The final report for the NT Hydraulic Fracturing Inquiry indicates the Northern Territory moratorium on hydraulic fracturing exploration and development activities may be lifted in 2018.

Introduction

Onshore shale gas activity in the Northern Territory could soon spring back to life with the recent release of the final report into the “Scientific Inquiry into Hydraulic Fracturing in the Northern Territory” (‘Inquiry’). In August 2016, the Northern Territory Government (‘Territory Government’) placed a moratorium on hydraulic fracturing and established an Inquiry to scientifically assess the impact of the practice. We previously outlined the scope of the Inquiry’s investigation and initial findings in July 2017.

Findings presented in the Inquiry report indicate support for opening access to shale gas resources in the Northern Territory. The Inquiry has found that while there are significant risks associated with hydraulic fracturing, the risks can be managed with implementation of regulation and standards. Several recommendations are made in preparation for lifting the Northern Territory moratorium, including frameworks that should be adopted by Government and obligations to be imposed on operators. These recommendations, in addition to significant pressure from industry and the Commonwealth Government, may result in the lifting of the moratorium during 2018.

Operational Requirements

The Inquiry has developed several recommendations as part of a “package deal” to facilitate safe hydraulic fracturing practices across the Northern Territory. These recommendations are likely to involve regulatory reforms.

The regulatory changes that should be expected in the Northern Territory include:

  • Operational Guidelines – The Territory Government may mandate codes of practice and guidelines to regulate exploration and development activities. The guidelines will include setting minimum standards for operations, monitoring obligations, waste standards and site closure practices.
  • Offset Policies – The hydraulic fracturing process involves several unavoidable environmental impacts. The Inquiry recommends the Territory Government draft a new environmental offset policy for hydraulic fracturing activities to compensate for any local vegetation, habitat and biodiversity loss.
  • Financial Assurance – A review of the Northern Territory’s financial assurance framework is proposed. The review will address which activities in the shale gas extraction process require financial security. The Inquiry recommends this operate on a tiered model, adjusted by demonstrations of good governance and compliance.

Social Concerns

A key aspect of the Inquiry has been consultation with local communities on the impacts of onshore shale gas activities. Consultations has highlighted a need for industry to take a pro-community stand in their onshore shale gas operations.

The key Inquiry initiatives and policy recommendations include:

  • Community Engagement – The Inquiry places a large focus on ensuring the benefits of the hydraulic fracturing industry are returned to local communities. This may include the introduction of minimum standards for local hiring and resourcing, the establishment of representative committees for facilitating community cohesion and educational programs.
  • Public Disclosure – To address community concerns surrounding the safety and environmental impacts of hydraulic fracturing, the Inquiry recommends public disclosure of key aspects of the hydraulic fracturing process. This is set to include disclosure of the composition of hydraulic fracturing fluids and publicly accessible real-time groundwater monitoring systems.
  • Industry Collaboration – The Inquiry promotes collaboration between shale gas development proponents and the Territory Government for assessing social impacts in affected regional communities. This includes the development of community baselines for concerns arising from extraction activities.

Exploration Permit Applications

Prior to the 2016 moratorium, exploration permits for shale gas exploration were provided through mechanisms under Section 16 of the Petroleum Act (NT). The Act allows the relevant Minister to invite applications for the exploration permits over areas of resource interest. The Inquiry has recommended the following factors be considered in this process when determining whether an area is capable of receiving exploration permit applications:

  • Consultation with community and relevant stakeholders;
  • The prospectivity of the land for petroleum;
  • The possibility of coexistence between the onshore gas industry and any existing or future industries in the area;
  • The land’s ecological value, cultural or strategic significance.

While these factors apply to specific areas of land, it is broadly accepted throughout the Inquiry’s report that exploration and development is most likely to occur in the Beetaloo sub-basin area of the Northern Territory.

The Inquiry further recommends that the Minister not grant an exploration permit unless satisfied the applicant is “fit and proper”. This status will be informed by the applicant’s environmental history and any prior compliance with the Petroleum Act (NT), reflecting the importance of environmental management in the hydraulic fracturing process.

Future of Shale Gas Activities

Submission of the final Inquiry report to the NT Government occurred on 27 March 2018. The Territory Government will now need to make a call on lifting the moratorium, with all signs indicating the moratorium will be lifted in 2018.