With energy policy determining whether new exploration, projects or pipelines get the green light, Australia’s pipeline industry has been patiently waiting to see which direction, in terms of resource development, is taken.
Following the recent state election in Queensland, as well as Michael Baird succeeding Barry O’Farrell as the Liberal Premier of New South Wales (NSW), there is a degree of uncertainty going into 2015.
On top of this, moratoriums on unconventional gas exploration and production in NSW, Victoria and Tasmania mean that, for the foreseeable future, there will be next to no new developments undertaken.
In this article The Australian Pipeliner will explore the issues facing land policy decisions and will provide an update on land access regulation in the major gas-producing states in Australia.
New South Wales
2014 saw the Liberal NSW Government further its Strategic Land Use Policy, implemented to identify, map and protect residential and agricultural land from the impacts of mining and coal seam gas (CSG) activity.
Passed through the parliament in 2012, the Strategic Land Use Policy reforms have resulted in safeguards established for approximately 5.3 million ha of home and farmland.
CSG exclusion zones now apply to 2.7 million ha in the state.
With approximately 2.8 million ha of farming land safeguarded through the independent scientific Gateway process, Critical Industry Clusters (CICs) have been implemented for 60,000 ha of viticulture land and 254,000 ha of equine land in the Upper Hunter Valley, with no new CSG developments allowed in any CIC.
The independent Gateway assessment was set up to protect NSW’s most valuable farming land – known as Biophysical Strategic Agricultural Land (BSAL) – which means that any significant CSG proposal on BSAL is subject to increased levels of scrutiny.
The most recent changes in land policy in NSW is the introduction of CICs, which are identified as “concentrations of highly productive industries within a region that are related to each other, contribute to the identity of that region and provide significant employment opportunities.”
The NSW Department of Planning and Environment identified where the equine and viticulture industries are concentrated in the Upper Hunter Valley as CICs.
The NSW Department of Planning and Environment states that the creation of these industry clusters is an important component of the Strategic Regional Land Use Policy, and enables the government to establish measures to protect the industries from CSG and mining activities.
In January 2014 the NSW Government finalised the CIC maps as well as introducing a ban on CSG activity within the mapped areas.
The industry was given a further set-back when the NSW Government chose to continue its freeze on natural gas exploration in September 2014.
The decision came just days after the release of the Federal Government’s Energy Green Paper, which specifically highlighted NSW’s need for an urgent uplift in gas production.
The Australian Petroleum Production and Exploration Association (APPEA) also reported that the decision to freeze gas exploration came days before a report into the science of gas development in NSW from the State’s Chief Scientist was due to be released.
APPEA said that this sent a message to the industry and third parties that such policy announcements are made independent of scientific consideration.
The NSW Chief Scientist Mary O’Kane recommended in her report that the NSW Government “make clear its intent to establish a world class regime for extraction of CSG” and “that Government ensure clear and open communication on CSG matters is maintained at all times”.
Queensland
Queensland has been the most progressive state in terms of developing its vast natural gas resources in recent years.
However, with the industry-friendly Newman government failing to hold onto power for a second term, the Labor party, led by Annastacia Palaszczuk, was sworn in on 14 February 2015.
While it is too early for the new government to have made any significant changes to the State’s land policies, industry players will be keeping an eye on the new government, who promised more scrutiny involved when it came to Queensland’s natural gas industry.
Queensland’s land access laws require all resource companies conducting exploration and development activities in Queensland to comply with the conditions of the Land Access Code.
The code also saw the introduction of the Land Access Framework, which specifically introduced requirements for:
- Providing landholders with entry notices for “˜preliminary activities’;
- Negotiating a conduct and compensation agreement (CCA) before accessing private land to undertake “˜advanced activities’;
- A statutory graduated negotiation and dispute resolution process for CCAs, with the Land Court being the last resort; and,
- Compensating landholders for a reasonable and necessary accounting, legal or valuation costs incurred in negotiating or preparing a CCA.
In March 2014, the Queensland Government released the Land Access Implementation Committee Report which recommended how to implement the government’s reforms to Queensland’s Land Access Framework.
The key recommendations outlined by the report were:
- a) Review the heads of compensation
to ensure no cost or erosion of landholder rights
b) Expanding the Land Court’s jurisdiction to hear matters concerning conduct as well as compensation; - Introducing an alternative dispute resolution process, independent of government;
- Conduct and compensation agreements to be noted on title;
- Parties can agree to opt-out of the requirement for a formal conduct and compensation agreement at the election of the landholder;
- The development of standard CCAs for mineral, coal and coal seam gas industries in partnership with the resource and agricultural sectors; and,
- A review and rationalisation of information sources into a single resource for landholders and resource companies.
The committee was chaired by Dr David Watson and included representatives of the GasFields Commission Queensland, AgForce, Queensland Farmers Federation, Queensland Resources Council (QRC), Australian Petroleum Production and Exploration Association and the Association of Mining and Exploration Companies.
Despite the general train of thought that a Labor Government will make it harder for the oil and gas sector, historically, Labor Governments in Queensland have had a very good relationship with the industry.
Queensland Resource Council Chief Executive Michael Roche pointed this out to the gathered Australian Pipelines and Gas Association members at the Brisbane dinner held in February.
“Since the formation of the Queensland Mining Council in 1991, we have worked with Labor Governments for 19 of the intervening 24 years,” said Mr Roche.
“The QRC worked alongside Premiers Beattie and Bligh to deliver the policy setting that underpinned the biggest private investment phase in the state’s history, including the creation of a $70 billion export gas industry.”
Victoria
Victoria has been stuck in a period of stagnation in terms of development and exploration for a number of years now, despite a new Government elected at the end of 2014.
A ban on CSG exploration has been in place since 2013, when the then Napthine-led Liberal Government began a parliamentary inquiry into fracking.
The moratorium on CSG exploration will continue until the middle of 2015.
To find out more about Victorian Government’s plans for the state’s natural resources read The Australian Pipeliner’s interview with the Minister for Resources Lily D’Ambrosio on page 62.
Northern Territory
Australia’s “˜top-end’ has made promising steps over the last few years in realising its potential as a major gas player.
In February 2014 the Northern Territory (NT) Government called for an independent inquiry into hydraulic fracturing in the NT.
Released in February 2015, the inquiry was led by Dr Allan Hawke AC who consulted extensively with the community, interested stakeholders, and experts as well as considering reports, knowledge and industry practices from interstate and overseas.
The key recommendations made in the report are:
- Consistent with other Australian and international reviews, the environmental risks associated with hydraulic fracturing can be managed effectively, subject to the creation of a robust regulatory regime.
- The substantive weight of agreed expert opinion leads the inquiry to find there is no justification whatsoever for the imposition of a moratorium of hydraulic fracturing in the NT.
- The NT Government form a Cabinet Sub-Committee, chaired by the Deputy Chief Minister and comprising the Ministers whose portfolios cover Lands, Planning and the Environment; Land Resource Management; Mines and Energy; and Primary Industry and Fisheries to oversee the work required for the NT to set the standard for a best practice regulatory regime.
- The NT Environmental Assessment Act be restructured in the light of this Report and the proposed bilateral agreements with the Commonwealth on environmental assessments and approvals.
- The NT Government consider aligning the petroleum and mineral royalty frameworks.
- The NT Government propose through the Council of Australian Governments (CoAG) Standing Council on Energy and Resources that the Australian Council of Learned Academies (ACOLA) host a workshop of international academies to consider their collective findings, learn from each other and identify the findings shared by all the academies.
The Territory Government released a statement saying that it broadly accepts the recommendations from the Hawke Inquiry report.
NT Minster for Mines and Energy Dave Tollner said the report makes it clear that the industry needs to earn its “˜social licence’ from the community by building trust, operating transparently, responding to community concerns and talking to people on the land.
“The Inquiry aimed to separate the actual environmental risks from the perceived risks and clear up some of the claims about fracking that have caused significant public concerns,” said Mr Tollner.
“The Territory Government sees onshore gas exploration as providing significant economic benefits, but we also recognise that Territorians will not accept trade-offs when it comes to the environment and protecting our treasured lifestyle.
“The key finding is that fracking can take place safely in the NT, provided the appropriate regulatory and monitoring regime is in place to allay community concern.”
Tasmania
In February 2015, the Tasmanian Government, led by the Liberal Party’s Will Hodgman, introduced a five year moratorium on hydraulic fracturing after considering a review into its potential use and impact on Tasmania.
In a statement, the Tasmanian Government said it supports a strong and thriving agriculture industry, which is why it applied a precautionary principle when considering any measures that could impact on the sector’s ability to grow ten-fold to $10 billion a year by 2050.
The Minister for Primary Industries and Water Jeremy Rockliff said given the uncertainty around fracking this would protect Tasmania’s reputation for producing fresh, premium and safe produce.
“There is considerable concern around the potential negative impacts of fracking, particularly within our rural communities and farming families who rely so heavily on our global reputation for producing premium and safe products,” said Mr Rockliff.
The Minister for Resources Paul Harriss said the Government supports the right mining techniques in the right areas.
“The Liberal Government continues to support exploration for resources like shale gas or petroleum, without the use of fracking,” said Mr Harriss.
“Exploration will allow us to better understand whether Tasmania has an economically viable resource and its potential impacts.”
A review into the practice of fracking will be conducted before the moratorium expires in March 2020.
South Australia
An inquiry into unconventional gas exploration began in November last year when the South Australia (SA) Liberal Party supported a motion from the Greens in the State Parliament’s Upper House.
The Greens initially called for a State-wide inquiry, but didn’t receive support from the Liberals who wanted to focus on the south east of the state.
To get the inquiry underway in Upper House, the Greens changed their motion to focus on the south east of the state, which sees an uncommon alliance between the Liberal and Green Parties.
The inquiry will see the Parliament’s Natural Resources Committee focus on the agriculturally-rich south east region, which the Labor Government set aside for shale gas extraction.
A statement released by APPEA said that the SA Liberal Party risked damaging investor and public confidence in the natural gas industry by moving to establish an inquiry into fracking – an industry practice that has been used safely in the state for many decades.
APPEA Chief Operating Officer Western Region Stedman Ellis said the inquiry had little basis in science.
“South Australia has consistently been ranked in international surveys as the most attractive Australian state for oil and gas investment, but this hard earned reputation will be at risk if a group, ideologically opposed to the industry, are given a platform to spread fear and misinformation,” said Mr Ellis.
“The reality is that numerous investigations and studies here in Australia and overseas have already clearly demonstrated that hydraulic fracturing, when properly regulated, poses minimal of environmental harm.”
To find out more about the fracking debate read CNC Project Management’s Ian Spence’s update on the issue.