On 18 November 2015, the Northern Territory Government (NT Government) released itsOil and Gas Industry Development Strategy, and in parallel announced significant plans to reform its environmental assessment and approvals processes and to restrict oil and gas developments in certain areas. The NT Government also announced plans to remove exemptions in the Water Act 1992 (NT) (NT Water Act) which mining, oil and gas proponents currently enjoy.

The NT Government has identified an overall aim of these initiatives:

to create as much certainty as possible for early stage oil and gas investors and the community. Creating this certainty is as, if not more important than, simply increasing access to land and water.

Reform of environmental assessment and approvals

The NT Government will implement a suite of reforms to provide for:

  • a ‘single front door’ through the system;
  • testing and accrediting project legislation and agency procedures by the Minister for the Environment in consultation with the NT Environmental Protection Agency (EPA);
  • establishment of the Minister for the Environment as the decision-maker for projects not subject to approval by an accredited approval process;
  • transparent reporting on compliance with environmental conditions;
  • a strengthened audit and compliance role for the NT EPA;
  • the Minister to publish policies and procedures to provide greater certainty to proponents and community; and
  • clarity in the roles and responsibilities of government agencies and the NT EPA system.

The NT Government plans to conduct broad public consultation on these environmental reforms, which is to begin next week and continue until September 2016.

Restrictions on oil and gas exploration and development

The NT Government has revised the method by which land for oil and gas is released. The NT Government will not grant future acreage release where there is a land use conflict based on the following criteria:

  • urban living areas including rural residential areas – where land is zoned as residential or rural residential, or where land is not zoned, but the land use is consistent with these purposes, oil and gas activities will not be permitted;
  • areas of intensive agriculture – the Department of Mines and Energy will assess the compatibility of land use, however oil and gas activities will not take place on areas such as melon farms, mango orchards and aquaculture operations. Landholders will have the ability to negotiate on a case by case basis through agreed land access agreements, should they agree to exploration;
  • areas of high ecological value – as determined through the NT’s robust environmental assessment process, following the implementation of the proposed reforms to environmental assessment and approvals processes;
  • areas of cultural significance as advised by the Aboriginal Areas Protection Authority – there is no change for Aboriginal land under the Aboriginal Land Rights or Native Title Acts, so this criteria mirrors the existing restrictions on activities on sacred sites.; and
  • areas that include assets of strategic importance to nearby residential areas – including areas with high potential for other uses such as tourism related development.

The NT Government will also retain the right to impose specific requirements on any development application, on the basis that the Government reserves the right under the grant of a permit to allow development to occur in one area but not another.

Importantly, existing applications will be assessed against the criteria above. It is not clear yet what if any implications these reforms will have for renewals of existing exploration tenure, and for grants of retention and production tenure. It is also not clear how a number of these reforms will work alongside or replace existing regulatory arrangements which limit activities in particular areas.

Other reforms

The NT Government also announced that mining and petroleum activities will be subject to the NT Water Act. Currently, mining and petroleum activities are exempt from the requirements to hold water licenses and permits for extraction of surface and groundwater. Removing the NT Water Act exemptions will ensure that water used in mining and petroleum industries is accounted for in the NT water allocation and planning framework, and will extend the pollution provisions in the NT Water Act to mining and petroleum projects on authorised sites.

The Oil and Gas Industry Development Strategy also proposes:

  • a review of Indigenous Land Tenure arrangements, with an aim to position traditional owners to readily attract private sector investment and finance to develop their own land with new industries and businesses;
  • acceleration of land access and approvals processes, including alignment with other Australian jurisdictions, and broader red-tape reduction initiatives generally;
  • offshore oil and gas exploration and development regulatory reform;
  • the development of guidelines to assist oil and gas sector proponents to “pre-prepare” to comply with regulatory and legislative requirements; and
  • consultation with the oil and gas industry regarding petroleum royalty reforms.

Conclusion

The NT Government’s steps are welcome in that they are directed at ensuring the regulation of oil and gas exploration and development is adequate to support the growing level of activity in the sector. The emergence of greater oil and gas interest in the jurisdiction in tandem with these developments poses a real opportunity for existing proponents and those considering investing in the sector to get involved in the reform consultation process. Participation in the public consultation process for the Oil and Gas Industry Development Strategy is open until 31 December 2015. Further details are available a thttps://onshoregas.nt.gov.au/