondent adduced evidence through Dr Elliott Taylor, an expert in (amongst other things) oil spill contingency planning and response, that the OSCP was, as at August 2009, reasonable, functional and comprehensive, and both met and exceeded planning requirements specified in Australia at the time. Dr Taylor also said that the OSCP was aligned with generally accepted oil field practices, with best international practices for offshore oil spill contingency plans in place at the time, and with Australia’s National Plan to Combat Pollution of the Sea by Oil and Other Noxious Substances (the National Plan). The National Plan has operated since 1973 and is managed by the Australian Maritime Safety Authority (AMSA). It is the national integrated government and industry consultative framework regarding marine pollution preparedness and the response to the threat posed to the marine environment by oil and chemical spills.

42    The respondent relied on the OSCP to support its case that it did not owe a duty of care to the applicant and Group Members. I will discuss that case in a later section of these reasons. For present purposes, I draw attention to the fact that the OSCP provided oil trajectory information. This information included oil trajectory modelling.

43    A fundamental aspect of oil spill contingency planning is the assessment of the risks posed by various uncontrolled spill scenarios. Oil spill response planners use a hazard assessment to identify potential spill sources and the volumes of oil related to each source for a particular operation. A worst-case spill scenario is typically used to assess the potential area of influence of a major spill through oil spill trajectory modelling. In practice, this modelling typically assumes little or no intervention to contain, collect or treat the spilled oil, other than eventually stopping the spill at its source. Put another way, the modelling assumes that the spilled oil is subjected to natural environmental processes only. Dr Taylor’s evidence was that no oil spill contingency plan is expected to identify all potential spill scenarios or outcomes. Rather, the plan is intended to ensure that mechanisms for a scalable response are in place.

44    The OSCP was prepared in the context of the National Plan, which classifies oil spills according to a three-tiered system. As described by Dr Taylor, Tier 1 is for spills of less than 10 m3. Typically, this might be a spill in the course of ship transfer or bunkering at a jetty or mooring. Tier 2 is for spills of 10 to 1000 m3. Typically, this might involve shipping incidents in ports, pipeline failures or nearshore exploration or production. Tier 3 is for spills greater than 1000 m3. This is regarded as a major incident, typically involving tankers or vessels with large bunker oil volumes. Such incidents might also include, for example, collisions or vessel loss, or well blowout.

45    The National Plan itself is not directed to specific spill sources or volumes for tiered response planning purposes. In short, any spill over 1000 m3 would be considered a Tier 3 incident. Indeed, in respect of designed spill size, the National Plan provides (Section 1, para 1.6):

1.6    The National Plan is established to respond to oil spills of any size in Australian waters. For planning and operational reasons and based on the experience of spills in Australia and international criteria, a designed spill size of 21,000 tonnes [approximately 24,000m3] exists. This has been determined by National Plan stakeholders taking into account current ship type and equipment holdings and is endorsed by the Australian Transport Council … as the appropriate level for which to plan equipment and other resource requirements. Additionally, arrangement are in place to augment this capacity from overseas equipment stockpiles should any incident exceed Australia’s resource capability.

46    A report dated 4 April 2003, which was prepared by URS Australia Pty Ltd to provide preliminary information in relation to the drilling of the H1, H2 and H3 Wells, as required under the EPBC Act (the URS Report), states (at 6.4.2.4):

6.4.2.4 Well control

With current technology, the risk of a well blowout is considered low. There are elaborate monitoring systems to detect potential blowouts and such events can occur only if all of the monitoring systems fail and if the casing, wellhead or blow-out preventers (BOPs) fail catastrophically. The occurrence of such circumstances has been greatly reduced by improved back-up systems. The risk is further reduced when knowledge of the underlying stratigraphy and formation pressures is available as a result of previous drilling nearby. Such knowledge is available to Newfield through the drilling results of previous wells in the vicinity of the Licence Area and this knowledge has been used in designing the drilling programme.

No shallow gas has been encountered in previous drilling.

Loss of well control could potentially result in substantial release of hydrocarbons to the environment. However, modern techniques have reduced the possibility of a blow-out to a minimal level and a blow-out has never occurred in all of the wells drilled off the Western Australian coast. A blow-out can occur only in the extremely unlikely event that all systems fail and warning signs are ignored. The probability of a blow-out is minimised by:

•    testing the BOP before starting the operation and regularly during the operation;

•    pressure testing of casing strings;

•    continuous monitoring for abnormal pressure during drilling; and

•    providing mandatory training for the drill crew in safety procedures.

Should a blow-out occur, the volume spilled will depend on the permeability of the producing formation, the thickness of the encountered producing interval, the viscosity of the oil, the number and type of obstructions in the well hole, and the time taken to regain control and seal off the well bore. Drilling of directional ‘interception’ or relief wells to stop the flow can be undertaken, but this is considered the last resort as this operation can take several weeks to complete.

Data collected by the WA MPR on offshore exploratory and production drilling in Western Australia show that no significant oil spills have been associated with a total of over 400 offshore wells drilled to date. No major oil spill from offshore drilling operations has been known to occur in Australia.

In almost 30 years of operation, the oil and gas industry in Australia has drilled over 1,500 exploration and development wells and produced over 3,500 million barrels (556,500 ML) of oil. During this same period, the total amount of oil spilled to the marine environment from all offshore oil exploration and production activities has been estimated to be less than 1000 barrels (159,000 L), with the majority of these spills occurring during production activities (Volkman et al. 1994).

Six blow-outs have occurred in Australia, of which three occured during exploration drilling. All six were gas blow-outs and none resulted in an oil spill. There have been no blow-outs in Australia since 1984, which is evidence of the technological and procedural improvements that have occurred over the last two decades.

These statistics led the Independent Scientific Review of the Environmental Effects of the Australian Oil Industry (Swan et al. 1994) to conclude: “there is minimal oil spill threat caused by Australian explorers”.

47    Dr Taylor relied on the URS Report to understand the sources of information used in developing the OSCP. He accepted the results and information presented in the report as being “professionally complete and correct”.

48    As is clear from the above quote, the URS Report proceeded on the basis that the risk of a well blowout would be “low”. Indeed, in a later part of the report, URS concluded that such an event would be “rare”. On the other hand, URS concluded that spills from the transfer of produced crude oil from a floating production, storage and offloading (FPSO) vessel would be the main source of spills in oil production operations.

49    Proceeding on this basis, the OSCP posited the maximum realistic spill event (i.e., the worst-case scenario) to be the total loss of crude oil from one wing tank of the Montara Venture FPSO, representing 15,000 m3 of Montara crude oil spilled over a period of 12 hours. The OSCP included trajectory modelling which investigated such a spill over seven days. In his evidence, Dr Taylor pointed out that this assumed spill volume was much larger than the spill records from blowouts registered in Australia over the preceding decades.

50    The results of the modelling illustrated the probability that spills may be transported to different locations around the well. At para 2.3.4, the OSCP stated:

…

The results of the surface slick modelling indicated that spills of oil from Montara are unlikely to impact on the nearest shorelines (Hibernia Reef, Ashmore Reef and Cartier Islands). The shorelines of Australia, Timor and the Indonesian Islands were all predicted to be at no risk whatsoever.

During winter the overall tendency for oil spills is to move in a south-westerly direction driven by a combination of prevailing winds and the tides. The ebb and flood of the tide through this area is in a north-south direction whilst during winter the dominant prevailing winds vary from northeast to east. The combination of these two forces, together with the tendency for surface currents to bend to the left of the wind direction as a result of coriolis forcing, produces this result.

During summer the tendency is in the opposite direction, to the north-northeast. Again this result is due to the direction of the ebb tide (approximately north) and the prevailing southwest and westerly winds. The steering of surface currents to the left of the wind is also a factor. During this period (and possibly the transition months) the wind and current forcing resulted in a predominant movement of oil slicks to the north, towards the chain of seamounts to the north of Montara. Investigation of the behaviour of oil components entrained or in solution however showed that there is negligible risk of sub-surface oil impacting on these seamounts, which are at least 10 m below the surface and the closest some 30 km away.

51    Although not professing to have personal experience with the model used, Dr Taylor said that the model’s approach, and the data sets for wind and currents, and the oil properties and weathering characteristics, used in the model, were well-defined and consistent with best practice in 2009. Later, after referring to AMSA’s technical guidelines for preparing contingency plans for marine and coastal facilities (published in January 2015), Dr Taylor said that the modelling was “consistent with best practices today” for oil trajectory, weathering and mass balance projections. He said that the OSCP’s prediction that the shorelines of Australia, Timor and the Indonesian Island were “at no risk whatsoever” from oil impact, was “consistent with best practice in planning at the time of the Montara oil spill”. Dr Taylor then expressed the conclusion that:

67    … a reasonable oil field operator would not have expected or foreseen an oil spill incident with the potential to harm residents of [Nusa Tenggara Timur] given the characteristics of the oil in the production field and analysis of oil weathering and trajectories forecast for the assumed reasonable worst-case spill incident at the time.

52    I point out, for later reference, that the modelling on which the OSCP was based was carried out by Global Environment Modelling Systems Pty Ltd (GEMS) using GCOM3D, a three-dimensional hydrodynamic model which was used to model the ocean currents, and the GEMS spill model called OILTRAK3D. The modelling was undertaken by Dr Graeme Hubbert, who was called by the applicant to give evidence on trajectory modelling and ocean currents.

53    It is convenient at this stage to also refer to modelling carried out by the respondent in 2011 and revisited in 2013. It looked at a 77 day period (a “loss of well control” spill) of 84,966 m3 (534,380 bbl) with a variable flow rate peaking at 3,802 m3 per day (23,912 bbl/day) down to 690 m3/day (4,340 bbl/day). The modelling was completed for three distinct seasons, defined by the unique prevailing wind and general current conditions. The modelling predicted a 90% probability of oil making shoreline contact >10 g/m2 with Rote, for all seasons. The report of this modelling described this scenario as “credible”.

54    The applicant relied on this modelling to support his case that the respondent owed him and the Group Members a duty of care. On the question of foreseeability, he submitted that the modelling showed information that was available to the respondent in 2009, had it taken steps to access that information at that time. The applicant submitted that the modelling undertaken for the OSCP in 2009 simply looked at the outcome of the loss of oil from a vessel wing tank. However, this was a risk which could only have arisen at some time in the future, when the H1 Well was in production. According to the applicant, the real risk, at the relevant time, was of a well blowout, given the “egregious incompetence” with which the respondent purported to temporarily seal the well.

55    According to the applicant, the OSCP in 2009 simply “failed to grapple” with the risks attached to the work the respondent was in fact undertaking. In cross-examination, Dr Taylor accepted that his opinion that a reasonable oil field operator would not have expected or foreseen an oil spill incident with potential harm to residents of NTT was based on the history of operations in the area, not on the particular facts leading to the blowout of the H1 Well.

Chemical Composition: An overview of The chemical composition and physical properties of Fresh and weathered Montara oil

56    No-one knows the chemical composition of fresh (meaning, not weathered) crude oil taken from the H1 Well (Montara-1 oil). No samples of Montara-1 oil were studied or were available to be studied prior to the spill. After the spill, the H1 Well was plugged and abandoned, making it impossible to obtain any sample. Similarly, no-one knows the physical properties of Montara-1 oil. However, two other oils from the Montara field were available for study—fresh oil from the H2 Well (Montara-2 oil) and fresh oil from the H3 Well (Montara-3 oil). Montara-3 oil was collected in 2002 and analysed by Intertek and Leeder Consulting. Montara-2 oil was collected in 2017, for the purposes of this case, and analysed by Dr Scott Stout, who was called by the respondent to give expert evidence. The experts on this topic—Dr Stout, and Professor Ball and Dr Fingas (who were called by the applicant)—agreed that Montara-2 oil and Montara-3 oil can be taken as suitable surrogates for Montara-1 oil.

57    There is no dispute about the chemical composition of Montara-2 oil or, in relevant respects, its physical properties, which are summarised in the following tables:

58    The following table provides a comparison between the two surrogates—Montara-2 oil and Montara-3 oil. Although differences exist between the values for the properties listed in the table, the relevant experts agreed that, overall, these oils are generally comparable to each other. Further, based on the apparent continuity, structure and character of the Montara field’s oil reservoir, the relevant experts agreed that there is no geologic basis to expect significant differences between the crude oil produced from different wells in the Montara field:

Comparison of Chemical and Physical Properties of Surrogate Montara crude oils

*ND—not determined

59    In light of the above discussion, it is convenient to refer to Montara-1 oil, Montara-2 oil and Montara-3 oil as, simply, Montara oil unless it is necessary to distinguish between the three oils.

60    The chemical composition and physical properties of crude oil can be affected by weathering. The processes involved include evaporation, aerosolization, dissolution, biodegradation, photochemical oxidation (also called photo-oxidation), and wax-agglomeration and separation.

61    Evaporation is the volatilization of oil components into the atmosphere. Aerosolization is a specific type of evaporation caused by injection of the oil into the air prior to it reaching the sea surface.

62    Biodegradation is the breakdown of oil components by microorganisms in the environment. Photochemical oxidation or photo-oxidation is the breakdown of oil components due to chemical reactions caused by exposure to sunlight.

63    Wax agglomeration and separation is the precipitation of waxy components in the oil to form wax-rich aggregates and their subsequent separation from the liquid oil. This is an atypical, but not unprecedented, weathering process. It affects “high wax” oils, such as Montara oil.

64    Emulsification is another weathering process in which oil and water become mixed to form emulsions. The experts agreed that this process, albeit common, was unlikely to have affected the spilled Montara-1 oil because of its low asphaltene and resin content. The experts agreed that reports at the time of the spill of “emulsified slicks”, and “emulsions” or “possible emulsions”, were not true emulsions but were, more likely, wax-enriched oils formed by the wax-agglomeration process.

65    These weathering processes occur mostly concurrently and would have had a collective (not individual) effect on the spilled Montara-1 oil.

66    The experts on this topic were asked to consider, in conclave, the effect of the weathering processes on the visual appearance, wax content, pour point, viscosity, smell, toxicity and adhesiveness of this oil. Their observations and conclusions were based, in part, on field-collected samples of weathered Montara-1 oil analysed by Leeder Consulting at the time of the spill.

67    As to visual appearance, the experts agreed (based on photographs and sample descriptions given at the time of the spill) that, as the oil weathered, it generally became lighter in colour (brown to orange to yellow to khaki) and formed white waxy particles. As waxy aggregates formed and became increasingly abundant, the oil may have appeared to be more viscous, which is a possible explanation for the field descriptions of the floating oil, made at the time of the spill, as “emulsified slicks” or “emulsions”.

68    The experts agreed that the overall wax content of the spilled oil increased through a combination of the conventional weathering processes and the wax agglomeration and separation process referred to above. Analysis of 13 field-collected samples taken at the time of the spill showed that the wax content of the weathered oil ranged from 13% to 79%.

69    The experts agreed that the pour point of the spilled oil (the lowest temperature that oil will flow when it is cooled) increased through a combination of the conventional weathering processes and the wax agglomeration and separation process. Analysis of the 13 field-collected samples showed that the pour point of the weathered oil ranged from 30°C to 51°C. This is an increase in the pour point of Montara-2 oil and Montara-3 oil. The experts agreed that the higher pour points of the field-collected samples indicate that, at night-time temperatures, most of the weathered spilled oil would have been solid and that highly-weathered oil and wax-rich aggregates with elevated pour points would have remained as solids at daytime temperatures.

70    There was some disagreement between the experts as to whether the data on viscosity obtained from 11 field-collected samples taken at the time of the spill were reliable. It is not necessary to engage with that debate because, despite that uncertainty, the experts agreed that it was their expectation that the viscosity of the spilled oil would have increased through a combination of the conventional weathering processes and the wax agglomeration and separation process.

71    The experts were sceptical that the intensity or nature of the spilled oil’s smell could be reliably described as having changed due to weathering. Certainly, there was no data available to them to evaluate this qualitative property, which they considered to be highly subjective to the individual describing the smell and, therefore, an unreliable means to assess the weathering of oil.

72    The evidence does not disclose that there was any investigation undertaken of the toxicity of the Montara oil at the time of the spill. However, the experts agreed that the concentrations of compounds that are typically associated with aquatic toxicity—the monoaromatic hydrocarbons benzene, toluene, ethylbenzene and xylene (BTEX), polycyclic aromatic hydrocarbons (PAHs) and total aromatic hydrocarbons—were measured in multiple field-collected samples at the time of the spill. None of the samples contained detectable BTEX. All samples showed reduced concentrations of PAHs and total aromatic hydrocarbons with increasing % weight (mass) loss (a proxy for weathering). They concluded that it was likely that the toxicity of the spilled oil decreased through a combination of the conventional weathering processes and the wax agglomeration and separation process. Notwithstanding this agreement, there was substantial debate about the significance of this decreased toxicity, particularly in relation to seaweed grown in the Rote/Kupang region of Indonesia in 2009 and subsequent years. I will deal with that topic in later sections of these reasons.

73    The relevant experts disagreed on whether the adhesiveness of the spilled Montara oil (here, its ability to adhere to biological material) would increase with weathering. Professor Ball and Dr Fingas contended that adhesiveness would increase with weathering. Dr Stout contended that there was no reliable or relevant data that addressed this topic. Once again, I will deal with that topic, but only to the extent that it is necessary to do so, in a later section of these reasons.

74    Based on qualitative observations in respect of 64 field-collected samples at the time of the spill, the experts agreed that the spilled Montara oil experienced varying degrees of weathering or wax-enrichment. Evaporation was clearly the most important weathering process that initially affected the oil after its release. Water-washing, biodegradation and photo-oxidation further caused a progressive loss of non-volatile aromatics (PAHs). Weathering and concurrent wax agglomeration and separation formed increasingly wax-rich residues that contained long-chain n-alkanes, but little else. Biodegradation did affect floating oils, but probably only in sheens (not slicks).

75    The relevant experts also agreed that quantitative observations of field-collected samples showed that BTEX was rapidly and completely lost from the spilled oil that was sampled. The % weight (mass) loss (once again, a proxy for weathering) showed losses ranging from 4% to 92%, with the highest loss being to the wax-rich residues (88% to 92%). Total aromatic hydrocarbons (>C7 to C35) and total PAHs were substantially reduced in the floating oils, such that the wax-rich residues contained 1.6% of total aromatic hydrocarbons and no detectable total PAHs (i.e., >50 mg/kg-1 or 50 ppm). The total aromatic hydrocarbons that persisted in the most highly-weathered wax-rich residue that was studied were exclusively comprised of larger aromatic hydrocarbons in the C16 to C35 (mostly C21 to C35) carbon range.

76    The significance of these observations will have greater meaning when I deal in more detail with the respective cases that were advanced on the topic of the toxicity of oil in relation to seaweed. I simply note, for present purposes, that BTEX and the PAHs are the chemicals commonly associated with aquatic toxicity.

77    It is convenient to record at this juncture that a number of observations made at the time of the spill—including by seaweed farmers and other observers in the Rote/Kupang region in late 2009—concerned the presence of foam. The relevant experts agreed that observations of foam in the sea does not indicate the presence of oil or an oil dispersant, but does not preclude their presence. Dr Stout pointed out that four foam samples collected from the Ashmore Reef area during the spill, which were analysed by Leeder Consulting, contained either predominantly or exclusively chemicals derived from naturally-occurring biological material(s). Two samples contained some hydrocarbons that indicated the presence of small but varying amounts of highly-weathered oil or wax.

The Rote/Kupang region of Indonesia

78    Nusa Tenggara Timur (NTT) is one of 34 provinces of Indonesia. It is located in the Coral Triangle region of South East Asia, north of Australia. It comprises 21 regencies (or districts) and the regency-level city of Kupang. Two of the regencies, known as the Regency of Kupang and the Regency of Rote Ndao, are the focus of this proceeding. For convenience, I will refer to them as comprising the Rote/Kupang region.

79    The Regency of Kupang is located in the western-most region of West Timor on Timor Island. It includes an island just off the coast of West Timor called Semau.

80    The Regency of Rote Ndao comprises a main island (Rote) located to the south-west of Kupang, and a number of adjacent, smaller islands.

81    The Rote/Kupang region is located approximately 500 km north-west of the Australian coast, and approximately 240 km north-west of the Montara oil field. Schedule A to these reasons reproduces part of a hydrographic chart which includes this region. Rote and West Timor are located between (approximately) latitude 11˚0’0”S and 9˚0’0”S and longitude 122˚0’0”E and 125˚0’0”E. The Montara oil field is located between (approximately) latitude 12˚0’0”S and 13˚0’0”S and longitude 124˚0’0”E and 125˚0’0”E. The coast of Western Australia is visible in the south-east corner of the chart.

82    As in other areas of Indonesia, the inhabitants of the Rote/Kupang region are subject to several levels of government. The national Indonesian government is based some distance away in Jakarta, and administers the various provincial governments, including that of NTT. Each regency in NTT, known in Bahasa Indonesia as a “kabupaten”, is headed by an elected regent known as a “bupati”. Each regency contains a number of sub-districts, known as “kecamatan”. These, in turn, contain a number of villages, known as “desa”. Villages can also be divided into sub-villages, known as “dusun”.

83    Rote and its two main adjacent islands Rote Ndao and Rote Nuse comprise about 60 villages. The Regency of Kupang comprises about 21 villages. The island of Semau comprises about 14 villages, and Kupang Barat, on mainland Timor, comprises about seven villages.

84    As I have noted, in his further amended statement of claim the applicant claims that oil spilled from the H1 Well reached 81 villages located in the Rote/Kupang region. A map plotting the location of the villages, which were identified by the lay witnesses, who gave oral evidence, as being the location of their places of residence, is reproduced in Schedule B to these reasons. In the course of the hearing, this map was given the identifier SAN.941.001.0191.

Aspects of the seaweed industry in Indonesia

85    Seaweeds, also known as macroalgae, are multi-cellular photosynthetic organisms. They range from microscopic in size to tens of metres in length. While they are not technically plants, they perform the same ecological role in coastal marine systems as plants do in terrestrial systems. They are classified into four major taxonomic groups characterised by their typical colours, which are red, brown, green and blue-green algae. This proceeding concerns, principally, several species of red algae.

86    The metabolic processes of a seaweed are conducted through the surface of its entire body (thallus). Gas exchanges at the thallus enable seaweeds to generate energy through photosynthesis and conduct cellular respiration and metabolism. Seaweeds also absorb essential nutrients through the thallus. Reproduction in red algae also typically occurs by way of the thallus, which at certain phases during the life of the seaweed will produce microscopic gametes and spores. Once formed, the spores in particular are capable of growing into new seaweeds without the need for fertilisation.

87    Three types of seaweed are cultivated in the Rote/Kupang region, each of which are species of red algae. Specifically, the three species, which are collectively referred to as the eucheumatoid seaweeds, are Kappaphycus alvarezii, commercially referred to as cottonii; Kappaphycus striatum, commercially referred to as sakol; and Eucheuma denticulatum, commercially referred to as spinosum or espinosum. Cottonii and sakol are the two species which are predominantly grown in the region and represent almost all of the seaweed produced there, with very little spinosum grown by comparison. Even though classified as red algae (or red seaweed), cottonii and sakol can, in fact, exhibit various colours.

88    Natural stocks of both Kappaphycus and Eucheuma seaweeds occur throughout the Indo-Pacific region, between approximately 20° north and south of the equator. Kappaphycus tends to grow in the wild as solitary plants scattered widely through sea grass beds. For this reason, they were difficult to harvest for mass production until commercial farming of vegetative cultivars was developed.

89    Commercial farming of eucheumatoid seaweeds is mostly undertaken between 10° north and south of the equator, which contains the coastal areas of winter sea-temperature isoclines between 21°C and 24°C. These are the optimal temperatures for growth. The primary centres for commercial production are located in the Philippines and Indonesia, which fall within this geographic area.

90    Commercial tropical farming of cottonii and sakol commenced in the Philippines in 1974. Farming of espinosum commenced around the same time, but production volumes were only around 20% of the production volumes of the two Kappaphycus seaweeds. The Philippines enjoyed a monopoly on production until 1986, when Indonesia commenced commercial farming.

91    By 2006, Indonesia was the world’s leading producer of eucheumatoid seaweeds. The rapid growth in the domestic seaweed industry was due to a range of factors, including: the area is typhoon free; the seasonality and incidence of disease are minimal; the area is stable legally; farmers have clear tenure rights over farm sites; infrastructure and shipping facilities are adequate; and business essentials are available.

92    Many Indonesian coastal regions, including the Rote/Kupang region, rate well on these features. Generally, they are good for seaweed cultivation all year round and enjoy a competitive advantage over the northerly regions of the Philippines, which suffer from periodic typhoons, and the southerly regions of the Philippines, which face recurring armed insurrections that inhibit the conduct of seaweed businesses.

93    Over the past decade, Indonesia has emerged as the global “alpha” source of tropical seaweeds, meaning that it is the world’s dominant source of raw, dried seaweeds (RDS) and can conceivably supply the entire global RDS demand (around half of which is generated by processors in China). By way of example, following Typhoon Haiyan (also known as Super Typhoon Yolanda) in November 2013, spinosum production in the Philippines was virtually wiped out, causing a global shortage which was filled by Indonesian producers within several months. The most recent production data was collected in 2013. It indicates that Indonesia produced 61% of global seaweed production, which is around 300,000 wet tonnes, worth approximately US$40 million, per month. In the course of giving his evidence about the seaweed industry in Indonesia, Dr Iain Neish, who was called by the applicant, estimated that this production would have risen to well over 70% by 2019, on the basis that the industry in Indonesia continues to grow and the industry in the Philippines continues to decline.

94    The NTT province, including the Rote/Kupang region, is viewed by the industry as a region with underdeveloped potential. Dr Neish said that, as at 2018, it was not considered as a reliable, year-round seaweed source, but the region has contributed to building Indonesia’s position as an alpha tropical seaweed supplier. He said that the seaweed industry in the Rote/Kupang region had developed to the point of widespread successful farming by 2009, but this was followed by a sudden crop failure throughout the region. There had been persistent efforts to re-establish farming, which eventually recovered over a number of years.

95    The agronomic process of seaweed farming in the Rote/Kupang region is remarkably simple. It essentially involves attaching a fragment of seaweed to a line and suspending it in the water to grow. A seaweed farm will comprise several of these long lines, made from ropes, strings or strappings, which may be “hung” in the sea using a variety of configurations. Generally, empty plastic water bottles are attached at intervals to act as floats.

96    As I have mentioned above, seaweeds are able to reproduce following the production of spores from the thallus, without a fertilisation step. This feature of seaweeds enables seaweed farmers to “seed” new crops periodically using seaweed fragments from the previous crop. The seeding process usually results in three-to-five-fold growth in around six weeks, which is the usual length of the seaweed growing cycle. Dr Neish accepted in cross-examination that it was a possible “untested hypothesis” that this approach to propagation of seaweed could create a lack of genetic variation in the crop over time. However, he disagreed that this would cause the extinction of a particular variety of seaweed in a given area.

97    After the six-week growing cycle is complete, the seaweeds are harvested and dried. The most common drying technique in the Kupang/Rote region is the use of drying platforms known as “para-para”. These are constructed from bamboo strips, which make a platform frame which is covered in fine netting and on which the seaweed is laid for two to three days to dry. The dried seaweed is then sacked or baled. Dr Neish deposed that this was an excellent drying technique. It meant that seaweeds from the Rote/Kupang region are generally clean and well-dried. For this reason, RDS from the region tended to fetch prices on the “high side of the Indonesian price range”. RDS is then usually sold to carrageenan processors to be made into carrageenan for industrial use.

98    Carrageenan (a hydrocolloid) is used as a thickening and emulsifying agent, primarily as a food ingredient. Its principal use is in meat packing, in which it is injected with brine into ham and other meats to keep them moist. It is also used in dairy products, for example to suspend cocoa in chocolate milk and to prevent ice crystal formation and impart a creamy texture in ice creams, and in jelly desserts. It is also used in pet food. The carrageenan derived from cottonii and sakol is called kappa carrageenan. The carrageenan derived from spinosum is called iota carrageenan.

99    Carrageenan production occurs predominantly in China, but there are also processors domestically in Indonesia and the Philippines, as well as in Europe.

100    RDS is sold for approximately US$1 to US$2 per kg. Carrageenan is sold for approximately US$10 to US$15 per kg. Indonesian export volumes of RDS (comprising 90% cottonii and 10% spinosum) grew from around 30,000 tons (worth around US$20 million) to over 100,000 tons (worth around US$110 million) between 2000 and 2008.

101    Qualitative research undertaken by Dr Neish suggests that the seaweed farming industry has provided local Indonesian residents with a major addition to their income. Seaweed is a cash crop for farmers. It can be undertaken at minimal cost. There is a ready market. Dr Neish estimates that an average seaweed farmer in the Rote/Kupang region is able to produce around 500 kg of dry Kappaphycus seaweed each month, which is generally sold for between US$4,000 and US$8,000. Seaweed farmers generally report that the income per unit effort they gain from seaweed farming is several multiples greater than income available from other sources. Indeed, few other economic choices are available. Other livelihood options in the Rote/Kupang region have tended to remain static or have declined since the development of seaweed farming. Seaweed farming thus provides an extremely important livelihood for the villagers in these areas. Dr Neish estimated that more than half the households in the region rely exclusively on seaweed farming to earn an income.

102    Dr Neish expressed the opinion that unprecedented high cottonii and sakol prices in 2018 were attracting seaweed farmers in the Rote/Kupang region to “have another go” at seaweed farming, despite their difficulties during and after the crop failure events of 2009.

the conduct of the hearing

103    The hearing of this proceeding was conducted in two broad phases. The first phase involved the taking of lay evidence from seaweed farmers in the Rote/Kupang region and other lay observers, including from that region. The second phase involved the taking of extensive expert evidence from experts across a broad range of disciplines.

The lay evidence

104    The applicant read the following affidavits of deponents who were cross-examined:

    Daniel Sanda, made on 18 August 2018;

    Silwanus Aplugi, made on 20 August 2018;

    Gustaf Lay, made on 23 August 2018;

    Gabriel Mboeik, made on 25 July 2018;

    Axel Pierre Chalvet, made on 21 August 2017;

    Adrian Sibert, made on 30 August 2018;

    Nikodemus Ndun, made on 12 October 2017;

    Lot Martinus Heu, made on 12 October 2017;

    Semin Polin, made on 15 September 2016;

    Yohan Lima, made on 13 October 2016;

    Dominggus Liman, made on 17 October 2016;

    Abner Yopi Pallo, made on 16 September 2016;

    Zadrak Patolla-Ballo, made on 26 September 2016;

    Petrus Ndolu, made on 3 April 2017;

    Abdul Rasyid Aitio, made on 23 March 2017;

    Mica Erwin Johanis Penna, made on 23 March 2017;

    Taftinus Taek, made on 22 March 2017;

    Semuel Messakh, made on 9 February 2017; and

    Yardin Adoni Lari Aplugi, made on 5 April 2017.

105    The applicant read the following affidavits of deponents who were not required for cross-examination:

    John Guiney, made on 29 September 2017;

    John Gregory Rogers, made on 30 September 2017;

    Simon Mustoe, made on 10 August 2018;

    Ghislaine Llewellyn, made on 30 August 2018;

    Ghislaine Llewellyn, made on 28 March 2019;

    James Watson, made on 30 August 2018;

    Matt Smith, made on 15 March 2019;

    Bartolo La Macchia, made on 5 March 2019;

    Antony La Macchia, made on 15 March 2019;

    Lorens Hendrik, made on 26 September 2016;

    Daud Nenokeba, made on 26 September 2016;

    Watson Sodi Mbuik, made on 17 February 2017;

    Jermias Manafe, made on 20 March 2017;

    Melkianus Mola, made on 20 March 2017;

    Marselinus Mesah, made on 3 April 2017;

    Johan Mooy, made on 2 April 2017;

    Anton Matasina, made on 8 March 2017;

    Ogus Tananggau, made on 23 March 2017;

    Resa Rehans Fatu, made on 5 April 2017;

    Thomas Dethan, made on 5 April 2017;

    Nathan Kearnes, made on 3 May 2019;

    Nathan Kearnes, made on 26 November 2019;

    Lewis Hamilton, made on 6 May 2019; and

    Lewis Hamilton, made on 18 November 2019.

The expert evidence

106    The expert evidence presented in this proceeding was extensive. It was, by and large, organised according to a number of topics, most of which are reflected in the structure of these reasons. The topics on which expert evidence was called were Satellite Imagery, Dispersants, Currents, Trajectory Modelling, Chemical Composition of Oil, Toxicology, Volume, Observations of Oil, Oil Spill Contingency Planning and the Seaweed Industry in Indonesia.

107    With the exception of Observations, Contingency Planning and the Seaweed Industry in Indonesia, expert conclaves were held in respect of each of these topics, and each resulted in a joint expert report prepared by the participating witnesses. The experts who participated in each conclave gave their oral evidence concurrently. Professor Steinberg did not participate in the Toxicology conclave. He gave his evidence and was cross-examined in the traditional manner. Dr Neish was the only expert witness who gave evidence on the Seaweed Industry in Indonesia. Dr Taylor was the only expert witness who gave evidence on Contingency Planning. Although there was no conclave on the topic of Observations, evidence was given concurrently on that topic by Professor Ball, Dr Fingas, Dr Taylor and Dr Maki.

The applicant’s expert evidence

108    The applicant called expert evidence from the following witnesses.

109    Professor Andrew Ball. Professor Ball is a Distinguished Professor who holds a PhD in microbiology and has taught and researched in environmental microbiology for 33 years. His research focusses on the interaction between pollutants in the environment and the natural microbial community; in particular, the ability of microorganisms to biodegrade petroleum hydrocarbons. Professor Ball presented five reports dealing with the topics of Chemical Composition, Toxicology and Observations, and participated in the Chemical Composition and Toxicology conclaves.

110    Dr Mervin Fingas. Dr Fingas is a scientist who holds a PhD in environmental sciences, Masters degrees in chemistry and business and has published over 950 papers, over 150 of which relate to oil spill properties and behaviour, over 100 of which relate to oil analysis, over 80 of which relate to dispersants, over 70 of which relate to oil fingerprinting and many which relate to oil or chemical toxicity. He has worked in oil spills for over 45 years, including the Deepwater Horizon spill in the Gulf of Mexico, has established a laboratory at Environment Canada to study and develop measurement techniques for oil spill behaviour, and has served on two US National Academy of Sciences committees relating to oil properties and behaviour. Dr Fingas presented six reports, one of which was revised, dealing with the topics of Chemical Composition, Dispersants, Toxicology and Observations, and participated in the Chemical Composition, Toxicology and Dispersants conclaves.

111    The respondent criticised Dr Fingas’ evidence. It noted that Dr Fingas had given evidence on “a host of topics”. It submitted that, in many respects, his evidence was “unsatisfactory, and should not be accepted on any contested issue”. The respondent appeared to advance two principal reasons for making this submission.

112    The first concerns Dr Fingas’ evidence in relation to analyses carried out by LEMIGAS, an Indonesian governmental oil and gas research organisation. The respondent’s criticism appears to be based on no more than the fact that Dr Fingas disagreed with the respondent’s own witness, Dr Stout, on what the LEMIGAS analyses revealed. In coming to his view about those analyses, Dr Fingas applied a regression analysis (discussed below) and argued that the CEN 15522 – 2 Protocol used by Dr Stout was “relatively new”—a proposition with which the respondent disagrees.

113    The second reason concerns Dr Fingas’ evidence in relation to dispersants. In giving that evidence, Dr Fingas disagreed with Dr Coehlo, who was called by the respondent, as to the interpretation of certain entries in AMSA logs concerning the effectiveness of dispersants that had been applied to the spilled oil. The authors of the entries were not called to give evidence.

114    Dr Fingas interpreted the entries as recording the percentage of oil targetted with dispersant (i.e., the percentage of oil “hit” with the dispersant). Dr Coehlo interpreted the entries as recording the percentage of oil removed from the sea surface by the dispersant.

115    Dr Fingas repeated his interpretation in oral evidence. He later developed this by saying that the percentage referred to in the entries was the percentage of oil that the operators targeted, which they felt would be dispersed by the dispersant.

116    When cross-examining counsel suggested to Dr Fingas that this was a fanciful reading of the relevant entries, he disagreed. He explained his interpretation as follows:

I’m sorry. I disagree. Because – simply because the length of time that it would take for a dispersant to actually work and for the oil to disappear from sight and which you could say was actually dispersed is too long for them to lay around in the vessel without going on to the next slick.

117    When it was put to Dr Fingas that he did not honestly believe the interpretation he had given and that, by this answer, he was attempting to make the evidence fit with his views about dispersant effectiveness, he said:

That is incorrect, because I have talked to operators in the past and this is how they’re taught. They’re taught to recognise the signs after dispersant has been applied that it may disperse or will not disperse. And so that is the percentage and very rough percentage that they will report.

118    In closing submissions, the respondent submitted that Dr Fingas had either given dishonest answers on this topic or was so biased in his views about dispersant effectiveness that he was unable to read the log entries objectively and rationally.

119    I do not accept that submission. I do not think that Dr Fingas gave his evidence on this topic, or on any other topic, dishonestly. He explained his interpretation of the log entries. I do not think that his explanation was fanciful, although his interpretation of the log entries is not one that I would adopt. I think that Dr Coehlo’s interpretation is to be preferred. However, Dr Fingas is not to be criticised for expressing a different view to Dr Coehlo on the interpretation of an operational document of which neither he nor Dr Coehlo was the author; nor is he to be criticised for expressing a different view to Dr Stout in relation to what the LEMIGRAS analyses reveal. Indeed, a feature of this case has been the remarkable number of disagreements between experts on the many issues that were canvassed across the broad range of topics considered in the evidence. I do not accept that, on the topics he addressed, Dr Fingas’ evidence was unsatisfactory. I reject the respondent’s broad submission that Dr Fingas’ evidence should not be accepted on any contested issue.

120    Dr Erich Gundlach. Dr Gundlach is a coastal geologist who has over 40 years’ experience related to oil spill assessments and the application of imagery and aerial photographs to determine spill location and shoreline impacts, and works extensively with oil spill models. His experience includes the Metula spill in the Strait of Magellan, the Amoco Cadiz spill in France, the Ixtoc 1 spill in the Gulf of Mexico, the Exxon Valdez spill in Alaska, the Gulf War spills in Kuwait and Saudi Arabia and the Deepwater Horizon spill in the Gulf of Mexico. Dr Gundlach presented three reports dealing with the topics of Satellite Imagery and Trajectory Modelling, and participated in the conclaves which took place on both of those topics.

121    Dr Graeme Hubbert. Dr Hubbert is a physical oceanographer who holds a PhD in physics and has worked in oceanography since 1981, during which time he has spent 17 years in government research institutes, including the Bureau of Meteorology (BoM), where he developed the first Australian 3D ocean model for environmental studies. In 1993, he established a consulting company called Global Environmental Modelling and Monitoring Systems Pty Ltd (GEMMS, previously referred to by the acronym GEMS), which has worked with the US Navy and, for the past 20 years, AMSA to develop ocean modelling systems applied mainly to search and rescue operations and environmental impact studies. Dr Hubbert presented two reports dealing with the topics of Trajectory Modelling and Currents, and participated in the conclaves which took place on both of those topics.

122    Dr John Luick. Dr Luick is a physical oceanographer who holds a PhD in that field and works as a consultant through Austides Consulting, which specialises in marine environmental consulting and marine software development, which he established and operates. He also holds appointments as an Honorary Senior Lecturer at Flinders University, a Visiting Scientist with the South Australian Research and Development Institute, and an Expert Adviser at Tridel Engineering (Dubai). He has over 30 years’ experience in oceanographic research and consulting. Dr Luick presented one report dealing with the topics of Trajectory Modelling and Currents, and participated in the conclaves which took place on both of those topics.

123    Dr Iain Charles Neish. Dr Neish is a marine biologist and businessman who holds a PhD in zoology and has worked with seaweeds and seaweed farmers in aquaculture systems since 1965. Dr Neish has extensive experience in seaweed value chains and the development of seaweed aquaculture agronomy systems on every continent except Antarctica. Over the past 41 years, he has been involved with the seaweed industry in South East Asia, and has been particularly involved in that industry in Indonesia since 1986, during which time Dr Neish played a role in industry development for the carrageenan industry and other seaweed industry diversification and development ventures. Since 2008, Dr Neish has also participated in surveys and value chain analyses that have included engagement with hundreds of active seaweed farmers in Indonesia. Dr Neish is currently undertaking seaweed industry development ventures as a Research and Development Advisor to PT Sumber Tanaman Samudra, a seaweed farming company, and as a Director of PT Sea Six Energy Indonesia, a seaweed processing company. A more comprehensive summary of Dr Neish’s qualifications may be found in Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd (No 6) [2019] FCA 1853 (at [4] – [9]), which dealt with various objections which were made to his expert report. Dr Neish presented one report dealing with the topic of the Seaweed Industry in Indonesia, and did not participate in any conclave.

124    Dr Janet Sprintall. Dr Sprintall is an observational physical oceanographer who holds a PhD in that field and has researched large-scale ocean circulation and inter-basin exchange at the Scripps Institute of Oceanography since 1993. She has a particular interest in the physical oceanography of the marginal seas in the Western Pacific Ocean, including the Indonesian, Philippine and Solomon archipelagos, and has spent the past 20 years researching the Indonesian Throughflow current (ITF) which runs between the Pacific Ocean and Indian Ocean. Dr Sprintall presented one report dealing with the topics of Trajectory Modelling and Currents, and participated in the conclaves which took place on both of those topics.

125    The respondent criticised Dr Sprintall’s evidence as it related to the reliability of the modelling evidence I discuss in later sections of these reasons. Dr Sprintall said that she had only limited confidence in the two models discussed. In the course of propounding the reliability of the modelling it advanced (SIMAP/SUNTANS), the respondent submitted that Dr Sprintall appears to have adopted (perhaps subconsciously) the role of an advocate for the applicant’s case. The respondent submitted that Dr Sprintall’s presentation in the concurrent evidence session on Trajectory Modelling was “more in the nature of a submission than an independent opinion based on her expertise”. This was because, in the respondent’s submission, Dr Sprintall took it upon herself to express a view about the likelihood of Montara oil reaching NTT based on her assessment of the reliability of the applicant’s lay evidence.

126    I do not accept that criticism of Dr Sprintall’s evidence. Dr Sprintall’s view was that all models have errors and uncertainties. She also noted that there was relatively poor agreement between certain buoy trajectories and the SIMAP/SUNTANS model trajectories advanced by the respondent. In the course of expressing that view, Dr Sprintall said:

So probably the best verification as to the reliability of the trajectories of the oil and/or the dispersants comes from the observations of oil and sheen in the Timor Sea evident in the AMSA daily maps and the surveillance flight reports, as well as the multiple firsthand eyewitness accounts of the presence of oil along the coast of the regencies of Rote and Kupang in Indonesia. That is the only way that the oil could have been observed in the Timor Sea is because the ocean currents had carried it there.

127    I do not accept that, in giving that evidence, Dr Sprintall was acting as an advocate for the applicant or advocating the reliability of the lay witness accounts of oil sightings. As an observational physical oceanographer, Dr Sprintall was doing no more than pointing to data sources that she thought might be more reliable than the modelling on which the parties were relying, her assumption being (without expressing a view either way) that the eyewitness accounts of oil sightings were themselves reliable. I do not accept that Dr Sprintall was purporting to express a personal view about the reliability of the lay evidence or in any way intending to usurp the role of the Court in fact-finding.

128    Professor Peter Steinberg. Professor Steinberg is a professor of biology at UNSW and Director and CEO of the Sydney Institute of Marine Science, who holds a PhD in biology and whose expertise is in the fields of seaweed biology and ecology and the coastal ecology of systems across the world. Professor Steinberg is one of the more senior seaweed ecologists and coastal ecologists in Australia. He has over 30 years’ experience in marine biology and ecology, has authored nearly 200 refereed papers or book chapters concerning the ecology, biology, chemistry or biotechnology of seaweeds and/or aspects of coastal ecology; is the inventor named in nine patents; and is considered one of the founders of the field of marine chemical ecology, particularly as it relates to seaweeds. Professor Steinberg presented two reports dealing with the topic of Toxicology. He did not participate in the conclave on that topic or give concurrent evidence.

129    Dr Anitra Thorhaug. Dr Thorhaug is a marine botanist and marine ecologist who holds a PhD and Masters degrees in marine biology and chemical oceanography, and has postdoctoral research experience in algal physiology and the membrane biophysics of algae. She is the president of an environmental foundation called the Greater Caribbean Energy and Environment Foundation. Dr Thorhaug has over 50 years’ experience in marine pollution work. Her relevant experience for tropic benthic oil spill work includes assessing the impacts of the 1991 Kuwait spill on the Arabian Gulf for the United Nations International Oceanographic Commission, acting as an adviser to British Petroleum in the National Environmental Resource Damage Assessment process of the Deepwater Horizon spill, exploring nearshore Caribbean oil spill methods, and creating a protocol for the Caribbean region. She has received a large number of awards for her work, including several Lifetime Achievement Awards and the 1982 United Nations Environmental Program Gold Medal for “Decade of Distinguished Research in Tropical Pollution and Ecology”. Dr Thorhaug presented one report dealing with the topic of Toxicology, and participated in the conclave which took place on that topic.

130    Professor Brian Towler. Professor Towler is a professor of chemical engineering and Chair of Petroleum Engineering in the Centre for Coal Seam Gas in the School of Chemical Engineering at the University of Queensland, and holds a PhD in that field. He has been conducting research into aspects of oil and gas production operations for over 30 years, including as the head of the department of Chemical and Petroleum Engineering at the University of Wyoming. He has also worked in the gas industry, including bringing the Mereenie oil field in Queensland into production. He has been an expert witness in several oil spill cases, including giving evidence regarding the causes of the blowout which occurred in the Deepwater Horizon spill. Professor Towler presented three reports dealing with the topic of Volume, and participated in the conclave which took place on that topic.

131    Professor Steven Wereley. Professor Wereley is a professor of mechanical engineering at Purdue University and holds a PhD in that field. His professional expertise is in quantitative image analysis, which he describes as “quantitative evaluation of images for the purpose of extracting flow information”, and he is the author of a leading text in that field, Particle Image Velocimetry: A Practical Guide. He has calculated the volume of the Deepwater Horizon spill, the Royal Dutch Shell pipeline weld failure in Nigeria in 2008, and the Tesoro spill in North Dakota, United States of America in 2013. Professor Wereley presented two reports dealing with the topic of Volume, and participated in the conclave which took place on that topic.

The respondent’s expert evidence

132    The respondent also called expert evidence from the following witnesses.

133    Dr Martin Blunt. Dr Blunt is the Shell Professor of Reservoir Engineering at Imperial College London and a fellow of the Royal Academy of Engineering. He holds a PhD in physics and has written two textbooks on reservoir engineering, one of which describes the material balance methodology he used in the context of this proceeding to calculate the volume of oil released during the Montara oil spill, and has taught on the subject of fluid flow principles for over 20 years. He has also published over 200 papers and won a number of awards for his teaching and research in this field. Dr Blunt was also involved in calculating the volume of oil released in the Deepwater Horizon spill. Dr Blunt presented one report dealing with the topic of Volume, and participated in the conclave which took place on that topic.

134    Dr Gina Coelho. Dr Coelho is an oil spill response scientist with Sponson Group Inc. and a member of the permanent oversight panel for the annual Clean Gulf conference and the Oil Spill Recovery Institute (Alaska-based) Science and Technology Committee. She holds a PhD focussed on dispersant use and response policy and has over 25 years’ experience working as a dispersant subject matter expert in environmental research, consulting, program management, group facilitation, and regulatory compliance. This experience includes co-facilitating approximately 20 Ecological Risk Assessments for the US Coast Guard for spill response planning, establishing three dispersed oil testing facilities in the United States of America, Brazil and New Zealand, and supporting responses to over 100 oil spills worldwide, including assisting British Petroleum in subsea dispersant injection testing and operational monitoring in the Deepwater Horizon spill. Dr Coelho also lead authored the BP Oil Spill Dispersant Use Manual and co-authored the IPIECA Subsea Dispersant Injection Good Practices Guide, and is a member of a panel of authors which published a book on deep water oil spills and future response technologies. Dr Coelho presented two reports dealing with the topic of Dispersants, and participated in the conclave which took place on that topic.

135    Dr Deborah French-McCay. Dr French-McCay is an environmental consultant oceanographer who holds a PhD in oceanography and has approximately 35 years’ experience in oil spill modelling. She specialises in model development and the application of models to various oil spills, for planning response and risk assessments and to support natural resource damage assessment. Models which she has developed have been applied worldwide for response planning, risk analyses, and spill assessments. Dr French-McCay has worked as an expert for the US National Oceanic and Atmospheric Administration (NOAA), with which she most recently performed modelling of the Deepwater Horizon spill as lead of the Offshore Water Column Technical Working Group, which evaluated the trajectory and fate of the oil and impacts to marine fish and invertebrates. Dr French-McCay is also the principal investigator and primary author of more than 100 technical reports and papers, some of which document the development, algorithms and assumptions of the oil spill model which she utilised to provide her evidence in the present case. Dr French-McCay presented four reports dealing with the topic of Trajectory Modelling and participated in the conclave which took place on that topic.

136    The applicant objected to certain passages in Dr French-McCay’s report dated 8 December 2019, which was provided in response to analyses undertaken by the applicant comparing Dr French-McCay’s trajectory modelling with recorded observations of Montara oil taken from other data (for example, AMSA observations). The applicant’s analyses were provided in an affidavit made by Nathan Kearnes, which I discuss in a later section of these reasons. Because Dr French-McCay’s 8 December 2019 report and Mr Kearnes’ affidavit were provided late in the hearing, the parties were content for me to deal with the objections to the report in these reasons. Given the nature of the objections, I am satisfied that this was an appropriate course to adopt.

137    The applicant’s objections are to paragraphs 3 to 5 (including Table 1) and to parts of paragraphs 6, 15 and 16 of the report. The single objection is that these paragraphs or parts of paragraphs are not responsive to Mr Kearnes’ affidavit. The respondent’s response is that these paragraphs or parts of paragraphs should be admitted as providing necessary context and background to the opinions expressed by Dr French-McCay. I accept the respondent’s submissions. I consider these paragraphs and parts of paragraphs to be responsive to Mr Kearnes’ affidavit. I will, therefore, admit this evidence.

138    Dr Oscar Garcia-Pineda. Dr Garcia-Pineda is a geoscientist with more than 15 years’ experience in the management of projects related to aerial and satellite remote sensing. He is the director of Water Mapping LLC, which provides remote sensing of oil spill services, and an adjunct scientist at the Florida State University Center for Ocean-Atmospheric Prediction Studies. Dr Garcia-Pineda’s experience includes work with the National Aeronautics and Space Administration (NASA), to develop and study the capability of sensors to detect surface ocean features, and with NOAA, on a number of spills. With these organisations, Dr Garcia-Pineda developed an image processing algorithm for mapping oil spills from synthetic aperture radar imagery, which has been adopted as the operational tool for the semi-automatic detection of oil spills in the United States of America. He has also authored and co-authored more than 20 articles in this field and presented at numerous conferences. Dr Garcia-Pineda presented one report dealing with the topic of Satellite Imagery and participated in the conclave which took place on that topic.

139    Professor Gregory Ivey. Professor Ivey is a physical oceanographer at the University of Western Australia who holds a PhD on ocean mixing and ocean dynamics. He has worked in ocean processes, ocean circulation and ocean mixing, including numerical ocean circulation modelling, for 39 years. His specific areas of expertise include tide and wind-drive flows in the coastal ocean, the impact of tropical cyclones on the ocean, internal tidal flows and small scale turbulent mixing. He has published nearly 200 academically refereed publications describing his research on these processes. He has worked extensively on physical oceanographic processes in the waters of the Australian North Shelf (extending from Ningaloo in Western Australia into the Timor Sea), and in those regions has conducted observational work using fixed moorings and ship-based observations of ocean currents and turbulent ocean mixing. Professor Ivey presented one report dealing with the topics of Currents and Trajectory Modelling, and participated in the conclaves which took place on both of those topics.

140    Dr Alan Maki. Dr Maki is a toxicology and water quality biologist who holds a PhD in fisheries and wildlife management, and has worked in environmental research and management, including in various aspects of the effects of oil on the environment, for over 45 years. He has published over 200 papers and books on numerous aspects of aquatic toxicology and chemistry and served as Science Advisor to the US Environmental Protection Agency for 12 years. Dr Maki was also Chief Environmental Scientist at Exxon Mobil, where he worked for over 35 years, including as Chief Scientist for the science and environmental impact studies completed in relation to the Exxon Valdez spill in 1989, and Chief Scientist for British Petroleum during the Deepwater Horizon spill. He is the former president of the Society of Environmental Toxicology and Chemistry. Dr Maki presented one report dealing with the topic of Toxicology, and participated in the conclave which took place on that topic.

141    Dr Scott Stout. Dr Stout is an organic geochemist who holds a PhD in geology and has over 30 years’ experience in geochemistry and the petroleum industry. He has expertise in the chemical composition of natural/shale gas, crude oil, coal, manufactured gas plant, gasoline, diesel and other fuel-derived sources of hydrocarbons in terrestrial and aquatic environments, and has authored or co-authored over 160 publications, including three textbooks concerning environmental forensic aspects of oil spills. Dr Stout has worked in both an exploration and production capacity for the oil industry (including in Indonesia) and in an environmental management capacity. His company has, for the past 15 years, provided petroleum chemical analysis of oil spill events to understand the effect of oil on the environment and chemical changes experienced by oil after it is released into the environment. Dr Stout’s recent experience includes working for NOAA in response to the Deepwater Horizon spill, during which his laboratory analysed over 34,000 samples and provided approximately 18 reports to the US government to assist it in settling its case with BP plc. Dr Stout presented four reports dealing with the topics of Dispersants and Chemical Composition, and participated in the conclaves which took place on both of those topics.

142    Dr Elliott Taylor. Dr Taylor is an environmental consultant who holds a PhD in oceanography and has worked in oil spill response, specialising in planning, preparedness and shoreline response, for over 30 years. His experience includes responding to the Exxon Valdez spill, the Deepwater Horizon spill and a range of other oil spills in marine environments and in inland waters and rivers. He has extensive experience in spill preparedness, including developing over 100 oil spill contingency plans, training programs and preparedness evaluations for industry and government. He has worked with the International Maritime Organisation to assist various countries to develop their spill preparedness capabilities, and developed a range of best practice guides, manuals and tools to assist in this process. Dr Taylor presented two reports dealing with Contingency Planning and Observations. He did not participate in any conclaves.

143    Dr Michael Zaldivar. Dr Zaldivar is a flow assurance engineer who holds a PhD in chemical engineering and has worked in the oil and gas industry for 17 years. He is the co-founder of a flow assurance company called evoleap, through which he provides expertise in multi-phase flow in pipes (being the concurrent flow of oil, gas and water in pipes). Dr Zaldivar has participated in over 50 oil and gas projects around the world, including as a multiphase flow expert in litigation concerning the Deepwater Horizon spill. Dr Zaldivar presented one report dealing with Volume, and participated in the conclave which took place on that topic.

The lay evidence

The applicant’s evidence

144    The applicant is a seaweed farmer. He lives with his family in Oenggaut, a village located near the south west extent of rote. Oenggaut is divided into five sub-villages. The applicant has lived in one of these, Tunggaoen Timur, his whole life. This sub-village and another have a combined population of 327 residents. The applicant said that his village was a traditional one that centres on family, church and community.

The applicant’s education and life before seaweed farming

145    The applicant made an affidavit on 18 August 2018 in which he deposed to the nature of his seaweed farming business, his observations of the arrival of (what he described as) oil in the waters off Inggurae Beach, and the effect of that event on his business. A redacted version of this affidavit is in evidence—redacted because, like a number of other witnesses, the applicant gave oral evidence of his observations and on other matters in contest in the proceeding.

146    The applicant does not speak English, but he made the affidavit in English with the assistance of two interpreters. His native languages are Bahasa Indonesia and the Delha dialect native in the west of Rote. The applicant deposed that he reads, writes and understands Bahasa Indonesia well. He deposed that the affidavit was carefully read aloud to him by one of the interpreters before he signed it, and that he understood it well. A version of the affidavit translated into Bahasa Indonesia and dated 18 August 2018 was admitted into evidence. The extent to which the applicant was involved in the preparation of the affidavit was the subject of cross-examination, which I address below.

147    The applicant attended primary school for five years from the age of ten. When he left school in 1973, he helped his mother and step-father with family crops. He lived at home with them until he was married under local custom in 1982 to Viktoria Sanda Bessie. He and his wife moved into a house he built. They have five children.

148    After the applicant married, and before he started seaweed farming, he earned income from extracting products from palm trees to make sugar, and from fishing. His estimated average annual income before he started seaweed farming was less than 2,000,000 IDR, which was just enough to survive and provide for his family.

Seaweed farming

149    In 2000, the applicant was introduced to seaweed farming by the then bupati of Rote. Officials from the Rote Department of Marine Affairs and Fisheries provided the applicant and others with seaweed seed (small pieces of fresh new branches from a clump of seaweed) of the cottonii hijau and cottonii merah varieties, and ropes on which to grow them. The applicant has only ever grown cottonii hijau seaweed.

150    The applicant first began seaweed farming as part of a collective. From when he started in 2000, his returns were regular enough that he stopped other work. The applicant does not remember how much money he made in 2000-2001, but his evidence is that it was several times more than he had earned in the years before. He was able to improve his home, pay for one child’s education, and plan to educate another.

151    In 2002, with the encouragement of the government, the applicant and the other nine members of his collective agreed to split up their seaweed equally and start new, individual plots using the seaweed as seed. The government provided rope as a grant, and the applicant procured other materials he required.

152    The applicant selected a new area for his plots after carefully observing the water off Inggurae Beach, which was close to his home. The first he selected is identified as Plot 3. He did not buy this plot or any other since. The process for selecting a plot was done by informal discussion and agreement with other local villagers who had an interest in seaweed farming, including the heads of his sub-village and another neighbouring it. The applicant says his ownership of Plot 3 and his other plots has always been recognised by other villagers and that he has never heard of any ownership disputes between others.

153    The framework on which he grew his seaweed consisted of wood posts driven into the sea floor, between which ropes of about 1.5 m in length were tied. The seaweed, and plastic bottles to keep it afloat, were tied to the ropes.

154    The applicant said that he harvested seaweed year-round, although most harvesting took place in the nine months of the dry season. The seaweed usually took about 35 days to mature from seed. It was harvested from the ropes and then dried in the sun. The dried seaweed was then stored in large bags typically weighing about 70-80 kg.

155    The applicant said that approximately once a month a collector representing a seaweed buyer bought the seaweed. The price was determined by the buyer, who also weighed the seaweed once the applicant had agreed to sell it.

156    During the wet season, the seaweed continued to grow but the harvest and drying stages were made somewhat more difficult by wet weather.

157    The applicant’s recollection was that:

(a)    From 2002-2005, the crops always performed well.

(b)    2006 was a good, consistent season without any unusual weather events.

(c)    2007 was similar to 2006, but with more favourable conditions in the wet season, meaning that he and his wife could access the plots more often during the wet season than in 2006. He said that the seaweed crop grew well.

(d)    2008 was the best year for growing seaweed. February was calm and good harvests could be made from early February. The conditions during the wet season at both the start and end of 2008 meant harvests could be done regularly throughout the rainy season. The applicant said that, in 2008, a long rope could produce five baskets of wet seaweed.

(e)    In 2009, the harvest started late because of wet and windy conditions in February. The applicant said that harvesting ended when the oil arrived: see below.

(f)    In 2010, there was no harvest at the beginning of the dry season because his crops had died in 2009. Harvesting only started when there was enough seaweed on the ropes. During examination in chief, the applicant said that towards the end of 2010, he was growing seaweed on 17 ropes, but that none had developed sufficiently to harvest. In 2010, he only filled part of one basket of wet seaweed per day.

(g)    In 2011 and 2012, harvesting could not be commenced at the beginning of the dry season because the crops were still recovering from the damage of 2009. In 2011, the rain was comparatively heavy in the wet season but that the dry season was much the same as in previous years. In 2012, he had about 160 ropes of seaweed growing and the weather was similar to 2011. His wife, Viktoria, looked after it mostly. At this time, on harvesting, a long rope produced only about two baskets of wet seaweed, compared to five in 2008, as the seaweed was not as healthy and grew poorly.

(h)    In 2013 and 2014, the seasonal conditions were good and consistent. In 2013, he grew seaweed on 200 ropes. On harvesting, a long rope yielded about two to three baskets of wet seaweed. In 2014, he grew seaweed on 227 ropes. Once again, on harvesting, a long rope again yielded about two to three baskets of wet seaweed.

(i)    In 2015, the seasonal conditions were good and consistent until stormy weather around Christmas time. He still had 227 ropes of seaweed and the yield of a long rope, on harvesting, remained at about two to three baskets of wet seaweed.

(j)    In 2016 and 2017, February was stormy and windy and harvesting started a little later than in 2015.

The applicant’s business practices

158    The applicant deposed that he had never used the Internet or owned a computer. He said that he makes phone calls with his mobile phone but does not know how to take photos with it. He said that he has not seen maps like those exhibited to his affidavit until they were shown to him by his lawyers in the preparation of the affidavit. He deposed that he has never kept written records of his seaweed business and does not know of any farmer in Oenggaut who does.

159    The applicant said that his income and expenses for his seaweed business have always been paid in cash. From about 2004 to 2007 and from 2018 until the time of the hearing, he kept a bank account in which he would occasionally deposit extra profits. However, he said that he does not know how to make money transfers and relies on his half-brother to occasionally make transfers for him. The applicant said that he does not budget for the future; it is his custom to live day by day.

The oil

160    The applicant said that in September 2009 he saw oil appear in the sea at his plots and that the seaweed died shortly after. Although unsure of the exact date, he said that this happened between the middle to the end of that month.

161    He said that the oil took the form of yellow-grey blocks and that the sea was otherwise dark. The blocks were about the size of a golf ball. When he touched the blocks, his hands felt smooth. As for the seaweed, it looked the same for two or three days but then turned white. Aside from the blocks in the water, the applicant also said that he saw rainbow colours in the water when the sun rose on the first and second day that the oil was there. The applicant also said that he saw many dead fish of various kinds at this time.

162    The applicant said that after the first two days he saw more dead fish. He also smelled the scent of oil. He saw yellowish blocks attached to his ropes and seaweed crops. Upon entering the water, his skin felt smooth with oil.

163    He observed other farmers’ plots. They were similarly affected. He observed the same conditions at a different site about 1 km from his home. In the following days, the applicant checked on his own plots and found that the water had not cleared. The seaweed had started to turn white. As more days passed and the water cleared, he found that his seaweed was gone.

After the oil

164    The applicant said that, in about March 2010, he bought some more seed and tied it to his ropes. The plants died after a week.

165    Later in 2010, the applicant was supplied with seed by the Department as a grant. He was told it was called sakol. It was different to the cottonii seaweed that he had grown before the oil arrived. The applicant said that he has only grown sakol since; cottonii has not been available. As I have already recorded, he was unable to grow seaweed that could be harvested for sale in 2010.

166    The applicant said that in the low-yield years, especially 2010-2011, the sakol seaweed he grew was soft and “mushy”, and resulted in a lighter-weight dry seaweed compared to the cottonii.

The effect of the oil in 2009 on the applicant’s life and income

167    The applicant said that the oil that arrived in 2009 killed his seaweed crop and that his business has never fully recovered. Prior to 2009, he says he could provide for his family comfortably and give money to his Church. He said that, today, the seaweed is growing again but does not provide as much income for him as it did prior to 2009. He said that he has taken on labouring work as well as managing the seaweed plots with his wife.

Cross-examination

168    The applicant was taken to his affidavit in cross-examination. He was challenged on the extent to which he had prepared to give his evidence, and the extent to which he had been involved in the preparation of his own affidavit given his limited understanding of English and limited literacy in Bahasa Indonesia. He said that he had not read the Bahasa version of his affidavit before swearing the English version, but that the Bahasa one had been read to him by an interpreter.

169    In closing submissions, the respondent said the applicant’s evidence should be treated with considerable caution, noting that he gave evidence of events up to 12 years prior with a level of detail at times that was surprising given the passage of so much time. Further, the respondent submitted that there were inconsistencies in the applicant’s evidence that he was unable to explain, which suggested a lack of candour.

170    Despite some inconsistencies in his evidence, I accept that the applicant was an honest witness. I accept the evidence he gave concerning the observations he made in September 2009 when oil appeared in the sea at his plots. I deal with the respondent’s other criticisms of the applicant’s evidence when considering the calculation of the applicant’s damages.

The evidence of other seaweed farmers, village heads and other lay observers

171    A large body of evidence was called from other seaweed farmers and the heads of villages in the Rote/Kupang region concerning the observations they made in late 2009, particularly in the September/October period, of the presence of (what they described as) oil on beaches and in the surrounding waters, and the impact of that oil on the seaweed crops growing in the area at that time. In many cases, this evidence was given orally through interpreters and subjected to cross-examination.

172    As to be expected, the evidence differed from witness to witness, no doubt reflecting each witness’ attempt to recall events that had occurred many years beforehand. There were, however, noticeably recurring observations across the evidence, such as the observations of waxy clumps of material, variously coloured, that was slippery or oily to the touch and which irritated the skin, and the presence of rainbow-coloured sheen on the water. Some witnesses spoke of the smell of kerosene or diesel oil or other fuel smells.

173    The substance of this evidence is summarised in Schedule C to these reasons. A number of the witnesses referred to maps (some maps better than others) showing the locations of their villages or seaweed farms. Where possible, I have included these maps in Schedule C. Schedule C also summarises the evidence of lay observers who were not seaweed farmers or heads of villages.

174    The respondent challenged the reliability of this evidence, submitting that the Court should exercise considerable caution before accepting it. The respondent pointed out, correctly, that, in their affidavits and oral evidence, the witnesses were relying on their memories of events which occurred many years ago. The respondent submitted that it is highly improbable that anyone would could recall with precision the characteristics of a substance observed almost ten years ago. The respondent pointed to the lack of photographs, notes or other contemporaneous records to support these recollections.

175    The respondent also contended that, in the case of the seaweed farmers, there was a risk that the potential of receiving a financial benefit from this litigation “impacted the construction of the impression that they presented”. It is not entirely clear to me what the respondent means by that expression. I assume that the respondent means that, subconsciously, the witnesses presented their recollections in a way that enhanced their prospects of receiving a financial gain.

176    The respondent devoted a section of its written submissions to outlining the respects in which it contended that the testimony of some of the witnesses was unsatisfactory, or should be treated as unreliable, either generally or in certain respects, or should be treated with caution.

177    One recurring theme in the respondent’s submissions was that the memories of some seaweed farmers had been contaminated, to a very large extent, by “consensus” versions of the facts they had discussed many times. To explain, the process of information gathering for the purposes of this proceeding involved meetings attended by seaweed farmers from particular locales. These meetings were called “sign up” meetings—meaning that the seaweed farmers were “signed up” to the class action (the definition of Group Members in the further amended statement of claim includes the requirement that they have signed a particular funding agreement before the commencement of the proceeding). At the “sign up” meetings, a number of topics were discussed, including the nature of the proposed class action and certain facts about the Montara oil spill. Information was collected and entered into standard forms—called Form V2 and Form V3. Form V2 was a summary of seaweed production for the locale for certain years. It contained collective information concerning the nature of the seaweed crops and the quality of seaweed grown in those years. It also provided information on average sales prices for dried seaweed in the relevant locale. Form V3 was a listing of seaweed farmers and the quantity of their individual dried seaweed production in 2008.

178    Affidavits, annexing some of these forms, are in evidence. Some of the witnesses were cross-examined on the information contained in them. These forms provide the genesis for the contention that, through the instrumentality of these meetings, the seaweed farmers reached “consensus” views. In cross-examination, this was extended to consensus views of the observations that had been made of the arrival and the appearance of oil in the coastal regions of Rote/Kupang, and in the seaweed farms. This led the respondent to submit that the Court could have no confidence that the descriptions of what the witnesses saw, as recounted in their affidavits or oral evidence, actually reflected their recollections as opposed to impressions drawn from, or at least strongly influenced by, many discussions which must have taken place.

179    The caution expressed through this submission is entirely appropriate. Generally speaking, the witnesses who were cross-examined in this way accepted the possibility, when it was put to them, that their recounting of what they observed in the water in late 2009 was, or might have been, affected by discussions they had had over the years or accorded with a consensus view. This acknowledgement sounds to their credit. My impression is that all the witnesses spoke frankly on this topic, although at times some had difficulty in following the line of questioning put to them. What does strike me is that the descriptions given by the witnesses of what they observed are not uniform, but vary in matters of detail. This will be apparent from the summaries I have provided in Schedule C. These descriptions are sufficiently different, in each case, to lead me to conclude that, when giving their evidence, the witnesses were relying on, and seeking to express as best they could, their personal observations, albeit that these observations might have accorded with a view that the witness regarded as also shared by others and was thus, in that sense, a consensus view. Some witnesses advanced support for their observations by reference to the fact that others had made a particular observation. In such cases, I do not think that the witness was resiling from his evidence that he, personally, had also made that observation.

180    Some witnesses gave an account in oral evidence of their observations that varied from the account given in their affidavit evidence. However, when this happened, the variation was, generally, to supply greater detail of what they had observed, which had not been included in the affidavit. Once again, when challenged, the witnesses adhered to the truthfulness of their oral accounts.

181    I now turn to consider the respondent’s criticisms of some particular witnesses.

182    The respondent criticised the evidence given by Mr Nikodemus Ndun. Mr Ndun is a shopkeeper and seaweed trader in Nemberala village. Amongst other things, Mr Ndun gave evidence of seaweed prices in various years.

183    The respondent submitted that Mr Ndun was “not an impressive witness” and that his evidence should be treated with “great caution”. This submission was based on Mr Ndun’s evidence of the number of truckloads of seaweed he sold in the wet and dry seasons, and of seaweed prices in 2008. I make no findings in that regard. It has not been necessary for me to rely on Mr Ndun’s evidence of these matters. The respondent did not challenge the reliability of Mr Ndun’s evidence of seaweed prices in other years.

184    The respondent submitted that the evidence given by Mr Silwanus Aplugi was so unsatisfactory that it should not be accepted as a whole. Mr Aplugi is a teacher and a seaweed farmer. At the time he gave his evidence, he was also the head of Anarae village.

185    According to the respondent, Mr Aplugi had knowingly given a false estimate of his seaweed production in 2008, when signing a Form V3. The figure given in that form for Mr Aplugi’s production was 10,000 kg. In oral evidence, Mr Aplugi said that his production was, in fact, between 15,000 to 17,000 kg, but he only put in 10,000 kg for the purposes of the form. Earlier in his cross-examination, Mr Aplugi said that his production for 2008 was 11,000 kg.

186    Mr Aplugi did not accept that the entry he had made in the Form V3 was false. He said that he thought that the Form V3 was only for “data collecting” purposes and that, for that reason, it was “okay” for him to “give a false number”.

187    The respondent also pointed to the fact that Mr Aplugi had attended a “sign up” meeting and had been told that oil from the Montara oil spill had killed the farmers’ crops in 2009.

188    Based on the differences in the figures given by Mr Aplugi for his seaweed production in 2008, his acknowledgement that the figure he gave for the Form V3 was “false”, and the fact that Mr Aplugi had attended the “sign up” meeting and been told of the Montara oil spill, the respondent submitted that the Court could have “no confidence” in his evidence.

189    I do not accept that submission. Mr Aplugi was cross-examined at length, but he was not challenged on his account of his observations about the death of his seaweed crop in mid to late September 2009. His account included his observation of “bubbles of oil” in the form of “candles and liquid” that were “yellowish and chocolate”. He observed that his seaweed became soft. There were dead birds and fish, and coral had become detached. He experienced itchiness in his arms and legs after he had entered the water and came into contact with these substances.

190    It is not necessary for me to resolve the differences concerning Mr Aplugi’s seaweed production in 2008. It is enough for me to say that, whatever criticisms might be made of his evidence on that topic, I am not persuaded that the evidence of his observations of oil in mid to late 2009 was false or cannot be relied upon, particularly when the respondent did not challenge those observations in any way. The fact that some years later Mr Aplugi was told about the Montara oil spill does not lead me to a different view.

191    The respondent submitted that the evidence given by Mr Axel Chalvet should not be accepted. Mr Chalvet is a French national who lives near the village of Boa, on the south-western coastline of Rote. He said that, in September 2009, he observed a large amount of “waxy, white greasy substance” floating all over the ocean. He said that it looked like “a very large river”, approximately “a couple of hundred metres” wide. He saw it moving east to west with the wind. At the beach at Boa, Mr Chalvet noticed that this material was “everywhere, accumulating in little whirlpools all over the beach on the sand, making clumps”. He noticed that this substance came and went over “a couple of weeks”. When he went fishing about 10 km to the south of Ndana Island (which is just off the coastline of Rote, near Boa), Mr Chalvet noticed a lot of grease and wax floating around. He said that it made his boat “really dirty”. He had to clean it “more than once”.

192    Mr Chalvet also observed “quite a bit of waxy substance” at Kite Beach—so named because it is a location for kite-surfing. It is an eastern facing beach on the southern coastline of Rote, also near Boa. He saw this waxy substance accumulating on the beach. Mr Chalvet also observed “pools of wax” at Oenggaut Beach, although there was more of this in the water than on the beach because the beach is west-facing. He observed the loss of seaweed crops at this time.

193    The respondent submitted that Mr Chalvet’s evidence should not be accepted because, it said, this evidence varied significantly from “the contemporaneous records of his observations”. The contemporaneous record was an email that had been broadcast by Mr Chalvet’s mother on 19 October 2009 referring to “stinky and oily pollution” reaching Rote’s shores. Mr Chalvet’s mother wrote:

One can see the white and yellow poisoning foam coming toward the beaches instead of dolphins and whales as usual.

194    Mr Chalvet accepted that this was a description he had given to his mother at the time, although in one part of his evidence he referred to this description as his mother’s, not his. In cross-examination it was put to him that this was, in fact, the best description of what he had seen. It was also put to him that what he had observed were algal blooms in the water. Mr Chalvet disagreed. He affirmed what he had seen, saying:

... what I saw was waxy and greasy. White and yellow foam is not waxy and greasy, plankton bloom is not greasy and waxy and not stinky.

195    Later, the following exchange took place:

And what I want to put to you is that this email and the description in the paragraph starting “one can see” represent a more reliable record of your observations in 2009 than what you can recall now?---That’s up to you to make that decision. You know, I don’t think so. I know exactly what I saw and I remember it very well, sir.

196    Although Mr Chalvet appears to be the provenance of the information in his mother’s email, it is not entirely clear to me that the use of “foam” was, in fact, of Mr Chalvet’s choosing. But even if Mr Chalvet did use the word “foam” when speaking to his mother, I do not see this word as encapsulating the entirety of Mr Chalvet’s observations at the time, remembering that his mother’s email also referred to “stinky and oily” pollution reaching Rote’s shores.

197    Mr Chalvet was an impressive witness. He gave his evidence confidently and calmly. He did not strike me as someone who would give the account he did, unless he was certain of what he had seen. I accept his evidence. I do not accept that his mother’s email provides a more reliable record of his actual observations at the time.

198    The respondent also submitted that the substances that Mr Chalvet saw were the same as the substances sampled by a Mr Sibert and supplied to Leeder Consulting for analysis. I discuss the Sibert sample in greater detail below. As I there explain, the integrity of that sample is seriously in question. No sound factual findings can be made about whether it contained or did not contain Montara oil at the point of its collection in late September 2009.

199    The respondent submitted that Mr Gabriel Mboeik’s evidence was unreliable and should be treated with considerable caution. Mr Mboeik is a seaweed farmer from Oelua village. He gave evidence that, in September 2009, the sea where his seaweed was grown was full of colours, and that the ropes on which his crop was grown were yellowish in colour with the seaweed chocolate in colour. He said that the smell of the seaweed was like “solid oil” and that it was soft to touch and made his skin feel itchy. He said that he saw dead fish in the water and, where there were trees, blocks of oil were attached to them. He said that, in the following days, his seaweed died and was washed away.

200    The respondent’s criticism of Mr Mboeik’s evidence was based on his denial in cross-examination that, before September 2009, any part of his seaweed had turned white or gone limp or soft, or had broken off his ropes and washed away.

201    Mr Mboeik later accepted that some of his seaweed had, in fact, broken off and washed away in the windy conditions in January and February 2009, as he had recounted in his affidavit. He said that this was “the season of waves” and that every year the seaweed could be broken off for this reason. Mr Mboeik explained that when he had given his initial denial in cross-examination he was intending to refer to the fact that he had never had a problem with seaweed breaking off because of oil. The respondent submitted that Mr Mboeik’s initial denial in oral evidence was false and therefore demonstrated his unreliability as a witness.

202    Next, the respondent relied on Mr Mboeik’s denial in cross-examination that, between 2006 and September 2009, he had any issue with seaweed breaking off his ropes and washing away. In his affidavit he had said that around October and November 2007 some of his seaweed had broken off in windy conditions and washed away. When challenged in cross-examination, Mr Mboeik accepted that this had happened. Once again, the respondent submitted that Mr Mboeik’s initial denial in cross-examination about seaweed breaking off and washing away between 2006 and September 2009 was an indicator of the unreliability of his evidence.

203    In his cross-examination, Mr Mboeik also said that in October and November 2007 the tips of some of his seaweed had become white. He was also picked up on this, but he explained that he was still able to sell his seaweed, “so it was equivalent to no problem”.

204    It is tolerably clear that when Mr Mboeik was giving his answers in cross-examination which the respondent said were “false” (and which Mr Mboeik denied were false), his focus was on the major problem he experienced in September 2009, which was that his seaweed had died and washed away. He was not considering what might be described as relatively insignificant day-to-day operational losses in running his seaweed farm which did not impact on him selling his seaweed. When Mr Mboeik’s oral evidence is considered in context, including with his affidavit evidence, I do not consider it to be unreliable. I accept Mr Mboeik’s account of what he saw in the water near his crops in September 2009.

205    The respondent submitted that the evidence given by Mr Gustaf Lay should be treated as unreliable. Mr Lay is a seaweed farmer and buyer from Tablolong village. His evidence was that early one morning in late September 2009 he observed that the water where his seaweed farm was located had changed colour. It was shiny and looked like a rainbow. He saw blocks that were coloured like chocolate and blocks that were yellowish and greyish. These blocks were the size of his fist. They resembled the texture of a candle and were oil. After touching them his skin felt itchy. He saw dead fish and other dead marine life in the water. His seaweed became soft. It did not recover and he was unable to harvest it.

206    The respondent submitted that Mr Lay’s evidence was unreliable because it was internally inconsistent and not supported by a file note taken by the applicant’s lawyers on 28 October 2014. The file note recorded a meeting at Tablolong which Mr Lay attended. In relation to Mr Lay, the note refers to him expressing his thanks for the visit and for “caring for life as farmers”. The file note seems to mention the Montara oil spill, and then proceeds with a number of dot points, including one which states: “Since spill from oil to now”. It is not apparent what that sentence was intended to convey.

207    In a later part of the file note, the question is posed: “When was first problem in 2009?” This is followed by:

March 2009/May2009. Isis.

I take the reference to “Isis” to mean so-called ice-ice disease.

208    Mr Lay explained that this was not a “problem” as such. It was more a situation that was anticipated. In Mr Lay’s experience, seaweed crops were prone to ice-ice disease at this time of the year. He said that March was the month for seaweed planting and that if the crops were not controlled—particularly should the ropes begin to sink—ice-ice disease could occur in April, when the season changes. He said, however, that he anticipates the problem by harvesting. If white spots (he said “dots”) begin to develop on the stems of the seaweed, Mr Lay said that he immediately picks it. Mr Lay accepted that ice-ice could develop on the tips of the seaweed if exposed to the sun. He also said that he had been told by other farmers that ice-ice disease could develop if the water is too warm. He said, however, that he had not experienced this problem himself. He said that, in his experience, the temperature of the seawater at Tablolong “has always been normal”.

209    The respondent submitted that Mr Lay’s evidence about there not having been a problem with ice-ice disease in March/May 2009 was false because the file note had, in fact, made a reference to it. I do not accept that submission. The file note makes a reference to ice-ice disease but is uninformative on this topic. The note that was made is not inconsistent with the explanation given by Mr Lay that ice-ice disease at this time of the year was a problem to be managed and that, to the extent that it was a problem, it was, in substance, an operational one that was posed each year, not just in 2009. The fact that the file note refers to it in response to a directed question for 2009 does not necessarily mean that it was a problem of any particular significance for that year. I accept Mr Lay’s explanation. He said that ice-ice was not a severe problem in April 2009 and not a problem for him in March or May 2009 or, so far as he was aware, for other seaweed farmers in Tablolong.

210    Next, the respondent submitted that it was significant that the file note did not record Mr Lay observing oil in the seawater around Tablolong in 2009. This is not entirely correct. The file note refers to the oil spill, indicating that this was part of the conversation in which Mr Lay participated or at least the context in which the conversation occurred. In other words, the meeting proceeded on the basis that the seaweed had, in fact, been damaged by the oil. It is true that the file note does not record the particular observations of oil which Mr Lay gave in evidence, but there is nothing in the file note to suggest that Mr Lay was, at this time, asked to give a detailed account of what he had seen in the water at Tablolong in late September 2009. I do not accept that Mr Lay would necessarily have volunteered such a description without being asked to give one. Therefore, I do not attach much significance to the absence of any such description in the file note.

211    The file note does record that the “white colour” (presumably a reference to the seaweed turning white) was first seen in “Sept/Oct 2009”. Mr Lay said that he informed Mr Phelps (the author of the note) about this. In cross-examination, Mr Lay said that the tips of his seaweed went white and the seaweed went “limp”, which he said “started after the oil spill” and “destroyed all the seaweeds”. He distinguished this from ice-ice disease which, in his view, was not a disease that attacked the tips of seaweed, but, firstly, the stems of the seaweed and then the whole plant.

212    The file note also records:

What do they know about oil spill?

In the beginning they did not know. Thought it was disease.

Any knowledge of why oil spill occurred? They did not know.

Don’t know of Commission of Inquiry

213    In cross-examination Mr Lay said that, in the beginning, he did not know where the oil had come from. He initially denied telling Mr Phelps that, in the beginning, he thought that the seaweed had been affected by a disease, but later accepted that it was possible that he had said that, because “it has been quite a long time”. Nevertheless, Mr Lay denied that his seaweed crop had been affected by a disease. He said:

Once again I have to say I know the disease of seaweeds. I know the disease of ice-ice and it was not an ice-ice disease. I would term it a disaster. ...

214    I accept that it is possible Mr Lay might have told Mr Phelps that in the beginning—meaning, when the tips of the seaweed started to turn white and the seaweed became limp in late September 2009—he harboured the thought that his seaweed might have been affected by a disease, albeit not ice-ice. However, I note that Mr Lay was not the only participant from Tablolong at this meeting. The other participants included Mr Jackarius (the head of Tablolong village in 2014), Mr Zakarius Doroh (presently the head of Tablolong village), and Mr Mester Eryon Bessie (the secretary of the village). It is possible that one of the other participants conveyed the initial thought of disease to Mr Phelps, who recorded it. I infer that if, at any time, Mr Lay did harbour that possibility, the thought dissipated quickly. Mr Lay said:

... on the first day I inspected that that situation had changed, a lot of oil there. On the second day I still had hope that everything could recover. On the third day the same. On the fourth day it was a Sunday, we could not work. So that the plan was for the following day I would pick up the harvest. I took a boat for the purpose of harvesting, but the crops were all destroyed.

215    Mr Lay was directly challenged on the fact that he had seen oil near his seaweed in September or October 2009. He rejected the assertion that he had not seen oil.

216    I accept Mr Lay as an honest witness whose evidence is generally reliable. I accept his account of what he observed in the water in and around his seaweed crop in late September 2009.

217    Notwithstanding the respondent’s various criticisms of it, I consider the lay evidence of the observations that were made to be reliable. On the whole of that evidence, I am left in no doubt that, at the time, all witnesses (seaweed farmers, village heads, and other lay witnesses) witnessed a single, strikingly unusual, and unique event in the Rote/Kupang region, which coincided with the quick and dramatic loss of local seaweed crops. I am satisfied that this event was so striking that it is likely that it was fixed in their minds, notwithstanding that it was an event that, not unnaturally, was the topic of conversation between them, perhaps on many occasions, in the following years.

218    The respondent submitted that many of the lay witnesses’ observations were inconsistent with the substances they observed being oil from the H1 Well blowout. The respondent sought to support this submission by the expert evidence that was given with respect to the weathering of Montara oil and the expert evidence that specifically commented on the lay witnesses’ observations. I will discuss these strands of evidence in a later section of these reasons. However, it is convenient to record now that, in closing submissions, after contending that weathered Montara oil would not have looked or smelled as the witnesses had stated, the respondent advanced the following propositions: (a) the expert evidence shows that the substances observed by the lay witnesses cannot have been Montara oil; (b) therefore, some other event or phenomenon caused those substances to reach Rote/Kupang in large volumes, if the lay witnesses’ evidence is reliable; (c) the state of weathered Montara oil was “otherwise indicative of the unreliability of the lay witness testimony”.

219    It is not clear to me how these propositions stand together. The first two propositions proceed on the basis that the lay witnesses did not observe Montara oil but the widespread arrival of another substance or other substances due to some other event or phenomenon. The third proposition appears to be that the lay witnesses’ observations were unreliable because the witnesses did not reliably describe weathered Montara oil. However, the presence of Montara oil in these locations is the very proposition that the respondent denies.

220    The respondent also contended that a “striking feature” of the applicant’s case is that oil from the H1 Well blowout reached not only the southern coast of Rote, but also the northern and western coasts of Rote, and Kupang. The respondent pointed to the fact that none of the modelling predicted those outcomes. I will deal with this submission in a later section of these reasons.

221    In closing submissions, the applicant drew attention to the evidence of some of the lay observers who were not seaweed farmers or village heads. Even though the gist of their evidence is included in Schedule C, I will now recount their evidence in a little more detail.

222    Matthew Smith was an aerial observer who was deployed by the Australian Marine Oil Spill Centre (AMOSC) to assist AMSA during the oil spill response effort. Mr Smith swore an affidavit in which he deposed to his observations of the oil during that period. The affidavit included photographs, mud maps and Surveillance Flight Reports related to observations of the spill.

223    Mr Smith undertook daily aerial observations for AMOSC in September and October 2009 from a Dornier search and rescue aeroplane. On each sortie he undertook various activities, including directing vessels which were part of the oil spill response containment and recovery operations to significant patches of oil; performing surveillance on nearby reef systems; and identifying the extremity of the oil and sheen.

224    Over the reefs near the blowout, Mr Smith observed sheen, but no thick, heavy oil. Identifying the extremity of the oil was a difficult task as the oil and sheen did not form a clear unbroken line on the sea surface. He said it was also difficult to identify the edge of the oil and sheen as there was a vast area of the Timor Sea to cover and conditions were variable. He was confident of his observations on some days and not on others, depending on the conditions. He also had no way of knowing how long the oil and sheen he observed had been on the sea surface.

225    Mr Smith said that the pilots of the Dornier aircraft had some flexibility regarding flight paths in Australian airspace but were not permitted to enter Indonesian airspace without prior approval. He did not say whether that approval was granted for any sorties he undertook.

226    To identify the edge of the oil and sheen, the plane tracked to its last known location before following a band of thicker oil as identified by Mr Smith. He said he could not exclude the possibility that oil and sheen had travelled beyond his line of sight and that he may have occasionally lost track of its edges. In closing submissions, the applicant submitted that it was therefore possible that the oil and sheen he observed extended further towards Rote and Kupang than was evident in his mud maps, Surveillance Flight Reports and other contemporaneous AMSA documents.

227    The applicant drew my attention to a number of sightings recorded in the AMSA Surveillance Flight Reports in September and October 2009 of oil or features consistent with oil north of Australia’s Exclusive Economic Zone at distances between 50 and 83 km from Rote. The applicant argued that it was plainly possible for that oil to have travelled north and reached the coastlines of Rote and Kupang.

228    Mr Smith was not cross-examined. However, in closing submissions, the respondent pointed to Mr Smith’s observations about the difficulty of identifying oil from the air in support of the contention that numerous phenomena can be mistaken for oil from above.

229    In a later section of these reasons I also refer to how oil spilled on the ocean surface can aggregate into filaments called Lagrangian Coherent Structures (colloquially, “tiger tails”). These structures imply that oil can travel via conduits, thereby potentially impeding its visual detection by, for example, aerial surveillance.

230    Dr Ghislaine Llewellyn, a marine program leader at the World Wide Fund for Nature Australia (the WWF), led an expedition by the WWF to the Timor Sea to document the consequences of the Montara oil spill on marine wildlife between 24 and 29 September 2009.

231    On behalf of the WWF, Dr Llewellyn commissioned Simon Mustoe, Director of Applied Ecology Solutions, to prepare an independent biodiversity survey of the area likely to be affected by the blowout. Mr Mustoe is an ecologist and made his own affidavit, referred to below.

232    The WWF chartered a boat for the expedition, leaving Darwin on 24 September 2009. Joining Dr Llewellyn and Mr Mustoe on the expedition was Kara Burns, a freelance photographer contracted by the WWF to take photographs; Deborah Glasgow, an expert in marine mammal observation and Chris Sanderson, an expert in bird observation and an employee of Applied Ecology Solutions. Lindsay Moller, a journalist and photographer from The Australian newspaper also joined, as well as a small crew.

233    Dr Llewellyn says Mr Mustoe compiled the data and observations from the expedition into a report titled “Biodiversity Survey of the Montara Field Oil Leak” dated 22 October 2009 (the WWF Report). The observations outlined in the WWF Report are recorded below. Dr Llewellyn says the locations identified and observations recorded in the WWF Report accord with her own recollections.

234    In particular, Dr Llewellyn says that on 27 September 2009, she smelled a foul, strong chemical smell and felt a slight burning sensation in the back of her throat. She assumed this was caused by the gases emitting from the wellhead platform and the boat changed course to evade the smell. Towards the end of the same day, Dr Llewellyn observed patches and windrows of oil on the surface of the water. The character of the oil was variable but she says they were in the boat for hours and there was a heavy blanket of oil on the surface of the water as far as the eye could see. The smell changed from earlier in the day and was more akin to the smell of a petrol station forecourt.

235    As Dr Llewellyn had not expected to see slicks or large amounts of oil, she had not made preparations to collect samples of oil. She therefore improvised with available materials and devised a system for the collection of samples. The coordinates where samples were collected was recorded by Mr Mustoe in the WWF Report. Samples were taken between 26 and 29 September 2009.

236    Dr Llewellyn’s second affidavit, sworn on 28 March 2019, included further photographs taken by Ms Burns as well as Mr Moller.

237    Simon Mustoe affirmed an affidavit on 10 August 2018 which included a copy of the WWF Report. The WWF Report sets out the locations travelled to and observations made during the field survey. The survey was carried out predominantly in an area to the northeast of the H1 Well, substantially within Australia’s Exclusive Economic Zone. The route is shown in Figure 6 of the WWF Report. Mr Mustoe deposed that he observed Ms Llewellyn collecting water and oil samples referred to in the WWF Report during the field survey.

238    On 25 September 2009, the WWF Report records that the observers noted some white specks in the water that they thought might have been broken up cuttlefish. However, the WWF Report notes that after the observers saw wax particles the following day it is possible, with hindsight, that the white specks were wax particles.

239    On the morning of 26 September 2009, the survey team crossed a patch of thick white snowflake-like material, which appeared to be a flocculating waxy compound that they presumed was residue from the oil spill. There was an obvious surface sheen layer associated with the wax particles. The survey team recorded surface sheen, and wax particle density and size, systematically throughout the day. In the morning, they mostly passed through areas of patchy light sheen with small wax particles of varying densities. At about midday, they crossed a dense waxy slick, and then a heavy algal bloom with some wax particles within it. In the afternoon they modified their course to head just north of the Jabiru drilling platform.

240    A record of the surface oil observed was kept from 26 to 29 September 2009. The expedition recorded the extent, weight, size and density of the oil. The results of this survey were summarised in Figure 24 and section 11.3.6 of the WWF Report. At times little or no surface oil was evident but at other times both surface sheen and heavier patches of oil were observed.

241    Notably, the WWF Report records that, on the afternoon of 27 September 2009, at about 40 nm from the H1 Well, the survey team observed a very heavy patch of surface oil, covered in a moderate to thick yellowish-brown layer. They observed rainbow patterns on the water and distinct trails of oil behind particles of a yellowish wax. Ripples on the water revealed a blackish streaked tinge to the waves. The area smelled strongly of turpentine.

242    On 28 September 2009, the survey began about 25 nm due east of the H1Well and headed northwest. Light oil sheen was evident in this area but there were not any particularly heavy patches of weathering oil. However the survey team observed long and broad slicks of surface sheen containing waxy particles of varying size and density. At dusk, they encountered the very thick area of oil slick observed the day before.

243    The survey team took photographs recording the behaviour of the oil observed on the sea surface. These are shown in Figure 22 to the WWF Report. The WWF Report observed that surface oil could be identified by extensive patches of continuous glassy water; particles of white waxy residue of varying sizes and densities; smell; or in moderately heavy patches, a clearly visible oil layer on waves or in the wake of the vessel. With regard to the particles of white waxy residue, the WWF Report observed that the larger of these could be seen to leave an oil trail on the surface.

244    With regard to the extent of the slick, the WWF Report concluded that there was extensive patchy surface sheen throughout most of the surveyed area, even in waters situated over 100 nm from the source of the spill. The furthest that surface sheen was found with any certainty was about 140 nm from the Montara H1 Well. It was assumed that this oil had originated from that source. The report concluded that there were areas where particles of white waxy residue of varying size and density were floating on the surface, and one particular area (referred to above) where the surface sheen was particularly thick and accompanied by slicks of yellowish wax particles.

245    Professor James Watson was commissioned by the Commonwealth Department of the Environment, Water, Heritage and the Arts (DEWHA) to lead an expedition to the Timor Sea to undertake a rapid survey of cetaceans, birds and marine reptiles (megafauna) in the Montara oil spill region. The purpose was to identify megafauna in the region and address the impact of the Montara oil spill on them.

246    Professor Watson engaged two colleagues from the University of Queensland to assist with the rapid survey, which was undertaken between 25 September 2009 and 4 October 2009. Professor Watson’s observations and findings were presented in a report titled, “A rapid assessment of the impacts of the Montara oil leak on birds, cetaceans and marine reptiles”, dated 23 October 2009 (Professor Watson’s Report).

247    The survey team conducted five days of transects at sea, incorporating 279 10 minute strip transects covering a distance of 668.5 nm and a total survey area of 99,040 ha. The area covered was directly north and northwest of the H1 Well extending to the Ashmore Reef as recorded at Figure 1 of Professor Watson’s Report.

248    In these surveys, a total of 124 10 minute strip transects were in waters visibly affected by oil, representing 44% of the total number of strip transects made. The oil was more prominent in transects directly north of the H1 Well, as shown in Figure 4 of Professor Watson’s Report.

249    Professor Watson’s Report does not describe the appearance of the oil in great detail, but referred to the variable coverage and thickness of oil on the water in different areas. Figure 7 of the report shows an example of a thick layer of oil on the surface of the water. It is a yellowish-brown colour and appears to be textured, with an area of sheen connected to it.

250    The report found there was a significant risk that a change in conditions could push the slick towards the breeding islands and reefs to the north, west and south of the H1 Well, or into deeper waters to the west and north of the Ashmore reef.

The volume of oil spilled

Introduction

251    There was a considerable body of evidence directed to estimating the volume of oil discharged from the H1 Well over the 75 day period of the oil spill.

252    On 21 August 2009, the respondent informed AMSA that the volume of oil being spilled may have been between 200 to 400 bbl/day. The respondent has not provided evidence in this proceeding to support that rate of release, but it did, however, provide the rate of 400 bbl/day as an assumption to be used by Dr French-McCay in her trajectory modelling: see below. Ultimately, the volume of oil released was of no consequence to Dr French-McCay’s modelling because, in her opinion, the trajectory of the released oil would not change; only its concentration would change at the locations which, on her modelling, the oil reached. The position was otherwise with Dr Hubbert’s modelling. Dr Hubbert disagreed with the notion that the volume of released oil did not affect its trajectory over time. He said that notion failed a “common sense” test.

253    As I explain below, in the trajectory models used by Dr French-McCay and Dr Hubbert, oil is represented as collections of particles or “spillets”. In these models, the particles are released intermittently to represent the continuous flow of oil into the ocean as it is affected by winds, ocean currents and turbulence. Dr Hubbert noted that Dr French-McCay’s model limited the number of particles that could be released—specifically, no more than five particles each 30 minutes. An increase in oil volume did not result in more particles being released. Rather, in Dr French-McCay’s model, a greater volume of oil was assigned to each particle. Therefore, the five particles ended up going to the same locations regardless of the volume of oil released. Dr Hubbert said that the model he used responded to an increase in the volume of oil by releasing a proportionally greater number of spillets every two minutes.

254    The applicant’s case is that a far greater volume of oil than 200 to 400 bbl/day was released during the spill. He sought to prove this in two ways. The first way was through Professor Wereley’s analysis and calculation of volume flow, based on photographic observations of oil discharging from a horizontal drain pipe on the wellhead platform during the course of the spill. The second way was through calculations performed by Professor Towler based on a “material balance” assessment of the H1 Well.

Oil volume flow rate calculation

Professor Wereley’s analysis and calculations

255    The blowout of the H1 Well caused liquids and gases (flux) from the Montara reservoir to flow out of the top of the wellhead. The flux hit the bottom of the drilling floor. Some portion of the flux continued upwards into the drilling mezzanine while another portion of it dropped back onto a helipad. The flux in the drilling mezzanine followed a path over to the West Atlas rig and then to the sea via a vertical drain pipe. The flux on the helipad followed a path through the wellhead platform to the sea via a horizontal drain pipe. Photographs taken at the time show other avenues for flux entering the sea. However, for his analysis, Professor Wereley relied on his observation of oil discharging from the horizontal drain pipe. It will be appreciated, therefore, that Professor Wereley’s analysis and calculations were somewhat conservative at the outset in that they did not purport to quantify all the oil that entered the sea as a result of the spill.

256    The helipad drain system was a long, circuitous pipe network that led from several drains on the helipad deck to the horizontal drain pipe that discharged to the sea. The network was comprised nearly entirely of straight runs of 200 mm (8”) nominal size pipe connected by many 90° elbows, and a few valves. The horizontal drain pipe was the bottommost pipe in the network. It was approximately 13 m long and terminated with a 45° (from the horizontal) angled section.

257    The flux can be considered as comprising three components: condensate (i.e. oil), gaseous hydrocarbons, and water. Professor Wereley’s evidence was that the gaseous hydrocarbons would have been carried away by the air. He said that the flow would have contained no water, having regard to the temperature at which, and force with which, water would have exited the wellhead. As Professor Wereley explained in his first report:

5.5    Because of the vigour with which the flux out of the well impinged on the drilling floor, the liquid was broken up into a fine spray comprised of many droplets. During this time, the heat of the liquid, already near the boiling point, combined with the agitation of the droplets provided ideal conditions for those droplets to evaporate. To the extent that the water, which flowed from the reservoir, was not already steam, the conditions upon its exit from the well head were such that it would have evaporated.

258    Professor Wereley’s examination of the available photographs of the wellhead platform and the West Atlas rig taken at the time of the spill confirmed (for him) that the flow, at least from the horizontal drain pipe, contained materially no water.

259    There are several ways of calculating the amount of oil that spills into the sea from an uncontrolled well. One of these is by visual observations taken from photographs to calculate the velocity of the liquid. The calculation of velocity is then converted to a volume flow rate. This method of calculating the velocity of a liquid from its trajectory is an accepted approach in fluid mechanics. As Professor Wereley explained:

6.1(e)    A single photograph of oil spilling from a broken pipeline can be used to estimate the amount of oil being spilled by that pipeline. For example, oil flowing from inside a pipeline out through a weld failure in the pipe arches high into the air creating a curved path through the air due to gravity’s effect pulling it back to the earth. From the path of the oil recorded in a single image, not a video, it is possible to calculate the speed of oil as it emerged from the pipe. When the speed is combined with the size of the weld failure, the amount of oil being spilled can be calculated.

260    This is the method that Professor Wereley used. He described the principle for calculating oil flow out of the horizontal drain pipe as follows (omitting footnotes):

8.2    The oil flows out of the mouth of the horizontal drain pipe. After it leaves the horizontal drain pipe, two forces act on it. The first of these is gravity which pulls the oil downward at 32.174 ft/s2. The second of these is wind which pushes the falling oil in the downwind direction.

8.3    The curve that the oil follows as it bends toward the sea below can be described mathematically. That description can then be used to extract the oil speed as it exits the pipe, as well as the wind direction.

8.4    Qualitatively the oil’s path can be illustrated by imagining the upper and lower limits of the oil speed as shown in Figure 8. If the oil drips out of the end of the horizontal drain pipe it will fall straight downwards and hit the sea directly underneath the drain pipe. If the oil is moving very fast (as out of a fire hose), it will travel straight along the direction of the end of the pipe (45 degrees downward from the horizontal) and follow a nearly straight line, ultimately hitting the sea. The actual oil speed in this oil spill is somewhere between these two extremes. Once the oil speed is known, the oil volume flow rate can be calculated by multiplying by the area of the pipe that is filled with the oil.

    Figure 8. The diagram shows the two limits on the path that oil can take as it falls downward to the sea.

261    To perform his initial calculations, Professor Wereley used two photographs taken on 21 August 2009 (designated as PTT.617.003.9947 and PTT.617.003.9939); one photograph taken on 22 August 2009 (designated as PTT.620.003.8765); one photograph taken on 26 August 2009 (designated as PTT.600.026.5696); one photograph taken on 9 September 2009 (designated as PTT.620.003.8819); and one photograph taken on 3 November 2009 (designated as PTT.620.004.0916). Thus, the oil flow from the horizontal drain pipe was measured on five days. Eight separate measurements were made. Professor Wereley summarised the results of his analysis and calculations in a table (Table 2):

262    Professor Wereley calculated the cumulative volume of oil spilled as follows:

17.2    Given the quantitative measurements and the qualitative observations, it seems clear that the oil continued flowing throughout the course of the oil spill. Based on the materials which I have been asked to consider, I am unable to observe any quantitative trend regarding the oil volume flow rate. For example, the volume flow rate of the oil exiting the horizontal drain pipe measured on 9 September 2009, was both considerably higher and lower than measurements for volume flow rates in August 2009. Consequently, it is my opinion that the best way to estimate the oil flow rate over the course of the spill is to average the first seven numbers in Table 2. These seven measurements are representative of the oil volume flow rate before the well head platform caught fire. I have excluded the measurement for 3 November 2009 as it is only representative of the short period of time that the well head platform was on fire. It is clear that less oil was spilled into the ocean when the well head platform was on fire as much of the oil burned and did not drain into the sea. The best estimate of the oil volume flow rate between 21 August 2009 and 31 October 2009 is:

Qavg = (1250+362+1582+668+417+1170+715)/7 = 881 bbl/day

17.3    The total volume of oil spilled is then the sum of the average daily oil volume flow rate times the number of days before the well head platform caught fire and the oil volume flow rate after the well head platform caught fire times the number of days before the well was killed:

Total volume = 72 days x 881 bbl/day + 3 days x 464 bbl/day = 64,824 bbl

(Emphasis in original.)

Criticism of Professor Wereley’s analysis and calculations

263    The respondent called Dr Zaldivar to prepare a report responding to Professor Wereley’s first report. In his report, Dr Zaldivar said that there were many errors, assumptions and simplifications in the methodology that Professor Wereley had used to calculate flow rate. He identified four matters which he saw as “key deficiencies” which, in his opinion, rendered Professor Wereley’s conclusions “completely unreliable and invalid”.

264    First, Dr Zaldivar said that Professor Wereley’s treatment of the effect of wind on the oil draining from the horizontal drain pipe was incorrect because Professor Wereley did not correctly account for the horizontal and vertical components of wind drag on fluid velocity. Dr Zaldivar argued that, when the correct equations are taken into consideration, it is not possible to calculate a flow rate using Professor Wereley’s approach. This is because there were too many unknown variables. Dr Zaldivar argued that, because the formulation used by Professor Wereley was incorrect, all the calculated flow rate results should be “considered unreliable and invalid”. Dr Zaldivar also pointed out that Professor Wereley had adopted inconsistent assumptions: Professor Wereley had argued that wind friction could be ignored but, in his calculations, he had added a horizontal component of wind speed to the fluid velocity where the fluid exits the horizontal drain pipe.

265    Secondly, Dr Zaldivar identified a unit conversion error which, he said, caused Professor Wereley’s calculations to be “fundamentally flawed”. Dr Zaldivar contended that, when this error was corrected, the results of Professor Wereley’s calculations were “completely out of the range of reality” and “nonsensical”. Dr Zaldivar argued that this underscored (what he saw as) the “fundamental unreliability” of Professor Wereley’s method.

266    Thirdly, Dr Zaldivar said that Professor Wereley had incorrectly assumed that the flow exited the horizontal drain pipe at a 45° angle (the exit angle of the pipe bend at the distal end of the drain pipe). In Dr Zaldivar’s opinion, the length of the pipe bend was not sufficiently long to cause the entire flow to deviate along the bend, especially at higher velocities. Dr Zaldivar replicated Professor Wereley’s calculations but changed the exit angle to 30°. This showed that Professor Wereley’s fluid velocity was nearly 86% greater for an exit angle that was only 50% greater than the angle which Dr Zaldivar used. According to Dr Zaldivar, this demonstrated the sensitivity of Professor Wereley’s calculations to the exit angle selected.

267    Fourthly, Dr Zaldivar said that Professor Wereley’s fraction filled calculation (i.e., how much of the pipe was filled with oil) was incorrect due to several factors, namely:

(a)    Professor Wereley had treated the fraction filled as 100% in cases where, in Dr Zaldivar’s view, there was insufficient photographic information available to make that determination (Dr Zaldivar said that Professor Wereley’s method of estimating the apparent fraction filled was “just a guess”);

(b)    the photographs that Professor Wereley had used showed only the “apparent fraction filled” (meaning that, as fluid exiting the drain pipe does not have enough time to bend completely along the pipe bend, the apparent fraction filled as seen at the exit of the pipe bend will always be higher than the actual fraction filled in the horizontal portion of the pipe: in other words, there is an appearance that the pipe is fully filled when, in fact, it is not); and

(c)    Professor Wereley had assumed that there was no water and no entrained gas in the liquid phase; any water would reduce the calculated volume of the oil that was discharged and entrained gas flowing in or with the oil would reduce the oil flow rate.

268    Dr Zaldivar advanced a number of other criticisms. He criticised Professor Wereley’s use of three of the photographs to carry out his calculations. In essence, Dr Zaldivar argued that the photographs were unsuitable, in various ways (including their low resolution), for the way in which Professor Wereley used them. With respect to two of the other photographs, Dr Zaldivar criticised the way in which Professor Wereley used them.

269    Dr Zaldivar criticised Professor Wereley’s analysis and calculations. In particular, he criticised the way in which Professor Wereley arrived at his calculation of cumulative volume. Dr Zaldivar argued that there was a clear trend of decreasing flow rate over time. He said that Professor Wereley’s estimated cumulative volume of oil discharged (64,824 bbl) was “between three and four times too high just based on the way [Professor Wereley] performs the cumulative calculation”.

270    Dr Zaldivar also argued that Professor Wereley had used an incorrect measurement for the internal diameter of the horizontal drain pipe (Professor Wereley used its nominal measurement of 8” whereas Dr Zaldivar said the internal diameter of the pipe was 7.813”). Dr Zaldivar said that Professor Wereley’s incorrect pipe diameter accounted for an over-estimate of the calculated flow rates by 4.6%.

271    Dr Zaldivar also argued that Professor Wereley’s analysis of the photographs had not accounted for perspective effects due to the wind velocity.

272    Further, Dr Zaldivar argued that Professor Wereley had failed to determine the uncertainty of the estimates he had used in performing his calculations. Dr Zaldivar said that if Professor Wereley had performed a scientific analysis of the uncertainty in this approach, he would have found that some of the inputs he used greatly affected the flow rates calculated using his methodology.

273    Dr Zaldivar also introduced the possible confounding effect of the activation of the fire systems on the platform and drilling rig at the time of the spill. He argued that if the fire systems were active, then water from those systems would have mixed with oil in the horizontal drain. If so, Professor Wereley would have overstated the observed flow from the horizontal drain because that flow would have included a potentially large amount of seawater.

274    It is convenient at this point to record that there is no direct evidence before me that the fire systems had, in fact, been activated at the time the photographs were taken. It is only Dr Zaldivar’s speculation that such systems might have been activated. He sought to give life to this speculation by referring to one photograph showing a difference in the colour of the flow from the vertical drain pipe on the West Atlas rig (a lighter colour) compared to the flow from the horizontal drain pipe on the wellhead platform (a darker colour). I am not prepared to draw any conclusion from this colour difference. It is very indirect evidence and, on the other evidence before me, the colour difference could be attributable to any one or more of a number of different factors. I am not satisfied on the evidence that the fire suppression systems had been activated in the photographs on which Professor Wereley relied. I would add that, had the fire suppression systems been activated, then there seems to have been no reason why the respondent could not have called direct evidence of that very matter.

275    Dr Zaldivar expressed his overall conclusions as follows:

5.1 Dr. Wereley used a method of estimating fluid velocity by applying a mathematical formulation that describes the trajectory of the fluid exiting the drain pipe and calculating a fluid velocity that predicted a trajectory that matches the observed trajectory in photographic evidence. In the process, he overly simplified or made unjustified assumptions about several factors:

1)    He assumed that the exit angle would always be 45° downward to the horizontal, which is incorrect based on the short length of pipe bend at the end of the horizontal drain pipe.

2)     He assumed that the apparent fraction filled in the photographs is the fraction filled in the horizontal pipe without regard for the fact that fluid at the edge of the horizontal pipe had to travel a mere 11.2 inches before it struck the top surface of the pipe bend, which would result in an apparent fraction filled of 100%. He also ignores the perspective effects on apparent fraction filled.

3)     He simultaneously assumed that air offers both zero resistance by ignoring the effect of air in calculating the trajectory, and infinite resistance by adding the horizontal component of wind velocity to the fluid exit velocity immediately upon its exit. He also assumed that wind velocity had no vertical component, and that the off-plane component of wind velocity had no apparent effect on the observed trajectory.

4)     He assumed that there is no water in the fluid exiting the horizontal drain pipe while providing no scientific basis for his assumption.

5)     He assumed that there is no gas entrainment in the liquid, while multiphase correlations show that at high liquid velocities, gas would certainly be entrained as dispersed bubbles in the liquid phase. He makes no effort to address this on a scientific basis.

6)     His calculation of cumulative volume discharged heavily weights the flow rates during the first five days of the spill.

7)     He made several mistakes in his report and did not consistently report all the calculated parameters, e.g., wind velocity is only reported in the first calculation and completely ignored in the rest of the calculations.

8)     He made no effort to extrapolate and compare the trajectory, which is calculated based on very few points near the exit of the drain pipe, to the longer trajectories visible in the photographs.

5.2     Beyond these mistakes and deficiencies in the report, the most important mistake is his conversion factor from ft3/s to bbl/d. Fixing this mistake puts his results in a range of flow rates that are wildly inconsistent, by an order of magnitude, with the reservoir simulations that were used in support of the well kill effort. The fact that the well kill effort was successfully performed lends credence to the reservoir simulations, based on which the oil flow potential of the well was estimated to be around 1500 bbl/d.

5.3     Based on all these factors, my opinion is that Dr. Wereley’s report cannot be relied upon to obtain a scientifically sound estimate of the total volume discharged during the incident. Even in the event one decides to accept his methodology to calculate flowrate, I found several omissions and mistakes that resulted in an overstatement of the calculated flowrates.

Professor Wereley’s response

276    Professor Wereley took on board Dr Zaldivar’s criticisms. He prepared a second report.

277    Professor Wereley accepted that there was inconsistency in assuming that the friction of the oil with the surrounding air was unimportant while at the same time assuming that the oil jet assumed the speed of the wind surrounding it. Professor Wereley accepted that the inconsistency needed to be resolved. He held to the assumption that the oil jet is not slowed considerably by the air because, at the exit of the horizontal drain pipe, the air only had a short time to act on the jet. However, Professor Wereley removed from his calculations the assumption that the oil immediately matched the speed of the air around it. In other words, he proceeded on the basis that the oil stream does not respond to the air drag near the horizontal drainpipe exit. As Professor Wereley put it, this approach is equivalent to saying that the momentum of the oil jet is large compared to the drag acting on it near the pipe exit. Professor Wereley said that this was a conservative assumption because neglecting the effect of drag on the jet (however small) would lead to a smaller jet speed in his calculations.

278    Professor Wereley accepted that he had made a unit conversion error in his calculations.

279    Professor Wereley accepted that the flow rate is dependent on the angle of the oil jet as it leaves the horizontal drain pipe. He therefore modified his jet flow calculations by extracting the exit angle from a “best fit” model of the jet motion, rather than assuming it from the geometry of the horizontal drain pipe.

280    With respect to the calculation of the fraction filled, Professor Wereley rejected the criticism that his methodology was “just a guess”. He said that his analysis of the photographs was based on commonly used methodologies in the open channel flow field (the study of flows in partially filled conduits, pipes and the like). As to Dr Zaldivar’s criticism that there was insufficient spatial resolution to see the jet height, Professor Wereley used a method to determine the fraction filled which involved deriving size ratios of the height of the jet exiting the horizontal drain pipe in images with better resolution, where the jet can be seen exiting the pipe and flowing at a more or less steady flow rate as it drops to the sea, and applying those ratios to the affected, lower resolution images.

281    Professor Wereley maintained his view that there was an insignificant amount of water in the discharge. Nevertheless, to compensate for uncertainties, he calculated what the flow rate would be if the flow contained 10% water. The figure of 10% appears to be based on a statement in the respondent’s Dynamic Kill Simulations and Evaluations report (relied on by the respondent to calculate the parameters for the operation to “kill” the well in order to stop the spill) that said that the condensate contained “less than 10% water cut”.

282    Professor Wereley agreed that air could be mixed with the oil in the drain system in such a way that the two would not separate as quickly as he had originally assumed. However, he considered that Dr Zaldivar had over-predicted the proportion of gas that might be entrained. Professor Wereley accepted that the flow out of the horizontal drain pipe is pulsatile. It was sometimes fast, and sometimes slow, which supported the view that the oil was mixed with air. As I have noted, the drain system is comprised of numerous straight sections of pipe with many 90° elbows and other fittings along its path. Professor Wereley explained that at each of these elbows or other fittings, the turbulent flow in the drain system thoroughly mixes the air carried along by the oil flow with the oil itself. Many small bubbles would be generated by repeated agitation, creating a mixture that would not be quickly separated. As a result, Professor Wereley modified his jet flow calculation by assuming that the liquid flowing out of the horizontal drain pipe is carrying air bubbles mixed in it.

283    With respect to Dr Zaldivar’s contention that, in calculating cumulative volume, Professor Wereley should have adopted a model in which oil flows slow with time, Professor Wereley observed that, while that may be the normal behaviour of an oil well, the H1 Well was not performing normally. He suggested, for example, that it was possible that the hole in the cement shoe would have eroded over time such as to cause an increase in flow. He said that, in order to make a “fact and observation-based measurement”, he had only used the data that he, himself, could measure. He did not use an outside model of the expected reservoir behaviour. However, as each instantaneous spill flow rate measurement was representative of the spill on a different date, and those dates were arbitrarily spaced through the duration of the spill, Professor Wereley re-calculated the spill volume using a method common in engineering called the trapezoidal rule, rather than relying on a simple average of all measurements he made. As Professor Wereley explained it, by applying the trapezoidal rule, instantaneous flow measurements (bbl/day) are turned into a total spill volume (bbl).

284    Professor Wereley recognised that there was uncertainty in each of the main components of his measurements, including: the scale factor; the speed of the flow calculation; the fraction filled calculation; the volume fraction of gas carried by the flow; and the fraction of the condensate that is water. He reasoned that the uncertainties in the scale factor and flow speed calculations could be ignored in the presence of the much larger uncertainties in other quantities.

285    In relation to the possible activation of the fire systems, Professor Wereley noted that one of the assumptions with which he had been provided was that all electricity to the West Atlas rig was turned off by 9.00 pm on Friday, 21 August 2009. If so, any fire suppression systems that may have been operating would have ceased by that time and any fire suppression fluids would have ceased running off the rig at that time or shortly thereafter. Two flow measurements that Professor Wereley calculated were based on photographs taken on 21 August 2009 during the day. He acknowledged that, consequently, it is possible that some part of the calculated flow was water from the fire suppression system on that day. However, as I have said, I am not satisfied on the evidence that the fire suppression systems had been activated in the photographs on which Professor Wereley relied.

286    Professor Wereley then re-computed his flow rate calculations and presented his revised results in his second report as follows:

15.1    My calculations have been revised incorporating the following factors that were discussed in detail above:

(a)    The correct inner pipe diameter of 7.813 inches.

(b)    The drag of the surrounding air on the jet just after it leaves the HDP is neglected.

(c)    The units are properly converted from ft3/sec to bbl/day.

(d)    The downward angle of the oil jet emerging from the HDP is extracted from the jet trajectory rather than imposing a 45 degree angle.

(e)    Fraction filled is treated differently in cases where the spatial resolution of the photo is too low to directly and accurately judge the fraction filled (i.e. PTT.600.026.5696) or cases where there is a fast and slow flow in the same photo and only one of those is emerging from the HDP exit in the photo (PTT.617.003.9947 and PTT.617.003.9939).

(f)    The model accounting for the air mixed in and carried along with the oil flow as bubbles using Gomez’s (2000) equation.

(g)    The calculation of total spill volume has been made by integrating the measurements made using the trapezoidal rule.

15.2     In order to calculate the total amount of oil spilled into the environment, the instantaneous oil spill rates (i.e. bbl/day) must be integrated into a single number. In order to bound the maximum and minimum possible spill sizes, the uncertainties in the fraction filled, volume fraction of gases, and water content have been considered as shown in Table 2 below.

287    After applying the trapezoidal rule, Professor Wereley calculated that the total oil spill volume over the period of the spill was between 452,000 and 714,000 bbl. This is approximately 6,000 to 9,000 bbl/day.

The Joint Report on Volume

288    The presentation of Professor Wereley’s revised calculations did not end the disagreements between the two experts on this question or bring them any closer. In fact, the area of disagreement was widened by some of the accommodations that Professor Wereley had made to meet Dr Zaldivar’s criticisms. For example, a new area of disagreement was the way in which Professor Wereley had analysed and digitised the trajectory of the oil jet from the horizontal drain pipe in his second report.

289    The various disagreements carried on into a Joint Report prepared by the four experts on spill volume (the Joint Report on Volume), and into the concurrent evidence session. Dr Zaldivar maintained that, notwithstanding the revisions which Professor Wereley made to accommodate his (Dr Zaldivar’s) criticisms, there were many errors, assumptions and simplifications in Professor Wereley’s methodology that rendered his conclusions “completely unreliable and invalid”. He also argued that the uncertainties associated with the inputs that Professor Wereley used, and their impact on the uncertainty of the calculated flow rate, had been “grossly understated” by Professor Wereley and provided “false confidence in the validity of the total volume estimate”.

290    No further light will be thrown on the differences between Professor Wereley and Dr Zaldivar by further summarising that debate in these reasons. The following matters are, however, important.

291    First, Dr Zaldivar’s instructions from the respondent were to prepare a report responding to Professor Wereley’s first report. Dr Zaldivar steadfastly interpreted these instructions as meaning that he was not to provide an estimate of spill volume and that he was confined to critiquing Professor Wereley’s methodology and calculations. Indeed, in the Joint Report on Volume he specifically identified this as his role. It was a role he performed with some vigour.

292    Secondly, Professor Wereley’s task was to find the best method possible, in the circumstances of the available evidence (which, admittedly, was limited), to calculate spill volume. As Professor Wereley himself explained, there is no “ground truth” in his calculations. Rather, they stand as one analysis through which the Court can gain an appreciation of the likely size of the spill (in terms of volume and rate of discharge) from objective evidence rather than unsupported assertion. Three experts provided that assistance in terms of using their expertise to arrive at reasoned calculations. Dr Zaldivar did not. His role was a more limited and directed one. Even then, the main thrust of his criticisms was to raise the prospect of error, without demonstrating that there was error, or error that would lead to an appreciably different outcome in actual result. Thus, his contentions that Professor Wereley’s calculations were “unreliable” or “invalid” reside in, and do not transcend, the realm of argument and debate.

293    The notable exceptions to this were Dr Zaldivar’s identification of Professor Wereley’s conversion error and Professor Wereley’s inconsistent inclusion of a wind drag factor in the equations he used. However, when these errors were pointed out, Professor Wereley quite properly accepted them as such, and made corrections to accommodate for them. Dr Zaldivar did perform a calculation—based on what he regarded to be Professor Wereley’s flawed methodology—in which he integrated the area under the curve to obtain a cumulative discharge volume. By this calculation, Dr Zaldivar arrived at a total volume spill of 16,178 to 21,181 bbl. However, in keeping with the limitations he placed on the instructions he had been given, Dr Zaldivar did not undertake his own analysis of the volume of oil spilled, or provide his own calculations based on that analysis. Thus, Dr Zaldivar did not present an alternative estimate of the amount of the oil spilled which could be exposed to evaluation and comment by his fellow experts—in particular, which could be set against Professor Wereley’s analysis.

294    In this regard, Dr Zaldivar did present several alternative analysis options in the Joint Report on Volume. But, having done that, he once again retreated to the position that he had received no instructions to proceed with them. He said that he would “undertake any of these options … upon receiving written instruction from the Court and an agreement that resolves how I will be compensated for such efforts”.

295    I do not regard it to be the role of the Court in an adversarial trial system to give such instructions or provide advice to parties as to the evidence they should adduce. In the end, Dr Zaldivar’s discussion of these options provided no meaningful assistance to the Court. The applicant submitted, with considerable justification, that Dr Zaldivar’s contribution to the topic of the volume of oil spilled could best be described as that of a “sniper” firing shots at Professor Wereley’s work: see the analogy described by Martin J in Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 16) [2017] WASC 340 at [741] – [743].

296    Thirdly, the thrust of Dr Zaldivar’s various criticisms of Professor Wereley’s work seems to be that it was carried out incompetently, both methodologically and as a matter of computation or calculation. If that is what Dr Zaldivar intended to convey, then that is certainly not my impression of Professor Wereley as an expert, or of his evidence. There was no challenge to Professor Wereley’s expertise.

297    Professor Towler, who calculated oil volume using material balance (see below), reviewed the reports prepared by Professor Wereley and Dr Zaldivar and expressed the opinion that the methodology that Professor Wereley had used to determine flow rate was, in fact, correct. For completeness, I record that Professor Blunt, the other expert on oil spill volume, did not comment on Professor Wereley’s work or Dr Zaldivar’s criticisms.

298    Whilst there were difficulties in carrying out a flow rate analysis on the evidence available to Professor Wereley, and whilst the possible impact of those difficulties on the estimates provided by Professor Wereley must be recognised, I do not accept that his estimates can simply be cast aside and ignored as “unreliable” or “invalid”.

299    Fourthly, Professor Towler expressed the opinion that the original estimate of spill volume made by Professor Wereley (i.e., in his first report) was the most reliable estimate using the flow rate method. He noted that, when Professor Wereley’s conversion error was corrected, the total volume of oil spilled would be in the order of 3.64 million bbl. He said that the averaging used by Professor Wereley in his first report was likely to be more accurate than applying the trapezoidal rule, because reservoir flow rates tend not to decline much in the first 75 days of production. In fact, a typical decline rate for a petroleum reservoir is about 10% per annum. This would amount to a decline of about 2% over 75 days. Therefore, according to Professor Towler, Professor Wereley’s original assumption of a constant rate for 72 days was reasonable.

300    Relatedly, Professor Towler disagreed with Dr Zaldivar’s suggested method of integrating the measured flow rates into a total spill volume, which was based on a decline rate of 85% over 75 days. Professor Towler said that this decline rate was quite unrealistic and led to a decreased estimate of the total volume spilled.

301    Professor Towler also pointed out that when Dr Zaldivar carried out his calculation of the amount of oil spilled using Professor Wereley’s methodology, he (Dr Zaldivar) committed the same conversion error for which he had criticised Professor Wereley. Professor Towler’s evidence was that if Dr Zaldivar had used the correct unit conversion factor in his calculations (i.e., the one Dr Zaldivar said that Professor Wereley should have used), his total spill volume would have been between 906,000 and 1.18 million bbl, not 16,178 to 21,181 bbl.

302    Fifthly, Professor Towler noted that the H1 Well was designed to be able to flow at 28,500 bbl/day, through a tubing string of 5.5” (external diameter). However, this tubing string had not been installed before the blowout. Consequently, the reservoir fluid was free to flow through the 9 5/8” casing. This means that the oil would have been able to flow at more than 28,500 bbl/day. On the evidence, there was also an expectation that, once completed, the well would flow at 9,000 to 10,000 bbl/day, under controlled conditions. However, during the blowout, the conditions were not controlled and, according to Professor Towler, it would be expected that the well was flowing at a rate that was not restricted by its well potential.

303    Sixthly, as I have already noted, Professor Wereley’s calculations were based only on the flow from the horizontal drain pipe and not the other sources of oil flow which would have contributed to the volume of oil spilled into the sea over the 75 day period that the well was uncontrolled.

Material balance calculation

304    Material balance is an independent method of verifying the amount of oil that was lost from the reservoir feeding the H1 Well during the blowout. To conduct the analysis, the pressure loss in the reservoir is used. Utilising the known volumes of oil and gas originally in the reservoir, the original and final pressures before and after the blowout, the properties of the reservoir fluid, and an estimate of the water that has invaded the reservoir from the aquifer during the blowout, it is possible to calculate the fluid lost from the reservoir.

305    Professor Blunt described the material balance method in the following simplified terms:

3.4     ... When the well is drilled through the reservoir, it encounters the fluids in the reservoir rock: oil, natural gas and water. These fluids are stored at very high pressures in tiny pore spaces. The rock is under enormous pressure from the weight of rock above it. The well allows a release of oil out of the reservoir to the surface. As oil, water and gas start to flow through the rock’s connected pores, the pressure of the oil in the reservoir decreases. When the pressure decreases, the remaining oil expands, pushing the oil out of the reservoir. As the pressure of the fluids within the rock pores drops, the rock is compressed down, squeezing the pore spaces, pushing out more oil. The material balance principle says that the volume of oil, gas and water that comes out of the reservoir must be equal to the combined volume expansion of oil, water and gas, and the compression of the rock pore space. To calculate the oil produced from this fluid expansion and rock compression, only the compressibility of the fluids and rock, the size of the reservoir connected to the well, and the change in pressure need to be determined. These are the three variables that will be discussed throughout the remainder of this report.

3.5     In even simpler terms: the pressure-driven change in the volume of oil, gas, water and rock pore space in the reservoir is equal to what comes out of the well. This is the central concept in reservoir engineering: to relate what was produced to changes in the reservoir. We keep track of the volume of oil produced by calculating the volume of oil displaced from fluid expansion and pore contraction.

3.6     The advantage of the material balance approach is that it does not require knowledge of changing flow rates over time, or other indirect measures of volume, such as the extent of the spill, instead computing directly the total amount of oil produced.

306    Using the material balance method, Professor Towler determined that the amount of oil spilled during the blowout was in the range of approximately 520,000 bbl to 3 million bbl, with the most likely amount to be about 1.8 million bbl (on a simple average, 24,000 bbl/day). Professor Blunt determined that the amount was between 57,000 bbl to 74,000 bbl, with a mid-range value of 69,000 bbl (on a simple average, 920 bbl/day). He nevertheless accepted in cross-examination that, within the range of uncertainty, the volume of oil released, by reference to his calculation, could have been 100,000 bbl or more (on a simple average, approximately 1,333 bbl/day).

307    There is, obviously, a significant difference between the two ranges that were calculated. The significant difference between them is the approximations that each had made.

308    To explain, the Montara oil field has a gas cap above the oil. It is also connected to a large body of underground water (aquifers). The water in the aquifers, and the gas in the cap, expanded when the pressure dropped during the blowout.

309    Professor Blunt assumed, for the purposes of his calculation, that the expansion of the water was matched by the production of water, and that the expansion of gas was matched by gas production. Therefore, on his approach, the oil produced and spilled equalled the expansion of oil.

310    Professor Towler considered Professor Blunt’s material balance model to be highly simplified. He argued that Professor Blunt had ignored several important drive mechanisms. According to Professor Towler, the most important of these was the invasion of water from the aquifer into the hydrocarbon reservoir. As water invades the reservoir, it pushes oil in front of it and drives the oil towards the producing well. Consequently, oil is preferentially produced over water. Professor Towler saw the aquifer influx as the primary drive mechanism, with gas expansion and oil expansion as the secondary and tertiary drive mechanisms, respectively. The three mechanisms were accounted for in his model, whereas Professor Blunt’s simplified model relied on oil expansion alone for estimating the volume of oil spilled.

311    Professor Towler said that there were three aquifers contributing to a strong water drive. The first is an aquifer directly connected to the Montara hydrocarbon reservoir, which feeds the H1, H2, and H3 Wells. Professor Towler opined that this aquifer was the main contributor to the aquifer influx during the blowout. It contained 6.5 billion bbl of water, had a reported permeability of 2000 milli-darcies (mD) (a very high permeability) and a thickness of 44 m. The second aquifer, referred to as the Regional Aquifer, contained 24 billion bbl of water and was also connected to the Montara hydrocarbon reservoir. The third aquifer was located in the region of a formation called the Plover Formation. It contained 400 billion bbl of water. Professor Towler estimated that approximately 3.6 million bbl of water invaded the Montara hydrocarbon reservoir during the blowout. This was a very small fraction (0.0066%) of the 6.5 billion bbl of the water in the first aquifer, and an even smaller fraction of the water in the other two aquifers.

312    Professor Blunt considered Professor Towler’s estimate of water influx to be excessive. In his view, the water flow would have been impeded by faults in the reservoir and aquifer, and that these impediments had to be accounted for in the calculation. In assessing the degree of impediment, Professor Blunt relied on aquifer properties analysed in a study called the Montara Aquifer Study (2003) (the Montara Aquifer Study). Professor Blunt estimated the aquifer influx to be 57,000 bbl of water. This was based on the assumed permeability used in the Montara Aquifer Study of the connection between the Plover Formation and the Montara hydrocarbon reservoir, recorded as 33 mD. He argued that if the aquifer influx had been of the order estimated by Professor Towler, the spill would have been comprised almost entirely of water.

313    Whilst not disputing that account had to be taken of the tortuosity between the large aquifer in the Plover Formation and the oil and gas accumulation in the Montara hydrocarbon reservoir, Professor Towler argued that, in using the figure of 33 mD, Professor Blunt had used the wrong value for permeability because, during the blowout, the aquifer that was invading the reservoir was the 6.5 billion bbl in the immediate vicinity. In other words, there was no basis to assume that the permeability of this aquifer was the same as the permeability of the more distant aquifer in the region of the Plover Formation. Therefore, in his analysis, Professor Towler used an aquifer permeability of 1000 mD, even though the Montara Aquifer Study reported the permeability of the first aquifer as 2000 mD. In his oral evidence, Professor Towler said that he selected the figure of 1000 mD in order to be conservative. He also assumed that, in relation to this aquifer, the faults had minimal effect.

314    A further matter pointed out by Professor Towler was that, even though Professor Blunt estimated the aquifer influx to be only 57,000 bbl of water, this figure was not taken up by Professor Blunt; aquifer influx did not appear in his material balance equation.

315    In the Joint Report on Volume, Professor Towler and Professor Blunt agreed that determining the amount of water influx during the blowout represented a significant uncertainty. They agreed that the well bore was sufficiently conductive to allow a release of more than 1 million bbl of oil if the flow were unimpeded. As I have said, the issue on which they disagreed was how significantly the oil flow would be impeded. The evidence does not enable that determination to be made. I am left only with the separate possibilities posited by Professor Towler and Professor Blunt.

Conclusion

316    On the evidence before me, I am satisfied that the oil released over the 75 days of the spill was far greater than the suggested rate of 200 to 400 bbl/day. Of course, one will never know with certainty the volume of oil actually spilled in that period or the rate at which it was released. But taking the lowest volume estimate in the evidence adduced in this proceeding (Professor Blunt’s mid-range estimate), and assuming a relatively steady rate of release over the period (a simplifying assumption I consider to be reasonable for my purposes), it can be seen that, as a minimum, the oil would have been released at a rate of 920 bbl/day. This is significantly greater than the rate assumed in Dr French-McCay’s base case modelling (400 bbl/day).

317    The applicant submitted that once it is accepted that the rate of release was greater than 200 to 400 bbl/day, the precise volume of oil spilled need not be quantified. That might be so. However, I should record that I am satisfied that it is likely that the volume of oil spilled was far greater than Professor Blunt’s estimate and that, correspondingly, the oil was spilled at a far greater rate than implied by that estimate. Professor Blunt and Professor Towler acknowledged that there is considerable uncertainty involved in the volume of the aquifer influx that would drive the release of oil. This uncertainty is reflected in the two estimates made on the basis of a material balance calculation. I note, however, their agreement that the well bore was sufficiently conductive to allow a release of more than 1 million bbl of oil (on a simple average, approximately 13,333 bbl/day over the period in question) if the flow were unimpeded.

318    Between Professor Blunt’s and Professor Towler’s respective estimates is the estimate made by Professor Wereley in his second report (6,000 to 9,000 bbl/day). The estimate made in Professor Wereley’s first report significantly exceeds this rate (once his conversion error is corrected).

319    I accept that there are difficulties (and hence uncertainties) in making a flow rate calculation on the basis of the available evidence. But even taking his lower estimate, it should be recognised that Professor Wereley’s analysis was directed to a single source of discharge (the horizontal discharge pipe on the wellhead platform), and not the other sources of discharge at the H1 Well.

320    Taking all the evidence on spill volume into account, I am satisfied on the balance of probabilities that, over the period in question, oil was being discharged at an uncontrolled rate in excess of the ranges considered in Dr Hubbert’s modelling (in other words, in excess of 2,500 bbl/day).

321    It is appropriate to recall that the modelling carried out by the respondent in 2011 and revisited in 2013 included a “loss of well control” spill over 77 days, discharging 84,966 m3 or 534,380 bbl of Montara oil at rates varying between 3,802 m3/day or 23,912 bbl/day down to 690 m3/day or 4,341 bbl/day. This scenario was regarded as credible.

Dispersants

322    Dispersants were applied to the oil spilled from the H1 Well in the period 23 August to 1 November 2009.

323    The term “dispersant” is used to refer to a variety of chemical spill-treating agents that promote the formation of small droplets of oil which then “disperse” throughout the top layer of the water column.

324    Dispersants are mixtures of two components: surfactants and solvents. Surfactants (surface-active agents) are the active ingredients of dispersants which are mixed with a solvent. The solvent has two functions: it reduces the viscosity of the surfactant, which enables it to be sprayed, and it promotes the penetration of the surfactant into the oil slick. The surfactants in dispersants are also used in many common household products, including soaps, skin creams, baby bath, cosmetics, shampoos, mouthwash, intestinal medications, and even food.

325    Some portion of released oil will disperse into the water column whether or not chemical dispersants are used. Natural dispersion of floating oil is a process facilitated by wave action that breaks the oil into small droplets. It is affected by the properties of the oil and the amount of wave energy at the sea surface. In general, oils with lower viscosity are more amenable to natural dispersion than those with higher viscosity. Likewise, higher wave energy produces more natural dispersion.

326    Dispersants work because surfactant molecules have two distinct and linked parts: one is lipophilic (attracted to oil) which orients itself into the oil; the other is hydrophilic (attracted to water) which orients itself into the water. The surfactant molecules align themselves at the oil/water interface and reduce interfacial tension. Interfacial tension causes oil molecules to stick to each other in the form of a slick. High interfacial tension keeps the slick intact on the surface. The surfactant molecules interfere with this tension by reducing forces between the oil molecules, which enhances the breakup of an oil slick. When mixing energy is applied (for example, through wind, waves, and currents), the dispersant-treated oil slick will break up into many tiny microdroplets that are less than 100 µm in diameter. The microdroplets generally tend to stay suspended in the water column, while larger droplets are more likely to float back to the surface and re-coalesce into the slick.

327    One motivation for using dispersants is to treat an oil slick in the hope that the surface slick does not contact a shoreline. A second motivation is to reduce the impact of the oil on birds and mammals on the water surface. A third motivation is to promote the biodegradation of oil in the water column.

328    There is some dispute in the evidence as to whether biodegradation is enhanced. Dr Fingas said that the effect of dispersants on biodegradation is still a matter of dispute and that some current dispersant formulations can, in fact, inhibit biodegradation. He said that no enhancement of biodegradation is clearly shown in any recent studies.

329    Dr Coelho strenuously disputed Dr Fingas’ statements in this regard, noting that Dr Fingas had cited no references in support. She said that Dr Fingas’ statements were contrary to dozens of peer-reviewed publications on dispersed oil degradation, which she referred to and summarised in her first report. Dr Coelho said that the use of dispersants provides naturally-occurring, oil-degrading bacteria greater access to the oil by creating a diluted mixture of small oil microdroplets. The microdroplets are inherently more biodegradable than large, un-treated oil droplets because a greater surface area-to-volume ratio is available for microbial attack.

330    There was also disagreement between Dr Fingas and Dr Coelho about the effectiveness of dispersants both generally and in relation to their application to the oil spilled from the H1 Well.

331    Dr Fingas said that the main cause of dispersant ineffectiveness is high oil viscosity, which results in little dispersant mixing of the oil. He said that when dispersant droplets hit viscous oils they may run off into the water column rather than mix with the oil.

332    Dr Fingas said that the second cause of ineffectiveness is the lack of stability of the oil droplets in the water column over time. He referred to the phenomenon of resurfacing oil, which is the result of two separate processes: destabilisation of the oil-in-water emulsion and desorption of surfactant from the oil-water interface. The latter results in less surfactants in the oil droplets, and thus more coalescence of the droplets. The more coalescence that occurs, the larger the droplets will be, and the faster they will rise to the surface, reforming a slick.

333    In response, Dr Coelho referred to certain literature dealing with the effectiveness of dispersants on viscous oils. She also referred to multiple field studies on dispersant effectiveness which, she said, have repeatedly documented the fact that once a dispersant is applied, the dispersed oil microdroplets mix into the underlying several metres of water column. She said these microdroplets are diluted horizontally and vertically into the ocean so that the individual microdroplets cannot collide with each other. If they cannot collide, they cannot re-coalesce. In this connection, Dr Coelho drew a distinction between closed and open systems. The ocean is an open system in which the dispersed oil droplets dilute such that the tendency for them to coalesce is minimised. Dr Coelho said that this is a critical fact that inhibits suspended, neutrally-buoyant microdroplets from reforming into larger, positively-buoyant drops that rise to the surface and again become a surface slick.

334    With regard to the application of dispersants applied to the oil spilled from the H1 Well, Dr Fingas referred to data obtained from reports prepared by Leeder Consulting of the concentrations of oil under the oil plumes treated with dispersants at the time of the spill. These were so-called “grab samples” from which Leeder Consulting measured total petroleum hydrocarbons (TPHs) before and after the application of dispersants. The samples were taken at various depths over varying time periods. Based on these data, which showed low concentrations of TPHs in the water column after the application of the dispersants, Dr Fingas opined that the dispersants had low or no effectiveness on the oil that was treated (in oral evidence he said that the “treated oil had <10% effectiveness”). As I understand Dr Fingas’ point, the fact that concentrations of TPHs were detected showed this lack of efficacy. According to Dr Fingas, one of the principal reasons for this was the high wax content of the Montara oil. He said that the data implied that the dispersants entered the water column rapidly and were transported with surface currents.

335    Dr Fingas also analysed the data of sea surface temperatures at the time of the spill and compared these temperatures to the pour point of fresh Montara crude (27°C). He said that if the sea surface temperature was near or close to this temperature, the dispersants would run off the oil and not be effective. At the time, the sea surface temperature near the H1 Well was between 25 and 30°C. Dr Fingas said that this implied that the oil was sometimes near the point of not being dispersible because it was nearly solid and had a high viscosity.

336    Dr Fingas then considered various observations made at the time of the spill as to the effectiveness of the dispersants that had been applied, together with various contemporaneous photographs and videos. The comments made by observers were to the effect that the applied dispersants were, indeed, effective to varying degrees. Dr Fingas doubted the accuracy of these comments for a number of reasons, not all of which need to be summarised here. I refer to two of them below—the colour of treated plumes and the degree and mode of agitation of the dispersant-treated oil.

337    In response, Dr Coelho criticised the Leeder Consulting data relating to oil concentrations under the treated plumes on which Dr Fingas relied. She said that the “results [did] not reveal much about dispersant effectiveness”. This was because of the time that had elapsed between the application of the dispersant and the sampling that had been done. Dr Coelho said that the sampling should have occurred at shorter time intervals because dispersed oil concentrations dilute to very low concentrations in a short amount of time and the dispersed oil does not remain directly under the slick, but is transported away and quickly diluted. As I understand Dr Coelho’s point, the Leeder Consulting data was obtained belatedly and could not show the oil that was, in fact, dispersed by the applied dispersants and carried away.

338    With regard to Dr Fingas’ analysis involving the comparison of the pour point of crude Montara oil and sea surface temperatures at the time, Dr Coelho said that Dr Fingas’ analysis had failed to account for “the dark oil absorbing heat once the sun shines on the slick”. She expressed the view that if the oil was returning to a less viscous state due to daytime warming and sun exposure, it would “again become amenable to dispersant application”.