Greenhouse gas reforms under the Offshore Petroleum and Greenhouse Gas Storage Act

Energy Oil & Gas

Key amendments to Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 (Cth) (Levies Act)

On 28 April 2020, a number of amendments to the OPGGSA and the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 (Cth) (Levies Act) came into force.

The key amendments include: 

  • (Transfer of regulatory authority to NOPSEMA) Transferring various regulatory functions and powers for offshore greenhouse gas wells and environment management from the Minister of Resources, Water and Northern Australia to NOPSEMA to ensure an experienced and independent regulator has oversight of offshore greenhouse gas storage facilities. The Minister will also retain an existing general power to give directions to greenhouse gas titleholders under the existing section 580 of the OPGGSA. However, under the new section 580(8A) if there is an inconsistent direction given by the Minister and NOPSEMA, the Minister's direction will have no effect to the extent of the inconsistency.
  • (Strengthen powers of NOPSEMA inspectors) Strengthening and clarifying the monitoring and enforcement powers of NOPSEMA inspectors. The amendments have given NOPSEMA additional power to conduct inspections without a warrant to monitor compliance by titleholders with well integrity-related obligations. Further, the amendments have expanded the categories of places that NOPSEMA inspectors may enter, without a warrant, for the purposes of conducting an environmental or OHS inspection.
  • (Levies extended to greenhouse gas wells) The Levies Act has been extended to apply the well investigation levy, annual well levy and well activity levy to greenhouse gas wells. This is designed to ensure that NOPSEMA can recover the cost of its oversight of well operations under greenhouse gas titles.
  • (Well activity levy) The Levies Act has been amended to impose a well activity levy on submission of a five-yearly revision of a well operations management plan, and to remove the levy imposed on applications for approval to commence well activities.

These reforms will ensure that there are adequate regulatory arrangements to manage a potential increase in greenhouse gas storage activities in the future.

On 15 May 2020, a number of further amendments to the OPGGSA and the Levies Act were passed.

The key amendments include:

  • (Greenhouse gas cross-boundary storage) Providing for the grant of single greenhouse gas titles that straddle the boundary between State/Northern Territory coastal waters and Commonwealth waters. Upon the grant of such title, the title area will become Commonwealth waters for all purposes of the OPGGSA. Decisions about the grant of such titles will be made by a newly established Cross-boundary Authority consisting of the responsible Commonwealth Minister and the relevant State or Northern Territory Resources Minister (this regime is similar to the current Joint Authority arrangements). The Levies Act has also been amended to ensure that the levies imposed by that Act apply to cross-boundary titles.
  • (Unification of adjacent Commonwealth greenhouse gas titles) Enabling the holder of two adjacent Commonwealth greenhouse gas titles to apply for a single title across the two areas, where the holder has reasonable grounds to suspect that there is a geological formation that straddles the two titles.
  • (Strengthen powers of NOPSEMA inspectors) Further strengthening and clarifying the powers of NOPSEMA inspectors. Currently, NOPSEMA does not have the power to inspect or enforce compliance by a titleholder in areas of State/Territory jurisdiction, such as in coastal waters or onshore. Obtaining a warrant or consent can impede compliance monitoring in emergency situations. The amendments strengthen NOPSEMA's powers to ensure compliance by a titleholder with its environmental management obligations in the event of an oil pollution emergency originating from operations in Commonwealth waters. Specifically, the amendments enable NOPSEMA inspectors to enter premises used for implementation of oil spill response obligations without a warrant, whether located in Commonwealth or State/Territory jurisdiction, in the event of an oil pollution emergency arising from operations in Commonwealth waters.
  • (Extension of polluter pays) The amendments extend the operation of the 'polluter pays' obligations and the application of significant incident directions that may be given by NOPSEMA to areas of State/Territory jurisdiction.
  • (Levies Act) The amendments ensure that levies are imposed on cross-boundary titles (including the part of the title that is in State/Northern Territory waters) and imposed in relation to regulatory activities undertaken in respect of greenhouse gas titles held by a State or the Northern Territory. These amendments will ensure that NOPSEMA and NOPTA are fully cost recovered for their regulatory operations.

These amendments come after the recently announced National Hydrogen Strategy and illustrate Australia's aspiration to be one of the first countries to create a hydrogen export industry, which relies on suitable carbon capture and storage. The amendments enable carbon capture and storage projects, such as the CarbonNet project, to proceed with plans to inject CO2 into underground reservoirs offshore. Currently, the CarbonNet project is investigating the feasibility of a commercial-scale, multi-user carbon capture and storage network in Gippsland, Victoria. The proposed storage site under the CarbonNet Project is one such site that straddles the boundary between Commonwealth waters and State and Territory coastal waters.

Further, these amendments will ensure that the sector is adequately regulated and aligned with international best practice so as to attract investment in new industries for Australia.

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