The Independent Scientific Panel Inquiry into Hydraulic Fracture Stimulation in Western Australia handed down its Final Report in September 2018. We have provided a summary of the revised position in WA and a recap of the position on fracking throughout the rest of the country.
The Independent Scientific Panel Inquiry into Hydraulic Fracture Stimulation in Western Australia 's Final Report found that the potential risks of fracking to people and the environment are low provided that suitable controls and processes are followed.
Following the release of the Final Report, the moratorium on fracking has been lifted in WA with the exception of some existing regional bans.
E&P clients have opportunity to re-examine onshore gas exploration and production opportunities.
Following the April 2018 lifting of the Northern Territory fracking moratorium (as outlined in our article, What the Frack?), the Independent Scientific Panel Inquiry into Hydraulic Fracture Stimulation in Western Australia handed down its Final Report on 12 September 2018. The result of this is, in many ways, very similar to the NT result: a partial lifting of the moratorium, and the provision of a very detailed set of recommendations to guide any hydraulic fracturing activities in WA going forward.
We have set out below a short summary of the revised position in WA, as well as a quick recap of the position through the rest of the country.
WA: The Independent Scientific Inquiry
The Panel's Final Report was based on over 9,500 written public submissions, and hundreds of scientific and technical reports. The Panel grouped the potential risks of fracking into five key themes – land (and biodiversity), water, greenhouse gas, public health and social surroundings. The Final Report included 91 findings, which generally concluded that the potential risks arising from fracking to people and the environment were low, if suitable controls and processes are followed. The Final Report also included 44 recommendations which the State Government intends to fully implement before any fracking production will be approved. The recommendations include the following material points:
- all fracking should be prohibited within 2 kilometres of gazetted Public Drinking Water Source Areas;
- all fracking should be prohibited within 2 kilometres of towns, settlements or residents;
- baseline atmospheric GHG levels and air quality should be acquired prior to the drilling of onshore wells, with ongoing monitoring and reporting of these levels over time, and public disclosure;
- baseline road use statistics should also be acquired, and monitored over the lifecycle of the development;
- site-specific health risk assessments should be provided to the Department of Health;
- well design, construction and testing should be assessed by an independent, certified expert well examiner, reporting to the regulator; and
- an enforceable Code of Practice should be developed by the WA Government to ensure that high standards of health, safety and environmental protection are enshrined to reduce any risks from fracking activities.
The enforceable Code of Practice is expected to be detailed and prescriptive, particularly in relation to chemical usage and on-going monitoring of frack sites. This is nothing new for our oil & gas clients, but it sets the tone for future onshore oil & gas development in WA.
WA: The current position
Following the release of the Final Report and the release of the State Government's public statements on it, the position on fracking in WA can be summarised as follows:
- The moratorium has been lifted, but the existing regional bans persist (for Perth Metropolitan, Peel and the South West), and have been extended to the Dampier Peninsular and national parks.
- Fracking will be permitted on existing onshore petroleum titles covering approximately 2% of Western Australia (over 5 million hectares), subject to the creation of the necessary regulatory regime.
- The Government has stated that traditional owners and farmers must consent before any fracking-based production can occur on their land.
- The royalty rate for unconventional oil and gas will increase to 10% which is the rate applying to conventional petroleum production. These royalties will be used to support renewable energy projects through a special Clean Energy Future Fund.
Australia: A whip around on the current position on fracking
Please refer to our earlier article, What the Frack? for the status of fracking regulations in the other states and territories.
Next steps for our E&P clients
The lifting of the moratorium on fracking in WA represents another opportunity for E&P companies to start to re-examine onshore gas exploration and production opportunities. However this will require a full understanding of the recommendations that the Western Australian (and recently the Northern Territory) governments are planning to implement, and a risk analysis of how these may impact your exploration and production operations and costings.
This is likely to be a slow process, given the level of regulatory detail that has been recommended by the Panel and accepted by the Government in order for fracking developments to proceed in WA.