As part of the ongoing Modernising Queensland’s Resources Acts program, the Queensland Government released its policy position paper Innovative resources tenures framework about proposed resource tenure reforms (Policy), on which it is seeking submissions by Monday, 16 October 2015.
In addition to proposing a set of common resource authorities across commodity types for each stage of the resource lifecycle, the policy includes significant changes to the current framework for the grant and administration of exploration permits. The common resource authorities identified will include information authorities, exploration authorities, resource development authorities (RDAs), production authorities and infrastructure authorities.
Changes to Exploration Authorities – grant and administration
One of the key changes proposed under the new policy is to remove the right for permit holders to renew their exploration authorities on expiry of the term. To counterbalance this, the maximum terms that exploration authorities can be granted for will be increased as follows:
- exploration authorities for coal will be granted for terms of up to 10 years
- exploration authorities for minerals will be granted for terms of up to 8 years, and
- exploration authorities for petroleum will be granted for terms of up to 12 years.
The policy proposes that the current statutory maximum areas specified for exploration permits will be also be removed under the new framework.
Another significant change is the proposed move away from prescriptive work program conditions and towards a work program based on detailed exploration objectives and a geological model to be used for the resource exploration authority. It is proposed that exploration authority holders would undertake annual self-assessment (including reporting) of compliance with these requirements, rather than the Department of Natural Resources and Mines (DNRM) having to assess this annually (or at tenement milestones as perOperational Policy 5/2012 Work program and relinquishment conditions).
Instead, DNRM is proposing the new concept of a mid-term ‘check-in’ where proponents would fully outline their exploration efforts over the relevant period, the extent to which those efforts have aligned with the exploration objectives and geological modelling and how the proponent has increased their knowledge of the resource potential.
DNRM would measure that performance as falling within three categories: strong, acceptable or under performing. If a resource authority holder is ‘under performing’, this may result in the cancellation of the authority or imposition of a penalty (or both).
This process would also eliminate the need to to submit variations for changing exploration activities during the term, however, at the mid-term ‘check-in’, the Policy proposes the proponent may be required to provide an overview of the reasons for any changes and potentially to update the exploration objectives and geological model.
Under the new framework, it is also proposed that there will be default relinquishment of 50% of the authority area at the mid-term point. If the authority holder is categorised as ‘under-performing’, the policy provides that the proponent may be required to relinquish more than 50%. Conversely, a proponent achieving strong performance against the stated objectives may be able to ‘negotiate’ a proportional or deferred relinquishment, avoiding the default 50%. In order to encourage investment in greenfield exploration, there may be opportunities for proponents to negotiate alternative mid-term relinquishment obligations for the grant of authorities in greenfield areas.
New maximum terms are also proposed for RDAs, which are identified in the Policy as the appropriate tenure for the ‘appraisal stage’ of a project. RDAs for minerals (including coal) will be granted for a maximum term of 10 years and RDAs for petroleum, geothermal and greenhouse gas will be granted for up to 15 years. Under the new framework it is proposed that retention status will be available to proponents where a resource has been identified but is not commercially viable, based on industry wide economic factors or where new technologies and resource types are in pilot testing, DNRM is proposing that RDAs may be renewed but only if the RDA is in ‘retention status’.
The Government is proposing ongoing consultation with industry to develop transitional arrangements in detail during 2015. The Policy notes in relation to these arrangements that:
- renewals of authorities will be limited in duration to coincide with implementation of the new laws
- existing tenures will be maintained, however, tenure holders can opt in to the new framework to the equivalent authority
- opportunities for higher tenure may only be available under the new tenure legislation, and
- production tenures that have rights and processes in common between the current and new tenure framework may be transitioned by the statute to the new framework.
DNRM is proposing ongoing consultation with industry with a view to developing the transitional arrangements by the end of 2015. DNRM is proposing that new legislation would be introduced into Parliament in the second half of 2016, following extensive consultation.
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Submissions close 5.30pm 16 October 2015.