Statutory land access agreements and new compensation rules for NT petroleum operations: what you need to know for 2021

Following extensive stakeholder consultation with pastoral lease holders, petroleum companies and peak industry bodies, the NT Government has endorsed the new Petroleum Regulations 2020 in order to implement a number of recommendations of the Independent Scientific Inquiry into Hydraulic Fracturing in the Northern Territory and provide better certainty for the petroleum industry and landowners alike.

The new Regulations will commence on 1 January 2021 and will repeal the Petroleum Regulations 1994.

Land access agreements

Under the new Regulations, an interest holder must not commence regulated operations on any particular area of land from 1 January 2021 without having a land access agreement in place with the landowner / occupier with a registered interest (designated person), which has been approved by the Minister for Mining and Industry. It will be an offence to commence regulated operations on land without having an approved land access agreement in place. Regulated operations are operations for which an exploration permit, retention licence or production licence is required under Petroleum Act 1984 (NT) (the Act), other than preliminary activities.

A land access agreement must at least contain provisions that address each of the 25 standard minimum protections prescribed in Schedule 2 of the Regulations. The standard minimum protections relate to, amongst other things, minimum notice periods, access points, rehabilitation and remediation, compensation for drilling and for decrease in value of land and a general obligation to make good.

An approved land access agreement is not required:

• if the land where the regulated operations are to be carried out is Aboriginal land or vacant Crown land; or
• to carry out an airborne survey that does not involve any physical contact with the relevant land.

Existing land access agreements and transitional period

Where regulated operations have commenced prior to 1 January 2021, a 12-month transition period will apply and a land access agreement approved under the Regulations does not need to be in place in order to continue those operations during the transition period. However, some form of agreement between an interest holder and a designated person about land access needs to be in effect during the transition period in order for those operations to continue during that period.

After the end of the transition period, an interest holder will need to have a land access agreement in place, which has been approved by the Minister under the Regulations, in order to continue regulated operations. A party to an agreement entered into before 1 January 2021 may, during the transition period, apply to the Minister to register that existing agreement about land access as an approved agreement under the Regulations. In this case, the Minister is not required to be satisfied that the agreement meets the standard minimum protections and only needs to be satisfied that the agreement makes reasonable provision about access to land for the purposes of carrying out regulated operations.

If satisfied, the Minister can register the agreement and it is taken to be an approved land access agreement under the Regulations that continues for the balance of its term. Where the Minister refuses to register the existing agreement, the party who submitted the agreement for registration may apply to the Civil and Administrative Tribunal for review of the Minister's refusal.

Initiation of negotiations on new land access agreements

In order for an interest holder to initiate the process of negotiating a land access agreement, the interest holder may give a negotiation notice in the approved form to each designated person for the area of land to give notice of the interest holder's intention to obtain a land access agreement.

The negotiation notice must include details about the land to be accessed, the petroleum interest, the proposed regulated operations, the maximum period of access, the interest holders contact details, a request to negotiate a land access agreement and a statement that the interest holder will cover the reasonable costs necessarily incurred in connection with the negotiation between the parties. The interest holder may also provide a draft land access agreement with the negotiation notice.

Once a negotiation notice has been given, the interest holder and the designated person must take reasonable steps to negotiate a land access agreement (in good faith) within a period of at least 60 days from when the designated person received the negotiation notice. This period can be extended by agreement.

The interest holder must pay the reasonable costs of the designated person incurred as a consequence of participating in the negotiation for a land access agreement within 30 days after a request for payment is made (subject to the commencement of Tribunal proceedings because of a dispute about those costs). These costs include:

• reasonable legal or accounting costs necessarily incurred by the designated person in connection with participating in the negotiation; and
• reasonable costs necessarily incurred by the designated person in connection with engaging a suitably qualified person to provide advice or reports on any relevant matter. For example, advice or reports about land valuation, agronomy or land capability or suitability.

Alternative dispute resolution (ADR)

Where the interest holder and designated person cannot agree on a land access agreement within the negotiation period (ie at least 60 days or a longer agreed period) the interest holder may give notice in the approved form requesting agreement from the designated person to participate in an ADR process (other than an arbitration). This includes using a facilitator or mediator to achieve a negotiated outcome for entering into a land access agreement. The interest holder may specify the period within which the ADR process is to occur which must be a period of at least 14 days (nominated period). The interest holder must provide a draft access agreement for the ADR process.

If an agreement has not been reached on an ADR process and the facilitator or mediator to be used by the end of the nominated period, the interest holder or the designated person may apply to the CEO of the Department of Industry, Tourism and Trade for the appointment of a member of the Mediators Panel (being a panel of mediators appointed by the Minister and published on the Department's website) to conduct mediation.

If an interest holder commenced negotiations about land access before 1 January 2021, the interest holder may also apply to the CEO to appoint a member of the Mediators Panel to conduct a mediation under the Regulations. For these pre-existing negotiations, the CEO may appoint a member of the Mediators Panel if satisfied:

• that the period since the negotiations started is at least 60 days; and
• that over the period of the negotiations the interest holder has acted in good faith in the conduct of the negotiations.

Similar to the initial negotiation process, the interest holder is to pay the reasonable costs of the designated person to participate in an ADR process as well as the costs of the agreed facilitator / mediator or the CEO appointed mediator (as the case may be) (ADR Convenor) within 30 days of a request for payment (again, subject to the commencement of Tribunal proceedings because of a dispute about those costs).

If after a period of at least 30 days from a date fixed by the ADR Convenor a negotiated outcome for a land access agreement is not achieved and either:

• the interest holder requests that the ADR process end; or
• the ADR Convenor decides, after consultation with the parties, to bring the ADR process to an end because there is no reasonable prospect that the matter will be settled through the ADR process within a reasonable time,

the ADR process is terminated and the interest holder may apply to the Tribunal for a determination about the terms of the land access agreement to allow for access by the interest holder. In making such a determination, the Tribunal must take into account and apply the standard minimum protections.

Approval of an agreed land access agreement

Where a land access agreement is successfully negotiated, an interest holder may apply in the approved form to the Minister for the approval of the land access agreement. The land access agreement does not allow the interest holder to access the relevant land until it has been approved by the Minister.

A land access agreement that has been determined by the Tribunal after the termination of an ADR process (as noted above) is taken to be an approved access agreement (and does not require approval of the Minister).

The Minister must make a decision about the application for approval of a land access agreement within 28 days after receiving the agreement or within a longer period as the Minister may reasonably require. The Minister may decide to approve the land access agreement or, if not reasonably satisfied that the land access agreement at least meets the minimum protection requirements, give notice to the parties that the land access agreement may be varied and resubmitted for approval.

If a varied land access agreement is resubmitted, the Minister may decide to approve or refuse the land access agreement.

The interest holder may apply to the Tribunal to review a decision of the Minister to refuse to approve a land access agreement.

Registration and variation of a land access agreement

An approved access agreement must be registered and included in a register to be maintained and updated by the Minister.

There is an ability to vary an approved land access agreement in accordance with the terms of the access agreement, by an agreement between the parties or by determination of the Tribunal (after an ADR process is conducted). A land access agreement that is varied (other than by the Tribunal) needs to be approved and registered by the Minister. A refusal by the Minister to approve a varied land access agreement is a reviewable decision and the party who submitted the variation for approval may apply to the Tribunal for review.

Preliminary activities and aerial surveys

As noted above, an approved land access agreement is not required to carry out preliminary activities or aerial surveys. For these activities, the interest holder must give notice to the designated person, at least 14 days prior to commencing the relevant activity.

Preliminary activities are preliminary or preparatory activities that are associated with the commencement of regulated operations and that have no impact, or only a low impact, on land.  These include: 

• taking water samples;
• taking rock samples without using heavy machinery;
• taking soil samples to a depth of up to 4 metres;
• carrying out surveys that do not involve the clearing of any vegetation or the permanent installation of any infrastructure or equipment on land; and
• driving a vehicle, other than a heavy vehicle, on land in connection with the above activities.

Compensation to landowners

Under the Act, a holder of a petroleum interest must pay to the owner of the petroleum interest land and any occupier who has a registered interest in the land, compensation for:

• deprivation of use or enjoyment of the land, including improvements on the land; and
• damage, caused by the permittee or licensee, to the land or improvements on the land; and
• any other prescribed reason or circumstance.

The new Regulations prescribe that compensation must be paid with respect to: 

• the drilling of a well on the land by the interest holder which may be an amount for each well or an amount represented by improvements or work on the land provided or carried out by the interest holder; and
• to the extent of an owner's or occupier's respective interests in the land – any decrease in the market value of the land caused by regulated operations carried out on the land by the interest holder. The compensation payable may be an amount equal to the decrease in market value of the owner's or occupier's interest in the land (as the case may be) or an amount represented by improvements or work on the land provided or carried out by the interest holder.

These matters are contained within the standard minimum protections (being matters that must be addressed by an approved land access agreement). The method of compensation is to be determined by agreement between the landowner / occupier and interest holder or, if they are unable to agree, by the Tribunal.

Offences

In addition to it being an offence to commence regulated operations on land without an approved land access agreement, it will also be an offence (amongst other things):

• to contravene the standard minimum protections for minimum notice periods, gates and notification of damage;
• to fail to provide copies of certain notices given under the above provisions, to the CEO;
• for the interest holder to fail to notify the landowner (where it is not the designated person) of any determination, approval or variation of a land access agreement; and
• for the interest holder to fail to comply with the notification requirements and certain responsibilities associated with airborne surveys and preliminary activities.

If you would like any further information with respect to the new NT Petroleum Regulations 2020 or understand what this means for your operations please contact us.

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