You may have read about the Queensland Government's release
of its "Blueprint for Queensland's LNG Industry" on
17 September 2009. A copy of the Blueprint can be downloaded
LNG Industry Unit
The Blueprint provides for the establishment of the
Government's LNG Industry Unit within the Department of
Employment, Economic Development and Innovation, outlined on page 2
of the Blueprint. One of the LNG Industry Unit's roles is to be
to "[assist] individual LNG projects with approvals, land
tenure and infrastructure negotiations".
The LNG Industry Unit can be contacted at:
LNG Industry Unit
Department of Infrastructure and Planning
PO Box 15009
Brisbane City East QLD 4002
T +61 7 3404 8206
The Blueprint essentially replicates the Queensland
Government's October 2008 policy on the treatment and disposal
of CSG water. It remains unclear how this will be implemented in
law, although there are two significant indications:
CSG producers will be required to prepare CSG water management
the proposed EPP (water) provisions will be supported by
guidelines for environmental management plans and performance
standards for beneficial uses of produced water.
This suggests that the policy will be given effect through
amendments to the Environmental Protection Act and
regulation. Consequential amendments to the Water Act and
petroleum laws may also be required.
Groundwater monitoring, assessment and reporting
Requirements for groundwater monitoring, assessment and
reporting have been included in the Petroleum and Gas
(Production and Safety) Act since 2004. Although their
implementation has not been pursued vigorously by the Government to
date, this is set to change.
In addition, the Government will impose a new industry
levy on CSG producers to fund a regional groundwater
monitoring regime and an independent water monitoring body. The
amount of that levy has not been announced. The Blueprint does not
make it clear whether explorers will be exempt.
Pages 5 and 6 of the Blueprint, under the heading
"Maintaining Queensland's Domestic Gas Supply",
suggest that the Government is likely to adopt one of the two
options set out in the Blueprint for domestic gas reservation. The
basic options under consideration are:
a Gas Reservation Policy, whereby gas producers will be
required to sell or make available to the domestic market the
equivalent of between 10% and 20% of gas production; or
a Prospective Gas Production Land Reserve, which significantly
includes a requirement for holding back from the market certain
prospective gas production areas in order to amalgamate/secure
areas for "orderly future use" (an undefined and highly
No further details of these options are provided at this
The Government has decided to retain the current royalty rate of
10% of wellhead value. Although this is helpful, there are two
One qualification is that the policy does not confirm whether
the existing basis upon which wellhead value is determined will be
retained (leaving aside the additional power that is given to the
Minister described above). One suspects that the impact of
potential changes to Queensland's CSG royalty regime on
producers is by no means settled.
Another qualification is that the Government has announced that
it will amend the Petroleum and Gas (Production and Safety)
Regulations 2004 to allow the Minister to determine the
components of wellhead valuation of petroleum commodities for
royalty purposes - in essence, the Minister determines the wellhead
value, not necessarily with a link to market pricing.
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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