Friday, October 6, 2017

Global Shale Law Compendium: Shale Governance in Australia (New South Wales, Victoria, Tasmania, and Northern Territory)

Written by Chloe Marie – Research Fellow

The Global Shale Law Compendium series addresses legal developments and other issues related to the governance of shale oil and gas activities in various countries and regions of the world. In this article, we will highlight governance actions taken by some of the states and Federal territory in southeastern Australia to develop policies specific to shale gas development. Another article will address shale gas development in additional Australian states.

In a report dated September 2015, the U.S. EIA declared that “with geologic and industry conditions resembling those of the USA and Canada, Australia has the potential to be one of the next countries with commercially viable shale gas and shale oil production.” According to the U.S. EIA, Australia holds approximately 437 Tcf of technically recoverable shale gas resources, mostly occurring in Western Australia, South Australia and Queensland. Other Australian states and Federal territory, including New South Wales, Victoria, Tasmania and Northern Territory may possess promising shale gas prospects, though such resources have yet to be proven.

New South Wales

In March 2012, the New South Wales (NSW) government prohibited the use of BTEX chemical compounds in all drilling and hydraulic fracturing activities and also required the disclosure of all chemical fluids used in hydraulic fracturing. Although the NSW government has declared that “there are no proven shale gas reserves in NSW,” it appears to not be opposed to the idea of developing such resources.

Indeed, on September 30, 2014, the NSW Chief Scientist & Engineer issued a Final Report on the Independent Review of Coal Seam Gas (CSG) Activities in NSW and provided some recommendations to the NSW government in terms of how to effectively respond to the impacts of existing CSG activities on the environment and public health. As part of its findings, interestingly, the Chief Scientist & Engineer recommended that a standing expert advisory body on CSG activities be established, one of whose important functions would be to advise on whether or not other unconventional gas extraction activities, including shale gas, should be allowed to proceed in NSW.

In the NSW Gas Plan, the Government also pointed out the importance to reform the existing hydrocarbon regulatory framework in order to ensure that all gas activities, including shale gas, hold an Environmental Protection License granted by the Environment Protection Authority (EPA).

Victoria

On August 24, 2012, the Victorian Coalition Government announced reforms to strengthen the existing CSG regulation and further protect regional communities. The government declared an immediate ban on onshore gas exploration activities using hydraulic fracturing or any work programs involving the said technique until the Coalition Government agreed on reform proposals. Minister for Energy and Resources Honorable Michael O’Brien stated that “this approach will help to avoid a situation where applications for hydraulic fracturing works might be approved now, only to be inconsistent with new standards to be set in the near future.”

In addition, on May 28, 2014, Minister for Energy and Resources Honorable Russell Northe expanded the moratorium to include all onshore gas exploration activities regardless of whether or not they involved the use of hydraulic fracturing. On August 30, 2016, following the enactment of the 2016 Resources Legislation Amendment Bill, Premier of Victoria Honorable Daniel Andrews announced a permanent ban on all onshore unconventional gas exploration and development, including through the use of hydraulic fracturing and coal seam gas development.  Premier Andrews also announced the extension of the moratorium on conventional onshore gas exploration and development to June 30, 2020. 

Tasmania

In March 2014, the Tasmanian government put in place a 12-month moratorium on the practice of hydraulic fracturing in unconventional reservoirs until a further review was conducted on the impacts of said technique on the environment and the community as well as a review of the existing oil and gas regulatory framework in Tasmania. On February 25, 2015, the Tasmanian Department of Primary Industries, Parks, Water and Environment released its Final Report on the Review of Hydraulic Fracturing in Tasmania and found, among other things, that “the potential use of fracking in Tasmania is unknown due to the nature of Tasmania’s geology, the size of any potential prospective area, and the lack of exploration for hydrocarbon resources to date.”

A day following the release of the Department’s Final Report, Minister for Primary Industries and Water Jeremy Rockliff, conjointly with Minister for Resources Paul Harriss, announced in a Press Release a five-year moratorium on the mining practice of hydraulic fracturing stating that “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.”

Northern Territory

The Northern Territory government introduced a temporary moratorium on September 14, 2016 on shale gas exploration using hydraulic fracturing to enable the government time to examine the environmental and social implications of hydraulic fracturing through a comprehensive independent scientific inquiry. On December 6, 2016, the Northern Territory government announced that an Independent Scientific Inquiry composed of ten independent scientists chaired by the Honorable Justice Rachel Pepper would investigate the environmental, social and economic risks and impacts of hydraulic fracturing of shale gas exploration and development activities in the Northern Territory.

The Scientific Inquiry released on July 14, 2017, an Interim Report setting out some of the principal issues to be reviewed assessing the impacts associated with hydraulic fracturing activities, including shale gas development and management in Australia and the Northern Territory, water, land, greenhouse gas emissions, public health, aboriginal people and their culture, social impacts, economic impacts, and the possibility of initiating a regulatory reform. The Scientific Inquiry stated that a final report is to be expected by the end of 2017.

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