New greenhouse gas injection and storage titles for the Western Australian jurisdiction

On 24 October 2012, the Petroleum and Geothermal Energy Legislation Amendment Bill 2012 was introduced to the Western Australian Parliament. The Bill proposes to amend the Petroleum and Geothermal Energy Resources Act 1967 (WA) (PGERA) by making onshore titles available for the injection and storage of greenhouse gases in geological formations, sometimes referred to carbon geo-sequestration.

The PGERA, as amended by the Bill, will continue to apply to the Western Australian jurisdiction only. The new titles will therefore be located within onshore Western Australia and offshore up to the three nautical mile boundary.

The injection and storage of greenhouse gases in underground geological formations are currently not regulated in the Western Australian jurisdiction other than in respect of the Chevron-operated Gorgon LNG Project. The Gorgon LNG Project is subject to the Barrow Island Act 2003 which regulates the injection and storage of carbon dioxide recovered during gas processing on Barrow Island.

The Bill also amends the Petroleum Pipelines Act 1969 (WA) to provide for the transportation of greenhouse gases.

Greenhouse gas titles

If passed, the Bill would establish a new set of greenhouse gas titles and an associated licencing regime. A greenhouse gas injection licence will authorise the injection and storage of a "greenhouse gas substance". "Greenhouse gas substance" means carbon dioxide, together with any substances incidentally derived from the capture or injection and storage processes, with the addition of prescribed chemical detection agents used to assist the tracing of the injected greenhouse gas substance.

In addition to greenhouse gas injection licences, the Bill establishes the following greenhouse gas titles:

• greenhouse gas exploration permit (similar to existing exploration permits under the PGERA) which authorises the permit holder to explore for greenhouse storage formations and injection sites and inject greenhouse gas substances on an appraisal basis;
• greenhouse gas retention lease (similar to existing retention leases under the PGERA) which enables a lessee to retain tenure over greenhouse gas acreage, if necessary, until it is in a position to commence greenhouse gas injection operations;
• greenhouse gas special prospecting authority (which will be a third category of existing special prospecting authorities under the PGERA in addition to petroleum special prospecting authorities and geothermal special prospecting authorities); and
• greenhouse gas access authority (which will be a third category of existing access authorities under the PGERA in addition to petroleum access authorities and geothermal access authorities).

Storage formations

The Bill would establish three categories of "storage formations", to reflect a title-holder's improving level of knowledge about the formations within the title area. These categories of storage formations are:

• A "potential greenhouse gas storage formation" defined as a part of a geological formation that is suitable for the permanent storage of a greenhouse gas substance, with or without regard to technological developments. The Bill requires a title-holder to immediately notify the responsible Minister if the title-holder discovers a potential greenhouse gas storage formation.
• An "eligible greenhouse gas storage formation" defined as a part of a geological formation that is suitable for the permanent storage of at least 100,000 tonnes of a greenhouse gas substance. If a title-holder reasonably believes that the title area contains an eligible greenhouse gas storage formation, it may apply to the responsible Minister for a declaration that it is an identified greenhouse gas storage formation (see below).
• An "identified greenhouse gas storage formation" defined as an eligible greenhouse gas storage formation that is declared by the responsible Minister to be an "identified greenhouse gas storage formation". A greenhouse gas injection licence authorises the injection and storage of a greenhouse gas substance in an identified greenhouse gas storage formation.

Conclusion

While the technology for carbon dioxide injection and storage has existed for some time, it is expected that an increasing number of participants will make use of the technology to minimise the social and, more recently, economic costs associated with carbon emissions.

A carbon storage legislative regime creates an opportunity for the petroleum industry to take measures to manage its emissions. If the Bill is passed, the PGERA will complement the existing regime for the injection and geological storage of greenhouse gases in the Commonwealth offshore jurisdiction as regulated by the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth).