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Unconventional Gas Mining
Adequacy of Australia's legislative, regulatory and policy framework for unconventional gas mining

BACON, Dr Rachel, Deputy Chief Executive, Department of the Chief Minister

KELLY, Mr Ron, Chief Executive, Department of Mines and Energy

Committee met at 8:03

CHAIR ( Senator Lazarus ): I declare open the public hearing of the Senate Select Committee on Unconventional Gas Mining and I welcome you all here today. This is a public hearing and a Hansard transcript of the proceedings is being made.

The committee prefers to hear evidence in public. It may agree to take evidence confidentially, if it is relevant. The committee may publish confidential evidence later but we would try to ask before doing this. It is important that witnesses give the committee notice, if they want to give evidence in private. In addition, if a committee has reason to believe that evidence may reflect badly on a person, the committee may direct that the evidence be heard in private.

I remind all witnesses that, in giving evidence to the committee, they are protected by parliamentary privilege. It is against the law for anyone to threaten or disadvantage a witness, because of evidence given to a committee. If they did, the action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to the committee. Witnesses should be aware that if, in giving their evidence, they make an adverse comment about another individual or organisation, that individual or organisation will be made aware of the comment and given a reasonable opportunity to respond to the committee. If a witness objects to answering a question, the witness should state the grounds of the objection and the committee will determine whether it will insist on an answer.

On behalf of the committee, I would like to thank witnesses here today for their time and their cooperation. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. The committee has the department's submission, which the committee has numbered as submission 37. I now invite you to make a short opening statement and after you have spoken I will invite members of the committee to put questions to you.

Mr Kelly : I would first like to thank the committee for allowing us the opportunity to appear today to advise the committee about the work that the Northern Territory government is doing to implement a robust and effective regulatory and policy framework applicable for onshore oil and gas developments. The term 'unconventional gas mining' covers a wide variety of oil and gas deposits and therefore, by extension, a wide variety of extraction processes. Coal seam gas, shale gas and tight gas are all grouped under the 'unconventional' banner. In the Northern Territory our known deposits are deep shale—typically more than a kilometre deep and, in effect, an average of about 2.5 kilometres in depth. That is the type of gas deposit applicable for the NT and the type of deposit that we are working, in a regulatory process, to administer.

The geology in different states and countries is not the same. That means that implementing uniform assessment and extraction processes across Australia is not necessarily desirable from an economic or environmental perspective—or even achievable. These differences explain why shale gas developments have in some regions been carried out with no discernible environmental impacts. In that context, the southern region of the Northern Territory and northern South Australia have been producing oil and gas from unconventional wells for more than 40 years with no significant environmental impacts. In saying that, I acknowledge the necessity of learning from the experience of other jurisdictions, both domestically and internationally, and working together to ensure a continuing improvement and targeted regulatory regime.

The Northern Territory government is aware of community concerns about some of the practices used to extract unconventional gas; hydraulic fracturing, or 'fracking', is one such practice. To that end, the government commissioned Dr Allan Hawke AC to undertake a public inquiry into the regulation of hydraulic fracturing, and after considering public submissions and detailed academic studies, Dr Hawke found that there was no case for a moratorium on hydraulic fracturing provided a robust regulatory regime was put into place. The Northern Territory government has accepted this report and each of Dr Hawke's recommendations contained within it. This is not the only work underway across the Northern Territory government to implement a robust and effective regulatory and policy framework.

When Dr Hawke delivered his first review, the Northern Territory government asked him to stay on and conduct a review into our environmental assessment and approval processes. Dr Hawke's review of our environmental impact assessment and approval framework confirmed that the territory environmental regulatory framework needed reform to meet modern challenges and community expectations. The government embraced the recommendations and are already progressing the development of a contemporary regulatory system with work underway right across the Northern Territory government to ensure that the territory has a robust and effective environmental regulatory and policy framework—this is for all environmental matters and not just oil and gas. Officers from the Department of Mines and Energy, the Department of Lands, Planning and the Environment, the Department of Land Resource Management and the Department of the Chief Minister are all at various stages of community consultation processes for our respective environmental regulatory responsibilities. When completed it will bring the Northern Territory to the forefront in environmental regulations nationally—and that is our stated and, we believe, achievable goal.

With reference to oil and gas specifically, my department have been running a three-stage process of overhauling our regulatory framework to provide better transparency and clarity for Territorians and for industry. Firstly, we released guiding principles to clearly articulate our expectations of industry, and all activities are currently being assessed against those guiding principles. Second is the environmental regulations themselves, which I will introduce in a moment. Finally, of course, is reform of the Petroleum Act to give it all effect. The new draft petroleum environment regulations are also designed to deliver on the government's objective of improving transparency and accountability in the regulatory system. The draft regulations have been released for public comment and are designed to apply best-practice principles to the regulation of the onshore oil and gas industry. In doing so, we have taken into account the adoption of new regulations by the Commonwealth for offshore waters and by the South Australian and Western Australia governments for their onshore unconventional gas industries.

Specifically, the regulations adopt an objective based approach rather than a prescriptive approach. The regulator will no longer develop a long list of prescriptive measures that a company ticks off when seeking approvals. Instead, the company must demonstrate that they have considered and assessed all risks and have appropriate practices developed. This drives continual best-practice improvement rather than complying with minimum standards which may not always necessarily address the specific risks of an individual site.

They encapsulate the following key points. Interest holders must not conduct petroleum activities unless there is an approved environmental plan in place. The plan must identify all environmental risks associated with the activity and demonstrate that all risks are reduced to a level that is as low as reasonably practicable and acceptable. They incorporate the principles of ecologically sustainable development. Baseline testing and through-life monitoring regimes must be designed and approved by the regulator and, importantly, the plan must involve stakeholder engagement during the development. The approved environmental management plan becomes a public document. If it helps the committee, I am happy to table a copy of the draft regulations, as to where they are at this point.

CHAIR: Thank you.

Mr Kelly : The benefits of objective based regulations are that oil and gas companies will be held accountable for the environmental outcomes and for the compliance of their approved implementation plans. Oil and gas companies are free to choose the best methods to achieve the agreed outcomes but must provide supporting evidence to satisfy the government that the outcomes will be achieved. We believe this stimulates innovation and continuing improvement within the industry.

An example of how this may work is if applied to the protection of surface water and groundwater, which are of paramount importance to all Territorians—in fact, to all Australians. In relation to groundwater, one of the critical risks is the integrity of the well that passes through the aquifer. We require companies to demonstrate that they have designed and implemented construction, testing and monitoring techniques that will ensure aquifers are not placed at risk before any approval to construct is granted. And they will be monitored and audited to ensure that they are complying with these approved plans and stated outcomes.

Water acquisition and the current exemption for mining and petroleum activities for licence and permit obligations under the Water Act has also been raised as a concern. In November last year, the Northern Territory government announced the removal of this exemption. The Department of Land Resource Management and my department officials are currently working together on legislative amendments to give effect to that exemption.

In addition, all approved environmental plans and statements of reason will be made public, including a new level of transparency that will allow Territorians to be appropriately informed about industry activities. The government further acknowledges that there may be instances where the risk of a project may well be managed—as in: brought into as-low-as-reasonably-practicable criteria—but it is simply not acceptable for environmental, social or cultural reasons for that project to proceed in that location. This is what being ALARP-consistent and acceptable means. In this context, the regulations dovetail with both the department's land access policy and its inclusion zone policy. We have effectively ruled out exploration for onshore oil and gas in a range of areas, such as residential and rural-residential areas. This is part of the requirement for the industry to demonstrate that it has achieved a social licence to operate.

The draft regulations have been out for public consultation, and the government is now considering submissions as we finalise these regulations. We have also sought expert, independent analysis and feedback on the draft regulations. One of those experts was a Dr Tina Hunter, who is an expert in energy law and codirector of the Aberdeen University Centre for Energy Law. She has advised governments around the world about environmental protection and the oil and gas industry, and the Western Australian government engaged her as well. If I can give one comment from Dr Hunter's report, I would like to read part of her executive summary in which she says: 'These'—that is, the regulations—'are a solid regulatory tool for future petroleum activity and represent a quantum leap from the Northern Territory regulations of old. They herald in a new era of objective based regulations which have been assessed by the World Bank to be the most suitable form of regulation to foster petroleum development. In addition, these regulations are the first for onshore petroleum to implement the concepts of ecologically sustainable development.' If it aids the committee, I am happy to table a copy of Tina Hunter's report on our draft regulations.

Our road to regulatory and policy reform has involved commissioning independent and internationally recognised experts to apply their knowledge specifically to the territory context. We have investigated many peer reviewed studies into unconventional gas developments and worked with other governments to incorporate their recommendations and experiences to ensure that we design and implement the best possible regulatory regime for any unconventional oil and gas industry in the Northern Territory.

Thank you for the opportunity to outline the process that we are undertaking here and the work involved in the Northern Territory. Dr Hunter and I are very happy to answer any questions and provide further details.

CHAIR: Ms Bacon, do you have any statement you would like to make?

Dr Bacon : I have nothing to add to that.

CHAIR: Okay. Senator Ludwig, did you want to kick off proceedings?

Senator LUDWIG: Originally, Dr Allan Hawke did a report and indicated that ultimately a moratorium should not be used for the exploration of onshore and shale gas. Do you have a name you refer to it as more commonly?

Mr Kelly : No. Onshore and shale gas are how we refer to it here.

Senator LUDWIG: He ultimately also recommended that it should proceed if the regulatory regime is robust. I take it that the work that you are currently doing is to that end. I want to connect the dots there a bit better. The work you are doing about the regulatory regime—the draft regulations and the consultation that is now being proceeded with—is to the end of ensuring that, if there is going to be that type of mining, there will be a robust regulatory regime in place as Dr Allan Hawke recommended. Am I on the right track there?

Mr Kelly : Yes. That is the full intent of conducting the review and changing our environmental regulations for shale gas and onshore gas. We have a regulatory and legislative regime currently in place that has enabled us to approve and develop the gas industry in the Northern Territory to date, but it was, as said earlier, prescriptive based regulations. With modern drilling techniques, modern well completion techniques and just knowing a whole lot more about the environment and oil and gas developments, there was a realisation that we needed to move to a better, more transparent and more robust regime that could accommodate that. That is the work that is underway.

Dr Bacon : To add to that: you are absolutely right that Dr Allan Hawke's inquiry was commissioned under our Inquiries Act, so it was a very formal established inquiry. It ran almost over the whole of 2014. There were over 263 written submissions received as part of that inquiry, and Dr Hawke conducted extensive consultations with the community right across the Northern Territory. He made six recommendations, all of which government accepted. You are entirely correct that one of the recommendations was that there was no need for a moratorium around hydraulic fracturing in the Northern Territory provided there is a robust regulatory regime in place. Government, having accepted all the recommendations from Dr Hawke's inquiry, sought further advice from Dr Hawke, taking advantage of the fact that he had done such extensive consultations with the community as well as a lot of other research into international best practice around regulation for oil and gas activities. In light of that background and the work he had already done, government asked Dr Hawke to provide further recommendations to government about how we could improve our regulatory system to ensure that the way we do environmental assessment and approvals right across all industry sectors is national best practice. The government also accepted those recommendations, which was announced last year, and now there is a whole-of-government implementation effort directed at implementing those recommendations to make sure the Northern Territory's environmental regulation regime is national best practice.

Senator LUDWIG: When you say whole of government, it is not only these regulations we have been talking to Mr Kelly about; there is other work that is being done by other departments?

Dr Bacon : There are half a dozen agencies working in the environment and natural resource space that have recommendations that need to be implemented, particularly out of Dr Hawke's second review of the environmental assessment and approvals processes. There is strong coordination around that whole-of-government effort. The CEOs of the relevant agencies involved meet on a regular basis to ensure that we are proceeding with that implementation exercise in a coordinated manner.

Senator LUDWIG: Sorry for being a little bit more specific, but does that also include access to land—particularly that which is freehold or pastorally held and that which has a bundle of Indigenous rights that might be attached to it?

Mr Kelly : Yes, that does. The government has announced a number of policies with respect to land access and potential land release for oil and gas activities. Firstly, no activities for drilling or exploration activities have occurred on any land in the Northern Territory without a written land access agreement between the parties. We have recently worked with the Northern Territory Cattlemen's Association, the mining industry and the oil and gas industry to develop a process where we can help facilitate those access arrangements so that all parties can have a reasonable and a fair opportunity to put their interests forward.

In relation to Aboriginal-owned land: the legislation, the Aboriginal Land Rights Act, has certainly not been changed in any way through this process, and Aboriginal landholders—the traditional owners—still enjoy all their rights about who has access to their land. The changes that we have also implemented in our land release program for potential oil and gas activities were changed recently to what we now call an 'inclusive zone'. Historically, the Northern Territory could be best described as a blank canvas, where any company could come and apply for an exploration permit over any part of the Northern Territory. That resulted in almost 98 per cent of the Northern Territory being subject to a claim in one way or another.

The government has changed the philosophy and the policies now to go down an inclusion zone area where we essentially pre-vet areas of land. There is a process that we have implemented for that, which involves all other government agencies, to decide what areas of land would be consistent with our land release policy. That is that it is not rural residential land, highly intensive agricultural land or land of strategic importance that may, in future planning, be allocated for some other potential use, or there are cultural imperatives. We will assess that and decide what areas of land could be potentially released, so the government now proactively releases land rather than waiting for applications to come in. We are slowly going through all of the existing licence applications that are in place and adjudicating or ruling on them under those new criteria. We have actually cancelled or refused to issue a number of licences as a result of that process.

Senator LUDWIG: In my state and in other places, one of the key issues for landholders particularly is the right of access. In short, many submitters that I have heard from in both this inquiry and others do want to have some say, rather than having what was described in Queensland—which happened very early in the piece—where there were geological exploration teams that would go out, explore, demand access and claim that they had a right to access and that, if you did not give them access to the particular land, they would see you in court. That is a shorthand explanation of how it was described. It was significantly objected to by the landholders themselves who wanted to have a little bit more say. Is what you are describing a shorthand way of saying how you have been addressing this issue? It is very critical to landholders—particularly people with stock—as to how the survey teams and the mining might actually be on that land.

Mr Kelly : It was probably a more longhand version of describing that, but that is exactly the process that we are trying to put in place. Here there is a process of consultation and mutual agreement on land access processes and regimes. The laws of the country over mineral ownership and the like are not something that we can contemplate or change here. That is for another time and another place. But, from a Northern Territory perspective, what we are endeavouring to put in place is a process where the parties will come together, and if they will not come together voluntarily then we have some leverage to force companies to engage with landholders. We have changed the process of when they have to consult and the format for when that consultation takes place. We encourage any mining company or any oil and gas company to engage early and thoroughly with other interested landholders so that we do not have the animosity that has bubbled to the surface in some other areas.

Of course, the biggest leverage we would have—and both the landholders and the oil and gas companies, in this case, will attest to this—is that we do not approve any activities on a granted-lease area. We might grant the lease, but you still cannot do anything unless you get approval from the Northern Territory government, the Department of Mines and Energy. We will not approve any activities until we are satisfied that that consultation has taken place and an access agreement has been provided to us. We have no visibility into what the terms of that access agreement might be, but it has to be shown to us that both parties have come to that agreement.

Senator LUDWIG: Ultimately, the reason for the work that you are doing—I will call it whole-of-government work—around the regulatory schema is designed to ensure that there is safe, accessible mining activity and a monitoring and regulatory regime that supports it. Is that a shorthand way of describing what you are currently doing?

Mr Kelly : Absolutely; that is what we are trying to achieve. We understand that any mining—any oil and gas activities—has an impact. Our regulatory regime is designed to assess that, to keep the impact as low as reasonably practicable and to have any monitoring and remediation proposals already preapproved in case something does go awry. That is the objective. But, importantly, built into that approvals process is significantly more transparency and stakeholder engagement that ever before. We believe that everyone has a greater level of transparency and, therefore, hopefully confidence in the processes that we are implementing.

Senator LUDWIG: You raise one issue: if there are land access agreements in place which have payments attached to them for landholders for access, will they be made public, too, as to what the payments are?

Mr Kelly : No, they will not. The government has no visibility into what is in those land access arrangements and processes. We just need to ensure that they are in place.

CHAIR: Just getting back to Dr Hawke: are you aware of any informal role that Dr Hawke had in the resource sector or in an organisation that supplies services to the resource sector?

Mr Kelly : I have read media reports that talk about Dr Hawke's past professional engagements, yes.

CHAIR: So, are you aware?

Mr Kelly : Yes.

CHAIR: You do not think that is a conflict of interest?

Mr Kelly : No, I do not. I believe that Dr Hawke dealt with that issue when it was raised with him as well as any involvement he had directly or vicariously in his previous appointments.

Dr Bacon : If I could just add that Dr Hawke is a highly respected eminent Australian with relevant expertise, most notably in relation to his work on the Commonwealth Environment Protection and Biodiversity Conservation Act. Dr Hawke has publicly demonstrated that assertions that I understand you are referring to have no basis.

CHAIR: Okay. There have been many calls for more independence from the resource sector in these matters. Do you support this?

Mr Kelly : Sorry, I am not quite sure of the—

CHAIR: Rather than having people that have had a role within the mining sector, do you think that we should have people that have had no previous connections?

Mr Kelly : We have sought and engaged people that we deem are independent from government or the resource sector; however, we still need to ensure that the people that are engaged to provide the government with advice on our approvals and regulatory process do have an in-depth knowledge of the industry and, on the other side, an in-depth knowledge of the environmental considerations. It is a balance in finding those people.

We have relied on a number of national and international academic investigations into oil and gas. Certainly the Australian Council of Learned Academies and Australia's current Chief Scientist have done some work in this space. The British academy of scientists in the UK have done some work in this space. Yale University, Stanford University and the University of Cincinnati have done longitudinal studies in this space, and we believe that their independence is established and their qualifications are certainly acceptable for us to take their recommendations forward.

CHAIR: The Hawke report calls for baseline testing. Will this be implemented?

Mr Kelly : Absolutely. It is one of the first things that we put in place with our guiding principles and with our regulatory process. Basically, the first drill that goes into the ground at any site will be a water bore, and testing will be conducted on both surface water and groundwater both on-site and surrounding any site so we can build up or add to our current knowledge database of water in the Northern Territory. We have also commissioned some joint work between Geoscience Australia, CSIRO, the Bureau of Meteorology, the Northern Territory Department of Land Resource Management and the Department of Mines and Energy to look at what knowledge and data we have on water and environmental matters in the areas where activity is taking place. Collaboratively, we will work on what we need to do to improve on that and plug any gaps that may be there.

CHAIR: Does an independent body do this?

Mr Kelly : The analysis is done by various government agencies. Most of the collection is done by our own environmental science people or companies engaged by oil and gas companies to collect samples. We crosscheck and cross-reference all of that and we believe it is building up the knowledge database that we have.

CHAIR: So the answer is no?

Mr Kelly : Independent bodies? The Northern Territory Environment Protection Authority, which is an independent entity here, has oversight of all wastewater discharge licences and the Water Act legislation. It is involved as well.

CHAIR: That is a government agency—is that right?

Mr Kelly : It is appointed by the government. It is independent, yes.

Dr Bacon : It is an independent statutory agency.

CHAIR: What about companies? Do they self-report?

Mr Kelly : Companies have to provide their water monitoring data to us, and we then compare that data with data that we currently have, or that our environmental monitoring people have collected, to ensure that we have a reliable, valuable database being built up for that baseline testing.

CHAIR: Do you think we would be better off with the government collating the data rather than the mining companies?

Mr Kelly : There is a combination of both. If the mining companies are out there spending money on doing the drilling and the like, having them collect the information that is provided to us means a greater volume of data is collected and the cost of that is not totally borne by the taxpayer.

CHAIR: Have you consulted with the landowners or the people who are going to have to live around these gas fields about the impact that this industry is going to have on them?

Mr Kelly : Absolutely. We have and continue to do so. I note that some of the witnesses who are down to provide evidence to the committee today are landholders or companies involved in that process. They may have a view on the value or the effect of that, but the Department of Mines and Energy does regularly visit community groups and landholders. To that end, I am travelling to Borroloola tomorrow to do another round of consultation on just that matter.

CHAIR: What are their major objections?

Mr Kelly : Their major concerns are certainty about water acquisition and potential water contamination, because it is very important that we have proper processes in place to protect that. Another issue is having good access arrangements so that they can coexist with mining companies and not have interference with mustering, fence lines being put up in silly places or the like. There is no one single issue that affects people, but I would rather yield to those people who are giving evidence who are directly involved to provide you that information.

CHAIR: Have you kept an eye on or looked at Queensland and New South Wales and the issues that they are facing?

Mr Kelly : Absolutely. We have looked at all of those issues. As I said, we have scouted quite widely. On the actual resource and the extraction method used there is really nothing to compare it with because it is a completely different type of resource and therefore extraction method. The similarities and things that we do keep an eye on and make sure that we put in good processes are about that landholder, mining company or gas company relationship and how that moves forward. The sort of information that stakeholders in New South Wales or Queensland—your home state—are claiming or are desirous of having, we are making sure that we capture that data so that we can provide it to people.

Senator PERIS: Mr Kelly, in your submission you talk quite a bit about the fracking process that has taken place in the Territory for decades. However, we are talking about unconventional shale gas here. On page 26 of your submission you say that the exploration of unconventional gas has occurred since 2011. Is it true that there are no commercially operating shale gas fields at the moment?

Mr Kelly : There are no commercially operating fields or wells in that more recent exploration activity that was referred to here from 2011 onwards. There are of course, though, commercially producing unconventional wells in the central Australian region of the Northern Territory. Some of them are shale, some of them are what we call 'tight gas', but they are still unconventional players in that sense. They have been using the process of fracking in those unconventional wells in Central Australia for some 30 to 40 years.

Senator PERIS: Are you able to explain, as briefly as you can, the key differences between conventional versus shale?

Mr Kelly : A conventional gas well is probably best described as a cavern or a void in the earth where gas has been released from where it was formed and captured in the earth. A drill can go down and access that gas, and it naturally flows to surface or is pumped to surface if it is a liquid. That is probably the simplest description of conventional. Unconventional covers gas deposits that could be termed 'tight gas', so it is in sandstone formations and cannot flow to surface naturally, or it could be still captured in shale rock, which is a prominent formation in the Northern Territory where oil and gas is captured in the rock but again it cannot flow or cannot be released from that sediment. That is where in the unconventional sense there needs to be some well-completion technique deployed whereby once the drill well has been drilled into that formation that something needs to happen to allow that gas to flow freely. That is the technique of fracking, which is to break apart or open up a path for that gas or oil to flow.

Senator PERIS: We have heard in a number of the submissions that shale gas fields require thousands of wells to be drilled and then fracked in order to get commercial quantities of gas. Is that correct?

Mr Kelly : That is correct. But with the introduction of modern drilling techniques, which is the horizontal drilling that we hear of now, it means that there needs to be considerably fewer wells drilled than what used to be the case when you only had vertical wells drilled. You will see examples in other parts of the world where there will be a wellhead every 300 metres, maybe even closer, and they all joined up together to access that shale gas. With the modern techniques of horizontal drilling, whereby you can drill a well down vertically into the shale and then horizontally for somewhere up to 1½ kilometres. This means that your separation between drill pads or wellheads can be upwards of three kilometres or more between wells and you can have multiple wells on a single pad. Yes, there do need to be multiple wells drilled into the deposit to free up commercial quantities of gas, but with modern drilling techniques that we are investigating here or that are under exploration here, the impact or the number of wells required is considerably less that what it was in the past.

Senator PERIS: Do you know if you have had shale gas drilling ponds overflowing already in the Territory, from the gas wells that have been drilled?

Mr Kelly : No, Senator.

Senator PERIS: Are the ponds that have been drilled lined to avoid seepage into the groundwater underneath?

Mr Kelly : In the current regime of drilling—because there have not been any wells drilled in the southern part of Australia for some time—in all the new work that is being done, any ponds that may have been or are constructed are certainly lined, but they are only temporary. With regard to the wastewater, or the processed water, that resulted from exploration wells that were drilled last year, we required that all of that processed water be captured, sealed into appropriate containers and trucked away to an approved water treatment processing facility. The reason for that is that, until we have the actual chemical constitution of that water—as it has come back out of the ground, if it has picked up any other elements—and we know exactly what that water looks like, we are unable to approve an appropriate treatment process on-place. So we take the precautionary principle in that regard, and we are not going to let it sit there in an evaporation pond, if you like, while we figure out the best way of treating it. We make sure that it is treated appropriately from the start.

Senator PERIS: Okay. Has the Department of Mines and Energy done water samples of what pollution is present in the shale gas drilling ponds across the Sturt Plateau and the Daly Waters?

Mr Kelly : We have water samples from any of those operations, but I think you would have to tell me which ponds you are looking at, because I am not aware of anything other than what may be there as temporary, protective, storage type measures. There are no long-term dams that are unlined or untested in the Northern Territory.

Senator PERIS: If the wells are not being used, are they continuously monitored or are they just abandoned?

Mr Kelly : If the wells that are not being used are in the exploration phase, then we are monitoring those wells on-site as work is occurring, and that is regularly happening. If a well is suspended while testing is being undertaken on the gas or the oil that has come out of it, or while analysing the results of the exploration, then we have to approve the method of suspending that well and ensure that that has taken place, and then the company will revisit that or come back when they continue their exploration work.

Senator PERIS: And how often is that?

Mr Kelly : Our inspection regime? It depends a bit on where that well is and what state of construction or development it is at in order to determine when we need to visit that site.

Senator PERIS: The chair asked just before about underground water quality. So you do have baseline studies prior to any exploration?

Mr Kelly : We do. I am not saying that we have long-term longitudinal studies on water monitoring of bores in the particular area where the drilling is taking place—because other landholders there have not conducted that regular testing because there probably has not been a need to—but we require that all water bores in the vicinity of a proposed well be identified and tested. For any new water bore that is put down, whether it is a monitoring bore or it is water for the people in the camp that are doing the construction, all of that information must be captured and then fed back into the Department of Mines and Energy, and then we work with the Department of Land Resource Management, Geoscience Australia and other people of interest in that space. With any testing that you do, of course, the first one is just a point-in-time test. It tells you maybe what the chemical constitution and the water level are at that time, but, until you can build up a long record, it is only a point-in-time test. So we ensure that we do that baseline testing before any activity takes place; and then, through the entire life cycle of that operation, we will require the same testing.

Senator PERIS: Are those baseline results made public before the drilling?

Mr Kelly : They will be made public. A lot of wells have not been done, to date. One of the reasons why all of that information is not currently available on our website is that we need to compile it into a format that includes the historical testing and the regime going forward, so that it actually means something. Otherwise, it is just a point-in-time test and it is not that meaningful to anybody.

Senator PERIS: The Northern Territory government, and it is publicly known, has issued extensive groundwater extraction licences from some of the territory's major aquifers. Can you explain how the gas industry's water usage is regulated and what impact current entitlements have on potential gas developments?

Mr Kelly : Currently, the oil and gas industry water extraction is regulated through departmental lines. We need to know where that water is coming from and part of our analysis on that aquafer is to what would be appropriate or sustainable yields. But, as I mentioned I my opening statement, to have accumulative impacts correctly monitored or accounted for, we are removing the exemption from the Water Act for mining and oil and gas operations so that all extractive licences for underground water will be administered through the one piece of legislation. That way, the full accumulative impacts of all water users will be better recorded.

We will have meters on bores for extraction, for commercial and oil, gas and mining operations. Understanding the draw-down from other users is a work that other departments are working through, as to how we can capture all of that and will talk to pastoralists and agriculture users.

CHAIR: What will you do if people do not want their land to be mined? What rights do landholders have in this state?

Mr Kelly : The same rights they have in any other state or territory in Australia.

CHAIR: Is that, pretty much, it?

Mr Kelly : No. If you talk absolutes, you are probably correct. But the process we are putting in place, here, is endeavouring to have coexistence between various—'competing' is, probably, not a term most people like to use—interests in that land. We are trying to implement—and I believe it is working; there is success in a number of areas of landholders and mining and oil and gas companies being able to work together for mutual benefit. I am not saying it is an easy road for all concerned, but it is the process we are embarking on to ensure that we will not approve operations until there is an access agreement in place. And we are working with the various stakeholders to develop a way to facilitate those agreements to resolve issues that people have.

CHAIR: So if I am a landholder and I say, 'No,' what is the process?

Mr Kelly : Essentially, the process is there will be an opportunity for consultation between all parties and, hopefully, they can resolve those differences. In the Northern Territory we have found that to be the case in most cases—in fact, in all cases to date. If either party in that discussion cannot reach agreement or will not reach agreement, for whatever reason—maybe unrealistic demands on either side—the process is that we form, here, in the Northern Territory, a mediation or arbitration panel. That involves representatives of government agents, at CEO level, and representatives from the different interests—whether it be the mining companies or peak body, or the cattlemen's association or peak body, or delegates they have agreed to—to form that arbitration panel. The quorum is four people and must be equal representation between industry and government, so it is not stacked one way or the other.

Hopefully, that group can work through each person's issues or grievances and find a way forward. There are always, of course, natural justice processes and people's rights to seek a legal outcome going through the courts. As we all know, the issues of Australia's land rights—

CHAIR: So I would be right in saying the landholder does not have any rights to refuse mining companies, and the arbitration is only going to try to nut out some sort of compensation for the landowner. If the landowner does not want mining companies to come on to their property and mine their property, they just do not have any rights to say no.

Mr Kelly : They have a right to contest that and—

CHAIR: [inaudible] they do that?

Mr Kelly : No, Senator. It is the same right across Australia.

CHAIR: Thank you very much. We have run out of time. Thanks, guys, for coming along.

Senator LUDWIG: If there are other matters that you would like to raise, you are welcome to provide a further submission to the committee.

Senator WATERS: Can you both hear me?


Senator WATERS: I was hoping to ask a couple of questions of the witnesses.

CHAIR: We have run out of time, sorry, Senator.

Senator WATERS: I am here to give quorum to this committee, so I would like to ask some questions. I will not be very long.

CHAIR: I am sorry, we have run out of time, Senator Waters.

Senator WATERS: Do you need me on the call or not, Chair? My understanding is that if I am not participating quorum cannot proceed.

CHAIR: You can certainly participate all day, if you like, but we have run out of time. We are 20 minutes over time.

Senator WATERS: Thanks very much.

CHAIR: Senator Waters, we were led to believe that you were busy, but I am happy for you to start the next line of questioning. That is fine.

Senator WATERS: Great. Sorry. I misunderstood. I thought you dismissed the current witnesses. Do we still have Mr Kelly and Dr Bacon there?

CHAIR: No, we do not. Sorry, Senator. If you would like to put questions on notice, we are happy for you to do that. We are way behind. We are nearly half an hour behind now.