Australia: Bill to prohibit hydraulic fracturing (fracking) in Tasmania fails

A Bill proposing to amend the Mineral Resources Development Act 1995 to prohibit hydraulic fracturing in Tasmania fails in the Tasmanian House of Assembly.

On 13 September 2017 the Mineral Resources Development (Hydraulic Fracturing) Amendment Bill 2015, which was tabled by the Greens on 19 March 2015 to prohibit the use of hydraulic fracturing in all exploration activities for hydrocarbons, extraction, development and production stages of a hydrocarbon resource projects, was negatived by the Tasmanian House of Assembly.

Fracking moratoriums and review

In 2014 the Tasmanian Government imposed a temporary 12 month moratorium to allow for a review into hydraulic fracturing in Tasmania. The Review was led by the Department of Primary Industries, Parks, Water and Environment and included collaboration with the Environment Protection Authority Division and Mineral Resources Tasmania in the Department of State Growth.

The Terms of Reference for the Review were:

  • To consider the potential use in Tasmania of hydraulic fracturing, including technology and processes, scientific evidence, as well as best practice environmental and safety standards.
  • To examine the potential impacts of hydraulic fracturing in Tasmania, in particular potential impacts on agriculture, groundwater and the broader Tasmanian environment.
  • To consider developments and experiences in the regulation of hydraulic fracturing nationally and internationally.
  • To examine the robustness and operation of the current laws governing exploration licences and any future extraction licences in Tasmania, and consider whether any changes are required to improve protections for land users and industry engagement with landholders and local community.
  • To consider any other relevant matters, including economic costs and benefits.

On 25 February 2015, the Final Report "Review of hydraulic fracturing in Tasmania" was released, containing 17 findings for consideration by the Tasmanian Government, which of particular note included that:

  • further exploration by industry is required to establish the potential for any economically viable unconventional hydrocarbon resources in Tasmania;
  • the risks associated with the use of hydraulic fracking, particularly in the Tasmanian geology, are unknown due to the current lack of exploration for hydrocarbon resources to date;
  • however, industry regulation and best practice methodologies have evolved to the point where the risks associated with this technique can be managed;
  • Tasmania has the opportunity to continue to learn from other Australian jurisdictions where unconventional gas exploration currently occurs; and
  • there is scope in the current regulatory regime to require environmental assessment of a fracking proposal in addition to the current assessments that would apply under the regulatory regime for mineral resource development.

All 17 findings of the Final Report of the Review of hydraulic fracturing in Tasmania

  • Further exploration by industry is required to establish the potential for any economically viable unconventional hydrocarbon resources in Tasmania;
  • The potential use of fracking in Tasmania is unknown due to the nature of Tasmania's geology, the size of any potential prospective area, and the lack of exploration for hydrocarbon resources to date;
  • Whilst the risks associated with this technology are seen as low and manageable by industry, via the use of current best practice environmental and safety standards that continue to evolve, on the basis of the submissions received there appears to be substantial community concern that fracking is inherently unsafe and unmanageable;
  • Appraisal and production of unconventional hydrocarbon resources have implications for agricultural areas including water resources and potential for contamination of land, water and air. Any potential flow on effects on land values and market access will need to be considered, should a project which is to use fracking proceed to the development appraisal stage;
  • The process of unconventional hydrocarbon resource appraisal and production may pose a potential risk to groundwater and surface water quality. Sources of risk include surface mishandling of chemicals and contaminated water, and potential leakage from production wells into shallow, potable aquifers;
  • There is a current lack of detailed information and knowledge on groundwater resources within the Tasmania Basin. However, proponents would be required to undertake detailed groundwater investigation at an appropriate geological and geographical scale prior to being granted approval to drill a petroleum well;
  • Fracking poses a potential risk to the broader Tasmanian environment, including surface water quality and localised impacts on air quality, visual amenity and natural ecosystems. These potential risks may increase as the scale of a potential unconventional gas project increases, and will therefore need to be addressed in a strategic manner if a significant unconventional gas resource is identified;
  • Fracking for the production of hydrocarbons has been in use in Australia for over 50 years. During this time the industry regulation and best practice methodologies have evolved to the point where the risks associated with this technique can be managed;
  • Tasmania has the opportunity to continue to learn from other Australian jurisdictions where unconventional gas exploration currently occurs and from Coal Seam Gas (CSG) regulations and guidelines where relevant, including the National Harmonised Regulatory Framework for Natural Gas from Coal Seams and recent codes of practice for CSG fracture stimulation activities and well integrity;
  • Proposals to undertake fracking in Tasmania are subject to the regulatory regime for mineral resource development in the Mineral Resources Development Act 1995. There is also scope for the Environmental Management and Pollution Control Act 1994 (EMPCA) to be applied for further environmental assessment of a fracking proposal;
  • Production and development of hydrocarbon resources are subject to the Land Use Planning and Approvals Act 1993 and may also be subject to EMPCA, providing further opportunity for community involvement and engagement with the assessment and approvals process;
  • The regulatory regime that applies to exploration and development of mineral resources is complex;
  • The current code of practice, the Mineral Exploration Code of Practice 5th Edition 2012, requires that landholder consent is provided before approval to drill an onshore well can be given. Concerns have been raised that this requirement does not provide enough protection for landholders, as it is not specified in legislation;
  • Fracking does not, of itself, have any direct climate change impacts because it is solely a well development process. Greenhouse gas may be released during hydrocarbon well completion, however, although these effects can be minimised using best practice technologies. Any future hydrocarbon production would lead to the release of carbon dioxide as processed fuels are burnt to produce energy. This would be a secondary impact that would not be directly related to the process of fracking;
  • An expansion of Government support for renewable energies as an alternative to development of an unconventional hydrocarbon resource is a strategic matter for the State and Federal Governments to consider over the coming decades;
  • The public submissions to the review outlined significant concern that the establishment of an unconventional hydrocarbon production industry in Tasmania would be detrimental to Tasmania's clean and green image and associated food, beverage and tourism industries. Additional concerns include potential public health and community impacts; and
  • The potential costs and benefits of an unconventional hydrocarbon industry in Tasmania are unknown and cannot be properly analysed unless a resource has been discovered and its potential confirmed.

After consideration of the Final Report, submissions as well as industry and community representations, the Government released the Tasmanian Government Policy Statement on Hydraulic Fracturing (Fracking) 2015 on 26 February 2015 which extended the moratorium on hydraulic fracturing in Tasmanian for a further 5 years until March 2020. The Policy states that exploration activities for hydrocarbons in Tasmania are supported by the Government, but fracking will not be permitted in its exploration or in the development or production phases of a resource project.

What next?

It is understood from the Government's Policy that while it is highly unlikely that Tasmania has economically viable unconventional hydrocarbon resources in Tasmania, the only way to determine this is through further private sector exploration. Accordingly, the Government proposes that a review into the practice of fracking will be conducted before the moratorium expires via a process to be determined by the relevant Minister at the time.

RELATED KNOWLEDGE

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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