In this article we summarise a range of significant legislative and policy changes in NSW since the beginning of 2014 which will have a profound impact on the interaction between the petroleum industry, land holders and other land users in the State.

In the coal seam gas (CSG) area, there have been a number of significant legislative and policy changes in NSW since the beginning of 2014.

New prohibitions on CSG developments

On 28 January 2014 the NSW Government concluded the second stage of its recent amendments to theState Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP).

The State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) Amendment (Coal Seam Gas Exclusion Zones) 2013 (2013 Mining SEPP Amendment) commenced in October 2013. It amended the Mining SEPP through the introduction of prohibitions on ‘coal seam gas development’ in and around residential areas.

The 2013 Mining SEPP Amendment was then further amended by the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) Amendment (Coal Seam Gas) 2014 (2014 Mining SEPP Amendment).

Together, the two SEPP amendments have significantly restricted the areas where CSG development may occur in NSW.

Specifically, a ‘coal seam gas development’ is defined in the Mining SEPP as:

“(a) development for the purposes of petroleum exploration, but only in relation to prospecting for coal seam gas,

(b) development for the purposes of petroleum production, but only in relation to the recovery, obtaining or removal of coal seam gas,
but does not include the following:

(i) the recovery, obtaining or removal of coal seam gas in the course of mining,

(ii) development to which clause 10 or 10A applies.”

(Clause 10 and 10A apply to developments of minimal environmental impact and other low risk activities.)

Exclusion and buffer zones

The prohibition on ‘coal seam gas development’ applies to ‘coal seam gas exclusion zones’ and ‘buffer zones.’

A ‘coal seam gas exclusion zone’ is defined in the Mining SEPP as:

“any of the following areas of land:

  1. land within a residential zone; which includes Zones R1 (General Residential), R2 (Low Density Residential), R3 (Medium Density Residential), R4 (High Density Residential) and RU5 (Village).
  2. future residential growth area land; which includes the North West and South West Growth Centres of Sydney and also a number of regional areas around the State.
  3. additional rural village land which includes; Sutton Forest in the Wingecarribee local government area, Jerrys Plains, Bulga, Camberwell and Broke in the Singleton local government area, Modanville in the Lismore local government area, and Gonnengerry in the in the Byron local government area.
  4. critical industry cluster land; which includes horse breeding and viticulture clusters in the Upper Hunter.

In addition to the exclusion zones, the Mining SEPP now also prohibits CSG development within 2 km of those exclusion zones (with the exception of ‘critical industry).”

In total, the CSG exclusion zones and buffer zones cover 2,700,000 hectares of the State. Detailed maps of all of these areas are available from the NSW Department of Planning and Infrastructure.

Part of broader Strategic Land Use Policy

The recent amendments to the Mining SEPP are a significant part of the NSW Government’s Strategic Regional Land Use Policy which aims to balance the land use needs of communities, valuable farmland and resource industries.

From a development perspective, another relevant aspect of the policy is the completion of Biophysical Strategic Agricultural Land (BSAL) Mapping in January 2014. A total of 2,800,000 hectares of land has now been characterised as BSAL, meaning that it has high quality soil and water resources, capable of sustaining high levels of productivity.

The effect of land being mapped as BSAL is that any ‘state significant’ mining or CSG proposal on BSAL will be subjected to an additional level of scrutiny through the ‘Gateway Process’ (a separate assessment by an independent panel of scientific experts before a development application can be lodged).

The BSAL maps include land within the completed Strategic Regional Land Use Plans (SRLUPs) for the Upper Hunter and the New England North West regions. SRLUPS were to be prepared for the remaining regions (Central West, Mid and Far North Coast, Southern Highlands, Western, South Coast and Illawarra regions) by 2015. However as the BSAL maps cover the entire State, it is now proposed that Regional Growth Plans (RGPs) will be prepared for these regions instead.

The RGPs will be developed with local community and stakeholder participation, and are intended to provide a comprehensive framework for managing growth and natural resources in regional areas (again, with a strong focus on the protection of high-quality agricultural land).

Independent Review of Coal Seam Gas Activities in New South Wales

Later in 2014 the NSW Chief Scientist and Engineer will deliver a comprehensive review of CSG–related activities, as directed by the NSW Premier in February 2013. In summary, the terms of reference for the review require the Chief Scientist and Engineer to:

  • undertake a comprehensive study of industry compliance involving site visits and well inspections;
  • identify and assess any gaps in the identification and management of risk arising from CSG exploration, assessment and production, particularly as they relate to human health, the environment and water catchments'
  • identify best practice in relation to the management of CSG or similar unconventional gas projects in close proximity to residential properties and urban areas and consider appropriate ways to manage the interface between residences and CSG activity;
  • explain how the characteristics of the NSW CSG industry compare with the industry nationally and internationally;
  • inspect and monitor current drilling activities including water extraction, hydraulic fracturing and aquifer protection techniques; and
  • produce a series of information papers on specific elements of CSG operation and impact, to inform policy development and to assist with public understanding.

An initial report was delivered on 30 July 2013 and the final report is expected later this year. Further information on this review is available from the Office of the NSW Chief Scientist and Engineer.

NSW Government freeze on Petroleum Exploration Licence Applications

In addition to changes arising from the Strategic Regional Land Use policy, on 26 March 2014, the NSW Government announced a freeze on processing new Petroleum Exploration Licence Applications (PELAs) until 26 September 2014 “as it puts in place a more comprehensive application process.”

This dramatic freeze was accompanied by additional announcements that:

  • the fee for a PELA will rise immediately from $1,000 to $50,000; and
  • there will be an audit of all existing Petroleum Exploration Licences (PELs).

The freeze has been gazetted in Government Gazette No. 30 (26 March 2014), pp. 1,023 - 1,024 under thePetroleum (Onshore) Act 1991 No. 84 (NSW).

‘Agreed Principles of Land Access’ announced

Just after the freeze was announced, on 28 March the Agreed Principles of Land Access was signed by gas companies Santos and AGL and landholder representatives NSW Farmers, Cotton Australia and the NSW Irrigators Council.

The parties to the agreement agreed to the following principles:

  • Any Landholder must be allowed to freely express their views on the type of drilling operations that should or should not take place on their land without criticism, pressure, harassment or intimidation. Any Landholder is at liberty to say “yes” or “no” to the conduct of operation on their land.
  • Gas companies confirm that they will respect the Landholder’s wishes and not enter onto a Landholder’s property to conduct drilling operations where that Landholder has clearly expressed the view that operations on their property would be unwelcome.
  • The parties will uphold the Landholder’s decision to allow access for drilling operations and do not support attempts by third party groups to interfere with any agreed operations. The parties condemn bullying, harassment and intimidation in relation to agreed drilling operations.

Implications for land access

The amendments to the Mining SEPP, the other NSW Government processes and announcements, and the non-government negotiations between various land users are all part of a highly contested landscape.

Significantly, the NSW Government has stated that the reforms have resulted in more than 95% of NSW dwellings, covered by current petroleum licences, now being protected from CSG exploration and development.

From a land developer’s perspective, the zoning of large parts of the State as CSG exclusion zones (and buffers) and also BSAL will have significant implications. So too will the results of the Chief Scientist and Engineer’s review in 2014 and the development of RGPs in 2015.

An important consideration for project proponents (and those involved in CSG infrastructure) is how to best negotiate the new NSW regime, in concert with ongoing Commonwealth Government involvement in CSG activities nationally.