In September 2016 the Hon Michael Gunner MLA, Chief Minister of the Northern Territory, announced a moratorium on hydraulic fracturing in the Northern Territory. This followed on from promises made during the election of the Northern Territory Labor government in August 2016. The blanket ban has been openly criticised, with the Federal Minister for Northern Australia, Senator Matthew Canavan, and the Australian Petroleum Production and Exploration Association speaking publicly against the moratorium.

Accompanying the moratorium was the establishment of an inquiry, chaired by Justice Rachel Pepper, tasked with scientifically assessing the impact of the practice. The Inquiry has recently released an interim report on the 14th of July 2017.

The report details the current progress of the Inquiry and provides insight into the recommendations set to be delivered in the final report. Recommendations include preliminary prohibitions, limited to specific risk-mitigating circumstances, and reviews of existing regulation to facilitate the introduction of hydraulic fracturing. The report assesses the risks and impacts posed from an impartial standpoint and delivers recommendations on a scientific basis.

Background

Hydraulic fracturing, colloquially known as “fracking”, is a process of injecting pressurised liquid into subterranean rock to create artificial cracks in the rock structure. Extraction of shale gas reserves requires the hydraulic fracturing process to create an efficient extraction environment. Several operational features must be managed during the process including water use, subterranean pressure and site infrastructure.

The Northern Territory’s moratorium was announced on the 14th of September 2016 at the South East Asia Australia Offshore and Onshore Conference. Justice Rachel Pepper of the NSW Land and Environment Court was subsequently appointed as the head of a scientific panel (the Panel), termed “The Scientific Inquiry into Hydraulic Fracturing of Unconventional Reservoirs in the Northern Territory” (the Inquiry). It comprises of 10 distinguished scientists drawn from a range of disciplines.

The Panel is tasked with analysing the environmental, social, cultural and economic impacts hydraulic fracturing will have on the Northern Territory. They will assess potential hydraulic fracturing practices and the adequacy of existing regulatory frameworks for mitigating the impact and risk on the Northern Territory. The Territory Government has stated the moratorium will remain in place for the duration of the Inquiry.

Water Impact Assessment

The Panel’s primary concern for water regulation relates to water sourcing and contamination issues.

The Panel has provided a preliminary view that water sourcing from surface level water bodies in arid regions of the Northern Territory should be prohibited. Site specific assessments will be required for sites in the northern parts of the Territory. Inquiries are being made into the impacts of sourcing water from subterranean aquifers located across the Northern Territory, such as the Beetaloo Sub-basin. A conclusion on the environmental viability of these sources is to be delivered in the final report.

Contamination of natural water sources is a key concern of the Panel due to the volume of water used in the fracturing process. The Panel highlights the importance of modern construction and management techniques for mitigating the risk of contamination. However, the Panel has provided a preliminary view that fracturing processes should be primarily scheduled for the May to October period. This is due to the increased risk of contamination posed by weather conditions in the November to April ‘wet season’ period.

Land Impact Assessment

The Panel has recognised the Northern Territory’s landscape as a top concern for the Inquiry. This is based on the biodiversity and amenity values that provide environmental and economic benefits to the Territory. To reduce impact on these values, the Panel has recommended that statute prohibit shale gas extraction activities in national parks and conservation areas. The Panel is considering expanding this prohibition’s scope to other areas including residential land, sacred sites and tourism locations.

Several statutory frameworks are being considered by the Panel. This primarily includes the introduction of minimum standard guidelines for extraction sites and baselines for regional fire regimes. The Panel further recommends the refinement of site rehabilitation standards, weed management guidelines and land access regulations to increase clarity and transparency surrounding their operation.

Greenhouse Gas Emission Assessment

A core concern heard by the Panel during public enquiries was the emission of greenhouse gases during the shale gas extraction process. In response, the Panel has reinforced the need for modern extraction practices to minimise environmental impact. This includes a recommendation that emission baseline measurements for each site commence a minimum of 12 months prior to fracturing or extraction activities. These measurements are expected to be maintained throughout project operation.

Public Health Impact Assessment

The Panel has highlighted two categories in assessing the risk extraction activities may pose to public health.

The chemicals used in the fracturing and extraction processes are recognised to have a low toxicity and are concluded not to pose a threat to public health. However, the Panel highlights that chemicals present in water interacting with subterranean rock may pose a health risk. As aquifer contamination risk differs for each extraction site, assessments are to be performed on a site-specific basis. This will minimise the impact of regulation on sites in rural areas of the Northern Territory.

Air Quality Impacts

The Panel has reviewed several studies addressing the impacts on air quality associated with chemicals and extraction techniques likely to be used. These studies are identified as having limited relevance due to potential extraction sites being a significant distance away from human habitations.

Aboriginal Culture Impact Assessment

The importance of the Northern Territory landscape to the Aboriginal people of the Northern Territory has been recognised by the Panel. They acknowledge that communication of the risks and benefits of hydraulic fracturing to Aboriginal communities has been insufficient and emphasise the importance of providing full information on future projects.

The Panel’s preliminary view is that laws protecting Aboriginal cultural heritage require better integration with the Northern Territory’s regulation schemes for environmental management and the petroleum industry. They recommend that new frameworks be introduced for protecting natural ecosystems of strong cultural significance. Further details regarding framework development and scope are not provided in the interim report.

Regulatory Process Improvement

The independence of the Norther Territory Department of Primary Industry and Resources was identified as a major community concern during public submissions. The Panel has acknowledged these concerns and is considering measures that can be adopted to improve the regulator’s role. This includes development of an access to justice system for review and appeal of decisions relating to the development of shale gas extraction projects across the Territory. Further information regarding the Panel’s proposed departmental restructures and access to justice systems are to be delivered in the Inquiry’s final report.

Future of the Inquiry

The Panel has commissioned the development of frameworks for assessing the social and economic impacts hydraulic fracturing will introduce to the Northern Territory. Coffey Service Australia Pty Ltd will develop a social impact framework for application in communities in the Beetaloo Sub-basin vicinity. ACIL Allen Consulting Pty Ltd is to provide a financial model for the economic growth provided by a shale gas industry in the Northern Territory. These frameworks are set to be included in the Inquiry’s draft final report set to be released in the late stages of 2017.

Following release of the interim report, the Panel will continue communication through public hearings and community consultations throughout the Northern Territory region. The Inquiry’s final report is scheduled to be delivered prior to the end of 2017.