Accessing land for petroleum development – current issues

1. Accessing land for petroleum development – current issues James Plumb, Partner

2. Three key land access challenges • Conduct and compensation negotiations. • Strategic cropping land. • Overlapping tenure.

3. Land Access Framework • Key features of the regime include: • Formal negotiation and alternative dispute resolution procedure; • Minimum conduct standards for resource companies on private land (Land Access Code); • Defined “compensatable effects”. • CCAs must be in place before entry to land to undertake advanced activities.

4. Conduct and Compensation Agreements (CCA) • Notice of Intention to Negotiate an Agreement. • negotiate for 20 business days using “all reasonable endeavours”. • At end of period, either party may refer the matter to conference or ADR. • If the CCA isn’t agreed within a further 20 business days, either party can apply to the Land Court for determination. • Following referral to Land Court, proponent can enter property to undertake activities.

5. CCAs – common issues • Information requests: • future plans; • nature of activities planned. • Extension of terms to include legislative obligations (such as under Environmental Protection Act). • Legal and other costs. Photograph (2011) – Australian Broadcasting Corporation <http://http://www.abc.net.au/rural/news/content/201111/s3354084.htm> at 28 March 2012.

6. Strategic Cropping Land (SCL) • Restricts activities that can be carried out on prime cropping land (not grazing). • Applies to new applications for tenure made after 30 January 2012 - applications made prior to 30 January 2012 may be exempt. • SCL status won’t necessarily prevent project – will attract compliance and financial assurance requirements. • Unlikely that projects that have a permanent impact (≥50 years) on SCL will be approved (open cut coal mining).

7. Identifying SCL

8. Overlapping tenure • Current regime allows exploration and production of coal and petroleum to occur on the same land at the same time. • Over 50% of the Bowen Basin is subject to overlapped tenements, Galilee and Surat Basins are around 30%. • Current mechanism for determining priority appears to be broken. Photograph (2010) GLNG <http://www.glng.com.au/Content.aspx?p=58> as at 28 March 2012.

9. Overlapping tenure • A production lease cannot be granted over land subject to another production lease without consent of the existing lease holder: • veto power. • Where exploration tenure overlaps, some priority is given to the first production lease application made: • competing request for priority can lead to lengthy delay.

10. A new regime? • DEEDI released discussion paper in January 2011 seeking to reform overlapping tenure regime. • Reforms included: • defined process for obtaining ministerial preference decision, including timeframes for the return of a decision; • removing power of producers to automatically veto exploration activities being carried out without providing reasons; • introducing a new form of petroleum tenure to enable CSG producers to retain access to CSG reserves for the purposes of delayed development. • QRC and APPEA currently finalising joint submission on best way forward for both coal and petroleum industries.