In brief: The Northern Territory Government has decided not to impose a moratorium on hydraulic fracturing for its onshore oil and gas industry, giving the Territory's onshore oil and gas operators and investors investment certainty at a time that export and domestic opportunities are arising. Partner Ben Zillmann (view CV), Managing Associate John Hedge(view CV) and Senior Associates Gobind Kalsi and Julieane Bull report.

WHAT DOES IT MEAN FOR YOU?

Existing and potential operators and investors in the NT onshore oil and gas industry now have greater investment certainty, with the NT Government having accepted the key findings of the Hawke Report,1 which was publicly released on 26 February 2015. In particular, the report found that there is no justification for the imposition of a moratorium on hydraulic fracturing (often referred to as fracking) in the NT. This means that moratoriums of the type that have been declared and extended in other states, such as New South Wales, Victoria and Tasmania, will not be implemented in the NT.

Critically, the NT Government has now also released the Onshore Oil and Gas Guiding Principles document, containing the framework for all aspects of the future regulation of the onshore oil and gas industry in the NT. The principles are also intended to operate as an interim measure, setting out the Government's expectations for the industry while the future regulatory regime is reviewed and finalised. The principles (and future regulatory regime) will extend to matters such as exclusion zones around major towns, and the management of environmental and social impacts, including local content.

The regulatory reform process provides an opportunity for onshore oil and gas operators and investors to shape a best-practice, streamlined and sustainable regulatory framework for the industry in the NT

KEY RECOMMENDATIONS OF THE HAWKE REPORT

Key findings and recommendations include:

  • the substantive weight of agreed expert opinion led the inquiry to find that there is no justification for the imposition of a moratorium on hydraulic fracturing in the NT;
  • the environmental risks associated with hydraulic fracturing can be managed effectively, subject to the creation of a robust regulatory regime;
  • that the Government create a Cabinet sub-committee to oversee the work required for the NT to set the standard for a best-practice regulatory regime;
  • that the Environmental Assessment Act 1982 ​(NT) be restructured in light of the report; and
  • that the Government consider aligning the petroleum and mineral royalty frameworks.

THE WAY FORWARD

The Government has asked Dr Hawke to lead the review of the existing onshore oil and gas regulatory regime in the NT.

Onshore oil and gas operators and investors now have the opportunity to engage with the consultation processes outlined by the NT Government to develop a regulatory regime that will maintain the industry's social licence to operate, while continuing to provide an environment conducive to investment and development.