Bills Digest no. 26 2008–09
Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill
2008
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date
introduced: 18
June 2008
House: House of Representatives
Portfolio: Resource, Energy and
Tourism
Commencement:
There are a large number
of different commencement dates for various provisions of the Bill,
and these are detailed in clause 2 of the Bill. However, Schedule
1, which is the focus of this Digest, will commence the day after
Royal Assent.[1]
Links:
The relevant
links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
This Bills Digest does not
take the House of Representatives amendments into
account.
The Offshore Petroleum Amendment (Greenhouse Gas
Storage) Bill 2008 (the Bill) amends the Offshore Petroleum Act
2006 (the Act) to create a legislative regime for the
potential geosequestration of greenhouse gases in suitable
geological formations in the seabed under Commonwealth
waters.[2] In
particular, the Bill regulates:
- the exploration, assessment and testing of geological
formations and the transportation to, and storage of greenhouse
gases in, such formations, and
- potential conflicts between current and future offshore
petroleum operations and titles and current and future
geosequestration operations and titles.
Please note that an explanation of the science
and technology behind geosequestration is in Appendix 1 of this
Digest.
In 2003, Australia became a founding member of
the Carbon Sequestration Leadership Forum (the CSLR), which was an
international group of governments, non government organisations,
industry and researchers collaborating on carbon capture and
storage (CCS).[3]
In 2005, the Ministerial Council on Mineral
and Petroleum Resources (the MCMPR) endorsed a set of regulatory
principles relating to CCS in Australia[4] and according to the Government:
The aim of the Regulatory Guiding Principles
was to achieve a nationally-consistent framework for CCS activities
in each Australian jurisdiction.
Six key issues were seen as fundamental to a
CCS regulatory framework:
assessment and approvals processes
access and property rights
transportation issues
monitoring and verification
liability and post-closure responsibilities
financial issues.[5]
In August 2007, the House of Representatives
Standing Committee on Science and Innovation (the Science and
Innovation Committee) published a report from its inquiry into the
science and economics of CCS.[6] The Science and Innovation Committee concluded
that CCS technology would potentially be important in the global
effort to reduce carbon dioxide emissions.[7] In order to realise that potential, the
Science and Innovation Committee emphasised the importance of
encouraging investor confidence in undertaking large scale CCS
activities and recommended that Commonwealth, State and Territory
governments should develop appropriate legislative and regulatory
CCS frameworks.[8]
Following consultation with industry
stakeholders,[9] it
was decided that the Act would be the most appropriate means of
implementing a greenhouse gas storage regime in offshore
areas.[10] This
decision was made on the basis of a belief that the longstanding
petroleum and emerging greenhouse gas storage industries have
similarities and would be able to co-exist in offshore
areas.[11]
Greenhouse gas storage or CCS is administered
by the Department of Resources, Energy and Tourism (DRET).[12] According to DRET:
CCS is one of many options which the Australian
Government is pursuing to help Australia and the world reduce
greenhouse gas emissions. The Australian Government is committed to
developing these technologies within both the domestic and
international spheres.[13]
The Act replaced
the Petroleum (Submerged Lands) Act 1967 (the PSLA), which
had been the primary Commonwealth legislation for the
administration of Australia's offshore petroleum resources for
almost 40 years and, through age and many amendments, had become
complex and unwieldy.[14]
The PSLA and
associated Acts provided the legal framework within which petroleum
exploration, development and production activity occurred in
Australia beyond the State coastal waters,[15] setting out a basic framework of
rights, entitlements and responsibilities of Government and
industry.[16]
The Act was not
intended to introduce any major policy or legal changes to
regulatory arrangements existing at the time.[17]
The Exposure Draft of the Bill was referred to
the House of Representatives Standing Committee on Primary
Industries and Resources on 19 May 2008 for inquiry and report. The
Committee s
Report[18] was
tabled on 15 August 2008 and its major recommendations are listed
in Appendix 1 of this Digest.
Submissions were made to the House of
Representatives Standing Committee on Primary Industries and
Resources in relation to its Exposure Draft inquiry.[19]
In general, the submissions expressed the
following concerns about the Exposure Draft:
- there are disincentives to future investment in greenhouse gas
storage due to uncertainty of risk created by:
- unequal access to existing acreages due to factors such as the
alleged power of veto by pre-existing petroleum title holders
- insufficient protection of greenhouse gas titles once obtained,
and
- potential long term liability of greenhouse gas title holders
and failure of the Government to assume such liability
- insufficient definitions of serious risk and serious adverse
impact results in inability of stakeholders to fully understand on
what basis the Minister would be making decisions regarding matters
such as release of acreages and protection of titles
- there is insufficient information about how public interest
considerations will be accommodated by the Bill
- a lack of proper consultation regarding the Bill much of the
detail of how the greenhouse gas storage regime would operate has
been left to regulations that have not yet been made some
stakeholders have said that they do not have sufficient information
to make informed opinions about the Bill
- expansive discretionary powers of the Minister
- insufficient information as to whether, and if so how, the
Minister would use industry expertise when making decisions under
the Bill, and
- lack of clarity regarding the extent of consultations that may
be undertaken under the Bill.
It has been stated that there is very little
difference between the Exposure Draft to the Bill and the
Bill.[20]
Consequently, the concerns expressed in those submissions would be
equally relevant to the Bill.
Details of the inquiry into the Exposure Draft
can be found at:
http://www.aph.gov.au/house/committee/pir/exposuredraft/index.htm.
The Bill itself was referred to the Senate
Standing Committee on Economics for inquiry and
the report was tabled on 23 September 2008 (the Bill
Inquiry).
To date there have been 15 submissions to this
current inquiry on the Bill, many of whom had made submissions to
the House of Representatives Committee Inquiry. There are 13
agencies that have made submissions to both inquiries.[21]
Details of the inquiry into the Bill can be
found at:
http://www.aph.gov.au/senate/committee/economics_ctte/offshore_petrol_08/info.htm.
In addition, the Bill was reviewed by the Senate
Standing Committee on the Scrutiny of Bills (the Scrutiny of Bills
Committee) and was reported upon in the
Alert Digest published 25 June 2008.[22] Some of the concerns expressed
by the Scrutiny of Bills Committee will be discussed in the Main
Provisions section of this Digest.
There are number of international instruments
of general application to which Australian is a Party that place
restrictions and conditions on the use of the seabed and subsoil
within our claimable continental shelf. These include United
Nations Convention on the Law of the Sea 1982 (UNCLOS) and
various regional agreements. However, the most directly relevant
instruments are the Convention on the Prevention of Marine
Pollution by Dumping Wastes and Other Matter 1972 (London
Convention)[23] and
the Protocol to the London Convention 1996 (London
Protocol).[24]
Australia is a Party to both instruments.
The London Convention and the London Protocol
control and regulate the deliberate disposal of wastes at sea and
are intended to:
prevent the indiscriminate disposal at sea of
materials and wastes that may be harmful to human health, living
resources and marine life, or which may damage amenities, or
interfere with other legitimate uses of the sea.[25]
However, while the London Convention regulates
dumping, the London Protocol seeks to prevent, reduce, and where
practicable eliminate pollution, and adopts the precautionary
approach as a general obligation .[26]
Both the London Convention and the London
Protocol define dumping as:
any deliberate disposal at sea of wastes or
other matter from vessels, aircraft, platforms or other man-made
structures at sea.[27]
It is unclear whether this definition will
include pipeline discharges direct from land-based sources. It has
also been suggested that the transportation of CO2 by
pipeline from a land-based course direct to sub-sea repositories
will not breach international law because the Protocol does not
extend to sub-seabed repositories accessed only from land .[28]
Parties to both the London Convention and the
London Protocol are encouraged to create regional agreements that
further their objectives. An example of this is the Convention
for the Protection of the Marine Environment of the North-East
Atlantic 1992 (see below).[29]
The London Convention has been ratified by 82
parties, including Australia.[30]
The London Convention prohibits ocean dumping
of wastes and other matters listed in Annex I (CO2 is
not included), but permits the dumping of materials listed in Annex
II if a permit is issued by the country doing the dumping. Annex
III lists the factors that must be considered before issuing a
permit.[31]
The London Protocol commenced on 24 March 2006
and replaces the 1972 London Convention for the 38 countries that
have ratified the Protocol (of which Australia is one). The 2006
amendments to the Protocol to the London Convention specifically
relating to the storage of CO2 under the seabed
commenced on 10 February 2007.
The London Protocol adopts a stricter legal
framework for preventing ocean waste disposal than the London
Convention, placing a general prohibition on the dumping of wastes,
except for those wastes or matter listed in Annex 1.[32] The London Protocol
also adopts the precautionary principle if an action or policy
might cause severe harm to the public or the environment, the
proponents of that action must prove it safe rather than its
opponents prove it unsafe.[33]
From 10 February 2007, amendments to the
Protocol now allow storage of CO2 under the
seabed.[34]
Australia, as a party to the Protocol (along with France, Norway
and the United Kingdom) proposed an amendment which changed Annex 1
to the Protocol to allow for the sequestration of captured carbon
dioxide streams into sub-seabed geological formations.
Following the 2007 amendments, Annex 1 now
includes carbon dioxide streams from carbon dioxide capture
processes for sequestration as an exception to the general
prohibition on dumping.[35] Carbon dioxide streams may only be stored if they meet
the following three criteria:
- Disposal is into a sub-seabed geological formation; and
- They consist overwhelmingly of carbon dioxide. They may contain
incidental associated substances derived from source material and
the capture and sequestration processes used; and
- No wastes or other matter are added for the purpose of
disposing of those wastes or other matter.[36]
Following the 2007 amendments to the London
Protocol,
Guidelines for sub-seabed geological sequestration of carbon
dioxide were agreed to at the second meeting of the contracting
parties in November 2007.[37]
The OSPAR Convention[38] is the current instrument guiding
international cooperation on the protection of the marine
environment in the North-East Atlantic. While this Convention is
not relevant to carbon capture and storage off the coast of
Australia, it underwent amendments in 2007 to allow the storage of
CO2 in geological formations under the seabed, thereby
contributing to the international jurisprudence relating to carbon
capture and storage.
According to the Government, greenhouse gas
title holders would incur compliance costs that are similar to
those incurred by petroleum title holders.[39] However, the Government admits that
it cannot quantify those costs in the absence of details in
regulations and guidelines, which are yet to be published.[40]
The Government states that:
Many of the requirements of the regulator are
costly but not additional to work which would be carried
out by titleholders as a routine part of designing and executing
and managing an offshore geosequestration operation
As long as administration is directed towards
minimal duplication and consistency of requirements, as is done in
offshore petroleum, there should be no undue burden to preparing
submissions for the regulator.[41]
The House of Representatives Standing
Committee on Science and Innovation Committee looked at the
economic costs of CCS and concluded that:
The predicted actual costs of implementing CCS
technology also vary.[42]
There is also the question of what impact CCS
deployment will have on electricity costs. Clean energy comes at a
price but in the case of CCS, the size of a price increase is not
clear.[43]
At this stage, it is extremely difficult to
accurately estimate the costs of CCS. The cost estimates for CCS
that are made are marked by very wide variations.[44]
Increased electricity costs have also been
predicted by others.[45]
Of primary concern is that, contrary to the
stated aims of the Bill,[46] it is argued that a greenhouse gas storage regime, as
proposed, creates a significant disincentive to invest in
greenhouse gas storage operations.
Such a disincentive to invest derives largely
from the uncertainty of future rights, obligations, costs and
liability created by proposed provisions in the Bill.
Greenhouse gas storage operations involve new
and developing, knowledge and technology and the general consensus
is that such operations would be extremely expensive. Stakeholders
generally submit that greenhouse gas storage proponents would be
disinclined to invest such large amounts of money into operations
if the prospect of receiving profitable returns is
uncertain.[47]
Uncertainty generally relates to the themes,
which are outlined below and discussed in more detail in the Main
Provisions section of this Digest.
As mentioned above, the offshore petroleum and
proposed greenhouse gas storage industries are closely linked,
hence the decision by the Commonwealth that both industries should
be regulated by the same Act.
However, as it has been pointed out, there are
differences between the offshore petroleum and greenhouse gas
storage industries, which must be considered.[48] Consequently, the challenge with
proposed provisions in the Bill is how to mesh the new greenhouse
gas storage industry with the existing petroleum industry framework
and to manage the synergies of these competing industries without
diminishing or destroying the momentum of either industry.
As the Standing Committee of Primary Industries
and Resources stated:
The need for the co-existence of petroleum and
GHG storage activities became very clear to the Committee during
our deliberations. Both endeavours are in the national interest,
and certain key locations in Australia s offshore waters are prime
sites for both activities.[49]
The issue of how the proposed greenhouse gas
storage regime intersects with the existing petroleum framework,
and, in particular, how it deals with potential conflict between
competing uses, is a key theme in the main provisions part of the
Digest.
Access to data - differing views exist about
the perceived imbalance in the availability of data to existing
petroleum titleholders and to new greenhouse gas titleholders. Some
consider access to data a major obstacle to the development of
offshore storage and when submitting work bids for acreage
release.[50] Others
consider these comments are misguided suggesting that there is
sufficient publicly available data to meet the needs of both
greenhouse gas and petroleum operators in identifying potential
storage sites.[51]
Protection of petroleum titles -
pre-commencement petroleum titles[52] are protected and petroleum titleholders
virtually have a right of veto over greenhouse gas operations
through the application of impact tests and public interest tests.
Proposed subsections 249CZC(1) and
(3) allows the Minister to issue a direction
to:
- eliminate any risk of significant adverse impact under a
greenhouse gas injection licence,
- suspend for a period or indefinitely any or all of the rights
rights conferred under a greenhouse gas injection licence, and
- cancel the licence.
The Bill allows for overlapping titles but
stakeholders are concerned at the lack of transparency in bidding
for acreage releases, the subjective nature of the criteria[53] and lack of certainty
in relation to post-commencement declared exploration permits,
retention leases and production licences which requires
Commonwealth ministerial approval to carry on key petroleum
operations.
The Bill makes little provision for mechanisms
to consult on State or Territory interests in relation to
cross-jurisdictional issues should they arise.[54] Given that greenhouse gas
injection and storage projects regulated by the Bill will take
place within the Commonwealth jurisdiction, any need to consult on
State/Territory interests was viewed by the Government as being
addressed through more formal avenues such as the MCMPR and its
subcommittees and other consultative forums.[55] Applications for pipeline licences
are made to the Joint Authority (comprising the responsible State
Minister and the responsible Commonwealth Minister) but the licence
is conditional on approval by the Joint Authority of the greenhouse
gas substance to be transported in that pipeline. The Commonwealth
Minister can however direct the Joint Authority in relation to a
decision it has made in approving or refusing a greenhouse gas
substance to be conveyed by pipeline.
Proposed provisions of the Bill have been
criticised for providing for only limited consultation regarding
what are largely discretionary ministerial decisions made and
actions performed with respect to various aspects of greenhouse gas
storage operations.[56]
As the greenhouse gas storage industry is a
relatively new and emerging industry, limited provision for
consultative processes creates uncertainty particularly with
respect to future rights of greenhouse gas storage proponents, as
well as the technological and knowledge base development of the
industry.
There is consensus that greenhouse gas storage
operations, such as exploration activities, appraisal drilling, and
construction of infrastructure, could potentially impact the
environment.[57]
The Bill contains several requirements aimed
at environmental protection and conservation.[58]
However, it is argued that these proposals do
not go far enough in environmental protection and conservation,
thereby contributing to uncertainty regarding greenhouse gas
storage proponents future obligations and thereby, future
costs.[59]
Although it is recognised that adverse impacts
associated with greenhouse gas storage operations may not arise or
be known until many years into the future,[60] there is no proposed provision in the
Bill expressly transferring liability to the Government once a
greenhouse gas storage site is closed.[61]
Under the Bill, the Minister has expansive
discretionary power to make certain decisions and take certain
action, in some cases, without provision for mandatory
criteria that the Minister must consider when using his or her
discretion.[62]
This does not reflect transparency in
ministerial decision making, creating uncertainty for greenhouse
gas storage proponents with respect to their rights, obligations
and liabilities.
This is exacerbated by the lack of express
provision in the Bill for the establishment of and/or reliance on
panels or committees with appropriate expertise to advise the
Minister.[63] It is
noted that the lack of express provision for the use of experts in
the Bill is not necessarily unusual and that, in such
circumstances, it is common practice for the Government to rely on
experts in the relevant area. However, given that greenhouse gas
storage is a new and emerging industry and that industry
stakeholders have clearly expressed their interest in and concern
for reliable and appropriate expert advice being relied upon in
developing this new industry,[64] the Government may consider providing an
explanation for its position regarding the use of expert
advice.
While the Bill does propose some rights of
appeal, these rights are limited largely to judicial as opposed to
merits review of ministerial decisions and actions.[65]
It is arguable that, in the context of the
sort of decisions being made, judicial review is the norm. For
example, this is the case with most major decisions under the
Environment Protection and Biodiversity Conservation Act
1999 (the EPBC Act).
However, some stakeholders take the view the
limited appeal rights further exacerbate the lack of transparency
in ministerial decision making and ensuing uncertainty for
greenhouse gas storage proponents as mentioned above.[66]
Many of the details of the proposed provisions
in the Bill are to be found in, as yet, unpublished regulations.
Consequently, stakeholders would not have sufficient information
with which they can properly be consulted with regarding the Bill.
This is a source of great uncertainty for stakeholders.[67]
Due to the comprehensive explanation of
proposed amendments in the Bill by the
Explanatory Memorandum to the Bill, this Digest will only deal
with the proposed amendments in Schedule 1 of the Bill and will do
so according to issues rather than by item numbers.[68]
In addition, this Digest does not purport to
cover all issues relating to nor all proposed amendments in the
Bill.
The current range of petroleum titles will
link closely with the proposed greenhouse gas titles. The following
briefly summarises the range of petroleum titles.
A petroleum exploration permit is
granted by the Joint Authority (relevant State Minister and the
Australian Government Minister) for a period of six years, with a
renewal period of five years. An exploration permit can be extended
if the permittee applies for a retention lease or a production
licence (Part 2.1 and Part 2.2 of the Act). When petroleum is
discovered the holder of the permit must notify authorities of its
discovery and then apply for either a retention lease or a
production licence.
A retention lease allows explorers to
retain tenure over discoveries until they become commercial. The
lease is issued for five years with a renewal period of five years
(Part 2.3 of the Act). The criteria to be satisfied when applying
for a retention lease is that it is not commercially viable at the
time of the application but the block is likely to become
commercially viable within 15 years.
A production licence is issued for an
indefinite period (Part 2.4 of the Act).
An infrastructure licence (Part 2.5
of the Act) is issued to enable the construction of offshore
facilities for the storage and processing of petroleum and for
facilities for the recovery of petroleum in areas outside a
production licence.
A pipeline licence (Part 2.6 of the
Act) is issued to transport petroleum and is granted for an
indefinite period. However the licence is terminated if no
construction occurs or the licence is not used for a continuous
period of at least five years.
Item 125 of the Bill proposes
to amend existing section 137 of the Act to
prohibit a petroleum production licensee to either inject or store
a substance in a geological formation permanently or otherwise. It
is the intention of the Government to:
preserve pre-existing rights of the petroleum
industry as far as is practicable to minimise sovereign
risk[69] to
existing title-holders investment in Australia s offshore
resources.[70]
However, certain stakeholders have submitted
that this provision restricts the rights that petroleum production
licensees currently have under section 137. Woodside Energy Ltd
comment that in practice, this had included the authority to
dispose of gas via re-injection into the production licence area
and to inject gas as a means of enhanced oil recovery or enhanced
gas recovery .[71]
The Act, as amended by the Bill, would
continue to apply only in the Commonwealth offshore jurisdiction
not within State or Territory Coastal waters.[72]
The new greenhouse gas titles, to be created
by proposed Chapter 2A, generally correspond to
equivalent petroleum titles in the Act (titles in parentheses are
the equivalent petroleum title).
Proposed sections 249AC-249AS
relate to the application for and grant of assessment permits which
enable the holder to explore for greenhouse gas injection and
storage sites. The rights and conditions under which these permits
operate are contained in proposed sections 249AD
and 249AE. The permit is granted for six years
(proposed section 249AH), although an extension is
available if the permit holder applies for a declaration of a
greenhouse gas storage formation (proposed section
249AHA).
Proposed sections 249BB-249BS
relate to the application for and grant of greenhouse gas holding
leases. These enable the lessee to explore the lease area for
potential storage formations and injection sites; and to inject and
store substances to determine the suitability of sites. Conditions
relating to greenhouse gas holding leases are found in
proposed section 249BC. The
criteria that apply to holding leases are that an identified
greenhouse gas storage formation exists in the lease area and that
the applicant is not able to commence operations immediately but is
likely to be able do so within 15 years (proposed sections
249BI, 249BO, 249BU). The duration of a greenhouse gas
holding lease is five years. A greenhouse gas holding lease cannot
be extended more than once (proposed section
249BT). However it can be extended if the lessee
applies for a special greenhouse gas holding lease (see discussion
on next page) or a greenhouse gas injection licence. A special
greenhouse gas holding lease remains in force indefinitely
(proposed subsection 249BF(2)). This enables the
lessee to retain tenure over a block or blocks until petroleum
operations are completed.[73]
The Minister must take account of the
following matters when considering an application from a greenhouse
gas holding lessee to carry out key greenhouse gas operations:
- the potential impacts that could affect existing and future
petroleum exploration or recovery operations under existing or
future petroleum titles such as an exploration permits, retention
leases or production licences this applies to pre-commencement and
post-commencement petroleum titles (proposed subsection
249BD(4))
- if the Minister considers that there is a significant risk of
significant adverse impacts, the Minister must take into account
any written agreements that may exist between the petroleum title
holder and the greenhouse gas applicant (proposed
subsection 249BD(5)) a similar provision relates to future
petroleum titles over the blocks (proposed subsection
249BD(6))[74]
- the composition of any substance being injected or stored (
proposed subsection 249BD(7))
- the Minister must have regard to the public interest[75] (proposed
subsection 249BD(8)) , however
- if the Commonwealth Minister is satisfied that there is
significant risk that the key greenhouse gas operations will have a
significant adverse impact on petroleum exploration or recovery
operations being carried out under either, an existing
pre-commencement petroleum title or post commencement production
licence, held by someone other than the applicant , the Minister
must not approve those greenhouse gas operations unless the holder
of a pre-commencement or post commencement petroleum title holder
has agreed in writing to the greenhouse gas operations being
carried out and the Minister is satisfied with that arrangement
(proposed subsection 249BD(11)).
A greenhouse gas injection licence authorises
greenhouse gas injection and storage activities of greenhouse gas
substances into identified greenhouse gas storage formations within
the licensed area. A greenhouse gas assessment permit holder, a
greenhouse gas holding lessee and a production licensee may apply
for an injection licence (proposed sections 249CH and
249CQ). As part of the process for applying for an
injection licence, the applicant must submit draft site plans to
the Minister. The draft site plan (see below) forms the basis of
the information that flows between the injection licensee and the
Commonwealth Minister (proposed subsection
249CH(9)).
A greenhouse gas injection licence remains in
force indefinitely, depending on the time it takes for the project
to be completed (proposed section 249CF). However,
an injection licence will be terminated if no injection operations
have been carried on for five years (proposed section
249CG).
The Bill does not specify what information is
to be included in a site plan. The Explanatory Memorandum states
that matters to be covered by the site plan will be contained in
the regulations and be modelled on the existing objective based
regulations under the Act, for example the Petroleum (Submerged
Lands) (Management of Safety on Offshore Facilities) Regulations
1996.[76]
The site plan will contain details of:
- the geological attributes and features of the greenhouse gas
storage formation
- current and proposed injection and storage operations
- the operations and techniques to be used by the licensee to
monitor and verify the behaviour of the greenhouse gas over the
life of the project
- operations management systems, including processes for
identification, assessment and management of risks, and
- predictions as to the short, medium and long term behaviour and
fate of the greenhouse gas in the identified storage formation and
associated geological formations.[77]
The site plan will be required by the
regulations to be updated both periodically and whenever there is a
material change in the level and kind of risk.[78]
The Bill proposes certain protections for
pre-commencement and post commencement petroleum titles.
Pre-commencement petroleum titles are titles
granted under the Act, prior to the commencement of the
Bill.
Post commencement petroleum titles are defined
in proposed section 6 as including a
post-commencement exploration permit, retention lease and
production licence.
In proposed subsection
249CZC(1), where a greenhouse gas injection licence area
overlaps with an area covered by certain pre-commencement petroleum
titles in which petroleum is discovered, the Minister must, with
written notice, suspend rights conferred by the greenhouse gas
injection licence; or cancel the greenhouse gas injection licence;
or give directions to the greenhouse gas injection licence holder
to take certain steps to eliminate risk if the Minister is
satisfied that:
- the recovery of petroleum either is, or is likely to become,
commercially viable
- there is a significant risk the greenhouse gas injection
licence operations will have a significant adverse impact on either
the recovery of the petroleum or the commercial viability of such
recovery[79]
- it is practicable to eliminate the risk, and
- the relevant petroleum title holder has not agreed in writing
to the greenhouse gas injection licence operations being carried
out.
A similar provision is proposed by
subsection 249CZC(3) in relation to mitigating,
managing or remediating risk in such situations.
This provision is aimed at protecting
pre-commencement petroleum rights,[80] which has been a particularly
contentious part of the Bill.[81]
Some stakeholders have argued that
proposed subsections 249CZC(1)
and 249CZC(3) effectively give a right of veto to
pre-commencement petroleum title holders, which could affect
competition, being unfairly advantageous to large petroleum
companies, because some of the most suitable greenhouse gas storage
sites would be located in areas where petroleum is being recovered,
thereby limiting access to suitable storage areas.[82] Other stakeholders argue that
protecting pre-commencement petroleum title rights is
important.[83]
However, it is noted that in both of those
proposed provisions, the actual power to suspend or cancel
greenhouse gas titles, in the absence of consent by the relevant
petroleum title holder, lies with the Minister.
It is also pointed out that at the injection
and storage stage of the greenhouse gas operations, the greenhouse
gas title holder would have already invested large amounts of
money. The proposed provisions create uncertainty of title for
greenhouse gas title holders who would suffer very substantial
detriment or loss of their investment if the Minister cancels or
suspends the injection of greenhouse gas.[84]
Proposed subsection 442D(1)
provides that, where the operation of the Act or regulations would
result in an acquisition of property from a person otherwise than
on just terms, the Government must pay a reasonable amount of
compensation for that acquisition of property.[85]
Section 51(xxxi) of the Constitution provides
that:
The Parliament shall, subject to this
Constitution, have power to make laws for the peace, order, and
good government of the Commonwealth with respect to:
the acquisition of property on just terms from
any State or person for any purpose in respect of which the
Parliament has power to make laws;
Section 51(xxxi) effectively ensures that all
Commonwealth laws relating to the acquisition of property must
provide just terms to people whose property has been compulsorily
acquired.[86] Such
laws failing to provide as such would be invalid.
The question of whether the Bill proposes a
right of compensation to greenhouse gas title holders who lose
their investment if the Minister cancels or suspends the injection
of greenhouse gas includes consideration of whether:
- there is property
- the cancelling or suspension of the operations is deemed to be
the acquisition of property, and
- it is an acquisition of property other than on just
terms.[87]
The majority of the High Court has stated
that:
It is well established that s 51(xxxi) of
the Constitution is concerned with matters of substance rather than
form and that "acquisition" and "property" are to be construed
liberally.[88]
It has been argued that the primary question
in determining whether there has been an acquisition is whether the
statutory right was inherently susceptible to statutory
modification or extinguishment from the time the right was created.
If so, then it is argued that there can be no acquisition because
anything done would not be inconsistent with the right as
originally granted.[89]
It is noted that in
Commonwealth v WMC Resources Ltd.,[90] Gummow J explained
that:
To accept this proposition is not to assert
that the defeasible character of the statutory rights in question
denies them the attribute of "property" in the "traditional" sense
of the general law.[91]
However, Gummow J went on to state that:
in some circumstances, of which the statutory
rights in this case are an instance, the nature of the property may
be such that its defeasance or abrogation does not occasion any
acquisition in the constitutional sense.[92]
However, more recently, the High Court has
warned that:
references to statutory rights as being
"inherently susceptible of change" must not be permitted to mask
the fact that "[i]t is too broad a proposition that the contingency
of subsequent legislative modification or extinguishment removes
all statutory rights and interests from the scope of
s 51(xxxi)". Instead, analysis of the constitutional issues
must begin from an understanding of the practical and legal
operation of the legislative provisions that are in issue.[93]
No definitive answer may be given regarding
the question of whether, and if so, how proposed section
442D applies to greenhouse gas titles proposed to be
created under the Bill. However, it is noted that despite the
cautious approach of the High Court in the more recent cases,
Commonwealth v WMC Resources Ltd has not been
overruled.
A post-commencement petroleum title is defined
in item 63, proposed section 6 as including a
post-commencement exploration permit, retention lease and
production licence.
Proposed section 249NDA
generally allows for overlapping of greenhouse gas and petroleum
titles.
However, the primary intent to protect post
commencement petroleum titles and discoveries is apparent in the
following proposed provisions in the Bill.
Under proposed subsections
249AD(3) (greenhouse gas assessment permits),
249BB(3) (greenhouse gas holding leases), and
249CD(3) (greenhouse gas injection licences),
petroleum recovered by a greenhouse gas title holder in the
relevant title area would not become the property of that title
holder. Instead, such petroleum may only be recovered by the
greenhouse gas title holder, with the Minister s written consent,
to appraise the petroleum discovery made as an incidence of the
particular greenhouse gas operations carried out.
In addition, proposed section
249NB provides that if petroleum is discovered in a
greenhouse gas title area, the relevant greenhouse gas title holder
must immediately inform the Minister about the discovery and,
within three days after the date of the discovery, that greenhouse
gas titleholder must provide the Minister with a written notice
of:
- details of the discovery, and
- any other information as provided for by the regulations.
Failure to comply with the notification
requirement would be an offence punishable by a maximum penalty of
$11 000 (100 penalty units).[94]
According to proposed subsection
249NB(4), the notification requirements do not apply to
petroleum title holders.
Proposed sections
79B, 114B and 138B provide a process for post-commencement
exploration permits, retention leases and production licences to be
determined by the Minister as declared exploration permits,
declared retention leases and declared production
licences.
When the Minister makes a determination to
declare a title, it indicates that operations under these petroleum
titles may have a significant risk of significant adverse impacts
on the injection or storage of greenhouse gas substances under
existing or future greenhouse gas titles. The determination can be
made at the time when the petroleum title is issued or at a later
time. The Minister can revoke the determination if the Minister
considers that the significant risks of those significant adverse
impacts no longer exist.
Under existing sections 79, 114 and 138,
exploration permits, retention leases and production licences are
granted by the Joint Authority (consisting of the responsible State
Minister and the responsible Commonwealth Minister). However,
should they subsequently become declared titles, they will be
subject to Commonwealth ministerial approval under proposed
sections 79A, 114A and 138A in order to carry out key
petroleum operations.
The Explanatory Memorandum explains that where
there are competing interests to be taken account of, these
provisions allow the Commonwealth Minister to decide the competing
merits of cases where they cannot co-exist.[95] The Regulatory Impact Statement
stated:
Allowing the regulator (Commonwealth Minister)
to make decisions on which industry should proceed in cases where
they cannot co-exist allows the relative merits of the two
competing opportunities to be taken into account (the public
interest model). It also allows for flexibility if the relative
importance of petroleum and greenhouse gas operations change. It
also enables commercial agreements between the parties to be taken
into account, which could lead to acceptable compromise solutions.
This could be done through a public interest test in which the
regulator would consider the relative merits of the two competing
proposals. Criteria could include social, economic and
environmental factors.
Stakeholders comment that the process of
declaring petroleum titles is unclear as is the way in which
significant adverse impact is assessed. Some consider that
there is no predictable or transparent system to manage the
interaction between greenhouse gas title holders and pre-existing
and co-existing petroleum title holders and in the opinion of some
stakeholders these provisions require significant
reconsideration.[96] There is concern with this part of the Bill also that
it will result in a disincentive to future upstream oil and gas
activity because of a lack of legal certainty,[97] and uncertainty about whether
titles might be declared or not.[98]
Note however if an applicant applies to carry
on key petroleum operations where an existing greenhouse injection
licence is in place, and the Minister considers that the proposed
petroleum operations poses a significant risk of significant
adverse impact on existing or future greenhouse gas operations,
then unless there is an agreement between the greenhouse gas
titleholder and the applicant to carry on petroleum operations with
which the Minister is satisfied, then the responsible Commonwealth
Minister must not give approval (proposed subsections
79A(10), 114A(10) and 138A(10)).
The Government states that there is no longer
a need to protect existing rights for post commencement
titles.[99]
However, it is still necessary to avoid perception by the petroleum
industry that the proposed greenhouse gas storage system hinders
future offshore petroleum operations, which would make it difficult
to attract investment in Australia by major petroleum
companies.[100]
The need to protect future petroleum title
development is reflected by proposed section
249CZC, as discussed above.
Some stakeholders expressed concern about the
disincentive on development of the greenhouse gas storage industry
caused by uncertainty in title is due to what is perceived as the
Bill s overarching aim of protecting petroleum interests.[101]
The provisions of the Bill relating to
pipelines enable stakeholders to apply for a licence to construct
greenhouse gas substance pipelines within a petroleum production
licence area or a greenhouse gas injection licence area, or to
construct pipelines from places outside those licensed areas to the
licensed areas.
Proposed subsection 181(5)
provides that the Joint Authority must first approve the greenhouse
gas substance to be transported under a pipeline licence before a
pipeline can operate. Licensees must also comply with regulations
that establish third party access to services
(proposed subsection 181(8)).
The Joint Authority must take account of the
following factors in relation to applications:
- whether the substance is suitable for injection and permanent
storage into an identified greenhouse gas storage formation,
and
- for exploratory purposes, if the substance is suitable for
injection and storage when searching for a potential greenhouse gas
storage formation, (proposed
subsection 181A(3).
The Commonwealth Minister may
direct the Joint Authority under proposed
subsection 181A(5) in its exercise of power in approving or
refusing an application under subsection 181A(2). Please note that
a direction under proposed subsection 181A(7), is not a legislative
instrument.
Proposed section 186A enables
a production licensee to apply for a pipeline licence under section
185 (application for pipeline licence) within 90 days of the
gazettal of a notice of an application by another person other than
the production licensee. The application must be made within the 90
days after gazettal and not more than 180 days (although this can
be longer if applied for within 90 days and approved by the Joint
Authority). In the application, the production licensee may request
that the application of the other person notified in the gazette be
rejected. This gives preference to the existing titleholder if they
wish to apply for a greenhouse gas pipeline licence. There are no
specific provisions in the Bill relating to criteria to refuse the
grant of a pipeline licence under proposed section 188A other than
if the Joint Authority is not satisfied that there are sufficient
grounds to grant a pipeline licence then the Joint Authority must
refuse to grant it. Similar rights for greenhouse gas injection
licensees exist in proposed section 186B.
Proposed section 187A grants
greenhouse gas-related licences to those who have applied for a
pipeline licence under section 185. Greenhouse gas pipeline
licences may be granted to the following:
- a person other than the production licensee (proposed
subsection 187A(2))
- a production licensee after compliance with certain
requirements(proposed subsection 187A(3))
- a person in a greenhouse gas injection licence area other than
a greenhouse gas injection licensee (proposed subsection
187A(5))
- a greenhouse gas licensee after compliance with certain
requirements(proposed subsection 187A(6))
- refusal of a greenhouse gas related pipeline licence to these
categories is dealt with in proposed section 188A
consultation provisions in section 226 apply to
the refusal of a licence to a production licensee and a greenhouse
gas injection licensee who apply for a pipeline licence
consultation involves written notice to the affected person with 30
days notice of the intended decision by the Joint Authority to give
the person an opportunity to make a submission to the
Authority.
The route of the pipeline should be shown in
the plan accompanying the application for a licence. The Joint
Authority may suggest a different route if it thinks it appropriate
(proposed subsection 187A(8)).
Although Native Title rights are protected
under the Bill in relation to greenhouse gas activities generally
and under section 243 of the Offshore Petroleum Act 2006
in relation to petroleum activities, pipelines that extend beyond
the licensed area into the coastal waters of a State or territory
may result in possible conflicts or interference with the enjoyment
of native title rights within the meaning of the Native Title
Act 1993 . The Bill refers to such possible interference in
relation to the matter of a site closing certificate
(proposed section 249CZF), in proposed
section 249NF where persons carrying out activities under
any of the greenhouse gas titles are to do so in a manner that does
not interfere with that enjoyment to a greater extent than is
reasonably necessary, and in proposed
section 316-311A relating to site closing
directions to holders of greenhouse gas injection licences to take
action to eliminate or manage the risk that an injected greenhouse
gas substance will have significant adverse impacts on the
enjoyment of native title rights. The Attorney-General s Department
advises that the Native Title Act will ensure that grants of
greenhouse gas titles are valid and that native title claimants and
holders will have the same procedural rights as holders of
non-native title interests. That is those with title interests will
be consulted about the grants of rights under the Bill.[102]
Certain State jurisdictions are concerned
about the lack of mechanisms in the Bill to enable State and
Territory interests to be considered. Cross-jurisdictional issues
may arise concerning the treatment of piped greenhouse gas from
onshore sites to offshore greenhouse gas storage
facilities.[103]
There is some concern that administrative confusion will occur
because of the separate regimes for the approval of pipeline
licences at State/Territory level and approval of the
transportation of a greenhouse gas substance by pipeline which is
the responsibility of the Commonwealth. The States want a more
cooperative effort in dealing with the interactions between the
State and the Commonwealth jurisdictions.[104] One stakeholder comments that the
pipeline right of way over State and Territory coastal waters is
one matter not dealt with by the legislation. A problem that needs
addressing, according to the stakeholder, is one illustrated by the
Otway Project where one of the difficulties encountered were the
approvals necessary for the pipeline which resulted in significant
delays and extra expense for the project.[105]
Part IIIA of the Trade Practices Act
1974 (the TPA) enables third parties to be able to use certain
essential infrastructure facilities, where particular public
interest criteria are met.
Following the recommendations of the Hilmer
Report in 1993 and as part of the commitment to national
competition principles, amendments were made to the TPA which came
into effect in 1995, establishing a new legal regime under which
firms could be given a right of access to essential facilities
owned by another firm, when the provision of such a right meets
certain public interest criteria. [106] The Explanatory Memorandum raises a
question as to whether the regime contained in Part IIIA applies to
a particular identified greenhouse gas storage formation, or
infrastructure used for injection and storage operations or related
operations.[107]
As there appeared to be some doubt as to the applicability of Part
IIIA of the TPA to the facilities, it was considered desirable to
establish a specialised third party access regime by regulation
under the Act.
Compliance with a third party access to
services regime may be an attached condition to several categories
of licence in the Act;
- revised section 167 conditions of infrastructure licences are
amended to provide for regulations that may establish a third party
access regime to services related to infrastructure facilities in
connection with greenhouse gas activities
- revised section 181 conditions of pipeline licences are amended
to provide for regulations that may establish a third party access
regime for services related to greenhouse gas pipelines
- proposed section 249CE
conditions of greenhouse gas injection licences provide for
regulations that may establish a third party access regime to
services that relate to the following:
- identified gas storage formations
- wells, equipment or structures used in injecting greenhouse gas
activities, or
- equipment and structures used in processing, compressing or
storing greenhouse gas substances prior to injection.
Several problems/issues are raised by
stakeholders concerning third party access. The primary issue is
that the detail as to the setting up of the regimes is left to
regulations rather than the principal Act itself.[108] Another concern is that third
party access regimes will only apply to greenhouse gas facilities
and services, something that currently does not apply to the
petroleum industry s facilities and services.[109] The Australian Coal
Association and the Minerals Council of Australia consider that
third party access to identified storage formations will pose
liability issues and for that reason greenhouse gas storage
formations should be removed from the list of facilities and
services to which third party access may apply. [110] APPEA considers that the full
extent of these powers are unclear with the detail to be included
in regulations and therefore unknown. Initially, it had understood
that the third party regimes would only apply to pipelines.[111] The Bill however,
includes provisions to set up third party access regimes in
relation to all aspects of greenhouse gas injection and storage
activities as set out above.
Greenhouse gas industry stakeholders have
commented on about their lack of access to data held by existing
petroleum title holders that may relate to areas where greenhouse
gas injection and storage activities could take place.[112] Factors causing
concern include:
- there is an imbalance of information available to greenhouse
gas title holders and petroleum title holders in relation to
proving whether there is a significant risk of significant adverse
impact, usually to overlapping petroleum titles ,[113] which could be a significant
hurdle to the development of offshore storage[114]
- the availability of data needed for the preparation of site
plans[115] a site
plan must demonstrate the safe and secure nature of the storage to
the Minister and identify risks and ways in which those risks would
be reduced to their lowest practicable level the regulator then has
to make a decision based on this information[116]
- access to data is considered to be a major obstacle to the
creation of a level playing field in relation to work bids in
acreage release[117]
- petroleum title holders have a competitive advantage to enter
the greenhouse injection and storage market, while creating a
significant barrier for new greenhouse gas competitors stakeholders
recommend that the Minister should be required to take the relative
information advantage into consideration when evaluating
bids[118]
Proposed section 249CZC is an
example of where unequal access to data could create an uneven
playing field in relation to entering the new greenhouse gas
storage industry.
It may be argued that there will be occasions
where the onus for refuting questions of:
- commercial viability of any petroleum discovered in an area
over which there is a greenhouse gas injection licence and which is
subject to a pre-commencement petroleum title
- whether there is significant risk of serious adverse impact
test on petroleum recovery operations or the commercial viability
thereof, and
- whether it is practicable to eliminate such risk,
would lie on the relevant greenhouse gas
injection licensee.[119]
This raises the question of whether the
greenhouse gas injection licensee can get access to what would be
confidential in-house data relating to the petroleum operations in
the area possessed by the petroleum title holder of that area.
Proposed section 249CZC does
not clearly address this particular question.
This was the subject of concern expressed by
some stakeholders.[120]
The procedure for releasing acreage is
contained in proposed sections 249AJ and 249AP.
Both procedures relate to the work-bid greenhouse gas assessment
permit and the cash-bid greenhouse gas assessment permit.
Proposed section 249AJ
provides that the Minister can invite applications for the grant of
a greenhouse gas assessment permit over any or all of the blocks
specified in the gazettal notice. Where there are two or more
applicants, the Minister ranks them by means of criteria that will
be made publicly available (proposed subsection
249AL(3)).
A similar provision exists for cash-bid
greenhouse gas assessment permits (proposed section
249AP)).
Stakeholders have several comments in relation
to the procedures for acreage release. Some consider that the
criteria for the work-bid process are inadequate, allocating tenure
to acreage to the most deserving applicant. Such criteria, they
claim, are highly subjective and involve different considerations
to those involved in the grant of petroleum rights. The Victorian
Government noted that the petroleum operators of the Gippsland
Basin with their accumulated knowledge and longstanding presence in
the area and that this is likely to be the most deserving of the
grant. New greenhouse gas storage proponents to the area will be
unable to make a competitive acreage bid.[121] Others consider that there is a
distinct absence of public participation, transparency and
accountability throughout the entire greenhouse gas storage
process. The Bill only provides the minimal mandatory matters that
the Minister need take account of when granting rights, citing as
an example the greenhouse gas acreage releases.[122] Stakeholders have argued that
greater transparency is required in the process, and that there
should be publicly available guidelines or procedures prescribed by
regulation and that the same transparent and accountable procedures
should also relate to the petroleum acreage release system.[123] As previously
mentioned, some stakeholders have argued that the availability of
data is seen as a major obstacle to a level playing field being
created because petroleum title holders will have a significant
advantage as far as availability of data is concerned and this very
fact runs counter to general competition principles and creates a
significant barrier to entry into the greenhouse gas injection and
storage market.[124]
The Significant Risk of Significant Adverse
Impact test (SROSAI test) is referred to in several proposed
provisions in the Bill, for example:
- subsection 146(4B) (impact of
post commencement petroleum production licence on greenhouse gas
titles)
- sections 249AF and
249BD (approval by Minister of key greenhouse gas
operations)
- sections 249BZ
(directions the Minister may give to greenhouse gas title
holders)
- section 249CXA (directions
Minister may give to greenhouse gas injection licensees to protect
geological formations containing petroleum pools)
- section 249CZ (serious
situations)
- section 249CZC (protecting
petroleum discovered in the title area of a pre-commencement
petroleum title), and
- section 249CZF (site closure
and pre-certificate notices).
Issues have been raised with the definition of
the SROSAI test.[125]
Item 81 of the Bill proposes
that the meaning of significant risk is affected by
proposed section 15E (see item
109 of the Bill), which appears to be a mistake and should
actually be section 15F, providing that where
there is a risk that a particular operation will have a large
adverse impact on other operations, such risk will be considered as
being significant even if the probability of it occurring is
low.
The actual SROSAI test is not defined
elsewhere in the Bill nor in the Petroleum Act, leaving its meaning
unclear.[126]
However, it is noted that in other similar
cases, the Government has to provide non-legally binding guidance
of the meaning of significance in the form of administrative
guidelines.[127]
It may be possible for the Government to do the same in this
context.
Under the proposed amendments in the Bill,
instances when the Minister must consider public interest include
decisions about:
- approving key petroleum operations in relation to declared
exploration permits (proposed subsection 79A(7));
retention leases; (proposed subsection 114A(7));
production licences (proposed subsection
114A(7))
- approving key greenhouse gas operations relating to greenhouse
gas assessment permits (proposed subsection
249AF(8)); greenhouse gas holding leases (proposed
subsection 249BD(8)), and
- grants of greenhouse gas injection licences (proposed
subsection 249CI(3)).
Under the proposed amendments in the Bill,
instances when the Joint Authority must consider public interest
include decisions about grants of production licences
(proposed subsections 145(1)(d) and
146(4B)(c)).
However, it is noted that under
proposed section 442C of the Bill, the public
interest test may, in fact, be applied to every ministerial
decision made under the Bill.
The Government has stated that the public
interest test, among other things, will be covered in the
Regulations because:
it appeared inappropriate to pursue this level
of detail without first soliciting clearer feedback from
stakeholders on the proposed legislative amendments.[128]
Stakeholders generally point out that without
the detail of what the public interest test involves, they are
unable to make informed comments about relevant provisions in the
Bill.[129]
Some indication of what the public interest
test would involve is given in the Government s Regulatory Impact
Statement on the Bill:
Allowing the regulator to make decisions on
which industry should proceed in cases where they cannot co-exist
allows the relative merits of the two competing opportunities to be
taken into account (the public interest model). It also allows for
flexibility if the relative importance of petroleum and greenhouse
gas operations change. It also enables commercial agreements
between the parties to be taken into account, which could lead to
acceptable compromise solutions. This could be done through a
public interest test in which the regulator would consider the
relative merits of the two competing proposals. Criteria could
include social, economic and environmental factors.[130]
There are several proposed provisions in the
Bill relating to consultations that must or may be carried out in
relation to ministerial decisions and/or actions under the Bill.
Examples are the Minister:
- proposing to direct a greenhouse gas injection licensee under:
- proposed section 249CZAA of
the Bill, to take certain action outside the licence area in an
attempt to deal with a serious situation pursuant to
proposed section 249CZA of the Bill
- proposed section 249CZCA of
the Bill, to take certain action outside the licence area in an
attempt to eliminate, mitigate, manage or remediate a risk that
greenhouse gas injection operations could have a significant
adverse impact on recovery of petroleum or the commercial viability
thereof pursuant to proposed section 249CZC of the
Bill, and
- proposed section 316-311B of
the Bill, to take certain action outside the licence area in
relation to site closure pursuant to proposed section
316-311A of the Bill
- granting or varying a greenhouse gas special authority under
proposed sections 249HG and 249
HJ respectively of the Bill
- making adverse decisions under the Act pursuant to
proposed section 249JH of the Bill
- cancelling a greenhouse gas title pursuant to proposed
sections 249MB and 249MC of the Bill,
and
- making entries into the Register to maintain the Register s
accuracy and currency pursuant to proposed section
298-286 of the Bill.
However, on closer examination of some of
those provisions, it appears that consultation generally involves
the Minister giving written notice to the relevant registered
greenhouse gas titleholders of the Minister s intention to give the
direction; grant or vary a greenhouse gas authority; make an
adverse decision; cancel a greenhouse gas title; or correct the
Register. The notice must include details of the Minister s
intention, as well as an invitation to make submissions regarding
such intention. The Minister must take into account any
submission received (see, for example, proposed subsection
249HJ(4)).
In addition, in certain cases, the Minister
must also give a copy of such notice to any other person as
determined by the Minister,[131] which leaves the following questions
unanswered:
- on what basis would the Minister decide who should receive the
notice?
- how would the Minister inform him or herself of what he or she
should consider when making this decision?
- what avenues of review would be afforded to people who do not
agree with that decision?
The Bill also proposes a further limitation if
the Minister considers that the situation is one of an emergency,
the Minister would not have to undertake the consultation provided
for in the Bill.[132]
Stakeholders have commented on the perceived
failure of proposed provisions in the Bill to ensure proper public
consultation of the greenhouse gas storage processes provided for
in the proposed amendments.[133]
State
and Territory Interests
Existing Part 1.4 of the Act provides for the
application of the general body of State and Territory laws, as
laws of the Commonwealth, to petroleum exploration, exploitation
and conveyance activities in the offshore area of that State or
Territory.[134]
State and Territory interests in relation to
pipelines are discussed on p. 33.
There are also amendments proposed in
items 253-261 of the Bill,
regarding the National Offshore Petroleum Safety Authority (the
Safety Authority). These amendments essentially include greenhouse
gas storage operations within the scope of the Safety Authority s
functions and powers relating to its regulation and supervision of
occupational health and safety (OH&S) obligations. These
proposed amendments allow for communication with relevant State and
Territory Greenhouse Gas Storage Ministers about certain matters
relating to OH&S obligations.
Some stakeholders have commented on the lack
of provision in the Bill for consideration of State interests. It
is submitted that this is particularly so because cross
jurisdictional issues arise from:[135]
- sources of greenhouse gas, such as power stations and
refineries that generate the greenhouse gases, located within State
and Territory jurisdictions
- transportation of greenhouses gas from those locations,
possibly across jurisdictional boundaries, to offshore sites,
and
- greenhouse gas storage formations located across jurisdictional
boundaries.
The Government s response is:
Close involvement with the States/Territories
on major projects can be addressed through existing consultative
processes, including the Ministerial Council on Minerals and
Petroleum Resources and its sub-committees.[136]
The Bill proposes several provisions aimed at
environmental protection and conservation generally. The following
are examples.
Proposed subparagraphs
249CZF(4)(b)(i) and (iii) provide that
the Minister may refuse to give a pre-certificate
notice[137] in
relation to an identified greenhouse gas storage formation if the
Minister is satisfied there would be a significant risk of
significant adverse impact on the conservation and exploitation of
natural resources and on the environment, among other things.
Proposed subparagraphs
316-311A(2)(f)(ix) and (xi) provide that,
in relation to site closure, the Minister may direct the
greenhouse gas injection licensee to undertake specified activities
to eliminate, mitigate, manage or remediate the risk of significant
adverse impact on the conservation or exploitation of natural
resources; or the environment, among other things.
Notably, both of these powers are
discretionary.
Proposed paragraphs
249NF(2)(b) and (c) provide that someone
carrying on activities in an offshore area under a particular
greenhouse gas title, must do so without interfering with fishing
or the conservation of the sea and seabed resources, to an extent
greater than is necessary for the reasonable exercise of the rights
and performance of the duties of that person.
However, it has been argued that these
proposals do not go far enough in environmental protection and
conservation.[138]
It is noted that sections 23-24A of the
Environment Protection and Biodiversity Conservation Act
1999 (EPBCA) prohibit actions that could have a significant on
the environment in a Commonwealth marine area, unless:
- ministerial approval has been granted, or
- one of the other exceptions in subsections 23(4) or 24A(8)
apply.
Presumably, therefore, the relevant
environmental assessment and approval provisions of the EPBCA will
apply to greenhouse gas operations in Commonwealth waters if it is
possible those actions might have a significant environmental
affect.
The Government has stated that while there is
limited experience with the permanent storage of large amounts of
greenhouse gas, greenhouse gas operations are generally analogous,
in scale and complexity, with offshore petroleum.[139] In addition, the Government
considers that careful site selection and effective monitoring of
greenhouse gas storage sites will minimise risks to people and the
environment.[140]
In line with the above comments, liability is
only addressed by the Bill to the extent of minimising risk by
monitoring and regulating greenhouse gas operations. Such
provisions include:
- ministerial powers relating to dealing with serious situations
(proposed section 249CZ)
- obligations of a greenhouse gas permit, lease or licence holder
in relation to surrender of the relevant title (proposed
section 249LB)
- remedial ministerial directions to former and current
greenhouse gas permit, lease or licence holders (proposed
sections 316-312 and 316-311)
- establishment of greenhouse gas inspectors to monitor and
inspect greenhouse gas operations (proposed sections
316-318 and 316-319)
- discretionary power of the Minister to impose conditions on
greenhouse gas titles that the title holder maintain insurance in
relation to the greenhouse gas operations, which are the subject of
the greenhouse gas title (proposed subsection
302(2A))
- site closure processes, which include:
- greenhouse gas injection licensees obligations to provide
certain information with an application for a site closing
certificate (proposed section 249CZE)
- issue of a pre-certificate notice to an applicant for a site
closing certificate (the applicant) once greenhouse gas injection
operations have ceased (proposed section
249CZF)
- payment of security by the applicant to the Government in
relation to the estimated costs of programs that the Government
proposes to carry out to monitor the behaviour of the greenhouse
gas substance stored, as specified in the pre-certificate notice
(proposed sections 249CZGAA and
249CZM), and
- site closing ministerial directions to greenhouse gas injection
licensees once greenhouse gas injection operations have ceased
(proposed section 316-311A).
There is no provision in the Bill expressly
transferring liability to the Commonwealth Government once a
greenhouse gas site is closed. In fact, the Government states
that:
there be no new regulation and the issue of
long term liability be left to common law in the same way as it
does for petroleum and other industries.[141]
According to the Government:
No new regulation would involve relying
on common law for long term liability. Under this option,
greenhouse gas title holders would not be immunised from common law
liability to persons who suffer injury or loss as a result of their
actions. Nor would their liability be limited. This
non-intervention would extend to all forms of common law liability,
including long term liability. The Government would therefore not
take over long term liability from project participants. Nor would
the Government provide any indemnity to project participants in
respect of any liability they might incur.
In the long term, the risk would, in a sense, pass to the community
because project participants may cease to exist or because of some
other time related factor such as availability of witnesses. For
example if GHG operations were to result in personal injury or loss
to individuals, at a time when there were no project participants
still available to be sued, or where damages were for some other
reason irrecoverable, the cost would in practice be borne by the
community. This would, however, be the consequence of the passage
of time, not of any assumption of liability on the part of
government. Greenhouse gas industry participants would therefore
need to make their own arrangements to deal with potential common
law liability, as an ordinary cost of doing business, as must
members of any other industry. [142]
The concern with the approach taken in the
Bill regarding liability associated with greenhouse gas storage is
that the need for monitoring and management of the greenhouse gas
site over a much longer period of time than for petroleum recovery
activities.[143]
The Government s statements acknowledge that
long term liabilities raise the following issues:
- non-existence of those responsible for the damage at the time
when an event occurs giving rise to the liability, and
- difficulties of maintaining proceedings after a long period of
time has passed such as unavailability of witnesses.
However, it does not reflect recognition of
the difficulties, for example, of obtaining insurance for cover of
future risks of unknown scale and magnitude.
The Government s position on long term
liability relating to CCS does not reflect the following
recommendations of the Science and Innovation Committee:
The Committee recommends that the Australian
Government, following industry consultation, develop legislation to
define the financial liability and ongoing monitoring
responsibilities at a geosequestration site.
The Committee recommends that financial
liability and site responsibility should consist of three
phases:
- Full financial liability and responsibility for site safety and
monitoring should rest with industry operators for the injection
phase and a subsequent length of time (this time to be determined
by the Australian Government subject to specific site risk
analysis);
- Following the above specified time, shared financial liability
and responsibility for site safety and monitoring should rest
equally with industry operators and state, territory and Australian
governments in the longer term. The exact length of this shared
responsibility and liability risk analysis; and
- Following the determined phase of shared liability and
responsibility, full financial liability and responsibility for
site safety and monitoring should be transferred to the two spheres
of government in perpetuity.[144]
Stakeholders have expressed concerns about the
prospect of greenhouse gas titleholders, particularly, greenhouse
gas injection licensees, being liable for damage incurred for many
years following closure of a greenhouse gas site, which would
discourage investment in greenhouse gas storage
investments.[145]
However, the Australian Network of
Environmental Defender s Offices (ANEDO) submits that the Bill does
not provide sufficient mandatory powers to the Minister to
effectively protect against risks to the environment and humans,
citing the example of proposed subsection
249CZF(4) of the Bill.[146] Under proposed subsection
249CZF(4), the Minister does not have to refuse to give a
pre-certificate notice, relating to an application for site closure
of a greenhouse gas storage formation, even if the Minister is
satisfied that there is a significant risk that the greenhouse gas
injected into that site will have an significant adverse
impact[147] on
the geological integrity of the site, natural resource conservation
or exploration, the environment or people. Nor would the Minister
have to refuse to give such pre-certificate notice if the Minister
was not satisfied that greenhouse gas substance was behaving as
predicted pursuant to the site plan for that greenhouse gas storage
formation.
As it is generally agreed that most depleted
or uncommercial petroleum sites are likely to be optimal greenhouse
gas storage sites,[148] this could create situations where petroleum
titleholders may also be greenhouse gas title holders (joint title
holders).
The proposed amendments in the Bill would
effectively create two regulators for these joint title
holders:
- the Joint Authority[149] (see, for example, items 131-136,
140-142 of the Bill), and
- the Minister.
The situation would be further complicated in
that the Minister, also part of the Joint Authority,[150] has greater power
or authority both as a part of and over the Joint
Authority.[151]
Such potential administrative burdens for joint
title holders are particularly noticeable in relation to the
transport of greenhouse gas from its source to the greenhouse gas
storage site by pipelines.
The Joint Authority has the power under
section 181 to grant pipeline licences subject to any conditions it
thinks appropriate. In relation to a greenhouse gas pipeline, the
Joint Authority has to approve the greenhouse gas substance under
proposed section 181A. The Minister, however,
under proposed subsection 181A(5) can direct the
Joint Authority in its exercise of power of approving or refusing
approval of a greenhouse gas substance to be conveyed by the
pipeline. In addition, the Minister may generally direct the Joint
Authority in the exercise of its power conferred by Part 2.6 of the
Act (Pipeline Licences) if it relates to an application for an
infrastructure licence or is an infrastructure licence relating to
infrastructure associated with greenhouse gas activities as set out
in proposed subsection 13(3). These directions
under proposed subsections 177B(1) and 181A(5) are
not legislative instruments, which means they are not tabled in the
Parliament nor are they subject to parliamentary scrutiny.
Greenhouse gas title holders would have
various regulatory obligations imposed on them, in relation to
greenhouse gas operations, by proposed amendments in the Bill.
These include:
- applications for:
- various greenhouse gas titles (proposed sections 249AE,
249BC and 249CE) and authorities
(proposed sections 249GF and
249HE)
- consent to surrender a greenhouse gas title (proposed
section 249LA)
- a site closing certificate (proposed section
249CZE)
- approval of transfer of a greenhouse gas title
(proposed section 298-257)
- entering name on Register as greenhouse gas title holder
(proposed section 298-265)
- approval of current and future dealings[152] (proposed sections
298-271 and 298-280 respectively),
and
- data management (see Chapter 5 of the Act and
proposed Chapter 5A of the Bill)
Greenhouse gas special authority holders would
also have particular reporting obligations under proposed
section 249HK in the Bill. If, during a particular month a
greenhouse gas special authority[153] is in force over any part of a
block, which is also subject of a greenhouse gas permit, lease or
licence, the holder of the greenhouse gas special authority must,
within 30 days following the end of that month, report to the
registered greenhouse gas permit, lease or licence holder about
operations carried out on the block during the month.
In addition, greenhouse gas permit, lease and
licence holders must notify the Minister about possible eligible
greenhouse gas storage formations and any discovery of petroleum
under proposed sections 249NA and
249NB of the Bill respectively.
Some stakeholders have commented on the
potential for additional administrative burdens being placed on
joint title holders by proposed amendments in the Bill.[154]
The Minister has various discretionary powers
under proposed amendments in the Bill. Examples of these powers
are:
- by written or published notice, make certain directions
(numerous proposed provisions)
- request information (proposed section
298-288)
- make decisions about blocks (proposed subsections
249NE(1) and 249NH(3))
- cancel titles (see, for example, proposed sections
249MB (greenhouse gas permits, leases and licences),
249ME (greenhouse gas search authority))
- consent or refuse to consent to surrender of a greenhouse gas
title (proposed section 249LB)
- vary, suspend or exempt titleholders from conditions imposed on
greenhouse gas permits; leases; licences; search or special
authorities (proposed sections 249KA and
249KE), and
- grant, refuse to grant, vary or revoke greenhouse gas titles
and authorities (see, for example, proposed sections
249HC, 249HF, 249HI and
249HL (greenhouse gas special authorities)).
This is an extensive, but by no means
exhaustive, list of discretionary powers that would be given to the
Minister. In addition, the Bill does not always clarify those
factors that the Minister must consider when using his or her
discretion. Both factors are of concern to stakeholders largely
because of the uncertainty created by such discretionary decision
making and the ensuing disincentive to invest in greenhouse gas
storage operations.[155]
The lack of clarity of the term public
interest , as discussed above, is related to this issue.
The Bill does not expressly mandate the use of
expert advice by the Minister when making decisions regarding
matters such as impact assessment tests.
In addition, the Explanatory Memorandum does
not explain whether, and if so, how the use of expert advice would
be used.
Stakeholders have expressed concerns about
this issue.[156]
As previously mentioned, it is noted that the
lack of express provision for the use of experts in the Bill is not
necessarily unusual and that the Government, in such circumstances,
does refer to experts in the relevant area. However, given that
greenhouse gas storage is a new and emerging industry and that
industry stakeholders have clearly expressed their interest in, and
concern for, reliable and appropriate expert advice being relied
upon in developing this new industry, the Government may consider
explaining its position regarding the use of expert advice. Such
explanation would have been usefully incorporated into the
Explanatory Memorandum to the Bill.
Stakeholders have also commented that
ministerial decision making proposed by the Bill would not be
sufficiently transparent, thereby not encouraging
accountability.[157]
The Bill does propose some degree of
notification requirements, including the requirement to
publish:
- variations of notices of directions to greenhouse gas
titleholders in relation to:
- dealing with serious situations (proposed subsection
249CZA(12))
- protecting petroleum discoveries (proposed subsection
249CZC(12))
- variations of conditions of greenhouse gas injection licences
(proposed subsection 249KA(4))
- notices of surrender and cancellation of titles
(proposed subsections 249LC(3) and
249MB(3) respectively)
- notices of declarations relating to reservation of blocks and
titles (proposed subsection 249NE(1))
- notices of correction of the Register (proposed
subsection 298-286(3)), and
- notices of directions to remove property (proposed
subsections 316-313(3) and (4)).
Importantly, proposed section
406-418 of the Bill sets out a list of events, of which
the occurrence and details must be published in the
Gazette.
Under proposed sections 249JH
and 249MC, when proposing to make an adverse
decision[158] or
a decision to cancel a title, the Minister must provide the
affected person with a notice of the proposed decision, which sets
out the reasons for and invites submissions regarding that proposed
decision.
It is noted that the Bill does not otherwise
propose that the Minister publish reasons for final decisions that
he or she makes. There appears to be slightly more extensive
provision for decision makers to provide reasons for decisions made
under existing petroleum provisions in the Act.[159]
However, it is noted that:
The Administrative Decisions (Judicial
Review) Act 1977 also confers on an aggrieved person a right
to obtain written reasons for the decision in question. The person
may request a written statement setting out the findings on
material questions of fact, referring to the evidence or other
material on which those findings were based and giving reasons for
the decision.[160]
Part 6.1 of Chapter 6 in the Act provides for
reconsideration and review of decisions made under the Act. In
particular, under section 433 of the Act,
reviewable ministerial decision includes a decision, which is:
(i) is made under this Act or the regulations;
and
(ii) is not a decision of a delegate of the
responsible Commonwealth Minister; and
(iii) is made in the performance of the
functions, or the exercise of the powers, of the Joint Authority,
or the Designated Authority, in relation to the offshore area of an
external Territory;
As it is, that part of the existing definition
would not include the Minister s decisions made under the Bill.
The definition in section 433
then provides that reviewable ministerial decision would, in the
alternative, would include:
(i) regulations made for the purposes of
paragraph 422(2)(c) or 423(2)(c), where the decision is of a kind
referred to in paragraph 428(2)(b); or
(ii) regulations made for the purposes of
paragraph 425(2)(c) or 426(2)(c); or
(iii) subsection 434(1) or (4); or
(iv) clause 6, subclause 7(1), clause 8, or
subclause 9(6) or
(10), of Schedule 5.
Note 1: Subparagraphs (b)(i) and (ii) relate to
the release of technical information.
Note 2: Subparagraph (b)(iii) relates to the
reconsideration of reviewable delegated decisions.
Note 3: Subparagraph (b)(iv) relates to the
release of technical information given to the Designated Authority
before 7 March 2000.
It is noted that the only amendment to
section 433 proposed by the Bill is item
274A, which proposes to amend the definition of
reviewable Ministerial decision in section
433 of the Act to include regulations made regarding
confidential use of information or samples under proposed
sections 406-422 and 406-423 of the
Bill.
The Bill proposes some other appeal rights in
relation to the Minister s decisions.
Proposed section 298-298 of
the Bill enables the Minister to determine registration fees.
Proposed subsection 298-298(3) provides that the
Minister s fee determination may be appealed against in the Federal
Court or relevant State or Territory Court.
Proposed section 316-315 of
the Bill provides for limitation of action relating to the removal,
sale or disposal of property under proposed section
316-314 of the Bill, with the exception of
proposed subsection 316-314(4) and
proposed section 442D of the Bill. In other words,
the only actions, suits or proceedings permitted are for recovery
of costs and expenses by the Minister incurred in relation to such
removal, sale or disposal of property; as well as compensation for
the acquisition of property other than on just terms. However,
rights conferred on a person by the Administrative
Decisions (Judicial Review) Act 1977[161] to apply to a court; or any
other rights either for judicial review or that a person has to
seek review by a court or tribunal, in relation to:
- a decision made
- failure to make a decision, or
- actions taken for the purpose of making a decision,
continue to be enforceable under proposed
subsection 316-315(3) in relation to such removal, sale or
disposal of property.
The Bill contains provisions setting out what
the regulations may provide, for example:
- conditions relating to pre-certificate notices and site closure
(proposed paragraph 249CZF(6)(b))
- basis of estimates of and other details relating to security
amounts relating to pre-certificate notices (proposed
249CZGAA(5))
- rights conferred by greenhouse gas special authorities[162] ((proposed
subsections 249CZJC(3) and 249HB(3)
respectively)
- application fees (proposed subsection
249JB(2))
- notification of petroleum discovery in a greenhouse gas title
area and information to be provided about the discovery
(proposed subsection 249NB(3))
- site plans details (proposed section 15E);
Part A will contain predictions on how the GHG will behave in the
identified greenhouse gas storage formation and Part B will deal
with other matters
- fees for inspection of the Register and instruments
(proposed section 298-296), and
- exercise of rights and compliance with international law
obligations (proposed sections 447A and
448A).
Such regulations are yet to be published.
According to the Government:
It should be stressed that the Government has
yet to make any decision on the regulations and
guidelines to cover things such as public interest tests,
impact significance tests, assessments and approvals, monitoring
and verification, financial issues and post closure responsibility.
Aside from acknowledging those used in offshore petroleum as a
useful starting point for many of these instruments, it appeared
inappropriate to pursue this level of detail without first
soliciting clearer feedback from stakeholders on the proposed
legislative amendments. As a consequence, many issues relating to
the final cost of regulation also cannot be assessed at this stage,
and will be the subject of a future analysis.[163]
The final stage in the process will be the
development of the associated regulations and guidelines. The
development of these regulations and guidelines will require
further consultation with relevant stakeholders. A further RIS will
be undertaken on the regulations and guidelines, at which stage a
clearer picture of costs and benefits will be provided.[164]
Stakeholders comments reflect the importance of
such regulations being developed and published in order to complete
consultation on the Bill. Without knowledge of the content of those
regulations, some stakeholders generally believe that consultation
on the Bill is inadequate.[165]
It is noted that the Scrutiny of Bills Committee
made the following comment on the setting of fees in unpublished
regulations (albeit in another, though related, the Offshore
Petroleum (Annual Fees) Amendment (Greenhouse Gas Storage) Bill
2008:
The Committee has consistently drawn attention
to legislation which provides for the rate of a fee to be set by
regulation. This creates a risk that the fee may, in fact, become a
tax. It is for Parliament, rather than the makers of subordinate
legislation, to set a rate of tax.[166]
Several proposed provisions in the Bill
provide for strict liability offences.[167]
Strict liability offences do not require fault
to be proven and the requirement to prove fault has been a basic
and important protection of criminal law. The concern about using
strict liability offences stems from the general premise that it is
unfair to subject people to:
criminal punishment for unintended actions or
unforseen consequences unless these resulted from an unjustified
risk (ie recklessness).[168]
The Government has further stated that:
Commonwealth Governments and Parliaments have
long taken the view that any use of strict or absolute liability
should be properly justified.[169]
Please refer to the comments made by the
Scrutiny of Bills Committee relating to the use of strict liability
offences in the Bill.[170]
Proposed subsection
406-412(1) provides that a person is not excused
from providing information, evidence or documents under
proposed section 406-409 on the grounds of
self-incrimination or that it would expose the person to a
penalty.
However, proposed subsection
406-412(2) provides that the information, evidence or
documents, or anything obtained as a direct or indirect
consequence of giving the information, evidence or documents
cannot be used in evidence against the person in civil or
criminal proceedings other than criminal proceedings for
an offence for failure to provide information, documents or
evidence; or the provision of false or misleading information,
documents or evidence.
Proposed section 316-319 of
the Bill provides that a greenhouse gas project inspector[171] may exercise
access, inspection and entry powers in relation to structures,
vessels, aircraft and buildings used in connection with certain
greenhouse gas operations. The greenhouse gas project inspector may
inspect and test equipment, as well as inspect, take extracts from
and make copies of documents, used in connection with greenhouse
gas operations.
Importantly, under proposed subsection
316-319(3), a greenhouse gas project inspector may only
enter residential premises with either the occupier s voluntary
consent or a warrant issued by a magistrate. However, there are
concerns with the relevant provisions.
First, it is noted that proposed
subsection 316-319(5) provides that before obtaining the
occupier s consent, the occupier must be informed that he or she
may refuse such consent and that proposed subsection
316-319(6) provides that consent must be voluntary in
order to be valid. Yet, there is no provision in the Bill requiring
the greenhouse gas project inspector to provide the occupier of
premises with the information necessary to enable that person to
give informed consent, such as explicit information about the
possible ramifications of consenting.
Second, where the greenhouse gas project
inspector relies on a warrant, the only requirement is for the
greenhouse gas project inspector to provide the occupier of the
premises a copy of the warrant or a form thereof if the occupier is
at the premises (proposed subsection 316-319(4)).
There is no requirement for the greenhouse gas project inspector to
inform the occupier, in plain English, of the occupier s rights and
responsibilities.[172] Yet the Government has stated that such a requirement
is in fact policy.[173]
Third, it is also noted that proposed
subsection 316-319(7) requires that a person who is either
the occupier of any building, structure or place; or someone in
charge of a vessel, aircraft or equipment, referred to in
proposed subsection 316-319(2), must provide
reasonable assistance to the greenhouse gas project inspector.
It is unclear, given the wording of
proposed subsection 316-319(2) and structure of
proposed section 316-319 in
general, whether the places in proposed subsection
316-319(2) may include residential premises , as well as
non residential premises . If so, it is noted that:
- proposed subsection
316-319(7) does not distinguish between entry by consent
and entry by warrant, and
- proposed subsection 316-319(8)
generally provides that non-compliance with the requirement in
proposed subsection 316-319(7) is
an offence.
In relation to residential premises, this
would be in stark contrast to the Government s position that:
Where legislation provides for entry to
premises with consent, there should not be a requirement to
cooperate with the officer / inspector and failure to cooperate
should not be an offence
Requiring cooperation or penalising
non-cooperation is fundamentally inconsistent with the notion of
consent.[174]
It is also noted that there is no provision
for a greenhouse gas project inspector to rely on a warrant or the
occupier s consent to exercise his or her powers of access, entry
and inspection with respect to non-residential premises. Under
proposed subsection 316-319(1), the greenhouse gas
project inspector simply has to exercise those rights at a
reasonable time and to produce his or her identity card.
It would be of assistance for the Government
to clarify whether proposed subsection 316-319(2)
refers to both residential and non residential premises.
Under proposed paragraph
316-319(2)(c) of the Bill, a greenhouse gas project
inspector may inspect and test equipment, which the greenhouse gas
project inspector reasonably believes is being or will be used in
connection with certain greenhouse gas operations in an offshore
area.
Under proposed paragraph
316-319(2)(d) of the Bill, a greenhouse gas
project inspector may also enter a structure, aircraft, vessel,
building or place, either offshore or in a State or Territory,
where the greenhouse gas project inspector reasonably believes
there are documents connected with those greenhouse gas operations,
to inspect, take extracts from or make copies of those
documents.
It is proposed that failure by the occupier of
the premises to assist the greenhouse gas project inspector or
hindering the greenhouse gas project inspector in exercising those
powers would be offences (proposed subsections 316-319(8)
and (9)).
The question raised by these proposed
provisions is that: do such powers of inspection, testing, taking
extracts of and copying amount to seizure ?
In the Explanatory Memorandum, the Government
appears to simply state that:
These powers are consistent with the monitoring
powers conferred on mining inspectors,[175]
Such a question is more significant when
considering that such powers may be exercised without informed
consent or warrant in relation to non-residential premises.
Carbon
capture and storage, on a scale as contemplated by the Bill, is an
emerging global industry, involving developing scientific knowledge
and technologies, and is an important part of a global effort in
reducing carbon dioxide emissions.
The Bill
provides a preliminary framework within which such an industry
could develop in Australian offshore areas, with many of the
details of the framework to be included by way of regulations (yet
to be published).
Submissions indicate that industry stakeholders, although generally
welcoming of the development of a CCS industry, continue to have
concerns about certain aspects of the Bill and its operation,
primarily relating to certainty of investment for future CCS
investors, the disincentives for new entrants to the greenhouse gas
storage industry and certain possible anti-competitive effects.
Lastly,
in proposing a preliminary framework, concerns about the Bill
relate as much to what has been omitted from the Bill, such as
failure to expressly or sufficiently provide for:
- responsibility for potential short and long term liability
arising from CCS operations, and
- the bases upon which the Minister makes important decisions,
especially those affecting people s rights and interests.
Australia s energy consumption
Although Australia has only 0.32 per cent of
the world s population, Australia contributes 1.43 per cent of
global greenhouse gas emissions and has one of the highest per
capita emission rates in the world. Much of this is due to its
heavy reliance on coal-based electricity generation, although other
factors such as the size of the country, the climate, and the large
volume of mineral processing also contribute. The amount of carbon
burned per dollar of wealth created in Australia is higher than the
USA and nearly double that of Europe and Japan. The average growth
rate of Australia s emissions over the last 25 years was twice that
for the USA and Japan, and five times that for Europe.[176]
Australia currently consumes over 5600
petajoules (PJ) of primary energy[177] annually, of which renewable energy
sources supply less than five per cent.[178] Stationary energy consumption alone
produces annual emissions of over 280 megatonnes (Mt) of
CO2-equivalents,[179] accounting for half of Australia s total
emissions.[180]
Growth in Australian energy consumption is projected to average
around 1.6 per cent until 2030, and it is forecast that Australia
will continue to be reliant on fossil fuels to supply most of its
energy needs for several decades. Under policy measures in
operation during 2007, fossil fuels are projected to account for 94
per cent of primary energy consumption in 2029-30;[181] however, greater
reliance on renewable energy sources should result from Government
policy measures including a renewable energy target of 20 per cent
by 2020 and the planned Carbon Pollution Reduction Scheme that will
drive investment in and uptake of renewable energy.[182]
In order to reduce its emissions of carbon
dioxide, Australia may need to consider clean coal technologies,
including carbon capture and storage, of which geosequestration for
greenhouse gas storage is a part.
There are a number of processes that have been
used for many years in coal-fired power stations that aim to
improve the efficiency and environmental acceptability of coal
extraction, preparation and use, and many more are under
development. These processes are collectively known as clean coal
technologies . These technologies reduce emissions of several
pollutants, reduce waste and increase the amount of energy gained
from each tonne of coal. They include various chemical and physical
treatments applied pre- or post-combustion. They may be broadly
divided into processes relating to combustion efficiency or
pollution control. An example is gasification of coal, by burning
it in oxygen to produce a cleaner gaseous fuel known as syngas (a
mixture mainly of hydrogen and carbon monoxide), which is
comparable in its combustion efficiency to natural gas. There are
also systems that increase efficiency by recycling waste heat,
which use less coal to generate the same amount of power.[183]
Most of Australia s current coal-fired
electricity-generating plants are of a conventional design, with
typical efficiencies of about 33-35 per cent. This means that only
about 35 per cent of the usable energy in the coal is actually
converted into electricity. Much of the rest is waste heat. Plants
with greater energy conversion efficiency (up to about 42 per cent)
are possible by using very high temperature steam, which is known
as supercritical steam. Such plants are in commercial use in many
developed countries and are being installed in greater numbers in
developing countries such as China. Even higher efficiencies (up to
50 per cent) are expected from ultra-supercritical plants that
utilise additional heat-capturing cycles. Two-thirds of Australia s
coal-fired power plants are older than 20 years, and only four
employ supercritical technology. Two plants utilising clean coal
technology are under construction in Australia, and several more
are proposed.[184]
Supercritical plants are now built to an
international standard, and a CSIRO project is under way to
investigate the production of ultra-clean coal that achieves 50-55
per cent energy conversion efficiency, reduces ash and sulphur to
low levels, and can reduce greenhouse gas emissions by 25 per cent
compared with the best conventional coal power stations. This works
out at about a 10 per cent reduction in total greenhouse gas
emission across the whole lifecycle of the plant, (which includes
all the additional emissions during mining, production and
transport).[185]
Gasifying coal to produce syngas reduces the
emissions of sulphur, nitrogen oxides, and mercury, resulting in a
much cleaner fuel while reducing the cost of capturing
CO2 emissions from the flue gas where that is conducted.
Integrated gasification combined cycle (IGCC) systems combine
gasification with a heat recovery system that feeds a steam-powered
generator, thereby increasing the power generated from a given
amount of coal. Continued development of IGCC systems is expected
to further reduce emissions.[186] Along with extensive research into and trials of
IGCC in Australia over recent years,[187] a joint venture by CSIRO and Metex
Resources Ltd is underway to develop underground coal gasification
technology, with a pilot project due to commence in the Surat Basin
in Queensland in August 2008.[188] This approach converts coal to syngas
underground, which reduces costs of mining and handling; allows
exhaust gases to be captured and separated; and may be applied to
deep, high ash, conventionally unmineable coal.
At present, none of the clean coal
technologies in use or in development offer the prospect of
emissions reductions as significant as carbon capture and storage
(CCS). Many of these technologies are being developed with CCS in
mind, for example concentrating CO2 in the combustion
exhaust to ease the separation and capture of CO2. The
majority of CCS effort is being invested in incorporating CCS into
new power generation plant designs: current figures indicate that
it is cheaper to build a new IGCC plant that produces a pure
CO2 exhaust stream than to retrofit an existing plant
with post-combustion capture technology.[189]
Geosequestration is the injection and storage
of greenhouse gases underground, out of contact with the
atmosphere. The best sites are deep geological formations, such as
depleted oil and natural gas fields, or deep natural reservoirs
filled with saline water (saline aquifers). Geosequestration is
part of the three-component scheme of carbon capture and storage
(CCS), which involves:
- capture of CO2 either before or after combustion of
the fuel
- transport of the captured CO2 to the site of
storage, and
- injection and storage of the CO2.
This scheme is proposed as a means of reducing
the greenhouse gas emissions of fossil fuel burning in power
generation and CO2 production from other industrial
processes such as cement manufacturing and purification of natural
gas. It is predominantly aimed at mitigating emissions of
CO2, but geosequestration may also prove to be
applicable to other greenhouse gases.
In addition to geological formations, other
potential reservoirs for CO2 sequestration under
consideration are biological sinks, ocean storage, and conversion
to solid mineral carbonates.
- Natural terrestrial biological sinks for
CO2 already sequester about one third of CO2
emissions from fossil fuel combustion.[190] These natural sinks are a transient
response to higher atmospheric CO2 concentration. The
uptake of CO2 by vegetation will decrease with time as
plants grow to their full capacity and become limited by other
resources such as nutrients, and regrowth potential in previously
cleared or sparsely vegetated areas is fulfilled. Biological
storage could be enhanced through agricultural and forestry
practices, but the capacity is limited and storage may not be
permanent.
- The ocean has also been an important sink for
anthropogenic CO2 emissions of similar magnitude to the
land sink but, as with the land sink, the ocean sink will decrease
in strength. CO2 is quickly dissolved in the ocean by
combining with carbonate ions, but the number of these ions is
limited and as their concentration decreases this will limit the
rate at which CO2 is taken up by the ocean out of the
atmosphere. A possible slow-down in ocean circulation may also
reduce the ocean sink capacity.[191] It has been proposed to bypass the natural ocean
CO2 uptake mechanism and inject CO2 directly
into the deep ocean to utilise its enormous storage capacity.
Models suggest that CO2 injected into the deep ocean
would remain isolated from the atmosphere for several centuries,
but on the millennial time scale it would recycle into the
atmosphere.[192]
Considerable uncertainties exist in our understanding of deep ocean
chemistry and biology and the potential adverse impacts on ocean
ecosystems. In addition, despite many years of theoretical work and
small-scale experiments, the feasibility of ocean storage has not
been demonstrated and the technologies for deep ocean
CO2 transport and dispersal are yet to be
developed.
- Mineral carbonation involves reaction
of CO2 with metal oxides that are present in common,
naturally occurring silicate rocks. The process mimics natural
weathering phenomena, and results in natural carbonate products
that are stable on a geological time scale. There are sufficient
reserves of magnesium and calcium silicate deposits to fix the
CO2 that could be produced from all fossil fuel
resources. Though the weathering of CO2 into carbonates
does not require energy, the natural reaction is slow; hence as a
storage option the process must be greatly accelerated through
energy-intensive preparation of the reactants. The technology is
still in the development stage and is not yet ready for
implementation, however studies indicate that a full CCS system
with mineral carbonation would need 60-180 per cent more energy
than a power plant with equivalent output without CCS.[193]
Of the storage options, geosequestration is
thought to be the most promising due to higher confidence in the
longevity of storage; large capacity of potential storage sites;
and greater understanding of the mechanisms of storage. There has
been considerable knowledge gained through the widespread use in
the oil industry of underground CO2 injection for
enhanced oil recovery (EOR), which is directly applicable to
geosequestration.
The geological formations most suitable for
CO2 storage are sedimentary basins. This is due to their
relatively high porosity, allowing CO2 to permeate
through the pore spaces between grains or minerals and utilise the
enormous pore volume for storage. The main types of formations
under consideration for CO2 storage are:
- saline aquifers
- oil and gas fields, either already depleted or for enhanced
recovery, and
- coal seams, either unmineable or for methane recovery.
Saline aquifers have been identified as the
most promising option due to their prevalence in and around
Australia and their large storage capacity. They have been
estimated to represent 94 per cent of Australia s feasible
geological storage capacity.[194] However, depleted oil fields are likely to be
the most readily utilised storage option in the shorter term due to
their pre-existing comprehensive characterisation (that is, there
is a lot of relevant data available on the fields). Site
characterisation has been identified as the most time-consuming and
costly component of the CO2 storage site selection
process and may require generation of new data and modelling
capabilities.[195]
For effective geological storage,
CO2 must be injected and maintained in a state that
allows ready diffusion through pore spaces but is compressed in
volume. This state is maintained under the high pressure at depths
greater than 800 metres.[196]
There must be an effective trapping mechanism
or combination of mechanisms to retain the CO2 within
the rock formation. Physical trapping mechanisms include
impermeable rock seals (caprock), or structural traps such as
faults or slips in the rock. Hydrodynamic trapping results where
CO2 is injected and dissolved into deep saline aquifers
or water within the rock pores: if the distance between the
injection site and the end of the impermeable formation is hundreds
of kilometres, it may take millions of years for the fluid to reach
the surface.[197]
Geochemical interactions with the rock and water within the
formation can further stabilise the CO2, leading to
CO2 being converted to carbonate ions over hundreds to
thousands of years and finally to stable carbonate minerals over
thousands to millions of years.[198] Bonding of CO2 onto the rock surface
is another stabilising mechanism that occurs in coal
formations.
Australia s
geological storage capacity
The Geological Disposal of CO2
(GEODISC) program (1999-2003) of the Australian Petroleum
Cooperative Research Centre (APCRC) was established to evaluate the
technological, environmental and commercial feasibility of
geosequestration in Australia. The program found that Australia s
geological storage capacity was likely to be sufficiently large and
accessible to present a viable emissions mitigation option. Based
on these findings, the Cooperative Research Centre for Greenhouse
Gas Technologies (CO2CRC) was proposed and funded from 2003 to
investigate CO2 capture and storage technologies and
options for Australia.[199]
The APCRC identified a mismatch between
location of CO2 emissions sources and potential
CO2 storage sites, with the majority of suitable storage
sites being in Western Australia (mostly offshore) and the majority
of sources being in eastern Australia.[200] The greatest capacity was
identified in deep unused saline formations with reliance on
hydrodynamic trapping.
Research within the GEODISC program estimated
that Australia s viable capacity for geological storage could
sequester up to 25 per cent of our annual net emissions, or 50 per
cent of emissions from major stationary sources.[201] However, methodology for
assessment of potential CO2 storage sites in terms of
geological, engineering, and economic considerations is still under
development and as yet there is no agreement within Australia or
internationally on a single assessment scheme.[202] The Intergovernmental Panel on
Climate Change (IPCC) issued a special report on CCS in 2005, which
found that little work had been done on matching CO2
sources with potential storage sites, and hence assessment of
viable storage capacities.[203]
The CO2CRC has investigated several offshore
sedimentary basins for CO2 storage suitability. These
include the Sydney, Gippsland and Perth Basins.
- The Sydney Basin was identified as potentially problematic due
to risks associated with reservoir quality and fault sealing,
factors that are probably responsible for the lack of petroleum
exploration activity in the area despite its proximity to the
largest energy market in the country.[204]
- A detailed study of the Gippsland Basin found that it contained
sufficient viable storage sites to accommodate all CO2
emissions from the Latrobe Valley area, being able to sustain an
injection rate of 50 million tonnes of CO2 per year for
40 years.[205]
The study noted that the depletion and decommissioning of some of
the major oil fields from 2015-25 was likely to coincide with the
need for CO2 storage anticipated from capture-ready new
coal developments.
- The Perth Basin has also been extensively studied for its
potential to store CO2. A suitable sandstone reservoir
large enough to store the total emissions from all major sources
within south-western WA (estimated at 22 million tonnes of
CO2 per year) was identified in the offshore Vlaming
sub-Basin of the Perth Basin.[206] The reservoir is overlain by a shale layer that
provides an effective seal.
Work is continuing within the CO2CRC to
comprehensively assess Australia s sedimentary basins region by
region to identify the most promising CO2 storage sites
and estimate their capacity.
CO2 is buoyant in most geological
settings; therefore there is a risk of leakage from storage sites.
Leakage may be slow and well dispersed in the atmosphere, causing
no immediate damage but negating the benefit of sequestration; or
it may be abrupt, potentially presenting environmental and/or
health hazards. There are also concerns about subsurface
CO2 migrating into groundwater and affecting its
chemistry; and the potential hazards of impurities injected along
with the CO2.
A maximum leakage rate of 0.1 per cent per
year has been suggested as providing for an effective storage
policy.[207]
Wells present the greatest leakage risk because of their inherent
design aimed at bringing high volumes of fluid to the surface
quickly, bypassing natural trapping mechanisms. They have been the
most common cause of leaks from underground gas storage
facilities.[208]
Carbonic acid forms when CO2 dissolves in saline water,
and this has been shown to cause corrosion of cements that are used
to plug wells.[209] In addition, large numbers of abandoned or orphaned
wells exist that may not be adequately plugged. Natural faults and
fractures can provide a similar conduit to the surface, and
potential storage sites must therefore be well-characterised to
identify and avoid such risks. Due to the risk of catastrophic
failure, active tectonic regions are not suitable for
geosequestration.
CO2 is an asphyxiant at high
concentrations and is denser than air so may not immediately
disperse. In a well-publicised incident at Lake Nyos in Cameroon in
1986, a large volume of naturally occurring CO2 came up
suddenly from the lake floor and, being heavier than air,
accumulated in the surrounding region, resulting in about 1700
deaths. Volcanic CO2 had seeped through natural
geological pathways to pool on the lake bottom, and this was
subsequently disturbed, causing rapid release of a large volume of
CO2 to the atmosphere.
Despite this natural incident, there are
several lines of evidence to suggest that CO2 can be
safely stored underground.[210]
- Several international CO2 storage projects are
currently underway with careful monitoring programs, and no leakage
has been observed from any of them in the few years that they have
been in operation.
- Buoyant fluids (oil, gas and CO2) have been trapped
naturally over geological time scales, demonstrating the widespread
presence of effective geological trapping mechanisms.
- The experience of the oil and gas industry in CO2
injection for EOR and underground storage of natural gas has
demonstrated very low release rates.
- Model studies of CO2 storage in reservoirs in the
North Sea suggest that in the absence of well failure or tectonic
movement, other processes that drive CO2 migration
through the subsurface do so very slowly: one simulation over 1000
years found that less than 0.2 per cent of stored CO2
moved into the overlying layers and went no further than half the
distance to the sea bed; and another found that CO2
would not enter the ocean for 100,000 years, and after a million
years the annual release rate would be about 10-6 of the
stored CO2.
Models and risk assessment methodology have
been developed to assess the probability of leakage from a given
site through multiple routes.[211] There is a high degree of confidence, therefore,
that with careful site selection and preparation the risk of
leakage can be very low.
Injection of CO2 at high pressure
can induce fracturing and fault movement. This can potentially
precipitate earthquakes, or provide pathways for CO2
leakage. EOR and gas storage activities in the oil and gas
industries have produced readily applicable methods to assess and
control induced fracturing and fault movement. Only a few seismic
events associated with well injection have been recorded, and none
have been attributed to CO2-EOR. However, more
experience with industrial-scale CO2 storage projects is
necessary to fully assess the risks of seismic activity during
injection and long term storage.[212]
Monitoring and verification is required to
ensure that the CO2 is stored safely and permanently
underground, to avoid the risks described above. Many monitoring
and verification technologies, including atmospheric and remote
sensing measurements, are not applicable or cannot easily be
applied to offshore geosequestration sites. Some of the
technologies that may be applied to offshore geosequestration are
detailed here.
Seismic techniques measure the velocity and
energy absorption of waves or vibrations through the subsurface
rock. The profile generated depends on the fluids contained in the
rock, and can trace the distribution of CO2 in the
reservoir. The resolution decreases with depth, but low thresholds
of detection should be possible for CO2 that has
migrated towards the surface.[213] The technology is applicable to offshore
reservoirs, as demonstrated at the Sleipner CO2 storage
project in the North Sea.
Sampling from injection or monitoring wells
can be used to assess the rate and extent of distribution of
CO2 through the reservoir, especially via natural or
introduced tracers. In onshore situations, baseline and ongoing
surveys of subsurface and near-surface water quality and
composition, and sampling for CO2 or tracers in air at
the surface or within the soil and water can detect migration of
CO2 beyond the storage site. At greater expense, direct
samples can be recovered at offshore geosequestration sites from
dredges or cores deployed from surface ships or submersibles.
One ocean monitoring technique that has been
developed uses lasers mounted on unmanned remote vehicles deployed
in the deep ocean to examine the light absorption and scattering
properties of materials. The technique can detect the chemical
composition of gas seeps.[214] Other deep ocean monitoring techniques include
deployment of pH and conductivity sensors in arrays, from tethered
or autonomous undersea vehicles, or from ship surveys; and acoustic
techniques that exploit the large difference in the speed of sound
between liquid CO 2 and sea water.[215]
The high variability in background ocean
carbon concentrations would make it difficult to track
CO2 plumes and attribute plumes to point sources,
particularly if there were multiple leakage points with overlapping
plumes. It has also been noted that in some parts of the ocean it
may be difficult to distinguish an increase in CO 2
concentration due to leakage from an undersea reservoir from that
due to oceanic uptake of CO2 from the
atmosphere.[216]
CO2 injection into underground
reservoirs has been routinely employed for more than 30 years in
the petroleum industry for EOR, and this technology can be directly
applied to geosequestration. There are several demonstration and
pilot projects underway within Australia and internationally to
investigate both onshore and offshore geosequestration as a viable
option for large scale CO2 storage. However, the process
has yet to be applied at commercial scale.
Internationally, there are three industrial
scale injection projects (over one million tonnes of CO2
injected per year) in operation with significant monitoring and
research programs.
- The world's first industrial-scale CO2 storage was
at Norway's Sleipner gas field in the North Sea,
where about one million tonnes per year of compressed liquid
CO2 separated from methane is injected into a deep
saline aquifer 1000 metres below the sea bed. The project has been
underway since 1996, and seismic surveys have demonstrated the
migration of CO2 through the reservoir can be
effectively mapped and monitored for leakage risk assessment.
- With most of its easily recoverable oil already extracted, the
Weyburn oil field in Canada is now one of the
largest EOR projects in the world. It is anticipated that 20
million tonnes of CO2 will be stored over the 20-year
lifetime of the project. The Weyburn CO2 Monitoring
Project (WCMP) has been established to study the long term
integrity, safety, performance and cost implications of
CO2 storage. CO2 injection began in December
2000. The first phase (2000-04) of the WCMP characterised the
geological and hydrological nature of the reservoir, developed
sampling and modelling strategies for monitoring and verification,
and developed risk assessment methodologies.[217] However, the project
identified the need for further research into monitoring and
verification technologies.
- In Salah Gas is the largest
natural gas development project in Algeria. In the world s first
large-scale carbon dioxide storage project in a gas reservoir, 1.2
million tonnes per year of CO2 have been separated from
the gas stream and re-injected at a depth of 1800 metres since
April 2004. The CO2 is stored in the aquifer zone of one
of the shallow gas-producing reservoirs. An estimated 17 million
tonnes will be geologically stored over the life of the project,
reducing the CO2 emissions of the project by 60 per
cent.
Several demonstration CCS projects are
underway within Australia, with more in the planning stages.
- CO2CRC s Otway Project in south-western
Victoria is researching, developing and deploying geosequestration
technology in the first such project in Australia. The project will
inject up to 100,000 tonnes of CO2 over two years into a
depleted gas reservoir at 2000 metres depth. It includes one of the
most comprehensive geosequestration monitoring programs in the
world. Extensive characterisation of the site has been carried out
and the project was launched in April 2008, with the first
injection of 10,000 tonnes in early July 2008.[218]
- The proposed Gorgon natural gas project in
Western Australia is due to commence in 2009 and will capture and
store 3 million tonnes of CO2 per year for 40 years.
CO2 will be separated from the gas and injected into a
saline reservoir 2000 metres beneath Barrow Island, reducing the
project's emissions by 36 per cent.[219] An extensive monitoring program is
planned.
Other Australian projects have been proposed
that cover a range of CCS technologies, including: retrofitting of
an existing power station for combustion in oxygen and CCS (2010,
Callide[220]); post-combustion capture from an existing power
station (in progress, Hazelwood[221]); CO2 capture from
a coal bed methane power station and storage in an unmineable coal
seam (2010, Fairview[222]); construction of an integrated
gasification combined cycle power plant with CCS (2012,
ZeroGen[223]); construction of a capture-ready power station
(2011/12, Coolimba[224]); and a commercial scale Syngas
underground oxygen-injected coal gasification demonstration trial
(2008, Carbon Energy[225]).
Although the technology and science of
geosequestration is still very much in progress, current
understanding has led to the generally accepted conclusion that
geosequestration can very likely effectively store CO2
at greater than 99 per cent efficiency for over 100 years, and
likely for over 1000 years.[226] A recent comprehensive MIT study addressing the
role of coal in a future carbon-constrained world found that:
no knowledge gaps today appear to cast doubt on
the fundamental likelihood of the feasibility of CCS.[227]
Appendix 2
House of Representatives Standing
Committee on Primary Industries and Resources
Down Under Greenhouse Gas Storage:
review of the draft Offshore Petroleum Amendment (Greenhouse Gas
Storage) Bill, August 2008.
Major Recommendations
Recommendation 1
The Committee recommends the
inclusion within the Bill of an objects clause, providing that the
legislation:
- provide greenhouse gas injection and storage proponents with
the certainty needed to bring forward investment; and
- preserve pre-existing rights of the petroleum industry as far
as is practicable to minimise sovereign risk to existing
titleholders investment in Australia s offshore resources.
Recommendation 2
The Committee recommends
that the responsible Commonwealth Minister utilise established
formal consultation pathways to consult with State Governments,
industry and environmental organisations, with a view to achieving
national consistency in the administration of GHG storage
legislation.
Access and property
rights
Recommendation 3
The Committee recommends
that no acreage be automatically excluded from consideration for
selection on the grounds of pre-existing petroleum activities.
Recommendation 4
The Committee recommends
that the process for identifying and shortlisting acreage for
release should be transparent and systematic, and should consider
the views and submissions of all relevant stakeholders.
Recommendation 8
The Committee recommends
that the Government review the Offshore Petroleum Act and
proposed amendments to provide for the development of integrated
petroleum projects, including the injection and storage of GHG from
multiple sources into a single storage formation.
3 Managing
interactions
Recommendation 9
The Committee recommends
that the Bill be amended to provide for the responsible
Commonwealth Minister to direct the parties to negotiate in good
faith where there are potential or actual overlapping GHG storage
and petroleum titles, under both pre-commencement and
post-commencement petroleum titles; and that the responsible
Commonwealth Minister be empowered to direct an outcome.
4 Investment
certainty
Recommendation 13
The Committee recommends
that the Government consider further financial incentives for the
earliest movers in this new industry, and that these incentives be
made public at the earliest opportunity.
Recommendation 14
The Committee recommends
that a process for the formal transfer of long term liability from
a GHG operator to the Government be established within the proposed
legislation, such transfer to be conditional upon strict adherence
to prescribed site closure criteria.
5 GHG
storage
Recommendation 18
The Committee recommends
consideration be given to making monitoring data associated with
GHG storage project publicly available.
Recommendation 19
The Committee recommends the
use of consultative pathways to provide feedback on the wider
community s concerns to the responsible Commonwealth Minister.
[1]. This is because item 32
of Schedule 1 of the Offshore Petroleum Amendment
(Miscellaneous Measures) Act 2008 commenced on 1 July
2008.
[69] Sovereign risk is the
risk of the State using its power to alter the established rights
of private sector companies. For further discussion see Vigar. C,
Parrots, politics and policy: governmental risk in energy and
resources projects , 2006, MinterEllison Lawyers,
http://www.minterellison.com/public/connect/Internet/Home/Legal+Insights/
Newsletters/Previous+Newsletters/A-A-Parrots,+politics+and+policy,
accessed on 12 August 2008.
[90]. [1998] HCA 8.
Commonwealth v WMC Resources Ltd., although
somewhat old, is a particularly relevant case because it involved
offshore petroleum title rights under the Petroleum (Submerged
Lands) Act 1967, the precursor legislation to the Act, and the
aim of the Government with the Bill is to establish an offshore
greenhouse gas storage regime similar to the existing offshore
petroleum regime under that Act. Consequently, the comments of the
High Court in that case would be relevant to the question as to the
effect of proposed section 442D. However, the
difficulty in ascertaining any underlying principle from
Commonwealth v WMC Resources Ltd., is that
while the majority of the High Court held that there was no
acquisition of property by the extinguishment of WMC Resources
rights under a statutory petroleum exploration permit, each judge
gave separate reasons for his or her decision.
Petroleum companies currently hold most of the
technical knowledge and expertise required to explore for and
develop potential GHG storage sites.
See also ibid., pp. 31-32 (Committee s opinion
regarding disparity of access to information).
[161]. For meanings of expressions used in proposed
subsection 316-315(3)), see Administrative
Decisions (Judicial Review) Act 1977 section 10. See also
Attorney-General s Department, General information on the
Australian Administrative Law System , op. cit.:
A review may be sought under the
Administrative Decisions (Judicial Review) Act 1977 by a
person who is aggrieved by the decision, conduct or failure to make
a decision. Any person whose interests are or would be adversely
affected by the decision is a person aggrieved by that decision.
The grounds on which a review may be sought under the Act are set
out in the Act, but generally cover failure to comply with the
specific requirements of legislation under which the decision is
made, and the general administrative law principles ...
Julie Styles, Moria Coombs, Sharon Scully and Kat
Post
24 September 2008
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
This work is copyright. Except to the extent of uses permitted
by the Copyright Act 1968, no person may reproduce or transmit any
part of this work by any process without the prior written consent
of the Parliamentary Librarian. This requirement does not apply to
members of the Parliament of Australia acting in the course of
their official duties.
This work has been prepared to support the work of the Australian
Parliament using information available at the time of production.
The views expressed do not reflect an official position of the
Parliamentary Library, nor do they constitute professional legal
opinion.
Feedback is welcome and may be provided to: web.library@aph.gov.au. Any
concerns or complaints should be directed to the Parliamentary
Librarian. Parliamentary Library staff are available to discuss the
contents of publications with Senators and Members and their staff.
To access this service, clients may contact the author or the
Library’s Central Entry Point for referral.
Back to top