Australia: NT hydraulic fracturing inquiry interim report released

The independent Scientific Inquiry into Hydraulic Fracturing of onshore unconventional reservoirs in the Northern Territory's interim report outlines its preliminary analysis of the risks and benefits of hydraulic fracturing in the Territory.

On 14 July 2017 the independent Scientific Inquiry released its Interim Report and an accompanying summary document, which details the activities undertaken by the Inquiry Panel, the revised issues that are being considered, possible regulatory reform and the future work the Panel will undertake before producing its final report by the end of 2017.

Panel activities

Since the Inquiry was announced in September 2016, the Panel has undertaken five Panel meetings and one interstate visit to South Australia to consult with officers of the Energy Resources division of the South Australia Department of State Development on the regulatory framework which is currently in place in South Australia for conventional and unconventional onshore gas development.

There has also been extensive community consultation including a total of 37 public hearings where stakeholders, organisations, businesses and any registered person or group has been able to make a presentation to the Panel. There is also ongoing opportunity to make a submission or submit feedback forms to the Panel, with over 290 submissions and a total of 181 forms already received.

Issues and risks

On 20 February 2017 the Background and Issues Paper was released as part of the Inquiry to facilitate a discussion between the Panel and Territorians about the Terms of Reference by identifying the potential risks of the hydraulic fracturing of onshore unconventional shale reservoirs and its associated activities in the Northern Territory. The submission period closed on 30 April 2017 and the feedback from the community submissions is summarised in nine key areas below.

Water

  • Adverse impact on potable water unacceptable
  • Potential causes of water contamination
  • Sourcing water required for hydraulic fracturing and need for monitoring and licensing
  • Insufficient baseline data to properly assess long-term impacts

Regulatory framework

  • No faith in current NT regulatory framework
  • Distrust in NT Government decision-making
  • Perception that NT Government and petroleum industry too closely aligned
  • Need for higher penalties, public reporting of incidents, adequate rehabilitation bonds and independent baseline testing
  • Need for well resourced NT Government and petroleum industry

Land

  • Loss of landscape amenity values
  • Loss of habitat for wildlife
  • Spread of weeds
  • Contamination of land
  • Impediment of stock movement caused by network of roads, pipelines, fences and well pads

Air

  • Methane emissions and limited or no measurements of levels at gas productions sites in Australia
  • GHG emissions and downstream use, including lack of baseline data and need to evaluate life cycle of GHG emissions
  • Need for baseline monitoring and independent monitoring of emissions
  • Climate change, including need to consider GHG emissions for Australia and implications for additional gas production and use

Aboriginal people and their culture

  • Detrimental effect on songlines, sacred sites and cultural landscapes
  • Concern no genuine effort to engage appropriately with, or to properly inform, traditional Aboriginal owners of actual impact for consent
  • Restriction of traditional land use (eg. camping, hunting, fishing, collecting bush tucker)

Social impacts

  • Rapid increase in population associated with development of any industry
  • Conflict within the community between those who support industry and those who do not
  • Influx of FIFO works and negative impact on social fabric of community
  • "Cash splash" resulting in increased alcohol and drug abuse and consequently increased crime

Public health

  • Contamination of water used for domestic consumption and stock watering
  • Release of fugitive emissions and impact on respiratory and related health effects
  • Air contamination by dust generated from land clearing, earthworks and traffic
  • Potential additional impacts on climate change
  • Increased risk of chemical spills along transport routes
  • Increased risk of road trauma
  • Impacts on mental health and wellbeing

Land access

  • Pastoral lessees and Native Title holders no right to refuse access to property is cause of anxiety
  • Under the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) traditional Aboriginal owners have right to refuse access to land at exploration stage but no right to veto production stage
  • Power imbalance between traditional Aboriginal owners and landholders to negotiate land access arrangements
  • Need for restrictions on access to areas of particular environmental, cultural or agricultural significance ("no go zones")

Economic impacts

  • Scepticism about true value of any economic benefit
  • Belief that those who bore risks of development would not receive benefit
  • Investing in onshore unconventional shale gas rather than renewable energy will result in opportunity cost to Government and community
  • Adverse impact on other industries such as tourism, pastoralism, horticulture and agriculture
  • Rehabilitation and remediation costs would fall on public
  • Will not alleviate purported "gas crisis"

As a consequence of submissions on the Background and Issues Paper, the Panel has revised the list of issues it is considering. A complete list of issues is contained in Appendix 1 of the Interim Report with any new issues italicised.

Based upon the Panel's own expertise and consideration of international and domestic literature, written submissions, letters and emails received by the Inquiry, oral submissions and feedback, and the views expressed in feedback forms, the Panel has made some preliminary assessments in relation to each of the key issues and risks. The Panel has also identified areas which require further investigation and assessment before it hands down its Final Report, including parameters for regulatory reform.

Regulatory reform

The Panel has considered the current regulatory framework for onshore unconventional gas development and agrees with submissions that it is deficient and needs to be strengthened to achieve the principles of ecologically sustainable development (ESD)1. The following have been identified as key items for the Panel to consider in order to determine what is necessary for the NT regulatory framework to achieve ESD:

  • precautionary principle2: the Panel will use the precautionary principle when assessing each of the risks identified and where appropriate recommend mitigation measures to ensure environmental harm is avoided, such as "no go zones" or "restricted activity zones";
  • "no go zones": consider which areas should be declared as "no go zones", in particular national parks, reserves and areas of high conservation value, agricultural land, sacred sites, cultural and tourism icons, towns and residential areas, and surface water resources;
  • rehabilitation bonds: consider options to mitigate potential legacy issues associated with abandoned wells;
  • minimum standards: consider whether or not the regulatory framework should include some prescriptive requirements (eg. minimum well pad spacings or minimum well casing standards) to ensure minimum environmental standards are attained. Currently the regulatory framework is objective-based with gas companies identifying certain environmental outcomes for each activity proposed that is to be achieved;
  • regulator: consider options to improve structure, powers and resourcing of the regulator;
  • access to justice: consider options to ensure that those affected (either directly or indirectly) by a decision have appropriate access to justice, such as review and appeal processes; and
  • land access: improvement to land access regime, particularly with regard to pastoral leases is needed.

Future work

It is understood that the Panel will undertake further work:

  • site visits to CSG operations in Queensland, including those in Chinchilla, Roma and Darling Downs;
  • consult with the Queensland Gas Commission;
  • attend briefings in Canberra on climate change, energy security and the Australian Government Bioregional Assessment Program;
  • visit several pastoral leases in the NT, including those in and around Beetaloo Sub-basin; and
  • consult by telephone with the Alberta Energy Regulator in Canada to understand the regulatory framework which operates and whether there are any measures from that jurisdiction which can be adapted and applied in the NT.

What next?

Further public hearings will occur in Darwin, Alice Springs, Katherine and Tennant Creek between 31 July and 10 August 2017 and it is understood that community consultation sessions will be held from 22 August to 1 September 2017. Details regarding the community consultation sessions have not yet been released.

Submissions can be made to the Inquiry at any time in the manner prescribed on the Inquiry's website.

It is expected that the Panel will release its draft Final Report towards the end of the year and the Final Report will be handed down by the end of the year, at which point the Government will look to make its decision to either ban fracking in the Northern Territory or allow it in highly regulated circumstances in tightly prescribed areas.

RELATED KNOWLEDGE

Footnotes

1 ESD is defined, in the Council of Australian Governments (COAG) endorsed National Strategy for ESD, as:

"Using, conserving and enhancing the community's resources so that ecological processes, on which life depends, are maintained, and the total quality of life now and in the future can be increased." Back to article

2 Where there is scientific uncertainty and the threat of serious or irreversible environmental harm, measures must be taken to avoid the threat of environmental harm. Back to article

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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