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Agreement on liability insurance for Qld farmers with gas wells – UPDATED

James Nason, 04/03/2021

LANDHOLDERS in Queensland with gas operations on their properties will be able to access general insurance policies for farm risk and be appropriately protected against loss, the Queensland Gasfields Commission confirmed yesterday.

Update: Following publication of this article landholder groups affected by CSG infrastructure have responded by saying that the claims made by the GasFields Commission of Queensland (GFCQ) in a media release stating that farmers are covered for public liability insurance are “misleading”, and have the potential to “falsely instil confidence for landholders to sign a Conduct and Compensation Agreement whilst there is no answer to the post CSG public insurance liability issue.”

“Contrary to what GFCQ claim, the new indemnity clause does not provide greater clarity for landholders where farming and gas infrastructure coexists.  Farmers are still completely exposed post CSG activities if any infrastructure is left on or under their land.” 

The landholder group said talks with two banks recently confirmed that farmer loan borrowing conditions are voided if they no longer have adequate public liability insurance.

“The situation has not changed. Farms with any remaining CSG infrastructure, once the CSG industry comes to a close and tenements have been returned to the government, are uninsurable.  Land liaison personnel are telling landholders that post CSG activity, the lack of public liability insurance for residual CSG infrastructure and I quote “is not their problem.” It certainly is the CSG industry’s problem. Landholders are well within their rights to refuse to sign any CCA forcing them into an untenable position that then allows banks to foreclose on loans.”

Further clarification has been sought from the GFCQ on this issue. A GFCQ statement provided in response acknowledges that the issue of post-gas landholder liability is yet to be resolved, and says that all members of the Commission’s working group, which includes landholders representatives and gas companies, have agreed to continue to work together on examining landholder’s public liability insurance in areas of ‘post-gas activity’ until clarification for landholders has been delivered. – Click here to view GFCQ’s response to Beef Central in full

Last year major insurer IAG announced it was withdrawing public liability coverage for farmers with Coal Seam Gas (CSG) operations or infrastructure on their properties. IAG’s subsidiaries include WFI and CGU.

At the time IAG said confirmed public liability and farm business insurance policies did not cover land and water contamination or the risk of farmers losing industry accreditation in the event of a spill, or gas infrastructure failure.

This week the Queensland Gasfields Commission has announced that a new indemnity clause has been developed so that, if required by the insurer and agreed by the landholder and proponent, it can be used to ensure ongoing farm public liability coverage in Queensland.

The new indemnity clause can be viewed online here: http://bit.ly/GFCQ-Indemnity.

The QGC said that after iAG announced its intention to withdraw from the market in mid-2020, it became apparent landholders would benefit from greater clarity and certainty around the liability protection in place should they have gas activities on their properties.

The commission said that In order to address the issue in a collaborative way it assembled a working group comprised of key representatives from the Insurance Council of Australia (ICA), AgForce Queensland, Queensland Farmers Federation (QFF), Cotton Australia, the Australian Petroleum Production & Exploration Association (APPEA) and relevant government departments.

It said the working group’s aim was been to ensure better alignment of interests between landholders and gas companies and to confirm that public liability cover for landholders would continue to be available from a broad range of insurers.

The Commission said the new indemnity clause provided greater clarity for landholders and gas companies where farming and gas infrastructure coexists.

It added that as each landholders’ situation and insurance needs were different, the indemnity clause was not a “one size fits all” solution.

“The Commission recommends landholders contact their insurance broker or representative, insurance provider and the gas company they have a Conduct and Compensation Agreement (CCA) with if they have any questions of concerns about their cover.”

‘More wells, less water’

Meanwhile landholder groups the Basin Sustainability Alliance and Property Rights Australia have recently raised concerns with the results of the latest three-yearly Underground Water Impact Report in Queensland.

In a statement titled “more wells, less water” – published at this link – the groups have raised concerns including that;

The number of farm water bores immediately impacted by CSG wells in Queensland is increasing;

Only half of immediately impacted farmer water bores have been made good on to date;

The same number of bores that are not immediately affected bores have also been made good on;

The issue of free gas impacts on bores is not given the same attention by the gas industry or Government regulators as is given to the analysis of bores where water levels drop due to CSG impacts.

“In Queensland, the CSG industry’s area of development is increasing, the number and density of CSG wells is increasing and the number of immediately impacted farmer’s water bores is increasing, yet only half of them have been made good on to date, while inexplicably, the same number that are not immediately affected bores have also been made good on,” the statement says.

It added that landholder experiences included conflicts in the way the rules are implemented in a way that often benefits the gas industry, the time and money needed to engaged with the forced situation of gas related water problems occurring, and the additional expertise they are required to pay for to present their side of the issue, and that they must deal with the Office of Groundwater Impact Assessment, the Department of environment & Science and the CSG industry which “triples the complexity and time involved by an order of magnitude for the farmer”.

A spokesperson for the Australian Petroleum Production and Exploration Association (APPEA) said the gas industry was required by law to make good all impacted bores whether the impact is due to water level decline or free gas.

Make good agreements were being progressively negotiated with landholders.

The spokesperson said that of the 2 percent of bores in the Surat Cumulative Management Area that were forecast to be impacted over the long term, around 80 percent were taking water from the same coal seams targeted by industry.

The spokesperson said that in Queensland to date the gas industry has negotiated over 5,700 land access agreements, paid over $500 million directly to landholders that host gas activities since 2011, entered into water supply agreements under which over 50,000ML of water was provided to farmers and communities in 2017 and directly spent $50 billion in Queensland since 2011 via business purchases and community and government payments

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