Key points

  • The CCS legislation introduces another overlapping tenure regime to Queensland
  • Settlement of potentially competing rights among overlapping tenement holders is complex. The state has an interest in maximising the resource potential, so this is a factor in the exercise of Ministerial discretion to resolve potential conflicts
  • The CCS regime is structured in a similar way to the existing CSG regime with the exception of providing GHG Lease holders with potentially greater security of tenure than overlapping mineral and petroleum tenement holders  

As resources project operators in Queensland have observed, there have been significant changes in the state’s mining and petroleum legal structure. New laws have been developed and variously enacted since 2004 which have resulted in the creation of mining tenements that did not previously exist. The reality of the geological setting in Queensland and the resources applicable to each type of tenement means that the potential exists for multiple overlapping tenements and thus competing interests arising.

More recently, there are several new resources regimes that have been established, partly as a result of the state government’s commitment to greenhouse and sustainability issues:

  • Carbon Capture and Storage (CCS) (Greenhouse Gas Storage Act 2009 (Qld) (GHG Act))
  • Underground Coal Gasification (UCG) or synthetic gas (current Mineral Resources Act 1989 (Qld), Petroleum and Gas (Production and Safety) Act 2004 (Qld) (P&G Act) and UCG State Government Policy, and
  • Geothermal Energy (Geothermal Exploration Act 2004 (Qld)).

The above regimes are in addition to earlier established regimes under the P&G Act for Coal Seam Gas (CSG) exploration and extraction.

The following article is the first in a series of articles focussing on various overlapping tenement regimes in Queensland. In this article, we provide an overview of the GHG tenement system and how that regime is regulated in circumstances where there are overlapping tenements.

The Greenhouse Gas Storage regime

The existing CSG framework that regulates overlaps between conventional mineral and petroleum tenements is found under Part 7AA of the MRA and Chapter 3 of the P&G Act. Each Act contains CSG related provisions that for the most part, mirror each other.

The GHG Act, enacted earlier this year, creates a CCS regime by providing for the granting of authorities to explore for and use underground reservoirs for the storage of ‘greenhouse gases’.

CCS Tenures

Three types of GHG authorities are available under the GHG Act:

  • GHG exploration permit (GHG Permit). The GHG Permit allows for storage exploration and evaluating the feasibility of GHG stream storage by GHG storage injection testing
  • the GHG injection and storage lease (GHG Lease). The GHG Lease permits the injection, compression, storage and monitoring of GHG streams, and
  • the GHG injection and storage data acquisition authority (GHG Data Acquisition Authority). The GHG Data Acquisition Authority allows a GHG tenure holder to conduct geophysical surveys on land contiguous to their existing tenement.

Although the GHG Act commenced operation in February 2009, the provisions relating to the grant of GHG Permits and GHG Leases will commence operation on a date to be fixed by proclamation. The state has indicated that these provisions are likely to commence in early 2010.

CCS and CSG Overlaps

The CCS regulatory regime is similar to the CSG regime. Each of the GHG Act, P&G Act and MRA contain mirror provisions that regulate tenement overlaps. Consistent with the CSG regime, the grant process for overlapping tenements within the GHG regime is regulated by the particular legislation under which the relevant tenement is granted. For example, if a mining lease holder becomes aware of an application for an overlapping GHG Lease, the mining lease holder must revert to the GHG Act in order to determine the holder’s rights in respect of the GHG Lease application.

As a general principle, earlier production leases or those declared as a significant project, take priority over overlapping applications which are later in time.

The main principles of the CCS regime are:

  • GHG tenements may overlap existing mineral and petroleum tenements
  • the Minister may make resource management decisions in order to determine overlapping tenement priorities
  • CCS and overlapping tenement holders may negotiate and jointly apply for approval of a voluntary GHG ‘coordination arrangement’
  • overlapping GHG Lease applications can be refused if a petroleum lease holder gives the Minister a notice stating that there are no reasonable prospects of a GHG coordination arrangement being made
  • development plans for a GHG Lease or amendments to the development plan must be consistent with the coordination arrangement and development plan for an overlapping mineral or petroleum tenement, and
  • the regime imposes a process of notifying the overlapping tenure holder of activities that are to be conducted.

In contrast to the CSG regime, the following are noted:

  • a GHG Lease may be granted over an existing mineral or petroleum tenement without the pre-existing tenement holder’s consent or a coordination arrangement in place, and
  • the Minister has the power to cancel a GHG coordination arrangement after having first considered any submissions of the lease holders. Cancellation of a GHG coordination arrangement will not affect any relevant lease, but may adversely affect one or both parties who might be relying on the terms of the coordination arrangement.

Existing GHG projects

The Queensland Government is currently supporting two low emission coal technology demonstration projects which will use integrated carbon capture and storage. The ZeroGen Project is located close to the Stanwell power station near Rockhampton. The Project will generate near zero emission electricity from coal through an integrated gasification combined cycle power plant with CCS. The Project is designed to achieve 75 per cent carbon capture by 2012 and 90 per cent carbon capture by 2017. The ZeroGen Project has conducted significant test drilling in the Northern Denison Trough (west of Rockhampton) to identify suitable sites for permanent storage of GHG.

The Callide Oxyfuel Project is located at the Callide A Power Station in Central Queensland. The project is the first of its type in the world and is being developed by CS Energy, a government-owned corporation. The oxyfuel technology burns coal in oxygen and gases rather than air to create a concentrated stream of carbon dioxide. This technology is designed to be retrofitted to existing power stations. The Callide Oxyfuel Project will start capturing GHG in 2011 and store approximately 50,000 tonnes of greenhouse gas over a three year period.