CSG, Markets, Technology

Making the link between CSG and water

The key water licensing requirements for coal seam gas (CSG) exploration and production include planning approval, the petroleum tenure, and the pollution and water licences. These approvals categories are generally required in one form or another in each Australian jurisdiction.

It is vital that all approvals operate in an integrated way and that they are legally defensible, commercially viable and operationally workable. They must be legally defensible so that they can withstand challenges from third parties; commercially viable so that financiers will lend on the basis of their grant; and, be operationally workable by the time exploration or production commences.

If any of the approvals do not meet these requirements then the viability of the whole project can be questioned. Accordingly, it is necessary that approvals for CSG exploration and production and water are dealt with in an integrated way from an early stage.

Integrating approvals

The key to achieving an integrated approval process is to assimilate water licensing with the planning approval and petroleum tenure. This is the preferred strategic approach to obtaining the approvals required for CSG exploration and production.

In New South Wales there is a clear legislative link between the planning approval, the petroleum tenure and the water licence. This process is enshrined under Part 3A of the Environmental Planning and Assessment Act 1979 (EP&A Act). However, in Queensland there is no clear legislative link and therefore it is necessary to purposely adopt a strategic approach of packaging approvals.

New South Wales

In 2005, the New South Wales Government introduced Part 3A of the EP&A Act for major projects. In respect to gas, Part 3A applies when projects have a capital investment value of more than $30 million, employ 100 people or more, or are located within a specified geographic area such as Greater Sydney, Hunter Valley or the Blue Mountains. If any of these criteria are met, the proponent is required to seek project approval from the Minister for Planning.

The process of obtaining a project approval triggers key integrated approval mechanisms. Most notably, if approval is granted under Part 3A for a petroleum project then a petroleum production licence and an environmental licence must be issued, which is consistent with the planning approval. Furthermore, there is no requirement for most water approvals once the project approval is granted. It should be noted that this does not meet the requirement for an environmental assessment in respect to matters such as water and instead the environmental assessment is centralised with the Department of Planning.

Part 3A meets most but not all of the requirements in relation to water licensing. For instance, it does not meet licences required under the previous Water Act 1912 for bores and dam licences. Nor does it meet the requirement to obtain a water allocation licence, that is, the requirement to buy a share of the available water.

Queensland

In Queensland there is no legal link between the planning approval, the grant of the petroleum tenure and water licensing. However, Queensland adopts a much more prescriptive petroleum scheme under the Petroleum and Gas (Production and Safety) Act 2004.

Under this Act the petroleum titleholder is granted rights to take an unlimited volume of water arising from petroleum operations. However, there is no corresponding statutory right to discharge to surface waters or to reinject into the aquifer without a further approval.

The petroleum titleholder is also granted the right to use the water for petroleum operations as authorised under the tenure. There is a limited right to supply third parties, being the right to supply water to a landholder on the tenement (or adjacent land if common owner) for domestic and stock watering purposes. Otherwise, third party supply requires a licence under the Water Act 2000. In practice, the rights of the titleholder are of minimal utility, particularly considering the practical difficulties of disposing an unlimited volume of water. Therefore, any third party supply will require further licensing under the Water Act.

In order to achieve a legally defensible, commercially viable and operationally workable suite of approvals, it is necessary to deal with them in an integrated fashion. In New South Wales there is a clear legislative link, which requires both the petroleum tenure and the water licence to be aligned with the planning approval. However, in Queensland there is no clear legislative link, necessitating a strategy of packaging all approvals.

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