Regulatory framework for oil and gas exploration and production
This chapter describes the regulatory arrangements for offshore oil and
gas exploration and production, and the interactions between both federal and
state authorities. Information is provided on the overall approach, legislative
framework and approvals process which govern offshore operations.
This chapter also explores the unique role of the National Offshore
Petroleum Safety and Environmental Management Authority (NOPSEMA) as an
independent 'one-stop' regulator, and the principles and legislation it
administers. Finally, information is included on BP's proposed venture, and the
status of its application to NOPSEMA.
Offshore oil and gas approval and regulatory regime
The offshore oil and gas industry is technically complex and its regulation
requires both specialist knowledge and expertise, and the co-operation of state
and Commonwealth governments.
In South Australia, petroleum operations which occur within the three
nautical mile limit of state waters are administered under the Petroleum
(Submerged Lands) Act 1982 (SA) and the Petroleum and Geothermal Energy
Act 2000 (SA).
Petroleum operations which occur outside this three nautical mile limit
occur within Commonwealth waters, and are administered under the Offshore Petroleum and Greenhouse Gas Storage Act 2006
(OPGGS Act), the Offshore Petroleum and Greenhouse Storage (Regulatory
Levies) Act 2003, and a range of associated regulations. These regulations
Offshore Petroleum and Greenhouse Gas Storage (Safety)
Offshore Petroleum and Greenhouse Gas Storage (Environment)
Offshore Petroleum and Greenhouse Gas Storage (Resource
Management and Administration) Regulations 2011; and
Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies)
This legislation 'provides for the orderly exploration for, and recovery
of, offshore oil and gas resources and sets out a basic framework of rights,
entitlements and responsibilities of government and industry'.
It is underpinned by four key principles. These are:
- Offshore oil and gas resources in Australia are best
exploited, and risk managed appropriately, through commercial development;
- All offshore operations are undertaken in accordance with
good oilfield practice, and are compatible with optimal long-term exploitation
of oil and gas resources;
- Risks to health and safety and the marine environment associated
with offshore operations must be managed to be as low as reasonably practicable,
and deemed acceptable;
- A system of licencing and titles grants exclusive
property rights to titleholders to provide protection and incentives throughout
the oil and gas lifecycle. These rights and incentives are dependent on
compliance with requirements under the OPGGS Act and associated regulation, and
On 21 August 2009, the Montara wellhead platform located in the Timor
Sea and operated by PTTEP Australasia (Ashmore Cartier) Pty Ltd suffered a
blowout which resulted in the uncontrolled escape of oil and gas. The leak was
stopped on 3 November 2009, after a number of attempts. As a result of the
incident, the Australian government initiated the Commission of Inquiry into
the Montara Incident which examined the likely cause of the incident, and the
adequacy of Australia's offshore oil and gas industry regulatory regime.
On 24 November 2010, the Report was publicly released and the findings
highlighted a number of operator design and regulatory failures. It recommended
the establishment of a single, independent regulatory body with safety, well
integrity and environmental management as its objectives.
In 2011, amendments to the OPGGS Act and associated regulations were
made to implement recommendations from the Inquiry. The key amendments
the separation of offshore regulation and titles administration
through the establishment of the National Offshore Petroleum Titles
Administrator (NOPTA). This would ensure that any potential or perceived
conflicts of objectives are avoided;
the responsibility for the regulation of well operations
management plans and approval of well activities was given to the former
National Offshore Petroleum Safety Authority (NOPSA); and
the regulation of environmental management in Commonwealth waters
was also added to the remit of NOPSA, and its name was changed to the National
Petroleum Safety and Environmental Management Authority (NOPSEMA) to reflect this
The legal framework regulating the Australian offshore oil and gas
industry is administered by three Australian Government entities: the National
Petroleum Titles Administrator (NOPTA); NOPSEMA; and the Department of
Industry, Innovation and Science. Legislation is also administered in
co-operation with state and Northern Territory governments through Joint
Figure 2.1 shows the regulatory process from the granting and administering of
titles, through to the monitoring of oil and gas operations to ensure
Figure 2.1 – Oil and gas activity regulatory process
Submission 7, Attachment 1, p. 30.
Each offshore area is administered by a Joint Authority comprising the
responsible Commonwealth Minister (the Minister for Resources and Northern
Australia) and the relevant state or Northern Territory Resources Minister.
Joint Authorities make key decisions on resource management and resource
security, and have responsibilities under the OPGGS Act including:
the release of offshore oil and gas exploration areas; and
the granting of titles, and making any subsequent changes to
National Offshore Petroleum Titles
Offshore oil and gas activity in Australia can only occur where a
company holds a valid title. NOPTA is responsible for the administration of
petroleum and greenhouse gas titles in Commonwealth waters in Australia. Its
key functions include:
the provision of information, analysis and advice to the Joint
the collection, administration and release of data;
to facilitate title administration such as the approval of
registration of transfers and dealings associated with titles, and Joint
Authority considerations of changes to title conditions; and
to maintain registers of offshore titles.
The Offshore Petroleum Exploration Acreage Release (acreage release) is
the key component of the Australian Government's strategy to encourage and
facilitate the exploration and production of offshore oil and gas in
Commonwealth waters. Acreage
is released regularly to provide new investment opportunities, and to provide
industry the ability to plan ongoing investment in Australia's offshore oil and
The responsible Commonwealth Minister (currently the Minister for
Resources and Northern Australia), the Department of Industry, Innovation and
Science, and Geoscience Australia undertake a 10–12 month consideration process
to select areas for acreage release. This process is made up of three key
components: the nomination of an area by industry, state/Northern Territory governments,
or Geoscience Australia; the consideration of nominated areas; and a
consultation process. The consultation process considers a range of factors
including the prospectivity of the area; existence of title; and the proximity
to sensitive marine zones.
Once areas have been shortlisted, the Department of Industry, Innovation
and Science undertakes targeted consultation with Commonwealth, state and
Northern Territory agencies responsible for managing the marine environment. In
addition, consultation is undertaken with industry bodies whose members have
access rights such as fishing licences. The department works closely with the
Department of the Environment and Energy which provides comprehensive comments
in relation to the environmental considerations of each release area. This
includes considerations such as whether the area includes Commonwealth Marine
The Department of Industry, Innovation and Science submitted that the
targeted 'consultation assesses factors such as such as maritime boundaries,
environmental and fisheries impacts, defence and communications requirements,
maritime safety and native title interests'. The outcomes of this consultation
may lead to the development of special conditions which must be met in the event
that title is awarded for the area.
Following targeted consultation, the Department of Industry, Innovation
and Science publicly makes available the proposed areas for the following
year's acreage release. In recognition of the increased community interest in the
acreage release process, the department also made the proposed areas for the
2016 acreage release publicly available on its consultation hub. This provided
the public with an opportunity to provide comment on proposed areas.
Following release, investors are invited to make competitive work
program bids or cash-bids.
These bids are assessed by NOPTA to determine compliance with the OPGGS Act,
and other relevant guidelines. NOPTA then provides advice to the Joint
Authority which makes a decision as to which bid to accept.
In making a bid, applicants are required to provide evidence of both
financial and technical capability, and comprehensive details of proposed
exploratory activity to be carried out. Following an assessment of bids, NOPTA
acting on behalf of the Joint Authority, executes the decision to make an offer
to the successful bidder. If the offer is successful, NOPTA on behalf of the
Joint Authority will grant an exploration title, and publish a notification in
the Australian Government Gazette.
The Department of Industry, Innovation and Science stated that it is
important to note that the granting of an exploration title authorises the
holder to undertake oil and gas exploration activity subject to the OPGGS Act
and its associated regulations. This includes a requirement that the
titleholder apply to NOPSEMA for approval prior to undertaking any exploration
National Offshore Petroleum Safety
and Environmental Management Authority
NOPSEMA is the independent statutory authority established under the
OPGGS Act responsible for the regulation of 'health and safety, well integrity
and environmental management for offshore oil and gas operations in
Commonwealth waters and in coastal waters where regulatory powers and functions
have been conferred'.
In its submission to the committee NOPSEMA stated that the authority's 'vision
is for safe and environmentally responsible Australian offshore petroleum and
greenhouse gas storage industries'. It further stated that its 'mission is to
independently and professionally regulate offshore safety, integrity and
NOPSEMA's legislated functions are specified under section 646 of the
OPGGS Act. They are summarised as follows:
to promote the occupational health and safety of persons engaged
in offshore petroleum operations;
to develop and implement effective monitoring and enforcement
strategies to ensure compliance with the OPGGS Act and associated regulations;
to investigate accidents, occurrences and circumstances that affect
occupational health and safety, or that relate to deficiencies in environmental
management or the structural integrity of facilities, wells and well-related
to advise on matters related to offshore health and safety,
environmental management and the structural integrity of facilities, wells, and
to make reports on investigations to the responsible Commonwealth
minister and each responsible state/Northern Territory minister;
to provide support to the responsible Commonwealth minister
through the provision of information, reports, analysis and recommendations;
to co-operate with other Commonwealth and state/Northern
Territory agencies and authorities which have responsibility for regulated
The OPGGS Act requires that all offshore operations be carried out in
accordance with 'good oilfield practice' which is defined as 'all those things
that are generally accepted as good and safe in the carrying out of exploration
for petroleum and petroleum recovery operations'.
Further, the Act also requires that offshore operations must not interfere with
a range of activities including navigation, fishing, conservation, native title
rights, or any other lawful oil or gas exploration activities.
In the event of an escape of petroleum, titleholders are required under
the Act to undertake a range of activities including controlling the spill,
cleanup activities, recovery, and environmental monitoring.
The OPGGS Act also provides NOPSEMA (or the responsible Commonwealth
minister) with the authority to give written directions to titleholders on any
aspect of petroleum exploration and production. This includes the authority to
provide remedial directions to titleholders requiring the restoration of the
environment, the removal or closure of well and well-equipment, the
conservation and protection of natural resources and the rehabilitation of
damaged seabed or subsoil.
As the independent regulator, NOPSEMA is not involved in policy decisions
such as the selection or release of areas for exploration and development, or
the granting of petroleum titles. Rather, NOPSEMA makes 'merits based decisions
on specific activities and their potential interactions with the environment in
which they are proposed to occur'. NOPSEMA stated that:
Decisions focus exclusively on the technical and scientific
merits of risk management plans and are independent of economic, commercial and
The Offshore Petroleum and Greenhouse Gas Storage (Environment)
Regulations 2009 (Environment Regulations) require titleholders to prepare and
submit an Environment Plan for activities proposed in Commonwealth Waters, to
NOPSEMA for assessment and approval. The Environment Regulations set out the
criteria for acceptance, and the content requirements for Environment Plans. The
object of the Environment Regulations is to ensure that
...oil and gas and greenhouse gas activities are carried out in
a manner that is consistent with the principles of ecologically sustainable
development and in a manner by which all environmental impacts and risks of the
activity will be reduced to as low as reasonably practicable and acceptable levels.
Once an Environment Plan is submitted to NOPSEMA, it is assessed against
the criteria for acceptance contained in the Environment Regulations. If it is
found not to meet these criteria, titleholders are given the opportunity to modify
and resubmit the plan. NOPSEMA typically only allows titleholders two
opportunities to modify and resubmit a plan before making a decision to accept
or reject it.
An Environment Plan is deemed to be in operation from the date it is
accepted by NOPSEMA, and the titleholder is required to provide a summary for
publication on the NOPSEMA website within 10 days. If an Environment Plan is
rejected by NOPSEMA, the titleholder may choose to submit another Environment
Plan for the same activity, and NOPSEMA will commence a new assessment.
NOPSEMA noted that its assessment process is iterative and that more than 90
per cent of Environment Plans have at least one interim decision before a final
decision to accept or reject a plan is made. Interim decisions can include
requests for further information, or as noted above, an opportunity to modify
and resubmit a plan.
As an independent statutory authority, NOPSEMA's decisions are based
only upon the requirements of the Environment Regulations, and the scientific
and technical merits of proposed risk management strategies and measures.
NOPSEMA submitted that with the exception of potential impacts and risks to
socioeconomic aspects of the immediate environment, NOPSEMA does not consider
economic, commercial, or political factors when making a decision.
Figure 2.2 shows the assessment process for environment plans.
2.2 – Environment Plan approval process
Source: NOPSEMA, https://www.nopsema.gov.au/environmental-management/assessment-process/environment-plans/.
NOPSEMA submitted that during an assessment it has regard to: the
compliance record of the titleholder where it relates to matters contained in
the Environment Plan, all relevant information including correspondence from
external stakeholders; all policies, guidelines and management plans related to
matters protected under Part 3 of the Environment Protection and
Biodiversity Conservation Act 1999 (EPBC Act); and reputable, publicly
available scientific and academic research relevant to the assessment.
In order to be assessed as meeting regulatory requirements, titleholders
must demonstrate that impacts and risks associated with oil and gas activities are
reduced to As Low As Reasonably Practicable (ALARP), and that they are
consistent with relevant Commonwealth Marine Reserve management plans where
The assessment and approval process also explicitly takes into consideration
any potential impacts on matters protected under Part 3 of the EPBC Act. These
world heritage properties;
national heritage places;
wetlands of national importance;
listed threatened species and ecological communities;
listed migratory species; and
the Commonwealth marine area.
NOPSEMA submitted that the Environment Regulations intend to ensure that
any petroleum activity is carried out in accordance with the principles of
ecologically sustainable development as defined under the EPBC Act. One of
these principles, commonly known as 'the precautionary principle' states that:
...if there are threats of serious or irreversible
environmental damage, lack of full scientific certainty should not be used as a
reason for postponing measures to prevent environmental degradation.
NOPSEMA stated that by implementing control measures that reduce or
eliminate uncertainty, titleholders can demonstrate that impacts and risks will
be of an acceptable level and ALARP.
In preparing an Environment Plan, titleholders must also comply with
rigorous consultation requirements. Titleholders must 'consult with relevant
persons including a person or organisation whose functions, interests or
activities may be affected by the activities to be carried out under the
Environment Plan, or any other person or organisation that the titleholder
considers relevant'. Relevant persons can include government agencies,
community groups, industry bodies and operators, non-government and
Titleholders are also required to provide 'sufficient information to
allow the relevant person to make an informed assessment of the possible
consequences of the activity on the functions, interests or activities of the
relevant person and a reasonable period for the consultation'.
Under the Environment Regulations, NOPSEMA cannot accept an Environment Plan
that does not demonstrate compliance with consultation requirements.
The Environment Plan must also include a comprehensive Oil Pollution
Emergency Plan (OPEP) which provides details of response and monitoring
arrangements in the event of an oil spill. The OPEP must include information on
control measures, response capability, and monitoring capability. It is
intended to ensure that the titleholder has demonstrated its ability to quickly
and effectively respond in the event of an oil pollution emergency.
The OPGGS Act requires titleholders to demonstrate financial assurance
sufficient to meet the costs, expenses and liabilities arising from carrying
out oil and gas activities. This assurance is intended to ensure that the
titleholder will have the capacity to meet any costs, expenses and liabilities associated
with its legislative obligations under the OPGGS Act. This includes obligations
to control, clean-up and monitor the effects of an oil spill, and in the event
of failing to comply, the costs of reimbursing NOPSEMA or the responsible
The Environment Regulations provide NOPSEMA with the ability to assess compliance
with the requirement of financial assurance as a condition precedent to the
acceptance of an Environment Plan. NOPSEMA must not accept an Environment Plan
if it is not reasonably satisfied that financial assurance is sufficient or in
an acceptable form. If financial assurance is not maintained during the course
of oil and gas activities, NOPSEMA has grounds to withdraw its acceptance of an
Endorsement of approvals process
In February 2014, the Commonwealth Minister for the Environment endorsed
NOPSEMA's environmental authorisation program (the Program) as being
'appropriate to ensure that offshore oil and gas activities do not have
unacceptable impacts on matters protected under the EPBC Act'.
This endorsement had the effect of making NOPSEMA the sole environment
regulator for oil and gas activities in Commonwealth waters. As a consequence,
activities which are assessed and approved by NOPSEMA no longer require
assessment and approval by the Department of the Environment under the EPBC
Act. NOPSEMA stated that this streamlining reduced the duplication of
environmental regulation whilst still maintaining strong environmental
In 2015, following the first 12 months of operation of the Program,
NOPSEMA was subject to an independent review of its authorisation process. The
review found that NOPSEMA was delivering the levels of environmental protection
required under the EPBC Act.
Objective based regulation
The OPGGS Act, and the Environment Regulations operate to provide an
'objective based' environmental management regime administered by NOPSEMA.
NOPSEMA submitted that the Environment Regulations were:
...developed to provide an objective‐based regime within which titleholders
are free to adopt environmental management practices and technologies best
suited to individual company circumstances, activities and locations, subject
to demonstrating that appropriate environmental performance outcomes and
environmental performance standards will be met.
The Environment Regulations 'do not prescribe specific processes,
standards or procedures, but rather, regulates through the achievement of
environmental objectives'. As such, proponents are able to determine how these objectives
are to be achieved within the parameters of the Environment Regulations.
Objective based environmental regulatory systems are considered to be
best practice for high hazard industries such as offshore petroleum operations.
Such systems require project developers to:
...consider and identify the acceptable outcomes for all
environmental matters, including matters of national environmental
significance. The activity approved must also include a clear demonstration of
how those outcomes will be delivered. This is in contrast to requirements under
a prescriptive regulatory regime, where the project developers only consider
those matters specifically identified by the regulation and meet the minimum
standard of protection the regulator prescribes.
The global adoption of objective based regulatory frameworks for the
offshore oil and gas sector stems largely from the worldwide reassessment of
regulation which occurred following the 1988 Piper Alpha disaster in the United
Kingdom's North Sea. The large explosion which destroyed the Piper Alpha oil
and gas platform and killed 167 people, led to the UK government conducting an
inquiry into the factors which caused the disaster. The UK Committee of Inquiry
into the Piper Alpha incident recommended moving from prescriptive regulation
to an objective based regime.
Objective based regulatory regimes are based on the principle that while
the legislation provides broad safety and environmental objectives,
titleholders must develop and implement the measures to achieve these goals. The
Department of Industry, Innovation and Science explained that this 'places the
onus and duty of care for environmental protection on project developers
seeking to undertake offshore activities'.
The Department of Industry, Innovation and Science explained that such
an approach encourages the:
...continuous improvement to achieve appropriate environmental
outcomes and ecologically sustainable development. It ensures flexibility in
operational matters to meet the unique nature of different projects, and avoids
a 'one size fits all' approach to regulation, allowing industry to determine
the most effective and efficient way to operate.
BP's proposed venture – process and status
The following provides an overview of the proposal for petroleum
exploration and production in the Great Australian Bight put forward by BP
Development Australia Pty Ltd (BP).
In June 2009, areas of the Great Australian Bight were released under
the 2009 Offshore Petroleum Exploration Acreage Release. In April 2010, BP
Exploration (Alpha) Ltd
lodged a bid for four release areas. On 14 January 2011, following an
assessment of BP's technical and financial competence to undertake the proposed
work program, the Commonwealth-South Australia Offshore Petroleum Joint
Authority awarded four petroleum exploration titles (EPP37–40) to BP.
The Joint Authority, in recognition of the sensitive environmental and
agricultural elements critical to the rural economy of the Great Australian
Bight region, and in light of the Deepwater Horizon incident, imposed
additional special conditions on all four titles. These special conditions
included the requirement that:
All well casing and cement design is to be undertaken by an
appropriately qualified and experienced engineer, who, along with other such
personnel associated with permit activities, will make themselves available for
peer review at the discretion, and to the satisfaction of NOPSEMA.
They also included the requirement that:
Prior to the commencement of drilling, the permittee is
required to lodge with NOPSEMA:
- An approved well design integrity monitoring plan designed to assure
well integrity within each well, which must be agreed by NOPSEMA and will
include quarterly compliance reporting.
Independent certification by the original provider, prior to
installation, that each Blowout Preventer to be used has been satisfactorily
tested to design pressures.
Prior to the commencement of drilling, BP would also have to:
...satisfy and have approved by
NOPSEMA, the hydrocarbon spill mitigation technologies and risk mitigation
processes that it will deploy throughout the drill and maintain for the active
life of the well.
There were also conditions which applied during exploration. These
included the requirement that:
As soon as practicable after the completion of drilling, and
prior to the commencement of any other exploration activity, the permittee will
conduct and report to NOPTA, for review by NOPSEMA, on Cement Bond Logging to
demonstrate effectiveness of cement jobs behind well casing.
Finally, BP would be required to:
...undertake an annual Environment, Health and Safety
Management System self-assessment each year, as per requirements determined by
NOPSEMA, in relation to the effectiveness of system elements, including the
Management of Change processes and procedures.
Throughout its exploratory activities, BP would be required to satisfy
regulators that it was not only compliant with special conditions, but also
standard title conditions, and all other legislative requirements.
On 1 October 2015, BP submitted an Environment Plan to NOPSEMA proposing
exploration drilling in a joint venture with Statoil Australia Theta B.V. The
proposed drilling would have occurred at water depths between 1,000 and 2,500
metres approximately 395 km west of Port Lincoln, and 340 km south of Ceduna in
On 16 November 2015, NOPSEMA notified BP that it was not satisfied that
the Environment Plan met the approval criteria of the Environment Regulations.
BP was provided with an opportunity to change and resubmit its Environment Plan
accordingly. On 15 March 2016, BP resubmitted its modified plan to NOPSEMA for
On 16 May 2016, after a complex assessment
NOPSEMA again notified BP that it was not reasonably satisfied with the
Environment Plan, and again BP was given the opportunity for modification and
resubmission. On 12 July 2016, BP sought an extension of time for the
modification and resubmission of its Environment Plan.
On 18 August 2016, BP sought, and was granted an extension until 31 December
2016. On 19 August 2016, BP submitted a new Environment Plan for two
exploration wells advising that these two exploration wells were a subset of
the activity covered by the original plan which would need to be amended
accordingly to remove them from its scope.
The new proposal stated that the two wells (Stromlo-1 and Whinham-1)
would be drilled by a semi-submersible mobile offshore drilling unit. Stromlo-1
was located approximately 600km west of Port Lincoln and 400km southwest of
Ceduna in a water depth of approximately 2,250m. Whinham-1 was located
approximately 600km west of Port Lincoln and 350km southwest of Ceduna in a
water depth of approximately 1,150m (see Figure 2.3). The drilling program was
scheduled to commence in the fourth quarter of 2016 to the first quarter of
2017. It was anticipated that each well would take approximately 75 days to
drill. NOPSEMA was due to make a decision on this new Environment Plan on
19 September 2016.
Figure 2.3 – Map showing proposed drilling sites for Stromlo-1 and Whinham-1
On 15 September 2016, BP released its own oil spill modelling for the
proposed exploratory drilling program. This modelling was based on a 'worst
credible case' oil spill scenario. BP also released its oil spill response
planning strategic review.
On 11 October 2016, BP announced that it would not be progressing with
its exploration drilling program in the Great Australian Bight 'citing
commercial reasons and a change in their global investment strategy'.
On 20 December 2016, BP withdrew both Environment Plans.
In an official statement, BP Developments Australia's Managing Director
for Exploration and Production, Ms Claire Fitzpatrick, commented:
The decision follows the review and refresh of BP's upstream
strategy earlier this year, which included focusing exploration on
opportunities likely to create value in the near to medium term, primarily
building on BP's significant existing upstream positions.
BP has determined that the GAB project will not be able to
compete for capital investment with other upstream opportunities in its global
portfolio in the foreseeable future.
We have looked long and hard at our exploration plans for the
Great Australian Bight but, in the current external environment, we will only
pursue frontier exploration opportunities if they are competitive and aligned
to our strategic goals. After extensive and careful consideration, this has
proven not to be the case for our project to explore in the Bight.
NOPSEMA noted that prior to BP withdrawing the Environment Plan, it had
requested further information from BP on the following key issues:
potential oil spill scenarios and arrangements in place to ensure
that control measures proposed were appropriate to manage potential impacts and
plans for monitoring of the environment in the event of an oil
the values and sensitivities of the surrounding environment
including but not limited to fisheries, Commonwealth Marine Reserves and
matters protected under the EPBC Act, the potential for impacts and
risks to these features and how these were proposed to be managed;
consultation with relevant persons, and demonstration that this
consultation met regulatory requirements;
management of potential impacts and risks from planned emissions
and discharges from the activity; and
the implementation strategy for the activity, and demonstration
that the environmental management system in place for the activity would be
effective in continuously identifying and reducing environmental impacts and
risks to levels that are acceptable and as low as reasonably practicable.
Further information on these key areas was not provided prior to the
withdrawal of the Environment Plans, and NOPSEMA stated that no further
assessment of the submissions would occur.
The Department of Industry, Innovation and Science stated that if
'exploration wells are not drilled by 30 June 2017, the title will be in
default on its work commitments, and may be cancelled at any time'. It noted
that prior to default, titleholders are able to seek investors to take-over
their commitments which could allow the continuation of the permits.
In the event that the titles fall into default and are subsequently
cancelled, titleholders are able to 'make good on their commitments by
diverting the committed expenditure to exploration of other areas—via a Good
The Department of Industry, Innovation and Science explained that:
The Good Standing Agreement is a policy mechanism available
to companies that wish to maintain 'good standing' with government to 'make
good' their default. If a company chooses not to enter into a Good Standing
Agreement, its default will reflect poorly on past performance and may affect
its ability to secure new exploration permits.
If permits cease to exist, they revert to vacant acreage and may be
nominated in future acreage releases to be considered for new petroleum
According to the Department of Industry, Innovation and Science 'as of
20 October 2016, BP and its joint venture partner had not made an
application to the Commonwealth-South Australian Joint Authority regarding the
future of the permits'.
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