Proposed significant amendments to coal and petroleum tenure management in Queensland

Amendments to Queensland resources legislation have been proposed by the Natural Resources and Other Legislation Amendment Bill 2019 (NROLA Bill), with key changes to affect industry's management of coal and petroleum exploration tenure.

On 26 February 2019, the NROLA Bill, an omnibus Bill that makes amendments to various pieces of Queensland legislation, was introduced into Parliament. This article focuses on a number of key amendments to the Mineral Resources Act 1989 (MRA), Mineral and Energy Resources (Common Provisions) Act 2014 (MERCPA) and the Petroleum and Gas (Production and Safety) Act 2004 (PAG Act) that affect aspects of the management of coal and petroleum exploration tenements.

Cap on life of a mineral and coal exploration permit

The amendments provide for a 15-year cap on the overall life of a mineral or coal exploration permit (EP) (being the initial term of up to five years and any renewals of up to five years each). A one-off extension to the final term of up to an additional three years may be granted by the Minister if exceptional events exist, which prevented the holder from complying with the work program for the last renewed term of the permit. The explanatory notes state that exceptional events are intended to be those that negatively affect the whole resource exploration industry, such as natural disasters or a global financial crisis (though the definition is drafted on more general terms).

Importantly, while the 15-year cap is not intended to apply retrospectively to EPs in existence at the date of the amendments, those existing EPs will still be affected. Currently existing EPs can be subject to an unlimited number of renewals. As a result of the transitional provisions to the amendments, existing EPs will be permitted further renewals totalling a maximum of 10 years from the first renewal after the commencement.

Work programs for EPs and authorities to prospect

Work programs for EPs and authorities to prospect (ATP) will now be either activities-based or outcomes-based, depending on the nature of the tenure.

Activities-based programs will generally remain as per the current requirements for work programs. However, outcomes-based programs are a new concept (intended to provide flexibility to the tenure holder) and must detail four components:

• the outcomes proposed;
• the strategy for pursuing the outcomes;
• the data and information to be collected; and
• the existing requirement to provide the estimated human, technical and financial resources proposed to be committed.

The explanatory notes indicate that outcomes-based work programs will generally be accepted for non-competitive-tender applications (subject to some exceptions), with activities-based programs generally being the default position for competitive tenders. However, even for competitive tenders, a call for tender may specify that the tender is required to be accompanied by an outcomes-based work program (for example, where it is greenfield site).

Existing programs of work for a current permit term will not be affected by these amendments. However, the effect of the transitional provisions is that some existing EP/ATP applications and renewal applications that are undecided at the commencement of the amendments will be affected. Proponents should consider the status of such applications to confirm the work-program requirements for those tenures as the amendments provide for an opportunity to re-submit proposed work-programs within specified timeframes.

Relinquishment of EPs and ATPs

The amendments propose to streamline the relinquishment requirements of EPs and ATPs by reducing the frequency of relinquishment.

EPs

The amendments introduce mandatory relinquishment of 50% of an EP area in years 5 and 10 of the term of an EP, subject to exceptional events (refer above as to what are exceptional events) or where an EP is within an exploration project.

The Minister may direct the holder of the EP to reduce the EP area by more or less than the 50% to allow for circumstances where an EP has been subject to the above exceptional events or is within an exploration project.

The area of an EP over which a higher form of tenure (mineral development licence or mining lease) has been granted, can count towards the 50% relinquishment requirement.

The extent to which the amendments will affect existing EPs will depend on the status of the term of the EP. Proponents should review the transitional provisions to confirm the relinquishment requirements that will apply to existing EPs as a result of the amendments.

ATPs

The relinquishment requirements for ATPs will also be amended from 8.33% per year to 50% by the "relinquishment day" (being the day before the 6th anniversary of the day the ATP took effect).

Existing ATPs are not affected by these changes.

Variation of conditions of EPs and ATPs

A new provision is to be inserted into the MRA and the PAG Act enabling the Minister to amend the conditions of an EP or ATP at any time (without application by, or seeking the views of, the holder). This power may be exercised by the Minister if exceptional events apply (refer above as to what are exceptional events). It applies to EPs and ATPs granted both before and after the commencement of the amendments.

The proposed amendments also seek to limit the grounds of an EP or ATP holder to apply for a variation of conditions (in the case of EPs) or a special amendment of conditions (in the case of an ATPs). Such applications may now only be made where there is an exceptional event or where the relevant EP or ATP is part of an exploration project. As well as applying to new EPs, the amendments will apply to existing EPs after particular timeframes. The amendments also limit the circumstances in which an extension to the period of a work program for an ATP will be granted.

Other amendments

Other amendments in the NROLA Bill include:

• Rehabilitation and environmental management: MERCPA is proposed to be amended to clarify that all resource authority holders may access public and private land to carry out rehabilitation and environmental management activities required under the Environmental Protection Act 1994.
• Remove area limit for potential commercial area and petroleum lease and enable amalgamation: The amendments remove the 75 sub-block area limit for a potential commercial area (PCA) or petroleum lease (PL), and enable applications to be made to amalgamate multiple PCAs or multiple PLs.

What happens next?

The NROLA Bill has been referred to the State Development, Natural Resources and Agricultural Industry Development Committee for detailed consideration. The Committee is due to provide its report on 18 April 2019, after which, Parliament has three months to respond to any recommendations of the report.

In the meantime, affected tenure holders should review the impacts of the NROLA Bill on currently held and future proposed tenures.