The committee’s August 2021 Interim Report examined a broad range of matters associated with oil and gas exploration and production in the Beetaloo. This section provides an update on some of these matters, including:
the status of the Beetaloo Cooperative Drilling program (BCD Program);
the resolution of litigation in the Federal Court of Australia (Federal Court);
accountability for a Russian oligarch’s interest in the Beetaloo; and
the economic rationale for shale gas activities in the Beetaloo.
Status of the BCD Program
As noted in Chapter 1, the Interim Report examined the former Australian Government’s BCD Program and its first three funding grants of up to $21 million, which were provided to Empire Energy Group Ltd (Empire Energy).
The committee found that Empire Energy had connections to the Liberal Party, and had lobbied government ministers, attended fundraisers and flown then Minister for Energy and Emissions Reduction, the Hon Angus Taylor MP, and his staff on a private jet prior to the grants decisions. The committee expressed its concern at the perception that these factors had directly influenced the awarding of the first three grants under the BCD Program.
Tamboran Resources Limited
Subsequently, as noted in Chapter 1, Sweetpea Petroleum Pty Ltd (Sweetpea) received a $7.5 million funding grant under the BCD Program. The committee was previously unable to inquire into the circumstances of this grant as Sweetpea’s parent company, Tamboran Resources Limited (Tamboran), refused to participate in the inquiry during the 46th Parliament. This refusal was examined in the March 2022 Second Interim Report, when the committee indicated its intention to pursue the matter as a possible contempt of the Senate in the 47th Parliament.
As discussed below (see ‘Senate’s power to summon witnesses’), shortly after the commencement of the 47th Parliament, the President of the Senate, Senator the Hon Sue Lines (President), considered a request from the committee to have Tamboran’s actions referred to the Privileges Committee as a possible contempt of the Parliament. The President confirmed that Tamboran’s failure to give evidence at a public hearing when summoned met the preliminary criteria for investigation. However, the President noted that, as the matter arose in the previous Parliament, the newly established committee might wish to consider other actions, including reiterating its invitation to appear before the committee, before proceeding.
In late September 2022, the committee chose to re-invite Tamboran to give evidence to the inquiry and Tamboran duly appeared at a public hearing held in Canberra on 10 October 2022. At this hearing, the committee questioned Tamboran representatives about the grant funding, as well as the company’s gas exploration activities in the Beetaloo.
Managing Director and Chief Executive Officer, Mr Joel Riddle, acknowledged the $7.5 million funding grant to Sweetpea and advised that Tamboran had intended to make two further funding applications but had missed the grants deadline. Mr Riddle further advised that Tamboran had so far received approximately $4.2 million of the grant, which was used to rebate up to 25 per cent of eligible drilling expenses.
Similar to Empire Energy, Tamboran representatives asserted that the company did not have any unfair advantage in its applications for funding under the BCD Program. Mr Riddle said that he first heard of the program when it was announced by then Minister for Resources, Water and Northern Australia, the Hon Keith Pitt MP. Mr Riddle gave evidence that he did not have any personal relationships with members of Parliament or government ministers. The committee is, however, aware that Tamboran donated $200 000 in the lead up to the May 2022 election, including a one‑off donation of $100 000 to the National Party less than two months after the company had been awarded the $7.5 million grant.
In its Interim Report, the committee examined Empire Energy’s consultations with Traditional Owners, Native Title holders, First Nations people and pastoralists, with respect to the company’s operations within its Exploration Permit (EP) 187 area.
The committee asked similar questions of Tamboran, whose representatives described some of the company’s interactions with Traditional Owners and Native Title holders. Dr David Close, Vice President of Operations and External Affairs, advised that Tamboran had followed ‘the process prescribed by the legislation [the Native Title Act 1993 (Native Title Act)] and regulations’:
It's an extensive process that's well documented, and the [Northern Land Council (NLC)] is the body that we engage the recognised native title holders through. We do engage more broadly with interested parties and concerned stakeholders and make ourselves available to other concerned or interested stakeholders, but there is a primacy given, of course, under [the Act] to native title through the NLC.
With respect to Traditional Owners in the Beetaloo, Dr Close stated that there is an informal process quite independent of the Native Title Act and the NLC:
The engagement outside the Northern Land Council is not through the same process of work program meeting. So, it will be on a more informal basis… We have had somewhat limited engagement with [the] Nurrdalinji group. We'll make ourselves available to any other groups that want to discuss matters around onshore gas development, protection of the environment, activity regulations and so forth... As I understand it, the NLC have indicated that [the Nurrdalinji Aboriginal Corporation does not represent Traditional Owners for the Beetaloo].
The committee considers that this and other information provided by Tamboran would have significantly assisted the inquiry during the 46th Parliament. As indicated in the Second Interim Report, the information was critical to ensure transparency and accountability over the former BCD Program, and to ensure taxpayer funds were being expended appropriately, without political influence, and in the public interest.
Senate’s power to summon witnesses
Under Senate Standing Orders, the committee has the power to summon witnesses, a power that derives from section 49 of the Constitution. Odgers’ Australian Senate Practice notes that failure to comply with a summons may constitute a contempt of the Senate.
In the 46th Parliament, the committee considered it unacceptable that Tamboran, a publicly listed company, whose subsidiary had received a multi‑million-dollar grant of taxpayer money, had refused to appear, including when summoned, to answer questions in relation to its gas extraction activities in the Beetaloo.
Accordingly, the committee reported the matter to the Senate in its Second Interim Report, stating:
…Tamboran’s actions, on their face, may constitute contempt of the Senate, pursuant to Senate Privilege Resolution 6(13), which states ‘a person shall not, without reasonable excuse…refuse or fail to attend before the Senate or a committee when ordered to do so’.
The committee notes that there will not be sufficient time to allow for a referral of this matter to, and consideration by, the Privileges Committee in the 46th Parliament.
However, the committee resolves to commence this process by notifying the President of the grounds for the referral under Privilege Resolution 7, and then pursue this matter further in the 47th Parliament.
As noted above, soon after the commencement of the 47th Parliament the committee chose to offer Tamboran one last opportunity to assist the committee with its inquiry and invited company representatives to appear at a public hearing in Canberra on 10 October 2022. Appearing on that date to give evidence, and subsequently provide written answers to 64 questions on notice, Mr Riddle explained the previous refusals to attend:
…the committee, during the last Parliament, requested attendance from Tamboran to appear at the inquiry. It was Tamboran's conclusion at the time…that our position should be represented to the committee via our industry's active peak body, APPEA [the Australian Petroleum Production and Exploration Association], who had agreed to attend. On 21 March, the committee, by letter, ordered Tamboran…to attend a hearing on Friday 25 March 2022 here in Canberra... Unfortunately, at that time…I had a major investor roadshow overseas already planned and I was in international transit for that roadshow when you requested our attendance here in Canberra.
The committee expresses its deep dissatisfaction with Tamboran, the company having been repeatedly requested, and then summoned, to give evidence. The committee notes that Tamboran was first approached on 1 March 2022 to appear at a public hearing three weeks later, and, having been consistently refused, Tamboran was then approached on 18 March 2022 to appear at a public hearing a week later. In both instances, the committee sought to facilitate the appearance and the decidedly combative response to the last invitation made no mention of an overseas commitment.
While the committee appreciates Tamboran’s belated contribution to the inquiry, committee members are unanimous in their view that the company’s earlier actions demonstrated a blatant disregard of the Parliament.
Resolution of Federal Court litigation
Chapter 1 of the Interim Report noted that the Environment Centre NT Inc. (ECNT) had commenced litigation in the Federal Court, challenging, among other things, Minister Pitt’s decision to approve up to $21 million in grant funding to Imperial Oil and Gas, a fully owned subsidiary of Empire Energy.
On 23 December 2021, His Honour Justice John Griffiths delivered judgement, finding that the former Australian Government had acted in a legally unreasonable manner and breached the model litigant obligations when it executed the funding contracts (the Contracts Decision) part-way through the legal proceedings:
…the Contracts Decision was legally unreasonable because of the circumstances in which it occurred and the effect it had on the extant litigation. [The applicant] contended that there was no evident and intelligible justification for the timing of the Contracts Decision… If the applicant had been given prior notice of the Contracts Decision it could have sought urgent interlocutory injunctive relief… The timing of the Contracts Decision had the effect of depriving the applicant of that opportunity and right.
The committee notes that the funding contracts were re‑executed, although for a slightly lesser amount ($19.4 million), which the then Department of Industry, Science, Energy and Resources explained was due to a costs review:
The Minister’s grant approval decisions were for funding up to $21 million, with final grant amounts subject to review of costs primarily in light of available efficiencies across the work programs.
Accountability for a Russian oligarch’s interest in the Beetaloo
In Chapter 2 of the Interim Report, the committee expressed its view that there are certain types of companies that should not have received funding grants under the BCD Program—one reason being issues concerning a company’s true ownership.
Falcon Oil and Gas Australia Ltd (Falcon, a 98 per cent owned subsidiary of Canadian-based Falcon Oil and Gas) has widespread interests in the Beetaloo (EP 76, EP 98 and EP 117). In March 2022, this interest resulted from a joint venture with Origin Energy Ltd (Origin).
At that time, the largest shareholder in Falcon Oil and Gas was the Lamesa Foundation with 16 per cent ownership, which has since decreased to 15 per cent ownership. The Lamesa Foundation is reportedly owned by Mr Viktor Vekselberg, a Russian billionaire who was sanctioned by the US Government in April 2018 and who has ties to Russian President Vladimir Putin.
Origin’s Mr Tim O’Grady, the General Manager of Government Engagement, confirmed that Falcon owns a 22.5 per cent interest in its Beetaloo joint venture and, as such, Mr Vekselberg has a financial interest in that venture of approximately four per cent. However, Mr O’Grady described this as a ‘passive interest’:
[The joint venture is between Origin and Falcon] has nothing to do with Mr Vekselberg. We have no relationship at all with Mr Vekselberg. I would also like to highlight that the Beetaloo joint venture is a hundred per cent operated by Origin Energy and is a hundred per cent financed by Origin Energy. So there is an interest from Mr Vekselberg, but it is a passive interest.
Australia’s sanctions law
Australia implements an autonomous sanctions regime as a matter of Australian foreign policy, under the Autonomous Sanctions Act 2011 (Autonomous Sanctions Act). On 18 March 2022, the then Minister for Foreign Affairs, Senator the Hon Marise Payne, announced that Mr Vekselberg had been sanctioned under the Act.
Mr O’Grady advised that Origin had sought information from the Department of Foreign Affairs and Trade (DFAT) on how the company should comply with the sanctions law:
We were aware…that Mr Vekselberg was designated on the Australian sanctions list, and we promptly contacted the Department of Foreign Affairs and Trade [for] advice on what actions, if any, Origin should take by this new development, and we will fully comply with any directions from DFAT and the Australian government.
Mr O’Grady emphasised that there was no financial benefit to Mr Vekselberg from his financial interest in the Beetaloo:
…the Beetaloo project which we've been developing with Falcon for the last eight years is a development project. So the Beetaloo project has not generated any revenue and has not returned a cent of revenue to any of the joint venture partners or shareholders through them. And, importantly, it's not going to produce a cent of revenue for the foreseeable future, for at least a few years.
Mr O’Grady’s response did not indicate what would be Origin’s position if and when exploration wells prove the resource and increase the value of shareholdings, or when the joint venture becomes profitable and dividends become payable to shareholders.
In September 2022, Origin announced that it would be divesting 100 per cent of its interest in the Beetaloo to Tamboran (B1) Pty Limited, an entity 50 per cent owned by Tamboran. Mr Riddle stated that Tamboran’s relationship with Falcon arises as a result of this acquisition, and he assured the committee:
…the Australian Sanctions Office [ASO], through their [sic] review in April , identified that Origin was in no way in contravention of sanctions law through the [joint venture] with Falcon… For the record, neither Viktor Vekselberg nor his company Lamesa Holdings has any involvement or communication with Tamboran Resources… [W]e plan to monitor that situation very closely, and, if required, we will confirm the ASO's assessment that was originally made back in April .
Mr Riddle added that Tamboran’s BCD Program funding grant was tied to EP 136, a former asset of Sweetpea and 100 per cent owned by Tamboran. Accordingly:
Falcon does not benefit from any profits or benefits that we get from EP 136, which Sweetpea own. It's a totally different tenement. The money that comes in from the government for the Beetaloo is Sweetpea's investment and Tamboran's investment. It has nothing to do with the Falcon-Origin deal.
Mr Andrew Walter, First Assistant Secretary of the Regulatory Legal Division at DFAT, described how the department determines ‘targets’ for the purposes of the Autonomous Sanctions Act. He could not speak to ministerial communications on the sanctioning of Mr Vekselberg or what intergovernmental collaboration might have occurred.
Mr Walter pointed out that identifying the assets of persons or entities sanctioned under the Act is not always straightforward: ‘there can be very complex business structures which make those things difficult’.
In 2017, the former Australian Government committed to improving the transparency of information on the beneficial ownership and control of companies. The Treasury conducted a month-long public consultation on the potential detail, scope and implementation of a beneficial ownership register for companies, however, the former government did not progress the matter. The matter has now been delayed for nearly five years.
Mr Walter could not confirm whether a beneficial ownership register would have assisted in the identification of Mr Vekselberg’s Australian assets, nor whether the department is certain that it has identified all those assets. Media reports have suggested that the oligarch uses shell companies to actively conceal his assets.
Mr Walter explained that the sanctions law prohibits any assets that have been provided directly or indirectly to a sanctioned individual or entity: ‘where the complexity comes in is through that 'indirect benefit' question and how many [corporate] structures might be in place’.
When asked whether an increased share price, resulting from government funding grants, would constitute an indirect benefit, the DFAT officers reiterated their evidence regarding the complexity of corporate structures:
There are a couple of challenges… [Y]ou are going to have to trace through the links. The catch is also how would we ever know the causal link? There could be a correlation, but the share prices go up and down for all sorts of reasons. How would you ever form a direct causal link between the share price going up on a stock exchange in a foreign country and an announcement made in Australia? The third point…is some of the factors you identified—for example, a government announcement in Australia made by a minister is not in this case Origin Energy taking action that directly or indirectly benefits that individual. Some of those factors would be completely out of Origin's control. They're complex factual scenarios that we would have to work through.
On 12 April 2022, news media reported that Origin had received guidance from DFAT that the company was not in breach of Australia’s sanctions law, as Mr Vekselberg was not benefitting from any asset ‘tied to’ the Beetaloo joint venture. Although the committee sought further information from the department to understand its reasoning, no further details were provided.
The committee considers that the proposal to create a register of beneficial ownership of companies is meritorious. It is not entirely clear why the proposal was not progressed by the previous government. As pointed out by the former Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, increased transparency assists with ‘preventing the misuse of companies for illicit activities including tax evasion, money laundering, bribery, corruption and terrorism financing’.
The committee recommends that the Australian Government publicly confirm its position on increasing the transparency of the beneficial ownership of companies and update the Treasury website to reflect this position.
Like DFAT representatives, the committee is not able to determine whether Australia’s sanctions law captures Mr Vekselberg’s beneficial interest in Falcon. This raises questions about the broadly defined term ‘asset’ in the Autonomous Sanctions Act and other initiatives, guidelines, et cetera that are intended to support this important foreign policy objective.
The committee notes that DFAT is currently reviewing Australia’s Autonomous Sanctions Framework, including with the following three terms of reference:
7. the appropriateness of existing regulatory powers—to examine if additional compliance tools are required, including with reference to the Regulatory Powers (Standard Provisions) Act 2014…
9. key concepts, terms and definitions, including the criteria for the imposition of targeted financial sanctions and travel bans—to clarify the operation of sanctions prohibitions
10. any other matters that are relevant to the efficiency and effectiveness of the autonomous sanctions framework.
The committee strongly encourages the Australian Government, and DFAT, to take note of the concerns raised in the inquiry regarding the statutory definition of ‘asset’ within the Autonomous Sanctions Act 2011 and the problems encountered with the identification of assets concealed within corporate structures.
Economic rationale for shale gas activities in the Beetaloo
In Chapter 3 of its Interim Report, the committee examined the former Australian Government’s economic rationale for ‘unlocking’ the gas resources in the Beetaloo. The committee heard that there are a range of projected economic impacts, including the creation of more jobs, increased tax revenues and broader (indirect) economic benefits.
After examining the information presented to the inquiry, the committee’s majority report concluded that ‘the economic case for gas exploration in the Beetaloo appears to be based on overly optimistic assumptions and unrealistic modelling’.
Following the tabling of the Interim Report on 24 August 2021, the committee inquired further into the projected economic impacts from development of the Beetaloo resource and the Australian Government’s support in this regard. This section of the report covers three specific topics:
the role of the now closed BCD Program;
Commonwealth investment in Territory infrastructure; and
the continuing industrial need for gas.
Role of the BCD Program
As noted in the Interim Report, Minister Pitt announced the BCD Program in December 2020 as part of the former Australian Government’s plan to accelerate gas exploration and development in the Territory by approximately two years:
The Government will provide up to $50 million for exploration that occurs before 30 June 2022, allowing the benefits of this important asset to be realised sooner…
The funding will fast track drilling by providing grants to cover 25 per cent of eligible exploration costs, capped at $7.5 million per well and three wells per exploration venture.
In announcing the Sweetpea funding grant in March 2022, Minister Pitt reaffirmed his government’s commitment to expediting the development of the Beetaloo resource:
This grant under the Beetaloo Cooperative Drilling Program is expected to bring forward $52 million in private investment at Sweetpea Petroleum’s Maverick 1 well. Investment such as this will help accelerate gas development in the Beetaloo, which has the potential to create thousands of jobs. Gas from the basin can also make a significant contribution to maintaining Australia’s affordable and reliable energy supplies. We should take the energy crisis in Europe as a warning of what could happen in Australia if there is not enough investment in the gas sector.
Two major oil and gas companies operating in the Beetaloo—Origin Energy Ltd (Origin) and Santos Ltd (Santos)—did not receive funding under the BCD Program but proceeded with their exploratory activities nonetheless. In Origin’s case, ‘[the program] was…more focused on an earlier stage of development and [Origin’s activities] were quite advanced’.
Santos representative, Ms Tracey Winters, the Acting Executive Vice President for Environment, Sustainability and Governance, similarly advised:
[An] application was made in accordance with the rules of the program quite some time ago. In the interim period, Santos proceeded to drill the well that we had applied for in terms of acceleration in any case. On that basis we were no longer eligible for funding.
From this evidence, and that of Tamboran (see paragraph 2.7), the committee understands that privately-owned gas companies operating in the Beetaloo had or were prepared to invest in exploration activities without the assistance of grants under the BCD Program.
The committee notes that, on 29 March 2023, on the motion of Australian Greens Senator Dorinda Cox, the Senate amended the Industry Research and Development Act 1986, to prevent the Minister for Industry and Science from prescribing any funding programs like the BCD Program that would ‘subsidise the extraction of coal or natural gas’.
Economic opportunities in the Beetaloo
The Beetaloo Strategic Basin Plan stated that ‘maximising regional benefits is a core objective of the Australian and NT Governments' support for Beetaloo development’. The plan identified four Commonwealth actions in this regard (see Figure 2.1).
Figure 2.1: Beetaloo Strategic Basin Plan, Action 4: Sharing regional benefits
Source: Australian Government, Unlocking the Beetaloo, The Beetaloo Strategic Basin Plan, 2021, p. 5.
In 2020, the former Australian Government commissioned the Northern Institute of Charles Darwin University (CDU) to prepare a high-level report on Aboriginal economic development in the Beetaloo (the Beetaloo Aboriginal Economic Development Strategy). The research aimed to outline how First Nations people could maximise economic development opportunities from onshore gas development in the Beetaloo.
One theme of the research was workforce development pathways. Under this theme the CDU reported:
The ability of the onshore gas industry to create new jobs for Aboriginal people in the Beetaloo corridor is determined by factors that are both difficult to predict and determined well outside the region. Reliably forecasting workforce needs is challenging. Programs and activities that aim to facilitate the flow of information between employers, trainers and job seekers will be important tools in ensuring positive local Aboriginal employment outcomes in the Beetaloo corridor.
Representatives from the gas industry provided the committee with little information on how gas exploration and production in the Beetaloo has or will provide economic opportunities for local workers and businesses. Mr Alex Underwood, Managing Director of Empire Energy, said:
Imperial [the company’s subsidiary] contracts with local businesses wherever practicable. During the recent Carpentaria-1 drilling and flow‑testing campaigns, Empire utilised the services of local businesses located in Darwin, Katherine, Daly Waters, Borroloola, Cape Crawford and the Barkly region for activities including civil works, earthmoving, accommodation, catering and fuel supply.
Specifically in relation to First Nations people, Mr Underwood added:
Indigenous people, and for that matter traditional owners, play a very important role in a lot of the work that needs to be done prior to the commencement of petroleum operations, such as cultural heritage clearances and archaeological clearances, and that's because they are the people who know that land the best. We go to great lengths to ensure that we respect that... As I mentioned, we have already been making material investments in local businesses. We foresee that, if we have further technical success and move into commercial production in the future, there will be great employment opportunities for local people, including Indigenous people. That's a really core part of our business strategy.
Origin’s Mr O’Grady agreed that further economic opportunities depend upon whether projects proceed to commercial production:
…if development goes ahead, this project means more work for and jobs with local companies, including Aboriginal companies… We see enormous potential for this project, with benefits to be shared across the local community, the Northern Territory and Australia.
Assessment of economic opportunities for First Nations people
On 16 January 2023, the National Indigenous Australians Agency (the NIAA) released portions of its report titled Blueprint for Aboriginal benefits realisation in the Beetaloo Region, in response to a Freedom of Information request made by the Nurrdalinji Native Title Aboriginal Corporation.
The NIAA report noted that, where Traditional Owners, Native Title holders and resource companies have made land access and benefit-sharing agreements, the First Nations people have almost always been at a disadvantage to the companies. The report outlined the four factors most often associated with strong benefit‑sharing agreements: political/strategic power; legal rights; ethos of the companies involved; and economics of the project. The report noted that, even when strong agreements are negotiated, these can still deliver mixed results for resident Indigenous populations.
The NIAA report examined these four factors in relation to the Beetaloo and provided a preliminary assessment that ‘the current conditions are not conducive to strong agreements being negotiated’. Its conclusion was based upon, among other things, the following findings:
…Traditional Owners and native title holders have limited political and strategic capacity in the Beetaloo Sub-basin.
The population of the sub-basin is sparse and widely distributed, with small-scale and informal corporate representative structures existing within the sub-basin.
There is limited community information and knowledge about the impact of resource development in the sub-basin. There is a risk that companies in the Beetaloo Sub-basin will not commit to principles of corporate social responsibility in relation to Aboriginal people.
The legislative framework operating in the Beetaloo Sub-basin does not favour Aboriginal interests.
Most of the land within the sub-basin is held by Traditional Owners pursuant to native title, with only a small amount of [Aboriginal Lands Rights (Northern Territory) Act 1976] land. The [Native Title Act] does not require informed consent or provide native title holders with a power of veto over resource development.
Furthermore, the assessment observes that the economic benefit of the project is uncertain and variable.
The committee heard that the Australian and NT Governments are keen to maximise regional benefits through the development of a gas industry in the Beetaloo. However, a federal government report casts doubt upon the ability of the industry to create meaningful local jobs. Another federal agency report—which was not voluntarily published—clearly indicates that Traditional Owners and Native Title holders in the region are unlikely to be able to negotiate strong benefit-sharing agreements.
As discussed in Chapter 5, the Native Title Act does not require gas companies to obtain consent from Native Title holders or claimants. Instead, the legislation compels the holders and claimants to negotiate or engage in arbitration, to obtain the fairest deal possible.
Noting the findings of the NIAA report (above), the committee considers that the gas companies should be required to ‘level the playing field’, including through the timely and contemporaneous provision of information to Native Title holders and claimants. This information should enable the holders and claimant to fairly assess the impacts of gas activities on their native title rights and interests and to negotiate accordingly.
Commonwealth investment in Territory Infrastructure
The Beetaloo Strategic Basin Plan signalled the former Australian Government’s intention to invest in critical infrastructure, as part of the plan to ‘grow the onshore gas industry in the NT’.
Figure 2.2: Beetaloo Strategic Basin Plan, Action 3: Enabling infrastructure
Source: Australian Government, Unlocking the Beetaloo, The Beetaloo Strategic Basin Plan, 2021, p. 5.
Two of the commitments—the ‘NT Gas Industry Roads Upgrades program’ and ‘Midstream infrastructure’ (see Figure 2.2) are briefly discussed below.
NT Gas Industry Roads Upgrades program
The NT Gas Industry Roads Upgrades program aims to ‘upgrade roads supporting the development of gas resources in around the Beetaloo’, as existing roads are of ‘low quality’ and ‘cannot support the higher volumes of heavy traffic required for exploration and development activity’.
As at the time of writing, the NT Gas Industry Roads Upgrades program is in the planning stage, with construction expected to have started in early 2023 and finish in mid-2028. The $217 million project cost will be jointly funded, with the NT Government’s co‑contribution being $43.4 million.
In the Interim Report, the committee considered information received from submitters and witnesses, who argued that Australian Government funding should be directed towards improving basic infrastructure in the Territory, including for the betterment and advancement of First Nations people.
At the Darwin public hearings, witnesses who live in and around the Beetaloo continued to call for infrastructure investment. For example, Aunty Naomi Wilfred, an Alawa Traditional Owner from Minyerri, reflected on the state of housing infrastructure in her community:
[On Country] we have to have our toilet and shower outside, during the big wet. And a small room. We don't know how to fit our grandchildren into one room to live. Small houses! Nothing! That's why we're getting angry. We're saying no to mining and everything. They're building up money mining; we don't know where the money's gone. No‑one is helping the community with good, healthy buildings for our children.
Ms Joni Wilson, a Yanyuwa Gawara woman from Borroloola, also commented on housing infrastructure in her community:
They're talking about closing the gap! What happened in Borroloola and that small outstation where we lived all our life, from little kids—no house and no housing. My house is down the corner. I thought my granddaughter might come and see me lying dead because the housing was falling down. Come on! We need something out here! Help! You want a mine? Help the community with housing!
The pastoral industry described its frustration with the lack of investment in regional infrastructure, which, in some cases, has generated support for a gas industry in the Beetaloo. Mr Will Evans, Chief Executive Officer of the NT Cattlemen’s Association, stated:
…a number of my members are looking at gas and saying, 'Well, at least this might bring investment, regional infrastructure and development with it.' I think that perspective shouldn't be so easily dismissed. It's unfortunate in some ways that we are in that position, but the reality is that, for whatever reason, the maths in terms of investing in regional Australia don't stack up at the moment.
Mr Rohan Sullivan, part owner of Birdum Creek Station, expressed his optimism that infrastructure created through the development of a gas industry in the Beetaloo could benefit pastoralists:
Once the exploration phase is finished, I would expect there to be roads put in place and, potentially, water, extra bores. There would be infrastructure that the gas companies had put in for their own operations that we could then make use of. From my point of view, that would be a very positive thing.
Dr Jennifer Ansell, Chief Executive Officer of Arnhem Land Fire Abatement (Northern Territory) Ltd, suggested that Commonwealth funding could be reinvested into the development of clean energy and offsets projects:
The Northern Territory, in particular, has really shown a lot of leadership in this space. The savanna burning method that we work under…has created incredible opportunity for projects right across northern Australia, whether they are on Aboriginal land, pastoral lands or the conservation estate. So there are many ways that we can contribute towards economies that support climate action as well as delivering on other co-benefits like economic and environmental outcomes.
Similarly, Ms Anna Boustead, Chief Executive Officer of the Indigenous Carbon Industry Network, argued that diverting taxpayers’ funds to fossil fuel companies limits the creation of other environmental, economic and social benefits. Further:
Our industry, which has been created by traditional owners, has been a path of collaboration, not seeking to create winners and losers, and I think that's a really important case study demonstrating how economically and environmentally sustainable development is not only possible but actually a reality for our members.
Ms Heidi Lee, Chief Executive Officer of Beyond Zero Emissions, agreed that renewable technologies investment in the Territory would create economic opportunities:
[We released a report in 2021] showing that investment in renewable energy in industrial centres elsewhere in Australia can add enormous windfalls to those communities of up to $13 billion and 45,000 ongoing jobs over 10 years from just two large industrial centres. That work we've done is part of a national program of 14 locations for renewable energy industrial precincts all across the country, including a location in Darwin.
Ms Lee further commented:
Instead of pursuing a sugar hit of fossil fuels like gas, the Northern Territory should be focused on developing industries that can maximise the huge potential of the Northern Territory's exemplary resources in solar—sunshine—and wind.
The committee recognises that regional infrastructure has long been neglected in the Territory. While Australian Government investment in road upgrades is therefore welcome, it does not begin to address the multiple infrastructure needs of people living and working in and around the Beetaloo. In the committee’s view, these needs must be addressed and not as a corollary of gas development in the Beetaloo but as a basic service for regional and remote communities.
According to the Beetaloo Strategic Basin Plan, development of a gas industry in the Beetaloo would also require new gas processing and transportation arrangements, such as additions to the Amadeus Gas Pipeline, expanded gas transmission routes to the east coast or additional LNG export facilities. The plan advises:
The NT Government, working with the Australian Government and gas operators, will deliver a midstream infrastructure plan. This plan will coordinate the timely delivery and appropriate scale of Beetaloo gas infrastructure required to support multiple operators.
In March 2022, the then Minister for Industry, Energy and Emissions Reduction, the Hon Angus Taylor MP, announced his government would be accelerating priority gas infrastructure, with the March 2022–23 Federal Budget providing funding for a feasibility study into the most efficient infrastructure to deliver natural gas from the Beetaloo to the east coast gas market.
The committee asked APPEA when pipeline infrastructure might be commissioned. The peak body’s response was that infrastructure placement and construction is ‘reliant on successful exploration results and better definition of the resource’.
On the information available, the committee understands that the Australian and NT Governments have not yet finalised arrangements for the processing and transportation of shale gas that might be produced in the Beetaloo. Further, gas industry representatives have made it clear that it is by no means certain from where that gas will be extracted. In this regard, the committee recalls that Tamboran plans to enter into commercial production in 2025 (see paragraphs 4.38 and 4.39) by which time it will be necessary to have transportation arrangements in place.
Middle Arm Sustainable Development Precinct
As noted in Chapter 1, the former Australian Government announced about $2 billion funding for the development of gas infrastructure at Middle Arm of Darwin Harbour in the March 2022–23 Federal Budget (the Middle Arm Sustainable Development Precinct).
In the October 2022–23 Federal Budget the new Albanese Government committed $5.4 billion over seven years from 2022–23 to support economic growth and development across regional Australia, including:
$1.9 billion in equity investment for the development of the Middle Arm Sustainable Development Precinct in the Norther Territory, including common use marine infrastructure and regional logistics hubs.
The NT Government has provided the following description of the 1500 hectares Middle Arm Sustainable Development Precinct, which will:
capitalise on the Territory’s strategic location and world-class solar resources
be designed to attract industries reflective of the Territory’s future economy including hydrogen, carbon capture, advanced manufacturing and minerals processing
drive industry diversification, exports, job creation and population growth
play a pivotal role in growing the Northern Territory (NT) economy.
In 2020, the Territory Economic Reconstruction Commission—the body responsible for advising the NT Government on ‘accelerating the Territory’s economic rebound and positioning the Territory for growth’—recommended that the government ‘complete the rapid master planning for low emissions petrochemicals manufacturing’. A related action was to: ‘work with upstream gas companies to identify and commercialise feedstock sources to support investment in petrochemical and other gas-based manufacturing projects’.
Tamboran’s Mr Riddle confirmed:
The Beetaloo basin's development plays an absolutely vital role in the economic development plan for Northern Australia and is strongly supported by the Northern Territory government. Specifically, the gas that will be extracted from the Beetaloo will be necessary for a full range of industrial purposes at the Middle Arm Sustainable Development Precinct, near Darwin. This includes ammonia and urea production for fertiliser, hydrogen production, energy-intensive manufacturing, power generation and LNG export. As we know, gas is not only a vital input into low‑emissions, gas-fired power generation but a critical feedstock into a range of industrial processes vital for modern life and the economy at large. With many of our major gas fields such as the Bass Strait forecast to expire in less than a decade, the simple reality is that we urgently need to develop strategic basins such as the Beetaloo just to keep our domestic production levels, let alone increase output as forecast. This is what is necessary for the transition to a reliable, renewable energy-based economy.
The APPEA’s former Chief Executive Mr Andrew McConville pointed out that 70 per cent of Australia’s gas usage is for manufacturing processes:
…only 30 per cent of gas is used in the generation of electricity, most of which is to support renewables. The other 70 per cent of gas is used in manufacturing processes such as those for many of the things we see around this room: glass, plastics, fertilisers—products that don't have any substitutable alternative for their production other than that which is provided by natural gas. It's very important to understand that.
Mr McConville also argued that, in addition to economic growth opportunities, the domestic market needs further gas development:
…it's very important to understand that the development of the gas industry in Australia provides benefits domestically in terms of the gas supply into Australia. Every year [the Australian Energy Market Operator] estimates whether there is a potential for either surplus or shortfall. At present [March 2022] it's estimated that there may be a shortfall from 2024 and beyond. And so the supply of gas that could potentially come from the Beetaloo Basin can be fed into the east coast domestic market.
Ms Winters suggested that the Australian Government’s plan to ‘unlock’ the Beetaloo is also designed to improve Australia’s and the region’s energy security: ‘it's not about helping the oil and gas companies; it's about a much more strategic issue’.
The committee recognises the Middle Arm Sustainable Development Precinct is intended to grow the Northern Territory economy, by attracting a range of industries that rely on gas, including that which could be produced in the Beetaloo. In view of the significant Commonwealth and Territory investment, the committee suggests that the Senate should exercise more detailed oversight of the Australian Government’s expenditure on this project.
The committee recommends that the Senate refer an inquiry to the Environment and Communications References Committee into the Middle Arm Sustainable Development Project, noting that a future liquified natural gas and petrochemical plant in the area would likely source feedstock from the Beetaloo Basin.