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The countdown is on to recommence fracking in the Northern Territory

By Nicole Besgrove, Margaret Michaels
04 Apr 2019
The NT Government has implemented another recommendation from the Independent Scientific Inquiry into Hydraulic Fracturing inching a step closer to the oil and gas industry restarting hydraulic fracturing in the Territory.  

After consideration of the Economic Policy Scrutiny Committee's inquiry report recommendations, the NT Parliament passed the Petroleum Legislation Amendment Bill 2018 with amendments on 19 March 2019. The Bill is currently awaiting assent and will commence on the day fixed by the Administrator by Gazette notice.

We previously examined the Bill after it was introduced into Parliament on 29 November 2018 with its key amendments being to:

  • provide provisions for open standing judicial review for decisions under the Petroleum Act and Petroleum (Environment) Regulations;
  • require that oil and gas companies, as applicants, are “fit and proper” to hold exploration permits or production licences; and
  • require oil and gas companies to comply with, and be penalised for breaches of, of Codes of Practice made under the regulations as recommended by the Inquiry.

These key amendments remain essentially the same, with some tweaks being made in order to implement most of the Committee's recommendations in full.

Ten amendments recommended

The Committee tabled its Report on 12 March 2019 and recommended that the Bill be passed with ten (10) amendments.

The ten amendments

Recommendation 2: The Committee recommends that the definition of hydraulic fracturing (cl 4) be amended to replace the term "gas and oil extraction" and the word "hydrocarbons" with the word petroleum.

Recommendation 3: That proposed section 15A(2)(b) be amended to provide for consideration of an associated entity as per section 16(3)(ea) and section 45(1)(ea).

Recommendation 4: That proposed section 15A(4) be removed and proposed section 15A(1)(a) be amended with words to the following effect: "whether the person has contravened the prescribed legislation, taking into account the seriousness of past contraventions, the length of time since the contraventions occurred, and any other matters that appear relevant to the Minister".

Recommendation 5: The Committee recommends that proposed section 15A(1)(c) be amended by substituting the words "prescribed legislation" for "prescribed environmental legislation".

Recommendation 6: The Committee recommends that the following legislation be added to the prescribed legislation listed in proposed section 15A(6): the Water Act 1992 (NT), the Northern Territory Aboriginal Sacred Sites Act 1989 (NT), and the Taxation Administration Act 2007 (NT)

Recommendation 7: The Committee recommends that the Bill be amended to include the following decisions in the proposed Schedule – Judicial Review of decision or determination (cls 12 and 18):

  • Proposed section 15A – appropriate person to hold permit or licence
  • Section 19(10) of the Petroleum Act 1984 (NT) – determination to either refuse or approve a transfer of an interest.

Recommendation 8: The Committee recommends that the Bill be amended to enable the Petroleum (Environment) Regulations to update the proposed Schedule – Judicial Review of decision or determination (cls 12 and 18).

Recommendation 9: The Committee recommends that the term “code of practice” should be adopted throughout the entirety of the Bill.

Recommendation 10: The Committee recommends that the phrase “the Minister must be satisfied” be inserted after the word “licence” in cl 10(2).

Recommendation 11: The Committee recommends that the Bill be amended to place on an applicant a clear obligation to disclose matters relevant to section 15A, and to enable the Minister to request further information relevant to a determination under section 15A, in line with Recommendation 14.12 of the Scientific Inquiry into Hydraulic Fracturing in the Northern Territory.

The majority of the Committee's recommended amendments were made in full, along with some additional amendments. The most notable changes made prior to the Bill being passed relate to the "fit and proper" test.

Associated entity

When determining whether to grant an exploration permit or production licence, the Minister must be satisfied that the applicant is an appropriate person to hold a permit or licence under the Act, having regard a range of matters which now includes whether any "associated entity" of the applicant is an appropriate person or body to be granted an exploration permit or production licence.

Associated entity is defined by reference to section 50AAA of the Corporations Act 2001 which includes related bodies corporate to the principal of the business, where one entity has the control or a significant influence over the other entity or a qualifying investment, and the operations, resources or affairs of one entity or interest from the investment is material to the other entity.

Record of compliance

When applying the "fit and proper" test, the Minister must also have regard to the applicant's or associated entity's record of compliance with the prescribed legislation which includes a range of State and Commonwealth environmental legislation (referred to as prescribed environmental legislation) as well as work health and safety and petroleum legislation. The legislation prescribed has now been expanded to also include:

  • the Water Act 1992 as prescribed environmental legislation; and
  • the Northern Territory Aboriginal Sacred Sites Act 1989 and the Taxation Administration Act 2007.

The next steps for fracking in the Northern Territory

Once the Act commences, enforceable codes of practice will be able to be made under the petroleum regulations, such as those recommended in the Inquiry's Final Report for:

  • setting out minimum requirements for the decommissioning of any onshore shale gas wells in the NT;
  • setting out the minimum requirements that must be met to ensure the integrity of onshore shale gas wells in the NT; and
  • ongoing monitoring, detection and reporting of methane emissions from any onshore shale gasfields and wells.

If you would like to understand how the amendments will affected your operations, please contact us.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.