Operators of onshore petroleum activities in the Northern Territory will now need to comply with the finalised code of practice and understand the prohibitions on water licences which have now commenced.

On 11 June 2019, by Special Gazette the Petroleum (Environment) Amendment Regulations 2019 commenced and amended the Petroleum (Environment) Regulations 2016 (PER) to give effect to the Code of Practice: Onshore Petroleum Activities in the Northern Territory and to require Authority Certificates for Aboriginal sacred sites to be included as part of an environment management plan (EMP) for regulated activities. Associated transitional amendments were made with respect to EMPs approved, and EMPs submitted but not yet decided by the Minister, prior to commencement of the amendments.

In addition to these changes, the Water Amendment Act 2019 which was introduced earlier this year, commenced on 19 June 2019 and amends the Water Act 1992 to effect to a number recommendations of the Final Report of the Independent Scientific Inquiry into Hydraulic Fracturing and includes new environmental offences and prohibitions on certain water licences.

Authority Certificates

As a consequence of the amendments, an Authority Certificate, as defined under the Northern Territory Aboriginal Sacred Sites Act 1984, in relation to the land on which the activity will be carried out is now required as part of the approval criteria for an EMP prescribed by regulation 9 of the PER.

Amendment was also made with respect to the Minister's decision about the approval of an EMP. Where the Minister is satisfied that more than the 90 day decision-making period is required to make a decision with respect to an EMP because an Authority Certificate has not been provided:

  • the Minister is not required to give the interest holder a notice setting out a proposed timetable for consideration of the EMP as required where the Minister is satisfied that more than 90 days is required to make a decision for another reason; and
  • the Minister must make the decision within 14 days after the interest holder has provided the Authority Certificate to the Minister.

Code of practice

In line with the recommendations from the Scientific Inquiry into Hydraulic Fracturing in the Northern Territory, a draft Code of Practice was released for public consultation in April 2019. Consultation concluded on 2 May 2019 and the finalisation of the Code of Practice was announced on 12 June 2019.

Essentially, the Code of Practice mandates enforceable minimum standards and requirements with respect to surface activities, well operations, well site water management and methane emissions monitoring, leak management, detection and reporting for all regulated activities which is defined under the PER as an activity:

  • carried out, or proposed to be carried out, in connection with a technical works programme for a petroleum interest; and
  • that has, or will have, an environmental impact or environmental risk.

Without limiting the above, the PER provides the following examples of the operations or works a regulated activity includes:

  • land clearing;
  • earthworks (for example, cutting, filling, excavating or trenching);
  • the construction, operation, modification, decommissioning, dismantling or removal of a well, pipeline or other facility;
  • establishing seismic lines or drill pads;
  • conducting seismic surveys;
  • drilling;
  • hydraulic fracturing;
  • the release of a contaminant or waste material; and
  • the storage and transportation of petroleum and hazardous substances.

A regulated activity does not include:

  • taking water samples;
  • taking rock samples without the use of heavy machinery;
  • walking or driving on existing roads or tracks in connection with an activity mentioned above; and
  • airborne surveys.

The Code of Practice, compliance with which is now a mandatory requirement under the PER, contains the following:

Principles: The principles clarify the purpose and outcomes which operations must achieve in carrying out the regulated activities. The principles underlie the mandatory requirements.

Mandatory requirements: These are requirements that that must be complied with by interest holders in carrying out regulated activities. The terms "shall" or "must" are used for these mandatory requirements. These are requirements which:

  • if a corresponding principle has been identified, are considered to be the minimum measures required to achieve the principle; and
  • if no corresponding principle has been identified, are otherwise required to be carried out.

Preferred requirements: These are practices, methods and techniques which should generally be followed by interest holders unless:

  • there is a convincing justification why they cannot be followed; and
  • any alternative practice, method or technique that will be followed:
    • if a corresponding principle has been identified, will achieve the principle; or
    • if no corresponding principle has been identified, will result in no greater environmental risks or environmental impacts than if good oilfield practice is followed.

Transitional arrangements for EMPs

An EMP approved before the commencement of the amendments to the PER (ie. 11 June 2019) and any revisions to that approved EMP will not be affected. Therefore, the interest holder for the approved EMP may carry out the regulated activity in accordance with:

  • the EMP as approved before the commencement of the amendments; and
  • any revision(s) made to the approved EMP irrespective of whether the revision(s) occurs after the commencement of the amendments.

With respect to an EMP which was submitted but the Minister did not made a decision before commencement of the amendments, the Minister must not approve the EMP unless reasonably satisfied that the EMP meets the approval criteria in regulation 9 as in force after the commencement of the amendments (i.e. the Code of Practice and the requirement for an Authority Certificate to be included).

Transitional arrangements for EMPs

An EMP approved before the commencement of the amendments to the PER (i.e. 11 June 2019) and any revisions to that approved EMP will not be affected. Therefore, the interest holder for the approved EMP may carry out the regulated activity in accordance with:

  • the EMP as approved before the commencement of the amendments; and
  • any revision(s) made to the approved EMP irrespective of whether the revision(s) occurs after the commencement of the amendments.

With respect to an EMP which was submitted but the Minister did not made a decision before commencement of the amendments, the Minister must not approve the EMP unless reasonably satisfied that the EMP meets the approval criteria in regulation 9 as in force after the commencement of the amendments (i.e. the Code of Practice and the requirement for an Authority Certificate to be included).

Water resources

We previously examined the Water Amendment Bill 2019 which was introduced into the NT Parliament on 13 February 2019 and proposed amendments to the Water Act 1992 to give effect to the following recommendations from the Inquiry's Final Report:

  • Recommendation 7.6 – prohibition on surface water take for petroleum activities;
  • Recommendation 7.8(a) – prohibition on water extraction for hydraulic fracturing within 1km of landowners bore without agreement or hydrogeological information;
  • Recommendation 7.9 – prohibition on reinjection of hydraulic fracturing wastewater into aquifers; and
  • Recommendation 7.17 – prohibition on release of hydraulic fracturing wastewater to surface waters.

Following on from its introduction into Parliament, the Bill was referred to the Economic Policy Scrutiny Committee for inquiry and report by 7 May 2019.

In its Report, the Committee recommended that the Bill be passed with the following amendments:

  • the word "groundwater" be removed from proposed section 17B(2)(b) and replaced with words that make it clear that the exemption only applies where produced water or flowback fluid is contained within the hydrocarbon bearing formation.
  • proposed sction 60A(2)(b) be amended to read to the effect that: "(b) the Controller is satisfied that hydrogeological investigations and ground water modelling indicate that the activities under the licence will not have any adverse effect on the supply of water to any designated bore mentioned in subsection (1)."
  • section 47 of the Water Act be amended to state that any notice given under that section to exempt a bore, or to drainage water or waste, of a specified class or description does not apply to activities related to hydraulic fracturing.

The Bill was subsequently passed (with amendment) by the NT Parliament on 14 May and received assent on 30 May 2019.

The Water Amendment Act 2019 commenced by Special Gazette on 19 June 2019 and the following will now apply under the Water Act:

New environmental offences: this will apply with respect to conduct resulting in hydraulic fracturing waste (treated or untreated) coming into contact with water, which includes water flowing or contained in a waterway, groundwater or tidal water.

Prohibitions on water licences: the Controller of Water Resources is prohibited from granting the following:

  • a licence to take surface water (ie. water flowing or contained in a waterway) if the proposed beneficial use of water under the licence is petroleum activity;
  • a recharge licence that permits the increase of water contained in an aquifer with water that is, or contains, hydraulic fracturing waste; and
  • a licence to take water from a bore if the proposed beneficial use of water under the licence is petroleum activity that includes hydraulic fracturing and one or more designated bores are located within 1 km of the bore, unless:
    • the owner of each designated bore consents to the grant of the licence; or
    • the Controller is satisfied that hydrogeological investigations and groundwater modelling indicate that the activities under the licence will not have any adverse effect on the supply of water to any of those designated bores.