House debates
Tuesday, 11 November 2008
Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008
Consideration of Senate Message
Bill returned from the Senate with amendments.
Ordered that the amendments be considered immediately.
Senate’s amendments—
(1) Schedule 1, page 7 (after line 3), after item 10, insert:
10A Section 6
Insert:
closure assurance period has the meaning given by section 249CZN.
(2) Schedule 1, item 81, page 22 (line 21), at the end of the definition of significant risk, add “, 15FA, 15FB, 15FC or 15FD”.
(3) Schedule 1, item 109, page 36 (line 23) to page 38 (line 7), omit section 15F, substitute:
15F Significant risk of a significant adverse impact—approval of key petroleum operations
(1) For the purposes of sections 79A, 79B, 114A, 114B, 138A and 138B and paragraph 435B(2)(a), the question of whether there is a significant risk that a key petroleum operation will have a significant adverse impact on:
(a) operations for the injection of a greenhouse gas substance; or
(b) operations for the storage of a greenhouse gas substance;
is to be determined in a manner ascertained in accordance with the regulations.
(2) A manner ascertained in accordance with regulations made for the purposes of subsection (1) must take into account:
(a) the probability, or range of probabilities, of the occurrence of the adverse impact; and
(b) the economic consequences of the adverse impact; and
(c) the economic consequences of the adverse impact relative to the potential economic value of the operations referred to in whichever of paragraph (1)(a) or (b) is applicable.
(3) Subsection (2) does not limit the matters that may be taken into account.
(4) Subsections (1) and (2) have effect subject to subsections (5) and (6).
(5) For the purposes of sections 79A, 79B, 114A, 114B, 138A and 138B and paragraph 435B(2)(a), a key petroleum operation will have an adverse impact on:
(a) operations for the injection of a greenhouse gas substance; or
(b) operations for the storage of a greenhouse gas substance;
(the relevant greenhouse gas operations) if, and only if, the key petroleum operation will result in:
(c) an increase in the capital costs (other than prescribed costs) of the relevant greenhouse gas operations; or
(d) an increase in the operating costs (other than prescribed costs) of the relevant greenhouse gas operations; or
(e) a reduction in the rate of injection of the greenhouse gas substance; or
(f) a reduction in the quantity of the greenhouse gas substance that will be able to be stored.
(6) For the purposes of sections 79A, 79B, 114A, 114B, 138A and 138B and paragraph 435B(2)(a), if there is a risk that a key petroleum operation will have an adverse impact on:
(a) operations for the injection of a greenhouse gas substance; or
(b) operations for the storage of a greenhouse gas substance;
then that risk is not to be treated as significant, and that adverse impact is not to be treated as significant, if the amount that, under the regulations, is taken to be the probability-weighted impact cost of the key petroleum operation is less than the amount that, under the regulations, is taken to be the threshold amount.
15FA Significant risk of a significant adverse impact—grant of production licence
(1) For the purposes of sections 145 and 146, the question of whether there is a significant risk that any of the operations that could be carried on under a production licence will have a significant adverse impact on operations that are being, or could be, carried on under:
(a) a greenhouse gas assessment permit; or
(b) a greenhouse gas holding lease; or
(c) a greenhouse gas injection licence;
is to be determined in a manner ascertained in accordance with the regulations.
(2) A manner ascertained in accordance with regulations made for the purposes of subsection (1) must take into account:
(a) the probability, or range of probabilities, of the occurrence of the adverse impact; and
(b) the economic consequences of the adverse impact; and
(c) the economic consequences of the adverse impact relative to the potential economic value of the operations that are being, or could be, carried on under the permit, lease or licence referred to in whichever of paragraph (1)(a), (b) or (c) is applicable.
(3) Subsection (2) does not limit the matters that may be taken into account.
(4) Subsections (1) and (2) have effect subject to subsections (5) and (6).
(5) For the purposes of sections 145 and 146, an operation that could be carried on under a production licence (the production licence operation) will have an adverse impact on operations (the relevant greenhouse gas operations) that are being, or could be, carried on under:
(a) a greenhouse gas assessment permit; or
(b) a greenhouse gas holding lease; or
(c) a greenhouse gas injection licence;
if, and only if, the production licence operation will result in:
(d) an increase in the capital costs (other than prescribed costs) of the relevant greenhouse gas operations; or
(e) an increase in the operating costs (other than prescribed costs) of the relevant greenhouse gas operations; or
(f) a reduction in the rate of injection of the greenhouse gas substance; or
(g) a reduction in the quantity of the greenhouse gas substance that will be able to be stored.
(6) For the purposes of sections 145 and 146, if there is a risk that an operation that could be carried on under a production licence (the production licence operation) will have an adverse impact on operations that are being, or could be, carried on under:
(a) a greenhouse gas assessment permit; or
(b) a greenhouse gas holding lease; or
(c) a greenhouse gas injection licence;
then that risk is not to be treated as significant, and that adverse impact is not to be treated as significant, if the amount that, under the regulations, is taken to be the probability-weighted impact cost of the production licence operation is less than the amount that, under the regulations, is taken to be the threshold amount.
15FB Significant risk of a significant adverse impact—approval of key greenhouse gas operations
(1) For the purposes of sections 249AF and 249BD and paragraph 435B(2)(b), the question of whether there is a significant risk that a key greenhouse gas operation will have a significant adverse impact on petroleum exploration operations, or petroleum recovery operations, that are being, or could be, carried on under:
(a) an existing exploration permit; or
(b) an existing retention lease; or
(c) an existing production licence; or
(d) a future exploration permit; or
(e) a future retention lease; or
(f) a future production licence;
is to be determined in a manner ascertained in accordance with the regulations.
(2) A manner ascertained in accordance with regulations made for the purposes of subsection (1) must take into account:
(a) the probability, or range of probabilities, of the occurrence of the adverse impact; and
(b) the economic consequences of the adverse impact; and
(c) the economic consequences of the adverse impact relative to the potential economic value of the petroleum exploration operations, or petroleum recovery operations, that are being, or could be, carried on under the permit, lease or licence referred to in whichever of paragraph (1)(a), (b), (c), (d), (e) or (f) is applicable.
(3) Subsection (2) does not limit the matters that may be taken into account.
(4) Subsections (1) and (2) have effect subject to subsections (5) and (6).
(5) For the purposes of sections 249AF and 249BD and paragraph 435B(2)(b), a key greenhouse gas operation will have an adverse impact on petroleum exploration operations, or petroleum recovery operations, that are being, or could be, carried on under:
(a) an existing exploration permit; or
(b) an existing retention lease; or
(c) an existing production licence; or
(d) a future exploration permit; or
(e) a future retention lease; or
(f) a future production licence;
if, and only if, the key greenhouse gas operation will result in:
(g) an increase in the capital costs (other than prescribed costs) of the petroleum exploration operations or petroleum recovery operations; or
(h) an increase in the operating costs (other than prescribed costs) of the petroleum exploration operations or petroleum recovery operations; or
(i) a reduction in the rate of recovery of the petroleum; or
(j) a reduction in the quantity of the petroleum that will be able to be recovered.
(6) For the purposes of sections 249AF and 249BD and paragraph 435B(2)(b), if there is a risk that a key greenhouse gas operation will have an adverse impact on petroleum exploration operations, or petroleum recovery operations, that are being, or could be, carried on under:
(a) an existing exploration permit; or
(b) an existing retention lease; or
(c) an existing production licence; or
(d) a future exploration permit; or
(e) a future retention lease; or
(f) a future production licence;
then that risk is not to be treated as significant, and that adverse impact is not to be treated as significant, if the amount that, under the regulations, is taken to be the probability-weighted impact cost of the key greenhouse gas operation is less than the amount that, under the regulations, is taken to be the threshold amount.
15FC Significant risk of a significant adverse impact—grant of greenhouse gas injection licence
(1) For the purposes of sections 249CI and 249CR and paragraph 435B(2)(c), the question of whether there is a significant risk that any of the operations that could be carried on under a greenhouse gas injection licence will have a significant adverse impact on operations that are being, or could be, carried on under:
(a) an existing exploration permit; or
(b) an existing retention lease; or
(c) an existing production licence; or
(d) a future exploration permit; or
(e) a future retention lease; or
(f) a future production licence;
is to be determined in a manner ascertained in accordance with the regulations.
(2) A manner ascertained in accordance with regulations made for the purposes of subsection (1) must take into account:
(a) the probability, or range of probabilities, of the occurrence of the adverse impact; and
(b) the economic consequences of the adverse impact; and
(c) the economic consequences of the adverse impact relative to the potential economic value of the operations that are being, or could be, carried on under the permit, lease or licence referred to in whichever of paragraph (1)(a), (b), (c), (d), (e) or (f) is applicable.
(3) Subsection (2) does not limit the matters that may be taken into account.
(4) Subsections (1) and (2) have effect subject to subsections (5) and (6).
(5) For the purposes of sections 249CI and 249CR and paragraph 435B(2)(c), an operation that could be carried on under a greenhouse gas injection licence (the injection licence operation) will have an adverse impact on operations (the relevant petroleum operations) that are being, or could be, carried on under:
(a) an existing exploration permit; or
(b) an existing retention lease; or
(c) an existing production licence; or
(d) a future exploration permit; or
(e) a future retention lease; or
(f) a future production licence;
if, and only if, the injection licence operation will result in:
(g) an increase in the capital costs (other than prescribed costs) of the relevant petroleum operations; or
(h) an increase in the operating costs (other than prescribed costs) of the relevant petroleum operations; or
(i) a reduction in the rate of recovery of the petroleum; or
(j) a reduction in the quantity of the petroleum that will be able to be recovered.
(6) For the purposes of sections 249CI and 249CR and paragraph 435B(2)(c), if there is a risk that an operation that could be carried on under a greenhouse gas injection licence (the injection licence operation) will have an adverse impact on operations that are being, or could be, carried on under:
(a) an existing exploration permit; or
(b) an existing retention lease; or
(c) an existing production licence; or
(d) a future exploration permit; or
(e) a future retention lease; or
(f) a future production licence;
then that risk is not to be treated as significant, and that adverse impact is not to be treated as significant, if the amount that, under the regulations, is taken to be the probability-weighted impact cost of the injection licence operation is less than the amount that, under the regulations, is taken to be the threshold amount.
15FD Significant risk of a significant adverse impact—power of responsible Commonwealth Minister to protect petroleum
(1) For the purposes of section 249CZC and paragraph 435B(2)(d), the question of whether there is a significant risk that any of the operations that are being, or could be, carried on under a greenhouse gas injection licence will have a significant adverse impact on:
(a) operations to recover petroleum; or
(b) the commercial viability of the recovery of petroleum;
is to be determined in a manner ascertained in accordance with the regulations.
(2) A manner ascertained in accordance with regulations made for the purposes of subsection (1) must take into account:
(a) the probability, or range of probabilities, of the occurrence of the adverse impact; and
(b) the economic consequences of the adverse impact; and
(c) the economic consequences of the adverse impact relative to the potential economic value of the operations or recovery referred to in whichever of paragraph (1)(a) or (b) is applicable.
(3) Subsection (2) does not limit the matters that may be taken into account.
(4) Subsections (1) and (2) have effect subject to subsections (5) and (6).
(5) For the purposes of section 249CZC and paragraph 435B(2)(d), an operation that could be carried on under a greenhouse gas injection licence (the injection licence operation) will have an adverse impact on:
(a) operations to recover petroleum; or
(b) the commercial viability of the recovery of petroleum;
if, and only if, the injection licence operation will result in:
(c) an increase in the capital costs (other than prescribed costs) of the recovery of the petroleum; or
(d) an increase in the operating costs (other than prescribed costs) of the recovery of the petroleum; or
(e) a reduction in the rate of recovery of the petroleum; or
(f) a reduction in the quantity of the petroleum that will be able to be recovered.
(6) For the purposes of section 249CZC and paragraph 435B(2)(d), if there is a risk that an operation that is being, or could be, carried on under a greenhouse gas injection licence (the injection licence operation) will have an adverse impact on:
(a) operations to recover petroleum; or
(b) the commercial viability of the recovery of petroleum;
then that risk is not to be treated as significant, and that adverse impact is not to be treated as significant, if the amount that, under the regulations, is taken to be the probability-weighted impact cost of the injection licence operation is less than the amount that, under the regulations, is taken to be the threshold amount.
(4) Schedule 1, item 169, page 103 (after line 32), after section 249AJ, insert:
249AJA Retention lessee or production licensee to be notified of proposal to advertise blocks
Scope
(1) This section applies if:
(a) the responsible Commonwealth Minister proposes to publish a notice under subsection 249AJ(1) specifying a block that is the subject of a retention lease or production licence; and
(b) at the time of the proposal, the lessee or licensee is entitled to make an application for the grant of a greenhouse gas holding lease over the block.
Notification
(2) The responsible Commonwealth Minister must, at least 60 days before the proposed publication of the subsection 249AJ(1) notice, notify the lessee or licensee of the proposed publication.
Deferral of publication of notice
(3) If, during the period:
(a) beginning when the lessee or licensee is given the notification under subsection (2); and
(b) ending at the end of the day of proposed publication of the subsection 249AJ(1) notice;
the lessee or licensee makes such an application, the responsible Commonwealth Minister must not publish the subsection 249AJ(1) notice until:
(c) the application lapses; or
(d) the lessee withdraws the application; or
(e) the responsible Commonwealth Minister refuses to grant the greenhouse gas holding lease or greenhouse gas injection licence.
(5) Schedule 1, item 169, page 104 (after line 21), at the end of section 249AK, add:
Decision must be made within 12 months
(3) The responsible Commonwealth Minister must make a decision under subsection (2) within 12 months after the end of the period specified in the relevant notice under subsection 249AJ(1).
(6) Schedule 1, item 169, page 111 (after line 12), after section 249AP, insert:
249APA Retention lessee or production licensee to be notified of proposal to advertise blocks
Scope
(1) This section applies if:
(a) the responsible Commonwealth Minister proposes to publish a notice under subsection 249AP(1) specifying a block that is the subject of a retention lease or production licence; and
(b) at the time of the proposal, the lessee or licensee is entitled to make an application for the grant of a greenhouse gas holding lease or a greenhouse gas injection licence over the block.
Notification
(2) The responsible Commonwealth Minister must, at least 60 days before the proposed publication of the subsection 249AP(1) notice, notify the lessee or licensee of the proposed pub
5:07 pm
Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source
I move:
That the amendments be agreed to.
In agreeing to the amendments, on behalf of the government I would like to make a few comments because this is world-first legislation. Also, I welcome the member for Groom to the House, because of the constructive contribution made by the opposition in facilitating the progress of what is world-first legislation.
It is important to note that those discussions were assisted firstly by the valuable work of the House of Representatives Standing Committee on Primary Industries and Resources which involved detailed consultations with industry and all other stakeholders. Many of the amendments suggested by the House committee were incorporated in the initial legislation to be considered by the House with the support of the opposition. The bill was also referred to the Senate Standing Committee on Economics. Could I indicate that the bill incorporates an amendment to reflect the government’s acceptance of a recommendation of the Senate Scrutiny of Bills Committee relating to the better definition of the minister’s regulation-making power.
Broadly, the amendments agreed to in the Senate have the following important outcomes. Firstly, petroleum retention leaseholders are to be given a priority to apply for the grant of a greenhouse gas holding lease in relation to areas covered by the retention lease. The objective of this is to allow the retention leaseholders to consider their own need to sequester their greenhouse gases arising from petroleum operations. Similar arrangements apply to petroleum production licence holders. Secondly, the holder of a petroleum production licence will be given priority to apply for a greenhouse gas injection licence where (a) all of the greenhouse gas proposed to be injected will be obtained as a by-product of petroleum recovery operations carried out under the production licences and (b) some or all of the greenhouse gas substance to be injected will be obtained as a by-product of petroleum recovery operations carried out under any production licence and the responsible Commonwealth minister is satisfied that it is in the public interest for this to occur. This is to allow the production licensees to use a storage area in their production licence area for their own sequestration needs, but it will also provide an ability for the injector to sequester gas from their own or other petroleum operations or, potentially, additional greenhouse gas from other sources to mutual benefit.
The amendments also provide for a closure assurance period of a minimum of 15 years to be established. This period commences on the issue of a site-closing certificate—a process estimated to take five years after injection ends and which ceases when the responsible Commonwealth minister is satisfied that there is, inter alia, no significant risk that a greenhouse gas substance injected into the formation will have a significant adverse impact. On the cessation of the closure assurance period, the injector’s liability against claims for negligence et cetera ceases. This is effectively a 20-year limit on liability of the injector, with the Commonwealth assuming liability thereafter.
I also address the concerns raised by the Senate Scrutiny of Bills Committee. The bill has been amended to define the impacts that will be regarded as adverse impacts. The amendment will allow the regulations to set threshold criteria that may be taken into account in determining whether a significant risk of a significant adverse impact exists. Thresholds will be determined on the basis of the probability of occurrences and consequences.
The facilitation of this bill through both the House of Representatives and the Senate has represented a constructive engagement between the government and the opposition, and so it should be. As we all appreciate, Australia as a nation is heavily dependent on fossil fuels for energy purposes. In actual fact, 80 per cent of our electricity comes from coal fired power stations. Whilst the government has a significant challenge in terms of our renewable energy target of 20 per cent by 2020, the truth of the matter is that we are still going to be heavily dependent on fossil fuel for energy security in Australia. We therefore understand that the issue of technology is the key to guaranteeing energy security and our economic future. For those reasons this legislation, side by side with working with industry and like-minded governments on actually putting in place carbon capture and storage capacity, is of the utmost importance not only to Australia but also to the global community. (Extension of time granted)
A recent International Energy Agency report reinforced that point and clearly indicated that throughout the global community coal fired power stations are also going to be central to energy security in both developed and developing nations. For that reason the legislation that is currently before the House is being watched closely by the international community. A range of governments have actually sought briefings from my department with respect to the nature of the legislation, especially going to the complex issue of liability and also the question of ensuring closure in a safe and proper way.
In conclusion I say that, on the basis of this Commonwealth legislation going to our responsibilities for offshore areas, it is now a priority that state and territory governments proceed to actually finalise consideration of their onshore legislative regime, because the issue of sequestration is not only capable of being achieved in offshore waters for which the Commonwealth has responsibility but also being closely pursued by a range of businesses with respect to onshore capacity.
I say to all those involved in the debate, within the House and the Senate and from the private sector of the Australian business community: thank you for your cooperation. It is a world first and without your constructive input Australia would not be best-positioning itself to actually confront the challenge of climate change in the 21st century. I commend the bill to the House.
5:14 pm
Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source
I am going to have to tread very carefully here. It has been accused by my colleague behind me of that it is some sort of love-in every time the minister and I get to our feet. I have to say that this process is incredibly important, and it could have been overlooked as just another boring piece of resources legislation. In fact, as the minister has just said, this is world first legislation. It is legislation that I congratulate the minister on completing; it is legislation that I began in my previous life. Australia can hold its head high and be very proud with the passage of this legislation. It is legislation which, as the minister said, not only sets the blueprint for terrestrial sequestration here in Australia—and hopefully the state governments will take the lead and not fiddle around with it too much and not waste too much time—but also shows that Australia can do it better than anywhere else in the world when it comes to technology.
The Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 will ensure that the opportunity is presented for those producers of energy from fossil fuel to sequester their CO2. That is incredibly important. But, just as important, it is a partnership between the Commonwealth government and the commercial operators of these fields. In doing so, Australia will be able to offer them an alternative to emitting that CO2 into the atmosphere. There are still a significant number of hurdles to step over before geosequestration—initially perhaps from oil and gas fields but ultimately from power stations—takes place. Those challenges cannot be underestimated. There is an enormous cost associated with geosequestration and an even greater cost associated with the development of the engineering and technology to actually perform it. This legislation creates that opportunity and it is legislation which is a world first and of which Australia can be very proud.
Question agreed to.