17 Mar 2016

New draft environmental regulations for NT's onshore oil and gas industry released

by Nicole Besgrove, Margaret Michaels

The Northern Territory Government has released new environmental regulations to achieve a best-practice environmental regulatory regime for the NT oil and gas industry.

On 5 March 2016, the NT Government released its draft Petroleum (Environment) Regulations which have been prepared as the next step to establishing a robust best-practice environmental regulatory regime to reduce environmental impacts and risks associated with onshore oil and gas activities to a level that is as low as reasonably practicable and acceptable. Submissions can be made on the draft Regulations until Monday, 4 April 2016.

Foundation and key principles

It is understood that the foundations of the draft Regulations have been formed from extensive consultation and consideration of the following:

  • the best-practice regulation in South Australia and Western Australia as well as lessons learned from onshore oil and gas development in North America;
  • academic review by industry expert Dr Tina Hunter in 2012; and
  • the Independent Inquiry into Hydraulic Fracturing in the Northern Territory undertaken by Dr Allan Hawke AC in 2014-15.

From this the key principles of the draft Regulations have been identified as:

  • Risk-based: focus on the key risks and impacts that must be managed.
  • Outcome-focused: do not prescribe what actions oil and gas companies must take, but require clear definition of environmental outcomes and performance standards and measurements criteria to ensure outcomes are met.
  • Ecologically Sustainable Development (ESD): all onshore oil and gas activities must be consistent with the principles of ESD which are:
    • decision-making processes should effectively integrate both long-term and short-term economic, environmental, social and equitable considerations;
    • if there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation;
    • the principle of inter-generational equity – that the present generation should ensure that the health, diversity and productivity of the environment is maintained or enhanced for the benefit of future generations;
    • the conservation of biological diversity and ecological integrity should be a fundamental consideration in decision-making; and
    • improved valuation, pricing and incentive mechanisms should be promoted.

Environmental Management Plans (EMP)

The key principles outlined above will be delivered by the draft Regulations through its mandatory requirement for an interest holder[1], who proposes to carry out a regulated activity, to prepare, and have approved, an EMP before the activity can commence.

A "regulated activity" is defined under the draft Regulations as an activity or a stage of an activity:

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

Such activities include, but are not limited to:

  • 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 or other surveys;
  • drilling;
  • the release of a contaminant or waste material; and
  • the storage of petroleum and hazardous substances.

However, regulated activities will not include the following low impact or reconnaissance activities:

  • driving on existing roads or tracks;
  • walking on a petroleum interest area to perform field studies that do not involve the use of equipment that will disturb the land;
  • taking water samples;
  • taking rock samples without the use of heavy machinery; and
  • airborne surveys.

The EMP must be submitted to the Minister only after the interest holder has undertaken appropriate stakeholder engagement which is to be determined by the extent of the stakeholder's connection with or use of land at the relevant location. A "stakeholder" is a person or body whose functions, interests or activities may be affected by an environmental impact resulting from the regulated activity, including a person who owns or leases in the relevant locations; an Agency or other statutory body; or a community organisation.

The draft Regulations set out the requirements for the form and content of an EMP and the "approval criteria" against which the Minister will assess the EMP, which includes a detailed list in Schedule 1. These requirements read together prescribe what an EMP must include, which can be summarised as follows:

  • a detailed description of the regulated activity (or activities) to be carried out under the EMP;
  • the location of each regulated activity and a detailed description of the environment that may be effected;
  • an evaluation of the environmental impacts and risks of each activity;
  • the environmental objectives and environmental performance standards, including measurement criteria to be used for those objectives and standards;
  • an implementation strategy, including the arrangements for ongoing monitoring of the interest holder's environmental performance and an emergency contingency plan;
  • the stakeholder engagement undertaken and plans for further stakeholder engagement;
  • a description of the relevant legislative requirements and how they are met; and
  • any other information necessary to demonstrate that each regulated activity for which the EMP is made will be carried out in a manner:
    • consistent with the principles of ESD; and
    • by which the environmental impacts and risks will be reduced to as low as reasonably practicable; and
    • by which the environmental impacts and risks will be of an acceptable level taking into consideration good oilfield practice, the nature and scale of the activity and the particular environment that will be affected by the activity.

The NT Government has also released Environment Regulations Information Papers, one of which includes a flowchart that outlines the form and content requirements.

Minister approval of EMP

Once an EMP has been prepared and submitted to the Minister for approval, the Minister must make one of the following decisions within 30 days of submission (or if more than 30 days is required, in accordance with the proposed timetable specified in a notice from the Minister to the interest holder):

  • if the whole EMP meets the approval criteria: approve the whole EMP (with or without conditions) and give the interest holder an approval notice;
  • if only part of the EMP meets the approval criteria:
    • approve that part of the EMP and give the interest holder an approval notice for it; and
    • give the interest holder a resubmission notice [2] in relation to the part of the plan that does not meet the approval criteria;
  • if no part of the EMP meets the approval criteria: give the interest holder a refusal notice for the EMP.

Other key features

The other key features of the draft Regulations at a glance are:

  • The requirement for revision of an EMP where certain events occur. These include where there is a new regulated activity, a change to an existing regulated activity, a new environmental impact or risk, a significant change to the existing environment, a change in interest holder, if requested by the Minister and at the end of each period of five years.
  • The EMP is to be published by the Minister. Information of a commercially confidential nature will be withheld as well as any other information if the Minister is satisfied there are reasonable grounds for doing so.
  • Revocation of approval of an EMP where an offence has been committed under the Regulations, where a requirement under the Regulations has been contravened or where no appropriate step under the Regulations is taken by an interest holder in relation to a refusal of a proposed revision, request for revision by the Minister or at the end of each period of 5 years.
  • Review of certain decisions to the Civil and Administrative Tribunal. An interest holder can seek review of the decision of the Minister to approve or refuse the EMP (or part) and decision of the Minister to revoke the approval of an EMP.
  • Offence provisions which relate to the following:
    • carrying out a regulated activity without an EMP;
    • contravening the EMP;
    • continuing with a regulated activity if a new environmental impact or risk occurs and the circumstances are not provided for in the EMP;
    • not giving notice and written reports to the Minister of a reportable incident[3]
    • not giving a written report to the Minister about recordable incidents[4]; and
    • not keeping prescribed records in accordance with the Regulations and making them available.
  • Transitional provisions which provide that:
    • An approved plan[5];in place immediately before commencement of the Regulations will continue to apply after commencement for the lesser period of either the period for which it is approved or 12 months after commencement. This means that a new EMP under the Regulations would need to be submitted and approved before the regulated activity can continue.
    • environmental directions will continue to apply after the commencement.

Where an EMP has already been prepared and submitted to the Minister for approval but no decision has been made immediately prior to commencement of the Regulations, the Minister must continue to consider that EMP as if the Regulations had not commenced and once approved the EMP has effect as if it were approved under the Regulations.

Interaction with other key environmental assessment processes

Where the environmental impacts and risks of the regulated activity are, in the opinion of the NT EPA, a matter which could reasonably be considered to be capable of having a significant effect on the environment, the environmental impact assessment (EIA) process under the Environmental Assessment Act (NT) will be triggered.

Furthermore, where the activity has, will have, or is likely to have a significant impact on a matter of national environmental significance (MNES), the Environment Protection and Biodiversity Conservation Act (Cth) will be triggered.

The NT Government has released a flowchart which outlines the proposed interaction between the draft Regulations and State and Federal environmental impact assessment processes.

What next?

Submissions on the draft Regulations can be made by email or post as specified on the Government's website.

If you would like to understand the full impact of draft Regulations on your organisation please contact us.

[1] Either a person who holds a petroleum interest for the activity or a person who has applied for a petroleum interest, but submitted an EMP for approval before the petroleum interest is approved. [back]

[2] A similar decision process will again a apply where a modified EMP is resubmitted to the Minister for approval. [back]

[3] A reportable incident means an incident arising from a regulated activity carried out under an EMP that has caused, or has the potential to cause:

  • material environmental harm; or
  • serious environmental harm. [back]

[4] A recordable incident means an incident, arising from a regulated activity carried out under an EMP:

  • that is inconsistent with an environmental objective, or has contravened an environmental performance standard, specified in the EMP; and
  • is not a reportable incident. [back]

[5] A plan that:

  • provides for the environmental management of a regulated activity carried out by an interest holder; and
  • has been prepared by the interest holder for the approval by the Minister as a condition of the granting of the interest. [back]

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.