The recent announcements for the supply of LNG from Queensland’s Surat Basin to China and Japan have been heralded by Queensland Premier Anna Bligh as “the birth of an industry that will secure the prosperity of Queensland for years to come”.
The $60 billion agreement signed between BG Group and China National Offshore Oil Corporation is the largest single LNG deal signed in Australia to date, while the $20 billion deal signed between BG and Tokyo Gas represents the first time a Japanese company has struck a deal to take LNG processed from coal seam gas (CSG). Gas is scheduled to be supplied through processing plants on Curtis Island for a 20-year period, with the first trains due to be operational from 2014.
Planning for the industry has been underway for more than 18 months around the port of Gladstone. In July 2008, the Queensland Department of Planning and Infrastructure amended the Gladstone State Development Area (SDA) to incorporate the Curtis Island Industry Precinct, which provides for the establishment of LNG facilities on the southwest of the island. The same amendment included the creation of the Curtis Island Environmental Management Precinct, which the Government says will serve as a 4,590 hectare environmental and recreational buffer around the proposed industry precinct.
Following on from the amendment to the Gladstone SDA was the announcement last August that the Callide Infrastructure Corridor would become Queensland’s eighth SDA. The Callide Infrastructure Corridor consists of a 200 m wide, 44 km long land corridor, which runs from the Calliope Range into the Gladstone SDA. On announcement of the SDA, Queensland Minister for Infrastructure and Planning Stirling Hinchcliffe said that the corridor would allow sufficient space for the co-location of up to eight pipelines, facilitating the construction of a “gas super highway”, and acting as the gateway into Curtis Island and its planned export facilities.
Meanwhile, CSG developments in the Surat Basin are being met with concern from a growing section of the community. According to the Queensland Department of Mines and Energy Coal Seam Gas Review August 2009, the number of CSG exploration wells drilled annually in Queensland increased from ten in the early 1990s to a high of approximately 600 in 2007-08. This rapid expansion has necessitated the requirement for petroleum companies to gain access to private property for the survey and exploration of resources.
Thousands of landowners have had to deal with a range of legislation and regulations for the first time. As Queensland Minerals Council Chief Executive Officer Michael Roche explains “There was a great deal of confusion in some corners as landholders have struggled to deal with different access rules for different forms of tenure. In an extreme case, one landholder could have mineral explorers, oil and gas explorers, and geothermal explorers all operating under different Acts and different rules on the same property.” Add the various proposals for new pipelines to this and it’s easy to understand why some landholders might be reluctant to deal with any further disruptive developments on their property.
In an attempt to respond to the concerns, a Land Access Working Group (LAWG) led by the State Government, has recently developed a draft Land Access Framework. This framework is a new mandatory code of conduct for explorers, underpinned by standard access agreements. The gradual introduction of the new code over the coming months will see additional departmental staff on the ground to advise and assist landholders to further support those who are affected by CSG extraction and its associated infrastructure. Queensland Minister for Energy Stephen Robertson said that the new code aims to simplify the relationship between landowner and proponent and enable the coexistence of CSG and agricultural developments.
However, complex access rights are not the only issue causing contention in relation to CSG developments on agricultural land. A Senate report, tabled in December 2009, analysed the effects of mining in the Murray Darling Basin and effectively summarised the major fears of landowners and rural action groups in the Darling Downs and Liverpool Plains areas.
The most controversial issue identified in submissions to the Senate was the unknown effects of mining activities on aquifers in regions where water resources sustain agricultural livelihoods. Other concerns revolved around the ways in which companies propose to remove the thousands of tonnes of salt that is anticipated to be produced as a by-product of CSG extraction, as well as how agricultural land would be restored and remediated following extraction.
The report concluded that the lack of detailed scientific knowledge in relation to the effects of mining on groundwater resources made it difficult to ascertain whether compliance with current legislation is actually providing sufficient protection to water resources. The report also called to ensure that the cumulative effects of mining, including CSG operations, are better represented in the assessment of proposed developments.
The Senate report is reflective of the mounting pressure from the agricultural lobby in recent months over what is being described as a “cash grab” from the Queensland Government, which will endanger prime agricultural land in favour of a short-lived LNG industry boom that would generate $850 million in royalties alone each year.
The State Government has responded to this by producing a Policy and Planning Framework discussion paper in February 2010, which aims to conserve and manage key food producing areas for the long term. By implementing these new provisions, the State Government aims to encourage petroleum and gas production to coexist with agriculture.
Areas of strategic cropping land will be identified by the state and additional planning constraints will be applied to those developments wishing to impact upon it. A new set of common guidelines will be developed to assess any proposed development on strategic cropping land. Preliminary criteria for assessment of a development on strategic cropping land include the:
* Impact of the proposed use;
* Availability of alternative sites;
* Assessment of public interest benefits of the proposal;
* Impacts of proposals on adjacent rural land uses;
* Potential to offset impacts; and,
* Requirements for proponents to demonstrate feasibility of reinstatement.
It is yet to be determined whether pipelines would trigger assessment under the new common guidelines. The coming months will see the expansion and finalisation of the additional planning requirements around strategic cropping land and the timeframe for its implementation. It will only be then that the proposed changes can be analysed by industry to evaluate what they will mean in terms of production and delivery of CSG. What is clear is that the clock is now ticking for the initial supplies of LNG in 2014 and the Queensland Government still has much to do to harmonise relationships between Queensland’s burgeoning LNG industry and its agricultural producers.
The Queensland Government’s Policy and Planning Framework discussion paper is available at www.dip.qld.gov.au/croppingland
The Senate Report entitled The impacts of mining in the Murray Darling Basin can be found at www.aph.gov.au/SENATE/committee/eca_ctte/mining_mdb/report/index.htm