The final report into coal seam gas operations in NSW has found the industry can go ahead, but needs a significant overhaul.
NSW chief scientist Mary O’Kane was given the job of reviewing the industry by former state Premier Barry O’Farrell.
Following 19 months of research, the final report was released yesterday, making 16 recommendations aimed at dealing with the controversial sector.
O’Kane found that while the industry had been hampered by a range of issues, the technical challenges and risks posed by CSG could be addressed.
The report found that land, water, managing waste, fracking and inadequate consultation were all concerns held by the community.
“CSG companies are viewed as untrustworthy by some members of the community in both urban and rural areas. This lack of trust seems to stem particularly from some CSG exploration companies: being perceived to be in violation of land access regulations; being perceived by some to bully vulnerable landholders; not managing sub-contractors appropriately; engaging in questionable environmental practices; and not reporting accidents to the regulator quickly enough,” O’Kane noted.
She also said the government was perceived by some as favouring the CSG sector for allowing it proceed in areas where there is strong community opposition.
Pointing to complex and inconsistent legislation, O’Kane said the government needed to move to a single Act for all gas extraction operations and ensure simplicity and clarity and regulatory requirements.
O’Kane said while risks associated with CSG can be managed, current risk management needs improvement to reach best practice.
The review found that government needs to establish a “world-class regime" for CSG extraction that ensures proponents in the industry know a “high performance is mandatory, compliance will be rigorously enforced and transgressions punished”.
“In particularly sensitive areas, such as in and near drinking water catchments, risk management needs to be of a high order with particularly stringent requirements on companies operating there in terms of management, data provision, insurance cover, and incident-response times,” O’Kane said.
She said while Australia has a long history of CSG activity, a better understanding of the industry impacts at scale and over time is needed and this will require more data from both the sector and a wider range of sources.
Legacy issues such as a better understanding of inappropriately abandoned wells also requires attention, as does the need to understand the nature of risk of pollution and other short and long-term environmental impacts from CSG and related operations.
O’Kane said rapid advances in knowledge and technologies in areas including numerical modelling, geology and petroleum engineering can be harnessed to improve CSG production efficiency and to minimise adverse impacts.
“All industries have a risk and, like any other, it is inevitable that the CSG industry will have some unintended consequences, including as the result of accidents, human error, and natural disasters,” O’Kane warned.
She said industry, government and the community need to work together to mitigate such risks and be prepared to respond to problems if they arise.
Reactions to the review
Having long campaigned against the CSG sector, Lock the Gate Alliance want current CSG operations shut down until all the 16 recommendations are implemented.
Group spokesperson Carmel Flint said the group would call on the NSW government to shut down CSG wells in Narrabri and Gloucester.
“The chief scientist has indicated that the CSG industry should only proceed in NSW if appropriate measures are in place to manage the large volumes of toxic wastewater and salt which it produces,” Flint said.
“However, experience in Queensland has proven CSG drillers are light years away from achieving that outcome, and the industry still does not have a plan as to how it is going to manage the vast mountains of salt it produces.
‘The report recommends “careful designation’ of areas where CSG extraction is “appropriate” and this would be best implemented by a system of no-go zones to protect important food-producing areas, water resources and other environmental assets from CSG mining.
‘In view of the report, the NSW government shouldn’t be putting families at Gloucester and Camden under threat by allowing CSG wells to be drilled or operated near residential dwellings,’ Ms Flint said.
Gasfield Free Northern Rivers also wants all CSG gas licences in the region cancelled.
“Given the risks and lack of available information highlighted in the report, the NSW Government should not be risking the health of the community in the Northern Rivers by allowing unconventional gas wells to be drilled in our closely settled region,” spokesperson Dean Draper sea.
Last week Premier Mike Baird said the review would be "the line in the sand" on how the CSG industry operates in the state.
A six month moratorium on new CSG exploration in NSW was extended just days ago with the government set to finalise regulation for the industry once it reviews the report.
Australian Petroleum Production & Exploration Association (APPEA) said the report should give the green light to the responsible development of natural gas resources.
“APPEA welcomes the Chief Scientist’s observations that the natural gas industry is mature and well equipped to manage extraction and related technologies through its high engineering standards and level of professionalism,” the industry group said.
“This is a far cry from the alarmist and misinformed claims that have too often characterised debate about natural gas projects in NSW.”
Intent, communication, transparency and fairness
That Government make clear its intent to establish a world-class regime for extraction of CSG. This could be articulated in a clear public statement that covers:
• the rationale/need for CSG extraction
• a clear signal to industry that high performance is mandatory, compliance will be rigorously enforced and transgressions punished
• a fair system for managing land access and compensation
• a mechanism for developing a clear, easy-to-navigate legislative and regulatory framework that evolves over time to incorporate new technology developments
• mechanisms for working closely and continuously with the community, industry, and research organisations on this issue.
That Government ensure clear and open communication on CSG matters is maintained at all times. This includes:
• simplicity and clarity in legislative and regulatory requirements
• ensuring openness about CSG processes in line with an open access approach; publishing all relevant approval requirements, decisions and responses, and compliance and enforcement outcomes on appropriate government websites and making CSG data from companies, Government and research organisations available through a centralised Government data repository
• measurable outcomes to track performance against commitments to reform.
That Government investigate as a priority a range of practical measures for implementation
(or extension of current measures) to allow affected communities to have strengthened protections and benefits including fair and appropriate:
• land access arrangements, including land valuation and compensation for landholders
• compensation for other local residents impacted (above threshold levels) by extraction activities
• funding (derived from the fees and levies paid by CSG companies) for local councils to enable them to fund, in a transparent manner, infrastructure and repairs required as a consequence of the CSG industry.
That the full cost to Government of the regulation and support of the CSG industry be covered by the fees, levies, royalties and taxes paid by industry, and an annual statement be made by Government on this matter as part of the Budget process.
Legislative and regulatory reform and appropriate financial arrangements
That Government use its planning powers and capability to designate those areas of the
State in which CSG activity is permitted to occur, drawing on appropriate external expertise as necessary.
That Government move to a single Act for all onshore subsurface resources (excluding water) in the State, constructed to allow for updating as technology advances. This will require a review of all major Acts applying to the resources sector.
That Government separate the process for allocation of rights to exploit subsurface resources (excluding water) from the regulation of the activities required to give effect to that exploitation (i.e. exploration and production activities); and that it establish a single independent regulator. The regulator will require high levels of scientific and engineering expertise, including geological and geotechnical ability, environmental and water knowledge and information, and ICT capability including data, monitoring and modelling expertise; and will be required to consult – and publish details of its consultations – with other arms of Government and external agencies, as necessary. The regulator will also require appropriate compliance monitoring and enforcement capability.
That Government move towards a target and outcome-focused regulatory system, with three key elements:
• regularly reviewed environmental impact and safety targets optimised to encourage uptake of new technologies and innovation
• appropriate and proportionate penalties for non-compliance
• automatic monitoring processes that can provide data (sent to and held in the openly accessible Whole-of-Environment Data Repository) which will help detect cumulative impacts at project, regional and sedimentary basin scales which can be used to inform the targets and the planning process.
That Government consider a robust and comprehensive policy of appropriate insurance and environmental risk coverage of the CSG industry to ensure financial protection short and long term. Government should examine the potential adoption of a three-layered policy of security deposits, enhanced insurance coverage, and an environmental rehabilitation fund.
Managing risk by harnessing data and expertise
That Government commission the design and establishment of a Whole-of-Environment
Data Repository for all State environment data including all data collected according to legislative and regulatory requirements associated with water management, gas extraction, mining, manufacturing, and chemical processing activities. This repository, as a minimum, would have the characteristics that it:
• is accessible by all under open data provisions
• has excellent curatorial and search systems
• houses long-term data sets collected as part of compliance activities
• can accept citizen data input
• can be searched in real time
• is spatially enabled
• is able to hold data in many diverse formats including text, graphics, sound, photographs, video, satellite, mapping, electronic monitoring data, etc., with appropriate metadata
• is the repository of all research results pertaining to environmental matters in NSW along with full details of the related experimental design and any resulting scientific publications and comments
• is the repository of historical resources data with appropriate metadata
Various legislative amendments or other incentives will be needed to direct all environment data to the Repository.
That Government develop a centralised Risk Management and Prediction Tool for extractive industries in NSW. This would include a risk register, a database of event histories, and an archive of Trigger Action Response Plans. The tool would be updated annually based on
Government and company reporting and would include information on risk management and control approaches and draw on data from the Whole-of-Environment Data Repository for the State. The risk tool would be reviewed and commented on by relevant expert and regulatory bodies. The risk tool would be used to assist with:
• assessing new proposals
• assessing compliance
• improving prediction capability for consequences of incidents in risk assessments
• improving prediction capability of risk likelihoods
• informing project design amendments to decrease risk levels (such as undertaken in the Dam Safety Committee)
• informing the calculation of cumulative impacts
• flagging issues or risks that require a higher level of regulatory protection such as inclusion in legislation.
That Government establish a standing expert advisory body on CSG (possibly extended to all the extractive industries). This body should comprise experts from relevant disciplines, particularly ICT and the earth and environmental sciences and engineering, but drawing as needed on expertise from the biological sciences, medicine and the social sciences. The prime functions of this expert body would be to advise Government:
• on the overall impact of CSG in NSW through a published Annual Statement which would draw on a detailed analysis of the data held in the Whole-of-Environment Data
Repository to assess impacts, particularly cumulative impacts, at project, regional and sedimentary basin scales
• on processes for characterising and modelling the sedimentary basins of NSW
• on updating and refining the Risk Management and Prediction Tool
• on the implications of CSG impacts in NSW for planning where CSG activity is permitted to occur in the State
• on new science and technology developments relevant to managing CSG and when and whether these developments are sufficiently mature to be incorporated into its legislative and regulatory system
• on specific research that needs to be commissioned regarding CSG matters
• on how best to work with research and public sector bodies across Australia and internationally and with the private sector on joint research and harmonised approaches to data collection, modelling and scale issues such as subsidence
• on whether or not other unconventional gas extraction (shale gas, tight gas) industries should be allowed to proceed in NSW and, if so, under what conditions.
That Government establish a formal mechanism consisting of five parallel but interacting steps. The five steps are given below.
• Companies or organisations seeking to mine, extract CSG or irrigate as part of their initial and ongoing approvals processes should, in concert with the regulator, identify impacts to water resources, their pathways, their consequence and their likelihood, as well as the baseline conditions and their risk trigger thresholds before activities start. These analyses and systems should be incorporated in project management plans to meet regulator-agreed targets. Appropriate monitoring and characterisation 15 systems would be developed as part of these project management plans and then installed. The monitors would measure baseline conditions and detect changes to these, as well as providing data on impacts and triggered risk thresholds.
- Data from the monitors should be deposited (either automatically or in as close to real time as possible) in the State Whole-of-Environment Data Repository by all the extractive industries. Increasingly automated tools to interrogate data in the Repository should be developed, and these used to search data for discontinuities and compliance alerts.
- As a separate process, the expert advisory body would examine on a frequent basis all data relevant to a region or a sedimentary basin. The expert body would use this data review to check for any factors signalling problems in that region and, if any are found, recommend to Government the appropriate action to be taken with regard to the relevant parties.
- In a parallel process, the Government should commission, construct and maintain a variety of models of each region and in particular one that seeks to address cumulative impacts. These models should feed into the land use planning process and the activity approvals processes, and should assist in target setting for new projects.
- Government, working with other appropriate Australian governments, should commission formal scientific characterisation of sedimentary basins starting with the East Coast basins, and concentrating initially on integration of groundwater with the geological, geophysical and hydrological context. Viewing these integrated systems in models and in interpretation could be described as a ‘Glass Earth’ approach to understanding the dynamics of activities and impacts in the basins.
Training and certification
That Government ensure that all CSG industry personnel, including subcontractors working in operational roles, be subject to ongoing mandatory training and certification requirements.
Similarly, public sector staff working in compliance, inspections and audits should be given suitable training and, where appropriate, accreditation.
Legacy and consistency matters
That Government develop a plan to manage legacy matters associated with CSG. This would need to cover abandoned wells, past incomplete compliance checking, and the collection of data that was not yet supplied as required under licences and regulations.
There will also need to be a formal mechanism to transition existing projects to any new regulatory system.
That Government consider whether there needs to be alignment of legislation and regulation governing extraction of methane as part of coal mining and the application of buffer zones for gas production other than CSG with the relevant legislation and regulation provisions governing CSG production.