In brief
The Northern Territory Government has released its Guiding Principles for the onshore oil and gas industry that set out the minimum expectations for the industry until a comprehensive regulatory review is completed. Operators and investors in the sector should review the compliance of their current operations with the Guiding Principles and consider the impact on future developments. Partner John Hedge and Senior Associates Gobind Kalsi and Julieane Bull report.
What does it mean for you?
The Northern Territory's 'Onshore Oil and Gas Guiding Principles' (Guiding Principles) will:
- inform the Department of Mines and Energy's (the Department's) enforcement of onshore oil and gas operators' statutory obligations; and
- be considered by the Department when assessing all applications for future onshore petroleum exploration and production licences.
The Guiding Principles also provide a strong indication that the future regulatory regime will continue to be conducive of investment in, and development of, the Northern Territory's onshore oil and gas industry, albeit with an increased focus on environmental and community outcomes.
Scope of the Guiding Principles
The Guiding Principles address all aspects of onshore oil and gas operations, including:
- well design, construction and operation
- land access
- water management
- air and noise emissions
- community and social impacts
- hydraulic fracturing
- rehabilitation and decommissioning, and
- local content
At this stage, the requirements are provided as high-level principles that are often expressed as outcomes rather than prescriptive process requirements. Pending the future legislation, operators will retain a reasonable degree of flexibility as to how the required outcomes are achieved.
Key operating principles
The Guiding Principles largely reflect the previously published draft Guiding Principles.
Key operating principles stated in the Guiding Principles include:
- well integrity being paramount;
- hydraulic fracturing continuing to be permitted, subject to implementation of various risk-mitigating measures;
- re-using and recycling water whenever possible;
- consultation and engagement with landowners and the broader community, and mitigation of community and environmental impacts;
- for the efficient management of waste by-products, ensuring no long-term legacy impacts arise (for example, water impacts);
- requirement for contaminated land surveys of high risk-areas prior to relinquishment; and
- prioritising local employment and service providers where possible.
Although in substance many of the operating principles reflect existing regulatory requirements and operational standards that sophisticated onshore oil and gas operators will already commonly satisfy, operators should review their current operations against the outcomes required by the Guiding Principles to confirm that the outcomes are achieved and appropriate management systems are in place.
New investors and operators seeking to further develop and expand existing operations should ensure that proposed new developments will satisfy the outcomes required by the Guiding Principles.
The way forward
The key next steps in the regulatory reform process by the Northern Territory Government in the next quarter of 2015 are:
- the finalisation and implementation of draft Petroleum (Environment) Regulations;
- commencing a review of approvals, compliance and monitoring processes; and
- consulting with industry and the community on legislative and regulatory amendments.
As we reported earlier this year, onshore oil and gas operators and investors now have the opportunity to engage with the Northern Territory Government to ensure it develops a regulatory regime that will maintain the industry's social licence to operate, and continue to provide an environment conducive to investment and development.