Offshore
Petroleum Amendment (Greenhouse Gas Storage) Bill 2008
Outline
1.
The Offshore Petroleum Amendment (Greenhouse Gas Storage)
Bill 2008 ('the Bill') will amend the Offshore Petroleum Act 2006
('principal Act') to establish a system of offshore titles, similar to the
offshore petroleum titles that already exist under the principal Act, that will
authorise the transportation by pipeline and injection and storage of
greenhouse gas substances in deep geological formations under the seabed. The
Bill will also make changes to the existing regime of petroleum titles that are
needed in order to accommodate the new kinds of activity being authorised by
the Act. Petroleum and greenhouse gas operations will in many respects be
similar and the resources of the seabed and subsoil that the two categories of
title-holders will seek to exploit have much in common. Each form of activity
will have the potential to impact on the other, both beneficially and
detrimentally. The Bill therefore provides for regulatory decisions made in
respect of each form of activity to take into account potential impacts on the
other.
2.
The adjustments made by the Bill to the rights and obligations
attached to petroleum titles will not apply to petroleum titles in existence at
the date of commencement of the relevant provisions of the Bill. Nor will they
apply to subsequent titles in the same series as existing titles. In addition,
when decisions are made in relation to approval of greenhouse gas-related
activities, those petroleum titles will have the protection of a 'no
significant adverse impact' test.
3.
A greenhouse gas injection licence will authorise the injection
and storage of a ‘greenhouse gas substance’. For practical purposes, when the
amendments commence, ‘greenhouse gas substance’ will mean carbon dioxide,
together with any substances incidentally derived from the capture,
transportation or injection processes, with the permitted or required addition
of chemical detection agents. There is a power by regulation to extend the
meaning of ‘greenhouse gas substance’ to include other greenhouse gases. This
regulation-making power is not expected to be used until such time as the 1996
Protocol to the London Dumping Convention is amended to permit geological
storage of those other greenhouse gases.
4.
The new titles established by the Bill correspond generally to
the existing petroleum titles. The new greenhouse gas titles and the petroleum
titles they correspond to are:
a greenhouse gas assessment permit
(petroleum exploration permit);
a greenhouse gas holding lease
(petroleum retention lease);
a greenhouse gas injection licence
(petroleum production licence);
a greenhouse gas search authority
(special prospecting authority);
a greenhouse gas special authority
(access authority);
an infrastructure licence can now
be obtained for greenhouse gas-related activities.
5.
The principal Act, as amended by the Bill, will continue to apply
only in the Commonwealth offshore jurisdiction. The new greenhouse gas titles
will therefore be located in the area between the outer limits of the State and
Northern Territory (3 nautical mile) coastal waters and the outer limit
of the Australian continental shelf.
6.
Schedule 1 inserts into the Offshore Petroleum Act the new
provisions that will provide for the release of offshore acreage over which
greenhouse gas titles may be obtained, establish the system of titles that will
authorise title-holders to engage in greenhouse gas related operations and
confer on the responsible Commonwealth Minister regulatory powers in relation
to those titles and those activities. New categories of project inspectors and
OHS inspectors are also established.
7.
Schedule 1 also contains a substantial number of provisions
that duplicate existing petroleum provisions relating to administrative,
regulatory and process matters, which are adapted to apply to greenhouse gas
titles and operations. In most cases, the adaptation extends only to changing
the names of the offshore titles and the name of the regulator, with the
responsible Commonwealth Minister being substituted for the Joint Authority and
Designated Authority, together with any necessary changes to cross-references.
The intended effect is that the existing 'petroleum' provisions will simply be
applied to greenhouse gas titles, title-holders and operations. However, for
ease of reading, the drafting approach taken has been to reproduce the
provisions in their entirety.
8.
Schedule 1 also adds some entirely new provisions, which will
apply to post-commencement petroleum titles and operations under those titles,
and makes certain other amendments made necessary by the fact that the Act now
provides for two systems of titles and two kinds of offshore operations.
Notes
on clauses
9.
Item 1 changes the long title of the principal Act to 'An Act
about petroleum exploration and recovery, and the injection and storage of
greenhouse gas substances, in offshore areas, and for other purposes'.
10. Item
2 amends section 1 to change the short title of the principal Act to 'the Offshore
Petroleum and Greenhouse Gas Storage Act 2006'.
Item 3 to 5 Section 3 Simplified outline
11. Items
3, 4 and 5 amend the simplified outline of the Act in section 3.
12. A
clause note is not provided for a self-explanatory change or addition to
section 6. Nor is a clause note provided where the term is defined in a
later provision.
13. Item
7 changes the definition of approved to allow for the fact that
approvals will now be given by two different decision-makers under the Act. In
the case of the petroleum provisions, approvals will be given by the Designated
Authorities, who will continue to have the day-to-day administration of the
petroleum provisions of Act. In the case of the greenhouse gas provisions,
approvals will be given by the responsible Commonwealth Minister.
14. Item
8 inserts a definition of approved site plan. The site plan is
the core regulatory document for each greenhouse gas injection and storage
project and will form the basis for the day-to-day regulatory interaction
between the injection licensee and the regulator (the delegate of the
responsible Commonwealth Minister). The site plan will keep the regulator
informed, at an appropriate level of detail, of the geological attributes or
features of the storage formation, as they are currently known, current and
proposed injection and storage operations, the results of ongoing monitoring
and verification programs and predictions as to the short, medium and long term
behaviour and fate of the greenhouse gas in the identified storage formation
and associated geological formation(s).
15. A
declared exploration permit is a post-commencement (petroleum)
exploration permit in respect of which the responsible Commonwealth
Minister has determined under proposed section 79B that there is a
significant risk of petroleum operations having a significant adverse impact on
greenhouse gas operations. The holder of a declared exploration permit
requires the responsible Commonwealth Minister's approval in order to carry out
key petroleum operations.
16. The
concept of a declared greenhouse gas facility is distinct from
that of the 'declared' petroleum titles to which items 11, 13 and 14 refer. A declared
greenhouse gas facility is a structure or plant in an injection licence
area used for greenhouse gas-related operations and which can be constructed
and operated under the authority of the injection licence. No infrastructure
licence is required. This definition is part of a group of definitions
designed to permit flexibility for an injection licensee in deciding on the
configuration of the structures and plant that are used in injection and
storage operations.
17. A
declared production licence is a post-commencement (petroleum)
production licence in respect of which the responsible Commonwealth
Minister has determined under proposed section 138B that there is a
significant risk of petroleum operations having a significant adverse impact on
greenhouse gas operations. The holder of a declared production licence
requires the responsible Commonwealth Minister's approval in order to carry out
key petroleum operations.
18. A
declared retention lease is a post-commencement (petroleum)
retention lease in respect of which the responsible Commonwealth
Minister has determined under proposed section 114B that there is a
significant risk of petroleum operations having a significant adverse impact on
greenhouse gas operations. The holder of a declared retention lease requires
the responsible Commonwealth Minister's approval in order to carry out key
petroleum operations.
19. A
greenhouse gas facility line is a pipe, or system of pipes, for carrying a
greenhouse gas substance that is part of a declared greenhouse gas
facility. The consequence of a pipe for greenhouse gas being part of a
declared greenhouse gas facility is that the pipe is not required
to be covered by a greenhouse gas-related pipeline licence or by an
infrastructure licence. This definition is part of a group of definitions
designed to permit flexibility for an injection licensee in deciding on the
configuration of the structures and plant that are used in injection and
storage operations.
20. A
greenhouse gas infrastructure line is a pipe, or system of pipes,
for carrying a greenhouse gas substance that is part of an infrastructure
facility. An infrastructure facility is a facility that is required to be
licensed under an infrastructure licence, because it is outside the relevant
injection licence area and so is not covered by the injection licence. A
greenhouse gas-related pipeline licence does not have to be obtained in order
to operate a greenhouse gas infrastructure line. There is no
limitation on the length of a greenhouse gas infrastructure line.
— It does not have to be structurally integral to the infrastructure facility,
other than being joined at an entry or exit flange. Whether a pipeline licence
is required in a particular case is controlled by the responsible Commonwealth
Minister via the discretion whether to declare a point on the pipe to be a terminal
point under proposed section 14A. This definition is part of a
group of definitions designed to permit flexibility for an injection licensee
in deciding on the configuration of the structures and plant that are used in
injection and storage operations.
21. A
greenhouse gas injection line is a greenhouse gas pipe that is
integral to an injection licensee's injection and storage operations in an
injection licence area. It is not required to be covered by a greenhouse
gas-related pipeline licence. Whether a pipeline licence is required in a
particular case is controlled by the responsible Commonwealth Minister via the
discretion whether to declare a point on the pipe to be a terminal point
under proposed section 14A. This definition is part of a group of
definitions designed to permit flexibility for an injection licensee in
deciding on the configuration of the structures and plant that are used in
injection and storage operations.
22. A
greenhouse gas pipeline must be licensed under a greenhouse
gas-related pipeline licence. Whether a particular stretch of pipe needs to be
separately licensed under a pipeline licence is controlled by the responsible
Commonwealth Minister via the discretion whether to declare a point on the pipe
to be a terminal point under proposed section 14A.
23. For
practical purposes, when the amendments made by this Bill commence, greenhouse
gas substance will mean carbon dioxide, together with any substances
incidentally derived from the capture, transportation, injection or storage
processes, with the permitted or required addition of chemical detection agents
to assist the tracing of the injected greenhouse gas substance.
24. There
is a power by regulation to extend the meaning of greenhouse gas
substance to include other greenhouse gases. This regulation-making
power is not expected to be used until such time as the Protocol to the London
Dumping Convention is amended to permit geological storage of those other
greenhouse gases. In accordance with that Protocol, it will be an offence to
add a waste substance or other matter to a greenhouse gas substance
for the purposes of disposal.
25. Key
greenhouse gas operations are greenhouse gas activities that it is
considered may have impacts of some kind on petroleum operations under a
present or future petroleum title under the Act. The impacts that these
greenhouse gas operations may have on petroleum operations include not only
impacts at the level of geological formations but also physical interference on
the surface, for example where vessels may be in close proximity.
26. Conversely,
key petroleum operations are petroleum activities that it is
considered may have impacts of some kind on greenhouse gas operations under a
present or future greenhouse gas title under the Act. The impacts that these
petroleum operations may have on greenhouse gas operations include not only
impacts at the level of geological formations but also physical interference on
the surface, for example where vessels may be in close proximity.
27.
A post-commencement petroleum title is a petroleum
exploration permit, petroleum retention lease or petroleum production licence
in respect of which the initial exploration permit in the series is granted
after the amendments made by the Bill commence.
28.
A pre-commencement petroleum title is a petroleum
exploration permit, petroleum retention lease or petroleum production licence
that is in force at the time when the amendments made by this Bill commence,
and any future petroleum title in the same series. This includes a petroleum
retention lease granted to the holder of a life-of-field production licence
that was itself a pre-commencement title.
29. The
construction and operation of an infrastructure facility requires an
infrastructure licence.
30. Section 13
at present defines infrastructure facility and sets out the
petroleum activities that can be carried on at such a facility. Those
permitted activities do not include exploring for, or recovering petroleum. (A
petroleum production licensee does not require an infrastructure licence in
order to construct and operate a petroleum production facility, or any other
plant or structure used for the recovery of petroleum, in the production
licence area.)
31. Item
103 adds a new subsection (3) to section 13 that sets out the
greenhouse gas activities that can be carried out at an infrastructure
facility. These activities do not include injecting a greenhouse gas substance
(or any substance) into the seabed or subsoil.
32. The
permitted activities do include activities preparatory to injecting a
greenhouse gas substance into an identified greenhouse gas storage formation,
for example, controlling the flow of a greenhouse gas substance into the
injection well. They also include preparing a greenhouse gas substance for
injection, for example, pumping, processing or compressing.
33. The
significance of these examples that the subsection expressly provides is that all
the activities and processes necessary to inject a greenhouse gas substance
into an injection well, including giving it its final compression and pumping
before it enters the well, and the plant and equipment (valves, etc) that
control the flow of the greenhouse gas substance into the injection well, can
take place, or be located on, an infrastructure facility that is outside the
injection licence area. As far as injection is concerned, all that the Act
requires to happen in the injection licence area is that the greenhouse gas
substance must enter the top of the injection well (the hole in the seabed) in
the injection licence area. The injection well is required to be wholly within
the injection licence area.
34. New
subsection 13(4) provides that, for the purpose of new
subsection (3), injection into an identified greenhouse gas storage
formation is taken to take place at the top of the relevant well. This is
stated expressly here for avoidance of doubt, as it is essential to the working
of the section. The same principle is, however, implicit in other relevant greenhouse
gas provisions.
35. Again,
it is an intention of this provision that a greenhouse gas injection licensee
have flexibility in deciding on the configuration of the structures and plant
that are used in injection and storage operations. An injection licensee may
wish to locate most of the project infrastructure outside the injection licence
area. A licensed infrastructure facility may be used for that purpose.
36. It
is the declaration of a terminal point on a pipeline that will determine
whether a stretch of pipeline is required to be licensed under a greenhouse
gas-related pipeline licence – see proposed section 187A for the
grant of such licences.
37. The
concept of a declared greenhouse gas facility is distinct from
that of the 'declared' petroleum titles to which items 11, 13 and 14 refer. A declared
greenhouse gas facility is a structure or plant in an injection licence
area used for greenhouse gas-related operations and which can be constructed
and operated under the authority of the injection licence. No separate
infrastructure licence is required.
38. This
clause extends the common, dictionary meaning of the word 'explore' in order to
regulate all seismic surveying, seabed sampling surveys and various airborne
remote sensing techniques such as gravity, magnetic and laser fluorimetry
surveys that are designed to assist in locating storage formations. Such surveys
can be carried out by various titleholders under the Act or by parties who are
not themselves petroleum or greenhouse gas explorers. The surveys are
performed by speculative survey companies (normally working under a special
prospecting authority or search authority) who aim to sell the survey results
to titleholders. Without this clause, there is doubt whether such speculative
activities could be regulated under the Act.
39. A
potential greenhouse gas storage formation
is a part of a geological formation that is suitable, with or without
engineering enhancements, for the permanent storage of an amount (at least
100,000 tonnes) of a greenhouse gas substance. Section 249NA requires a
greenhouse gas title-holder to notify the responsible Commonwealth Minister if
the title-holder reasonably suspects that the title area contains a potential
greenhouse gas storage formation.
40. An
eligible greenhouse gas storage formation is a part of a
geological formation that is suitable, with or without engineering
enhancements, for the permanent storage of a particular amount (at least
100,000 tonnes) of a particular greenhouse gas substance injected at a
particular point or points over a particular period. A greenhouse gas
title-holder who reasonably believes that the title area contains an eligible
greenhouse gas storage formation may apply for a declaration that it is
an identified greenhouse gas storage formation.
Spatial extent
41. The
spatial extent of an eligible greenhouse gas storage
formation is the vertical and horizontal extent of the expected migration
pathway(s) of the injected greenhouse gas substance over a predicted
period. This predicted period is:
the proposed injection period
+ the notional site closing period.
Note 1: The expected migration pathway is
worked out on the basis of any assumptions and/or methodologies specified in
the regulations and the level(s) of probability specified in the regulations.
Note 2: The notional site closing period
is the period between the end of the proposed injection period and the
estimated earliest time when there will be sufficient certainty about the fate
of the injected greenhouse gas substance to enable the responsible Commonwealth
Minister to grant a site closing
certificate.
Note 3: For the requirements for the responsible
Commonwealth Minister to grant a site closing certificate, see s 249CZF.
42. Many
of the decisions made by the responsible Commonwealth Minister under the
greenhouse gas provisions depend on whether the Minister is satisfied that
there is a 'significant risk' of an adverse impact occurring. Section 15F
provides for the circumstance where there is only a small risk of the adverse
impact occurring but where, if the adverse impact does occur, it will be
large. The section provides that, in such a case, the risk is taken to be a
significant risk, even if the probability is low.
43. Item
119 inserts new subsections into section 79, which is the section that
provides for the conditions to which a petroleum exploration permit is
subject. The new subsections apply only to a declared exploration permit.
Only a post-commencement exploration permit can become a declared
exploration permit. The process by which an exploration permit becomes
'declared' is in proposed section 79B.
44. New
subsection 79(8) provides that a declared exploration permit is subject to
the condition that the permittee will not carry on key petroleum
operations unless the responsible Commonwealth Minister has approved
the operations under proposed section 79A. This condition does not have
to be specified in the permit.
45. Subsection (10)
provides that, where the responsible Commonwealth Minister approves key
petroleum operations, the Minister may impose new conditions on the
permit.
46. Subsection (12)
provides that the new conditions may require the permittee to ensure that wells
made in the permit area are made in a manner and to a standard that will
facilitate the plugging of the wells (ie at the decommissioning stage) in a way
that restores or maintains the suitability of a geological formation for the
permanent storage of a greenhouse gas substance. The reason why the
responsible Commonwealth Minister may impose such a condition is that a well
may only be able to be plugged to the requisite standard if it has been
initially constructed in a manner that facilitates plugging to that standard.
47.
Proposed section 79A relates to
the statutory condition imposed by the new provisions in section 79 that
the holder of a declared exploration permit must obtain the
approval of the responsible Commonwealth Minister in order to carry out key
petroleum operations in the permit area. The term key petroleum
operations is defined in section 6. Key petroleum operations are
activities that it is considered may have impacts of some kind on greenhouse
gas operations under a present or future greenhouse gas title. The impacts
that these petroleum operations may have on greenhouse gas operations include
not only impacts at the level of geological formations but also physical
interference on the surface, for example where vessels may be in close
proximity.
48.
Proposed subsections (1)
and (2) provide for a petroleum exploration permittee to apply to the
responsible Commonwealth Minister for approval of one or more key petroleum
operations. The responsible Commonwealth Minister may give the approval or
refuse to give the approval.
49.
In deciding whether or not to give an
approval, the responsible Commonwealth Minister may have regard to any matters
that the Minister considers relevant (see proposed subsection (9)). There
are, however, some matters to which the Minister must have regard and there are
some circumstances in which an approval must not be given.
Matters to which the Minister must have regard
50. Proposed
subsection (4) provides that, in deciding whether to approve key petroleum
operations, the responsible Commonwealth Minister must have regard to potential
impacts on greenhouse gas injection or storage operations under any existing greenhouse
gas assessment permit, holding lease or injection licence. Where there is a
greenhouse gas permit or lease in force over relevant blocks, the Minister must
also have regard to potential impacts on greenhouse gas injection or storage
operations under a future greenhouse gas title over those blocks.
51. Proposed
subsection (5) applies if the responsible Commonwealth Minister is
satisfied that there is a significant risk that any of the key petroleum
operations will have a significant adverse impact on injection or storage operations
that are being, or could be, carried on under an existing greenhouse gas
assessment permit, holding lease or injection licence held by a person other
than the applicant. In that case, the subsection provides that the Minister
must have regard to whether the holder of the greenhouse gas title has agreed
in writing to the carrying out of the key petroleum operations and, if so, to
the terms of that agreement. In relation to the risk of impacts on a greenhouse
gas assessment permit or holding lease, there does not have to be an agreement
in order for the Minister to give the approval. But if there is an agreement,
the Minister must have regard to it.
52.
Proposed subsection (6) makes the
same provision in relation to a future greenhouse gas holding lease or
injection licence, where an existing greenhouse gas title is in force over the
block or blocks in question, except that the relevant agreement (if any) will
be with the holder of the existing greenhouse gas title.
53.
Proposed subsection (7) requires
the responsible Commonwealth Minister to have regard to the public interest.
Circumstances in which approval must not be given
54.
The circumstances in which approval
must not be given relate to impacts on existing injection licences. (An
injection licence is given the same level of ‘impacts’ protection as a
pre-commencement petroleum title. This is because of the level of investment
required in order to develop a greenhouse gas project to the injection and
storage stage.)
55.
Proposed subsection (10) applies
if the responsible Commonwealth Minister is satisfied that there is a
significant risk that the key petroleum operations will have a significant
adverse impact on injection or storage under an existing injection licence held
by a person other than the applicant. In that case, the responsible
Commonwealth Minister must not approve the key petroleum operations unless the
existing injection licensee has agreed to the petroleum title-holder carrying
on the operations.
56.
Proposed subsection (11) makes
clear that there is no entitlement to an approval under this section. The fact
of having obtained a post-commencement exploration permit does not 'guarantee'
that the permittee will be able to carry out any particular exploration
program, for example that an exploration well can be drilled in a particular
place. A further example of the operation of proposed subsection (11) is
that, even if a greenhouse gas title-holder has agreed to the carrying out of
the key petroleum operations that the petroleum permittee proposes, the
responsible Commonwealth Minister may refuse to give the approval if the
agreement contains terms that the Minister considers are contrary to the public
interest.
57. Proposed
section 79B provides the process by which a post-commencement exploration
permit may become a declared exploration permit. The responsible
Commonwealth Minister may make a determination under this section either as
soon as a permit comes into force or at any later time when the permit is in
force. There is also provision for the Minister to revoke a determination. A
pre‑commencement petroleum title cannot be 'declared'.
58. Subsection (1)
provides that, if the responsible Commonwealth Minister is satisfied that there
is a significant risk that any of the key petroleum operations that could be
carried on under a petroleum exploration permit will have a significant adverse
impact on injection or storage operations that are being, or could be, carried
on under an existing or future greenhouse gas assessment permit, holding lease
or injection licence, the Minister may determine that the petroleum exploration
permit is a declared exploration permit.
59. Under
subsection (2), if at any time the responsible Commonwealth Minister is no
longer satisfied that the exploration permit meets the criteria for
'declaration', the Minister must revoke the declaration.
60. Item
122 inserts new subsections into section 114, which is the section that
provides for the conditions to which a petroleum retention lease is subject.
The new subsections apply only to a declared retention lease.
Only a post-commencement retention lease can become a declared
retention lease. The process by which a retention lease becomes
'declared' is in proposed section 114B.
61. New
subsection 114(11) provides that a declared retention lease is subject to
the condition that the lessee will not carry on key petroleum operations
unless the responsible Commonwealth Minister has approved the operations under proposed
section 114A. This condition does not have to be specified in the permit.
62. Subsection (13)
provides that, where the responsible Commonwealth Minister approves key
petroleum operations, the Minister may impose new conditions on the
lease.
63. Subsection (15)
provides that the new conditions may require the lessee to ensure that wells
made in the lease area are made in a manner and to a standard that will
facilitate the plugging of the wells (ie at the decommissioning stage) in a way
that restores or maintains the suitability of a geological formation for the
permanent storage of a greenhouse gas substance. The reason why the
responsible Commonwealth Minister may impose such a condition is that a well
may only be able to be plugged to the requisite standard if it has been
initially constructed in a manner that facilitates plugging to that standard.
64.
Proposed section 114A relates to
the statutory condition imposed by the new provisions in section 114 that
the holder of a declared retention lease must obtain the approval
of the responsible Commonwealth Minister in order to carry out key
petroleum operations in the lease area. The term key petroleum
operations is defined in section 6. Key petroleum operations are
activities that it is considered may have impacts of some kind on greenhouse
gas operations under a present or future greenhouse gas title. The impacts
that these petroleum operations may have on greenhouse gas operations include
not only impacts at the level of geological formations but also physical
interference on the surface, for example where vessels may be in close
proximity.
65.
Proposed subsections 114A(1)
and (2) provide for a petroleum retention lessee to apply to the
responsible Commonwealth Minister for approval of one or more key petroleum
operations. The responsible Commonwealth Minister may give the approval or
refuse to give the approval.
66.
In deciding whether or not to give an
approval, the responsible Commonwealth Minister may have regard to any matters
that the Minister considers relevant (see proposed subsection (9). There
are, however, some matters to which the Minister must have regard and there are
some circumstances in which an approval must not be given.
Matters to which the Minister must have regard
67. Proposed
subsection (4) provides that, in deciding whether to approve key petroleum
operations, the responsible Commonwealth Minister must have regard to potential
impacts on greenhouse gas injection or storage operations under any existing greenhouse
gas assessment permit, holding lease or injection licence. Where there is a
greenhouse gas permit or lease in force over relevant blocks, the Minister must
also have regard to potential impacts on greenhouse gas injection or storage
operations under a future greenhouse gas title over those blocks.
68. Proposed
subsection (5) applies if the responsible Commonwealth Minister is
satisfied that there is a significant risk that any of the key petroleum
operations will have a significant adverse impact on injection or storage operations
that are being, or could be, carried on under an existing greenhouse gas
assessment permit, holding lease or injection licence held by a person other
than the applicant. In that case, the subsection provides that the Minister
must have regard to whether the holder of the greenhouse gas title has agreed
in writing to the carrying out of the key petroleum operations and, if so, to the
terms of that agreement. In relation to the risk of impacts on a greenhouse
gas assessment permit or holding lease, there does not have to be an agreement
in order for the Minister to give the approval. But if there is an agreement,
the Minister must have regard to it.
69.
Proposed subsection (6) makes the
same provision in relation to a future greenhouse gas holding lease or
injection licence, where an existing greenhouse gas title is in force over the
block or blocks in question, except that the relevant agreement (if any) will
be with the holder of the existing greenhouse gas title.
70.
Proposed subsection (7) requires
the responsible Commonwealth Minister to have regard to the public interest.
Circumstances in which approval must not be given
71.
The circumstances in which approval
must not be given relate to impacts on existing injection licences. (An
injection licence is given the same level of ‘impacts’ protection as a
pre-commencement petroleum title. This is because of the level of investment
required in order to develop a greenhouse gas project to the injection and
storage stage.)
72.
Proposed subsection (10) applies
if the responsible Commonwealth Minister is satisfied that there is a
significant risk that the key petroleum operations will have a significant
adverse impact on injection or storage under an existing injection licence held
by a person other than the applicant. In that case, the responsible
Commonwealth Minister must not approve the key petroleum operations unless the
existing injection licensee has agreed to the petroleum title-holder carrying
on the operations.
73.
Proposed subsection (11) makes
clear that there is no entitlement to an approval under this section.
74. Proposed
section 114B provides the process by which a post-commencement retention
lease may become a declared retention lease. The responsible
Commonwealth Minister may make a determination under this section either as
soon as a lease comes into force or at any later time when the lease is in
force. There is also provision for the Minister to revoke a determination. A
pre-commencement petroleum title cannot be 'declared'.
75. Subsection 114B(1)
provides that, if the responsible Commonwealth Minister is satisfied that there
is a significant risk that any of the key petroleum operations that could be
carried on under a petroleum retention lease will have a significant adverse
impact on injection or storage operations that are being, or could be, carried
on under an existing or future greenhouse gas assessment permit, holding lease
or injection licence, the Minister may determine that the petroleum retention
lease is a declared retention lease.
76. Under
subsection (2), if at any time the responsible Commonwealth Minister is no
longer satisfied that the retention lease meets the criteria for 'declaration',
the Minister must revoke the declaration.
77.
Item 127 inserts new subsections into
section 138, which is the section that provides for the conditions to
which a petroleum production licence is subject. The new subsections apply
only to a declared production licence. Only a post-commencement
production licence can become a declared production licence.
The process by which a production licence becomes 'declared' is in proposed
section 138B.
78.
New subsection 138(10) provides
that a declared production licence is subject to the condition that the
licensee will not carry on key petroleum operations unless the
responsible Commonwealth Minister has approved the operations under proposed
section 138A. This condition does not have to be specified in the
licence.
79.
Subsection (12) provides that,
where the responsible Commonwealth Minister approves key petroleum
operations, the Minister may impose new conditions on the licence.
80.
Subsection (14) provides that the
new conditions may require the licensee to ensure that wells made in the
licence area are made in a manner and to a standard that will facilitate the
plugging of the wells (ie at the decommissioning stage) in a way that restores
or maintains the suitability of a geological formation for the permanent
storage of a greenhouse gas substance. The reason why the responsible
Commonwealth Minister may impose such a condition is that a well may only be
able to be plugged to the requisite standard if it has been initially
constructed in a manner that facilitates plugging to that standard.
81.
Proposed section 138A relates to
the statutory condition imposed by the new provisions in section 138 that
the holder of a declared production licence must obtain the
approval of the responsible Commonwealth Minister in order to carry out key
petroleum operations in the licence area. The term key petroleum
operations is defined in section 6. Key petroleum operations are
activities that it is considered may have impacts of some kind on greenhouse
gas operations under a present or future greenhouse gas title. The impacts that
these petroleum operations may have on greenhouse gas operations include not
only impacts at the level of geological formations but also physical
interference on the surface, for example where vessels may be in close
proximity.
82.
Proposed subsections 138A(1)
and (2) provide for a petroleum production licensee to apply to the
responsible Commonwealth Minister for approval of one or more key petroleum
operations. The responsible Commonwealth Minister may give the approval or
refuse to give the approval.
83.
In deciding whether or not to give an
approval, the responsible Commonwealth Minister may have regard to any matters
that the Minister considers relevant (see proposed subsection (9). There
are, however, some matters to which the Minister must have regard and there are
some circumstances in which an approval must not be given.
Matters to which the Minister must have regard
84.
Proposed subsection (4) provides
that, in deciding whether to approve key petroleum operations, the responsible
Commonwealth Minister must have regard to potential impacts on greenhouse gas
injection or storage operations under any existing greenhouse gas assessment
permit, holding lease or injection licence. Where there is a greenhouse gas
permit or lease in force over relevant blocks, the Minister must also have
regard to potential impacts on greenhouse gas injection or storage operations
under a future greenhouse gas title over those blocks.
85.
Proposed subsection (5) applies if
the responsible Commonwealth Minister is satisfied that there is a significant
risk that any of the key petroleum operations will have a significant adverse
impact on injection or storage operations that are being, or could be, carried
on under an existing greenhouse gas assessment permit, holding lease or
injection licence held by a person other than the applicant. In that case, the
subsection provides that the Minister must have regard to whether the holder of
the greenhouse gas title has agreed in writing to the carrying out of the key
petroleum operations and, if so, to the terms of that agreement. In relation
to the risk of impacts on a greenhouse gas assessment permit or holding lease,
there does not have to be an agreement in order for the Minister to give the
approval. But if there is an agreement, the Minister must have regard to it.
86.
Proposed subsection (6) makes the
same provision in relation to a future greenhouse gas holding lease or
injection licence, where an existing greenhouse gas title is in force over the
block or blocks in question, except that the relevant agreement (if any) will
be with the holder of the existing greenhouse gas title.
87.
Proposed subsection (7) requires
the responsible Commonwealth Minister to have regard to the public interest.
Circumstances in which approval must not be given
88.
The circumstances in which approval
must not be given relate to impacts on existing injection licences. (An
injection licence is given the same level of ‘impacts’ protection as a
pre-commencement petroleum title. This is because of the level of investment
required in order to develop a greenhouse gas project to the injection and
storage stage.)
89.
Proposed subsection (10) applies
if the responsible Commonwealth Minister is satisfied that there is a
significant risk that the key petroleum operations will have a significant
adverse impact on injection or storage under an existing injection licence held
by a person other than the applicant. In that case, the responsible
Commonwealth Minister must not approve the key petroleum operations unless the
existing injection licensee has agreed to the petroleum title-holder carrying
on the operations.
90.
Proposed subsection (11) makes
clear that there is no entitlement to an approval under this section.
91.
Proposed section 138B provides the
process by which a post-commencement injection licence may become a declared
injection licence. The responsible Commonwealth Minister may make a
determination under this section either as soon as a licence comes into force
or at any later time when the licence is in force. There is also provision for
the Minister to revoke a determination. A pre-commencement petroleum title
cannot be 'declared'.
92.
Subsection 138B(1) provides that,
if the responsible Commonwealth Minister is satisfied that there is a
significant risk that any of the key petroleum operations that could be carried
on under the petroleum production licence will have a significant adverse
impact on injection or storage operations that are being, or could be, carried
on under an existing or future greenhouse gas assessment permit, holding lease
or injection licence, the Minister may determine that the petroleum injection
licence is a declared injection licence.
93. Under subsection (2), if at any time the responsible
Commonwealth Minister is no longer satisfied that the injection licence meets
the criteria for 'declaration', the Minister must revoke the declaration.
94. Proposed
section 249AA gives a summary of Chapter 2A, which provides for the grant
of greenhouse gas titles and the regulation of activities carried out under
those titles. This summary will not form part of the operative text of the
Act.
95. A
greenhouse gas assessment permit corresponds to a petroleum exploration
permit. It is the title under which exploration is carried out for a
geological formation that is suitable to be used for the injection and
permanent storage of a greenhouse gas substance, and for one or more suitable
injection sites.
96. This
clause gives a summary of Part 2A.2 covering assessment permits. This summary
will not form part of the operative text of the Act.
97. Proposed
section 249AC makes it an offence to explore in an offshore area for a
potential greenhouse gas storage formation or potential greenhouse gas
injection site unless the exploration is authorised by a greenhouse gas assessment
permit or is otherwise authorised or required by or under this Act. The
purpose of this prohibition is to ensure that all greenhouse gas exploration in
Commonwealth waters is brought under the regulatory supervision of the
responsible Commonwealth Minister. This is so that any activity having the
potential to cause damage to the environment or to resources or interfere with
the operations of other users of the sea or seabed is subject to regulatory approval,
for example, so that the activity will be covered by an environment plan that
is in force under the regulations.
98. This
clause extends the common, dictionary meaning of the word 'explore' in order to
regulate all seismic surveying, seabed sampling surveys and various airborne
remote sensing techniques such as gravity, magnetic and laser fluorimetry
surveys that are designed to assist in locating storage formations. Such
surveys can be carried out by various titleholders under the Act or by parties
who are not themselves petroleum or greenhouse gas explorers. The surveys are
performed by speculative survey companies (normally working under a special
prospecting authority or search authority) who aim to sell the survey results
to titleholders. Without this clause, there is doubt whether such speculative
activities could be regulated under the Act.
99. Proposed
section 249AD authorises the permittee to explore in the permit area for a
'potential greenhouse gas storage formation' or a 'potential greenhouse gas
injection site'. (These terms are defined in section 6.)
100. Subsection (1)
authorises the holder of an assessment permit to carry out all forms of
exploration in the permit area, including surveys and the drilling of wells.
Subsection (1) expressly extends the right to explore to injection and
storage in a geological formation, on an appraisal basis, of a greenhouse gas
substance, air, petroleum or water. (Appraisal of a resource is, in any case,
a form of exploration.)
101. The right
of a permittee to explore is subject to the conditions of the permit. The
conditions include a requirement to obtain the approval of the responsible
Commonwealth Minister to carry out 'key greenhouse gas operations' (see proposed
sections 249AE and 249AF)
102. The right
is also subject to compliance with the Act and regulations. This refers to (among
other things) the requirements under the regulations that must be complied
with, and other regulatory approval processes that need to be gone through,
before actual exploration activity may commence. For example, no exploration
activity can be commenced unless there is an environment plan in force under
the regulations and in the case of drilling an exploration well, a range of
regulatory approvals would have to be obtained.
103.
In a case where a greenhouse gas exploration well yields
petroleum, para 249AD(1)(g) authorises the permittee, with the approval of
the responsible Commonwealth Minister, to recover petroleum for the purpose
only of appraising the petroleum discovery. (Any petroleum recovered does not
become the property of the permittee.) A greenhouse gas permittee cannot be
compelled to carry out this appraisal work, however, the absence of appraisal
data will make it difficult for the responsible Commonwealth Minister, when
considering an application for a subsequent greenhouse gas title over the
relevant block(s), to reach the necessary state of satisfaction as to the
potential impacts of future greenhouse gas activities in the block(s).
104. A greenhouse
gas assessment permit also authorises the permittee to carry on such
operations, and execute such works in the permit area as are necessary for the
purposes of carrying on the above exploration activities.
105.
There is no statutory requirement that a substance injected on an
appraisal basis be permanently stored, because the very purpose of the
injection is to appraise the ability of the storage formation to retain
injected substances permanently. It is possible that the substance injected
will remain permanently stored but it is also possible that it will not. The
quantities injected will be small, however, so escape from the storage
formation, even into the atmosphere, should not cause problems. Any
appraisal injection will be a 'key greenhouse gas operation' and therefore
subject to prior approval by the responsible Commonwealth Minister, including
as to the substance to be injected.
106.
Proposed section 249AE enables the responsible Commonwealth
Minister to grant a greenhouse gas assessment permit subject to whatever
conditions the Minister thinks appropriate. Conditions must be specified in
the permit, except for those in subsections (3) and (4), which are
imposed by the section itself.
Approval of key greenhouse gas operations
107. Proposed subsection 249AE(3)
makes it a statutory condition of a greenhouse gas assessment permit that the
permittee will not carry on ‘key greenhouse gas operations’ unless the
responsible Commonwealth Minister has approved the operations under proposed
section 249AF. Conditions may be attached to the approval and compliance
with those conditions is itself a condition of the permit.
Providing or topping-up security
108. Proposed subsection 249AE(4)
also makes it a statutory condition of a permit that, if the responsible
Commonwealth Minister at any time, under proposed section 249NCA, requires
the permittee to provide security, or to top-up any security previously
provided, the permit-holder will provide the security or additional security.
Work-bid greenhouse gas assessment permits
109.
Proposed subsection 249AE(5) authorises the responsible
Commonwealth Minister to impose conditions on a work-bid greenhouse gas assessment
permit requiring the carrying out of work (which may be particular work) or the
spending of particular amounts in carrying out such work. The permit may
specify periods within which the work is to be carried out. The conditions imposed
under proposed subsection (5) may also require the permittee to comply
with directions relating to the above matters.
110. Proposed
subsection 249AE(6) provides that a cash-bid greenhouse gas assessment
permit must not be granted subject to conditions of the kind in proposed
subsection (5).
111. Proposed
subsection 249AE(8) provides that the matters with respect to which the
responsible Commonwealth Minister can impose conditions are not limited by
subsections (3), (4) or (5).
112.
Proposed section 249AF relates to the statutory condition
imposed by proposed section 249AE that a greenhouse gas assessment
permittee must obtain the approval of the responsible Commonwealth Minister in
order to carry out ‘key greenhouse gas operations’ in the permit area. The
term 'key greenhouse gas operations' is defined in section 6. Key
greenhouse gas operations are greenhouse gas activities that it is considered
may have impacts of some kind on petroleum operations under a present or future
petroleum title. The impacts that these greenhouse gas operations may have
on petroleum operations include not only impacts at the level of geological
formations but also physical interference on the surface, for example where
vessels may be in close proximity.
113. Proposed
subsections (1) and (2) provide for a greenhouse gas assessment
permittee to apply to the responsible Commonwealth Minister for approval of one
or more key greenhouse gas operations. The responsible Commonwealth Minister
may give the approval, with or without conditions, or refuse to give the
approval.
114. In
deciding whether or not to give an approval, the responsible Commonwealth
Minister may have regard to any matters that the Minister considers relevant
(see proposed subsection (10)). There are, however, some matters to which
the Minister must have regard and there are some circumstances in which an
approval must not be given.
Matters to which the Minister must have regard
115. Proposed subsection (4)
provides that, in deciding whether to approve key greenhouse gas operations,
the responsible Commonwealth Minister must have regard to potential impacts on
petroleum exploration or recovery operations under any existing or future
petroleum exploration permit, retention lease or production licence. This
applies both to pre-commencement and post-commencement petroleum titles. In
the case of potential impacts on a future petroleum title, there need not be
any petroleum title in existence over the relevant blocks.
116. Proposed
subsection (5) applies if the responsible Commonwealth Minister is
satisfied that there is a significant risk that any of the key greenhouse gas
operations will have a significant adverse impact on operations that are being,
or could be, carried on under an existing (pre-commencement or
post-commencement) petroleum exploration permit, retention lease or production
licence held by a person other than the applicant. In that case, the
subsection provides that the Minister must have regard to whether the holder of
the petroleum title has agreed in writing to the carrying out of the key
greenhouse gas operations and, if so, to the terms of that agreement. In
relation to the risk of impacts on a post-commencement exploration permit or
retention lease, there does not have to be an agreement in order for the
Minister to give the approval. But if there is an agreement, the Minister must
have regard to it.
117. Proposed
subsection (6) makes the same provision in relation to a future
(pre-commencement or post-commencement) petroleum exploration permit, retention
lease or production licence, except that the relevant agreement (if any) will
be with the holder of the existing petroleum title (if any) over the block or
blocks in question.
118. Proposed subsection (7)
provides that, where the key greenhouse gas operations for which approval is
sought is, or includes, injection or storage on an appraisal basis, the
responsible Commonwealth Minister must have regard to the composition of the
substance.
119. Proposed
subsection (8) requires the responsible Commonwealth Minister to have
regard to the public interest. For example, the Minister might consider that
there was a public interest in enabling an onshore electricity generation plant
to be constructed on a zero-greenhouse gas emissions basis. Or the Minister
might consider that there was a public interest in ensuring that commerciality
of a major new petroleum discovery was not compromised by drilling of
greenhouse gas exploration wells.
Circumstances in which approval must not be given
120. The circumstances
in which approval must not be given relate to impacts on either existing or
future pre-commencement petroleum titles or existing post-commencement
production licences. (An existing post-commencement production licence is
given the same level of ‘impacts’ protection as a pre-commencement title. This
is because of the level of investment required in order to develop a petroleum
discovery to the production stage.)
121.
Proposed subsection (11) applies if the responsible
Commonwealth Minister is satisfied that there is a significant risk that the
key greenhouse gas (exploration) operations will have a significant adverse
impact on petroleum exploration or recovery under an existing pre-commencement
petroleum title, or an existing post-commencement production licence, held by a
person other than the applicant. In that case, the responsible Commonwealth
Minister must not approve the greenhouse gas operations unless the existing
petroleum title-holder has agreed to the greenhouse gas title-holder carrying
on the operations.
122. Proposed
subsection (12) makes the same provision in relation to a future
pre-commencement petroleum exploration permit, retention lease or production
licence, except that the relevant agreement must be with the holder of the
existing pre-commencement petroleum title over the block or blocks in question.
123. Proposed
subsection (13) makes clear that there is no entitlement to an approval
under this section . The fact of having obtained
an assessment permit does not 'guarantee' that the permittee will be able to
carry out any particular exploration program, for
example that an exploration well can be drilled in a particular place.
A further example of the operation of proposed subsection (13) is that,
even if a pre-commencement petroleum title-holder has agreed to the carrying
out of the greenhouse gas exploration operations that the permittee proposes,
the responsible Commonwealth Minister may refuse to give the approval if the
agreement contains terms that the Minister considers are contrary to the public
interest.
124. Proposed
subsection (14) provides that, for the purposes of this section, a title
is taken to be in force notwithstanding that rights under the title have been
suspended under s 229.
125. Proposed
section 249AH provides that a greenhouse gas assessment permit remains in
force for 6 years. The Notes to this section refer to statutory processes
under other sections that can affect the duration of a permit.
126. Proposed
section 249AHA is one of the sections that can extend the duration of an
assessment permit. The section applies where, before the time when the
assessment permit would otherwise expire, the permittee applies for a
declaration of an identified greenhouse gas storage formation. If the
assessment permit would otherwise have expired before the responsible
Commonwealth Minister makes a decision on the application for a declaration,
the permit will instead continue in force by operation of this section until:
(a) if the Minister
makes the declaration – the end of the period of 12 months after the making of
the declaration; or
(b) if the Minister
refuses to make the declaration – the time when notice of the refusal is given
to the permittee.
127. This section
provides for the responsible Commonwealth Minister to release acreage for the
making of applications for greenhouse gas assessment permits. There could be a
general release of a substantial number of blocks, perhaps on an annual basis,
as is the case with the release of petroleum acreage, or there could be a
release of individual blocks or small numbers of blocks, either on request or
where blocks previously held under title have become vacant.
128. The
provisions in section 249AJ to section 249AO for applying for a
work-bid greenhouse gas assessment permit are the same as the equivalent
provisions for obtaining a work-bid petroleum exploration permit, with the
exception that section 249AM(c) has provision for requiring the applicant
to provide a security prior to the making of the grant.
129. As is the
case with petroleum exploration permits, section 249AL provides for the
ranking of multiple applicants according to the order in which they are
'deserving' of the grant. The criteria on the basis of which they are to be
ranked must be made public by the responsible Commonwealth Minister. It is
expected that the criteria will, like the petroleum permit grant criteria, be
primarily concerned with the extent and quality of the work program bid of each
applicant. There may, however, be additional public interest criteria
published in relation to some acreage releases.
130. Sections
249AP to 249AS are in the same terms as the provisions relating to cash-bid
petroleum exploration permits, except that section 249AS(1)(d) has
provision for requiring security to be given prior to the actual grant.
131.
In order for the holder of a greenhouse gas assessment permit to
advance to a greenhouse gas holding lease or an injection licence, the
permittee must obtain from the responsible Commonwealth Minister a declaration
of a part of a geological formation as an ‘identified greenhouse gas storage
formation’. The identified greenhouse gas storage formation must be wholly
situated within the permittee’s permit area.
132. It is
possible to have a second or subsequent identified greenhouse gas storage
formation declared in an assessment permit area, holding lease area or
injection licence area, provided each of them is wholly situated within the
title-holder’s current title area.
133. An
application for a declaration of an identified greenhouse gas storage formation
may also be made by a petroleum production licensee. (A petroleum production
licensee may apply for a greenhouse gas injection licence under section 249CQ.)
134. This
declaration of an identified greenhouse gas storage formation is a core
document that broadly corresponds to the declaration of a petroleum location.
Unlike a petroleum location, however, the declaration of the identified greenhouse
gas storage formation retains its significance over the whole life of the greenhouse
gas project. This is because the injection activities that may be carried out
under the eventual injection licence will be controlled, via licence
conditions, by the matters specified in the declaration of the identified
storage formation.
135. There is
scope for the declaration of the identified greenhouse gas storage formation to
be varied by the responsible Commonwealth Minister, either at the request of
the title-holder or, if circumstances warrant, at the Minister's own
instigation. This allows for (eg) variation of one or more fundamental
suitability determinants as new information about the storage formation becomes
available.
136. Once there
is an injection licence in force over the area where an identified greenhouse
gas storage formation is located, the declaration and the licence must be kept
consistent with each other. A variation to one may therefore require a
variation to be made to the other.
137. An
application for a declaration of an identified greenhouse gas storage formation
is made under proposed section 249AU. An application may be made by a greenhouse
gas assessment permittee, holding lessee or injection licensee, or a petroleum
production licensee, who has reasonable grounds to believe that an 'eligible
greenhouse gas storage formation' is wholly situated in the permit, lease or
licence area, as the case may be (subsection (1)).
138. An
‘eligible greenhouse gas storage formation’ is a part of a geological formation
that is suitable, with or without engineering enhancements, for the permanent storage
of a particular amount (at least 100,000 tonnes) of a particular greenhouse gas
substance injected at a particular point or points over a particular period
(see proposed section 15B). Under subsection 249AU(2), the
title-holder applies to have that 'part' of the geological formation declared
as an 'identified greenhouse gas storage formation'.
139. Subsection (3)
requires an application to set out:
–
the applicant's reasons for believing that the 'part' of the geological
formation is an 'eligible greenhouse gas storage formation';
–
the 'fundamental suitability determinants' of the 'eligible greenhouse
gas storage formation', ie:
(a) the amount of greenhouse gas substance that it is
suitable to store;
(b) the chemical composition of the greenhouse gas
substance that it is suitable to store;
(c) the proposed injection point or points;
(d) the proposed injection period;
(e) any proposed engineering enhancements;
(f) the effective sealing feature, attribute or
mechanism that makes it suitable;
–
an estimate of the spatial extent of the 'eligible greenhouse gas
storage formation'; and
–
any other information (including analysis) that is prescribed in the
regulations.
140. Subsection (4)
enables the responsible Commonwealth Minister to require the applicant to
provide further information or to carry out further analysis of information. Subsection (5)
provides that, if the applicant fails to provide the required information or
analysis, the responsible Commonwealth Minister may refuse to progress the
application further. Subsections (6) to (9) provide for the variation of
the application with respect to the fundamental suitability determinants or the
estimate of the spatial extent.
141. Subsection (10)
provides that, if the responsible Commonwealth Minister is satisfied that:
(i) the part of a
geological formation that is the subject of the application is (provided any
engineering enhancements nominated in the application are carried out) suitable
for the permanent storage of the nominated amount of the nominated greenhouse
gas substance, if injected at the nominated injection point or points over the
nominated period; and
(ii) the estimate of the
spatial extent set out in the application is a reasonable estimate;
the Minister must declare that part of the geological
formation to be an 'identified greenhouse gas storage formation'.
142. If
satisfied of the matters in (i) and (ii) above, the responsible Commonwealth
Minister must also declare that the spatial extent of the identified greenhouse
gas storage formation is the spatial extent estimated in the application (subsection (10)),
and set out that estimate in the declaration (subsection (11)). The
Minister must also declare that the fundamental suitability determinants
specified in the application are the fundamental suitability determinants of
the identified greenhouse gas storage formation (subsection (10)) and set
them out in the declaration (subsection (12)).
143. Subsection (14)
requires that, unless the responsible Commonwealth Minister is satisfied of all
of the matters in (i) and (ii) above, the Minister must refuse to make the
declaration.
144. Proposed section 249AUA
provides for the variation of a declaration of an identified greenhouse gas
storage formation, either on application by the holder of the relevant permit,
lease or licence, or on the responsible Commonwealth Minister's own
initiative. An application by the title-holder must set out the proposed
variation and specify the applicant's reason for the proposed variation.
145. Subsection (5)
provides that, in deciding whether to vary the declaration, the responsible
Commonwealth Minister must have regard to any new information, any new
analysis, any relevant scientific or technological developments and such other
matters (if any) as the responsible Commonwealth Minister considers relevant.
Subsection (5) does not limit the matters to which the responsible
Commonwealth Minister may have regard or the circumstances in which the
responsible Commonwealth Minister may decide to vary the declaration.
146. To take
an example where an application for a variation is made by the title-holder,
the reason for seeking the application may be that the title-holder wishes to
increase the amount of greenhouse gas substance to be injected, because new
information indicates that the injectivity of the storage formation is better
than previously thought. The varied fundamental suitability determinants must
still 'work', however. That is, with the fundamental suitability determinants
varied, the responsible Commonwealth Minister must still be satisfied in terms
of subsection 249AU(10)(b)(i) and (ii). Another example is that the
title-holder may have expected a source of greenhouse gas substance to become
available that in fact will not materialise. The title-holder may therefore
wish to vary downwards the amount to be injected, or the injection rate.
147. An
example of the circumstances in which the responsible Commonwealth Minister
might vary the declaration on his own initiative is where new information
indicates that the storage formation is not suitable for the storage of the
amount of greenhouse gas substance specified in the original declaration but
would be suitable for the storage of a lesser amount. Subsection (6)
requires the responsible Commonwealth Minister to consult the title-holder
before making a variation on his own initiative.
148. Proposed section 249AUB
provides that the responsible Commonwealth Minister may revoke the declaration
if he is satisfied that, using any set of fundamental suitability determinants,
the storage formation is not suitable for the permanent storage of at least
100,000 tonnes of a greenhouse gas substance (see section 15B). This
power will be exercisable in circumstances where, had more been known at the
time, the original declaration would not have been made.
149. Before
revoking the declaration, the responsible Commonwealth Minister must consult
with the title-holder and also consider whether to vary the declaration under section 249AUA.
150. Proposed section 249AUBA
requires the responsible Commonwealth Minister to maintain a Register of
Identified Greenhouse Gas Storage Formations.
Section 249AV Responsible
Commonwealth Minister may give directions to greenhouse gas assessment
permittees
151. Proposed section 249AV
confers power on the responsible Commonwealth Minister to give a greenhouse gas
assessment permittee a direction for the purpose of eliminating, mitigating or
managing the risk that operations under the permit could have a significant
adverse impact on operations under an existing or future petroleum title. The
responsible Commonwealth Minister can give a direction under this section
whether or not there is a petroleum title in existence over the relevant
blocks. A direction can therefore be given to protect potential petroleum
acreage that has not yet been released.
152. Proposed
subsection 249AW(1) makes it an offence to fail to comply with a direction
under section 249AV. Subsection (2) provides that an offence against
subsection (1) is an offence of strict liability. The offence created by
the statutory obligation in this section could be difficult to establish if the
prosecution were required to prove intention with respect to an omission to do
the things required. Accordingly, an obligation of this type is usually imposed
by the legislature with the intention that strict liability should apply.
153. A
greenhouse gas holding lease broadly corresponds to a petroleum retention
lease. As is the case with a petroleum retention lease, obtaining a greenhouse
gas holding lease is not an obligatory step for an assessment permittee in
moving towards a greenhouse gas injection licence.
154. A holder
of a greenhouse gas assessment permit who has had an identified greenhouse gas storage
formation declared in the permit area can proceed directly to a greenhouse gas
injection licence, if there will be a source of a greenhouse gas substance
available to commence injection within 5 years of the grant of the injection
licence. An assessment permittee who does not have a source of a greenhouse
gas substance that will be available to commence injection within 5 years, however,
can obtain a greenhouse gas holding lease instead. This will enable the lessee
to retain tenure over the block(s) to which the identified greenhouse gas storage
formation extends while the lessee secures a source of greenhouse gas.
155. A holder
of a greenhouse gas injection licence also can choose to revert to a greenhouse
gas holding lease over the same blocks.
156. The
motivation in each of the above cases to obtain a greenhouse gas holding lease
rather than an injection licence is that, if an injection licensee fails to
carry out any injection and storage operations in the licence area for a
continuous period of 5 years, the responsible Commonwealth Minister may cancel
the injection licence.
157. The
holder of a greenhouse gas holding lease can continue to explore for additional
storage formations in the lease area (as well as in blocks of the original
permit area that the permit is still in force over). If the title-holder finds
one or more new storage formations, they can have them declared as identified
greenhouse gas storage formations and proceed to storage licence(s) in respect
of the blocks to which they extend.
158. This
clause gives a summary of Part 2.2 covering greenhouse gas holding
leases. This summary will not form part of the operative text of the Act.
159. Proposed
section 249BB authorises the lessee to explore in the lease area for a
'potential greenhouse gas storage formation' or a 'potential greenhouse gas
injection site'. (These terms are defined in
section 6.)
160. Subsection (1) authorises the holder of a holding
lease to carry out all forms of exploration in the lease area, including
surveys and the drilling of wells. Subsection (1) expressly extends the
right to explore to injection and storage in a geological formation, on an
appraisal basis, of a greenhouse gas substance, air, petroleum or water.
(Appraisal of a resource is, in any case, a form of exploration.)
161. The right of a lessee to explore is subject to the
conditions of the lease. The conditions include a requirement to obtain the
approval of the responsible Commonwealth Minister to carry out 'key greenhouse
gas operations' (see proposed sections 249BC and 249BD)
162. The right is also subject to compliance with the Act and
regulations. This refers to requirements under the regulations that must be
complied with, and other regulatory approval processes that need to be gone
through, before actual exploration activity may commence. For example, no
exploration activity can be commenced unless there is an environment plan in
force under the regulations that covers the activity and in the case of
drilling an exploration well, a range of regulatory approvals would have to be
obtained.
163. In a case where a greenhouse gas exploration well yields
petroleum, para 249BB(1)(g) authorises the lessee, with the approval of
the responsible Commonwealth Minister, to recover petroleum for the purpose
only of appraising the petroleum discovery. (Any petroleum recovered does not
become the property of the lessee.) A greenhouse gas lessee cannot be
compelled to carry out this appraisal work, however, the absence of appraisal
data will make it difficult for the responsible Commonwealth Minister, when
considering an application by the lessee for a subsequent greenhouse gas title
over the relevant block(s), to reach the necessary state of satisfaction as to
the potential impacts of future greenhouse gas activities in the block(s).
164. A greenhouse gas holding lease also authorises the lessee
to carry on such operations, and execute such works in the lease area as are
necessary for the purposes of carrying on the above exploration activities.
165. There is no statutory requirement that a substance injected
on an appraisal basis be permanently stored, because the very purpose of the
injection is to appraise the ability of the storage formation to retain
injected substances permanently. It is possible that the substance injected
will remain permanently stored but it is also possible that it will not. The
quantities injected will be small, however, so escape from the storage
formation, even into the atmosphere, should not cause problems. Any appraisal
injection will be a 'key greenhouse gas operation' and therefore subject to
prior approval by the responsible Commonwealth Minister, including as to the
substance to be injected.
166. Proposed section 249BC enables the responsible
Commonwealth Minister to grant a greenhouse gas holding lease subject to
whatever conditions the Minister thinks appropriate. Conditions must be
specified in the lease, except for those in subsections (3) and (4),
which are imposed by the section itself.
Approval of key greenhouse gas operations
167. Proposed subsection 249BC(3) makes it a statutory
condition of a greenhouse gas holding lease that the lessee will not carry on
‘key greenhouse gas operations’ unless the responsible Commonwealth Minister
has approved the operations under proposed section 249BD. Conditions may
be attached to the approval and compliance with those conditions is itself a
condition of the lease.
Providing or topping-up security
168. Subsection 249AE(4) also makes it a statutory
condition of a lease that, if the responsible Commonwealth Minister at any
time, under proposed section 249NCA, requires the lessee to provide
security, or to top-up any security previously provided, the lessee will
provide the security or additional security.
Work to be carried out by lessee
169. Subsection 249BC(5) authorises the responsible
Commonwealth Minister to impose conditions on a holding lease requiring the
carrying out of work (which may be particular work) or the spending of
particular amounts in carrying out work. The conditions imposed under proposed
subsection (5) may also require the lessee to comply with directions
relating to the above matters.
170.
Proposed subsection 249BC(7)
provides that the matters with respect to which the responsible Commonwealth
Minister can impose conditions are not limited by
subsections (3), (4) or (5).
171. Proposed section 249BD relates to the statutory
condition imposed by proposed section 249BC that a greenhouse gas holding
lessee must obtain the approval of the responsible Commonwealth Minister in
order to carry out ‘key greenhouse gas operations’ in the lease area. The term
'key greenhouse gas operations' is defined in section 6. Key greenhouse
gas operations are greenhouse gas activities that it is considered may have
impacts of some kind on petroleum operations under a present or future
petroleum title. The impacts that these greenhouse gas operations may have on
petroleum operations include not only impacts at the level of geological
formations but also physical interference on the surface, for example where
vessels may be in close proximity.
172. Subsections (1) and (2) provide for a greenhouse
gas holding lessee to apply to the responsible Commonwealth Minister for
approval of one or more key greenhouse gas operations. The responsible
Commonwealth Minister may give the approval, with or without conditions, or
refuse to give the approval.
173. In deciding whether or not to give an approval, the
responsible Commonwealth Minister may have regard to any matters that the
Minister considers relevant (see subsection 10). There are, however, some
matters to which the Minister must have regard and there are some circumstances
in which an approval must not be given.
Matters to which the Minister must have regard
174.
Proposed subsection (4) provides
that, in deciding whether to approve key greenhouse gas operations, the
responsible Commonwealth Minister must have regard to potential impacts on
petroleum exploration or recovery operations under any existing or future
petroleum exploration permit, retention lease or production licence. This
applies both to pre-commencement and post-commencement petroleum titles. In
the case of potential impacts on a future petroleum title, there need not be
any petroleum title in existence over the relevant blocks. The responsible
Commonwealth Minister may therefore have regard to impacts on petroleum still
to be discovered in acreage not yet released.
175. Subsection (5) applies if the responsible Commonwealth
Minister is satisfied that there is a significant risk that any of the key greenhouse
gas operations will have a significant adverse impact on operations that are
being, or could be, carried on under an existing (pre-commencement or
post-commencement) petroleum exploration permit, retention lease or production
licence held by a person other than the applicant. In that case, the
subsection provides that the Minister must have regard to whether the holder of
the petroleum title has agreed in writing to the carrying out of the key greenhouse
gas operations and, if so, to the terms of that agreement. In relation to the
risk of impacts on a post-commencement exploration permit or retention lease,
there does not have to be an agreement in order for the Minister to give the
approval. But if there is an agreement, the Minister must have regard to it.
176. Proposed subsection (6) makes the same provision in
relation to a future (pre-commencement or post-commencement) petroleum
exploration permit, retention lease or production licence, except that the
relevant agreement (if any) will be with the holder of the existing petroleum
title (if any) over the block or blocks in question.
177. Proposed subsection (7) provides that, where the key greenhouse
gas operations for which approval is sought is, or includes, injection or
storage on an appraisal basis, the responsible Commonwealth Minister must have
regard to the composition of the substance.
178. Proposed subsection (8) requires the responsible
Commonwealth Minister to have regard to the public interest. For example, the
Minister might consider that there was a public interest in enabling an onshore
electricity generation plant to be constructed on a zero-greenhouse gas emissions
basis. Or the Minister might consider that there was a public interest in
ensuring that commerciality of a major new petroleum discovery was not
compromised by drilling of greenhouse gas exploration wells.
Circumstances in which approval must not be given
179. The circumstances in which approval must not be given
relate to impacts on either existing or future pre-commencement petroleum
titles or existing post-commencement production licences. (An existing
post-commencement production licence is given the same level of ‘impacts’
protection as a pre-commencement title. This is because of the level of
investment required in order to develop a petroleum discovery to the production
stage.)
180. Subsection (11) applies if the responsible
Commonwealth Minister is satisfied that there is a significant risk that the
key greenhouse gas operations will have a significant adverse impact on
petroleum exploration or recovery under an existing pre-commencement petroleum
title, or an existing post-commencement production licence, held by a person
other than the applicant. In that case, the responsible Commonwealth Minister
must not approve the greenhouse gas operations unless the existing petroleum
title-holder has agreed to the greenhouse gas title-holder carrying on the
operations.
181. Subsection (12) makes the same provision in relation
to a future pre-commencement petroleum exploration permit, retention lease or
production licence, except that the relevant agreement must be with the holder
of the existing pre-commencement petroleum title over the block or blocks in
question.
182. Proposed subsection (13) makes clear that there is no
entitlement to an approval under this section . The fact of having obtained
a holding lease does not 'guarantee' that the lessee will be able to carry out
any particular exploration program, for example that an exploration well can be
drilled in a particular place. A further example of the operation of proposed
subsection (13) is that, even if a pre-commencement petroleum title-holder
has agreed to the carrying out of the greenhouse gas exploration operations
that the lessee proposes, the responsible Commonwealth Minister may refuse to
give the approval if the agreement contains terms that the Minister considers
are contrary to the public interest.
183. Proposed subsection (14) provides that, for the
purposes of this section, a title is taken to be in force notwithstanding that
rights under the title have been suspended under section 229.
184. Proposed
section 249BF provides that a greenhouse gas holding lease (other than a
special greenhouse gas holding lease) remains in force for 5 years. It
can be renewed once, for a further period of 5 years. There are special
rules about the continuation in force of a holding lease after it would
otherwise have expired in a number of other sections.
185. Subsection (2)
provides that a special greenhouse gas holding lease remains in force
indefinitely. Proposed sections 249BSA, 249BSB and 249BSC provide
for the grant of a special greenhouse gas holding lease to an unsuccessful
applicant for a greenhouse gas injection licence, where the sole reason for the
refusal to grant the injection licence was that there was a risk of an adverse
impact on petroleum operations. The purpose of a special greenhouse gas
holding lease is to enable the lessee to retain tenure over the block or blocks
where an identified greenhouse gas storage formation is located during the time
required for the petroleum operations to be completed. An indefinite duration
for a special holding lease is therefore appropriate.
186. Proposed
section 249BH provides for the making of an application for a greenhouse
gas holding lease by the holder of a greenhouse gas assessment permit who has
one or more identified greenhouse gas storage formations wholly located in the
permit area. This section sets out the rules for determining whether multiple
storage formations are to be covered by a single holding lease or whether
multiple holding leases are to be obtained. Generally speaking, the outcome
depends on whether there is horizontal overlapping of the storage formations
or, if there is no horizontal overlapping, whether the storage formations
extend to the same block or to blocks that have a side or a corner point in
common. Otherwise, a separate holding lease is to be obtained.
Single identified greenhouse gas storage formation
187. Subsection (2)
provides that, if there is a single identified greenhouse gas storage
formation, the permittee may apply for a holding lease over the block or blocks
to which the identified greenhouse gas storage formation extends.
Multiple identified greenhouse gas storage formations
188. Subsections (3)
and (4) provide that, if there are 2 or more identified greenhouse gas storage
formations which together extend to only one block, the permittee may apply for
a holding lease over that block. It makes no difference whether or not a
horizontal line would pass through each of the storage formations, because only
one block is affected and a block is the smallest area over which a greenhouse
gas holding lease can be obtained.
189. Subsection (4)
also provides that, if there are 2 or more identified greenhouse gas storage
formations which together extend to 2 or more blocks and a vertical line would
pass through each of the storage formations, the permittee may apply for a
holding lease over those blocks.
190. Subsection (5)
applies if there are 2 or more identified greenhouse gas storage formations
which together extend to 2 or more blocks and a vertical line would not pass
through each of the storage formations. Paragraph (5)(c) provides that
if, for each identified greenhouse gas storage formation, at least one of the
blocks to which the storage formation extends immediately adjoins a block to
which the other, or another, storage formation extends, the permittee may apply
for a holding lease over the blocks to which the storage formations together
extend. The operation of subsection (5) is not confined to circumstances
where none of the identified greenhouse gas storage formations horizontally
overlaps another. The subsection applies whenever a single vertical line
would not pass through all of the storage formations, even if some of them do
overlap.
191. Subsection (6)
provides that, for the purpose of subsection (5), blocks 'immediately
adjoin' each other either if they have a side in common or if they meet at a
point.
192. Subsection (7)
requires that an applicant provide details of the applicant's proposals for
work and expenditure, which the responsible Commonwealth Minister may
incorporate into the conditions of the holding lease.
193. An
application for a holding lease must be made within 12 months after the
identified greenhouse gas storage formation was declared by the responsible
Commonwealth Minister or, if there are 2 or more identified greenhouse gas
storage formations, within 12 months after the first declaration was made.
194. Proposed
section 249BI applies where an application for a greenhouse gas holding
lease has been made under proposed section 249BH. It sets out the
criterion for the grant of a holding lease to the holder of a greenhouse gas
assessment permit. The responsible Commonwealth Minister must be satisfied
that the applicant is not, at the time, of the application, in a position to
inject a greenhouse gas substance into the identified greenhouse gas storage
formation, or in the case of an application in respect of multiple greenhouse
gas storage formations, into each of the storage formations, but is likely to
be in such a position within 15 years.
195. If the
responsible Commonwealth Minister is satisfied of this, the Minister must give
the applicant an offer document telling the applicant that the Minister is
prepared to grant a greenhouse gas holding lease over the block or blocks
specified in the application.
196. Proposed
section 249BJ provides that if the responsible Commonwealth Minister is
not satisfied as required by proposed section 249BI, the Minister must
refuse to grant the applicant a greenhouse gas holding lease.
197. Proposed section 249BK
provides that if an applicant who has been given an offer document under proposed
section 249BI has made a request under proposed section 249JF for the
grant of a holding lease and lodged any security required, in the amount and in
the form required, the responsible Commonwealth Minister must grant the
greenhouse gas holding lease.
198. Proposed section 249BL
provides that when a greenhouse gas holding lease comes into force in relation
to one or more blocks, a greenhouse gas assessment permit ceases to be in force
in relation to that block or those blocks. (The greenhouse gas assessment
permit will remain in force in relation to any other blocks in the permit area
for the remainder of the term of the permit, unless it ceases to be in force
for any reason under the Act.)
199. Proposed
section 249BN provides for the holder of a greenhouse gas injection
licence to apply for a holding lease over a block or blocks containing one or
more identified greenhouse gas storage formations. The reason why an injection
licensee might choose to revert to a greenhouse gas holding lease is that if an
injection licensee fails to carry out any injection and storage operations in
the injection licence are for a continuous period of 5 years, the
responsible Commonwealth Minister may cancel the injection licence. Reverting
to a greenhouse gas holding lease will give the injection licensee more time to
secure a supply of greenhouse gas substance for injection into the greenhouse
gas storage formation or formations.
200. The
application must be made within 5 years of the grant of the greenhouse gas
injection licence.
201.
The criterion for the grant by the responsible Commonwealth
Minister of a greenhouse gas holding lease to an injection licensee is that the
applicant is not, at the time, of the application, in a position to inject a
greenhouse gas substance into the identified greenhouse gas storage formation
or formations, but is likely to be in a position to do so within 15 years.
202.
The remaining provisions in proposed sections 249BP
to 249BS in relation to the grant are the same as in proposed sections 249BJ
to 249BM.
203. Proposed
section 249BSA applies where the holder of a greenhouse gas assessment
permit or a greenhouse gas holding lease whose permit or lease area contains
one or more identified greenhouse gas storage formations has applied for a
greenhouse gas injection licence over the block or blocks containing the
identified greenhouse gas storage formation(s) and the responsible Commonwealth
Minister refuses to grant the injection licence for a reason relating to the
risk of a significant adverse impact on petroleum operations under a petroleum
title.
204. Proposed
section 249BSA provides that, in these circumstances, the greenhouse gas
assessment permittee or greenhouse gas holding lessee may, within the
application period, apply to the responsible Commonwealth Minister for a
special greenhouse gas holding lease over the relevant block or blocks. The
application period is 90 days beginning on the day on which the permittee or
lessee was notified of the refusal.
205. Proposed
section 249BSB provides that the responsible Commonwealth Minister must
give the applicant an offer document telling the applicant that the Minister is
prepared to grant the special greenhouse gas holding lease.
206. The
remaining provisions in proposed sections 249BSC to 249BSFA in
relation to the grant are the same as in proposed sections 249BJ
to 249BM.
207. Proposed
section 249BT provides for applications for renewal of a greenhouse gas
holding lease (other than a special greenhouse gas holding lease, which is
indefinite). A greenhouse gas holding lease may only be renewed once. Like
the initial holding lease, a renewed holding lease has a duration of 5 years.
208. An
application for renewal of a holding lease must be accompanied by details of
the lessee's proposals for work and expenditure in relation to the lease area,
which the responsible Commonwealth Minister may incorporate into the conditions
of the holding lease.
209. Subsection (6)
provides for an extension of the period of the lease if the lease would
otherwise expire before the responsible Commonwealth Minister makes a decision
on the application or before the application is taken to lapse under proposed
section 249JF.
210. Proposed subsections 249BU(2)
and (3) set out two alternative sets of circumstances and provide that, in
those circumstance, the responsible Commonwealth Minister must, or may, respectively,
grant the renewal of the greenhouse gas holding lease.
211. Subsection (2)
provides that, if the applicant has, during the term of the initial lease,
complied with the conditions of the initial lease and the applicable provisions
of the Act and the regulations, and if the responsible Commonwealth Minister is
satisfied that the applicant is not, at the time, of the application, in a
position to inject a greenhouse gas substance into the identified greenhouse
gas storage formation or formations, but is likely to be in a position to do so
within 15 years, the responsible Commonwealth Minister must give the applicant
an offer document.
212. Subsection (3)
provides that, if any of the conditions of the initial lease or of the
applicable provisions of the Act and the regulations have not been complied
with, but the responsible Commonwealth Minister is satisfied that there are
sufficient grounds to warrant the grant of the renewal of the lease, and the
responsible Commonwealth Minister is satisfied as set out above in relation to
injection of a greenhouse gas into the storage formation, the responsible
Commonwealth Minister may give the applicant an offer document.
213. Proposed section 249BV
sets out circumstances in which the responsible Commonwealth Minister must
refuse to grant a renewal of a greenhouse gas holding lease.
214. Subsection (2)
provides that, if any of the conditions of the initial lease or of the
applicable provisions of the Act or the regulations have not been complied
with, and the responsible Commonwealth Minister is not satisfied that there are
sufficient grounds to warrant the grant of the renewal of the lease, the
responsible Commonwealth Minister must refuse to renew the lease.
215. Subsection (3)
provides that, if the responsible Commonwealth Minister is satisfied that the
applicant is, at the time of the application, in a position to inject and store
a greenhouse gas substance into the identified greenhouse gas storage formation
or formations, the responsible Commonwealth Minister must refuse to renew the
lease.
216. Subsections (4)
and (5) provide for the continuation in force of the applicant's holding lease
after the date when it would otherwise have expired, in a case where the
responsible Commonwealth Minister refuses to grant a renewal under subsection (3).
217. Proposed
section 249BW provides that if an applicant who has been given an offer
document under proposed section 249BU and has made a request under proposed
section 249JF for the grant of a holding lease and lodged any security
required, in the amount and in the form required, the responsible Commonwealth
Minister must grant the renewal of the greenhouse gas holding lease.
Proposed section 249BZ
Responsible Commonwealth Minister may give directions
218. Proposed section 249BZ
confers power on the responsible Commonwealth Minister to give a greenhouse gas
holding lessee a direction for the purpose of eliminating, mitigating or
managing the risk that operations under the lease could have a significant
adverse impact on operations under an existing or future petroleum title. The
responsible Commonwealth Minister can give a direction under this section
whether or not there is a petroleum title in existence over the relevant
blocks. A direction can therefore be given to protect potential petroleum
acreage that has not yet been released.
219. Proposed
subsection 249BZA(1) makes it an offence to fail to comply with a
direction under section 249BZ. Subsection (2) provides that an
offence against subsection (1) is an offence of strict liability. The
offence created by the statutory obligation in this section could be difficult
to establish if the prosecution were required to prove intention with respect
to an omission to do the things required. Accordingly, an obligation of this
type is usually imposed by the legislature with the intention that strict
liability should apply.
220. A
greenhouse gas injection licence is the injection and storage project licence.
It authorises the injection and storage of a greenhouse gas substance in one or
more identified greenhouse gas storage formations that are wholly situated in
the licence area.
221. The
injection licence authorises injection and storage operations in accordance
with the specifications that were set out in the declaration of the identified
greenhouse gas storage formation. That declaration will have been updated (ie
varied) as necessary to take account of any new information about the
characteristics of the storage formation or any changes in the current
title-holder’s proposed operations, and can be further varied during the term
of the injection licence. The specifications in the declaration become part of
the injection licence by being attached as licence conditions. If the
declaration is varied during the term of the injection licence, the licence
will also be varied so that the two remain consistent.
222. An
injection licence remains in force until injection operations have ceased, the
site closing work program has been completed by the licensee, the licensee has
lodged any required security for the ongoing monitoring program and the responsible
Commonwealth Minister has granted a site closing certificate. At that point,
the licensee has no further statutory responsibility in relation to the stored
greenhouse gas substance and can abandon the site.
Role of site plan
223.
An applicant for an injection licence must submit a draft site
plan for assessment by the responsible Commonwealth Minister. A decision by
the responsible Commonwealth Minister that the draft site plan meets
requirements is an important part of the process for granting the injection
licence. The regulations will set out the matters that must be covered by the
site plan and the objectives that it must meet. The regulations relating to
site plans will be modelled on existing 'objective-based' regulations under the
Offshore Petroleum Act 2006 such as the Offshore Petroleum
(Management of Safety on Offshore Facilities) Regulations 1996.
224.
The site plan is the core regulatory document for each project
and will form the basis for the day-to-day regulatory interaction between the
injection licensee and the regulator (the delegate of the responsible
Commonwealth Minister). The site plan will keep the regulator informed, at an
appropriate level of detail, of:
–
the geological attributes or features of the storage formation;
–
current and proposed injection and storage operations;
–
the operations and techniques to be used by the licensee to monitor and
verify the behaviour of the greenhouse gas over the life of the project.
–
operations management systems, including processes for identification,
assessment and management of risks; and
–
predictions as to the short, medium and long term behaviour and fate of
the greenhouse gas in the identified storage formation and associated
geological formation(s).
225. The
regulations will prohibit the carrying out of any activity under the authority
of the injection licence unless a site plan is in force under the regulations
and unless the activity is carried out in accordance with the site plan. The
site plan will be required by the regulations to be updated periodically and
also whenever there is a material change in the level or kind of risk.
226. Proposed
section 249CC makes it an offence to inject or store a substance in the
seabed or subsoil in an offshore area unless that injection or storage is
authorised by a greenhouse gas injection licence or is otherwise authorised or
required by or under the Offshore Petroleum Act 2006.
227. Subsection 249CD(1)
provides that a greenhouse gas injection licence authorises the licensee to
inject and store a greenhouse gas substance in an identified greenhouse gas
storage formation that is wholly situated in the licence area. The injection
must take place at a well situated in the licence area. This requires, in relation
to the injection well, that the top of the hole in the seabed must be in the
injection licence area and that the point at which the well enters the
greenhouse gas storage formation must be in the injection licence area. Proposed
section 249CD does not permit injection operations by means of an inclined
well, as paragraph 137(b) permits in the case of petroleum recovery
operations. Proposed section 249CD does not impose any requirement as to
the location of the valves and other equipment by means of which the flow of
greenhouse gas substance into the well is controlled and which may be regarded
as part of the well. The location of such equipment will depend on the
licensee's own operations. Injection of a greenhouse gas substance takes place
as the greenhouse gas substance enters the top of the hole in the seabed, not
at any earlier point where the pumping or compression may take place that
causes it to enter the well.
228. Subsection 249CD(1)
also confers the same powers with respect to exploration as are conferred by a
greenhouse gas assessment permit and a greenhouse gas holding lease. There is
an important difference, however, in that there is no requirement on a
greenhouse gas injection licensee to obtain the approval of the responsible
Commonwealth Minister to the carrying out of 'key greenhouse gas operations'.
229. Subsection (2)
provides that the rights conferred by subsection (1) are subject to the
Act and the regulations. This refers to (among other things) the requirements
under the regulations that must be complied with, and other regulatory approval
processes that need to be gone through, before actual injection activity, or
even construction of injection infrastructure, may commence. For example, no
activity can be commenced unless there is an environment plan in force under
the regulations that covers the activity and in the case of drilling an
injection well, a range of regulatory approvals would have to be obtained.
230. Proposed
section 249CE provides that the responsible Commonwealth Minister may
grant a greenhouse gas injection licence subject to whatever conditions the
responsible Commonwealth Minister thinks appropriate. The conditions must be
specified in the licence, except for certain conditions imposed by the section
itself which do not have to be specified in the licence. The condition imposed
by subsection (3) does have to be set out in the licence, including the
particular specifications for each greenhouse gas storage formation. This
means that the particular specifications for each greenhouse gas storage
formation in an injection licence area will be publicly available, because they
will appear in the Register of greenhouse gas titles.
Injection and storage of greenhouse gas substance
231. Subsection (3)
imposes the condition that gives effect to the fundamental suitability
determinants and other matters specified in the declaration of the identified
greenhouse gas storage formation. The condition requires the injection
licensee to carry out injection and storage operations under the licence
consistently with the specifications in the declaration. The condition
requires, in relation to each identified greenhouse gas storage formation in
the licence area, that:
–
the identified greenhouse gas storage formation is as 'specified' in the
licence (the 'specification' being a description of the storage formation,
including the spatial extent);
–
the greenhouse gas substance is of a kind specified in the licence;
–
the greenhouse gas substance complies with any requirements specified in
the licence;
–
the origin or origins of the greenhouse gas substance are as specified
in the licence;
–
the greenhouse gas substance is injected at the site or sites specified
in the licence;
–
the greenhouse gas substance is injected during a period specified in
the licence;
–
the amount of greenhouse gas substance already injected together with
the amount proposed to be injected does not exceed the total specified in the
licence;
–
the rate, or range of rates, of injection of the greenhouse gas
substance is as specified in the licence.
232. Subsection (4)
is the provision that 'staples' the injection licence to the declaration of the
identified greenhouse gas storage formation. It requires that the matters
specified in the licence as required above not be inconsistent with the
fundamental suitability determinants in the declaration.
233. Because
the matters set out above must be specified in the licence in relation to each
identified greenhouse gas storage formation in the licence area, it means that
injection and storage operations in relation to each storage formation must be
compliant. For example, the injection rate or range of rates and the injection
period (including the starting date) must be as specified in the licence.
Therefore, if there is non-compliance in relation to a single storage formation
in a multi-storage formation licence area, the licensee will be in breach of
the licence condition even if the specifications of operations in the licence
area as a whole are within the required parameters. A licensee who is unable
to comply fully in relation to a storage formation in the licence area will be
able to seek a variation of the declaration that was made in relation to the
storage formation. If the responsible Commonwealth Minister is prepared to
make the variation, the licence also will be varied so that the two instruments
are consistent.
Securities
234. Subsection (9)
makes it a statutory condition of an injection licence that, if the responsible
Commonwealth Minister at any time, under proposed section 249NCA, requires
the licensee to provide security, or to top-up any security previously
provided, the licensee will provide the security or additional security.
Access regime
235. Part IIIA
of the Trade Practices Act 1974 establishes a regime of compulsory third
party access to services provided by means of infrastructure facilities. The
question whether that regime was applicable to a particular identified
greenhouse gas storage formation, or infrastructure used for injection and
storage operations or related operations, would have to be answered in light of
the particular circumstances of the injection and storage project. If, for any
reason, Part IIIA of the Trade Practices Act did not apply to injection and
storage infrastructure, it might be considered desirable to establish a specialised
third party access regime by regulations under the Offshore Petroleum Act. Subsections (10)
and (11) make it a statutory condition of a greenhouse gas injection
licence that the licensee will comply with such a regime.
Other conditions
236. Subsection (12)
enables the responsible Commonwealth Minister to vary an injection licence by
imposing one or more additional conditions.
237. A
greenhouse gas injection licence remains in force indefinitely, ie for the life
of the project. Where injection and storage operations have been carried on
under the injection licence, the licence will remain in force until injection
operations have ceased, the site closing work program has been completed by the
licensee, the licensee has lodged any required security for the ongoing
monitoring program and the responsible Commonwealth Minister has granted a site
closing certificate. Injection operations may cease for a number of reasons,
including that the responsible Commonwealth Minister has directed the licensee
to cease injection and to apply for a site closing certificate.
238. Proposed
section 249CG provides that, if no operations for the injection and
storage of a greenhouse gas substance have been carried on in an injection
licence area for a period of 5 years, the responsible Commonwealth
Minister may, after the expiry of the notice period and having carried out the
consultation process required by the section, terminate the licence. This
provision corresponds to section 140 of the Offshore Petroleum Act, which
provides for termination of a petroleum production licence if no petroleum
production operations have been carried on in the licence area for a period of
5 years.
239. Proposed
section 249CH provides for the making of an application for a greenhouse
gas injection licence by the holder of a greenhouse gas assessment permit or
greenhouse gas holding lease who has one or more identified greenhouse gas
storage formations wholly located in the permit or lease area. This section
sets out the rules for determining whether multiple storage formations are to
be covered by a single injection licence or whether multiple injection licences
are to be obtained. Generally speaking, the outcome depends on whether there
is horizontal overlapping of the storage formations or, if there is no
horizontal overlapping, whether the storage formations extend to the same block
or to blocks that have a side or a corner point in common. Otherwise, a
separate injection licence is to be obtained.
Single identified greenhouse gas storage formation
240. Subsection (2)
provides that, if there is a single identified greenhouse gas storage
formation, the permittee or lessee may apply for an injection licence over the
block or blocks to which the identified greenhouse gas storage formation extends.
Multiple identified greenhouse gas storage formations
241. Subsections (3)
and (4) provide that, if there are 2 or more identified greenhouse gas
storage formations which together extend to only one block, the permittee or
lessee may apply for an injection licence over that block. It makes no
difference whether or not a horizontal line would pass through each of the
storage formations, because only one block is affected and a block is the
smallest area over which a greenhouse gas injection licence can be obtained.
242. Subsection (4)
also provides that, if there are 2 or more identified greenhouse gas storage
formations which together extend to 2 or more blocks and a vertical line would
pass through each of the storage formations, the permittee or lessee may apply
for an injection licence over those blocks.
243. Subsection (5)
applies if there are 2 or more identified greenhouse gas storage formations
which together extend to 2 or more blocks and a vertical line would not pass
through each of the storage formations. Paragraph (5)(c) provides that
if, for each identified greenhouse gas storage formation, at least one of the
blocks to which the storage formation extends immediately adjoins a block to
which the other, or another storage formation extends, the permittee or lessee
may apply for an injection licence over the blocks to which the storage
formations together extend. The operation of subsection (5) is not
confined to circumstances where none of the identified greenhouse gas storage
formations horizontally overlaps another. The subsection applies whenever
a single vertical line would not pass through all of the storage formations,
even if some of them do overlap.
244. Subsection (6)
provides that, for the purpose of subsection (5), blocks 'immediately
adjoin' each other either if they have a side in common or if they meet at a
point.
Application
245. Subsection (7)
and (8) require that the application set out matters corresponding to, and
consistent with, the fundamental suitability determinants in the declaration of
the identified greenhouse gas storage formation.
246. Subsection (9)
requires that an application set out (among other things) a draft site plan. A
decision by the responsible Commonwealth Minister that the draft site plan
meets requirements is an important part of the process for granting the
injection licence. The regulations will set out the matters that must be
covered by the site plan and the objectives that it must meet.
247. Subsections (1)
and (2) of proposed section 249CI make identical provision for the
decision to be made by the Minister on an application for a greenhouse gas
injection licence. The only difference is that subsection (1) applies
where the applicant is a greenhouse gas assessment permittee and subsection (2)
applies where the applicant is a greenhouse gas holding lessee.
248. The subsections
provide in each case that, if the responsible Commonwealth Minister is
satisfied as to the matters set out in the subsection, the Minister must grant
an injection licence to the applicant. The matters as to which the Minister
must be satisfied relate primarily to the potential for significant adverse
impacts on existing and future petroleum operations. Broadly, the same levels
of protection are applied as is the case when the responsible Commonwealth
Minister approves key greenhouse gas operations – for post-commencement
petroleum titles the public interest test is applied and for pre-commencement
petroleum titles and existing production licences, the 'no significant negative
impact' test is applied unless there is agreement of the petroleum
title-holder.
249. Under
paragraph (b), the responsible Commonwealth Minister must be satisfied
that, if the licence is granted, the applicant will commence injection and
storage of a greenhouse gas substance in at least one identified greenhouse gas
storage formation in the licence area within 5 years.
250. Under
paragraph (c), if the responsible Commonwealth Minister is satisfied that there
is a significant risk of a significant adverse impact on petroleum operations
under an existing post-commencement exploration permit or retention lease, or
under a future post-commencement production licence in the same series as an
existing exploration permit or retention lease, the Minister must be satisfied
that the grant of the greenhouse gas injection licence is in the public
interest.
251. Under
paragraph (d), if the responsible Commonwealth Minister is satisfied that there
is a significant risk of a significant adverse impact on petroleum operations
under an existing pre-commencement petroleum title, or under an existing
post-commencement production licence, held by a person other than the applicant,
the responsible Commonwealth Minister must be satisfied that the holder of the
petroleum title has agreed in writing to the grant of the injection licence and
that the agreement either has been approved for registration in the Registers
maintained under the Act or is reasonably likely to be so approved.
252. Paragraph (e)
makes the same provision in relation to a future pre-commencement petroleum
title, except that the agreement must be between the applicant for the
greenhouse gas injection licence and the holder of the existing
pre-commencement petroleum title.
253. A special
test is applied where the proposed injection licence area overlaps a
pre-commencement petroleum title or a production licence area. If there is
known to be commercial petroleum in the area of the overlap, the responsible
Commonwealth Minister must be satisfied that there will be no significant
adverse impact. The difference in this case is that the petroleum title-holder
cannot agree to the grant of the injection licence, where there is a risk to
the petroleum. The public interest in the development of the petroleum
resource is paramount.
254. Under
paragraph (g) the responsible Commonwealth Minister must be satisfied that
the applicant's technical and financial resources are adequate, having regard
to the nature and scale of the applicant's proposed operations, and under
paragraph (h) that the draft site plan satisfies the criteria specified in
the regulations.
255. Proposed
section 249CJ provides that, where the applicable requirements of section 249CI
are not met, the Minister must refuse to grant the injection licence.
256. Proposed section 249CJA
provides that if an applicant who has been given an offer document under proposed
section 249CI and has made a request under proposed section 249JF for
the grant of an injection licence and lodged any security required, in the
amount and in the form required, the responsible Commonwealth Minister must
grant the greenhouse gas injection licence.
257. Proposed
section 249CK deals with the situation where an application is made for a
greenhouse gas injection licence and, at the time when the application is made,
there is already an application for a post-commencement exploration permit
being considered by the Joint Authority. In such a case, the responsible
Commonwealth Minister's decision-making process may be different according to
whether the petroleum exploration permit is, or is not, in existence at the
time when the decision on the injection licence is made. The section provides
that the responsible Commonwealth Minister may make a decision in the public
interest to defer the decision on the grant of the injection licence until the
decision on the petroleum exploration permit has been finalised by one means or
another.
258. Proposed
section 249CQ applies where a petroleum production licensee has obtained
from the responsible Commonwealth Minister a declaration of one or more
identified greenhouse gas storage formations wholly situated within the
production licence area. The production licensee may apply for an injection
licence over the relevant block or blocks, provided that there is not already a
greenhouse gas title in force over that block or those blocks.
259. The section
sets out the rules for determining whether multiple storage formations are to
be covered by a single injection licence or whether multiple injection licences
are to be obtained. Generally speaking, the outcome depends on whether there
is horizontal overlapping of the storage formations or, if there is no
horizontal overlapping, whether the storage formations extend to the same block
or to blocks that have a side or a corner point in common. Otherwise, a
separate injection licence is to be obtained.
Single identified greenhouse gas storage formation
260. Subsection (2)
provides that, if there is a single identified greenhouse gas storage
formation, the permittee or lessee may apply for an injection licence over the
block or blocks to which the identified greenhouse gas storage formation
extends.
Multiple identified greenhouse gas storage formations
261. Subsections (3)
and (4) provide that, if there are 2 or more identified greenhouse gas
storage formations which together extend to only one block, the permittee or
lessee may apply for an injection licence over that block. It makes no
difference whether or not a horizontal line would pass through each of the
storage formations, because only one block is affected and a block is the
smallest area over which a greenhouse gas injection licence can be obtained.
262. Subsection (4)
also provides that, if there are 2 or more identified greenhouse gas storage
formations which together extend to 2 or more blocks and a vertical line would
pass through each of the storage formations, the permittee or lessee may apply
for an injection licence over those blocks.
263. Subsection (5)
applies if there are 2 or more identified greenhouse gas storage formations
which together extend to 2 or more blocks and a vertical line would not pass
through each of the storage formations. Paragraph (5)(c) provides that
if, for each identified greenhouse gas storage formation, at least one of the
blocks to which the storage formation extends immediately adjoins a block to
which the other, or another storage formation extends, the permittee or lessee
may apply for an injection licence over the blocks to which the storage
formations together extend. The operation of subsection (5) is not
confined to circumstances where none of the identified greenhouse gas storage
formations horizontally overlaps another. The subsection applies whenever
a single vertical line would not pass through all of the storage formations,
even if some of them do overlap.
264. Subsection (6)
provides that, for the purpose of subsection (5), blocks 'immediately
adjoin' each other either if they have a side in common or if they meet at a
point.
Application
265. Subsection (7)
and (8) require that the application set out matters corresponding to, and
consistent with, the fundamental suitability determinants in the declaration of
the identified greenhouse gas storage formation.
266. Subsection (9)
requires that an application set out (among other things) a draft site plan. A
decision by the responsible Commonwealth Minister that the draft site plan
meets requirements is an important part of the process for granting the
injection licence. The regulations will set out the matters that must be
covered by the site plan and the objectives that it must meet.
267. Proposed
section 249CR applies where a petroleum production licensee has made an
application for a greenhouse gas injection licence under proposed section 249CQ.
There is an important difference between the circumstances in which a petroleum
production licensee applies for a greenhouse gas injection licence under this section
and those in which a greenhouse gas assessment permittee or a greenhouse gas
holding lessee applies for an injection licence under proposed section 249CH.
The difference is that the petroleum production licensee has not had to compete
with other applicants for the blocks over which the injection licence is
sought. By contrast, a greenhouse gas title-holder will have had to compete
via a work program bid for the initial assessment permit over the blocks. In
order to maintain competitive neutrality between petroleum production licensees
and greenhouse gas permit and lease-holders, it is considered appropriate that
there be some restriction on the operations that can be carried on under an
injection licence granted under this section. That restriction is in paragraph
(c). There is a further important difference between this section and section 249CI
in that, even if all of the requirements in this section are satisfied, the
responsible Commonwealth Minister does not have to grant an injection licence.
The Minister has a discretion as to whether to give an offer document to the
applicant.
268. The section
sets out the matters as to which the responsible Commonwealth Minister must be
satisfied in order to grant the injection licence.
269. Under
paragraph (b), the responsible Commonwealth Minister must be satisfied
that, if the licence is granted, the applicant will commence injection and
storage of a greenhouse gas substance in at least one identified greenhouse gas
storage formation in the licence area within 5 years.
270. Paragraph
(c), which is applicable only to applications under this section, requires the
responsible Commonwealth Minister to be satisfied that all of the greenhouse
gas substance injected into the identified greenhouse gas storage formation
will be obtained as a by-product of petroleum recovery operations carried on
under the production licence. This does not extend to by-product greenhouse
gas sourced from other petroleum title areas, even those held by the same person.
This ensures that a petroleum production licensee's concessional access to a
greenhouse gas injection licence does not give an unfair competitive advantage
to the petroleum industry when entering the greenhouse gas injection and
storage industry.
271. Paragraph
(d) provides that, if the responsible Commonwealth Minister is satisfied that
there is a significant risk of a significant adverse impact on petroleum
operations under an existing post-commencement exploration permit or retention
lease, or under a future post-commencement production licence in the same
series as an existing exploration permit or retention lease, the Minister must
be satisfied that the grant of the greenhouse gas injection licence is in the
public interest or that the petroleum title-holder has agreed to the grant of
the injection licence.
272. Under
paragraph (e), if the responsible Commonwealth Minister is satisfied that there
is a significant risk of a significant adverse impact on petroleum operations
under an existing pre-commencement petroleum title held by a person other than
the applicant, the responsible Commonwealth Minister must be satisfied that the
holder of the petroleum title has agreed in writing to the grant of the
injection licence.
273. Paragraph (f)
makes the same provision in relation to a future pre-commencement petroleum
title, except that the agreement must be between the applicant for the
greenhouse gas injection licence and the holder of the existing
pre-commencement petroleum title.
274. Under
paragraph (g) the responsible Commonwealth Minister must be satisfied that
the applicant's technical and financial resources are adequate, having regard
to the nature and scale of the applicant's proposed operations, and under
paragraph (h) that the draft site plan satisfies the criteria specified in
the regulations.
275. Under
paragraph (g), if the responsible Commonwealth Minister is satisfied that there
is a significant risk of a significant adverse impact on petroleum operations
under another existing production licence held by a person other than the
applicant, the responsible Commonwealth Minister must be satisfied that the
holder of the other production licence has agreed to the grant of the injection
licence.
276. Under
paragraph (h) the responsible Commonwealth Minister must be satisfied that
the applicant's technical and financial resources are adequate, having regard
to the nature and scale of the applicant's proposed operations, and under
paragraph (i) that the draft site plan satisfies the criteria specified in
the regulations.
277. Proposed section 249CRB
provides that if an applicant who has been given an offer document under proposed
section 249CR has made a request under proposed section 249JF for the
grant of an injection licence and lodged any security required, in the amount
and in the form required, the responsible Commonwealth Minister must grant the
greenhouse gas injection licence.
278. Proposed
section 249CT enables a greenhouse gas injection licensee to apply to the
responsible Commonwealth Minister for a variation of the specification (ie
description) in the licence of the identified greenhouse gas storage formation
or of one of the matters corresponding to the fundamental suitability
determinants. The responsible Commonwealth Minister has a discretion as to
whether to make the variation. If the Minister varies the licence, the varied
matter must not be inconsistent with the fundamental suitability determinants
in the declaration of the identified greenhouse gas storage formation. The
effect of this requirement is that if an injection licensee wishes to vary a
matter in the licence in a way that would make the licence inconsistent with
the fundamental suitability determinants in the declaration of the identified
greenhouse gas storage formation, the licensee will have to seek a variation to
the declaration.
279. Proposed
section 249CTA is another provision that 'staples' the injection licence
to the declaration of the identified greenhouse gas storage formation. The section
provides that, if the responsible Commonwealth Minister varies the identified
greenhouse gas storage formation so that it is inconsistent with the injection
licence, the responsible Commonwealth Minister must vary the injection licence
to make it consistent.
280. The
directions that the responsible Commonwealth Minister may give to a greenhouse
gas injection licensee under this Division are in some respects much more
extensive than the Designated Authority can give to a petroleum title-holder.
This is because of the potential need to deal with the risk that a greenhouse
gas substance injected and stored under the injection licence will or may cause
loss or damage to the environment, other resources or the interests of other
persons or of the community.
Proposed section 249CXA
Responsible Commonwealth Minister may give directions to protect geological
formations containing petroleum pools
281. Proposed
section 249CXA enables the responsible Commonwealth Minister to give a
direction to an injection licensee for the purpose of eliminating, mitigating
or managing the risk that operations under the injection licence could have a
significant adverse impact on a geological formation that contains petroleum or
otherwise compromise the exploitation of any petroleum. For example, the
drilling of a well by the injection licensee might break the geological seal
holding an accumulation of petroleum in place, or it might so reduce pressure
in the geological formation that the petroleum became irrecoverable, or not
commercially viable to recover.
282. A
direction may require the licensee to do something inside or outside the
licence area. This power to require the licensee to do something outside the
licence area is a new feature introduced by this Bill and is specific to
greenhouse gas licensees.
283. A
direction under this section has effect and must be complied with despite
anything in the regulations or in the applied (State or NT) laws, or in the
approved site plan or in the injection licence. In the case of a direction
inconsistent with the licence, the responsible Commonwealth Minister may vary
licence to remove the inconsistency. In the case of an inconsistency with the
site plan, the licensee must submit a proposed variation of the site plan for
the approval of the responsible Commonwealth Minister.
284. Proposed
section 249CXB sets up a consultation process in a case where a direction
under section 249CXA requires an injection licensee to do something
outside the injection licence area in an area over which another person holds a
greenhouse gas title.
285. This
Division is the source of the responsible Commonwealth Minister's principal
regulatory powers for dealing with circumstances where injection and storage
operations do not go as planned and there are, or may be, serious
consequences. In most cases, there is no requirement that the responsible
Commonwealth Minister identify any particular risk to the environment, other
resources or the interests of other persons or of the community. It is enough
that something has happened, or there is a significant risk that something will
happen, that was not foreseen or for which there are not approved contingency
plans in place or for which the plans in place may prove inadequate. The
occurrence, or potential occurrence, may be such as to indicate that the
storage formation is not in fact suitable as a site for the licensee's
injection and storage operations, so that the licensee must cease operations,
as well as taking any precautionary or remedial action that the Minister
requires.
286. The
responsible Commonwealth Minister is given a very broad range of powers for
dealing with serious situations. The expectation is that the Minister will in
each case take the least 'drastic' action that will deal with the situation to
the Minister's satisfaction.
287. Proposed
section 249CZ lists the circumstances in which a 'serious situation' is
considered to exist. Under paragraphs (1)(a) and (b), these include that
an injected greenhouse gas substance has leaked or is leaking or that there is
a significant risk that it will leak, from the identified greenhouse gas
storage formation. (This refers to the injected greenhouse gas substance
migrating outside the expected migration path. It does not necessarily mean
that there is a risk of leakage into the atmosphere or into a place where there
is potential damage to a resource, although these would of course be included.)
288. Paragraphs (1)(c)
and (d) list the circumstances that the greenhouse gas substance has leaked, or
is leaking, or that there is a significant risk of it leaking, in the course of
being injected into the greenhouse gas storage formation.
289. Paragraphs (1)(e)
and (f) list circumstances of the greenhouse gas substance behaving
otherwise than as predicted in the site plan. There may be no identifiable
risk attaching to these circumstances. But it means that the licensee's
predictions have been wrong, and that there will at least have to be a review
by the licensee of the available information to ascertain whether the mistake
was a material one, and if so, a revision to the site plan or a modification to
the licensee's operations, to the satisfaction of the responsible Commonwealth
Minister.
290. Paragraphs (1)(g)
and (h) list circumstances of the injection and storage of the greenhouse gas
substance having a significant adverse impact on the geotechnical integrity of
the geological formation or geological structure of which the identified
greenhouse gas storage formation forms a part. For example, the greenhouse gas
substance may react chemically with the rock that forms the storage formation
in a manner that impacts adversely on the storage capacity of the formation.
Or there may be an unexpected build-up of pressure at a particular point.
291. Finally,
paragraph (1)(i) lists the circumstance that the identified greenhouse gas
storage formation turns out not to be 'suitable' for the injection and storage
of the particular amount of the particular greenhouse gas substance set out in
the declaration of the identified greenhouse gas storage formation, if injected
at the point(s) and over the period set out in the declaration.
292. Proposed
section 249CZA sets out the range of powers available to the responsible
Commonwealth Minister where the Minister is satisfied that one of the
situations listed in proposed section 249CZ exists. With one exception,
the powers are expressed in very general terms, because the actions that the
injection licensee might be directed to take, or refrain from taking, will
depend on the particular operations and the particular circumstances. The
greenhouse gas injection and storage industry is a very new industry. The
technological processes involved, the conditions that might be encountered
within geological formations, perhaps 30 or 40 years from now, must be dealt
with legislatively in broad terms so as to enable the regulator to take the
most appropriate and effective action when the time comes.
293. The one
exception to the general drafting of the powers is in paragraph (1)(d).
This is merely an example of the actions that the responsible Commonwealth
Minister might require the injection licensee to undertake. Where the problem
that has arisen is that there has been a build-up of pressure at a point in the
storage formation that might not be capable of withstanding it, the remedy
might be to inject a greenhouse gas substance or another substance such as air
or water on one side or other of the weak point. Alternatively, the remedy
might be to recover some of the stored greenhouse gas.
294. A
direction may require the licensee to do something inside or outside the licence
area. This power to require the licensee to do something outside the licence
area is a new feature introduced by this Bill and is specific to greenhouse gas
licensees. A possible example of the kinds of action that an injection
licensee might be directed to take outside the licence area is to plug an old
petroleum well, perhaps drilled by a petroleum explorer under a now defunct
title, that is now found to be in one of the potential migration paths of the
stored greenhouse gas.
295. A
direction under this section has effect and must be complied with despite
anything in the regulations or in the applied (State or NT) laws, or in the
approved site plan or in the injection licence. In the case of a direction
inconsistent with the licence, the responsible Commonwealth Minister may vary
licence to remove the inconsistency. In the case of an inconsistency with the
site plan, the licensee must submit a proposed variation of the site plan for
the approval of the responsible Commonwealth Minister.
296. Proposed
section 249CZAA sets up a consultation process in a case where a direction
under section 249CZA requires an injection licensee to do something
outside the injection licence area in an area over which another person holds a
greenhouse gas title.
297. Subsections (1)
and (2) of proposed section 249CZC are in similar terms, except that subsection (1)
applies where the responsible Commonwealth Minister is satisfied that it is
practicable to eliminate the risk to the recovery of the petroleum and subsection (2)
applies where the responsible Commonwealth Minister is satisfied that it is not
practicable to eliminate the risk.
298. Subsection (1)
applies where a greenhouse gas injection licence overlaps in whole or in part a
pre-commencement petroleum title and there is a discovery of commercial, or
potentially commercial, petroleum in the area of the overlap. The subsection
provides that, if the responsible Commonwealth Minister is satisfied that there
is a significant risk that injection and storage operations under the injection
licence will have a significant adverse impact on the recovery of the petroleum
and the petroleum title-holder has not agreed to the injection and storage
operations going ahead, the Minister must give a direction to the injection
licensee for the purpose of eliminating the risk, or suspend any or all of the
rights under the injection licence or cancel the injection licence.
299. Subsection (2)
is in the same terms, except that the direction must be given for the purpose
of mitigating, managing or remediating the risk.
300. A
direction may require the licensee to do something inside or outside the
licence area. This power to require the licensee to do something outside the
licence area is a new feature introduced by this Bill and is specific to
greenhouse gas licensees.
301. A
direction under this section has effect and must be complied with despite
anything in the regulations or in the applied (State or NT) laws, or in the
approved site plan or in the injection licence. In the case of a direction
inconsistent with the licence, the responsible Commonwealth Minister may vary
licence to remove the inconsistency. In the case of an inconsistency with the
site plan, the licensee must submit a proposed variation of the site plan for
the approval of the responsible Commonwealth Minister.
302. Proposed
section 249CZCA sets up a consultation process in a case where a direction
under section 249CZC requires an injection licensee to do something
outside the injection licence area in an area over which another person holds a
greenhouse gas title.
303. The site
closing process begins when all injection and storage operations in the licence
area have ceased. At that time, the licensee is required to apply for a site
closing certificate. The making of that application is the trigger for the
operation of section 316-311A, which confers direction-giving powers on
the responsible Commonwealth Minister. Under section 316-311A, the
Minister can direct the injection licensee to carry out whatever work is
necessary to ensure that the responsible Commonwealth Minister will be able to
issue a site-closing certificate.
304. The work
that an injection licensee can be directed to carry out goes well beyond the
work that a petroleum production licensee can be directed to carry out at the
decommissioning stage of a petroleum project. As well as directing the
plugging of wells and restoration of the seabed and removal of structures and
equipment, the responsible Commonwealth Minister can direct a greenhouse gas
injection licensee to carry out work for the purpose of ensuring that the
injected greenhouse gas substance does not, in the future, cause damage to the
environment or other resources or cause injury or loss to other users of the
sea or risk to the health and safety of the offshore workforce.
305. For this
purpose, the licensee can be directed to carry out work on the storage
formation within the licence area and also on geological formations or
structures into which the greenhouse gas substance is expected to migrate in
the future, after the site closing certificate has been granted and the
injection licensee has been permitted to vacate the site. This may include the
plugging of old abandoned petroleum wells outside the injection licence area
that might otherwise enable the injected greenhouse gas substance to migrate to
the surface or to contaminate other natural resources of the sea, seabed or
subsoil.
306. The site
closing work program will also include extensive monitoring, measurement and
verification of the behaviour of the injected greenhouse gas in the storage
formation. The purpose of this is to enable the responsible Commonwealth
Minister to achieve sufficient confidence about the likely fate of the injected
greenhouse gas that the Minister can grant a site closing certificate to the
licensee.
307. An
injection licensee who has injected a greenhouse gas substance into one or more
identified greenhouse gas storage formations in the licence area must apply for
a site closing certificate when injection operations in the whole licence area
have ceased permanently. The application must be accompanied by a written
report setting out:
–
the licensee’s modelling of the behaviour of the greenhouse gas and
relevant information and analysis; and
–
the licensee’s assessment of the expected migration pathway(s) and short
and long term consequences of the migration; and
–
the licensee’s suggestions for the post site-closing program of
monitoring and verification by the Commonwealth, the cost of which will be paid
by the licensee prior to receiving the site closing certificate.
308. See the
clause note to section 249CZFA for the likely order of events.
309. Proposed
section 249CZF sets out the matters to which the responsible Commonwealth
Minister must have regard when making the decision whether to grant a site
closing certificate, the circumstances in which a certificate may be refused
and the circumstances in which a certificate must not be given. The section
does not limit the matters to which the responsible Commonwealth Minister may
have regard when making the decision.
Responsible Commonwealth Minister must have regard to certain matters
310. Subsection (2)
requires the responsible Commonwealth Minister to have regard to any
significant risk that he considers exists that the injected greenhouse gas
substance will have a significant adverse impact on navigation, fishing,
pipeline construction or operation or the enjoyment of native title rights.
Circumstances in which a certificate may be refused
311. Subsection (4)
provides that the responsible Commonwealth Minister may refuse to grant a
certificate if he or she is not satisfied that the injected greenhouse gas
substance is behaving as predicted in the site plan, or if he or she is
satisfied that there is a significant risk to the conservation or exploitation
of natural resources, or to the geotechnical integrity of a geological
formation or structure or to the environment or human health or safety.
312. The
application for a site closing certificate is the start of the site-closing
process. The grant of the site closing certificate is the end of that
process. The site closing certificate cannot be given until the licensee has
completed the work program that the responsible Commonwealth Minister has
directed to be carried out. That work program may take months, perhaps many
months. It is also possible that it might take years for the migration of the
injected greenhouse gas substance to become predictable enough to enable the
responsible Commonwealth Minister to reach the necessary state of confidence
about the fate of the greenhouse gas in order to grant the site closing
certificate. The injection licensee will have been required all along to keep
the Minister informed about the behaviour of the injected greenhouse gas
substance and of the licensee's predictions as to its future behaviour. It may
therefore not take very much additional time and information for the
post-injection stage to be completed. The possibility must be allowed for,
however. Section 249CZFA therefore enables the responsible Commonwealth
Minister to defer making a decision on the application for as long as is
necessary.
313. Proposed
section 249CZGAA applies where the responsible Commonwealth Minister has
made the decision to grant a site closing certificate to an injection
licensee. The pre-certificate notice requires the injection licensee to
provide security to cover the cost of the program of monitoring of the future
behaviour of the greenhouse gas substance stored in the identified greenhouse
gas storage formation. The notice must set out the program of operations that
the Commonwealth proposes to carry out. (The work program will have been
initially proposed by the licensee in the application for a site closing
certificate and will usually have been agreed with the licensee before the
pre-certificate notice is given.) The notice must also set out an estimate of
the future costs and expenses of the Commonwealth in carrying out the work,
which will have been worked out in accordance with the regulations. It will
also set out the form and amount of security to be lodged in respect of the
compliance by the holder of the site closing certificate with the future
obligation in proposed section 249CZM to pay for the work.
314. The
purpose of obtaining this security is that the program of monitoring and
verification will be carried out over a considerable time, and there is no
certainty that the person responsible for payment of the Commonwealth's costs
and expenses will still be in existence, or still in a financial position to
reimburse the Commonwealth.
315. If the
injection licensee lodges the security in compliance with the pre-certificate
notice, the responsible Commonwealth Minister must issue the site closing
certificate.
316. Proposed
section 249CZJB provides for a transfer of the interest in a security
provided under proposed section 249CZGA. This is necessary so that, if
the whole or part of the security is discharged under regulations made under proposed
section 249CZJC, the return can be made by the Commonwealth to the right
person.
317. This section makes
the costs and expenses of the Commonwealth in carrying out the post site
closing work program recoverable from the holder of the site closing
certificate. It is entirely possible that any attempt to recover under this section
would be unsuccessful. The Commonwealth will, however, be able to call upon
the security to the extent that the costs and expenses prove to be
irrecoverable.
318. This Part
deals with the granting of, and powers conferred by, greenhouse gas search
authorities. A greenhouse gas search authority is the greenhouse gas title
which corresponds to the petroleum special prospecting authority title (which
are dealt with in Part 2.7 of the Act).
319. This
section provides a simplified outline of Part 2A.5. This is not an operative
provision of the Act.
320. This
section provides that a greenhouse gas search authority authorises the holder
of the authority to, in the authority area, do everything required to explore
for potential greenhouse gas storage formations and injection sites, except for
making a well. For example, the titleholder may carry out seismic surveys and
seabed sampling.
321. The
section provides that these titleholder rights are subject to the Act and the
regulations (for example, a greenhouse gas search authority may be surrendered
under Part 2A.10 of the Act, or cancelled under Part 2A.11, if the requirements
in those Parts are met).
322. This
section provides that the responsible Commonwealth Minister may grant a
greenhouse gas search authority subject to whatever conditions the Minister
thinks fit. Those conditions (if any) must be specified in the authority.
Conditions could include, for example, temporal or spatial restrictions to
avoid conflict with navigation in a shipping lane.
323. This section
deals with the period during which a greenhouse gas search authority is in
force. The section provides that an authority comes into force on the day
specified in the authority, and remains in force for the period specified in
the authority. This period must not exceed 180 days (see subsection (3)).
324. Subsection
(4) provides that this section has effect subject to this Chapter. For
example, a greenhouse gas search authority may be surrendered (under Part
2A.10). If that occurred, the authority would no longer be in force even if
the period specified in the authority had not yet expired.
325. This
section provides that a greenhouse gas search authority cannot be transferred
from one person to another. The relatively short duration of a search
authority (maximum 180 days) means that the administrative procedures which are
involved in transferring a title under this Act (see Part 3A.3, discussed
below) would be disproportionate to the duration of the authority. Further, as
there is no enduring title to an area under a greenhouse gas search authority,
it is not inconsistent with the nature of the title to require any new party to
apply for a new search authority.
326. This
section sets out the basic application procedure for greenhouse gas search
authorities. This procedure is complemented by the standard procedures in Part
2A.8.
327. Subsection
(1) specifies that a person or company may apply for a greenhouse gas search
authority over a block or blocks, provided that none of the following are in
force over the block or blocks the subject of the application: a greenhouse gas
assessment permit, a greenhouse gas holding lease, a greenhouse gas injection
licence, an exploration permit, a retention lease or a production licence.
328. An
application may be made in respect of blocks in relation to which another permit,
licence consent or authority has been granted under the Act.
329. A
company, which was not a titleholder under the Act, may apply for a greenhouse
gas search authority if it wished to undertake speculative surveys in the
offshore area, in order to sell the data obtained from those surveys.
330. As
another example, a company which was a titleholder of a greenhouse gas
assessment permit over a nearby area may apply for a search authority because
the company wished to gather data outside of the permit area to better
understand the regional geological or structural setting. (However, as an
existing titleholder the person could achieve the same end by applying for a
greenhouse gas special authority under Part 2A.6. This could be preferable as
it could allow for obtaining access even when the block was under a type of
title listed in subsection (1)).
331. The
application must specify the operations which the applicant wishes to carry on,
and the blocks within which the applicant wishes to carry on those operations.
The application must be accompanied by the application fee - see section 249JB.
332. Where an
application has been made for a greenhouse gas search authority, the
responsible Commonwealth Minister must consider the application, and then
either grant the authority to the applicant or refuse to grant the authority to
the applicant. If the Minister refuses to grant the authority, the Minister
must notify the applicant in writing of the refusal. If the Minister decides
to grant the authority, the Minister may do so with or without conditions - see
section 249GC.
333. More than
one greenhouse gas search authority may be granted in respect of a block (that
is, search authority is not an exclusive right over the blocks in respect of
which the authority is granted). This section provides for notification to be
given to any existing holder of a search authority over a block if a new search
authority is granted over the same block. The responsible Commonwealth
Minister must provide written notification, setting out the operations
authorised by the new greenhouse gas search authority, and any conditions of
the authority.
334. The
Minister is also required to notify the new search authority holder of the
existing search authority or authorities in force in respect of that block,
including the operations authorised by, and any conditions of, the authority or
authorities.
335. This
section provides for notification to be given to any existing holder of a
greenhouse gas search authority over a block if a special prospecting authority
is granted over the same block (see Part 2.7 of the Act for provisions relating
to special prospecting authorities). The Designated Authority must inform the
search authority holder or holders of the operations authorised by, and any
conditions of, the special prospecting authority. The responsible Commonwealth
Minister must inform the person who has been granted the special prospecting
authority of the existence of, the operations authorised by, and any conditions
of, any greenhouse gas search authorities in force in respect of the block.
336. This Part
deals with the grant of and powers conferred by greenhouse gas special
authorities. Greenhouse gas special authorities are the greenhouse gas titles
which correspond to petroleum access authority titles (see Part 2.8 of the
Act).
337. This
section provides a simplified outline of Part 2A.6. This is not an operative
provision.
338. This
provision authorises the holder of a greenhouse gas special authority to carry
on, in the authority area, the operations specified in the authority. The
holder must do so in accordance with any conditions to which the authority is
subject (see section 249HC). The operations authorised by the special
authority must relate to greenhouse gas exploration, injection or storage (see
the table in section 249HE). The greenhouse gas special authority cannot not
authorise the holder to make a well.
339. As
provided in section 249HE, only a person who holds a greenhouse gas assessment
permit, greenhouse gas holding lease, greenhouse gas injection licence or
greenhouse gas search authority may apply for a greenhouse gas special
authority. Further, the person can only be granted a special authority over an
area which is either in the same offshore area as the existing title held by
the person, or in an adjoining offshore area.
340. A person
may apply for a greenhouse gas special authority if, for example, the person
wished to obtain geoscientific information about a block adjacent to the person's
title area. The operations for which authorisation is sought could, as an
example, involve carrying out seismic surveys or seabed sampling.
341. The
rights conferred on the holder of a greenhouse gas special authority are
subject to the Act and the regulations (see subsection (3)). For example,
other provisions of the Act provide for revocation and surrender of greenhouse
gas special authorities, and work safety requirements.
342. This
section provides for the period in which a greenhouse gas special authority
will be in force. A special authority comes into force on the day specified in
the authority, and remains in force for the period specified in the authority.
The period may be extended by the responsible Commonwealth Minister for a
further period.
343. Subsection
(3) provides that this section has effect subject to this Chapter. For
example, a greenhouse gas special authority may be surrendered (under section
249LD) or revoked (under section 249HL). If one of those events occurred, the
authority would no longer be in force even if the period specified in the
authority had not yet expired.
344. This
section sets out who may apply for a greenhouse gas special authority. It also
sets out what operations the person (or company) may apply to have authorised
under a greenhouse gas special authority, and in respect of which areas the
person may apply for a greenhouse gas special authority.
345. Additional
procedures relating to obtaining a greenhouse gas special authority are set out
in Part 2A.8 of the Act (see notes on that section below).
346. This
section sets out limits on the responsible Commonwealth Minister's discretion
to grant a greenhouse gas special authority to a person (or company) who has
made an application under section 249HE. The Minister may only grant a
greenhouse gas special authority to a person if the Minister is satisfied that
it is necessary or desirable to do so, either for the more effective use of the
applicant's rights, or for the proper performance of the applicant's duties, in
the applicant's capacity as the registered titleholder of one of the titles set
out in that section.
347. The
Minister also has a power to refuse to grant a greenhouse gas special authority
to the applicant, by notice in writing.
348. Consultation
procedures apply to the consideration of certain applications for a greenhouse
gas special authority - see the notes to section 249HG of the Act (below).
349. A
consultation process must take place before a greenhouse gas special authority
is granted if any of the area over which the greenhouse gas special authority
is sought is already the subject of a greenhouse gas assessment permit, a
greenhouse gas holding lease, a greenhouse gas injection licence or a
greenhouse gas search authority held by a person who is not the applicant for
the greenhouse gas special authority. The consultation process is set out in
subsections (2)-(4).
350. There is
an exception to the requirement for consultation if the titleholder has given
written consent to the grant of the greenhouse gas special authority (see
paragraph (1)(d)).
351. No
consultation process is required if the greenhouse gas special authority
applicant holds a separate title over the blocks over which the greenhouse gas
special authority is granted. This may occur, for example, if the applicant's
title over that block is about to expire or be terminated, but the applicant
wishes to continue operations in the block for a period after the expiration or
termination.
352. This
section gives the responsible Commonwealth Minister power to vary a greenhouse
gas special authority, by written notice given to the holder of the authority.
Consultation is required in most cases before a variation is made - see section
249HJ.
353. This
section sets out the consultation procedures which apply in relation to a
proposed variation of a greenhouse gas special authority. Consultation must
take place where the authority area is, to any extent, the subject of a
greenhouse gas assessment permit, greenhouse gas holding lease, greenhouse gas
injection licence or greenhouse gas search authority which is held by a person
other than the person who holds the greenhouse gas special authority.
354. There is
an exception to the requirement for consultation where the holder of the other
title gives written consent to the variation - see paragraph (1)(d).
355. This
section provides for monthly reporting, by registered holders of greenhouse gas
special authorities, of the operations carried out under the authority and the
facts ascertained from those operations. The report must be given to any
holder of a greenhouse gas assessment permit, greenhouse gas holding lease, or
greenhouse gas injection licence which is in force in the same area as the
greenhouse gas special authority. The reporting requirements are intended to
benefit the holders of those other titles, by making data available which is
relevant to those titles. The titleholders may be able to use that data for
commercial purposes.
356. It is an
offence not to comply with the reporting requirements (subsection (2)). The
maximum penalty for the offence is specified as 50 penalty units, however a
greater penalty could be imposed if a body corporate, rather than a natural
person, was convicted of the offence (see section 4B(3) of the Crimes Act).
357. This
section provides the responsible Commonwealth Minister with a power to revoke a
greenhouse gas special authority. The section does not require that
consultation take place prior to the Minister making the revocation. The
generally short period of duration of a greenhouse gas special authority means
that, in many cases, the greenhouse gas special authority would expire
(according to its period of duration - see section 249HD) before a consultation
process could have been completed.
358. The
responsible Commonwealth Minister is required to notify any holder of a
greenhouse gas assessment permit, greenhouse gas holding lease or greenhouse
gas injection licence (which is in force in the same area as the greenhouse gas
special authority) of the revocation. This is consistent with the requirement
that the greenhouse gas special authority holder notify any such of the results
of the greenhouse gas special authority operations under section 249HK.
359. This Part
recognises Australia's obligations under the United Nations Convention on the
Law of the Sea (UNCLOS) to allow marine scientific research on its continental
shelf (see in particular Article 246 of the UNCLOS).
360. This
section provides a simplified outline of Part 2A.7. It is not an operative
provision.
361. This
section sets out the rights conferred on the holder of a greenhouse gas
research consent.
362. A
greenhouse gas research consent relates to one offshore area only. It
authorises the holder to carry out, in the course of the scientific
investigation specified in the consent, operations relating to the exploration
for potential greenhouse gas storage formation and injection sites that are
specified in the consent. A separate research consent would need to be sought
if the applicant wished to carry on scientific investigations that required
access to more than one offshore area.
363. These
rights are subject to the conditions set out in the greenhouse gas research
consent (see section 249HO below), and to section 249NF of the Act. Section
249NF of the Act operates, in general, so that the research consent holder must
not interfere with the rights of other users of the marine areas in which the
scientific investigation is carried out, to a greater extent than is necessary
for the exercise of the research consent holder's rights.
364. This
section provides that the responsible Commonwealth Minister may grant a
greenhouse gas research consent subject to whatever conditions the Minister
thinks appropriate. The Minister must specify the conditions in the research
consent.
365. Conditions
in greenhouse gas research consents may be more wide-ranging in scope than
conditions imposed in relation to other titles. This is because the conditions
imposed in relation to a research consent are the primary legal instrument for
regulating the research consent holder's activities.
366. This
section provides the responsible Commonwealth Minister with a power to grant a
greenhouse gas research consent to a person or company. The Minister may only
grant a research consent which authorises a person (or company) to carry on, in
an offshore area, operations which relate to the exploration for potential
greenhouse gas storage formations or injection sites, in the course of a
scientific investigation. This means that the Minister would require relevant
information to be able to assess whether the activities in respect of which a
research consent was sought fit within these requirements. This would be
likely to include information about the credentials of the person or company
seeking the research consent, and the objectives and plan of the scientific
investigation in relation to which the research consent is sought.
367. This Part
sets out standard procedures which apply to the processes of applying for,
considering and granting greenhouse gas titles under the Act.
368. This
section provides that the types of applications listed in the section must be
made in the manner approved in writing by the responsible Commonwealth
Minister. The Minister may approve a different manner of application for the
different types of applications (s 33(3) of the Acts Interpretation Act 1901).
For example, the responsible Commonwealth Minister may require that some
information in some types of applications be provided in a statutory
declaration, but not require a statutory declaration for other types of
applications.
369. This
section provides that applications of the kind listed in the section must be
accompanied by the application fee (if any) specified in the regulations. A
different application fee may be prescribed in the regulations for the
different types of applications. The imposition of application fees enables
the Commonwealth to recover the costs incurred in processing applications under
the Act.
370. No
application fee is required for an application for a greenhouse gas special
authority or greenhouse gas research consent. Generally, an applicant for a
greenhouse gas special authority will already be a titleholder (and therefore
paying an annual fee in respect of that title), and the special authority work
will be auxiliary to the work done under the title. Greenhouse gas research
consents are provided in accordance with Australia's obligations under the
UNCLOS, and may often be sought by non-profit organisations.
371. This
section provides that applicants submitting the types of applications set out
in the section may, in the application, set out any additional matters that the
applicant wishes the responsible Commonwealth Minister to consider when
assessing the application.
372. This
provision does not apply to every type of application. For example,
applications covered by section 249JH are not covered by this section. This is
because that section sets out consultation procedures (which enable the
applicant to make additional submissions) which apply if a Minister proposes
not to make the relevant grant.
Proposed section 249JD Responsible Commonwealth
Minister may require further information
373. This
section provides the responsible Commonwealth Minister with a power to require
the applicant (in respect of the applications listed in subsection (1)) to give
the Minister further specified information relating to the application. This
power could be used more than once in connection with any particular
application.
374. If the
person who is required to provide additional information does not do so, the
Minister may refuse to consider, or take any further action in relation to, the
application.
375. The power
to require further information does not relate to every type of greenhouse gas
title application under the Act. For example, there is no power to seek
additional information in relation to an application for a greenhouse gas
search authority, special authority or research consent. If an application for
one of these types of titles was rejected on the basis of the original
application, the applicant could apply again, providing additional information
in the new application.
376. This
section deals with the issuing of an offer document for the grant of a
greenhouse gas assessment permit, greenhouse gas holding lease or greenhouse
gas injection licence, and the renewal of a greenhouse gas holding lease. The
section sets out what must be included in an offer document in respect of one
of those titles. These requirements are intended to ensure that the applicant
receives all the necessary information to be able to progress the grant or
renewal of the title, and that the applicant is aware of the conditions which
will operate in respect of the title. In practice, the applicant should be
aware of these conditions prior to the issue of the offer document, through
consultation about the conditions with the applicant during the application
process. The section also provides that the offer document may require the
applicant to lodge a security in respect of compliance with the applicant's
relevant statutory obligations (see subsections (4) and (5)).
377. If the
applicant cannot accept the conditions set out in the offer document, the
applicant can allow the application to lapse by not making a request under
section 249JF that the grant or renewal (as the case may be) be made.
378. There is
no offer document issued in relation to greenhouse gas search authorities,
special authorities or research consents. These titles are of short duration,
and may simply be issued by the responsible Commonwealth Minister in accordance
with the relevant legislative requirements for each title (see sections 249GG,
249FF and 249HP).
379. This
section provides for the next step after an offer document is issued to an
applicant under section 249JE.
380. An
applicant who has received an offer document must accept the offer under this
section in order for the title the subject of the application to be granted or
renewed (as the case may be). Subsection (1) provides a table which sets out
the time period within which the applicant must accept the offer. The time
period for most types of applications is 30 days, however, the time period is
longer for an application for a greenhouse gas injection licence. In respect
of applications for a grant of a work bid greenhouse gas assessment permit, a
grant of a greenhouse gas holding lease (but not a renewal) and a grant of a
greenhouse gas injection licence, the responsible Commonwealth Minister may
extend the period in accordance with the requirements set out in the table and
subsections (2) and (3).
381. If the
applicant does not accept the offer within the relevant timeframe, or pay a
security if one is required, the application lapses (subsection (4) and section
249JGAA). In the case of an application for a cash-bid greenhouse gas
assessment permit, the application will also lapse if the offer document
specified an amount which must be paid to the Commonwealth for the grant of the
permit, and the application does not pay the amount within the same timeframe
under this section (see section 249JG).
382. This
section relates to applications for cash-bid greenhouse gas assessment
permits. The section provides that an application will lapse if an offer
document has been given to the applicant which specifies an amount that must be
paid to the Commonwealth for the grant of the permit, and the applicant does
not pay that amount within the timeframe that applies for accepting the offer
(see the table in section 249JF(1)).
383. This
section applies where an offer document has been given to an applicant and that
offer document requires a security to be lodged (see section 249JE(4)). The
section provides that, if the security is not lodged within the time period for
accepting the offer (see the table in section 249(JF(1)), then the application
lapses.
384. This
section provides for consultation with an applicant where, in relation to an
application of the type set out in subsection (1), the responsible Commonwealth
Minister is considering refusing to make the relevant grant, renewal or
variation. These applications relate to situations where the applicant is
already a titleholder, and so would generally have made significant financial
investment in the title in the preceding years.
385. The
consultation process requires the Minister to advise the applicant of the
Minister's reasons for the proposed refusal, and to take into account any
submissions that the applicant makes to the Minister in relation to the
proposed refusal. The section also provides for consultation with other
relevant persons. This could include, for example, contractors of the
titleholder who carry out operations in the title area.
386. In
general, conditions placed on a title are expected to apply for the full period
of the title. However, there are some circumstances where it may be
appropriate for a condition to be varied or suspended, or an exemption granted
from compliance with a condition. This section deals with when and how
variation, suspension and exemption of conditions of greenhouse gas assessment
permits, holding leases and injection licences may take place (see section
249KE for variation, suspension and exemptions for greenhouse gas special
authorities and search authorities).
387. Subsection
(1) sets out when the conditions of a title may be varied or suspended, or an
exemption granted (see the table in that subsection). Subsection (2) provides
the responsible Commonwealth Minister with the power of variation, suspension
and exemption, by issue of a written notice to the titleholder. The Minister
may impose conditions on the variation, suspension or exemption, and any
conditions must be specified in the notice. However, the Minister's power
under this section does not extend to altering the term of a title (see section
249KB, which includes a power to extend the term of a greenhouse gas assessment
permit or greenhouse gas holding lease in certain circumstances).
388. If a
greenhouse gas injection licence is varied under this section, the variation
must be published in the Gazette, and the variation takes effect on that
day. A variation of a greenhouse gas assessment permit or greenhouse gas
holding lease takes effect on the day on which the notice of the variation is
given to the titleholder.
389. As noted
above in relation to proposed section 249KA, the responsible Commonwealth
Minister cannot, under that section, extend the term of a permit, lease or
licence to which that section applies. However, section 249KB provides the
responsible Commonwealth Minister with a power to extend a greenhouse gas
assessment permit or greenhouse gas holding lease in certain circumstances.
Those circumstances are where a suspension or exemption has been made in
relation to any condition of a greenhouse gas assessment permit or greenhouse
gas holding lease (but not a greenhouse gas injection licence) under section
249KA, and the Minister considers that it is reasonable in the circumstances of
the case to extend the term of the permit or lease. The Minister cannot extend
the term beyond the term of the suspension or exemption.
390. As an
example, if a permittee is subject to a work program condition, but the
permittee is temporarily unable to meet the work program milestones, the
Minister may (depending on the circumstances) choose to exercise the Minister's
discretion under section 249KA to grant an exemption from the work program
condition for the period during which the permittee is unable to meet the work
program milestones. Again depending on the circumstances, the Minister may
also consider it reasonable to extend the period of the permit so that the
permittee is not forced into non-compliance with the work program condition by
not completing the work program by the end of the permit term.
391. The
extension may be set out in the notice of suspension or exemption given to the
titleholder under section 249KA, or in a later written notice given to the
titleholder.
392. This
section requires the responsible Commonwealth Minister to suspend rights
conferred by a greenhouse gas assessment permit or greenhouse gas holding lease
if the Minister is satisfied that it is necessary to do so in the national
interest. This could occur, for example, as a result of a new discovery of an
area of high environmental sensitivity, or for defence or national security
reasons. The suspension may be of all or any of the rights conferred by the
permit or lease, and may be indefinite or for a specified period. The term of
the permit or lease may be extended accordingly (see section 249KD below).
393. This
power does not extend to greenhouse gas injection licences, which generally
involve a higher capital investment and a smaller seabed area than a greenhouse
gas assessment permit or greenhouse gas holding lease.
394. If the
responsible Commonwealth Minister has suspended any or all of the rights of a
greenhouse gas assessment permit or greenhouse gas holding lease under section
249KC, the Minister has a related power to extend the term of that permit or
lease for a period which is equal to (or less than) the period of the
suspension. This power is expected to be exercised where, for example, the
suspension means that the titleholder cannot keep to a work plan which is
imposed as a condition of the title. If an extension was not granted in these
circumstances, the titleholder may not be able to complete the work plan
requirements before the end of the period of the title.
395. In
general, conditions placed on a title are expected to apply for the full period
of the title. However, there are some circumstances where it may be
appropriate for a condition to be varied or suspended, or an exemption granted
from compliance with a condition. This section deals with when and how
variation, suspension and exemption of conditions of greenhouse gas search
authorities and special authorities may take place (see section 249KA above in
relation to variation, suspension and exemption of greenhouse gas assessment
permits, holding leases and injection licences).
396. Subsection
(1) sets out when the conditions of a title may be varied or suspended, or an
exemption granted (see the table in that subsection). Subsection (2) provides
the responsible Commonwealth Minister with the power of variation, suspension
and exemption, by issue of a written notice to the titleholder.
397. The
Minister may impose conditions on the variation, suspension or exemption. Any
conditions must be specified in the notice.
398. This
section sets out who may apply for a consent to surrender a greenhouse gas
assessment permit, holding lease or injection licence, and whether the
application must be in respect of the whole of the title or could also be made
in respect of part of the title only.
399. An
application may be made by the registered titleholder in writing. An
application for consent to surrender a greenhouse gas assessment permit or a
greenhouse gas holding lease must be for the whole permit or lease. However,
an application to surrender made in respect of a greenhouse gas injection
licence can be for either the whole licence, or some or all of the blocks in
relation to which the licence is in force (for example, when the usefulness of
some blocks covered by the licence has been exhausted, but other blocks covered
by the title remain able to be used for injection, the titleholder may apply to
surrender the blocks which are no longer able to be used for injection).
400. This
section provides the responsible Commonwealth Minister with the power to give
consent to a surrender application made under section 249LA, and sets out the
criteria which must be met before consent can be given.
401. If some
or all of the criteria are not met, the Minister may still consent to the
surrender if the Minister is satisfied that there are sufficient grounds to
warrant giving the consent. Alternatively, there may be a ground for
cancelling the title instead. For example, one of the consent criteria is that
that the titleholder has complied with the conditions of the title - see paragraph
(3)(b). One of the grounds for cancellation is that the titleholder has not
complied with the conditions of the title - see section 249MA(a). A
titleholder would generally be expected to prefer a surrender to a cancellation
(as a cancellation of a title may affect the titleholder's reputation).
402. If the
responsible Commonwealth Minister gives consent to a surrender under section
249LB, then the titleholder may surrender the relevant title (or blocks under
the title, as relevant) by written notice to the Minister. The surrender must
be published in the Gazette, and takes effect on the day of publication.
403. The holder
of a greenhouse gas search authority or greenhouse gas special authority may
surrender the authority by written notice to the responsible Commonwealth
Minister. There is no process of applying for and receiving consent to
surrender for these titles (unlike for greenhouse gas assessment permits,
holding leases and injection licences – see sections 249LA, 249LB and 249LC
above).
404. If
remedial action needs to be taken in respect of the title, this can be dealt
with after surrender of the title under section 316-312.
405. This
section sets out a list of grounds for cancelling a greenhouse gas assessment
permit, greenhouse gas holding lease or greenhouse gas injection licence. The
grounds generally relate to non-compliance with obligations (see paragraphs
(a)-(d) – for example, were the titleholder has not complied with a condition
of the title or a direction, or been more than 90 days late in paying an amount
due) or follow from a revocation of a declaration in relation to the title (see
paragraphs (e) and (f)).
406. The power
to cancel a title on one of these grounds is given by section 249MB, and must
be exercised after a process of consultation (see section 249MC). Other
sanctions may also be available (instead of or in addition to cancellation),
depending on the particular breach or other action of the titleholder. For
example, if the titleholder has breached a direction given under section
316-305, the titleholder could be liable for prosecution under section 316-307,
and/or costs recovery under section 316-308.
407. This
section provides the responsible Commonwealth Minister with power to cancel a
greenhouse gas assessment permit, greenhouse gas holding lease or greenhouse
gas injection licence if there is a ground for doing so (see section 249MA for
the grounds for cancellation). The Minister must follow the consultation
procedures set out in section 249MC before exercising the power of
cancellation. The Minister must also, in deciding whether to cancel the title,
take into account any action the titleholder has taken to remove the ground of
cancellation (for example, by paying the amount which was unpaid, or taking
action to remedy a breach of condition) and to prevent the recurrence of
similar grounds. After undertaking the consultation process and taking these
matters into account, the Minister may decide not to cancel the title. If the
Minister does decide to cancel the title, the cancellation must be published in
the Gazette, and the cancellation takes effect on the day of
publication.
408. This
section sets out the consultation process which the responsible Commonwealth
Minister is required to undertake prior to exercising the right to cancel a
title under section 249MB. Broadly, the Minister is required to notify the
titleholder, and any other person that the Minister sees fit (for example, a
contractor who has been working on the title operations), of the proposed
cancellation and the reasons for it, and invite each of those persons to make a
submission about the proposal. When considering whether to go ahead with the
cancellation, the Minister must take into account those submissions (as well as
the other matters set out in section 249MB(2)).
409. Titleholder
breaches of this or other Acts can, in some cases, give rise to a number of
possible consequences under the Act. This section deals with two of those
cases, confirming that certain possible consequences are not mutually
exclusive.
410. Subsection
(1) and (2) provide that, where a titleholder has not complied with specified
provisions of the Act (which could give rise to both cancellation of the title
and criminal prosecution), the Minister may still exercise the power of
cancellation if the titleholder has been convicted of an offence in respect of
that non-compliance. Likewise, the titleholder can still be prosecuted even if
the Minister has exercised the power of cancellation as a result of the
non-compliance.
411. Subsections
(3) and (4) deal with the situation where the titleholder has not paid an
amount due under this Act or the Annual Fees Act within 90 days of the payment
being due. This could give rise to both cancellation of the title, and/or
judgment from a Court in respect of that non-payment. The subsections provide
that the Minister can still cancel the title even if Court judgment has been
obtained, and that the titleholder is still liable to pay the unpaid amount
(and any associated penalty) even if the Minister has already cancelled the
title. This means that, after cancellation, the Commonwealth can pursue
recovery of the amount through the Courts.
412. The
inclusion of this section avoids uncertainty as to whether the responsible
Commonwealth Minister must choose between cancellation or legal proceedings
(either criminal or civil, depending on the circumstances), or can use both
avenues.
413. This
section provides the responsible Commonwealth Minister with a power to cancel a
greenhouse gas search authority if the titleholder has breached a condition of
the authority. The cancellation is by written notice to the titleholder.
414. There is
no requirement to undertake consultation with the titleholder prior to
cancelling the title (unlike in relation to the cancellation of greenhouse gas
assessment permits, holding leases and injection licences). This difference
reflects the shorter term of a search authority, which would generally mean
that the search authority term would expire before a consultation process was
complete.
415. Proposed
section 249NCA applies to the holder of a greenhouse gas assessment
permit, holding lease or injection licence. It provides that, in addition to
the right of the responsible Commonwealth Minister to require that an applicant
provide security for compliance with statutory obligations prior to the grant
of the permit, lease or licence, the responsible Commonwealth Minister may, at
any time during the term of the title, require the title-holder to provide
security, or an additional security, in the form and in the amount specified by
the responsible Commonwealth Minister. This will enable the responsible
Commonwealth Minister, if events as they unfold suggest that insufficient
security has been obtained from the title-holder, to require the title-holder
to top-up the amount of security provided to a sufficient amount.
416. This
provision ensures that, once a security is in force in relation to a greenhouse
gas title, it will remain in force even though the title may have changed hands
one or more times since the security was lodged. Usually, when a title-holder
sells a title, any security lodged by that title-holder is discharged and it is
necessary for the regulator to obtain a fresh security from the purchaser of
the title. Proposed section 249NCB will have the effect that, when a
greenhouse gas assessment permit, holding lease or injection licence is
transferred, the interest of the transferor in the security is transferred to
the transferee along with the title. Any reference to the transferor in the
security documentation has effect as if it were a reference to the transferee.
The transferee of the title therefore holds the reversionary interest in the
security. The value of the security has effectively become part of the value
of the title and will be paid for by the transferee as part of the purchase
price.
417. The
discharge of securities will be handled under the regulations.
418. Proposed
section 249ND is a regulation-making power in relation to site plans. It
provides, for example, that the regulations may provide that a greenhouse gas
injection licensee must not carry on any operations in relation to an
identified greenhouse gas storage formation unless an approved site plan is in
force in relation to the formation (subsection (1)). The section also
provides that the regulations may make provision for the responsible
Commonwealth Minister to withdraw approval of approved site plans.
419. These are
not matters for which a detailed and express regulation-making power would
normally be necessary. There are already provisions in a number of sets of
regulations under the principal Act that prohibit the carrying on of any
activities under a petroleum title unless there is a particular kind of plan in
force that has been approved by the Designated Authority. The Offshore
Petroleum (Management of Environment) Regulations 1999, for example,
contains such a provision.
420. The
reason for including these express regulation-making powers in the Bill in
relation to site plans is that the decision as to whether the site plan
satisfies the requirements of the regulations (ie a de facto approval
decision) is, under the provisions inserted by this Bill, an important pre-requisite
for the grant of an injection licence. If there had been no express
regulation-making powers of the kinds conferred by this section, there might
have been a doubt as to whether that de facto approval, once given under
the Act, could be subsequently withdrawn under the regulations.
421. A site
plan must be kept under constant review and must be updated as operations
progress and new information becomes available. A regulation prohibiting the
carrying out of operations under the injection licence unless there is a site
plan in force is a necessary enforcement mechanism in the regulations, as it is
in the case of the other plan-based regulations under the Offshore Petroleum
Act. This is so that, if the title-holder fails to comply with obligations in
the regulations in relation to updating the plan, or if operations differ
materially from those described in the plan or other significant failures of
risk management occur, the responsible Commonwealth Minister (or Designated
Authority, in the case of the existing petroleum regulations) can withdraw
approval of the plan and it ceases to be in force.
422. The
express regulation-making power in proposed section 249ND is therefore
included as a precautionary measure, in view of the particular status of the site
plan in the injection licence-granting process under the Act.
423. This item
inserts a new Part 3A into the Act. New Part 3A covers a range of matters
relating to the greenhouse gas title Register, including the requirement to
keep a Register and registration of transfers of and dealings in greenhouse gas
titles. Notes on the individual sections are set out below.
424. This
section provides a simplified outline of Chapter 3A. This is not an operative
provision of the Act.
425. This
section provides definitions of the terms Register and title for
the purposes of Chapter 3A.
426. This
section provides that, for the purposes of Chapter 3A, if a dealing forms part
of the issue of a series of debentures, then all of the dealings constituting
the issue of that series of debentures are taken to be one dealing. The
purpose of this clause is to enable greater administrative efficiency where
there is an issue of a series of debentures.
427. This
section requires the responsible Commonwealth Minister to keep a Register of
greenhouse gas titles and greenhouse gas search authorities. The Register
will, essentially, be a collection of memorials or entries relating to
specified events, facts, documents or instruments relating to greenhouse gas
titles and search authorities. What must be included in the Register is set
out in the provisions below.
428. This
section deals with the Register, and provides general rules for what must be
included in the Register in respect of greenhouse gas titles and greenhouse gas
search authorities. (Other sections in this and other Parts of Chapter 3A
provide for additional registration requirements.)
429. Subsection
(1) requires the responsible Commonwealth Minister to make an entry (called a
'memorial') in the Register in respect of each greenhouse gas title and
greenhouse gas search authority. What must be entered in the memorial for each
title is set out in the table in subsection (2). The Minister must also make a
memorial of any notice or other instrument which varies, cancels, surrenders
(in whole or part) or has any other effect on a greenhouse gas title or
greenhouse gas search authority (see subsection (3)). The subsections (1)-(3)
requirements will be taken to be sufficiently complied with if, instead of
making a separate memorial, the Minister enters in the Register a copy of the
relevant greenhouse gas title, greenhouse gas search authority, notice or
instrument.
430. The
Minister must endorse, on every memorial or document copy entered in the
Register, the date on which it was entered in the Register (subsection (5)).
431. This
section provides that if any of the events specified in this section occur in
relation to a greenhouse gas title or a greenhouse gas search authority, the
Minister must enter a memorial of that fact in the Register. Those events
relate to particular circumstances (as set out in the section) where a title or
search authority expires or otherwise ceases to be in force.
432. This
section provides that a transfer of a greenhouse gas title has no force until
it has been approved by the responsible Commonwealth Minister and an
instrument of transfer has been registered under Part 3A.3.
433. The
following sections in this Part deal with applications and approvals of
transfer, and registration of instruments of transfer.
434. This
section provides that either party to a proposed transfer of a greenhouse gas
title may apply to the responsible Commonwealth Minister for approval of the
transfer. The application must be in writing.
435. See
proposed section 298-258 for details of what documents must accompany an
application, and proposed section 298-259 for the time limit for making an
application.
436. This
sections sets out what documents must accompany an application for a transfer,
and certain content and execution requirements for those documents.
437. This
section provides that, in general, an application for transfer must be made
within 90 days after the last party executes the transfer document. This time
limit is intended to keep the Register as current as possible, which assists in
providing certainty for investors and potential investors. However, where
there are sufficient grounds to warrant allowing a longer time period for
making an application, the responsible Commonwealth Minister may do so.
438. The
responsible Commonwealth Minister must enter the date of an application for
transfer in the Register. This requirement is aimed at ensuring there is no
uncertainty about the date of application (see section 298-259 above). The
Minister may also make other notations if the Minister considers it appropriate
to do so.
439. If an
application is made for approval of a transfer, the responsible Commonwealth
Minister must consider the application and then either approve or refuse to
approve the transfer. The Minister must notify the applicants of the decision
and, if the decision was to refuse to approve the transfer, make a note of this
refusal in the Register.
440. If the
responsible Commonwealth Minister approves the transfer of a greenhouse gas
title, the Minister must make a note of the approval on the instrument of
transfer and a copy of that document. Once the transfer fee has been paid (see
the Registration Fees Act), the Minister must enter certain details of the
transfer in the Register.
441. The
transfer takes effect once the specified details of the transfer have been
entered in the Register. After this, the responsible Commonwealth Minister
must retain and make available for inspection the copy of the instrument of
transfer which was endorsed with the Minister's approval. The original
endorsed instrument must be returned to the applicant.
442. Merely
executing a transfer does not create an interest in the title for the person
whom the title is proposed to be transferred. See section 298-262 above, which
provides that registration is required in order for a transfer to take
effect.
443. The
approval of a transfer does not give the transfer any force, effect or validity
that the transfer would not have had if Chapter 3A had not been enacted. For
example, the approval of a transfer could not remedy a legal defect in the
contract between the transferor and the transferee.
444. In some
cases, the rights of the registered holder of a greenhouse gas title may
devolve on another person by operation of law. Where this has occurred, these
sections provide a process for the person on whom the title rights have devolved
to become the registered holder of the title.
445. Section
298-265 provides that the person may apply in writing to the responsible
Commonwealth Minister to have that person's name entered in the register as the
holder of the title. Section 298-266 provides that, if a person has made an
application and paid the prescribed fee (which will be set out in the
regulations), then, if the responsible Commonwealth Minister is satisfied that
the rights of the holder have devolved on the applicant by operation of law,
the Minister must enter that person's name in the Register as the holder of the
title.
446. The
applicant becomes the registered holder of the title when the Register entry is
made.
447. These
sections provide the process for having the name of a company altered in the
Register, where that company (which is the registered holder of a greenhouse
gas title) changes its name.
448. Section
298-267 provides that the company may apply to the responsible Commonwealth
Minister in writing to have its new name substituted for its previous name in
the Register in relation to a title for which it is the registered holder.
Section 298-268 provides that, if an application has been made and the
prescribed fee (which will be set out in the regulations) paid, then, if the
Minister is satisfied that the company has changed its name as set out in the
application, then the Minister must alter the Register accordingly.
449. Separate
applications need to be made for each title for which the company is the
registered holder.
450. This
clause sets out the various types of dealings and agreements to which Part 3A.6
applies. These do not include transfers of titles, which are deal with in Part
3A.3. Creation and assignment of rights and interests in relation to
greenhouse gas titles are covered, as well as other specified dealings in
relation to titles and other greenhouse gas permits, licences and leases.
451. This
section provides that a dealing covered by this Part is of no force, unless it
has been approved by the responsible Commonwealth Minister and has been entered
in the Register under section 298-276. This allows the Minister to consider
any proposed dealing before it takes effect (see section 298-275).
452. This
section provides that an application for an approval of a dealing must be made
in writing. A separate application must be made for each title in respect of
which approval of the dealing is sought.
453. Any party
to the dealing may make the application. The concurrence of the other party or
parties to the dealing will be evidenced in the documents required to accompany
an application (see section 298-272).
454. This
provision sets out the documents which must accompany an application for
approval of a dealing. As well as providing the instrument evidencing the
dealing (or a copy if that instrument has been lodged with a separate
application), the applicant may choose to provide a supplementary instrument.
This option is provided so that, if the dealing is approved, a member of the
public may access and view the supplementary instrument rather than the
original instrument (which may contain information which the applicant wishes
to keep confidential). The prescribed details to be included in the
supplementary instrument will be set out in regulations.
455. Subsection
(5) provides that, where a company creates a charge, and lodges documents with
ASIC under section 263 of the Corporations Act 2001 in relation to the
creation of that charge, the applicant for approval of a dealing may provide a
copy of the documents lodged with ASIC instead of the instrument evidencing the
dealing.
456. Subsection
(4) requires certain document copies to accompany the application.
457. This
section provides that, in general, an application for approval of a dealing
must be made within 90 days after the last party executes the instrument
evidencing the dealing. This time limit is intended to keep the Register as
current as possible, which assists in providing certainty for investors and
potential investors. However, where there are sufficient grounds to warrant
allowing a longer time period for making an application, the responsible
Commonwealth Minister may do so.
458. This
section is subject to section 298-284 (see below), which deals with approval of
a dealing where the dealing was entered into before the relevant greenhouse gas
title came into existence.
459. The
responsible Commonwealth Minister must enter the date of an application for
approval of a dealing in the Register. This requirement is aimed at ensuring
there is no uncertainty about the date of application (see section 298-273
above). The Minister may also make other notations in the Register if the
Minister considers it appropriate to do so.
460. If an
application is made for approval of a dealing in respect of a particular title,
the responsible Commonwealth Minister must consider the application and then
either approve or refuse to approve the dealing. The Minister must notify the
applicant of the decision and, if the decision was to refuse to approve the
dealing, make a note of this refusal in the Register.
461. The
Minister's powers under this section are limited by section 298-284, which
deals with approval of a dealing that was entered into before the title came
into existence.
462. If the
responsible Commonwealth Minister approves a dealing in respect of a particular
title, the Minister must make a note of the approval on the instrument
evidencing the dealing and the copy of that document (or, if a copy of the
instrument was lodged in place of the original, on both of the copies). Once
the relevant fee has been paid (see the Registration Fees Act), the Minister
must enter certain details of the approval in the Register. The Register entry
must consist of an entry on the memorial relating to the relevant title, or the
copy of the title.
463. This
section provides for certain documents relating to approved dealings to be
retained by the responsible Commonwealth Minister and made available for
inspection by the public.
464. If no
supplementary instrument was lodged with the application, the original
instrument evidencing the dealing (or the copy, if no original was lodged),
endorsed with the Minister's approval of the dealing, must be made available
for inspection in accordance with Chapter 3A. If a supplementary instrument
was lodged with the application, that supplementary instrument must be made
available for inspection in accordance with Chapter 3A of the Act (endorsed
with the Minister's approval), and the instrument evidencing the dealing must
not be made available for inspection.
465. For
provisions relating to inspection of documents under Chapter 3A, see
section 298-296. For information about the content and purpose of
supplementary instruments, see the notes to proposed section 298-272.
466. The
section also requires the Minister to return the original instrument evidencing
the dealing, and the supplementary instrument if one was lodged, to the
applicant. The returned instrument/s evidencing the dealing must be endorsed
with the approval of the responsible Commonwealth Minister (see also subsection
298-276(2)), to provide the applicant with certification of the approval of the
dealing.
467. This
section has the effect that any failure of the responsible Commonwealth
Minister to comply with the any of the requirements of this Part relating to
approval of a dealing will not render the approval or registration of a dealing
ineffective.
468. This
section provides that the approval of a dealing does not give a dealing any
force, validity or effect that it would not have had if Chapter 3A had not been
enacted. This means that the approval of a dealing under this Chapter will not
overcome a legal failing in the dealing arrangements between the parties to the
dealing.
469. This Part
deals with the situation where persons wish to enter into a dealing in relation
to a title before that title has come into existence. For example, a party
that holds a greenhouse gas assessment permit, and has applied for (but not yet
been granted) a greenhouse gas injection licence, may conclude a dealing with
another party relating to equity in the future greenhouse gas injection
licence, in anticipation of the licence being granted.
470. This
section provides that where two parties enter into a dealing relating to a
title that may come into existence in the future (such as in the example
above), a party to the dealing may make a provisional application for approval
of that dealing. In order for this section to apply, the dealing must be one
to which, if the title came into existence, Part 3A.6 would apply. As for
applications for approval under Part 3A.6, a separate application must be made
in for each title in respect of which approval of the dealing is sought (see
section 298-271).
471. See
section 298-281 for the documents which must accompany the application.
472. This
clause requires and permits (as relevant) the same documents to accompany a
provisional application for approval of a dealing as would be provided for
under clause 298-272 if the dealing were in relation to a title which already
existed.
473. This
section provides for when a provisional application may be made. A provisional
application for approval of a dealing relating to a greenhouse gas assessment
permit, a greenhouse gas holding lease, or a greenhouse gas injection licence
may be made on or after the day on which an offer document relating to the
application for the title is given to the applicant for the title. A
provisional application for approval of a dealing relating to a greenhouse gas
special authority may be made on or after the day that an application for the
grant of the special authority is made. The difference exists because there is
no offer document given for a greenhouse gas special authority.
474. A
provisional application cannot be made after the relevant title comes into
existence (after that time, an application for approval of a dealing would be
made under Part 3A.6).
475. The
section does not make any stipulations relating to the timing of the dealing
(which the subject of the application). The commercial transaction could be
made prior to the relevant title application was lodged, or after it was lodged
(but before the title was granted).
476. This
section provides that, if a provisional application has been made in respect of
a title which may come into existence, and that title comes into existence,
then the provisional application will be treated as though it was an
application for approval of a dealing (made under section 298-271 of Part 3A.6)
which was made on the date that the title came into existence. This is
provided that the dealing is one to which Part 3A.6 applies - see section
298-269 for dealings to which that Part applies.
477. This
section provides a limit on approvals of dealings in respect of a title which
took place before the title came into existence, by providing that these types
of dealings may only be approved if one of two courses is taken. Either a
provisional application must have been lodged under Part 3A.7 in respect of
that dealing (in which case the application will be treated as an application
under Part 3A.6 when the title comes into existence), or an application for
approval of the dealing must be lodged under Part 3A.6 within 90 days of the title
coming into existence (or, if there are sufficient grounds to warrant allowing
a longer period and the responsible Commonwealth Minister allows a longer
period, within that period).
478. To
protect the interests of investors and potential investors, making changes to
entries in the Register must not be a process which is taken lightly. This
section is the only section which allows the responsible Commonwealth Minister
to alter the Register without first publishing the Minister's intention to do
so, or as a result of the matter being heard by a Court. This power is
restricted to the correction of clerical errors and obvious defects.
479. This
section provides the responsible Commonwealth Minister with a general power to
make entries to correct the Register, to ensure the accurate record of the
interests and rights which exist in relation to a title. The Minister may do
so on Minister's own initiative, or in response to a written application by
another person. To protect the interests of persons who have an interest in
the accuracy of the Register, before the Minister makes any entry the Register
under this section, the Minister is required to publish the proposed entry and
allow for those persons to make a submission about the entry. If submissions
are made, the Minister must take them into account when deciding whether or not
to make the proposed entry. If no submissions are made in relation to the
proposed entry, the Minister may decide to make the entry in any case. If the
Minister makes an entry under this section, the final form of the entry must be
published in the Gazette.
480. This
section provides a list of grievances that a person may have in relation to the
Register (for example, that an entry is incorrect) and provides an avenue for
aggrieved persons to apply to the Federal Court or the relevant Supreme Court.
The Court may then make any orders it sees fit in relation to the rectification
of the Register, and the responsible Commonwealth Minister must comply with
those orders.
Proposed section 298-288 Responsible Commonwealth
Minister may obtain information from applicants
481. This
clause refers to all types of applications that companies or individuals can
make under this Chapter in relation to the Register, and provides the
responsible Commonwealth Minister with a power to require the applicant to
provide such additional information as the Minister considers necessary or
advisable. The Minister exercises this power by providing a written notice to
the applicant.
482. This
provision is intended to ensure that the Minister is able to provide proper
vetting of the credentials of applicants seeking to register an interest in the
title.
483. The
section contains two offence provisions. The first, in subsection (4),
provides that it is an offence if a person who has been given a notice to
provide additional information omits to do an act, and that omission
contravenes a requirement in the notice. The second, in subsection (5),
provides that it is an offence for a person, who has been given a notice, to
give information which the person knows is false and misleading in a material
particular. The maximum penalty for both of these offences is 50 penalty
units. The section also includes a note that the same conduct may be an
offence against both subsection (5) of this section and section 137.1 of the Criminal
Code. It is an offence under section 137.1 to give information (in
purported compliance with a law of the Commonwealth) which is false or
misleading, or knowing that it omits any matter or thing without which the
information is misleading. The maximum penalty for that offence is 12 months
imprisonment.
Proposed section 298-289 Responsible Commonwealth
Minister may obtain information from a party to an approved dealing
484. This
section provides the responsible Commonwealth Minister with a power to require
a party to a dealing in relation to a title (which has been approved under
section 298-275) to give the Minister information about alterations in the
interests or rights existing in relation to the title. As for section 298-288
above, the Minister exercises this power by providing a written notice to the
applicant, and can require such information as the Minister considers necessary
or advisable.
485. This
provision will, amongst other things, enable the Minister to obtain information
relevant to keeping the Register information up to date in respect of rights
and interests in titles.
486. Equivalent
offence provisions to those set out in section 298-288 are included in this
section (see subsections (4) and (5)). Again, the same conduct may be an
offence under subsection (5) and section 137.1 of the Criminal Code.
487. This
section provides the responsible Commonwealth Minister with a power to require
a person, by written notice, to produce or make available a document which is
related to an application under this Part. This enables the Minister to obtain
and consider documents which would be relevant to an application.
488. The
section includes offence provisions which are similar to those in sections
298-288 and 298-289.
Proposed section 298-291 Responsible Commonwealth
Minister may retain documents
489. This
section provides the responsible Commonwealth Minister with a power to take
possession of a document produced under section 298-290 and to retain it for as
long as is necessary. The section contains protections for the person who
would otherwise be entitled to the possession of the document and who may need
or wish to access or use the document while it is in the possession of the
Minister. That person is entitled to be supplied with a certified copy of the
document, and until a certified copy is supplied, the Minister or inspector
must provide that person (or another person authorised by the person) with
reasonable access to the document for purposes of inspecting the document, and
making copies of or taking extracts from it.
Proposed section 298-292 Responsible Commonwealth
Minister not concerned with the effect of instrument lodged under this Chapter
490. This
section is intended, along with sections 298-264 and 298-279 (discussed above),
to clarify that any instrument lodged with the responsible Commonwealth Minister
under this Chapter takes effect according to its own terms. That is, the
Minister is not responsible for verifying that the instrument has the effect in
law that it purports to have. Of course, it may be necessary for the Minister
to make some inquiry into the legal effect of an instrument in order to
identify its effect in relation to the Act. However, otherwise, the legal
effect of an instrument is a matter for the Courts and not for the Minister.
491. The
amount of registration fee payable on a transfer or dealing will be calculated
according to the value of the consideration involved in the transfer or
dealing. This offence provision is directed to ensuring that the correct value
of the consideration (and any other information relevant to the calculation of
the fee) is reported in instruments lodged with the responsible Commonwealth
Minister which relate to a transfer or dealing. The maximum penalty for this
offence is 100 penalty units. The same conduct may be an offence under this
section, and under section 137.2 of the Criminal Code, which relates to
knowingly producing a false or misleading document.
492. This
offence provision is directed to ensuring the accuracy of the contents of the
Register. The section provides that a person commits an offence if the person
makes an entry, causes an entry to be made or concurs in the making of an entry
in the Register, and does so knowing that the entry is false. The offence
applies equally to an official working with the Register, a member of the
public (for example, who inspects the Register) or an applicant who provides
false information to the responsible Commonwealth Minister for entry in the
Register. The maximum penalty for he offence is 50 penalty units. The same
conduct may be an offence under this section and section 145.4 of the Criminal
Code, which relates to (amongst other things) falsifying a Commonwealth-held
document with the intention of obtaining a gain or causing a loss. That
offence has a maximum penalty of 7 years.
493. This
section provides that a person commits an offence if the person produces or
tenders in evidence a document which falsely purports to be a copy of or
extract from either a Register entry or an instrument given to the responsible
Commonwealth Minister under this Chapter. The offence is directed to ensuring
that persons do not use, in evidence, forged or counterfeit Register
documents. The maximum penalty for this offence is 50 penalty units. However,
the same conduct may be an offence under this section and under section 137.2
of the Criminal Code. Section 137.2 relates to the producing of false or
misleading documents. The maximum penalty for that offence is imprisonment for
12 months.
494. This
section provides for public access to the Register, and to instruments which
are subject to inspection under Chapter 3A. The section requires the
responsible Commonwealth Minister to ensure that the Register and instruments
are available, at all convenient times, on payment of the relevant fee
(calculated under the regulations).
495. This
section confers status on the Register (and certified copies of and extracts
from it) as prima facie evidence in all courts and tribunals of the matters
required or authorised to be contained, and which are contained, in the
Register (or copy or extract, as the case may be). The clause also allows for
evidentiary certificates to be prepared. This option may be used confirm facts
which may not be obvious from a single entry in the Register or a single document
held by the responsible Commonwealth Minister. These certificates have status
as prima facie evidence of the statements contained within them. The person
who signed the certificate may be called to give evidence in criminal
proceedings, and any evidence given in support or rebuttal of a matter stated
in a certificate must be considered on its merits.
496. The
section provides for a fee to be prescribed under the regulations for the
obtaining of a copy of or extract from the Register, or an evidentiary
certificate. This fee is serve to recover the costs incurred in making the
copy, extract or certificate.
497. This
section provides the responsible Commonwealth Minister with a power to
determine the amount of a fee payable under the Registration Fees Act in
relation to an entry in the Register. Such a determination must, of course,
comply with the provision of that Act. Other fees, for example the fee
applicable to obtaining an evidentiary certificate under section 298-297(4),
will not be determined by the Minister, as they will be set out in regulations
made under this Act.
498. Subsection
(2) deals with the situation where the Minister has made a fee determination on
the basis of an instrument given by a person, which contains statements in
relation to the consideration for the transfer or dealing (or any other fact
which affects the amount of fee payable for the transfer or dealing), but that
person is convicted of an offence in relation to providing that instrument
under section 298-293. The subsection provides the responsible Commonwealth
Minister with a power to make a fresh determination of the amount of the fee
payable under the Registration Fees Act (so as to make the applicant liable for
the correct amount of the fee, not the incorrect amount calculated on the basis
of the false or misleading information contained in the instrument originally
given to the Minister).
Division 2—General
power to give directions
499. Proposed
section 316-304 confers on the responsible Commonwealth Minister a very
broad power to give directions to greenhouse gas title-holders and others
engaged in offshore greenhouse gas operations. The section corresponds to
existing section 305, except that the titles and operations are greenhouse
gas, not petroleum, titles and operations and the person on whom the power is
conferred is the responsible Commonwealth Minister instead of the Designated
Authority.. The same is true of the ancillary provisions in proposed sections 316-306
and 316-307, which correspond to sections 306 and 307.
Division 3—Responsible
Commonwealth Minister may take action if there is a breach of a direction
Proposed section 316-308
Responsible Commonwealth Minister may take action if there is a breach of a
direction
500. Proposed
section 316-308 provides that, if a direction given under the greenhouse
gas provisions of Act is not complied with, the responsible Commonwealth
Minister may carry out whatever work the person subject to the direction failed
to carry out and recover the costs from that person. The section corresponds
to existing section 308, except that the titles and operations are
greenhouse gas, not petroleum, titles and operations, the provisions of the Act
referred to are greenhouse gas provisions and the person on whom the power is
conferred is the responsible Commonwealth Minister instead of the Designated
Authority.
501. Proposed
section 316-309 provides for a defence to a prosecution for a breach of a
direction that the defendant took all reasonable steps to comply with the
direction. This section corresponds to existing section 309.
502. Item 204
inserts a new subsection into section 311. Section 311 confers power
on the Designated Authority to give a petroleum title-holder (including an
infrastructure licensee and a pipeline licensee) to do such things as remove
property from the title area, plug wells, make good damage to the seabed etc.
This is the principal provision under which the decommissioning of petroleum
projects is supervised by the Designated Authority.
503. Item 204
is concerned with the plugging of petroleum wells made in the petroleum title
area by the petroleum title-holder. Unplugged petroleum wells and (probably
more so) inadequately plugged petroleum wells that are in the migration path of
injected greenhouse gas substance have the potential to allow the greenhouse
gas substance to migrate to the surface and so into the sea or the atmosphere.
They may also allow the greenhouse gas substance to migrate into other
geological formations and contaminate other natural resources. A plugging of a
well in a manner that will prevent the escape of petroleum through the well may
not, after a time, prevent the escape of a greenhouse gas substance. It has
therefore become necessary that, in the case of petroleum title areas that are
located in a potential migration path of injected greenhouse gas substance,
petroleum wells are plugged to a standard that makes them able to withstand the
effects of carbon dioxide.
504. Petroleum
title areas that are so located that they may affect greenhouse gas operations
are able to be 'declared' by the responsible Commonwealth Minister under proposed
section 79B (exploration permits), section 114 (retention leases) and
section 138B (production licences).
505. Item 204
inserts into section 311 a subsection (2A) which provides that the
Designated Authority, in deciding whether wells have been plugged or closed off
to the satisfaction of the Designated Authority, must (in the case of a
declared petroleum title) and may (in the case of other petroleum titles) have
regard to the principle that plugging or closing off wells should be carried
out in a way that restores or maintains the suitability of a geological formation
for the permanent storage of greenhouse gas substances. There will be a
consequent cost to the petroleum industry, where the Designated Authority
imposes the new standard for plugging wells. It has, however, become a
necessary cost for petroleum title-holders of sharing certain parts of the
Australian continental shelf with greenhouse gas title-holders.
506. Item 205
inserts a new subsection (3A) into existing section 312. Section 312
confers on the Designated Authority a power to give the same kinds of
directions to former holders of petroleum titles as section 311 does in
relation to current holders of petroleum titles. New subsection (3A) is
in the same terms as the subsection inserted by item 204 into section 311.
507. Proposed
section 316-311 confers on the responsible Commonwealth Minister power to
give directions to holders of greenhouse gas titles to do such things as remove
property from the title area, plug wells, make good damage to the seabed and
provide for the conservation and protection of the natural resources in the
title area. It relation to greenhouse gas injection licensees, this
direction-giving power applies only when no greenhouse gas substance has been
injected under the authority of the licence (except for injection on an
appraisal basis as part of exploration for another greenhouse gas storage
formation in the licence area).
508. The section
corresponds to existing section 311, except that the titles and operations
are greenhouse gas titles and operations, not petroleum titles and operations,
and the person on whom the power is conferred is the responsible Commonwealth
Minister instead of the Designated Authority.
509. The same
is true of proposed section 316-312, which corresponds to existing
petroleum section 312. Proposed section 316-312 gives the
responsible Commonwealth Minister the same direction-giving powers in respect
of former holders of greenhouse gas titles as proposed section 316-311
does in relation to existing holders of greenhouse gas titles.
510. Proposed
section 316-311A confers on the responsible Commonwealth Minister a power
to give a range of remedial and precautionary directions to an injection
licensee during the site closing period that go beyond the kinds of directions
that the Minister can give to other greenhouse gas title-holders or that the
Designated Authority can give to petroleum title-holders. They are similar to
the directions that the responsible Commonwealth Minister can give for the
purpose of dealing with 'serious situations', although there is not, under proposed
section 316-311A, any requirement to establish that a 'serious situation'
exists. The site closing process begins when all injection and storage
operations in a greenhouse gas injection licence area have ceased. At that
time, the licensee is required to apply for a site closing certificate.
511. Section 316-311A
applies where operations for the injection and storage of a greenhouse gas
substance have been carried on in an injection licence area and all such
operations in the licence area have ceased. (In a licence area where there are
multiple identified greenhouse gas storage formations, operations must have
ceased in all of them for the operation of this section to be triggered. A
staged shut-down of operations at multiple storage formations in the one
licence area will be managed via the site plan until operations at the last
storage formation have ceased.) There is a further requirement that the
injection licensee have applied for a site closing certificate, or that the
licensee have been under an obligation to apply for a site closing certificate
and have failed to do so.
512. The
difference between the directions that the responsible Commonwealth Minister
can give under this section and those the Minister can give under section 316-311
and section 316-312 is that, as well as having the ordinary powers to
direct decommissioning work in the licence area, the responsible Commonwealth
Minister can direct the licensee to carry out work for the purpose of ensuring
that the injected greenhouse gas substance does not, in the future, cause
damage to the environment or other resources or cause injury or loss to other
users of the sea or risk to the health and safety of the offshore workforce.
513. The work
that a licensee is directed to carry out will include an extensive program of
monitoring of the behaviour of the injected greenhouse gas substance during the
site closing period. Examples of other kinds of work that can be directed
under section 316-311A, if circumstances warrant it, are: to plug old,
abandoned petroleum wells, or to carry out remediation work at other potential
weak spots, either in the identified greenhouse gas storage formation (ie in
the licence area) or in a geological formation or structure that is in the
projected migration path of the stored greenhouse gas substance perhaps many
years into the future. The actual activity required might take the form of
concreting, or recovering some of the greenhouse gas substance to relieve
pressure at a particular site or perhaps injecting greenhouse gas substance or
air or water to increase pressure at a site.
514. The
direction-giving powers are conferred by subsection (2).
Paragraph (a) is the ordinary power to direct removal or other disposal of
property brought into the licence area by the licensee. Paragraph (b) is
the ordinary power to direct the plugging of wells in the licence area, with
the important difference that the wells need not have been drilled under the
authority of the injection licence – they may be petroleum exploration wells
that were allowed to remain unplugged when a former petroleum title-holder
abandoned the site. Paragraph (c) is the ordinary power to require
provision for the conservation and protection of the natural resources in the
licence area. Paragraph (d) is the ordinary power to require the making
good of any damage to the seabed or subsoil in the licence area caused by any
person engaged in operations under the licence. Paragraph (e) confers an
express power (which would have been implied in any case) to require the
licensee to carry out operations to monitor the behaviour of the greenhouse gas
substance in the storage formation.
515. Paragraph (f)
is the new direction-giving power to require work in relation to the storage
formation. It extends to requiring any action for the purpose of dealing with
the risk that the injected greenhouse gas substance will have a significant
adverse impact on other users of the sea or seabed, the conservation or
exploitation of natural resources, the geotechnical integrity of a geological
formation or structure, the environment or human health or safety.
Paragraph (g) confers power to require work for the purpose of ensuring or
increasing the likelihood that the stored greenhouse gas substance will behave
as predicted in the site plan.
516. Subsection (6)
makes clear that directions under paragraphs (f) and (g) can require
the doing of something inside or outside the licence area.
517. Proposed
section 316-311B sets up a consultation process where the responsible
Commonwealth Minister proposes to give a direction to an injection licensee to
do something outside the licence area in an area over which another person
holds a greenhouse gas title. This will ensure that the responsible Commonwealth
Minister is fully informed of any risk that the directed action might pose for
the other title-holder's workforce, infrastructure and operations. It will
also ensure that the other title-holder can make the responsible Commonwealth
Minister aware of any matters that the title-holder wishes to have taken into
account by the Minister when framing the direction.
518. Proposed
section 316-312 provides the responsible Commonwealth Minister with the
same direction-giving powers as proposed section 316-311, except that
under this section the direction is given to a former holder of the title.
Proposed section 316-313
Responsible Commonwealth Minister may take action if there is a breach of a
direction
Proposed section 316-313 provides that, if a
direction given under proposed section 316-311A or 316-312 is not complied
with, the responsible Commonwealth Minister may carry out whatever work the
person subject to the direction failed to carry out and recover the costs from
that person. The section corresponds to existing section 313.
519. Proposed
section 316-314 makes provision for the responsible Commonwealth Minister
to remove, sell or otherwise dispose of property where a person has failed to
comply with a direction under proposed section 316-313. Proposed
section 316‑315 excludes any action, suit or proceeding, by a person
other than the Minister acting under subsection 316-314(4), in relation to
the removal, disposal or sale, or purported removal, disposal or sale, of
property under section 316-314. There is an exception in the case of an
action under proposed section 442D. Section 442D is the
'constitutional safety net' provision. It provides a right to compensation in
circumstances where the operation of the Act or the regulations would result in
an acquisition of property otherwise than on 'just terms' and the relevant
provision or provisions would for that reason be invalid by operation of
section 51(xxxi) of the Constitution.
520. This
amendment inserts a new heading before section 317: 'Division 1 – Petroleum',
which will establish a new Division 1 in Part 4.4 of the Act.
521. Part 4.4
is titled 'Offences and enforcement'. Division 1, constituting sections
317–322 of the Act (which are already in the Act, and are subject to only minor
amendments, set out below) will deal with offences and enforcement relating to
petroleum titles and operations.
522. A new
Division 2 will be inserted by item 216 (see below), which will deal with
offences and enforcement relating to greenhouse gas titles and operations.
That item will also establish a new Division 3, containing the current section
323 (with minor amendments). That Division will deal with the time for
bringing proceedings for offences, in relation to both petroleum and greenhouse
gas titles.
523. These
items provide for consequential amendments to section 317 (which currently
contains a simplified outline of Part 4.4, but after the amendments will
contain a simplified outline of Division 1 of Part 4.4) to reflect the changes
in the structure of Part 4.4 which are effected by Items 208 and 216. As
described above in relation to item 208, Part 4.4 will go from being a Part
without Divisions, which deals with offences and enforcement relating to
petroleum titles, to being a Part with three Divisions. The first Division
will deal with offences and enforcement relating to petroleum titles. The
second Division will deal with offences and enforcement relating to greenhouse
gas titles. The third Division, which will contain the current section 323,
will deal will the time for bringing proceedings for offences under both of
Divisions 1 and 2.
524. These
items provide for consequential amendments to sections which are in Part 4.4 of
the Act and which will, by operation of Item 208 (discussed above) become part
of Division 1 of that Part. The amendments insert the word 'petroleum' before
the words 'project', 'pipeline', 'pumping station', 'tank station' and 'valve
station' in various provisions in new Division 1, to make these terms
consistent with the other terms which refer to petroleum operations in the Act,
and to restrict the operation of those provisions to petroleum operations.
Greenhouse gas operations will be dealt with in new Division 2 of Part 4.4 (see
the notes to items 208 and 216).
525. This item
inserts new Division 2 into Part 4.4 of the Act, titled 'Greenhouse gas'. This
Division will deal with offences and enforcement relating to greenhouse gas
titles (offences and enforcement relating to petroleum titles are dealt with in
Division 1 of Part 4.4. See the notes to item 208 above). Notes on individual
sections are set out below.
526. This
section provides a simplified outline of Division 2 of Part 4.4. It is not an
operative provision of the Act.
527. This
section provides the responsible Commonwealth Minister with a power to appoint
greenhouse gas project inspectors, and requires the Minister to issue each
inspector with an identity card. The categories of persons from which
appointments may be made are set out in subsection (1).
528. An
inspector may perform functions such as observing engineering operations on
offshore facilities, but the most usual duties of an inspector would generally
relate to examining documentation held by the operators of those facilities.
Section 316-319 sets out the monitoring powers of inspectors. Other powers in
relation to information and documents are set out in section 406-409.
529. Inspectors
must carry their identity cards whenever they are exercising the powers or
functions of an inspector (subsection (4)). Subsection (3) is an offence
provision, which requires a person who ceases to be an inspector to return his
or her identity card to the responsible Commonwealth Minister (unless it has
been lost or destroyed). The maximum penalty for this offence is 5 penalty
units. The ex-inspector would bear the evidential burden in relation to
proving that the card was lost or stolen.
530. This
section sets out the monitoring powers that a greenhouse gas project inspector
may exercise for the purposes of the Act and regulations. These powers are
consistent with the monitoring powers conferred on mining inspectors, and
include wide-ranging access, inspection and testing rights in offshore areas,
including powers to inspect and take copies of documents relating to greenhouse
gas operations (subsection (2)). The occupier or person in charge of the
premises accessed by the inspector is required to provide the inspector with
all reasonable facilities and assistance for the exercise of the inspector's
powers (see subsection (7)). It is an offence not to comply with this
requirement, punishable by a maximum of 50 penalty units (subsection (8)).
531. A limited
power to access residential premises onshore (and to inspect and take copies of
documents from those premises) is also provided (subsections (3)-(6)). That
power may only be exercised with the consent of the occupier of the premises,
or under a warrant (see section 316-320 for when a warrant may be issued).
532. Inspectors
also have powers in relation to obtaining information and documents under
section 406-409. However, the exercise of those powers requires written notice
to be given to the person requested to provide the information or documents,
and providing at least 14 days for compliance with the request (see the notes
on section 406-409 below).
533. It is an
offence to obstruct or hinder an inspector in the exercise of his or her
powers, without a reasonable excuse (subsection (9). The defendant bears an
evidential burden in relation to proving the reasonable excuse). The maximum
penalty for this offence is 50 penalty units. The same conduct may be an
offence under this section and also under section 149.1 of the Criminal
Code, which deals with the obstruction of Commonwealth public officials.
The maximum penalty for that offence is imprisonment for two years.
534. This
section provides for the issue of a warrant to enter residential premises for
the purposes of exercising the powers under section 316-319(3) (see the notes
on that section above). The section requires certain information to be
provided in support of an application for a warrant, and provides for certain
conditions to be specified in the warrant (such as when the warrant may be
executed, and when the warrant ceases to have effect). These provisions are
consistent with other provisions providing for official entry into residential
premises in other Commonwealth legislation.
535. This
section is an offence provision. It provides for a maximum penalty of 10 years
imprisonment for engaging in conduct which results in damage or interference
with greenhouse gas structures, vessels, equipment and operations (as described
in subsection (1)). The severity of the penalty reflects the potentially
serious consequences of damage to, or interference with, facilities or
operations. This section is complemented by sections 329 and 331, which
prohibit vessels from navigating too close to offshore facilities through the
use of safety zones.
536. This
section relates to convictions for various offences including and relating to
unauthorised exploration for potential greenhouse gas storage formations or
injection sites (section 249AC), and unauthorised injection and storage of
greenhouse gas (section 249CC). The related offences are: being an accessory
after the fact (see section 6 of the Crimes Act) and the ancillary
offences (attempt, incitement or conspiracy) referred to in section 11.6 of the
Criminal Code.
537. The
section provides that, if a person is convicted of one of these offences, the
Court may make an order for the forfeiture of a specified aircraft or vessel,
or equipment, used in the commission of the offence. The Court may take
evidence in relation to these matters before making orders.
538. This
heading establishes a new Division 3 in Part 4.4, containing section 323 (Time
for bringing proceedings for offences), with minor amendments as set out in
items 217, 218 and 219. See the notes to item 216 in relation to the new
structure of Part 4.4.
539. These
items amend section 323, which deals with the timeframe in which proceedings
for offences under the Act may be brought. The items provide for section 323
to cover the new offences inserted into the Act by item 169 (insertion of new
Part 2A), item 191 (insertion of new Part 3A) and item 274 (insertion of new
Part 5A) respectively.
540. This item
amends the simplified outline of Part 4.5 to reflect the amendments made to
that Part by items 221-252. Broadly, those items rename and make minor
amendments to Division 2 of that Part to clarify that that Division applies in
relation to petroleum titles and operations, and insert a new Division 3, which
applies in relation to greenhouse gas titles and operations. Notes on those
items are set out below.
541. The
simplified outline is not an operative provision of the Act.
542. These
items amend the definitions in section 326 of the Act (Division 1 of Part 4.5)
to insert definitions relating to greenhouse gas titles and operations (which
are dealt with under new Division 2A of Part 4.5, see item 328 below), to
expand certain existing definitions to include references to greenhouse gas
titles and operations, and to restrict certain other existing definitions so
that they cover only petroleum titles and operations.
543. These
sections provide for the responsible Commonwealth Minister to declare that a
person is an authorised person for the purposes of Part 4.5. This reflects the
Minister's role in relation to the administration of the aspects of the Act
which deal with greenhouse gas titles and operations.
544. This item
amends the heading to Division 2 of Part 4.5. The heading currently reads
'Safety zones'. The new heading will be 'Petroleum safety zones'. Greenhouse
gas safety zones will be dealt with in new Division 2A (inserted by item 238).
545. These
items amend certain subsections of section 329, so that the terms used in that
section are consistent with the new definitions relating to petroleum titles
and operations in Division 1 of Part 4.5 of the Act (see notes to items 221–229
above).
546. This item
inserts a new Division 2A into Part 4.5. The new Division 2A is titled
'Greenhouse gas safety zones'. Petroleum safety zones are dealt with in
Division 2 of this Part. Notes on individual sections are set out below.
547. This
section authorises the responsible Commonwealth Minister to prohibit, by Gazette
notice, vessels from entering or being present in a greenhouse gas safety
zone (as set out in the notice) without the Minister's consent. The safety
zone may extend to 500m around a greenhouse gas well, a greenhouse gas
structure or greenhouse gas equipment which is specified in the notice. The
section provides for a range of offences relating to breaching the safety zone
prohibition (subsections (3), (5), (7) and (9)). The different offences are
based on different fault elements, with a maximum penalty of imprisonment for
15 years for the offence that has a fault element of intention. The offence
with a fault element of recklessness has a maximum penalty of 12.5 years, the
offence with a fault element of negligence has a maximum penalty of 10 years,
and the strict liability offence has a maximum penalty of 5 years.
548. This
provision is designed to ensure the safety of offshore greenhouse gas
installations and equipment. The significant penalties in the provision
recognise the potentially serious consequences of damage to, or interference
with, greenhouse gas facilities or operations. They are intended to act as a
deterrent to persons whose dangerous navigation or other conduct could place at
risk the lives of scores of people on board offshore structures.
549. These
items amend section 333 (Other powers of authorised persons) and 334 (Warrants)
to include references to new section 335-329, inserted by item 238 (see the
notes on that section above). These amendments will mean that authorised
persons will be able to exercise their powers in situations where there has
been, is or may be a contravention of that section, and warrants will be able
to be sought in respect of past, present or future contraventions of that
section.
550. This item
amends section 336, which is in Part 4.6 (Collection of fees and royalties),
Division 1 (Fees payable under the Annual Fees Act) of the Act. The amendment
extends the scope of the section to cover situations where a fee is payable
under the Annual Fees Act in relation to a year of the term of a work-bid
greenhouse gas assessment permit, a greenhouse gas holding lease, or a
greenhouse gas injection licence.
551. These
items amend section 339 to provide a specific reference to the provision of the
Annual Fees Act (that is, section 4) under which an amount may be due and
payable in relation to a year of the term of a petroleum title.
552. This item
adds a new section, equivalent to section 339, which covers amounts payable to
the Commonwealth under section 4A of the Annual Fees Act (that is, amounts in
relation to a year of the term of a greenhouse gas title set out in section
336(1).
553. This item
inserts a specific reference to the provisions of the Registration Fees Act
(that is, sections 5 and 6) under which a registration fee may be payable in
respect of a petroleum title.
554. This item
inserts a new section to provide that the fees payable under the Registration
Fees Act in relation to a greenhouse gas title (that is, under sections 6A and
6B of that Act) are payable to the Commonwealth.
555. Section
346 provides that the fees listed in that section are payable under the Act are
to be paid to the Designated Authority on behalf of the Commonwealth. The fees
currently listed all relate to petroleum titles.
556. Item 250
amends the section so that the current section content (that is, the
requirement to pay petroleum title fees to the Designated Authority) becomes
subsection (1). Item 251 inserts new subsection (2), which provides that the
fees payable under the Act set out in that subsection (which relate to
greenhouse gas titles) are payable to the Commonwealth.
557. One of
the major advantages of adopting the legislative approach of incorporating
greenhouse gas titles and injection and storage activities into the Offshore
Petroleum Act is that the occupational health and safety of the offshore
workforce engaged in the construction, operation, maintenance and
decommissioning of structures, vessels, pipelines and equipment used in
injection and storage operations and related operations can readily be brought
under the regulatory supervision of the National Offshore Petroleum Safety
Authority.
558. The
facilities and processes used in the recovery, preliminary processing and
transporting of petroleum are very much the same as those that will be used in
the transporting, offshore processing and injection of greenhouse gas
substances. Indeed, injecting substances into geological formations and
structures is already an important element in some offshore petroleum
projects. This means that the occupational health and safety risks to the
workforce engaged in offshore greenhouse gas operations will be well-known to
NOPSA and its OHS inspectors and that NOPSA is uniquely well-placed to take on
this new function.
559. Item 252
adds proposed section 316-321, which prohibits interfering with a
greenhouse gas installation or operation, to the 'listed OHS laws' that are
administered by NOPSA, to the extent that such interference has OHS
implications for the workforce.
560. Item 254
adds to the NOPSA-related definitions in section 353 a definition of
'Greenhouse Gas Storage Ministerial Council'. This is defined to mean a
Ministerial Council that deals with injection and storage of greenhouse gas
substances or, if there is no such body, the Ministerial Council on Mineral and
Petroleum Resources (MCMPR).
561. Item 256
inserts a definition of 'offshore greenhouse gas storage operations'. This
term corresponds to the term 'offshore petroleum operations', which is a main
delineator of the scope of NOPSA's regulatory responsibilities. Where
appropriate, references to 'offshore petroleum operations' in the Act,
including Schedule 3, will now have 'or offshore greenhouse gas storage
operations' added to them. 'Offshore greenhouse gas storage operations' is
defined as any 'regulated' operations (including diving operations) that relate
to greenhouse gas exploration, injection, storage, compression, processing,
offloading, piped conveyance or pre-injection storage of greenhouse gas and
monitoring of stored greenhouse gas in the seabed or subsoil.
NOPSA's regulatory responsibilities
in relation to greenhouse gas activities are confined to 'offshore greenhouse
gas storage operations' that, if they are diving operations, take place in
Commonwealth waters or, if they are not diving operations, take place in
Commonwealth waters and at a 'facility'. The term 'facility' is therefore the
other main delineator of the scope of NOPSA's regulatory responsibilities.
562. This item
replaces the current Chapter 5 heading ('Chapter 5 – Information') with the new
heading 'Chapter 5 – Information relating to petroleum'. This does not signify
a change in the scope of Chapter 5. Chapter 5 already deals with information
containing petroleum, and this will not change after passage of the Amending
Act. However, the Amending Act will also insert new Chapter 5A (see item 274,
discussed below), which deals with information relating to greenhouse gas.
This heading change is intended to assist the reader in this context.
563. These
items amend sections 406, 409, 411, 413, 414, 415 and 416 in Chapter 5 of the
Act. The sections are amended by inserting the word 'petroleum' before
references to 'projects' in those sections. These amendments confine the
information which is covered by those sections to information relating to
petroleum projects, so the provisions will not cover information relating to
greenhouse gas projects. Information relating to greenhouse gas projects will
be covered by provisions in new Chapter 5A (see item 274).
564. This item
inserts a new Chapter 5A into the Act, headed 'Information relating to
greenhouse gas'. New Chapter 5A will contain provisions relating to data
management and gathering of greenhouse gas information, and release of
regulatory and technical regulation relating to greenhouse gas projects.
565. Notes on
each of the proposed provisions in new Chapter 5A are set out below.
566. This item
inserts a short simplified outline of new Part 5A.1 of the Act. This is not an
operative provision of the Act.
567. This
section confers on the responsible Commonwealth Minister a power to give
directions to greenhouse gas title holders about documenting a greenhouse gas
operation, including by keeping accounts, records and other documents, and
collecting and retaining cores, cuttings and samples. The Minister may also
require the person to give those documents and other items to the Minister.
568. A person
commits an offence if the person is subject to a direction, the person omits to
do an act, and the omission breaches the direction. The maximum penalty for
the offence is 100 penalty units.
569. A
requirement under this section is additional to any requirements in regulations
made under proposed section 406-408 (discussed below).
570. This
section provides for regulations under the Act to make provision for data
collection and management relating to greenhouse gas operations, including the
giving of data and samples to the responsible Commonwealth Minister or another
person. The regulations may establish a scheme for requiring greenhouse gas
title holders to submit a data management plan in accordance with the
regulations, and to act in accordance with an approved data management plan.
571. Much of
the information and material collected through the operation of these
regulations will eventually become publicly available and potentially useful to
other persons and companies wishing to undertake greenhouse gas or petroleum
operations in the area.
572. If a
titleholder is subject to any requirement or requirements under section 406-407
(see above), that requirement or those requirements are additional to any
requirement or requirements in regulations made under this section (see
subsection 406-408(5)).
Proposed section 406-409 Responsible Commonwealth
Minister or greenhouse gas project inspector may obtain information and
documents
573. Whereas
the previous two sections deal with powers to require titleholders to collect
and manage data relating to greenhouse gas operations, this section provides
the responsible Commonwealth Minister or a greenhouse gas project inspector
with a power to require any person (which may be an individual or a
corporation, and not necessarily a titleholder) to provide factual information
which is relevant to the proper administration of the Act by way of documents
or oral or written evidence.
574. In order
to exercise this power, the Minister or inspector must provide the person with
a written notice setting out the details of the information to be provided, and
the manner and time of, or timeframe for, its provision. The notice must set
out the effect of the following offence provisions which relate to the giving
of evidence or information: subsection 406-409(5) (the offence provision for
this section); section 406-415 (giving false and misleading information);
section 406-416 (producing false or misleading documents); and section 406-417 (giving
false or misleading evidence).
575. A person
commits an offence if the person has been given a notice, and the person omits
to do an act, and the omission contravenes a requirement in the notice. The
maximum penalty for this offence is 100 penalty units.
576. See
proposed section 406-412 (discussed below) in relation to situations where the
giving of information or evidence, or producing a document, may tend to
incriminate the person required to comply with the requirement.
577. A person
who is given a notice which requires him or her to copy and produce documents
(see proposed section 406-409(2)(c), discussed above) is entitled to reasonable
compensation for complying with that requirement. This is a safeguard
provision to ensure that a requirement to make copies of documents under that
section does not effect an acquisition of property otherwise than on just
terms, contrary to the requirements of s 51(xxxi) of the Constitution.
578. If a
person is required to appear to give evidence to the responsible Commonwealth
Minister or a greenhouse gas project inspector under proposed section 406-409
(see above), this section provides that the Minister or inspector (as the case
may be) has power to administer an oath or affirmation to that person, and
examine that person on oath or affirmation. This could be appropriate, for
example, in the course of an investigation, to determine whether charges could
be laid against a person who is not the person giving evidence.
579. This
section relates to section 406-409. The section provides that a person who is
required to give information or evidence, or to produce a document under that
section, will not be excused from that requirement on the grounds that the
information, evidence or document might tend to incriminate the person or
expose the person to a penalty.
580. The
section also provides that the relevant information is not admissible in
evidence against the person in civil proceedings, or criminal proceedings
except in relation to offences against subsection 406-409(5) of the Act
(omission breaching a notice requirement); section 406-415 of the Act (giving
false and misleading information); section 406-416 of the Act (producing false
or misleading documents); section 406-417 of the Act (giving false or
misleading evidence), or section 137.1 or 137.2 of the Criminal Code, where the
proceedings relate to this Division of this Act.
581. This
partial immunity from legal consequences for the person increases the
likelihood of a successful investigation. In some circumstances, it may be
more important to establish the facts in relation to an incident than to use
the facts in a prosecution or other legal action.
582. This
section is relevant to sections 406-409. The section provides that the
responsible Commonwealth Minister or a greenhouse gas inspector may inspect a
document produced under this Division, and may make and retain copies of, or
take and retain extracts from, such a document.
Proposed section 406-414 Responsible Commonwealth
Minister or greenhouse gas project inspector may retain documents
583. This
section is also relevant to section 406-409. The section provides the
responsible Commonwealth Minister or a greenhouse gas project inspector (as
relevant) with a power to take possession of a document produced to that person
under this Division, and to retain it for as long as is reasonably necessary.
The section contains the same protections for the person who would otherwise be
entitled to the possession of the document as under section 298-291 (discussed
above). In particular, the person who would otherwise be entitled to
possession of the document is entitled to be supplied with a certified copy of
the document, and until a certified copy is supplied, the Minister or inspector
must provide that person (or another person authorised by the person) with
reasonable access to the document for purposes of inspecting the document, and
making copies of or taking extracts from it.
584. This
section, along with the following two provisions, is an offence provision. The
offence relates to the power of the responsible Commonwealth Minister or a
greenhouse gas project inspector to require a person to give information under
subsection 406-409(2). The section provides that a person commits an offence
if the person is required to give information under that subsection, and the
person gives information, and the person does so knowing that the information
is false or misleading in a material particular. The maximum penalty for this
offence is 100 penalty units.
585. The same
conduct may constitute an offence against both this section, and section 137.1
of the Criminal Code.
586. This is
another offence provision, which relates to providing documents in response to
a notice from the responsible Commonwealth Minister or a greenhouse gas project
inspector under subsection 406-409(2). The section provides that a person
commits an offence if the person has been given notice under that subsection,
the person produces a document to the Minister or inspector, in compliance or
purported compliance with the notice, and the person does so knowing that the
document is false or misleading in a material particular. The maximum penalty
for this offence is 100 penalty units.
587. The same
conduct may constitute an offence against both this section, and section 137.2
of the Criminal Code. However, the penalty for breaching section 137.2
may be up to 12 months imprisonment.
588. This
offence provision relates to notices given by the responsible Commonwealth
Minister or a greenhouse gas project inspector under subsection 406-409 which
require a person to give evidence. The section provides that a person commits
an offence if the person gives evidence to another person, the person does so
knowing that the evidence is false or misleading in a material particular, and
the evidence is given under section 406-409. The maximum penalty for this
offence is imprisonment for 12 months, consistent with the Criminal Code penalties
for knowingly providing false or misleading information or documents.
589. This
section provides that the responsible Commonwealth Minister must publish the
occurrence of certain events in the Gazette (along with such details of
the event as the Minister thinks fit). The events are set out in the table in
the section, and generally relate to the grant, renewal, variation, and expiry
(including through cancellation, surrender and termination) of various
greenhouse gas titles.
590. As
provided for in section 442 of the Act, if the event takes place in the
offshore area of a State or Territory, the event may be published in the
Government Gazette of that State or Territory, and will then be taken to have
been published in the (Commonwealth) Gazette. Publication in the
Commonwealth Gazette would generally take place where the event takes
place in the offshore area of an external territory.
591.
This Part deals in particular with information and samples which
fall within the definitions of documentary information and eligible
samples respectively. See sections 406-421 and 406-421A for
definitions of those terms, and related information.
592. This
section provides a short simplified outline of Part 5A.3. This section is not
an operative provision of the Act.
593. Proposed
section 406-421 provides definitions of the following terms used in Part 5A.3: applicable
document (which is related to the definition of documentary information);
documentary information, and eligible sample.
594. Proposed
section 406-421A relates to identifying which documents and samples fall within
the scope of the definitions of applicable document and eligible
sample. That section specifies certain documents and samples which are to
be disregarded in considering whether a document is an applicable document
or a sample is an eligible sample.
595. These
sections restrict what the responsible Commonwealth Minister may do with
documentary information and eligible samples. They do this by providing that
the Minister must not make documentary information publicly known or available
to any person, or make details of an eligible sample publicly known, or permit
a person to inspect an eligible sample, unless doing so falls within one of the
exceptions listed in these provisions.
596. The
exceptions are as follows. The Minister may make information and samples
available to Commonwealth, State and Northern Territory Ministers. The
Minister may make information and samples available to other persons (or
publicly) if this is done in accordance with the regulations, or for the
purposes of the administration of the Act or the regulations.
597. These
exception relating to Ministers provides for information to be provided,
without breaching the confidentiality requirement, to the Commonwealth Minister
who administers environmental legislation, or to other State and Territory
Ministers to ensure proper coordination of the various government agencies
which are concerned with Australia's marine jurisdiction.
598. The
exception which provides for data to be made public in accordance with the
regulations anticipates a scheme in the regulations for making much of the
technical information and material collected publicly available. Such
information would be potentially useful to other exploration companies with a
future interest in the areas over which the submitter of the information held a
title. If such a company began operations in the area under a new title, it
would be required to contribute to the database of technical information in
turn. However, there would generally be a period of delay between the receipt
of the information and it being available to members of the public under the
regulations.
599. This
section provides that the regulations may provide for fees relating to making
information and samples available to a member of the public (see paragraphs
406-422(2)(c) and 406-423(2)(c)). This provision enables the Commonwealth to recover
expenses incurred in giving this access (for example, the costs of staff time
in searching for the document or sample, photocopying and mailing).
600. The Privacy
Act 1988 (Privacy Act) deals with the management of personal information
(broadly, information about an individual), and provides various restrictions
on its disclosure (and other activities relating to personal information).
This section provides that Part 5A does not override any requirements of the
Privacy Act. This means that Part 5A will not provide for any exceptions to
the rules of non-disclosure in the Privacy Act. In particular, some provisions
of the Privacy Act provide for personal information to be disclosed if another
Act requires or authorises the disclosure of that information. This provision
makes it clear that Part 5A does not require or authorise the disclosure of
personal information.
601. Part 5A
provides for applicable documents to be able to be copied and provided to
members of the public and other Ministers (within the limitations set out in
the sections described above). Those documents may contain copyrighted literary
or artistic works. The copyright in those works would generally be owned by
the person or company that originally submitted the material. This section
operates so that the Minister can make and provide copies of those documents
without infringing the copyright in the documents.
602. Proposed
section 442B confers power on the responsible Commonwealth Minister to
delegate his or her function or powers to the Secretary of the Minister's
Department or an SES employee or acting SES employee in the Department. Subsection (3)
excludes from this power of delegation the functions or powers that the
Minister has under the principal Act as a member of the Joint Authority, or as
Designated Authority, for an offshore area. Those functions and powers relate
to petroleum titles and the applicable powers of delegation are in Part 1.3 of
the principal Act.
603. Proposed
section 442C is included for avoidance of doubt. It provides that an
express requirement in the Act that requires the responsible Commonwealth
Minister or the Joint Authority to have regard to the public interest when
making a particular decision does not, by implication, prevent the responsible
Commonwealth Minister, the Joint Authority or the Designated Authority from
having regard to the public interest when making other decisions. The public
interest is relevant to the exercise of many discretionary powers under the
Act, for example, the powers to approve transfers of titles and dealings in
titles under Chapters 3 and 3A.
604. Proposed
section 442D is the 'constitutional safety net' provision. It provides a
right to compensation in circumstances where the operation of the Act or the
regulations would result in an acquisition of property otherwise than on 'just
terms' and the relevant provision or provisions would for that reason be
invalid by operation of section 51(xxxi) of the Constitution.
605. Schedule
3 contains the provisions of the Offshore Petroleum Act that confer specific
powers and functions on NOPSA in relation to the occupational health and safety
of the offshore petroleum workforce. Items 291 to 296 extend NOPSA's specific
powers and functions to the workforce engaged in 'offshore greenhouse gas
storage operations'. This occurs mainly via the definition of 'facility' in clause 4
of Schedule 3.
Item 293 adds to the vessels or
structures that are 'facilities' vessels or structures used, or being prepared
for use, for a list of offshore greenhouse gas activities.
Offshore
Petroleum (Annual Fees) Amendment (Greenhouse Gas Storage) Bill 2008
Outline
606. The Offshore
Petroleum (Annual Fees) Act 2006 ('principal Act') requires the registered
holder of the following petroleum titles under the Offshore Petroleum
Act 2006:
a work-bid exploration permit;
a special exploration permit;
a retention lease;
a production licence;
an infrastructure licence; or
a pipeline licence;
to pay an annual fee for each year of the term of the
permit, lease or licence. The amount of the fee is specified in, or calculated
in accordance with, the regulations.
607. This Bill
amends the principal Act by adding greenhouse gas titles to the titles in
respect of which annual fees are payable.
Notes
on clauses
608. Item 1
changes the long title of the principal Act to:
An Act to provide for the payment
of annual fees for certain permits, leases and licences under the Offshore
Petroleum and Greenhouse Gas Storage Act 2006, and for related
purposes.
609. Item 2
changes the short title to:
Offshore Petroleum and
Greenhouse Gas Storage (Annual Fees) Act 2006.
610. Proposed
section 4A adds the following greenhouse gas titles to the titles in
respect of which annual fees are payable.
a work-bid greenhouse gas assessment
permit;
a greenhouse gas holding lease;
a greenhouse gas injection
licence.
Offshore
Petroleum (Safety Levies) Amendment (Greenhouse Gas Storage) Bill 2008
outline
611. The Offshore
Petroleum (Safety Levies) Act 2003 ('principal Act') imposes safety
investigation levy, safety case levy and pipeline safety management plan levy
in respect of petroleum facilities and petroleum pipelines in Commonwealth
waters and in State and Northern Territory designated coastal waters (ie in the
waters covered by the Commonwealth, State and Northern Territory Offshore
Petroleum Acts).
612. This Bill
amends the principal Act by extending the imposition of those levies to
greenhouse gas facilities and greenhouse gas pipelines.
Notes
on clauses
613. Item 1
changes the long title of the principal Act to:
An Act to impose safety
investigation levy, safety case levy, and pipeline safety management plan levy,
in relation to offshore petroleum and greenhouse gas facilities.
614. Item 2
changes the short title to:
Offshore Petroleum and
Greenhouse Gas Storage (Safety Levies) Act 2003.
615. The
remaining items of this Bill that make substantive amendments to the principal
Act do so by changing all references to the Offshore Petroleum Act 2006 to the Offshore
Petroleum and Greenhouse Gas Storage Act 2006.
616. The
effect of this, together with the amendments to the Offshore Petroleum
Act 2006 made by Offshore Petroleum Amendment (Greenhouse Gas Storage)
Bill 2008, is that the levies imposed by the principal Act will become
payable also in respect of greenhouse gas facilities and greenhouse gas
pipelines in Commonwealth waters.
617. The
levies will not become payable in respect of any greenhouse gas injection and
storage infrastructure in State or Northern Territory coastal waters, even
though the amendments made by this Bill will potentially extend the levies to
such facilities. This is because the States and Northern Territory are not at
present moving to extend the operation of their Offshore Petroleum Acts to
greenhouse gas injection and storage operations. The required State and Northern
Territory legislative underpinning that is necessary for these levies to apply
will therefore not be in place.
Offshore
Petroleum (Registration Fees) Amendment (Greenhouse Gas Storage Bill 2008
Outline
618. The Offshore
Petroleum (Registration Fees) Act 2006 ('principal Act') imposes fees
in respect of the entry in the Register of titles kept under section 253
of the Offshore Petroleum Act 2006 of a memorandum of the transfer
of a petroleum title or of an approval of a dealing in a petroleum title.
619. This Bill
amends the principal Act by adding greenhouse gas titles to the titles in
respect of which transfers and dealings will attract the imposition of
registration fees.
Notes
on clauses
620. Item 1
changes the long title of the principal Act to:
An Act to impose, as taxes, fees
for the registration under the Offshore Petroleum and Greenhouse Gas Storage
Act 2006 of transfers of titles and approvals of dealings
621. Item 3
changes the short title of the principal Act to:
Offshore Petroleum and
Greenhouse Gas Storage (Registration Fees) Act 2006.
622. Item 17
adds a new section 6A which imposes a fee in respect of the entry in the
Register kept under proposed section 298-253 of the Offshore Petroleum
and Greenhouse Gas Storage Act 2006 of a memorandum of the transfer of
a greenhouse gas title.
623. Item 17
also adds a new section 6B which imposes a fee on the entry in the
Register of the approval of a dealing in a greenhouse gas title.
AMENDMENTS TO OFFSHORE
PETROLEUM LEGISLATION TO PROVIDE FOR GREENHOUSE GAS TRANSPORT, INJECTION AND
STORAGE IN COMMONWEALTH WATERS
REGULATION IMPACT
STATEMENT
CONTENTS
1. Regulatory
proposal
2. Consultation
3. Implementing
the regulatory proposal in Commonwealth waters
3.1 Legislation
3.2 Management of release and award of
exploration areas
3.3 Management of the environment
3.4 Management of occupational health and
safety issues
3.5 Management of storage sites
3.6 Site closure
3.7 Transport
3.8 Long term liability
3.9 Bonds and guarantees
3.10 Interactions with petroleum
3.11 Other users of the ocean
3.12 The regulator
4. Compliance
costs
5. Review
6. Conclusions
AMENDMENTS TO OFFSHORE
PETROLEUM LEGISLATION TO PROVIDE FOR GREENHOUSE GAS TRANSPORT, INJECTION AND
STORAGE IN COMMONWEALTH WATERS
1.
REGULATORY PROPOSAL
Geological storage has been recognised
internationally as having important potential to significantly reduce
greenhouse gas emissions, and is integral to a number of emerging low-emission
energy and industrial technologies. However, while there is good understanding
of many of the technology issues, international experience of long term
geological storage is extremely limited. If expansion of the use of geological
storage is to be feasible, investors will require certainty about the
regulatory environment, and the public will require confidence that risks are
well controlled.
The Commonwealth Government has been working
towards the development of such regulation in Commonwealth waters, that is,
those areas seaward of three nautical miles and within Australia's continental shelf.
These areas are already the location of an active offshore petroleum industry,
which itself has rights to the subsurface provided by well established
petroleum law. The Commonwealth's regulatory proposal is for the introduction
of amendments to this petroleum legislation to regulate greenhouse gas
transport, injection and storage in these waters, in a way which balances those
rights with the needs of the community and potential investors.
Problem
The
problem to be addressed is how to apply best practice regulatory principles for
geological storage in Commonwealth waters.
Much
of the analysis of alternative regulatory approaches has already
been provided by COAG's Ministerial Council on Minerals and Petroleum
Resources (MCMPR), which in 2005 released Carbon Dioxide Capture and
Geological Storage: Australian Regulatory Guiding Principles, which
constituted a Regulation Impact Statement (RIS), which is available from www.ret.gov.au/general/resources-CCS.
Key decisions associated with the implementation of these guiding
principles in the case of Commonwealth legislative amendments are discussed
further in Section 3 below.
The
Regulatory Guiding Principles highlighted the challenges in reconciling views
of stakeholders in developing a regulatory approach. Since the release of
the MCMPR report the Commonwealth has continued to engage State/Territory and
other stakeholders with the view to better understanding stakeholder impacts
and ensuring consistency in any regulatory regime. This consultation process,
which is described in more detail in Section 2, has helped to address a number
of threshold implementation issues, but has also highlighted that many
stakeholders are withholding judgement on the regulatory proposal until they can
consider the detail of any draft legislative amendments. A key challenge
in addressing the problem will be providing stakeholders with sufficient detail
of the regulatory proposal so they can make informed comment on its impacts.
Scale of the Problem
The
risks associated with this regulatory proposal are that the framework may act
as a disincentive for petroleum or geological storage activities, that
geological storage activities might go ahead in a manner which damages other
rights or resources, or that the stored greenhouse gas is allowed to leak.
There are also the other risks common to the petroleum industry, in areas such
as health, safety or environment.
In
considering the regulatory proposal, the potential scale of a new greenhouse
gas transport, injection and storage industry in Commonwealth waters has to be
taken into account. There are likely to be only a relatively small number of
projects in offshore waters in the first five years. These projects, however,
are likely to be very large scale. Overall it estimated that no more than ten
release areas would be the subject of substantial evaluation as storage
opportunities in this timeframe. The number of projects to progress to
injection and storage is likely to be no more than half this.
Experience
with the permanent storage of large quantities of gases is limited. However
greenhouse gas transport, injection and storage activities are expected to be
close analogues to offshore petroleum in scale and complexity. Exploration
will cost from hundreds of thousands to multiple millions of dollars, and the
costs of a greenhouse gas transport, injection and storage project would be in
terms of hundreds of millions or some billions of dollars. Experience from the
petroleum industry suggests such projects necessitate some complexity in
regulation.
Issues Not Covered in this RIS:
Regulations and Guidelines
It should be stressed that the Government has
yet to make any decision on the regulations and guidelines to
cover things such as public interest tests, impact significance tests,
assessments and approvals, monitoring and verification, financial issues and
post closure responsibility. Aside from acknowledging those used in offshore
petroleum as a useful starting point for many of these instruments, it appeared
inappropriate to pursue this level of detail without first soliciting clearer
feedback from stakeholders on the proposed legislative amendments. As a
consequence, many issues relating to the final cost of regulation also cannot
be assessed at this stage, and will be the subject of a future analysis.
Objectives
The
aim of the legislation is to provide an enabling framework for objective-based
regulation which will allow a new greenhouse gas transport, injection and
storage industry to operate in Commonwealth waters while:
- meeting
the industries’ need for investment certainty;
- meeting
community expectations by addressing issues such as safe and secure
storage of greenhouse gases, protection of the environment and
occupational health and safety;
- providing
a system for managing the rights and needs of other users of the sea and
the subsurface (including the offshore petroleum industry);
- providing
a modern regulatory regime that encourages best practice and continuous
improvement.
The success in meeting these objectives will be
tested, in this stage of the process, through stakeholder comments on the
exposure draft of the legislation. In the next stage of the process,
stakeholder comments on the details of regulations and guidelines, when these
are developed, will provide a further measure of appropriateness of the
framework. Stakeholder reaction when individual projects are being developed
and are subject to the regulatory process will provide a final test. We would
also propose that the legislation be reviewed five years after it commences.
2.
CONSULTATION
Following
the release of the Regulatory Guiding Principals, the MCMPR Contact Officers
Group met in April 2006 to begin work on a discussion paper addressing the
implementation of a national regulatory regime for carbon capture and storage
(CCS) projects in Australia. The MCMPR Contact Officers Group drew membership
from the Commonwealth and each State and Territory, with each member
responsible for consolidating comments raised from consultation within their
jurisdiction.
In
early July 2006, a draft of the discussion paper entitled "Implementing
an Australian Regulatory Framework for Carbon Capture and Geological Storage"
was circulated by the Contact Officers Group, setting out options on how the
Regulatory Guiding Principles might be applied to greenhouse gas injection and
storage in Commonwealth waters.
This
draft paper was circulated to members of both the Inter-Departmental Committee
(IDC) on CCS and the CCS Stakeholders Group (see below for membership),
inviting comment. A CCS Stakeholder Group meeting was held on 26 July 2006 to
discuss the draft paper and assist in clarifying any issues or concerns held by
stakeholders on the proposal. Following from the meeting, the then DITR invited
formal submissions from stakeholders on the proposed legislative model
described in the draft discussion paper.
Nine
submissions were received in response to the paper. Some petroleum companies
were concerned that, despite the proposed no significant negative impact test,
greenhouse gas injection operations could still impact adversely on their
activities. Other non-petroleum companies were concerned that the ‘no
significant impact test’ could effectively quarantine prospective storage sites
for many decades. Many stakeholders highlighted the importance of the
Government in providing further detail of its proposed legislation to allow
better assessment of how these concerns would be addressed. Specific issues are
discussed further under Section 3 of this statement. In general, the
submissions were supportive of the regulatory model as it related to proposed
legislative amendments.
On
28 July 2006 the MCMPR Standing Committee of Officials (SCO) gave in principle
support to the legislative model presented in the discussion paper. However,
full endorsement was not given due to outstanding issues associated with
overlapping rights, managing conflict over property rights, and clarification of
long term liability and decommissioning.
Following on from this SCO meeting, the
Contact Officers Group undertook to revise the CCS discussion paper based upon
stakeholder comments, separately outlining the proposed legislative framework
for access and property rights for CCS in offshore Commonwealth jurisdiction
and summarising the further work required to underpin the legislation,
particularly long term liability and decommissioning issues.
The
finalised discussion paper "Implementing an Australian Regulatory
Framework" was endorsed out of session by the SCO group in November 2006.
The main elements of this framework were:
·
the
use of existing Commonwealth legislation (the Offshore Petroleum Act 2006)
to provide a regime for access and property rights similar to those used for
petroleum.
·
an
acreage release system similar to that used for petroleum;
·
protection
of the rights of pre-commencement petroleum title holders by requiring the
greenhouse gas operator to satisfy the regulator that there would be no
significant adverse impact on petroleum operations;
·
for
post commencement titles, a public interest test to decide which activity
should proceed, if the petroleum and greenhouse gas operations could not
co-exist;
·
a
closure procedure which involved post-injection monitoring to provide the
regulator with assurance that the injected substance was behaving as predicted
before the operator could relinquish the title.
A
working group consisting of representation from the then DITR, the Australian
Government Solicitor and Geoscience Australia, commenced development of
drafting instructions for the legislation in early 2007 with drafting of the
proposed legislation ongoing through 2007.
A
meeting of the MCMPR Contact Officers Group was held in March 2007 to discuss
regulatory requirements and report on progress of the drafting of proposed CCS
legislation. In June 2007, the Environmental Protection and Heritage Council
Standing Committee of Officials (EPHC) agreed to progress the development of
nationally consistent guidelines for the environmental assessment and
regulation of carbon dioxide and geological storage and to establish a Joint
Officials Working Group co chaired by the MCMPR and the EPHC.
Following
substantial completion of the exposure draft of the proposed legislation, an
IDC meeting was held on 12 November 2007 to provide an overview and invite
comment on the exposure draft prior to release for broader public consultation.
No significant comments were received.
3.
IMPLEMENTING THE REGULATORY PROPOSAL IN COMMONWEALTH WATERS
The
2005 Regulatory Guiding Principles highlighted a number of areas which
required careful consideration in preparing regulation on carbon capture and
storage. Work to implement a regulatory framework identified 12 threshold
questions that had to be addressed. Some of these had been addressed in a
general sense in the 2005 RIS. Thus, in some cases the questions become ones
of what regulation should be used, while in other cases the question of whether
regulation is needed also had to be addressed. In its regulatory proposal the
Commonwealth has endeavoured to answer these implementation questions in the
specific circumstance of Commonwealth waters, while trying to ensure
consistency with any eventual State/Territory regime. As was the case when the
regulatory principles were first developed, there is little international
experience in this type of regulation which is relevant to Australia, so many of these
choices have been made from first principles.
The
questions were:
1) What legislation should
be used to provide the access and property rights?
2) What management system
is needed for the release and award of exploration areas?
3) What regulation is
needed to manage environmental issues?
4) What regulation is
needed to manage occupational health and safety issues?
5) What regulation is
needed for site management, including monitoring and verification, serious
situations, and reporting?
6) What, if any, regulation
is needed in respect of site closure?
7) What regulation is needed
to manage transport?
8) What, if any, regulation
is needed in respect of long term liability?
9) What, if any, regulation
is needed in respect of performance bonds and guarantees?
10) What, if any, regulation
is needed to manage interactions with the petroleum industry?
11) What, if any, regulation
is needed to manage interactions with other users of the sea?
12) Who should be the
regulator?
The
issues and the approaches to them are closely interrelated. Thus, for example,
the choice of the legislative model is likely to have major implications for
the form of much of the required regulation. At a different level,
arrangements relating to monitoring and verification will be closely linked to
the expected behaviour of the greenhouse gas substance in the reservoir which
will dictate in large part the options for dealing with serious situations.
Approaches
to these issues are analysed below.
3.1. Legislation
The
2005 RIS concluded that legislation is required to increase industry certainty,
increase clarity as to community expectations, increase consistency and
transparency and reduce risks to the environment, health and safety.
To
implement this conclusion for Commonwealth waters, four options were
considered:
·
Project
specific legislation;
·
Stand
alone legislation;
·
Amendments
to the Offshore Petroleum Act 2006 to provide a legislative framework
for greenhouse gas injection and storage;
·
Amendments
to some other existing legislation.
Handling
all the issues requiring legislation in a single framework is desirable. Such
an approach will significantly reduce complexity and is consistent with the
Guiding Principle of adapting existing systems where possible.
Project
specific legislation
Project
specific legislation could be developed. However the nature of greenhouse gas
storage and injection projects is likely to be such that each one would have to
be developed on a case-by-case basis for defined projects. As a result,
project proponents would have no certainty as to their future access until
after they had undertaken considerable initial exploration. Moreover, there
remains the question of under what framework initial exploration activities
would be undertaken. Other issues include the time required for new
legislation each time a new project was proposed and the very cumbersome
arrangements that would be needed to manage project variations or changes in
expected practices. In addition, such an approach would be unlikely to provide
for consistent regulation of projects.
This
option is not consistent with the use of established legislative and regulatory
arrangements as concluded in the guiding principles.
Stand
alone legislation
Stand
alone legislation is feasible and could provide a clean platform for a
regulatory framework which avoids perceptions of the greenhouse gas transport,
injection and storage legislation being the province of the petroleum industry.
Stand
alone legislation would require a large amount of subordinate regulation
relating to issues such as the environment and occupational health and safety
compared with the use of an existing platform.
Managing
the interactions between the greenhouse gas industry and the petroleum industry
will require substantive amendments to the OPA in relation to post-commencement
petroleum titles (see section on interactions with the petroleum industry
below). Management of these interactions will be greatly simplified if these
arrangements are covered by a single regulatory framework.
The
use of separate legislation also raises the question of ‘future proofing’ of
the regulatory system. It gives less certainty that all matters relating to
any future amendments to legislation or regulations dealing with either
greenhouse gas activities or petroleum activities, will take the other industry
into account.
Stand
alone legislation could also be developed as a ‘satellite act’ of the OPA which
would allow the many definitions and subsidiary regulation of the OPA to be
used, thus addressing the above issues. Such an Act would operate by invoking
the OPA for the many definitional issues that arise. However, any company
wishing to undertake greenhouse gas transport, injection and storage would have
to refer to both Acts, with some matters potentially being addressed in one and
some in another. This has the potential to lead to confusion as to which Act
applies in specific circumstances, especially in relation to managing
interactions with the petroleum industry, where different aspects of many
relevant matters would appear in different Acts. The option of a satellite Act
was therefore discarded as being cumbersome and potentially inefficient.
Stand
alone legislation is not consistent with the conclusion of the 2005 RIS that
established legislative and regulatory arrangements should be used wherever
possible.
Amendment
of the
Offshore Petroleum Act 2006
The
Offshore Petroleum Act 2006 (OPA) will replace the existing Petroleum
(Submerged Lands) Act 1967 (PSLA) as soon as certain (minor)
State/Territory procedures are completed. This is expected to happen during
the first half of 2008.
The
existing access and property rights arrangements provided to the petroleum
industry through the PSLA have been operating since 1967 and have proven to be
effective and efficient. This is demonstrated through petroleum industry
investment in exploration of oil and gas in Australia’s offshore areas. It has also proven an
effective mechanism for the administration of activities.
Most
of the technologies, equipment and techniques used for greenhouse gas injection
and storage will be effectively identical to those in common use in the
petroleum industry. These include such activities as acquiring seismic data,
drilling of wells, and the transport and handling of large quantities of
fluids. Offshore petroleum production facilities will also have a great deal
in common with offshore greenhouse gas injection facilities, including the
basic structural, equipment associated with wellheads and compressors.
Worldwide,
the petroleum industry has significant relevant experience, including injection
of:
·
large
quantities of natural gas (predominately methane) either for permanent disposal
of natural gas that is produced associated with crude oil in remote areas where
there is no market for the natural gas;
·
as
part of gas recycling projects where natural gas is reinjected to increase the
volume of liquids produced;
·
carbon
dioxide for enhanced hydrocarbon recovery;
·
carbon
dioxide for disposal.
In
engineering terms, such operations are almost identical to the transport and
injection of greenhouse gases. However, experience with permanent storage is
limited.
The
OPA provides a framework which already addresses most of the activities
identified as needing regulation above in regards to petroleum. Many of the
areas identified by the 2005 RIS as requiring government regulation are very
similar to matters dealt with under the OPA in respect of petroleum.
Currently,
regulation under the PSLA applies to these activities when undertaken as part
of petroleum operations. These regulations under the PSLA relating to
petroleum will be replaced with similar regulations under the OPA.
Existing
regulation under the PSLA includes:
http://www.industry.gov.au/content/itrinternet/cmscontent.cfm?objectID=D8E4D206-65BF-4956-B390E074A736B139Petroleum (Submerged
Lands) (Management of Well Operations) Regulations 2004
Petroleum (Submerged
Lands) (Data Management) Regulations 2004
Petroleum (Submerged
Lands) (Management of Safety on Offshore Facilities) Regulations 1996
Petroleum (Submerged
Lands) (Occupational Health and Safety) Regulations 1993
Petroleum (Submerged
Lands) (Management of Environment) Regulations 1999
Petroleum (Submerged
Lands) (Pipelines) Regulations 2001
Petroleum (Submerged
Lands) (Datum) Regulations 2002
Petroleum (Submerged
Lands) Regulations 1985
Petroleum (Submerged
Lands) (Diving Safety) Regulations 2002
Because
of the similarity of the industries, these regulations could be extended to
regulate identical activities undertaken as greenhouse gas transport, injection
and storage operations.
These
regulations are currently being reviewed with the aim of consolidation into a
lesser number of regulations, removal of any inconsistencies and to streamline
approvals processes. The outcome of this review will apply equally to
greenhouse gas transport, injection and storage regulation.
Many
of the companies undertaking greenhouse gas transport, injection and storage
are expected to be petroleum companies, acting either to store greenhouse gases
that they have produced or as an agent (or partner) of the generating industry.
Incorporating
the amendments into the OPA will increase the length of this already large
Act. While the use of the OPA could lead to perceptions that greenhouse gas
transport, injection and storage is solely the province of the petroleum
industry, it is inevitable that there will be significant interactions between
the greenhouse gas injection and storage and the petroleum industries.
Bringing all requirements within a single Act will make reference and cross
reference easier for users.
Amendments
to other legislation
Other
legislation that was considered included the Environmental Protection and
Biodiversity Conservation Act 1999 (EPBC) and the Environment Protection
(Sea Dumping) Act 1981.
The
EPBC Act may be triggered by projects or activities which are likely to have a
significant impact on matters of national environmental significance including
the Commonwealth marine environment. Greenhouse gas injection and storage
projects could trigger the Act, but some aspects of exploration may not have
significant impacts on the environment. The EPBC Act applies to specific
environmental matters only and does not provide any basis for an access and property
rights regime.
The
Sea Dumping Act puts into effect the requirements of the 1996 Protocol
to the London Convention on the Prevention of Marine Pollution by Dumping of
Wastes and Other Matter (the London Protocol). The injection and storage
of greenhouse gases in offshore areas will require approval under the Sea
Dumping Act. However, like the EPBC, it provides no basis for an access and
property rights regime.
The
Offshore Minerals Act 1999 could also provide a basis. While it could
be used to establish an access and property rights regime, there are few of the
synergies that are available from using the OPA.
Amendment
of these Acts, therefore, would require new sections which would be effectively
indistinguishable from stand alone legislation.
Conclusions
|
|
Potential
Disadvantages
|
Potential
Advantages
|
|
Project
Specific Legislation
|
Problems
of consistency, industry certainty
|
|
|
Stand
Alone Legislation
|
Requires
a new framework for providing access and property rights
Will
require extensive cross reference to the OPA to manage interactions with the
petroleum industry
|
Single
purpose legislation will be shorter
|
|
Offshore
Petroleum Act
|
Act
becomes very large
Could
be perceived as making greenhouse matters the province of the petroleum
industry
|
Draws
on well established and understood framework for providing and managing
access and property rights
Provides
potential for using much of the same management framework, thus reducing the
need for new sets regulations, dealing with what are essentially identical
activities
Provides
for integrated management of any issues relating to integration with
petroleum activities
|
|
Use
different Legislation
|
No
other legislation provides a basis for providing and administering access and
property rights
|
|
Recommendation
That
the regulatory framework for greenhouse gas transport, injection and storage be
implemented by amending the OPA and its attendant regulations to deal with the
many aspects of a greenhouse storage project would have in common with
petroleum industry operations.
3.2. Management of
Release and Award of Exploration Areas
The
management and award of exploration areas to prospective greenhouse gas
operators was not addressed directly in the 2005 RIS. Nevertheless, any system
of access and property rights will need a system to determine who obtains those
rights.
Work
to date, especially the GEODISC project, has identified areas which may provide
suitable storage sites and made an estimate of Australia’s potential storage capacity. In some
cases, more specific site studies have been undertaken by the Cooperative
Research Centre for Greenhouse Gas Technologies (CO2CRC). This pre-competitive
geoscientific work provides a starting point for the detailed evaluation of
specific sites, which involve data acquisition and analysis, that is needed to
prove up sites to the level required.
There
are two basic options for allocating areas to prospective greenhouse gas
operators so that they can explore for and assess storage sites which they may
then use for storage operations:
·
direct
allocation to potential users based on some criteria such as perceived need;
·
some
form of competitive process allowing selection of a winning bid.
A
competitive process is used for petroleum titles in Commonwealth waters, which
commences with the selection of areas for release for bidding by companies
wishing to explore that area. Selection is based on the geological potential
of the area to contain hydrocarbons, and on taking into consideration possible
impacts on environmental values and other activities, such as fisheries,
navigation and defence. This process provides a basis for deciding what areas
are to be released and what, if any, special conditions may apply. The areas
are then released for bids and allocated on the basis of published selection
criteria. Bids are assessed in terms of the work program commitments that
bidders make and a requirement of the title is that these work programs be
met. This process has been in use for many years and is proven and effective.
The
OPA also makes provision for the use of cash bidding (which involves bidders
tendering a ‘cash’ amount for the rights to the area). These provisions are
rarely used.
A
similar process could be used for greenhouse gas exploration titles. It is
proposed that allocation would be based on work program bidding or cash bidding
in the same way as for petroleum.
Initial
screening of areas prior to release will be essential to avoid potentially
intractable issues after areas have been awarded. This will be required
irrespective of the allocation process chosen to ensure that areas are
appropriate and the needs of other users of the sea are taken into account.
An
alternative to the competitive bidding processes is the direct allocation of
areas to project proponents. This would provide greater certainty to potential
greenhouse gas transport, injection and storage proponents at an early stage.
However, it is not an open and transparent process and could leave the
regulator in the position of being concerned that the operator is not
necessarily the best qualified to assess and operate the site. This lack of
transparency would likely lead to strong criticism and claims of
discrimination.
This
basic model was put forward in the 2006 document Implementing an Australian
Regulatory Framework for Carbon Capture and Storage and drew a variety of
comment from stakeholders.
Some
stakeholders have argued that some prospective areas for greenhouse gas storage
should be allocated directly to potential greenhouse storage companies. This
was put forward as a means of reducing uncertainty about access to sites and to
promote a more rapid uptake of greenhouse gas storage technology. Some of
these proponents have also argued that, given the need to reduce greenhouse gas
emissions, this allocation should be based purely on public interest and
possibly over-ride the rights of pre-commencement petroleum titles.
Overall,
it is expected that the market, operating in tandem with a bidding system
should provide the best results. To capitalise on the investment in assessing
a greenhouse storage site, the operator would have a very strong incentive to
do business with a greenhouse gas producer (and vice versa).
Substantial
further feedback from stakeholders is expected when the exposure draft of the
legislation is released.
Conclusion
The
advantages and disadvantages of the options are:
|
|
Potential
disadvantages
|
Potential
advantages
|
|
Competitive
bidding process
|
Less
certainty for greenhouse gas storage proponents
|
Provides
a transparent market based process for allocation of areas
|
|
Direct
allocation of areas
|
Not
a transparent process
No
assurance that the ‘best’ potential applicant is awarded the area
|
Provides
greenhouse storage proponents with greater certainty as to access
|
Recommendation
That
the release and award of areas for exploration for greenhouse gas storage sites
use a competitive process similar to that used for petroleum.
3.3.
Management of the Environment
Environmental
risks for an offshore greenhouse gas transport, injection and storage industry
will be very similar to those for the petroleum operations. These risks
include disturbance of habitat during construction, operation and
decommissioning and potential impacts on migratory species. There are also be
specialised risks associated with the impact on any leakage of greenhouse gases
to the environment, including, for example, the potential impacts of
acidification of water. This, however, is offset by the much lower risk of
petroleum spills to the environment, compared with the petroleum industry.
Ensuring that risks are managed is an essential consideration. This is
particularly the case given that the storage of greenhouse gases is a new
industry where there is no significant practical experience.
Environmental management
was one of the matters considered in the 2005 RIS as part of the assessment and
approvals process section. The RIS concluded that a “consistent management approach,
which minimises risks associated with CCS processes, should be applied to
assessment and approval processes for CCS. This would best be achieved through
regulation .… whereby existing regulation be amended or added to as appropriate
… and provides for similar treatment to other comparable industries.”
In
the absence of clear, consistent and transparent environmental management
framework, it will be difficult for operators to perform in a way that meets
the expectations of the community.
Given
that the 2005 RIS concluded that regulation is required, there are two options:
. Use
of arrangements similar to those used for the offshore petroleum industry;
. Development
of new arrangements.
Under
existing arrangements for the offshore petroleum industry environmental management
is undertaken through the Environmental Protection and Biodiversity
Conservation Act (EPBC) and the Environment Protection (Sea Dumping) Act
1981 together with Petroleum
(Submerged Lands) (Management of Environment) Regulations 1999. Major
offshore projects usually require an impact assessment process. Conditions are
usually applied to the project as an outcome of this process. The existing
petroleum regulations are outcome focussed and have been designed to promote
the adoption of emerging best practice.
Experience
of applying these three streams of management in the petroleum industry has
resulted in a system which minimises overlaps, while providing an integrated
approach to environmental management.
Developing
new arrangements would only duplicate existing arrangements. Unless
specifically over-ruled, the EPBC Act and the Sea Dumping Act will continue to
apply to offshore greenhouse gas, transport and injection projects. No purpose
is seen in making such an exception, as they would need to be replaced by
equivalent new regulation. Similarly, no useful purpose would be served in
replacing the Petroleum
(Submerged Lands) (Management of Environment) Regulations 1999, with a new
system for managing environmental issues.
No
specific comments have been received from stakeholders on this proposed
approach.
There
will, however, be a need to address issues relating specifically to the safe
and secure storage of CO2. This is addressed in Section 3.5.
Conclusions
The
advantages and disadvantages of the options are:
|
|
Potential
disadvantages
|
Potential
advantages
|
|
Use
of petroleum industry model
|
|
Improved
efficiency through the use of proven system
|
|
Develop
new arrangements
|
Would
require duplication of existing arrangements
|
|
Recommendation
That
management of environmental impacts (excluding issues relating to the safe and
secure storage of the greenhouse gas substance) be done using the existing
framework applied to petroleum activities.
3.4.
Management of Occupational Health and Safety Issues
There
are potential occupational health and safety risks associated with most
industrial processes. Greenhouse gas transport, injection and storage is no
exception. Occupational health and safety risks for an offshore greenhouse gas
transport, injection and storage industry will be very similar to those for the
petroleum operations, involving many processes and activities in common.
Ensuring that these risks are managed is an essential consideration. This is
particularly the case given that the storage of greenhouse gases is a new
industry where the is very limited practical experience.
Occupational
health and safety was one of the matters considered in the 2005 RIS as part of
the assessment and approvals process section. The RIS concluded that a “consistent
management approach, which minimises risks associated with CCS processes,
should be applied to assessment and approval processes for CCS. This would
best be achieved through regulation .… whereby existing regulation be amended
or added to as appropriate … and provides for similar treatment to other
comparable industries.
In
the absence of clear, consistent and a transparent management framework, it
will be difficult for operators to perform in a way that meets the expectations
of the community.
Given
that the 2005 RIS concluded that regulation is required, there are two options:
- Use
of arrangements similar to those used for the offshore petroleum industry;
- Development
of new arrangements.
Existing
arrangements for the offshore petroleum industry involve an occupational health
and safety process, which is undertaken through the National Offshore Petroleum
Authority (NOPSA). NOPSA was established in 2005 to introduce best practice to
occupational health and safety outcomes for Australia’s offshore petroleum industry. As part of this
process, conditions are usually applied to the project.
Overall,
for the greenhouse gas industry, compliance with occupational health and safety
requirements is likely to be slightly less onerous than compliance for
petroleum operations due to the fact that CO2 in not flammable. However, a
minor additional matter for consideration would be that greenhouse gas
transport, injection and storage is a new industry and the expertise required
to identify any unique features, for example, failure modes, may require the
development of expertise not currently held by proponents.
The
role of NOPSA could be expanded to include greenhouse transport, injection and
storage within its scope of activities.
Any
other approach would require additional legislation and regulation covering
essentially identical activities and the establishment of a body to undertake
the regulation which would require the same skill set as are already available
in NOPSA (noting that these skills are both expensive and in short supply).
This approach would inevitably lead to increased costs.
No
specific comments have been received from stakeholders on this proposed
approach.
Conclusions
The
advantages and disadvantages of the options are:
|
|
Potential
disadvantages
|
Potential
advantages
|
|
Use
of petroleum industry model
|
|
Improved
efficiency through the use of proven system
|
|
Develop
new arrangements
|
Would
require duplication of existing petroleum arrangements
Issue
of access to expertise
|
|
Recommendation
That
management of occupational health and safety issues be done using the existing
framework and institutions applied to petroleum activities.
3.5.
Management of Storage Sites
Leakage
from storage sites poses possible environmental and health risks. It also has
the potential to partially negate the purpose of storage which is to prevent
emission of greenhouse gases to the atmosphere. In addition, even if no
leakage of greenhouse gas to the environment occurs, undesirable migration
could impact adversely on other resources, such as petroleum or potable water.
Careful
site selection and effective regulatory oversight was identified by the
Intergovernmental Panel on Climate Change Report (available from http://www.ipcc-wg2.org/index.html)
as fundamental to ensuring safe and secure storage. Numerous specialists have
also reached the conclusion that, with appropriate site selection and effective
monitoring and verification, the probability of leakage is very low. However,
the potential scale of costs for remediation could be high. This is also the
area where community concerns are likely to be high.
Characterisation
and management of storage sites was one of the matters considered in the 2005
RIS as part of the assessment and approvals process section. The RIS concluded
that a “consistent management approach, which minimises risks associated with
CCS processes, should be applied to assessment and approval processes for CCS.
This would best be achieved through regulation .… whereby existing regulation
be amended or added to as appropriate … and provides for similar treatment to
other comparable industries.”
There
is no existing regulation that could readily be adapted for this purpose.
However, the administration of the offshore petroleum industry involves the
approval of field development plans which provides a plan for how the resource
will be produced and the field managed.
Given
that the 2005 RIS concluded that regulation is required, the issue is one of
what type of regulation this should be. There are two basic options:
- The
proponent submits a plan to the regulator for approval for managing the
site using outcome oriented criteria;
- prescriptive
management plans overseen by the regulator.
Prescriptive
criteria are not well suited to situations where the circumstances of each
individual project are likely to be quite different (for example, different
quantities and injection rates, different geology). Each one will need to be
considered on a case-by-case basis. What might be an acceptable deviation in
the migration path of the injected substance in one case, might pose
unacceptable risks in another. Moreover, the lack of practical experience with
greenhouse transport, injection and storage projects would make it effectively
impossible to develop sensible prescriptive criteria.
An
outcome oriented approach to regulation will allow site specific factors to be
taken into account and provide a basis for the adoption of emerging best
practice.
As
a result, an outcome oriented approach is preferred, analogous to that used for
offshore petroleum field development plans. Thus, the proposed legislation
requires an operator to lodge a comprehensive site plan for approval before
activities can proceed. Such a site plan would have to demonstrate, to the
satisfaction of the regulator, that the site and its management would result in
‘safe and secure’ storage. The site plan would need to identify risk factors
and show that risks had been reduced as low as reasonable practical. The
regulator would then have to decide whether these risks, taking into account
potential mitigation and remediation strategies, were acceptable.
While
this part of a site plan would be large, requiring substantial data acquisition
as background, and its analysis, this work would have to be undertaken by any
responsible operator, irrespective of whether or not is was required by
regulation. As a result, the actual compliance cost would be modest, involving
the preparation of the plan in a form acceptable to the regulator (but based
entirely on internal work that the operator would have had to undertake in any
event) and its submission.
No
formal comments have been received from stakeholders on this proposal, but
informal discussions have been supportive.
Conclusions
The
advantages and disadvantages of the options are:
|
|
Potential
disadvantages
|
Potential
advantages
|
|
Use
of site plan model
|
Lower
certainty as to regulator requirements
|
Allows
for use of objective based regulation
Provides
flexibility to deal with site specific factors
Allows
for rapid adoption of best practice and new technologies
|
|
Use
of prescriptive regulation
|
Does
not provide site specific flexibility
Does
not allow for improvements in best practice
Creates
high levels of duty of care responsibilities for the regulator
|
Better
certainty of regulator requirements
Simplifies
submission and approvals process, but not necessarily outcomes
|
Recommendation
That
a greenhouse gas injection licence not be granted until a project specific site
plan is approved by the regulator. The plan should contain detailed modelling of
the expected behaviour of the greenhouse gas substance after injection,
including the expected migration path or paths.
Monitoring
and verification
Monitoring
and verification is required to ensure operationally safe performance of
greenhouse gas transport, injection and storage projects and must form an
integral part of storage site management.
Current
scientific understanding indicates that effective monitoring and verification
of the stored greenhouse gas substance is a key component for minimising risks.
The
2005 RIS concluded that regulation was required for monitoring and verification
to enable “the generation of clear, comprehensive, timely accurate and publicly
accessible information that can be used to effectively and responsibly manage
environmental, health, safety and economic risks”.
It
is envisaged that monitoring should be carried out pre-injection, continuously
during injection and for an appropriate period thereafter. Monitoring could
involve ambient air monitoring, water monitoring, shallow subsurface
monitoring, as well as a range of techniques to monitor the movement of the
injected substance in the storage formation. Some monitoring may be
continuous, while others might be carried out at intervals, with the frequency
depending on site specific factors.
Although
projects will be assessed on a case-by-case basis, any monitoring and
verification system needs to ensure industry provides accurate and relevant
information, which is readily available to the community and independently
verifiable.
Effective
monitoring can also verify that the amount of greenhouse measured has actually
been injected as well as its behaviour over time. In the long-term, monitoring
can confirm the continued storage of the injected greenhouse gas substance
stream in its intended location or storage formation.
Verification
of the methods used in monitoring and the data collected will bring confidence
to the process. This is likely to come in the form of operating and reporting
standards or objectives that apply to all projects to deliver a high degree of
certainty to operators and the community.
Monitoring
requirements will be highly dependant on site specific factors and is closely
related to the detection of and reaction to any incidents that occur, and hence
to mitigation and remediation actions that might be required. For these
reasons, it would be most efficient if monitoring was integrated with the site
plan. Specifically, the proponent could be required to propose a monitoring
and verification plan that satisfied the regulator that any serious events in
the reservoir would be detected in a timely manner. Timely detection of
incidents is essential if any remedial or mitigation action is required.
No
adverse comments on the form of regulation relating to monitoring and
verification have been received in consultations to date. A number of
stakeholders, however, have strongly supported the need for such regulation,
although there has been no substantive feedback on the form of such regulation.
Environmental
management of greenhouse gas projects is also the subject of a Joint Officials
Working Group under the Environment Protection and Heritage Council. This work
is focussing on onshore jurisdictions as opposed to Commonwealth offshore
waters, which is the subject of this RIS. This process will drive national
consistency.
Conclusions
Integration
of monitoring and verification requirements into the site plan provides the
linkage that is needed between different facets of site management. This also
provides for an objective based approach to regulation in this area.
Recommendation
That
the site plan contain a comprehensive monitoring and verification program to be
implemented by the licensee throughout the injection phase and post-injection
phase of the project, to ensure that the injected greenhouse gas substance is
behaving as predicted or, if it is not, to identify any risks to the
environment, safety or other resources.
Remediation
and mitigation
If
monitoring shows that the storage site is leaking, behaving in way which is
likely to lead to leakage to the environment, or impact on other resources,
then remediation or mitigation strategies may need to be implemented.
The
site plan could provide a basis for establishing remediation and mitigation,
which should set out strategies for management of identified risks. Compliance
to the site plan, including these aspects, should be a condition of the
licence.
Remediation
and mitigation strategies could involve very large expenses, for example
drilling of wells and injection or extraction of large quantities of fluids.
If the injected greenhouse gas substance does behave otherwise than predicted,
or looks as though it may do so, the regulator will need to have extensive
powers to direct the licensee to take action to eliminate, mitigate or manage any
risk posed by the situation, including the suspension or permanent cessation of
operations, as well as the taking of action to prevent or remedy any damage
that might arise.
Remediation
and mitigation strategies will be highly dependant on site specific factors and
is closely related to monitoring and verification which provides the mechanism
for detecting serious events. For these reasons, it would be most efficient if
remediation and mitigation strategies were integrated with the site plan.
Specifically, the proponent could be required to propose remediation and
mitigation strategies that satisfied the regulator that any serious events in
the reservoir could be managed in an acceptable manner.
No
consultations have taken place in relation to the regulation of remediation and
mitigation to date, but it will be one of the matters for consideration by
stakeholders once an exposure draft of the legislation is released.
Conclusions
Integration
of remediation and mitigation strategies into the site plan provides the
linkage that is needed between different facets of site management. This also
provides for an objective based approach to regulation in this area.
Recommendation
That
the site plan specify the safeguard measures that will be implemented to ensure
that the injected greenhouse gas substance does not deviate from the expected
migration path(s) and does not escape into the atmosphere. This needs to be
supported by regulatory powers to direct outcomes in the event that a serious
situation occurs.
Reporting
Information
will be required on the volume and location of greenhouse gas emissions that
have been abated and are stored underground which are accurate enough to meet
current and future inventory reporting and commercial requirements; and to
engender public confidence.
While
reporting was not considered as a separate matter in the 2005 RIS, it is
perceived as an integral part of monitoring and verification.
There
is a need to develop and establish procedures for carbon dioxide accounting for
greenhouse gas storage projects, which include accounting in the event of any
leakage of the greenhouse gas substance. These procedures could form the basis
of possible future greenhouse gas transport, injection and storage standards,
including standards for certification, auditing, management and accounting for
stored carbon dioxide. This need will be addressed in the next stage of the
process when the detailed regulations are developed.
Reporting
is likely to require regular reports of the amount of greenhouse gases stored,
together with any losses from the transport and injection processes. Leakage
of stored greenhouse gas will be a matter that will need to be considered more
broadly under the monitoring and verification and mitigation and remediation
powers. While reporting may depend on the requirements of emissions trading
scheme and any international obligations, this basic data is likely to meet
most requirements.
Under
the existing system for the petroleum industry there is a framework of
regulatory driven reporting requirements. Overall, however, reporting for the
greenhouse gas industry is likely to be no more onerous than the reporting
required of the petroleum industry and consistent with the reports that
operators would have to compile to secure abatement permits under any national
or international accounting framework.
Conclusions
Reporting
requirements will likely involve a degree of prescriptive regulation (for
example, frequency of reports and nature of information required) to ensure
that reporting arrangements are consistent between projects and with national
and international data requirements.
Recommendation
That
detailed regulations on reporting requirements be developed, having regard to
need of the community to understand fully the fate of the greenhouse gas
substance and any requirements that might be imposed through a carbon trading
scheme and international reporting obligations.
3.6.
Site Closure Process
Scientific
advice is that the behaviour of an injected greenhouse gas substance is likely
to change markedly once injection ceases, when migration rates may decrease
substantially. It will therefore be necessary to continue to monitor the
behaviour of the injected substance after injection ceases so that the
community can be assured that the greenhouse gas substance is behaving as
predicted and not posing any unacceptable risks.
In
addition, as part of the site closing process, the licensee will be required to
remove or decommission any structures, plant and equipment, to plug any
remaining exploration or injection wells and make good any damage to the seabed
and subsoil. This requirement is effectively identical to that placed on the
petroleum industry.
Post-injection
There
are three options for post-injection
monitoring prior to site closure:
- undertaken
by the operator as part of the obligations under their injection licence;
- undertaken
by the regulator using funds provided by the operator for this specific
purpose;
- undertaken
by the regulator using public funds.
Funding
for post-injection monitoring can properly be considered part of the business
of greenhouse gas transport injection and storage and government funding could
be seen as direct support for the activity. If government support for a
project is to be considered it should be through direct funding as this
provides much better transparency and certainty. This approach would also
raise issues relating to liability.
Similarly,
even if funds were provided by the operator to enable the Government to
undertake the decommissioning and post-injection monitoring, the Government
could still face the situation where it could not be certain if the available
funds would be sufficient to meet all costs. This could occur, for example, if
the behaviour of the injected substance was not behaving as expected and
required additional monitoring or remediation and mitigation. Issues relating
to liability are the same as in the previous option.
Requiring
the operator to undertake the post-injection monitoring provides a clear and
transparent system for managing issues such as liability. Risks would be
assumed by industry in a way analogous to any other industrial process.
Moreover, the operator will have both the experience and knowledge to undertake
activities in the most cost effective manner.
If
post-injection monitoring is undertaken by the operator as part of their
obligations, the licensee will have to conduct extensive monitoring and
verification of the behaviour of the injected greenhouse gas substance, in
order that reliable predictions can be made as to its potential migration and
interaction with the surrounding geological structures. During this period,
the licensee may be required to undertake precautionary or remedial work to
prevent or mitigate harmful effects on the geotechnical integrity of the
storage site. This will include any necessary measures to avoid damage to
natural resources. The objective during this phase will be for the licensee to
satisfy the regulator that all reasonable possibilities have been provided for.
The
purpose of this work is to enable the regulator to compare predictions of the
behaviour of the greenhouse gas substance with actual results, in order to
inform future regulatory practice and to ensure that no unforeseen events take
place. A site closing certificate would not be issued until a high degree of
certainty had been attained.
One
the regulator the regulator is satisfied, the title holder may apply for
closure, which would result in the surrender of the title.
Post-closure
The
three options for post-injection monitoring prior to site closure discussed
above also apply to the post-closure phase, but noting that arrangements would
have to take into account that statutory obligations would have ceased (see
also section 3.8 on long term liability, below).
Under
this option (effectively option 2 above, undertaken by the regulator using
funds provided by the operator), the licensee would also be required to make
financial provision for a program of post-closure monitoring and verification.
No
substantive consultations have taken place in relation to the proposed closure
process to date, but it will be one of the matters for consideration by
stakeholders once an exposure draft of the legislation is released.
Conclusions
The
advantages and disadvantages of the options are:
|
|
Potential
disadvantages
|
Potential
advantages
|
|
Post-injection/pre-closure
|
|
Undertaken
by operator as part of their obligations under their injection licence
|
Period
to closure uncertain
|
Clear
and transparent means of addressing liability
Risks
managed in a similar way to other industries
Makes
use of operator experience and expertise
|
|
Undertaken
by the regulator using funds provided by the operator
|
Liability
issues less clear
Potential
lack of expertise by the regulator
Funds
may not be sufficient to cover costs
|
Certainty
as to timing for end of statutory obligations
Provides
an incentive for greenhouse gas operations by reducing uncertainty about
future liabilities
|
|
Undertaken
by the regulator using public funds
|
Liability
issues clear
Potential
lack of expertise by the regulator
Funds
may not be sufficient to cover costs
Provides
government support for project through an non-transparent mechanism
|
Certainty
as to timing for end of statutory obligations
Provides
an incentive for greenhouse gas operations by reducing uncertainty about
future liabilities
|
|
Post-Closure
|
|
Undertaken
by operator as part of statutory obligations
|
Cumbersome
additional access tenure would be required
Does
not provide for changes in company circumstances
|
Clear
and transparent means of addressing liability
Makes
use of operator experience and expertise
|
|
Undertaken
by the regulator using funds provided by the operator
|
Potential
lack of expertise by the regulator
Funds
may not be sufficient to cover costs
|
Certainty
as to timing for end of statutory obligations
Allows
monitoring to continue independent of company circumstances
Provides
an incentive for greenhouse gas operations by reducing uncertainty about
future liabilities
|
|
Undertaken
by the regulator using public funds
|
Liability
issues clear
Potential
lack of expertise by the regulator
Funds
may not be sufficient to cover costs
Provides
an effective government subsidy through non-transparent mechanisms
|
Certainty
as to timing for end of statutory obligations
Allows
monitoring to continue independent of company circumstances
Provides
an incentive for greenhouse gas operations by reducing uncertainty about
future liabilities
|
Recommendation
That
post-injection/pre-closure monitoring be undertaken by the operator as part of
their obligations under the site closing process, with the operator being
required to make financial provision for post-closure long term monitoring
after they have vacated the site.
3.7.
Transport
Pipelines
transporting greenhouse gases will be an integral part of any offshore
greenhouse gas injection and storage project. The risks associated with these
pipelines will be very similar to those for petroleum pipelines.
The
2005 RIS concluded that gaps in the existing regulatory system be addressed and
that amendments/additions to regulatory frameworks for pipelines be extended to
explicitly cover pipelines transporting greenhouse gases.
For
Commonwealth offshore waters, the OPA and its regulations require only minor
amendment to be applicable to the transport of greenhouse gases. These
amendments would consist of extending the existing system to apply to
greenhouse gas pipelines as well as petroleum pipelines. If this approach is
used, then administration would essentially be identical to that of offshore
petroleum pipelines.
No
other regulation exists in Commonwealth offshore areas for pipelines.
Approaches
other than use of the Offshore Petroleum Act would have to duplicate this
existing framework if community expectations on issues such as occupational
health and safety and the environment are to be met. Such duplication would
lead to higher costs through the need to develop new administrative systems.
No
substantive comments have been received from stakeholders on this proposed
approach.
Conclusions
No
existing regulatory framework other than the OPA exists for regulating offshore
greenhouse gas pipelines.
Recommendation
That
the existing pipeline regime under the OPA be adopted by extending it to apply
to greenhouse gas pipelines.
3.8.
Long Term Liability
Up
until the period to site closure the proposed regulatory system would establish
comprehensive statutory responsibilities of title holders with respect to the
protection of the environment, other seabed resources and human health and
safety in exactly as the same way as for petroleum.
Given
the potential timeframes associated with the storage of the greenhouse gas
substance as well as the longevity of commercial enterprises, the question of
how any long term liabilities would be met arises.
Many
commentators and stakeholders have raised the question of liability for the
period after site closure. Suggestions have ranged from government assumption
of all longer term liabilities to having all liabilities rest with industry in
perpetuity. Other suggestions have been for some form of shared
responsibility.
The
2005 RIS concluded that that liability should be based on existing regulatory
arrangements and common law.
After
site closing, there are four options for long term liability:
- new
regulation under which Government explicitly assumes long term liability;
- new
regulation where industry is required to assume long term liability;
- new
regulation to share long term liability between government and industry.
No
new regulation would involve relying on common law for long term liability.
Under this option, greenhouse gas title holders would not be immunised from
common law liability to persons who suffer injury or loss as a result of their
actions. Nor would their liability be limited. This non-intervention would
extend to all forms of common law liability, including long term liability.
The Government would therefore not ‘take over’ long term liability from project
participants. Nor would the Government provide any indemnity to project
participants in respect of any liability they might incur.
In
the long term, the risk would, in a sense, pass to the community because
project participants may cease to exist or because of some other time related
factor such as availability of witnesses. For example if GHG operations were
to result in personal injury or loss to individuals, at a time when there were
no project participants still available to be sued, or where damages were for
some other reason irrecoverable, the cost would in practice be borne by the
community. This would, however, be the consequence of the passage of time, not
of any assumption of liability on the part of government. Greenhouse gas
industry participants would therefore need to make their own arrangements to
deal with potential common law liability, as an ordinary cost of doing
business, as must members of any other industry.
Under
existing arrangements relating to petroleum, the OPA does not exclude, limit or
allocate common law liability of title-holders or others engaged in offshore
petroleum operations. Common law liability lies where it falls.
If
Government were to explicitly assume long term liability this would effectively
be a subsidy. Any subsidies would better be delivered directly rather than
through this indirect mechanism which lacks transparency and puts the
Government in the position of accepting potential liabilities whose size is
highly uncertain. This approach could also establish precedents for government
policy in other areas.
New
regulation to require industry to assume liability could only realistically
involve the establishment of some sort of fund to meet liabilities. No other
options are practical given the long term nature of potential liabilities (in
the order of thousands of years) and the potential life of industrial
participants. This would have the effect of posing additional costs on
industry compared with existing law. There would also be a major issue in
determining the quantum for contributions to any such fund.
A
system could be developed through which industry and government shared long
term liability. However, mechanisms for this are unclear and would require
significant new law and could set precedents for policy in other areas. In any
event, the ‘no new regulation’ option effectively provides a system where
liabilities would be shared between industry and the community, with Government
effectively assuming a greater share of liability due to the passage of time.
While
many comments have been made on this issue, no consultations have taken place
with stakeholders in relation to the proposed approach to date, but it will be
one of the matters for consideration by stakeholders once an exposure draft of
the legislation is released.
Conclusions
The
advantages and disadvantages of the options are:
|
|
Potential
Disadvantages
|
Potential
Advantages
|
|
No
new regulation
|
Lack
of precedents in this industry means that the outcome of common law
application remains to be tested
Perception
that long term liability has not been addressed
Potential
disincentive to investors
|
Makes
use of existing frameworks
Provides
incentive to industry to take practical actions to minimise exposure
Provides
a mechanism by which liabilities would be shared over time
Does
not set new precedents for government policy
|
|
New
regulation under which Government explicitly assumes long term liability
|
Government
exposure to future costs unclear
Incentive
provided in a non-transparent manner
Could
set precedents for government policy in other areas
Incentive
for industry to take practical actions to minimise exposure unclear
|
Provides
an incentive to project investors
|
|
New
regulation where industry is required to assume long term liability
|
Could
impose higher costs than necessary on industry through the need to contribute
to a fund which would be held in perpetuity
Issue
of determining appropriate level of contribution to a fund
|
Incentive for industry
to take practical actions to minimise exposure
|
|
New
regulation to share long term liability between government and industry
|
Unclear
as to how liabilities could be shared
|
May
provide an incentive to industry to take practical actions to minimise
exposure
|
Recommendation
That
there be no new regulation and the issue of long term liability be left to
common law in the same way as it does for petroleum and other industries.
3.9.
Bonds and Guarantees
Experience
with the mining industry, both in Australia and internationally, has demonstrated that
there is a significant risk that commitments to undertake certain works,
especially decommissioning and site rehabilitation may not be undertaken. This
can arise when, for example, a company ceases operations and has no remaining
resources to fund the necessary work. Such risks can be faced during any phase
of a project. For example, exploration activities may result in the need for
rehabilitation activities. Risks may also be posed during operation as a
result of earlier than planned termination, as well as at the end of planned
project life.
As
a result, it is common practice in the Australian on-shore mining and petroleum
industries to require financial bonds or guarantees for site rehabilitation.
Such bonds and guarantees are also normal practice internationally. These
bonds or guarantees are usually required from the commencement of the project
and the amount reviewed during the project to take account of any changes that
occur. Bonds and guarantees have not been required of the Australian offshore
petroleum industry because of the nature of the industry involved (large
companies with the resources to undertake any decommissioning and site
rehabilitation required and their need to maintain their social licence to
operate). This situation, however, is kept under review and may change in the
future if industry structure changes to pose significant risks that such
activities will not be undertaken adequately.
In
assessing the need for securities there is a need to take into account that
this is a new industry where there is a relatively high degree of uncertainty
about risks and an array of potential company ownership, structures and sizes
involved. Thus it is prudent to provide for the possibility of bonds and
guarantees to ensure that funding is available for key activities. To avoid
the situation of always requiring bonds or guarantees, it is preferable that
the need be assessed by the regulator on a case-by-case basis. This will
minimise overall costs.
A
mandatory requirement for bonds and guarantees inevitably results in a ‘lowest
common denominator’ approach with all companies being required to enter into
arrangements, irrespective of the need in their specific case. Leaving it to
the regulator’s discretion reduces the number of bonds and guarantees that will
be sort, thus lowering overall compliance costs.
On
the other hand, the ability to be able to decide the level, if any, of a
security required on a case-by-case basis may lead to perceptions of bias.
Clear guidelines on security assessment criteria will need to be developed to
ensure transparency.
No
substantive comments have been received form stakeholders on this proposed
approach.
For
long term monitoring after site closure, it is likely that a bond or guarantee
would be required in nearly all circumstances. This reflects the long term
nature of such monitoring and the need maintain certainty as to migration and
potential impacts.
No
substantive comments have been received from stakeholders on the issue of bonds
and guarantees.
Recommendation
That
regulatory provision be made for bonds and guarantees to be requested at the
discretion of the regulator.
3.10.
Interactions with Petroleum
Effectively
all of Australia’s offshore areas that
may be attractive for greenhouse gas injection and storage are the subject of
existing petroleum titles. Over time, some of these will be relinquished and
become vacant. The greenhouse gas transport, injection and storage industry
will need to be able to access areas which overlap petroleum titles. Without
this overlap no significant areas would be available for greenhouse gas
injection and storage. In most cases, petroleum and greenhouse gas activities
will be able to co-exist. It is possible, however for greenhouse gas
activities to impact negatively on petroleum operations. This could occur, for
example, through migration of the greenhouse gas into a petroleum pool and
displacing the petroleum, making it effectively unrecoverable and/or leading to
materials incompatibility problems with existing petroleum production
equipment. Similarly future petroleum operations could impact negatively on an
established greenhouse gas operation. Thus a system is required to manage
circumstances where the activities could impact negatively on one another.
Without such a system both industries would face greater uncertainty to access
rights which would be counter to the guiding principles.
There
are potential advantages for both the greenhouse gas and petroleum industry in
working in the same area. For example, information gained by one activity may
have significant commercial value for the other.
The
issue of interactions with petroleum was not addressed in the 2005 RIS.
Pre-commencement
petroleum titles
It
is a policy imperative that the rights of pre-commencement petroleum title
holders (that is those titles that are in force before the greenhouse gas
regulatory framework is put in place) are preserved. Impinging on these rights
would create increased sovereign risk with the likely result of reduced
petroleum activities in Australian waters.
Options
to avoid adverse impacts on pre-commencement titles include:
- avoiding
areas covered by pre-commencement petroleum titles;
- allowing
greenhouse gas operations to proceed only with the agreement of the
petroleum title holder;
- requiring
greenhouse gas proponents to demonstrate that they will have no
significant impact on petroleum operations.
As
already discussed, avoiding areas covered by pre-commencement titles
effectively means that no areas would be available for greenhouse operations.
A system of overlapping titles is therefore necessary.
However,
the options of no significant adverse impact and commercial agreements can be
combined. Under this option, greenhouse gas operations could proceed when
there was a commercial agreement between the two industry title holders. In
the absence of such an agreement, greenhouse gas operations could only proceed
if the greenhouse gas proponent could demonstrate that there would be no
significant adverse impact on the pre-commencement petroleum title holder’s
rights.
In
the event that a greenhouse gas proponent is unable to reach a commercial
agreement with a petroleum title holder, they will face significant risks in
their ability to operate. Prospective greenhouse gas title holders, however,
will be in a position to evaluate these risks before making any investment
decisions.
This
framework was proposed in the 2006 document Implementing an Australian
Regulatory Framework for Carbon Capture and Storage and drew a variety of
comment from stakeholders. The petroleum industry expressed concern that it
might not do enough to protect their existing rights, while some greenhouse gas
proponents perceived it as giving the petroleum industry a ‘veto’ power over
their operations. Both groups noted that they needed more detail on how this
framework would be implemented.
This
issue is expected to attract significant feedback when the exposure draft is
released for stakeholder comment and is closely related to the issue of
managing release and award of exploration areas discussed in Section 3.2 above.
Recommendation
That,
in the absence of an agreement between the parties, the rights of
pre-commencement petroleum title holders be protected by requiring greenhouse
transport, injection and storage operators demonstrate to the satisfaction of
the regulator that their activities will not have a significant negative impact
on petroleum operations.
Post-commencement
titles
For
post-commencement titles the imperative to protect existing rights is no longer
an issue. Nevertheless, it is important to ensure that the system developed is
not perceived by the petroleum industry as putting major obstacles in the way
of future offshore petroleum operations. Such a perception would make it more
difficult for Australia to attract the highly
mobile petroleum exploration budget of major petroleum companies, with
significant implications for future discoveries of petroleum.
Options
available include:
- giving
one industry (either petroleum or greenhouse gas) precedence over the
other;
- giving
precedence to whichever industry was first granted a title in the area in
question;
- allowing
a decision to be made by the government as to which industry should
proceed based on the specific circumstances of the case in situations
where both industries cannot co-exist;
Giving
precedence to one industry (the ‘preferred industry’ option) over the other
(that is, petroleum always preferred or greenhouse gas always preferred) raises
the risk that major opportunities in one industry will be foregone in return
for a lesser opportunity in the other. In addition, it would increase the
perceived sovereign risk for whichever industry was not favoured. Against
this, the other industry would have greater investment certainty. This
approach also has the disadvantage that it does not allow for flexibility if
the relative importance of petroleum and greenhouse gas operations change.
Giving
whichever industry was first awarded a title (the ‘first-in-first-served’
option) also raises the risk that major opportunities in one industry will be
foregone in return for a lesser opportunity in the other. This approach also
has the disadvantage that it does not allow for flexibility if the relative
importance of petroleum and greenhouse gas operations change. It does,
however, have the advantage that it increases certainty for the first industry
established.
Allowing
the regulator to make decisions on which industry should proceed in cases where
they cannot co-exist allows the relative merits of the two competing
opportunities to be taken into account (the ‘public interest’ model). It also
allows for flexibility if the relative importance of petroleum and greenhouse
gas operations change. It also enables commercial agreements between the
parties to be taken into account, which could lead to acceptable compromise
solutions. This could be done through a public interest test
in which the regulator would consider the relative merits of the two competing
proposals. Criteria could include social, economic and environmental factors.
However,
to provide confidence to investors it would be necessary to limit this test to
titles earlier in the series than production licences or injection licences,
after which point title holders could be making large investments. Thus, once
an injection licence or production licence has been granted, the other industry
would have to demonstrate no significant adverse impact, in the same manner as
is done for pre-commencement petroleum titles.
Management
of this system will require that certain post-commencement petroleum titles
(that is those that overlap a greenhouse gas title) are identified and
operators are required to inform the regulator of proposed activities so that
the regulator can then inform the greenhouse gas title holder and ensure that
activities can co-exist. Greenhouse title holders (except for holders of
injection licences) will have to be placed under a similar obligation.
The
difference between these options in terms of administrative requirements is
negligible. In a ‘preferred industry’ or ‘first-in-first-served’ option the
reduced compliance costs on the first industry in will be counterbalanced by
increased compliance costs for the second.
The
framework proposed in the 2006 document Implementing an Australian
Regulatory Framework for Carbon Capture and Storage contained the public
interest test option. Only limited feedback on this aspect was provided by
stakeholders, although one informal comment was that the increased certainty
offered by the first-in-first-served model could outweigh the flexibility
offered by the public interest model.
Further
feedback is expected when the exposure draft is released for stakeholder
comment.
Conclusion
The
advantages and disadvantages of the options are:
|
|
Potential
disadvantages
|
Potential
advantages
|
|
Preferred
industry option
|
Reduced
certainty for the non-preferred industry
No
ability to decide which industry represents the most important opportunity
Limited
basis for commercial agreements between industries
|
Increased
certainty for the preferred industry
|
|
First-in-first-served
option
|
Reduced
certainty for the second industry to enter the area
No
ability to decide which industry represents the most important opportunity
Limited
basis for commercial agreements between industries
|
Increased
certainty for the second industry to enter the area
|
|
Public
interest model
|
Reduced
certainty for industry
|
Increased
flexibility to allow the most ‘valuable’ development opportunity to proceed
Provides
a basis for commercial negotiations between industries
|
|
|
|
|
Recommendation
That,
in the event that activities cannot co-exist, post-commencement petroleum
titles and greenhouse gas titles be prioritised using a public interest test.
3.11.
Other Users of the Sea
Other
users of the sea include fisheries, marine transport, communications and
defence. Greenhouse gas activities have the potential to impact on the users
through environmental impacts affecting fisheries and through the physical
presence of structures (for example impacts on fishing trawling, the hazard to
navigation represented by fixed structures, and access to defence practice
areas. All these potential impacts are essentially identical to those posed by
petroleum operations. The OPA protects these rights by requiring other users
to be taken into account in the process and demonstrating that impacts have
been minimised to the extent practical. In practice, the first stage in
managing potential impacts is through stakeholder consultation when deciding on
areas to be released for exploration (see Section 3.2). This process may lead
to special conditions being applied to the area in question.
An
identical approach is proposed for the greenhouse gas transport, injection and
storage industry which will have almost identical impacts on other users of the
ocean.
No
consultations have taken place in relation to the proposed approach to date,
but it will be one of the matters for consideration by stakeholders once an
exposure draft of the legislation is released.
Recommendation
That
the rights of other users of the sea be managed in the same way as for the
petroleum industry.
3.12.
The Regulator
Given
that there will be a large number of areas in the regulatory framework which
will require decisions or approvals by a regulator (sections 3.2, 3.3, 3.4,
3.5, 3.6, 3.7, 3.9, 3.10 and 3.11 above, the question arises of who should be
responsible for these tasks.
This
issue was not addressed in the 2005 RIS or the 2006 discussion paper.
There
are two basic options:
- the
existing Joint Authority/Designated Authority (JA/DA) model used for
petroleum, whereby day-to-day decisions are delegated to the States/Territories;
- administration
by the Australian Government (that is the responsible Commonwealth
Minister).
Administration
through the JA/DA model has the advantages
- use
of existing administration systems;
- close
involvement with the day-to-day administration of petroleum could provide
synergies for managing greenhouse gas activities;
- ensuring
close involvement with the States/Territories on projects that are likely
to be relevant to their interests.
Administration
by the Australian Government is feasible because of the small number of
potential projects and also provides a number of advantages.
- it
will provide greater national consistency, which will be particularly
important given that this will be a new industry and many regulatory
approvals in the early stages of the scheme will be setting precedents for
future decisions;
- not
all jurisdictions have the expertise or want the responsibility for
managing greenhouse gas operations;
- given
that projects will be in offshore waters under Commonwealth legislation,
delegation of decision making powers to the States/Territories could lead
to additional complexity if the issues arise relating to long term
liability.
Because
many of the day-to-day regulatory matters are essentially identical to those in
the petroleum industry, there is an opportunity to under the central
administration model for States/Territories to be contracted to undertake these
regulatory activities on behalf of the Australian Government. This will
address any issues that might arise from the need to develop new expertise in
the Australian Government which could duplicate existing State/Territory
expertise.
Close
involvement with the States/Territories on major projects can be addressed
through existing consultative processes, including the Ministerial Council on
Minerals and Petroleum Resources and its sub-committees.
An
element of greenhouse gas activities more suited to the JA/DA regulation model
relates to pipelines. This approach would be well suited because all known
potential greenhouse gas pipelines associated with offshore storage projects
will traverse areas of State/Territory jurisdiction as well as Commonwealth
waters. Leaving pipeline administration under current arrangements will
provide for better coordination of decision making than applying the Australian
Government model.
Occupational
health and safety is another area that is more suited to using the existing
regulator, that is, the National Offshore Petroleum Safety Authority (see
Section 3.4).
The
proposal has been discussed with States and Territories. Some are supportive,
while others have expressed some reservations. Wider consultation on this
proposal will take place when the exposure draft of the legislation is released
for comment.
Conclusion
The
advantages and disadvantages of the options are:
|
|
Potential
disadvantages
|
Potential
advantages
|
|
JA/DA
Model
|
Potential
to reduce national consistency, especially in relation to ‘first time’
decisions which will set precedents for future decisions
Not
all jurisdictions have the expertise or want the responsibility for managing
greenhouse gas operations
Potential
for greater complexity if issues arise relating to long term liability
|
Use
of existing administration systems
Close
involvement with the day-to-day administration of petroleum could provide
synergies for managing greenhouse gas activities
Ensures
close involvement with the States/Territories on projects that are likely to
be relevant to their interests
|
|
Administration
by the Australian Government
|
Does
not provide the synergies that might arise from the close involvement with
the day-to-day administration of petroleum industry
May
reduce involvement with the States/Territories on projects that are likely to
be relevant to their interests
|
Potential
to increase national consistency, especially in relation to ‘first time’
decisions which will set precedents for future decisions
Overcomes
the issue of not all jurisdictions having the expertise or wanting the
responsibility for managing greenhouse gas operations;
Simpler
if issues arise relating to long term liability;
|
Overall,
the advantages of Australian Government administration are considered to
outweigh those of the JA/DA approach. It will however, require processes to be
put in place for liaison with States/Territories.
Recommendation
That
regulation of greenhouse gas injection and storage activities in Commonwealth
waters be undertaken by the responsible
Commonwealth Minister, with the exceptions of pipelines, which would be
administered under the existing JA/DA model and occupational health and safety
which would be administered by NOPSA.
4.
COMPLIANCE COSTS
The operator of a greenhouse gas sequestration
title will face many compliance costs analogous to the operation of offshore
petroleum titles. Lodgement of documents, compilation of plans, requests for
permission and record keeping are expected to be broadly consistent with that
under the OPA. In the absence of detail on regulation and guidelines, it is
impossible to quantify such costs at this stage with traditional tools such as
the OPBR Business Cost Calculator.
While
the costs of compliance under the Offshore Petroleum Act have not been
quantified, the recent revisions to this regulatory framework – which have been
adopted in the geosequestration provisions – were intended to lower the costs
of compliance from the Petroleum (Submerged Lands) Act 1967. Similarly,
moves toward objective based regulation for petroleum were intended to allow
industry to seek least cost solutions to compliance. This approach is central
to the site management plan in the geosequestration amendments, and is proposed
to be retained under future regulations and amendments appropriate to
geosequestration.
Many
of the requirements of the regulator are costly but not additional to
work which would be carried out by titleholders as a routine part of designing
and executing and managing an offshore geosequestration operation. For example,
highly detailed modelling of the subsurface behaviour which is essential for a
site plan, should also be a regular part of the work which would be done by the
company for its own commercial purposes. As long as administration is directed
towards minimal duplication and consistency of requirements, as is done in
offshore petroleum, there should be no undue burden to preparing submissions
for the regulator.
An
important aspect of reducing compliance costs will be to establish the
guidelines which give detail, particularly on procedural matters, and to
establish experience in both industry and the Commonwealth Government in
administering this industry. Given the infancy of the geosequestration
industry, and the lack of international models, in some areas (eg. the
application of a public interest test), the proposed legislation gives wide
ranging powers to the Responsible Commonwealth Minister rather than prescribes
complex decision making rules. If this balance is not correct, there is a risk
that the potential cost of compliance will be a disincentive to investment in
geosequestration. As this is difficult to determine a priori, this issue
will need to be reassessed prior to titles being awarded.
However,
despite the initial uncertainty which will accompany any new regulatory regime,
there is an expectation that the choice of a single regulator will lower the
cost of compliance in the long term. At present, offshore petroleum titles may
pass through complex and repetitive assessments between State/NT and Australian
Governments, and industry has been critical of delays and differences in
interpretation between jurisdictions. The establishment of the Australian
Government as the sole regulator is expected to shorten approval timeframes and
costs and minimise the opportunities for disputes.
Compliance
costs in relation to managing interactions with the petroleum industry should
also be modest as analysis of possible impacts will naturally arise out of the
detailed analysis of the suitability of potential sites. The main impact in
this context relates to industry certainty. This issue, however, will be known
by potential investors from the outset and can be taken into account in their
decision making process.
There
may also be some compliance costs for holders of post-commencement petroleum
titles. However this is likely to affect a very small number of petroleum
title holders and again the compliance costs should be limited.
5.
REVIEW
The
Government’s proposed regulatory model will be reviewed by the Responsible
Commonwealth Minister in the light of feedback collected by the Department of
Resources, Energy and Tourism on the exposure draft of the legislation.
If
the proposed legislation moves into law, it is expected to be required
indefinitely so will not be subject to a sunset clause. Review is expected to
continue on an ad hoc basis and also to be subject to the Government's general
policy of five yearly reviews, as in the case of current petroleum legislation.
The MCMPR has formally committed to a review of its guiding principles by 2010,
which will be used to assess issues associated with the implementation of the
offshore legislation.
The
Department of Resources, Energy and Tourism will establish a single point of
contact for any inquiries or feedback related to the operation of the
regulation. This will include a web presence and regular e-mail newsletter to
interested parties encouraging feedback on general and specific issues.
Regular
reports will also be made to State and Commonwealth officials under the MCMPR
on issues associated with the amendments.
6.
CONCLUSIONS
In
application of the 2005 Regulatory Principles to Commonwealth Waters, it is
proposed that:
- That
the regulatory framework for greenhouse gas transport, injection and
storage be implemented by amending the Offshore Petroleum Act 2006
and its attendant regulations to deal with the many aspects of a
greenhouse storage project would have in common with petroleum industry
operations.
- That
the release and award of areas for exploration for greenhouse gas storage
sites use a competitive process similar to that used for petroleum.
- That
management of environmental impacts (excluding issues relating to the safe
and secure storage of the greenhouse ages substance) be done using the
existing framework applied to petroleum activities.
- That
management of occupational health and safety issues be done using the
existing framework and institutions applied to petroleum activities.
- That
a greenhouse gas injection licence not be granted until a project specific
site plan is approved by the regulator. The plan should contain detailed
modelling of the expected behaviour of the greenhouse gas substance after
injection, including the expected migration path or paths.
- That
the site plan contain a comprehensive monitoring and verification program
to be implemented by the licensee throughout the injection phase and
post-injection phase of the project, to ensure that the injected
greenhouse gas substance is behaving as predicted or, if it is not, to
identify any risks to the environment, safety or other resources.
- That
the site plan specify the safeguard measures that will be implemented to
ensure that the injected greenhouse gas substance does not deviate from
the expected migration path(s) and does not escape into the atmosphere.
This needs to be supported by regulatory powers to direct outcomes in the
event that a serious situation occurs.
- That
detailed regulations on reporting requirements be developed, having regard
to need of the community to understand fully the fate of the greenhouse
gas substance and any requirements that might be imposed through a carbon
trading scheme and international reporting obligations.
- That
the existing pipeline regime under the OPA be adopted by extending it to
apply to greenhouse gas pipelines.
- That
post-injection/pre-closure monitoring be undertaken by the operator as
part of their obligations under the site closing process, with the
operator being required to make financial provision for post-closure long
term monitoring after they have vacated the site.
- That
there be no new regulation and the issue of long term liability be left to
common law in the same way as it does for petroleum and other industries.
- That
regulatory provision be made for bonds and guarantees to be requested at
the discretion of the regulator.
- That,
in the absence of an agreement between the parties, the rights of
pre-commencement petroleum title holders be protected by requiring
greenhouse transport, injection and storage operators demonstrate to the
satisfaction of the regulator that their activities will not have a
significant negative impact on petroleum operations.
- That,
in the event that activities cannot co-exist, post-commencement petroleum
titles and greenhouse gas titles be prioritised using a public interest
test.
- That
the rights of other users of the sea be managed in the same way as for the
petroleum industry.
- That
regulation of greenhouse gas injection and storage activities in
Commonwealth waters be undertaken by the responsible Commonwealth
Minister, with the exceptions of pipelines which would be administered
under the existing JA/DA model and occupational health and safety which
would be administered by NOPSA.
These
policy decisions have been translated into draft legislation for further
stakeholder comment.
The
proposed legislative framework involves the extension of existing petroleum
regulations under the OPA to apply to greenhouse gas activities, and new
regulations to cover those aspects of greenhouse gas transport, injection and
storage activities where existing petroleum regulation is not appropriate.
However, the overall framework establishes the broad direction and structure of
many of these regulations.
Next
Steps
The
next stage in the process is to release the Bill as an exposure draft for
comments from stakeholders to obtain more detailed feedback on the framework.
Following consideration of comments from stakeholders it is envisaged that the
Bill will be amended, if necessary, and introduced into Parliament.
Regulations and guidelines to cover things such
as public interest tests, impact significance tests, assessments and approvals,
monitoring and verification, financial issues and post-closure responsibility
remain to be developed. While those used for regulating the offshore petroleum
industry provide a useful starting point for many of these instruments, it
appeared inappropriate to pursue this level of detail without first soliciting
clearer feedback from stakeholders on the proposed legislative amendments. As
a consequence, many issues relating to the final cost of regulation also cannot
be assessed at this stage.
The
final stage in the process will be the development of the associated
regulations and guidelines. The development of these regulations and
guidelines will require further consultation with relevant stakeholders. A
further RIS will be undertaken on the regulations and guidelines, at which
stage a clearer picture of costs and benefits will be provided.