Last month the NSW Government announced a new regime for
regulating coal seam gas activities in NSW. Not all the details of
the NSW Gas Plan have been released, but the changes are big and
already proving controversial. We take a look at the Gas Plan's
key policies and developments.
All of the 16 pending licence applications (covering 60% of the
state) are being cancelled. Instead, the NSW Government will
release specific areas covering approximately 15% of the state for
CSG exploration and require operators to tender for petroleum
licences. Under this new framework, operators must submit a plan to
develop a licence area. If the operator fails to commit to these
proposed investments, it will risk losing its licence.
A compensation regime will be introduced for landholders whose
properties are subject to CSG exploration activities. Compensation
will be determined by the Independent Pricing and Regulatory
Tribunal, while landholders will also be entitled to a share of the
royalties received by the state from any CSG extracted on their
The NSW Government will establish a Community Benefits Fund for
the benefit of local communities affected by CSG activities.
Operators will be given the option to make payments into the fund
that will be matched by the Government at a ratio of 2:1. Although
payments are ultimately voluntary, we think the Fund will be pretty
successful – CSG operators will gladly contribute in order to
create goodwill towards local communities and appear to be socially
A government review wouldn't be complete without the
application of more safety standards. Reviews of current safety
standards (including the Codes of Practice for Fracture Stimulation
Activities and Well Integrity) are currently underway and the NSW
Government's findings should be available in early 2015.
It is unlikely that the proposed changes to NSW's CSG
regulatory regime are going to quell rampant mistrust of operators
in the state, let alone garner any support for the industry in
general. But at least the NSW Government is on the path to
developing a coherent policy approach.
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It is a common misconception that the grant of mining tenure, whether it be an Exploration Permit, Mineral Development Licence or Mining Lease, will entitle the holder to access all land within it in order to explore or mine.
This briefing note sets out a likely structure for the proposed privatisation of the networks and identifies key issues.
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