The Northern Territory Civil and Administrative Tribunal has exercised its new powers under the Petroleum Act 1984 (NT) and Petroleum Regulations 2020 (NT) for the first time, giving some useful guidance on:
- the provisions to be included in an Approved Access Agreement (AAA) (including with respect to certain heads of compensation); and
- whether the Tribunal had jurisdiction to determine compensation under the Act prior to activities being carried out under the exploration permit.
The project in the Beetaloo Basin
Sweetpea Petroleum Pty Ltd holds exploration permit (EP136) over land portions where Beetaloo Basin pastoralists Yarabala Pty Ltd, BB Barkly Pty Ltd and Rallen Australia Pty Ltd hold perpetual pastoral leases.
Sweetpea sought a determination of an AAA to allow it access to land pursuant to an exploration permit, before operations can commence. The parties in both proceedings had undertaken the required process of negotiation and mediation in relation to the AAAs, but had not reached agreement. This triggered the Tribunal's ability to consider an application to determine the provisions that should form the content of the AAA.
The Northern Territory Civil and Administrative Tribunal's powers over Approved Access Agreements
Both proceedings involved a jurisdictional challenge where the pastoralists alleged the Tribunal either had no jurisdiction to make the relevant determinations with respect to the AAAs, or should decline to exercise its jurisdiction.
In their judgment, presiding members Mark O'Reilly and Leslie McCrimmon found the NTCAT had jurisdiction to make determinations with respect to the AAAs. In so finding, the members made the following observations:
- the possibility that the terms of an AAA could interfere with private property rights and a pastoralist's business operations does not create any jurisdictional impediment;
- the NTCAT's jurisdiction to determine the provisions of the AAA does not confer a right of access, but rather regulates how access will occur upon receipt of all necessary approvals;
- the parties' participation in good faith negotiations is a matter for costs; and
- the NTCAT's role is not to determine what activities may occur under any exploration permit, but rather, to determine the provisions of the AAA to ensure that disturbance would be minimised during the occurrence of the future activities.
The pastoralists also asked the Tribunal to assess compensation payable under section 81 of the Act pursuant to its powers under section 82A of the Act. However, the Tribunal found that its jurisdiction under section 82A of the Act was not triggered and therefore, it did not have jurisdiction to determine compensation until after the activities had occurred.
This was because the Tribunal considered no compensable activities had been carried out at the time of the hearing. This is in contrast to the position in other jurisdictions where determinations as to compensation are routinely made in advance of the compensable activities.
What can (and can't) go into an Approved Access Agreement
The Tribunal held that parties to an AAA are relevantly the "interest holder of the relevant petroleum interest" and the "designated person of the relevant land". The relevant land covered by the AAA was that described in the particular petroleum interest, in this case, the relevant exploration permit. The Tribunal ultimately held that the AAA was unable to include land beyond the particular interest. Therefore, the AAA could not include activities subject to a separate Access Authority held by Sweetpea.
Further, the Tribunal found that an AAA must, at a minimum, include clauses commensurate with Schedule 2 of the Regulations which prescribe the Standard Minimum Protections (SMPs).
In relation to the term of the AAA, the Tribunal held that absent agreement, the appropriate term of an AAA should be consistent with the period of the exploration permit as varied from time to time rather than more limited periods sought by the pastoralists.
Determining compensation in an Approved Access Agreement
The Tribunal held that an AAA must address the following matters in relation to compensation (as required by the SMPs):
- the minimum amount of compensation payable for drilling a well on the land; and
- compensation for any decrease in the market value of the land.
However, the Tribunal indicated that in determining such matters, it was not making a determination that the compensation is payable by Sweetpea as that was a matter for separate assessment after the activities had occurred.
The minimum amount of compensation for drilling a well
The Tribunal ultimately declined to determine an amount of compensation payable. However, the members made the following comments in relation to the minimum amount of compensation for drilling a well:
- The purpose of including compensation matters in an AAA is to reinforce the rights of landholders to make compensation claims and set parameters to encourage negotiated outcomes following eligibility for compensation.
- Sweetpea's evidence as to the minimum compensation payable for drilling a well comprised evidence of the fees payable for permits ($3,000-$5,000). The Tribunal found this had no relationship with potential claims for compensation.
- Equally the Tribunal did not accept the pastoralists' evidence that the minimum amount of compensation should reflect that which may be achieved through a commercial sale or lease of the property ($17 million).
- Compensation should reflect the minimum amount of loss the pastoralists expect to experience.
Would the proposed activities lead to a decrease in market value?
The Tribunal then considered whether any activities carried out on the land would lead to a decrease in market value.
In doing so, the members considered the parties' submissions as to whether the proposed operations would use existing pastoral tracks. While Sweetpea submitted it would do so, with the effect of minimising the need for land clearing, the pastoralists asserted that section 111 of the Act operated to prohibit Sweetpea using existing tracks.
This section relevantly provides that a permittee or licensee must not carry out operations which would otherwise be permitted under the Act on land that is within a distance of 200m of any artificial accumulation of water or any outlet from which water may be obtained.
The pastoralists asserted that Sweetpea's proposed operations were not permitted under the Act as underneath the tracks, there was a reticulated watering system consisting of poly pipe, which would be considered "accumulation of water" within the meaning of section 111.
The Tribunal did not accept the pastoralists' submission, instead finding that the poly pipes themselves were not properly considered "any artificial accumulation of water" as required by the Act. Rather, that the pipes were connected to a water system and distributed the water to a point of accumulation, being the tanks and troughs which are the artificial accumulations of water.
The members commented that if the pastoralists' interpretation of "any accumulation of water" was adopted, this would seriously impede any proponent's ability to carry out operations. Ultimately, in determining any likely decrease in the market value of the properties, the Tribunal proceeded on the basis that Sweetpea's ability to use existing tracks will not be impacted by the presence of the poly pipes, but rather, impacted by the existence of water tanks and troughs.
The evidence that establishes a decrease in market value
The Tribunal then considered the parties' submissions and competing valuations in relation to compensation for a decrease in market value.
The methodology adopted by the parties' respective experts differed markedly. While Sweetpea's expert adopted a comparative sales approach to support his opinion that the activities to be undertaken on the land would not decrease the market value of the land, the pastoralists' expert adopted a piecemeal approach to support his conclusion that the decrease in market value resulting from Sweetpea's activities would be $624,000 (in the Yarabala proceeding) for each well drilled.
The Tribunal preferred the evidence offered by Sweetpea's expert. In addressing the pastoralists' evidence, it was noted that their expert's approach did not provide a compelling basis upon which to determine a reduction in market value.
Ultimately, the Tribunal found that Sweetpea's proposed activities were unlikely to lead to a decrease in the market value of the land and sought to include a provision in the AAA to this effect. The Tribunal also clarified that any provision in the AAA as to the decrease in market value of the land ought to make clear that it does not limit the landholder's right to apply for compensation should a decrease in the value of the land occur as a result of the activities.
What's next for Approved Access Agreements
The two Sweetpea matters are only the first of a number of similar proceedings currently before the Tribunal, so future decisions could flesh out more of the AAA regime – stay tuned.
As for the Sweetpea decisions themselves, they have both been appealed to the Supreme Court of the Northern Territory, although the appeal itself has not yet been listed for hearing. Until the Supreme Court hands down its decision, proponents will need to carefully consider the Sweetpea and subsequent decisions in crafting an AAA and in negotiations with landholders.