The Petroleum and Gas (Production and Safety) Act 2004 (Qld) (the Act) provides legislative governance over exploration, recovery and transport through pipelines of petroleum and fuel gas. As petroleum tenement holders would no doubt be aware, the Act allows for incidental activities such as the construction and operation of pipelines used in petroleum activities to take place on land within a petroleum lease or authority to prospect, despite the rights of the underlying land holders. When the construction and operation of a pipeline extends to areas outside the area of a petroleum lease however, a pipeline licence is required. This licence requirement stems from a general restriction (subject to various exceptions including for incidental activities under the Act) on the construction or operation of a pipeline contained in section 802 of the Act.
Unlike the grant of a petroleum lease or authority to prospect, a pipeline licence does not, of itself, entitle its holder to any specific rights in relation to the land required to construct and operate the pipeline, including the most important right of all for a pipeline licence holder – access to the land. There are therefore a number of relevant factors that a proposed pipeline licence holder must be aware of in order to fully appreciate the extent of the activities able to be carried out under a pipeline licence.
This article will look at how the Act treats pipelines and pipeline licences, in order to cast some light on the rights and further requirements on proposed and current pipeline licence holders in respect of a proposed pipeline project.
The pipeline licence
When reading though the pipeline licence provisions in the Act, one would be forgiven for assuming that the comprehensive information that must accompany a pipeline licence application is designed to ensure that, upon grant of the licence, there will be no further impediments to construction and operation of the pipeline; essentially that everything has been considered and there will be no further surprises. Whilst this may be a reasonable assumption, without due attention to the requirements under the Act, it is not always the case. The first and probably most important point to note regarding a pipeline licence is that the grant of a pipeline licence will not entitle the licence holder to construct or operate the pipeline on the land.
Section 409 of the Act requires that an application provide details of: the land in the area of the licence; the terminal points of the pipeline (for application of a point to point licence); the extent and nature of activities to be carried out under the licence; a statement about how and when the applicant proposes to consult with and keep informed any relevant land owners or occupiers of private or public land or land used for access; and numerous other requirements. These requirements are no doubt incorporated into the application process in order to ensure that a prospective applicant has determined the most appropriate location for the pipeline as well as considered and possibly held discussions with any relevant landowners in the proposed pipeline’s path, particularly in relation to land access and adequate compensation for the proposed disturbance to the land. The Act, however, at this application stage, does not necessarily require that any agreements be reached with land owners or occupiers in relation to the proposed disturbance on the land from the construction and operation of the pipeline. Although it seems practical in an economic sense that a pipeline licence applicant will have discussed the proposed pipeline with land owners or occupiers prior to applying for a licence, the reality is that the Act allows a licence to be granted with the negotiation process with land owners or occupiers to follow post-grant.
The grant of a pipeline licence therefore will not necessarily give a pipeline project a green light. The essential element of access to land is not granted with a licence. The Act, however, steps in at a later point to ensure that land access issues are determined before any construction takes place.
“Pipeline Land”
Section 418 of the Act requires that a pipeline licence holder must consult, or use reasonable endeavours to consult, with each owner and occupier of access land for the licence and other private or public land. Once the access land becomes land available for use by the holder for the pipeline it is termed “˜pipeline land’.
“˜Pipeline land’ has its own definition in section 399 of the Act; being either land that the licence holder owns or has a valid easement over, or land in respect of which the licence holder has obtained written permission from the owner to enter on and construct a pipeline. Pipeline land represents another tier to the pipeline licence regime, separate and distinct from the pipeline licence itself.
As seen above, to avoid any potential conflict with the rights of existing land holders at the outset, the Act separates a grant of a pipeline licence from the pipeline land on which the pipeline is to operate. At first instance it is left up to the licence applicant or holder to either obtain title to the land, negotiate consent with a landowner to access the land, or obtain grant of an easement over the land for access. This initial separation also ensures that the Act does not circumvent or override any native title or cultural heritage claims to the land. These issues must also be addressed separately by a licence holder irrespective of the grant of the pipeline licence. Due to this separation the Act can allow a pipeline licence to be issued over any land, including land in the area of another petroleum authority, however, this is limited by section 400 of the Act which specifically provides that land within a mining lease area will have priority over a pipeline licence if the mining lease was granted prior to the licence being granted, and the pipeline licence holder must then obtain the consent of the mining lease holder in order to carry out pipeline activities on the land.
The grant of a pipeline licence, therefore, often represents the initial and probably easiest step in a longer process involving negotiations with land owners and occupiers in order to confirm access to the land required to commence construction of the pipeline. In situations where a pipeline licence holder has been unable to obtain title to the relevant land, gain an easement over the land, or obtain the owner’s consent to entry and construction of the pipeline on the land, the Act provides a deadlock breaker in section 463. Section 463 allows a pipeline holder (or applicant) to apply for permission to construct or operate a pipeline on the land. The licence holder must, when seeking permission, provide evidence to confirm its attempts to obtain access or ownership of the land. The Act then imposes a consultation process on the licence holder and the landowner with the intention that the parties should come to an agreement. As a final position, the Act provides that the Minister has the overriding ability to either grant or refuse the permission request to access the land. The Minister’s decision will depend on many factors relating to the history of the pipeline proposal and subsequent evidence of thorough negotiations with land owners or occupiers, therefore it should not be seen by a prospective pipeline licence applicant as an easy alternative to negotiations with land owners.
The final tier to the pipeline licence regime under the Act becomes apparent when a licence holder wishes to deal with the pipeline licence or the pipeline itself once construction has taken place.
The pipeline
A “˜pipeline’ is defined in section 16 of the Act as:
“…a pipe, or system of pipes, for transporting petroleum, fuel gas, prescribed storage gases or substances prescribed under section 402.”
It is not until one looks at the dealings provisions in the Act that it becomes clear that the Act treats a pipeline licence, the pipeline land and the pipeline as separate concepts. Section 568 of the Act provides that the transfer of the actual pipeline that is the subject of a pipeline licence is a permitted dealing under the Act. The transfer of pipeline licence, however, is a prohibited dealing unless the pipelines that are the subject of the licence and the pipeline land for the licence are also to be transferred to the transferee of the pipeline licence.
Sections 568 and 569, however can create some confusion. For example, if Company X applies for a pipeline licence with land owner consent rather than owning the land or having a valid easement, and (for the sake of simplicity) constructs and operates the pipeline for an amount of time, but soon after decides to sell the pipeline to Company Y, this is a permitted dealing under 568. However, without a pipeline licence, Company Y will not be entitled to operate the pipeline; they can only own the pipeline. If Company X then decides to transfer the pipeline licence to Company Y, under section 569 (d) of the Act this is a prohibited dealing unless the pipeline is the subject of the licence and the land for the licence is also transferred to Company Y. In this case Company X does not own the land, therefore this transfer is technically not possible and remains a prohibited dealing. In practice it may be possible to argue with the Department of Mines and Energy that obtaining a new consent from the land owner should satisfy the department (assuming a land owner or occupier will agree to the transfer), however, the legislation does not technically allow this to occur.
Conclusion
Proposed pipeline licence holders should be aware that although obtaining a pipeline licence under the Act may seem a straight-forward process, the fact that the licence itself does not grant a holder any rights of access to land means that the process of moving forward with a pipeline project once a licence has been granted is not always simple and straightforward. A pipeline licence represents only an initial hurdle to an operating pipeline. A proposed licence holder should focus their concerns on creating positive relationships with land owners and occupiers in order to ensure that, once a licence is granted, access to the land will be as a matter of course rather than a long, costly negotiation process or worse.
References
1. Section 406 of the Act
2. Section 402 (Licence may extend transportation right to other prescribed substances).
3. Section 569(1)(d) of the Act.