LAND ACCESS & LAND USE
The questions of land access and land use have generated much of the
controversy surrounding the coal seam gas industry. For many landholders, despite
understanding that they do not own the mineral resources under their land, the
realisation that they are legally required to give access to their land to gas
exploration companies and that those companies could, for example, construct
roads, clear drilling sites, build work camps and, ultimately, construct gas
production facilities, came as a profound shock. This represents a huge
imposition on the landholder who may have believed that freehold title meant
what it said.
The legal position in both NSW and Queensland has no process for dealing
with a situation in which a landholder simply does not wish to have CSG
activity on their land under any circumstances. In such a situation, should the
company choose, it can require the landholder to enter into arbitration and
comply with the result of that arbitration, which will include access to the
It is important to note that, whenever it was put to a gas company by
the committee whether they intended to use these powers the answer was that
they had not and would prefer not to use them in the future. For example, in
evidence to the committee, a senior company executive summed up Santos's
As you saw when you came out and visited our area, we have to
have respectful relations with our community. We employ locals because we want
to understand the area; we want to understand particular farmers' issues. If a
farmer does not want us on his property, we will not be going through that
The campaigns against giving land access to coal seam gas exploration
and production companies, particularly those such as Lock the Gate seeking to
deny access altogether, have contributed to a public perception that
landholders have few legal rights when dealing with these companies and that
the only alternative is 'civil disobedience'. At the other extreme, some
landholders, perhaps lacking the resources, knowledge, or the confidence to
'take on' a major corporation, simply accepted what was offered by way of an
access agreement and compensation and permitted access to their land.
In fact the law in this area has been evolving quite rapidly to respond to
public concern and, while it is correct to say that a landholder cannot
absolutely deny access to the land, equally it is wrong to imply that a gas (or
other resources) company has an unfettered right of access to conduct whatever
activities they see fit on any land.
The Legal Position in Queensland & New South Wales
Under Australian law minerals under the earth's surface belong to the
Crown, represented by the States.
The right to explore for, and produce, minerals, oil and gas, is generally
granted by the State to private exploration and production companies. There are
differences in the legal regimes governing exploration and production between
the two States but, with regard to the rights of a permit holder to access land
to exercise his rights under an exploration or production permit, the situation
in the two States is broadly similar.
The holder of an exploration permit in Queensland – an authority to
prospect – has the right to carry out "...authorised activities ... despite
the rights of an owner or occupier of land on which they are exercised".
These activities are:
- exploring for petroleum;
- testing for petroleum production;
- evaluating the feasibility of petroleum production; and
- evaluating or testing natural underground reservoirs for petroleum
The Queensland Act goes on to list activities that are "... reasonably
necessary for, or incidental to, an authorised activity" and these
1. constructing or operating plant or works, including, for
example, communication systems, pipelines associated with petroleum testing,
powerlines, roads, separation plants, evaporation or storage ponds, tanks and
2. constructing or using temporary structures or structures
of an industrial or technical nature, including, for example, mobile and
3. removing vegetation for, or for the safety of, exploration
or testing under section 32(1)
Obviously not all of these activities would be carried on at every site,
and many of the larger works are located on land owned by the companies. However
this list makes it clear how intrusive and disruptive CSG exploration might be.
The right to access land to carry out these activities is not uncontrolled.
In Queensland, it is governed by the land access laws and the Land Access
Code, introduced into Queensland law in October 2010. The purpose of the
laws is to ensure that all holders of an authority to explore for, or produce,
resources comply with a single set of rules.
The law's key features are:
- an entry notice requirement for ‘preliminary activities’ i.e. those that will have no or only a minor impact on landholders
- a requirement that a Conduct and Compensation Agreement be
negotiated before a resource authority holder comes onto a landholder’s
property to undertake ‘advanced activities’ i.e. those likely to have a
significant impact on a landholder’s business or land use
- a graduated process for negotiation and resolving disputes about
agreements which ensures matters are only referred to the Land Court as a last
- stronger compliance and enforcement powers for government agencies
where breaches of the Land Access Code occur.
The Land Access Code
sets out the requirements that govern the relationship between an exploration
or production company and the landholder. The general principles embodied in
the Queensland Code encourage both parties to negotiate in good faith, to
respect the rights of the other party, to act responsibly and to provide all
relevant information necessary to the creation of a satisfactory working
relationship. These are perfectly sound and, if followed in spirit as well as
to the letter, would minimise the friction between landholders and the gas
The Code also includes mandatory conditions in relation to:
- the training of personnel operating on a landholder's property;
- the selection, construction and use of access points, roads and
- livestock and property;
- the spread of declared pests;
- the siting and management of camps;
- bringing items on to the land – firearms, domestic animals and
alcohol are banned (without the owner's consent); and
- gates, grids and fences.
These mandatory conditions generally place an obligation on the company
to minimise its impact on the land, its occupants and their farming and other
activities. Where a problem arises relating to any of these headings, the
company is required to advise the landholder and, if relevant, make good the
In addition to the Code, the Guide to Queensland's New Land Access
Laws sets out conditions relating to land access and provides definitions
of commonly used terms. One of those is a requirement that a copy of the Land
Access Code be provided to landholders with the first entry notice, prior
to a company gaining access to land.
Queensland has also moved to protect its agricultural resources by
introducing a Strategic Cropping Land policy:
The Queensland Government’s policy position is that strategic
cropping land is a finite resource that must be conserved and managed for the
long-term. Such land should be protected from those developments that would
result in its permanent alienation (that is, when a use on or near strategic
cropping land will endure for 50 years or more and prevents cropping during
that time or in the future) or diminished productivity.
The criteria which define what constitutes strategic cropping land go to
slope, soil depth and quality and soil water storage capacity.
The areas which the policy will apply have been defined. The criteria will be
applied to individual properties to determine whether they, in fact, fall under
the definition of strategic cropping land. The legislation to give effect to
the policy was to be introduced into the Queensland Parliament on 25 October 2011.
The Queensland Government has identified CSG activities such as large
water storage ponds and compressor stations as falling under the heading of
activities likely to alienate strategic cropping land and thus unlikely to be
given approval. Thus it can be assumed that some of the areas of greatest
concern, black soil country along the Condamine River for example, will be
protected from intensive development.
In addition, other lower impact actions may come under the policy's
The policy will also apply to activities that have a
temporary affect on strategic cropping land. These are activities where the
land is able to be restored to its previous strategic cropping land condition
at a later date. For example, activities such as pipelines or wells associated
with petroleum and gas production and geothermal developments generally have a
smaller footprint and may have a temporary impact. These activities will still
be assessed under the strategic cropping land policy to ensure appropriate
conditions requiring full restoration are applied.
Much of the area affected by CSG mining falls outside the areas of
designated strategic cropping land.
New South Wales access and compensation arrangements are governed by the
Petroleum (Onshore) Act 1991.
This Act sets out both the matters that may be covered by an access
agreement and the restrictions which apply to the holder of a petroleum title.
69D Matters for which access arrangement to provide
(1) An access arrangement may make
provision for or with respect to the following matters:
(a) the periods during which the
holder of the prospecting title is to be permitted access to the land,
(b) the parts of the land in or on
which the holder of the prospecting title may prospect and the means by which
the holder may gain access to those parts of the land,
(c) the kinds of prospecting
operations that may be carried out in or on the land,
(d) the conditions to be observed
by the holder of the prospecting title when prospecting in or on the land,
(e) the things which the holder of
the prospecting title needs to do in order to protect the environment while
having access to the land and carrying out prospecting operations in or on the land,
(f) the compensation to be paid to
any landholder as a consequence of the holder of the prospecting title carrying
out prospecting operations in or on the land,
(g) the manner of resolving any
dispute arising in connection with the arrangement,
(h) the manner of varying the
This section of the Act further provides that "...If the holder of
a prospecting title contravenes an access arrangement, a landholder of the land
concerned may deny the holder access to the land until:
(a) the holder ceases the contravention, or
(b) the contravention is remedied to the reasonable
satisfaction of, or in the manner directed by, an arbitrator appointed by the Director-General."
Sections 71 and 72 of the Act further limit the rights of a permit
(1) The holder of a
production lease must not carry out any mining operations or erect any works on
the surface of any land which is under cultivation except with the consent of
This limitation is subject to Ministerial discretion,
(2) The Minister may, however, if the Minister considers that
the circumstances warrant it, define an area of the surface of any parcel of
cultivated land on which mining operations may be carried out or works may be
erected, and may specify the nature of the operations to be carried out or the
works to be erected.
Section 71 does not, except in exceptional circumstances, apply to
cultivation of pasture.
Exploration and production are subject to the following restrictions:
(1) The holder of a petroleum title must not carry on any prospecting
or mining operations or erect any works on the surface of any land:
(a) on which, or within 200 metres
of which, is situated a dwelling-house that is a principal place of residence
of the person occupying it, or
(b) on which, or within 50 metres
of which, is situated any garden, vineyard or orchard, or
(c) on which is situated any
improvement (being a substantial building, dam, reservoir, contour bank, graded
bank, levee, water disposal area, soil conservation work, or other valuable
work or structure) other than an improvement constructed or used for mining or prospecting
except with the written consent of the owner of the
dwelling-house, garden, vineyard, orchard or improvement (and, in the case of
the dwelling-house, the written consent of its occupant).
Disputes arising over these limitations
are determined in the Land and Environment Court.
The right of access to land to explore for CSG must be balanced by the
right of the landholder, whether on free or leasehold, to exercise some control
on who comes on to their property and what activities are undertaken on that
property. Given the array of legal protections available to the landholder,
short of an absolute right of refusal of access, why has the issue generated so
There are two aspects to the problem. Firstly, the issue of access has,
in many instances, been mishandled by some gas companies and the resulting
community hostility has been combined with anxiety among those subject to
exploration permits who were 'waiting for the axe to fall'. Secondly, there is
a very real impact on the lives and businesses of landholders if CSG
exploration and production takes place on their land. This is considered later
in this chapter.
Extensive evidence of offhand, patronising and simply insulting
behaviour by companies – unannounced arrivals, phone calls at wholly
inappropriate times and gratuitous, not to say stupid, advice on how to manage
the land in conjunction with gas exploration was given to the committee. For
example, a landholder near Narrabri explained that:
...when they come to us for meetings, they have made no
effort to actually do any research into how we conduct our businesses. They had
the audacity to ask us if we had heard of sorghum when they were telling us
what we could do with the water. They said: 'We irrigate a crop; I think it's
called sorghum. Have you heard of that?' Then they want us to trust them that
they are going to do the right thing by us.
The same witness also gave example of the casual approach of a company
to a number of other landholders:
I know firsthand that my sister was contacted at 20 past
eight on a Sunday morning asking for access to her property. That was her first
contact. That was before the mail out. ... I know that he rang other
landholders in our PEL on a Saturday afternoon as well. Apparently the
reasoning for that is, 'Because that is the only time we can get hold of you
Another landholder described her experience of dealing with a gas
company holding an exploration permit over her land:
It was immediately evident to my husband and me that they
were completely ignorant of the type of farming that we do. They had no idea
that we are on a flood plain and that the area where they wanted to put the
pilot was right in a major floodway. They did not understand our land values,
our irrigation practices or the level of intrusion that their activities would
cause to our property.
As an example of the type of approach that angers landholders and
undermines belief that some companies are acting in good faith, the committee
received a copy of a letter sent to landholders by Leichhardt Resources, the
holder of a Petroleum Exploration Licence (PEL) in the Moree Region of New
The letter, posted in Brisbane, is dated 30 June 2011 (a Thursday). It is fair
to assume that it would not have been delivered to rural property owners near
Moree until the following Monday at the earliest, that is 4 July 2011.
The letter announced that the drilling contractor "... proposes to
drill an exploration core hole on your property" and that "... the
well program is scheduled to commence in July." It then quite properly
advises the property owner of the legal requirements relating to access and
compensation including that the landholder has 28 days to reach an agreement
after which the matter would go to arbitration; i.e. the landholder is entitled
to take until at least 1 August to reach an agreement.
Thus by the company's own calculation it could not meet its own target
for the commencement of operations if the landholder chose to exercise his or
her full legal entitlement of 28 days to reach an access and compensation
agreement. It is also unacceptable that the first direct contact with a
landholder should also be the request for an access agreement and the trigger
for the 28 day period in which the landholder is required to negotiate the
In too many cases it appears that the gas companies adopted a 'take it
or leave it attitude' to negotiations with farmers, shifting the onus to the
farmer to seek to negotiate reasonable conditions of entry and appropriate
compensation for CSG activity on their land.
One witness at a hearing, who stressed that her family had a good
relationship with the company seeking access to their land, nevertheless
commented that landholders had to demand that access and compensation
agreements covered issues of concern to them:
Senator STERLE: ... Have you directly asked questions
like who is going to fix your bores, what happens to the flaring in the dry,
who is on the property and what chemicals are being used?
Mrs Scott: Yes we have but we want it in writing. We
want it to be written in the conduct and compensation agreement. At the moment,
the current conduct and compensation agreement that was put before us does not
mention any of those things. So it is up to us to highlight them and to make
sure that they are in writing to try to protect ourselves.
As outlined above, both Queensland and NSW have detailed guidelines that
should govern the interaction between landholders and gas companies and include
requirements that the parties act in good faith. The behaviour described in
preceding paragraphs is clearly unacceptable and in breach of the guidelines.
The Queensland Government has, in the last year, introduced a number of
measures to support landholders in their negotiations with the gas industry:
- a training program, to assist landholders negotiate a successful Conduct
and Compensation Agreement;
- A program of landholder and resource industry information
sessions on the new laws in late 2010; and
- Opening a new Mines office in Dalby in January 2011 with officers
trained in mediation conferencing.
These initiatives are to be welcomed and should be extended to areas
subject to future expansion by the industry in advance of that expansion. It is
regrettable that landholders involved in the first wave of the industry did not
have that level of support.
The impact of gas exploration and extraction varies, having regard to
the type of farm it is on – grazing or intensive cropping, the soil type, rainfall
patterns, the dependence on groundwater, whether it is an irrigated property
etc. In addition which of the range of mining related activities is to be
carried out on a particular property will have a major impact on the extent of
Disruption to agricultural production can be such that the viability of
a property is threatened. This is not restricted to the prime cropping lands
such as the Liverpool Plains in New South Wales or the land east of the
Condamine River in Queensland.
The operators of a major grazing property near Roma in Queensland
identified continued, reliable access to water as their major concern. The
property, part of a major integrated beef producer including grazing and
feedlotting, gets 50 per cent of its water from overland flow and the remainder
from groundwater entitlements.
The operators were deeply concerned that loss of a groundwater source
could not readily be replaced or compensated for:
[The gas company will] guarantee that if we ruin or destroy
your water or water-taking ability, we will give you an alternative.'
Generally, the alternative is to sink another bore. So will we just sink
another bore in an already depleted and/or contaminated water-bearing seam? I
am a little bit confused as to how it has easily passed that that is the
solution for the future ...
In addition to anxieties about reliability of water supply and the
capacity to make good damage to it, day-to-day grazing operations could also be
The animals are not allowed to settle because there is a
flared well every 405 metres across your land. But, all importantly, our cattle
eat grass. Because of dust and disturbance to the grass the cattle cannot eat.
Mr Foote also highlighted the problem of compensation:
In our situation, through the integrated operation we run, we
will never be able to be fully compensated, because how can you get
compensation for tenderness, which is a measure of the beef that we provide and
put into those supermarkets across the eastern states? How do you get
compensation for that?
At the moment, compensation is focused on the immediate
impact of that well or that well head.
The impact goes far beyond the well-head. Exploration for, or production
of, gas has the potential to severely disrupt virtually every aspect of agricultural
production on cropping lands and, in extreme circumstances, remove the land
They compensate us for impact and they think the square
footprint of that well is an impact, but it is not. Our labour bill has gone up
20 or 30 per cent in the last 12 months to keep staff on. Our access to
transport and roads is all getting more expensive. There are so many things
that are impacting our business. As far as the impacts on the management of the
farm, it is the fact your runs are not as long as they used to be so you are
turning around. It is just all these inefficiencies. It is very hard to say
exactly what it is worth until you have worked through it ...
In a submission to the committee a producer of high quality wheat
identified the likely impact of coal seam gas wells on his property. The gas
company with a permit over this property estimated it would require only one
acre in 250 for its wells. The landholder, having regard to the topography,
drainage patterns, risk of erosion, plus the need for safety zones along
pipelines and around wells, arrived at a figure of some 38 acres in 250. This
calculation assumed that only wells and associated access roads and pipelines
would be put on his land.
A partner in the same group described the importance of careful land
management to retain soil quality and prevent erosion:
Summer rain is intense and water erosion is a major issue on
our black, self-mulching clay soils. We manage this by reducing tillage,
retaining stubble or planting cover crops in addition to the installation of
contour banks and waterways to convey stormwater from the upper slopes to the
natural watercourses at the base of the slopes.
Any development on these productive but fragile black soils can
result in serious erosion if inappropriately designed and constructed. We also
actively manage salinity on our soils and any development that impacts on the
groundwater flow system may contribute to soil scalding. 
A second impact is that the presence of the wells would require
changes to farming practices:
... there is the inconvenience factor and loss of production
efficiencies because our machinery is in multiples of 40ft, 60 ft or 120 ft and
fixed overheads are spread over a lower number of production acres.
Mr Cush estimated that the loss of production on his property
would be in excess of 25 per cent.
Ms Tydd described these problems in detail:
At an operational level, we carry out controlled traffic
farming, confining compaction to permanent traffic lanes, optimising soil
conditions and reducing overlap. The machinery we use is up to 36 metres wide,
set up on three-metre wheel spacing and equipped with the latest GPS navigation
systems. Machinery of this scale requires plenty of room to move and turn
around. Fields need to be free of any fencing, ponds, dams and roads. A
one-quarter-acre well site every 250 acres with interconnecting gravel roads
and pipelines would severely hinder our use of this machinery. Investment in
the latest equipment delivers both environmental and economic benefits. For
example, the use of GPS navigation delivers immediate production savings of 10
to 12 per cent. That means less diesel, less chemicals and less water.
A paper prepared for the Queensland Government some years ago made a
Laser levelling for cropping operations now means that long
runs are required by grain and cotton farmers to operate machinery; and
controlled traffic techniques require runs to be on established configurations.
A network of even small obstacles in a paddock may make cultivation
Gas company representatives indicated that they "were sensitive"
to these issues and were willing to modify their practices accordingly:
... we do have some existing production in the Denison
Trough, which is north of Rolleston. That is in black soil country and in that
country ... the arrangements we have with the farmers is that we will walk into
The committee has been told of cooperative processes where companies
have agreed to site their facilities in such a way as to have the minimum
negative impact on the landholder's own business; for example a gas company had
worked with the landholder to agree the positioning and upgrading of roads
within a property, thus providing some long term benefit to the landholder
beyond the life of the gas field. In another example a company was open to
negotiate the placement of wells when the landholder pointed out that the
company's original proposal would intrude both on the operation of his business
and the amenity of his family.
The gas companies have stressed in evidence to this committee that they
wish to have good relations with landholders and rural communities, that they
prefer to avoid being required to go to arbitration and that they wish to have
regulatory certainty. Santos and Dart Energy have also indicated in evidence to
the committee that they would not enter land without the owner's consent.
Other land users
The Queensland Government has moved to restrict future minerals
exploration near populous areas.
However this may be of little benefit to one group of landholders.
While the focus of much of the comment received by the committee was on
landholders with significant holdings, the impact of the CSG industry extends
beyond that group. The committee has received a number of submissions from
people living on smaller blocks; people who have made a 'lifestyle' choice to
move to a rural area or have been compelled by rising costs in urban areas to
move to the country.
This group may not be faced with the direct intrusion of a gas company
on to their property but they are nonetheless adversely affected by production
facilities on adjacent land, increased traffic and industrial noise and related
dust, and rising costs. These changes represent a real loss of the ambience and
sense of community that may have drawn them to the land.
In addition to these impacts, there are claims of adverse health impacts
from chemicals used by the industry:
The small size of rural residential allotments (many are 12
hectares in area) and higher population density, particularly in the
Tara-Chinchilla locality, increases the risk for gas field activities to cause
environmental harm and nuisance when compared to other parts of the gas field.
In particular, noise and vibration, dust and light could affect more residents
and these effects could have more severe impacts on residents who through
physical and financial circumstances are more sedentary.
The special position of this group was recognised in the Queensland
Co-ordinator General who commented that,
This suggests strongly that the special circumstances of
rural residents in this locality should be effectively addressed by quality
liaison and social impact management.
The author of this submission has argued that the responses of the gas
company, QGC, and the Queensland Department of Environment and Resource
Management (DERM) to specific complaints has been derisory. Dust suppression
was carried out with water that produced a toxic run-off; claims of leaking gas
wells were dismissed by DERM; complaints about excessive noise took months to
Consultation with locals was also inadequate:
Recently QGC brought on line 5 wells near my home.
Not once was I consulted about their activities all I got was
a letter telling us work would commence - as far as I am concerned that is not
consulting I was merely told what was going to happen. The work lasted over 100
days and was clearly audible inside my house. Security guards would patrol the
area 24hrs a day. I experience reverse beepers going off at 1 am in the morning
... trucks and vehicles run up and down the road causing dust and damage to the
road. The road was repaired only after the work had been finished. The road was
only usable for 4wd vehicles.
A number of submissions to this committee have expressed similar
frustrations and a sense that the agencies responsible for regulating the gas
industry are not prepared to stand up to that industry. Whether all the claims
of inaction are justified or not, there is clearly a very strong perception
emerging in regional communities that the needs of the gas industry are being given
priority over those of the local community.
While it may be of little consolation to affected individuals, the
committee notes that the responsibilities of both the Queensland and New South
Wales Ombudsman extend to the failure of public officials to investigate
complaints about breaches of government regulations.
The obligations comprising the requirement to restore well sites,
pipelines, dam sites (and other land used by the companies) need to be clearly
identified in individual agreements and in the general conditions governing
exploration and production licenses.
Much of the infrastructure associated with the industry will be removed
but sealed wells and in-ground pipelines will remain. Wells will be sealed with
cement and cut off some metres below the surface. Old pipelines are considered
to be stable for the very long term.
The committee is particularly concerned with the rehabilitation of
storage pond sites. It has been put to the committee that small ponds
associated with exploration wells were not being adequately restored but merely
bulldozed, burying saline residues. If the land is to be restored to a
productive condition all residues must be removed and lining material whether
impermeable or clay-based must also be removed.
Pipelines have also been raised as a cause for concern. Once production
ceases, over the long term old metal pipelines will corrode and create areas of
subsidence which will erode. The National Farmers Federation expressed concern
Leaving the poly pipes in the ground may resolve the
short-term impact but these will collapse in the longer term resulting in
subsidence issues. Some examples show that crops cannot be grown on pipes
installed 50 years ago so there may also be very long-term production impacts.
The committee has heard no suggestion that old pipelines would be
removed as part of site restoration works.
In evidence to the committee the gas companies accepted full
responsibility for the clean-up and restoration of all their wells and sites
and also for monitoring the stability of sealed wells in the future. However
there must be some question about how long that responsibility will be retained
by the companies, given that corporate structures and ownership change. This
responsibility should not simply devolve on the public over time.
4.70 The committee recommends that the Commonwealth, in cooperation
with the states, establish an independently managed trust funded by the gas
companies to make financial provision for long-term rectification of problems
such as leaks in sealed wells or subsidence and erosion caused by collapsing
Access and Compensation agreements
The issue of access and compensation agreements for the intrusion
of a gas company onto a landholder's property is at the core of much of the
hostility to the industry. It is important to bear in mind that in dealing with
a gas company a landholder is being compelled to enter into an arrangement not
of their choosing. Thus a satisfactory access and compensation agreement is
essential to creating an amicable working relationship.
The significance of compensation agreements was emphasised in
evidence to the committee:
Conduct and compensation agreements are of extreme
importance. Notwithstanding that they are not able to be registered on the
title, they forever run with the land and bind future landowners. They contain
extremely important rights and obligations and constitute equitable easements
over land even though no plan need be registered. The make-good obligation also
involves negotiation of a no less important document. The importance of
securing water supply to maximise the productivity of land cannot be
Many witnesses were concerned at the imbalance of power between
the two parties to the negotiations on conduct and compensation – the
individual landholder and the multi-national gas company. This has been
addressed to some extent by the requirement to complete a Conduct and
Compensation Agreement before undertaking 'advanced activities' on the land.
(See paragraph 4.11 above)
It is clear that there is wide variation in agreements even having
regard to differences in land use, etc, and that the capacity of individual
landholders to negotiate, seek legal advice, act cooperatively with neighbours,
etc. has a significant impact on outcomes. A witness emphasised the need for a
consistent approach to agreements:
We do not want legislation that is actually going to
prescribe what must be done but some legislation that will actually underpin
something as simple as consistent codes of conduct, consistent agreements, and
consistent heads of compensation positions. ... we have tried very hard to work
with the companies but we are relying on personal goodwill with individuals
within the companies.
The Queensland Guide is particularly relevant to the
question of compensation. It lists "compensatable effects" (which can also be found in the Petroleum
and Gas (Production and Safety) Act 2004). These are:
- Deprivation of possession of land surface;
- Reduction in land value;
- Reduction in land use including reduced use including reduced use
that could be made through any improvements to it;
- Severance of any land from other parts of the land owned by the
- Any costs, damage or loss arising from activities carried out
under the land surface;
Accounting, legal or valuation costs reasonably incurred by the
landholder to negotiate or prepare a Conduct and Compensation Agreement, other
than costs involved to resolve disputes via independent alternative dispute
resolution (ADR) [when parties have failed to reach an agreement]; and
- Damages incurred by the landholder as a consequence of matters
It should be noted that reduction in land value and reduction in the
opportunity to improve the land are both included in the list of compensatable
effects. This subject has been the subject of much comment.
Anecdotal evidence suggests that the gas industry is having a negative
effect on land values, though in the view of the Queensland Government:
Due to the infancy of the industry and the subdued state of
the rural property market, at this point in time, there is insufficient market
sales data to provide definitive evidence about the impact of CSG operations on
Access and compensation agreements have generally included a
confidentiality clause. Such a clause is included in the Queensland Standard
Conduct and Compensation Agreement. However it comes with the following
... the clause is optional and if the parties agree it may be
deleted by crossing through the clause and initialling the deletion.
Most of the landholders that the committee spoke to had
negotiated agreements with a gas company which included such clauses. However,
generally there did not seem to be much support for them. In fact
confidentiality agreements were perceived as offering an advantage to the gas
companies in that they prevented unified action by landholders to ensure that
all agreements were in similar form and that compensation payments were soundly
based and included similar levels of compensation for similar types of
The major gas companies did not view confidentiality clauses as
particularly important; indeed it seemed to be recognised that such clauses
merely heightened community suspicion of the industry. When asked by the
committee if the companies were quite happy to waive existing clauses and
forego their use in the future if that was the landholder's wish:
The current landholder agreement used by Santos includes a
standard confidentiality clause. ... Santos is aware that there is a public
concern about potential for the clause to limit a landholder's ability to
discuss their compensation arrangement. In response to this concern, whilst the
confidentiality clause will remain standard practice, if, at any time a
landholder wishes to waive the confidentiality clause, Santos will be willing
It needs to be recognised that land access is a business arrangement
between two entities, both of whom have legal rights and reasonable
expectations. All too often it appears that gas company representatives, or
their sub-contractors, have not behaved in a responsible and business-like
manner. Farms are businesses and their owners and managers deserve to be
treated as responsible business people. At the same time, many farms are the
private homes of families who should be treated with ordinary politeness and
The request for land access involves major commercial and personal
decisions for landholders which will have significant long-term impacts both on
their business and their private lives and that of their families. Thus they
should be given ample time to consider all of these issues, seek advice,
consult neighbours, etc. without the threat of compulsory arbitration hanging
The coal seam gas industry is a relatively short lived industry. It may
have a life of only 25 to 30 years in most regions. However, if it is not
properly regulated, that period of time is sufficient to do serious damage to agricultural
productivity on some of the best farmland in Australia. Landholders are
legitimately concerned about water supply, disturbance to livestock, erosion
caused by access roads and pipelines, interruption to natural drainage flows,
damage to soil, particularly from salt, and the spread of noxious weeds.
The committee recognises that the holders of exploration or production
permits for underground minerals must have access to the land surface to
exercise their rights. However, in the context of the increasingly demanding
food task that Australia and the world face it would be irresponsible to put at
risk highly productive agricultural areas in exercising those rights.
In the committee's view it is both unreasonable and unwise to expose
agricultural properties to the risk of long term damage, for example from loss
of water, erosion or salt contamination, or to compel the owners of productive
agricultural land to undertake significant changes to their farming practice to
accommodate the gas industry.
Significant changes would include adopting less efficient production
methods, re-equiping with machinery to operate on a smaller scale, cultivating
different crops or undertaking major reconfiguration of a property to
accommodate any of these changes.
The committee believes that the CSG industry can co-exist with
agriculture but that this requires the industry to negotiate with landholders
on matters such as the location of wells, the alignment of access roads and
pipelines and the placement of major facilities such as compressor stations to
ensure that they make the minimum intrusion on the management and operation of
In some areas intensive CSG production may be incompatible with
agriculture. The committee notes that Queensland and New South Wales are
developing strategic cropping land policies to protect land use. Queensland's
policy is explained thus:
Strategic cropping land (SCL) is an
important, finite resource that must be conserved and managed for long-term
food and fibre production, and regional growth. Currently, the state's SCL
resources are subject to a range of competing land-use activities, including
agriculture, mining and urban development.
It is important to find a balance
between these sectors and minimise land-use conflicts by assessing potential
impacts of development on this land.
These policies will define land of high agricultural value which will be
protected from development. The criteria which will be used to determine what
is strategic cropping land in Queensland are:
- Rock size and content;
- Gilgai microrelief;
- Soil depth;
- ph levels;
- chloride content; and
- soil water storage capacity.
Strategic cropping land must also be in
minimum areas of 50 hectares in the Eastern Darling Downs and 100 hectares in
the Western Cropping Zone.
New South Wales "... has a moratorium on issuing exploration
licences while it develops regional strategic land use plans", which
... will identify the best places for cropping, viticulture,
thoroughbred breeding, mining, coal seam gas extraction, conservation, and
Until these plans are in place, all applications for licences
will have to be exhibited for public comment and have to submit an agricultural
Projects will not be supported if they
have unacceptable impacts on agricultural lands or industries that are
considered to have high strategic value.
4.91 The committee supports the concept of strategic agricultural land
and recommends that, when identified, exploration for, or production of, coal
seam gas be banned from land identified under defined criteria.
This will protect areas such as the Liverpool Plains in New South Wales
and the land east of the Condamine River in Queensland. The exclusion of land
having these characteristics would apply to that land only; exploration and
production could be permitted in a region containing strategic cropping land as
long as it did not pose a risk to the reserved land.
It is important to note that a great deal of land subject to CSG
exploration or production permits falls outside the areas identified in
Queensland as 'strategic cropping land'. For example, AP LNG comment that the
majority of their tenements lie outside the Strategic Cropping Protection and
In practice, drawing a distinction between 'high quality agricultural land' and
the rest in trying to manage the impact of the CSG industry may oversimplify
To provide protection to agricultural land that falls outside the
criteria of strategic cropping land the committee believes that the relevant
laws relating to land access should be amended to make it clear that the
overriding concern in access agreements for exploration or production must be
the maintenance of the agricultural productivity or the land in question.
A grazing property may be average land and fall outside the definition
of strategic cropping land but at the same time be a highly productive source
of food. Thus the committee considers it appropriate to focus on agricultural
productivity in general rather than restrict protection to 'prime' land.
At present where a dispute arises between a landholder and a gas company
that dispute is resolved by going to either the Land Court in Queensland or the
Land and Environment Court in New South Wales. Very few disputes, in practice,
go to arbitration. Landholders have in the past been unwilling to go to
arbitration because of cost and a perception that they can do little to prevent
the gas company coming on to their land. Gas companies rarely enforce their
rights through the courts.
The committee considers that the position of landholders when
negotiating with mineral exploration and production companies needs to be
strengthened, by making it clear that any arbitration process or the exercise
of a ministerial discretion in relation to land access must be required to give
priority to the protection of agricultural productivity.
Such a change is also consistent with the Queensland Government's draft food
policy - Food for a Growing Economy: An Economic Development Framework for
the Queensland Food Industry – as outlined in its submission to this
The committee recommends that the Commonwealth, through the
Council of Australian Governments, or other appropriate forum, request the States
to insert in the relevant legislation a requirement that arbitration bodies
charged with resolving disputes between landholders and the holders of
exploration or production titles – the Land Court in Queensland; the Land and
Environment Court in NSW – must give priority to the maintenance of
agricultural production with minimal disruption in deciding any dispute.
4.100 Similarly, where a ministerial discretion such as that exercised
under s.71 of the NSW Petroleum (Onshore) Act exists, the exercise of that
discretion should be required to give priority to maintaining agricultural
production with minimum disruption to the existing land-use.
4.101 The committee
notes that section 71 of the Petroleum (Onshore) Act 1991(NSW) provides
a significant degree of protection to cultivated land generally while at the
same time, through the exercise of a Ministerial discretion, providing
protection for the interests of the holders of a production lease.
4.102 The committee
believes that the inclusion of such a provision, extended to include
exploration permit holders, in the relevant laws of all the states would
further strengthen the position of landholders. At the same time the committee
believes that it would be desirable to clarify the meaning of 'cultivated land'
to include land that was generally cultivated but that might, as part of a
normal rotation, be pastured in some years.
4.103 In speaking to
this committee the companies have all stressed that they believe that their
activities can co-exist successfully with existing land use. Clearly there are
already examples of 'best practice' behaviour by companies that are working
cooperatively with landholders. These should become the industry norm. The
committee believes that, by making it clear in legislation that the protection
of agricultural productivity must be the priority in developing plans for land
access for the conduct of CSG mining operations, this will be achieved.
believes that section 69D of the Petroleum (Onshore) Act 1991 (NSW)
provides a reasonable guide to the sort of general issues that need to be
covered by an access agreement. However certain matters need to be added to
that list including an obligation to inform the landholder what chemicals a
company may bring on to a property and arrangements with regard to fire safety.
The access agreement should also clarify the obligation on the
gas company to advise the landholder when and for what purpose its workers will
be on a property. Farming involves the use of heavy machinery and the
application of chemicals, for example, and the use of contracted services can
also reduce the landholder's flexibility. Avoiding interference with a
landholders business and occupational health and safety considerations require
that landholders know who is on their property at any given time.
A requirement to inform the landholder before any gas workers
came on to a property would also do something to reduce the anxiety caused to
families by the presence of strangers on a property.
4.107 The committee recommends that draft access agreements between
landholders and gas companies include a requirement that company employees must
have a landholder's approval whenever they wish to enter a property and that
companies must maintain logs of staff entering private property.
4.108 The committee recommends that draft access agreements clarify the
gas companies responsibility with regard to fire safety and require the gas
company to advise landholders of all chemicals that are brought on to the land.
4.109 The committee
believes that the list of matters to be dealt with in compensation agreements
contained in the Queensland Guide is, with two important exceptions, a
good summary of matters for which compensation should be paid. As discussed
above, the disruption to the lives of landholders when coal seam gas
exploration or production occurs on their land is considerable and the
intrusion into the landholders life is forced on him. It is appropriate that
the compensation recognise both the involuntary nature of the landholder's
situation and the loss of social amenity.
4.110 This view is
supported in evidence to the committee:
The compensation regime at the moment makes no allowance for
the social impacts and no allowance for the compulsory nature of the
4.111 It has been
suggested that a premium of 20 per cent be added to any compensation package to
recognise the involuntary nature of the landholder's participation. The
committee does not wish to propose a specific figure but it certainly endorses
4.112 The committee recommends that legislation governing compensation
to landholders include provisions that recognise as compensatable effects the
involuntary nature of landholders' dealings with coal seam gas companies and
the social impact of coal seam gas exploration and production.
4.113 A further
proposal put to the committee was that, in extreme circumstances, a landholder
should have the right to demand that he be bought out.
If a landowner loses his water and has to rely on water being
piped from an uncertain source of uncertain quantity and quality, aside from
the interference with his land values, there is likely to be a general
interference with his enthusiasm to continue on the land. I see no reason why a
landowner so affected should not have the right to require the immediate
acquisition of his farm at its pre-market value and consequential damages.
4.114 The committee is
generally inclined to support such a proposal where CSG activity either renders
an agricultural property unviable or requires fundamental changes to its
operations to maintain its viability. However it is to be hoped that if the
committee's recommendations are adopted then the situation where a farm was
rendered non-viable would not occur.
4.115 It would be
desirable to have a clear statement that where a property suffers irreversible
damage due to unforeseen circumstances, for example long-term interruption to
water supply or saline pollution over a significant area, the liability of the
gas company to 'make good' must includes a liability to acquire the property
"... at its pre-market value and consequential damages".
4.116 The committee
also considers that compensation for legal costs incurred by a landholder in
negotiating an agreement are unnecessarily restrictive. The exclusion of
"... costs involved to resolve disputes via independent alternative
dispute resolution" discourages a landholder from seeking independent
arbitration of a dispute with a gas company.
4.117 The committee recommends that States' include in the relevant
legislation as a compensatable effect the costs incurred by a landholder in
seeking independent arbitration of a dispute over an access and compensation
agreement, except where it can be demonstrated that the landholder had not
negotiated reasonably and in good faith.
4.118 Some landholders
were not fully informed of their legal rights or received misleading advice
about the time available for landholders to respond to a request for access;
some felt bullied and intimidated by the prospect of expensive and
time-consuming legal action and were talked into signing confidential
agreements about access and compensation, which prevented concerted action to
assert and defend their rights.
4.119 Given the
evidence the committee has received of wide variation in the terms of
agreements and in standards of practice between companies, some requirement to
review existing agreements in light of these published principles should be
considered. For example, industry representatives did acknowledge in informal
conversation that there had been some 'cowboy' behaviour by companies and that
they had put considerable effort into improving this aspect of their
4.120 In view of the
wide variation in practice by gas companies, particularly in the earlier stages
of the rapid expansion of the industry, the committee supports a proposal put
forward by the Basin Sustainability Alliance (BSA) and others, that land access
and compensation agreements that have already been entered into should be
subject to review. Such reviews could be conducted by a specially appointed
official of the State Ombudsmen's offices, for example.
4.121 If a landholder
believes that an agreement was entered into under duress or with inadequate or
misleading advice then there should be some right of redress. The BSA
identified the following circumstances that might trigger a review:
- Lack of independent legal advice;
- Age, language, lack of understanding of the implications, etc can
be shown to have influenced the process;
- Where clauses in the agreement can be shown to have compromised
make-good obligations, future rights or materially changed rights; and
- Where there is evidence of misleading or deceptive conduct; or
where reasonably unforeseeable consequences or interference have affected the
landholder subsequent to the agreement.
4.122 The committee recommends the Queensland and New South Wales
governments establish mechanisms that provide where a landholder, having an
access and compensation agreement with a coal seam gas exploration or
production company, believes that that agreement was entered into without
proper advice or understanding of its implications, then the landholder be
entitled to seek a review of the agreement.
4.123 The committee
notes that many landholders and residents of small regional communities having no gas facilities on their land, particularly
those on small blocks, may be subject to many of the negative impacts of the
gas industry but have no protection under an access and compensation agreement.
4.124 The committee recommends that the position of residents of small
regional communities and on small blocks of land also be clarified and that
enforceable conditions, including a buffer zone around houses, are included in
exploration or production permits to ensure that, despite having no development
on their land, they are not subject to excessive interference from coal seam
4.125 There has been
some discussion before the committee as to whether compensation payments to
landholders should reflect the value of the gas being extracted through wells
on their land. The committee does not support this view. The minerals under the
ground belong to the Crown, not to the landholder.
4.126 Payment for the
right to extract those minerals is made to the relevant government through
royalties, fees and other taxes and charges. In addition, the disruption to a
landholder's activities may be wholly unrelated to the value of the gas being
extracted through his land. Compensation to the landholder should reflect that
of the industry made it clear that they were not wedded to any particular
distribution of the taxes they paid but that changes to one could not be
isolated from consideration of the rest:
We pay royalties, which in effect come to $6 billion. Those
royalties ... are the compensation to the Australian people. On top of that we
pay the landholders an additional sum. We are more than happy to look at
different regimes covering where the money is distributed–whether it is
Commonwealth, state or landholders. What we cannot do, however, is just have
money added on top of money.
4.128 The committee
does not believe that it is necessary to take any action with regard to confidentiality
clauses beyond ensuring that all parties to a negotiation are aware that they
Navigation: Previous Page | Contents | Next Page