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Client Update: Victoria to ban fracking

8 March 2017

In brief: Victoria has become the first state to permanently ban all onshore unconventional gas exploration and development, passing new anti-fracking legislation this week. The new law also extends the moratorium on all onshore petroleum exploration and production in Victoria until 30 June 2020. Partner Igor Bogdanich (view CV) and Lawyer Darcy McLennan report.

How does it affect you?

  • It is now an offence to carry out unconventional onshore gas exploration, including the mining of coal seam gas and the practice of hydraulic fracturing (fracking).
  • Any incidental discoveries of coal seam gas must be reported to the Minister for Resources as soon as reasonably practicable. The Minister may issue a notice requiring further details.
  • The moratorium on all onshore petroleum exploration and development, including by conventional methods, has been extended until June 2020.
  • Offshore exploration and development are unaffected. 

Background

In August 2016, the Andrews Government announced that it would introduce legislation to permanently ban onshore unconventional gas exploration and development and to extend the moratorium on all onshore petroleum exploration and development until June 2020.

The proposed ban on fracking and coal seam gas exploration and mining has attracted a great deal of political discussion, including debate between, on the one hand, farming industry bodies and environmental advocacy groups, and, on the other, industry advocates such as APPEA and the Victorian Chamber of Commerce.

What does the new law say?

The primary purposes of the Resources Legislation Amendment (Fracking Ban) Bill 2016 (the Bill) are to:

  • prevent the exploration for and mining of coal seam gas;
  • ban fracking;
  • continue the moratorium on petroleum exploration and production in the onshore areas of Victoria until 30 June 2020; and
  • enable the Minister to pay for the surrender of certain mining, exploration and retention licences.

The Bill amends the Mineral Resources (Sustainable Development) Act 1990 (Vic) to introduce offences for exploring or mining coal seam gas and for carrying out fracking. It also imposes an obligation to report any discovery of coal seam gas to the Minister as soon as practicable.

The Bill also amends the Petroleum Act 1998 (Vic), reinforcing the fracking ban described above and imposing a moratorium on petroleum exploration and production until 30 June 2020.

Amendments made to both statutes enable the Minister to pay for the surrender of a range of licences relating to newly prohibited conduct.

Conclusion

The ban on unconventional and conventional onshore gas exploration and development has been criticised in light of domestic gas shortages and high energy prices. However, many parties including farmers and their representative bodies are in favour of the ban.

Gas exploration and production companies should be aware of the new offences for fracking and mining coal seam gas, as well as the obligation to report incidental discoveries of coal seam gas.

The Bill currently awaits Royal Assent. 

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