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Focus: Coal seam gas water management in Queensland

13 April 2010

In brief: Following the release of its Management of Water Produced from Coal Seam Gas Production Discussion Paper in May 2009, the Queensland Government has issued its overarching guidelines on the management of coal seam gas activities and the beneficial use of coal seam gas water. As a follow up to our audio update Partner Bill McCredie (view CV), Special Counsel Philip Murray and Senior Associate Suzanne Westgate report on the Beneficial Use Guideline.

How does it affect you?

  • The Guideline on the Approval of CSG Water for Beneficial Use will affect all coal seam gas (CSG) water producers, users and purchasers. CSG water producers, in particular, will need to carefully consider this guideline, to determine whether proposed uses of CSG water fall within categories of approved uses under the proposed new 'General Approval'.
  • While the existing legislative regime relating to the management and beneficial use of CSG water has been retained, the guidelines attempt to tighten the relevant regulatory requirements for CSG water use and disposal. Specific, prescriptive standards and management requirements for the beneficial use and management of CSG water have been introduced. The prescribed standards have been considerably expanded from the previous general approval granted in 2007.

Introduction

The Queensland Government (via the Department of the Environment and Resource Management) (the Government) guidelines are:

  • the Guideline on the Approval of CSG Water for Beneficial Use (the Beneficial Use Guideline);
  • Model Conditions for Level 1 Environmental Authorities for CSG Activities (the CSG Model Conditions) (the CSG Model Conditions will be the subject of a separate article); and
  • the Guideline on Preparing an Environmental Management Plan (EM Plan) for CSG Activities (the CSG EM Plan Guideline).

A new CSG water regime?

The new regime is the Government's response to the rapid expansion over the past few years of the CSG industry in Queensland, resulting in the production and disposal of significant quantities of CSG water.

As we reported in our Client Update in May 2009, despite the fact that the current legislative framework for CSG water extraction, use and on-supply has been heavily criticised by the CSG industry as being overly burdensome and not facilitating the beneficial reuse of CSG water, the existing legislative regime has been retained.

Nonetheless, as foreshadowed in the Management of Water Produced from Coal Seam Gas Production Discussion Paper (the Discussion Paper), the guidelines seek to 'tighten' the current regulatory requirements applying to CSG water beneficial use and management.

What stays the same?

With the exception of the existing rights to use CSG water provided under the Petroleum and Gas (Production and Safety) Act 2004 (Qld) for authorised activities under a petroleum tenure or for limited domestic garden or stock watering purposes, CSG water remains a 'waste' under the Environmental Protection Act 1994 (Qld) (the EP Act) and the Environmental Protection (Waste Management) Regulation 2000 (Qld) (the Waste Regulation).

This means that, in order to dispose of CSG water in Queensland, CSG water producers must either:

  • obtain a specific beneficial use approval under the Waste Regulation or environmental authority that provides for the disposal of the waste under the EP Act; or
  • comply with the proposed new 'General Approval' (see below).

Any supply of CSG water in Queensland for another purpose will also require a water licence under the Water Act 2000 (Qld), and the CSG water provider will need to be registered as a service provider under the Water Supply (Safety and Reliability) Act 2008 (Qld) if it intends to charge for the supply of water. Approvals may also be required under the Sustainable Planning Act 2009 (Qld) for pipelines or associated works located outside petroleum tenures.

Overall, and as foreshadowed by the earlier Discussion Paper, the suite of new CSG guidelines make it clear that:

  • CSG producers are responsible for the treatment and disposal of CSG water that cannot be reinjected or beneficially reused.
  • Unless CSG producers use direct injection of CSG water or have arrangements for 'environmentally-acceptable' direct beneficial reuse of untreated CSG water, the producers must treat CSG water to the DERM's standards before disposal or on-supply.
  • A CSG water management plan is to be incorporated into the environmental management plan required for a level 1 Environmental Authority under the EP Act.

What has changed?

While the hierarchy of preferred (category 1) and non-preferred (category 2) uses remain substantially the same, there are several important changes:

  • 'Direct supply via pipeline to a water supply dam managed by a water service provider' has been specifically included in the category 1 list in the CSG EM Plan Guideline. Beneficial use of CSG water for public water supply storages will require specific approval, and proof of contract between the CSG producer and the responsible entity for the water supply dam must be provided.
  • While evaporation dams are no longer to be used as the primary method for disposal of CSG water, the CSG EM Plan Guideline recognises that evaporation dams may be authorised where an applicant can demonstrate that there is no feasible alternative for using, treating, storing or disposing of CSG water. This appears to be a step back from the Government's previous position that evaporation ponds were to be discontinued entirely. In addition, there is no mention of the Government's previous policy position that existing evaporation ponds are to be remediated within three years (although this may still be the Government's general position).
  • 'Disposal via discharge to surface water' remains a category 2 activity – however, the CSG EM Plan Guideline provides a hierarchy that will apply to the assessment of surface water discharges in order of preference, with frequent or continual releases into temporary streams being the least favoured option.
  • 'Disposal to land' has been added to category 2 (other than where it is approved for beneficial use such as dust suppression or irrigation).

A key element introduced by the Beneficial Use Guideline is the proposed introduction of a new general beneficial use approval under the Waste Regulation (the General Approval) that can be used by CSG water producers or third parties for specific types of beneficial use of CSG water. Beneficial uses carried out in compliance with the prescribed criteria under the General Approval will not require separate specific approval.

The proposed General Approval varies and significantly increases the requirements of the previous general approval granted on 13 December 2007 (described in the Management of water produced in association with petroleum activities (associated water) Operational Policy 2007) (the Previous General Approval).

The Beneficial Use Guideline is intended to provide the framework for when certain beneficial uses of CSG water will be covered by the General Approval.

Types of beneficial uses specified to be covered by the General Approval will include:

  • aquaculture and human consumption of aquatic foods;
  • coal washing;
  • dust suppression;
  • industrial use;
  • irrigation; and
  • livestock watering.

Both 'landscaping and revegetation' and 'drinking water' have been dropped from the Previous General Approval. 'Coal washing' and 'industrial use' (such as salt recovery or slurry pumping) have been added as new approved beneficial uses.

The Beneficial Use Guideline expands the minimum general standards for approved beneficial uses from the Previous General Approval. For example, CSG water must not be beneficially used if it possesses any properties or contains any organisms or other contaminants in concentrations that are capable of causing material or serious environmental harm. Also, CSG water must not be used if there is an accumulation of salt that may, at some stage, be released to the environment. The minimum general standards are broadly worded, and may cause compliance difficulties with the General Approval.

Significantly expanded specific standards and criteria are prescribed for each individual category of beneficial use. For example:

  • Aquatic and human consumption of aquatic foods – physico-chemical limits apply for the protection of aquaculture species.
  • Coal washing – CSG water may only be beneficially used at coal mines for coal washing where drainage from coal washing and preparation operations is captured within the mine site water management system, and pH and dissolved oxygen levels must comply with minimum standards.
  • Irrigation schemes – the criteria set for irrigation schemes are extremely conservative, in recognition of the complex issues relating to the management of soils, waters and landscapes. Of particular note is that beneficial use of CSG water for irrigation purposes cannot be applied to Good Quality Agricultural Land.
  • Dust suppression – can only be carried out in a particular location for a period not exceeding three months, whereupon more permanent solutions for dust suppression are required.

If CSG water producers cannot comply with the General Approval, they will need to seek a specific beneficial use approval under the Waste Regulation.

Importantly, the Beneficial Use Guideline is not a statutory document. In our experience, though, the Queensland Government will not deviate from its internal guideline documents in its decision-making processes on CSG water-related matters.

While beneficial use activities will be required to comply with the General Approval itself (non-compliance with which would be a breach of the Waste Regulation), the General Approval, while referred to in the Guideline, does not yet appear to have been released. It remains to be seen how much of the prescribed criteria will be adopted in the General Approval; we assume that the General Approval will reflect the standards prescribed in the Beneficial Use Guideline.

While the Guideline should bring some clarity to the CSG water industry as to what is and is not allowed under the General Approval, this appears to be at the expense of the flexibility of use and disposal options that previously existed. In addition, much of the Guideline's introductory language is broadly framed and, in parts, may be open to interpretation. In some instances, it appears that the Guideline is specifically intended to limit beneficial uses based on subjective tests (for example, 'over-application' that could be 'seen as disposal of CSG water' will not comply with a beneficial use approval).

What next?

The guidelines will be highly relevant to all CSG water producers and users.

It is likely that, in practice, the guidelines' requirements will need to be met by any parties involved in the production, supply and beneficial use of CSG water; therefore attention should be directed to the prescribed standards for any proposed beneficial uses and the Guidelines should be taken into account in the environmental assessment of proposed CSG activities and integrated into the Environmental Management Plan for CSG Projects.

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