Australia: Queensland Gasfields Commission gains its powers

Key Points:

The Gasfields Commission's role is to facilitate stronger relationships between the onshore gas industry, landholders and their regional communities.

The Queensland Government had announced that it would establish the Gasfields Commission midway through 2012; the Queensland Parliament has now passed the legislation to establish it and grant the powers necessary for it to perform its roles. The powers are set to commence as of 1 July 2013.

The legislation grant significant powers to the Commission and may present some initial cause for concern for some onshore gas industry operators; they will require many Queensland gas industry operators and affected landowners to consider how they will interact with it. There may however be advantages to be gained by industry participation in the Gasfields Commission activities over the coming years.

In this article we look at the extent of the Gasfields Commission powers and its potential to shape future gas industry operations in Queensland.

What are the objectives of the Gasfields Commission?

The overall policy objective behind the establishment of the standalone Gasfields Commission is to facilitate stronger relationships between the onshore gas industry, landholders and their regional communities.

The Government has recognised that, while gas and agriculture constitute two of the four pillars of Queensland's economy, these are sectors which have at times struggled to find equilibrium.

Landowners and communities have concerns about the impact of gas projects on their local society and the environment, including water and land, so it will be interesting to see how the Gasfields Commission seeks to undertake its facilitation role and how it will balance this against other specific objectives such as recommendations on changes to gas regulation.

What are the functions of the Gasfields Commission?

The functions of the Gasfields Commission include:

  • reviewing the effectiveness of the regulatory frameworks that relate to the onshore gas industry in Queensland;
  • advising the government on the coexistence of onshore gas industry, landholders and regional communities;
  • convening onshore gas industry participants, landholders and regional communities to resolve ongoing issues;
  • obtaining information from "prescribed entities" about the gas industry and activities; and
  • publishing educational materials about the onshore gas industry to further its objectives.

While these functions are broadly expressed, it will important for gas industry participants to understand the scope of these powers and actively contribute to the knowledge base of the Gasfields Commission so that actions can be based on scientific and sound engineering principles.

Likewise, agricultural industry will need to contribute its knowledge of agricultural science on matters such as land use management and sustainable land practices in the context of coexistence of the two industries.

What are the powers of the Gasfields Commission?

Broadly speaking the legislation confers on the Gasfields Commission all powers that are "necessary or convenient" to perform its stated functions.

Power to require information

The most significant from an industry perspective is the power to require particular information from "prescribed entities", which is not only a landholder or an onshore gas operator, but also any company working for, or on behalf of, an onshore gas operator under a written agreement.

The Gasfields Commission has the power to compel these entities to provide any relevant documents or information in the possession or control of the entity that is required for the Gasfields Commission to carry out its functions.

However, there are exceptions to the mandatory requirement to disclose information to the Gasfields Commission where:

  • the material is in another person's possession or control and that the entity has reasonably, but unsuccessfully, tried to obtain it from them;
  • the provision of the information or document is prohibited by law;
  • the information is confidential to another party, and that other party has refused to consent to the disclosure despite reasonable efforts to obtain that information;
  • the information may incriminate the entity;
  • the materials are confidential to the entity; or
  • the giving of the material would harm the entity's commercial or other interests.

A failure to provide requested information or to provide false or misleading information are offences which carry a prescribed maximum penalty of 100 penalty units. This equates to $11,000 for an individual and up to five times that amount for a company.

Power to publish information

The Gasfields Commission will also have the power to publish any information relevant to its purposes or functions that is not confidential information.

Under the legislation "confidential information" is that which:

  • could identify an individual;
  • concerns a person's current financial position or financial background; or
  • would damage the commercial activities of the person to which the information relates.

Importantly, confidential information does not include information that is publically available or information that could not reasonably be expected to result in the identification of the individual to whom it relates.

How will this impact the gas industry?

Conduct and Compensation Agreement Register

The Government has announced that the Gasfields Commission is to use these powers to compile a confidential register of Conduct and Compensation Agreements between landholders and the CSG industry in Queensland.

In a recent press release the Queensland Minister for State Development, Infrastructure and Planning announced that the Gasfields Commission will make publically available an "indicative, de-identified list of financial arrangements between landholders and gas companies for access and use of land".

The purpose of this list is said to provide stakeholders with the information necessary to negotiate agreements with gas industry participants.

Once compiled, and depending on the nature of the information that is actual presented by the Gasfields Commission, the register may provide some uniformity of the quantum of compensation or at least a range within which parties may be expected to negotiate.

Of course in practice it will be more complex; in our experience each negotiation is particular to the specific activities sought to be conducted on the land, their location and impact, the existing use of the land and the willingness of the parties to conclude an agreement.

The negotiation process for Conduct and Compensation Agreements is set out in Chapter 5 of the Petroleum and Gas (Production and Safety) Act 2004 (Qld) and it may be that the information made available by the Gasfields Commission may provide useful reference point for more routine exploration activities and some specific production activities.

Challenges for the Gasfields Commission in obtaining existing Conduct and Compensation Agreements

Clearly the biggest challenge for the Gasfields Commission in obtaining sufficient information to compile a proper sample of Conduct and Compensation Agreements will be the existing confidentiality provisions in each agreement and the willingness or otherwise of both parties to consent to the disclosure of that information.

The Gasfields Commission's input to regulatory framework and social licence to operate

The concept of the gas industry operators requiring or striving to achieve a "social licence to operate" is not a pure legal concept. Rather it is terminology that brings with it a method of operating that seeks to gain acceptance from the general community and other interested parties.

Whether this is fully achievable and the methods used to seek to gain this acceptance is beyond the scope of this paper, however, it is interesting to note that if the Gasfields Commission plays a supporting role, provides useful input to industry regulation and acts as a true facilitator between the gas industry, the agricultural industry and the community, then there is an increased probability that the gas industry operators will benefit from greater levels of acceptance.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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