What’s happened?

The NSW Government has released the long awaited final Strategic Regional Land Use package (SRLU Package). The SRLU Package contains a suite of new plans, policies and codes aimed at reducing land use conflicts between agricultural land use and mining and coal seam gas (CSG) projects.

The SRLU Package provides the NSW mining and CSG industry with some much needed certainty as to how the mining and CSG industry will be regulated going forward.

Who needs to know

Anyone involved in mining or CSG projects in NSW.

What are the details?

What is the SRLU Package?

The Strategic Regional Land Use package consists of:

  1. the Strategic Regional Land Use Plan – New England North West,
  2. the Strategic Regional Land Use Plan – Upper Hunter,
  3. the Aquifer Interference Policy, and
  4. two CSG specific codes of practice:
    • the Code of Practice for Coal Seam Gas – Well Integrity, and
    • the Code of Practice for Coal Seam Gas – Fracture Stimulation Activities.

The Strategic Regional Land Use Plans and the Gateway Process

The new Strategic Regional Land Use Plans for the New England North West and the Upper Hunter:

  1. map specified land as being Biophysical Strategic Agricultural Land or part of a Critical Industry Cluster, and
  2. impose a new Gateway Process for mining and CSG projects.

The table below contains an overview of the new gateway process.

Table - The New Gateway Process

Click here to view the table.

The Aquifer Interference Policy

The Aquifer Interference Policy (AI Policy) is a State wide policy which sets out the water licence and assessment requirements for ‘aquifer interference activities’. The Water Management Act 2000 (NSW) (WMA):

  1. defines ‘aquifer interference activities’ broadly and in a manner which captures most mining and CSG activities, and
  2. contains provisions which enable separate aquifer interference approvals to be required for such activities.

However, to date, the aquifer interference provisions of the WMA have not been activated. The AI Policy will provide the policy foundation for the activation of the aquifer interference provisions of the WMA.

The AI Policy contains detailed provisions setting out:

  1. How the water taken through the carrying out of aquifer interference activities will be licensed. These provisions substantially reflect the current water access licensing regime. However, the AI Policy makes it clear that volumetric water access licences will be required for aquifer interference activities which induce flow from adjacent groundwater sources or flow from connected surface water sources (even if no water is actually extracted for a particular use). For example, where an open cut mine takes water from a groundwater source, and this take causes the movement of water from a connected river water source into the groundwater source, then separate water access licences must be held authorising the take of water from both the river and the groundwater source. The AI Policy makes it clear that the obligation to maintain such water access licences remains in place until the system returns to equilibrium, potentially for very long periods after mining or CSG production has ceased.
  2. When separate aquifer interference activities must be licensed and how all aquifer interference activities must be assessed even where no separate licence is required.
    • The AI Policy makes it clear that separate aquifer interference approvals will not be required for SSD mining and CSG projects. However, the aquifer impacts of such projects will be assessed by requiring the Minister for Primary Industries to provide advice on the assessment of the project against the minimal impact considerations contained in the AI Policy, which advice will be made public, either at the gateway stage or (if the gateway does not apply) during the assessment of the SSD application. In addition, the AI Policy also sets out a number of other water related considerations which must be considered in assessing CSG projects under the planning regime and supports an adaptive management approach to conditioning the water aspects of both mining and CSG SSD projects.
    • The AI policy contains detailed minimal impact considerations which have been prepared for each highly productive and less productive groundwater sources and which deal with issues such as water table and groundwater pressure drawdown as well as groundwater and surface water quality changes. The minimal impact considerations include what are called ‘Level 1 minimal impact considerations’. If the predicted impacts are less than the ‘Level 1 minimal impact considerations’ (or only exceed these by no more than the accuracy of an otherwise robust model) then these impacts will be considered as acceptable. However, if the predicted impacts are greater than the Level 1 minimal impact considerations (by more than the accuracy of an otherwise robust model) then the project will not be considered to be acceptable unless further assessment shows that the predicted impacts do not prevent the long-term viability of water-dependent assets. 
    • The AI Policy also sets out the level of assessment required for aquifer interference activities and makes it clear that ‘the level of detail required to be provided by the proponent is proportional to a combination of the likelihood of impacts occurring on water sources, users and dependent ecosystems and the potential consequences of these impacts.’
  3. The ‘minimal impact aquifer interference activities’ which will not require aquifer interference approval. These include certain monitoring bores, core holes, stratigraphic holes and geo-environmental, geotechnical bores, tailings and ash dams and produced water holding ponds. Importantly, there is no general exemption given for exploration activities which will require separate aquifer interference approvals unless they fall within a specific exemption.

The Codes of Practice

The new CSG codes of practice contain detailed standards regulating well integrity and hydraulic fracture stimulation (or fraccing) activities.

The Code of Practice for Coal Seam Gas – Well Integrity contains both mandatory requirements and recommendations for the CSG wells which cover a range of aspects including:

  1. well design,
  2. casing,
  3. cementing,
  4. well heads,
  5. drilling fluids,
  6. logging and testing, 
  7. monitoring and maintenance, and
  8. abandonment.

Similarly, the Code of Practice for Coal Seam Gas – Fracture Stimulation Activities sets out both mandatory requirements and recommendations for fraccing. These include the preparation of, and compliance with, a fracture stimulation management plan which must include details of:

  1. stakeholder consultation,
  2. fracture stimulation design,
  3. risk assessment,
  4. the use of chemicals in fracture stimulation, and
  5. water management.

Compliance with the new codes of practice will be assured by imposing conditions requiring compliance, on all petroleum exploration licences and petroleum production leases.

The release of these codes marks the end of the NSW Government’s moratorium on fraccing.

What will happen next?

The new measures contained in the SRLU Package are not the end of the story, as the NSW government has foreshadowed a number of additional mining and CSG specific reforms. These include:

  1. an amendment to the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP) to give effect to the gateway process. The NSW Government proposes to exhibit the proposed amendments to the Mining SEPP for public comment shortly,
  2. the preparation of further Strategic Regional Land Use Plans covering the Central West, the Southern Highlands, the Western, the Murrumbidgee and the Alpine regions of NSW,
  3. the finalisation of the draft Code of Practice for Coal Seam Gas Exploration
  4. the preparation of standard form land access agreements for CSG exploration, and
  5. the preparation and public exhibition of a draft guideline on triple bottom line cost benefit analysis methodology for use by applicants who choose to submit such an analysis as part of the assessment of their project under the NSW planning regime.

Implications

The SRLU Package represents a significant tightening of the regulatory requirements for new mining and CSG projects. These requirements are likely to bring forward assessment requirements and cause further delay in obtaining project approvals for new mining and CSG projects.

However, the impacts for the mining and CSG industries could easily have been much worse as the publicly exhibited drafts of the documents contained some much more stringent requirements which have been substantially watered down in the final documents. For example, a gateway certificate can no longer be refused and most of the more significant issues with the draft aquifer interference policy (which was unworkably complex) have been corrected.

Most importantly, the SRLU Package provides the NSW mining and CSG industry with some much needed certainty as to how mining and CSG projects will be regulated going forward and demonstrates the NSW Government’s commitment to ensuring the sustainable development of NSW’s mineral and CSG resources.