An all-party parliamentary committee has delivered a scathing assessment of the approach taken by state and Federal Governments to regulating the burgeoning coal seam gas industry.

After conducting a wide-ranging inquiry into the management of the industry across the Murray Darling Basin, the senate committee on rural affairs and transport has recommended the Government freeze all new CSG developments in areas that overlay the Great Artesian Basin until further scientific studies are completed.

The committee has questioned the Government's controversial “adaptive” approach to managing the industry’s development, suggesting that approving developments first and responding to problems as they arise is not appropriate given the lack of scientific understanding of the long term impacts of CSG.

It has also raised concerns that existing approval and impact-assessment processes deal only with each individual project, and do not take adequate account of the multiplier-effects of several projects drawing on the same natural resource.

The committee wants the Government to ensure that all future developments are preceded by a regional, multi-state and multi-layer model of the cumulative effects of multiple developments on ground and surface water.

After taking submissions and hearings from people and companies involved in all sides of the industry, the committee has taken the view that despite existing levels of regulation, more needs to be done to protect environmental and agricultural resources and the rights of landholders affected by CSG developments.

It wants the CSG industry to establish a trust fund to compensate landholders for damage caused to their land and the water resources upon which their enterprises rely.

Included in the 24 recommendations is a call for compensation arrangements for landholders to reflect the involuntary nature of their dealings with resource companies and the social impacts of the industry’s development.

It also recommends that where landholders believe that an agreement was entered into without proper advice or understanding of its implications, the landholder should be entitled to seek a review of the agreement.

When an aquifer used for stock or domestic water in close proximity to a CSG operation is depleted, the onus is currently on the landholder to prove that the CSG operation was responsible before the company would be required to make good the damage caused. The Senate committee believes the onus should be on the CSG company to prove that its activities were not responsible.

The committee also wants the Government to prohibit the development of controlled landfills for the disposal of salt in the basin.

The Government has three months to respond to the inquiry report.

The recommendations would not affect the three large CSG to LNG operations already approved in the region – overseen by Queensland Gas Company, Santos and Origin.

However, if environment minister Tony Burke accepts the recommendations, it would force the delay of Arrow Energy’s yet-to-be approved project until a CSIRO and Geoscience Australia report is completed by the end of 2012.

Lock the Gate Alliance president, Drew Hutton said the committee’s report highlighted the inconsistency between adaptive management and the precautionary principle.

He said it was ludicrous that governments had given coal seam gas companies approvals without full knowledge of impacts and how to control them, and then introduced a system of changing the conditions of their approvals if the companies were met by circumstances they did not predict.

Mr Hutton said it was now up to state and federal governments to address the recommendations from the report and to add some new ones including coal seam gas in areas outside the MDB, the life-cycle emissions from CSG/LNG, the social impacts of coal seam gas and the imbalance between the rights of farmers and mining companies in relation to land access.

The Australian Petroleum Production & Exploration Association’s chief operating officer for Eastern Australia, Rick Wilkinson, said the committee’s report had been largely overtaken, because of a number of the issues raised had been addressed by industry and independent studies, government policy or regulation.

“For example, the Standing Council on Energy and Resources is currently working to develop a nationally harmonised approach to regulation and issues relating to co-existence, best practice standards, land access and water management.
“APPEA supports science-based public policy and supports the Government’s call last week for a ‘science-based’ approach to matters regarding the gas industry’s expansion.”

List of recommendations

Recommendation 1
1.72 The committee recommends that federal and state governments conduct a thorough review of the appropriateness of 'adaptive management' in the context of regulating the industry, given the significant gaps in information regarding cumulative and long term impacts of the industry.

Recommendation 2
1.85 The committee recommends that  the Commonwealth Government, through the Council of Australian Governments, or Standing Council on Energy and Resources (SCER), take  the initiative in promoting a consistent national regulatory framework for all aspects of the coal seam gas industry.

Recommendation 3
2.58 The committee recommends that, given  the degree of uncertainty about the long-term consequences of the CSG industry on the water resources of the Great Artesian Basin, that the Commonwealth not give any further approvals for production of CSG in that part of the Murray-Darling Basin overlying the Great Artesian Basin pending the completion of the Queensland Government's regional groundwater model and the CSIRO &  Geoscience Australia basin scale investigation of water resources.

Recommendation 4
2.59 The committee recommends that the Commonwealth await the completion of the Namoi Catchment study before considering any applications under the Water Act or the Environment Protection and Biodiversity Conservation Act 1999 for approvals to undertake coal seam gas production.

Recommendation 5
2.60 The committee recommends that all future CSG development approvals should be preceded by the development of "… a regional-scale, multi-state and multi-layer model of the cumulative effects of multiple developments" of ground and surface water as recommended by Geoscience Australia.

Recommendation 6
2.70 The committee recommends that the Commonwealth take the necessary steps to amend the Water Act 2007 to include that part  of the Great Artesian Basin that underlies the Murray-Darling Basin within the definition of Basin water resources.

Recommendation 7
2.75 The committee recommends that the Commonwealth take the necessary steps to amend the  Environmental Protection and  Biodiversity Conservation Act 1999 to include the sustainable use of the Great Artesian Basin as a 'matter of national environmental significance'.

Recommendation 8
2.81 The committee recommends that all future approvals require independent comprehensive monitoring of regional earth surface movements to assess whether any measurable subsidence is occurring. Where subsidence occurs and has an adverse effect on land management or the natural environment, for example by altering drainage, the responsible gas companies would be liable for any necessary remediation. Further all gas exploration and/or production in an area subject to subsidence or impacts from subsidence not foreseen in the EIS should cease until action is taken to ensure that no further damage will occur. Where subsidence occurs in a gas producing region the onus lies with the gas companies to demonstrate that the subsidence is not a result of gas production activities.

Recommendation 9
2.85 The committee recommends that it be a requirement of all exploration or production approvals that the fluids extracted from wells after fraccing are kept isolated in secure separate storages and  prior to disposal are treated to the highest standards.

Recommendation 10

2.96 The committee recommends that the Commonwealth provide funds to NICNAS to enable that organisation to undertake a comprehensive review of the chemicals used in fraccing, having  particular regard to the quantities, combinations of chemicals and the way in which these chemicals are used and to confirm safe levels for their use. This study should be completed within the next two years. The Commonwealth and state governments should act promptly to ensure all fraccing activities comply with any NICNAS recommendations.

 

Recommendation 11
3.64 The committee recommends that all CSG water should be included in the calculation of the total withdrawal from the ground and surface water systems. Seepage into depressurised coal seams, reinjection into regulated formations and virtual reinjection or surface disposal  must be monitored and recorded if a complete picture of the state of artesian and sub-artesian water is to be maintained.

Recommendation 12
3.65 The committee recommends that where any aquifer used for the supply of stock or domestic water is depleted as a  result of coal seam gas activities, the relevant company or companies should be required to pay for that water at the prevailing rate or make  good the loss of water by virtual reinjection or reinjection where water to be reinjected  is of an environmentally appropriate standard. The onus should rest with the gas companies to prove that, where an aquifer is depleted, it is not the result of coal seam gas extraction.

Recommendation 13
3.69 The committee recommends that as  a general principle it should be established that where a gas company supplies treated CSG water for beneficial use to an existing water user in agriculture, industry or for domestic use that supply must be as a substitute for an existing allocation.
3.70 Where treated water is supplied to landholders (including on a company's own land) to develop a new crop or enhance existing production, that supply should be clearly understood to create no entitlement, above a pre-existing water licence, to water from any other source once the supply of CSG water ceases.

Recommendation 14
3.72 The committee recommends that comprehensive water management plans, and the capacity to implement those plans, particularly with regard to the disposal of salt and brine, be a requirement before any further production approval for coal seam gas be granted.

Recommendation 15
3.74 The committee recommends that all salt and brine residues that cannot be disposed of within the short term, either as part of an industrial process or by safe injection into a suitable aquifer, should be required to be removed from agricultural areas and water catchments. No controlled landfills for the disposal of salt should be permitted in the Murray-Darling Basin.

Recommendation 16
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 pipelines.

Recommendation 17
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.

Recommendation 18
4.99 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.

Recommendation 19
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.

Recommendation 20
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.
Recommendation 21

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.

Recommendation 22
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.

Recommendation 23
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.

Recommendation 24
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 gas developments.

To view the full report click here