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2013-2014-2015
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE AMENDMENT
(MISCELLANEOUS MATTERS) BILL 2015
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Industry and Science,
the Honourable Ian Macfarlane, MP)
OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE AMENDMENT
(MISCELLANEOUS MATTERS) BILL 2015
OUTLINE
The purpose of this Bill is to amend the Offshore Petroleum and Greenhouse Gas Storage
Act 2006 (OPGGS Act) to:
Automatically grant or extend the coverage of titles under the OPGGS Act to ensure
security of tenure for titleholders over blocks moving from State/Northern Territory
coastal waters into Commonwealth jurisdiction as a result of a change to the boundary
of the coastal waters of a State or Territory;
Provide comprehensive arrangements for the valid granting of renewals of
Commonwealth titles over blocks remaining in Commonwealth waters, where part of
that title has moved into State/NT waters as a result of a change to the boundary of the
coastal waters of a State or Territory;
Make further amendments related to the conferral of functions on NOPSEMA in
designated coastal waters under State or Northern Territory legislation, to provide
clarification on the arrangements to both clearly distinguish between petroleum and
greenhouse gas storage regulation and provide for satisfactory cost recovery
arrangements for functions undertaken in waters landward of the territorial sea
baseline;
Make technical amendments relating to automatic revocation of certain blocks within
a petroleum exploration permit and of declarations of location; and
Make technical amendments to provisions relating to suspension, variation, or
exemption from compliance with title conditions, and extension of the term of certain
titles when a suspension of a condition is granted.
Changes to the boundary of the coastal waters of a State or Territory
Geoscience Australia has an ongoing responsibility to define the limits of Australia`s
maritime jurisdiction. The boundary between Commonwealth waters and State/Territory
coastal waters changes automatically by operation of the Commonwealth Coastal Waters
(State Title) Act 1980 and Coastal Waters (Northern Territory Title) Act 1980 to reflect actual
changes to the territorial sea baseline. In practice, however, changes to Australia`s maritime
boundaries are only identified through the publication of new maps or datasets.
In May 2014, the Australian Government announced that the maritime boundaries around
Scott and Seringapatam Reefs offshore of Western Australia had changed to reflect the
outcomes of a Geoscience Australia review of the area`s most seaward features. The revised
boundaries intersect three existing Commonwealth offshore petroleum titles. As a result of
the boundary change, affected blocks within those Commonwealth petroleum titles now lie
within Western Australian jurisdiction. To maintain certainty for offshore petroleum
titleholders, section 283 of the OPGGS Act contains a delaying provision which postpones
the effect of the change in jurisdictional boundary until the affected Commonwealth title
ceases to be in force. A title will cease to be in force if it expires, is renewed, cancelled or
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surrendered, or if a successor title is granted (such as the grant of a petroleum production
licence to the holder of a petroleum exploration permit).
However, section 283 of the OPGGS Act contains a regulatory gap whereby, upon cessation
of the existing Commonwealth title, blocks affected by the boundary change would become
vacant acreage in Western Australian waters. To prevent this situation from occurring, the
Western Australian Government passed a Browse Basin-specific Act providing that, upon
cessation of the affected Commonwealth titles, the affected blocks will automatically
transition to analogous Western Australian titles.
If the situation was to occur in reverse and the coastal waters boundary changed so that
blocks within a State/Territory title then lay within Commonwealth waters, there is currently
no mechanism in the OPGGS Act to enable affected blocks to transfer, with continuity of
tenure for the holder of the State/Territory title, from State/Territory to Commonwealth
jurisdiction. Instead, affected blocks would become vacant acreage in Commonwealth waters
upon cessation in force of the State or Territory title and existing titleholders would lose title
over those blocks. Those titleholders may have already spent considerable sums of money
and effort undertaking exploration activities under their title, and therefore it is considered
critical that titleholders should have continuity of tenure in the event of a boundary change.
The amendments to the OPGGS Act made by this Bill are the only way to satisfactorily
eliminate the risk this poses for titleholders. Amendments will preserve continuity of tenure
for titleholders and provide for the seamless and efficient transition of affected blocks
between jurisdictions in the event of future boundary changes.
Conferral of functions on NOPSEMA by a State or the Northern Territory
Section 646 of the OPGGS Act permits the States and the Northern Territory (NT) to confer
functions on the National Offshore Petroleum Safety and Environmental Management
Authority (NOPSEMA) in relation to petroleum and greenhouse gas storage activities that
take place in waters under State/NT jurisdiction. Section 646A qualifies section 646, by
providing that section 646 does not authorise NOPSEMA to perform certain functions unless
various conditions are satisfied.
There is an ambiguity in the current wording of paragraph 646A(1)(c) of the OPGGS Act
whereby the view could be formed that jurisdictions contemplating the conferral of
occupational health and safety and structural integrity functions on NOPSEMA in relation to
petroleum activities in their waters are prevented from doing so unless they also confer those
functions in relation to greenhouse gas storage activities. This is not, however, the intention
of the provision. The amendments in this Bill therefore clearly and expressly separate the
requirements for conferral of petroleum and greenhouse gas storage functions. Further minor
amendments are also made to clarify the intended operation of section 646A.
Cost recovery for performance by NOPSEMA of conferred functions
The Offshore Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Measures)
Bill 2014 (the Miscellaneous Measures Bill) was introduced into Parliament on 3 December
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2014. If passed by the Parliament, the Miscellaneous Measures Bill will, inter alia, modify
the definition of designated coastal waters` in the OPGGS Act to include waters of the sea
that are landward of the territorial sea baseline. The purpose of that change is to enable the
States and the NT to confer functions on NOPSEMA in respect of all waters of the sea
landward of the offshore area` (the zone of Commonwealth jurisdiction) under section 646
of the OPGGS Act.
Extending the area of coastal waters eligible for conferral raised some issues when
considering how to cost-recover for any activities NOPSEMA undertakes in such waters.
Legal advice received in November 2014 suggested there would be a medium to high
constitutional risk associated with extending the existing cost recovery arrangements for the
performance of NOPSEMA`s functions under the Offshore Petroleum and Greenhouse Gas
Storage (Regulatory Levies) Act 2003 (Regulatory Levies Act) across the expanded
designated coastal waters area.
This Bill therefore amends the OPGGS Act so that the costs of performing NOPSEMA`s
conferred functions in waters landward of the territorial sea baseline may be recovered from
industry. The cost-recovery provision will make it a condition of conferring functions on
NOPSEMA, in respect of waters landward of the territorial sea baseline, that the responsible
Commonwealth Minister and the responsible State or NT Minister reach an agreement on
cost recovery for regulatory operations NOPSEMA undertakes in those waters, and that the
agreement has been implemented. Therefore, in practice, should a State or the NT wish to
confer in waters landward of the territorial sea baseline, it will be required to implement
measures (likely to be legislation) to establish cost recovery arrangements that closely
resemble the arrangements under the Regulatory Levies Act.
This arrangement would only apply for coastal waters landward of the territorial sea baseline.
For conferral in waters seaward of the baseline, the current arrangements (whereby cost
recovery is enabled under the Regulatory Levies Act) would be preserved. This would ensure
that a consistent cost recovery regime can be applied for all regulatory operations undertaken
by NOPSEMA, both in the Commonwealth offshore area and in all designated coastal waters
where functions have been conferred on NOPSEMA.
FINANCIAL IMPACT STATEMENT
This Bill has no financial impact.
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STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Offshore Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Matters) Bill
2015
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the Bill
The purpose of the Bill is to amend the Offshore Petroleum and Greenhouse Gas Storage Act
2006 (OPGGS Act) to:
Automatically grant or extend the coverage of titles under the OPGGS Act to ensure
security of tenure for titleholders over blocks moving from State/Northern Territory
coastal waters into Commonwealth jurisdiction as a result of a change to the boundary
of the coastal waters of a State or Territory;
Provide comprehensive arrangements for the valid granting of renewals of
Commonwealth titles over blocks remaining in Commonwealth waters, where part of
that title has moved into State/NT waters as a result of a change to the boundary of the
coastal waters of a State or Territory;
Make further amendments related to the conferral of functions on NOPSEMA in
designated coastal waters under State or Northern Territory legislation, to provide
clarification on the arrangements to both clearly distinguish between petroleum and
greenhouse gas storage regulation and provide for satisfactory cost recovery
arrangements for functions undertaken in waters landward of the territorial sea
baseline;
Make technical amendments relating to automatic revocation of certain blocks within
a petroleum exploration permit and of declarations of location; and
Make technical amendments to provisions relating to suspension, variation, or
exemption from compliance with title conditions, and extension of the term of certain
titles when a suspension of a condition is granted.
Human rights Implications
The amendments in this Bill are mechanical in nature and do not engage any of the applicable
rights or freedoms.
Conclusion
This Bill is compatible with human rights as it does not raise any human rights issues.
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OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE AMENDMENT
(MISCELLANEOUS MATTERS) BILL 2015
NOTES ON CLAUSES
Clause 1: Short title
This is a formal provision specifying the short title of the Act.
Clause 2: Commencement
Sections 1 to 3 of the Act, Parts 1, 2, 3 and 5 of Schedule 1 to the Act, and Division 2 of Part
4 of Schedule 1 to the Act will commence on the day after this Act receives the Royal Assent.
Division 1 of Part 4 of Schedule 1 to the Act will commence retrospectively on 20 June 2014.
This Division inserts provisions into the Offshore Petroleum and Greenhouse Gas Storage
Act 2006 (the OPGGS Act) that ensure it is clear that where there has been a seaward shift in
the boundary of the coastal waters of a State or Territory, which reduces the area of a
Commonwealth petroleum retention lease that lies within Commonwealth waters, a renewal
of the lease may be granted over the portion of the lease area that remains in Commonwealth
waters - see item 48. Although this provision will apply generally, it is of particular
relevance with respect to the renewal of the Commonwealth retention lease held by the
Browse joint venture, which has been affected by a seaward shift in the coastal waters
boundary. The application to renew the retention lease was submitted to the National
Offshore Petroleum Titles Administrator (the Titles Administrator) on
20 June 2014. The purpose of retrospective commencement from that date is therefore to
ensure the validity of both the application submitted by the Browse joint venturers, and any
subsequent decision by the Joint Authority to renew the lease.
Retrospective commencement of the amendments will serve the beneficial purpose of
ensuring security of tenure of title for the Browse joint venture, which has made a substantial
investment in the Browse project, and will not impose any new or additional requirements on
a titleholder that would not have otherwise applied from that date. Furthermore, the Browse
joint venture is supportive of measures taken that will provide certainty by ensuring valid
grant of the renewal of their retention lease over the part of the title that remains in
Commonwealth waters.
Retrospective commencement of the relevant provisions is also supplemented by a validation
provision (see item 49), so that if the renewal of the lease is granted before the day after this
Act receives Royal Assent (when the Act will itself commence), the grant is as effective as it
would have been if the relevant provisions had been in place at all material times before that
day.
Clause 3: Schedules
This clause gives effect to the provisions in the Schedule to this Act.
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Schedule 1 - Amendments
Part 1 - Extension of the terms of permits and leases etc.
Division 1 - Amendments
Offshore Petroleum and Greenhouse Gas Storage Act 2006
Under the OPGGS Act, petroleum and greenhouse gas titles are granted subject to certain
conditions. Generally, but not always, these conditions define the work program
commitments, in terms of type and timing (attached to a specific year of the permit), to which
titleholders are obliged to adhere. As a general rule, these conditions should not change
during the term of a title. However, it is recognised that it is not always possible to accurately
predict the nature of and required timeframe for offshore petroleum and greenhouse gas
storage activities, particularly given the impact of a range of geological and geophysical
factors, weather and market conditions on particular work programs. Consequently, it is
appropriate in certain circumstances to suspend or vary title conditions, or to exempt a
titleholder from compliance with a condition.
Section 264 of the OPGGS Act provides for the making of suspension, variation and
exemption decisions by the Joint Authority in relation to conditions of petroleum titles,
including in circumstances where the relevant titleholder has made an application to the
Titles Administrator for a decision of this kind. Section 265 then allows the Joint Authority to
extend the term of a petroleum exploration permit or petroleum retention lease in
circumstances where the Joint Authority has suspended or exempted the titleholder from
compliance with any of the conditions to which the permit or lease is subject.
Part 3.9 of the OPGGS Act sets out equivalent provisions to enable the responsible
Commonwealth Minister to suspend, vary or exempt a greenhouse gas titleholder from
compliance with conditions to which greenhouse gas titles are subject, and to then extend the
term of a greenhouse gas assessment permit or greenhouse gas holding lease where the
Minister has suspended or exempted the titleholder from compliance with any of the
conditions to which the permit or lease is subject.
Potential unintended consequences have been identified as a result of the current drafting of
the provisions. Firstly, under current paragraph 264(3)(b), the Joint Authority is not permitted
to vary, suspend or exempt a titleholder from compliance with title conditions where this
action would affect the term of a petroleum title. In effect, this could be read to mean that the
Joint Authority could not, in most known industry circumstances, suspend a title condition
that is connected to the final year of the title, as the titleholder cannot be given more time to
comply with the condition - which in effect is what must necessarily result from the
suspension of a condition - unless the term of the title is also affected. Therefore, on a
technical reading, the ability for the Joint Authority to extend the term of a petroleum
exploration permit or petroleum retention lease under section 265 also could not be applied to
enable extension of the term of the permit or lease in these circumstances, as section 265 only
applies if the Joint Authority has first made a decision to suspend any of the conditions to
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which the permit or lease is subject under section 264. As noted above, the Joint Authority
cannot, in most known industry circumstances, do so where the permit or lease is in its final
year, as a result of the application of paragraph 264(3)(b).
The amendments in this Part therefore clarify the ability for the Joint Authority to grant a
suspension of a permit or lease condition, and extension of the permit or lease term, during
the final year of the term of the permit or lease.
Secondly, section 265 currently enables the Joint Authority to extend the term of a petroleum
exploration permit or petroleum retention lease in circumstances where a permittee or lessee
has been exempted from compliance with a title condition. This pairing of exemptions and
extensions is both inconsistent with resource management policy and it does not reflect
current administrative practice, given that in the event of an exemption a titleholder will be
exempt from the requirement to comply with a condition to undertake work that was
previously committed to, and, given this results in an effective reduction in the overall work
programme, there is no justifiable reasoning or grounds on the basis of the exemption itself to
require more time within the permit or lease term. The amendments in this Part therefore
remove references to exemptions in section 265, so that the Joint Authority will only be able
to grant an extension of the term of a petroleum exploration permit or petroleum retention
lease where the Joint Authority suspends any of the conditions to which the permit or lease is
subject. As explained above, a suspension of a condition necessarily results in a sanctioned
delay in the undertaking or completion of a condition. A suspension of a condition,
depending on the timing aspect of the condition within the overall term of the title, may
constitute justifiable reasoning or grounds to grant an extension in the term of the title.
Thirdly, there have been some instances in administrative practice where a title has been
close to expiring due to a decision not being made on an application for a suspension and
extension until just before the title expiry date. This may be, for example, due to the timing of
the application, and/or the level of complexity of considerations to be taken into account by
the Titles Administrator and the Joint Authority in determining whether to grant the
suspension and extension. There is no currently no provision that would extend the duration
of a petroleum title pending a suspension and extension decision - which both risks a title
inadvertently expiring or a decision being made under undue pressure to avoid the
unfortunate situation of a title expiring.
The amendments in this Part therefore ensure that a petroleum exploration permit or
petroleum retention lease is kept in force where an application has been made under section
264 to suspend any of the conditions to which the permit or lease is subject, and the Joint
Authority has not made a decision in relation to the application at the time the permit or lease
would otherwise expire. If the Joint Authority subsequently decides not to suspend the
condition, the permit or lease will be automatically extended for a further two (2) months to
enable the titleholder reasonable time to apply for a renewal of the permit or lease, or for a
successor title (such as a production licence).
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Finally, the amendments in this Part specifically enable a titleholder to apply for a variation
and suspension of title conditions within the one document, instead of treating these as
separate applications. The amendments also clarify that the Joint Authority can make a
decision, and provide notice of the decision to the titleholder, in relation to both the variation
and suspension concurrently. They also allow the Joint Authority to provide notice of the
decisions to suspend and extend together, for administrative and regulatory efficiency.
Equivalent amendments are also made to the corresponding greenhouse gas provisions in Part
3.9 of the OPGGS Act.
Item 1: Subsection 102(2) (note 4)
This item amends note 4 to section 102 to reflect that the duration of a petroleum exploration
permit will no longer be able to be extended following a decision by the Joint Authority to
exempt the permittee from compliance with any of the conditions to which the permit is
subject - see item 8.
Item 2: Subsection 102(2) (after note 4)
This item inserts a new note after section 102 to advise the reader of the effect of new section
265A, which provides that the duration of a petroleum exploration permit will be extended, or
in other words the permit will be kept in force, pending a decision by the Joint Authority to
suspend any of the conditions to which the permit is subject, if the permit would otherwise
expire prior to the decision being made - see item 8.
Item 3: Subsection 139(2) (note 4)
This item amends note 4 to section 139 to reflect that the duration of a petroleum retention
lease will no longer be able to be extended following a decision by the Joint Authority to
exempt the lessee from compliance with any of the conditions to which the lease is subject -
see item 8.
Item 4: Subsection 139(2) (after note 4)
This item inserts a new note after section 139 to advise the reader of the effect of new section
265A, which provides that the duration of a petroleum retention lease will be extended, or in
other words the lease will be kept in force, pending a decision by the Joint Authority to
suspend any of the conditions to which the lease is subject, if the lease would otherwise
expire prior to the decision being made - see item 8.
Item 5: After subsection 264(1)
This item inserts a new subsection 264(1A), which specifically enables a titleholder to apply
for a variation and suspension of title conditions within the one document, instead of treating
these as separate applications.
Under current section 264 of the OPGGS Act, the holder of a petroleum exploration permit,
petroleum retention lease, petroleum production licence, infrastructure licence or pipeline
8
licence may apply to the Titles Administrator for a variation or suspension of any of the
conditions to which the permit, lease or licence is subject. However it is acknowledged that in
practice, a titleholder may wish to apply at the same time for both a variation and a related
suspension of a condition to which a title is subject.
For example, the holder of an exploration permit may apply to vary a condition of the permit
in the fifth year of the permit term to substitute geological and geophysical studies with
drilling of an exploration well. To ensure there is sufficient time to drill the well within the
fifth year of the permit term, the permittee may also apply to suspend the condition requiring
drilling of the well. A suspension is used to extend the end of the particular permit year, so if
granted in response to presentation of justifiable grounds, this would in effect give the
permittee more time to drill the well and remain compliant with permit obligations.
The amendment made by this item therefore clarifies that an application for the variation and
suspension of title conditions can be made at the same time and in the same document. This
will ensure that the titleholder does not need to submit two separate applications, and that it is
clear to the decision-maker that the applications for the variation and suspension are related.
Item 6: After subsection 264(2)
This item inserts a new subsection 264(2A), to clarify that the Joint Authority can make a
concurrent decision to vary and suspend any of the conditions to which a title is subject, and
provide notice of the decision to the titleholder in the same document.
As discussed under item 5, new subsection 264(1A) will specifically enable a titleholder to
apply for a variation and suspension of a title condition or conditions within the one
document, instead of submitting and treating these as separate applications. New subsection
264(2A) ensures that, if such an application is submitted, the Joint Authority can then make a
combined decision in relation to both the variation and suspension, and notify the titleholder
accordingly.
Item 7: Subsection 264(3)
This item repeals the existing subsection 264(3), and replaces it with a new subsection
264(3). The effect of this amendment is to repeal paragraph 264(3)(b). This paragraph could
potentially be interpreted to suggest that section 264 would otherwise enable the Joint
Authority to give a notice varying, suspending, or exempting a titleholder from compliance
with any of the conditions to which a petroleum title is subject that would affect the term of
the title. However, this is not the policy intent of section 264. Section 264 only enables the
Joint Authority to make a decision to vary, suspend or exempt compliance with title
conditions. Section 265 then separately provides for any consequential extension of the term
of a petroleum exploration permit or petroleum retention lease, following a decision of the
Joint Authority to suspend any of the conditions to which the permit or lease is subject.
The effective repeal of paragraph 264(3)(b) by this item will also ensure that a decision to
suspend a condition to which an exploration permit or retention lease is subject, and extend
the term of the permit or lease, can be made in the final year of the permit or lease term. The
9
current effect of paragraph 264(3)(b) is that the Joint Authority could not, on a technical
reading, suspend a permit or lease condition in the final year of the permit or lease term, as
the titleholder cannot be given more time, in the final year, to comply with the condition
unless the term of the title is also affected. Assume, for example, the final year of a permit
commences on 1 January 2015 and ends on 31 December 2015. The end of the permit term is
therefore also 31 December 2015. If the permittee applies for a suspension of the final year
work program, this means they do not believe they can meet their obligations by 31
December 2015, and want more time to do so. However, the only way to give them more
time is to suspend the permit year so that it ends after 31 December 2015, which would take
the permit year beyond the end of the permit term.
Current subsection 265(2) provides that, despite current subsection 264(3), the Joint
Authority may extend the term of a permit or lease if it considers that the circumstances make
it reasonable to do so. However, section 265 (including subsection 265(2)) only applies if,
under section 264, the Joint Authority first gives a notice suspending any of the conditions to
which a permit or lease is subject (as specified in subsection 265(1)). Therefore if the Joint
Authority has not already authorised a suspension under section 264, section 265, including
the exception in subsection 265(2), does not apply. As noted above, the Joint Authority
cannot suspend a condition where the permit or lease is in its final year, as a result of the
application of paragraph 264(3)(b).
The removal of the references to a petroleum exploration permit and petroleum retention
lease as a result of the repeal of paragraph 264(3)(b) will therefore enable the Joint Authority
to suspend a permit or lease condition under section 264, and at the same time grant a
corresponding extension of the permit or lease term under new section 265, during the final
year of the term of the permit or lease.
With respect to a petroleum production licence, infrastructure licence or pipeline licence,
these titles remain in force indefinitely in any case (unless surrendered, cancelled or
terminated) so that the reference to affecting the term of such a licence in paragraph
264(3)(b) is redundant, with the exception of a fixed-term petroleum production licence. It is
not intended, however, that the term of a fixed-term petroleum production licence be able to
be extended under section 265 as a consequence of a suspension of a condition, as the types
of conditions that a fixed-term production licence may be subject to are, in practice, different
in nature from the conditions to which an exploration permit or retention lease is subject (i.e.
generally work program conditions that are required to be completed within a particular
time).
This item also makes a consequential amendment as a result of the insertion of new section
265A (see item 8).
New section 265A continues a petroleum exploration permit or petroleum retention lease in
force, if the permit or lease would otherwise expire before the Joint Authority makes a
decision in relation to an application for a suspension of any of the conditions to which the
permit or lease is subject. If the Joint Authority subsequently refuses the application, the
10
permit or lease then continues in force until the end of the period of two months that began
when notice of the refusal was given to the permittee or lessee. However, although it is
current practice for a notice of a refusal decision to be given to a permittee or lessee, there is
no specific reference in the OPGGS Act to a notice of refusal that the new provision can be
tied to.
This item therefore inserts a new subsection 264(3A) to specifically require the Joint
Authority to give a titleholder a written notice of a refusal to grant an application by the
titleholder for a variation, suspension or exemption from compliance with any of the
conditions to which the title is subject. As noted above, this already reflects current practice.
Item 8: Section 265
This item repeals section 265 and inserts new sections 265 and 265A, relating to the
extension of the term of a petroleum exploration permit or a petroleum retention lease.
The amendment to section 265 achieves a couple of purposes. Firstly, the Joint Authority will
no longer have the ability to extend the term of an exploration permit or retention lease if the
Joint Authority, under section 264, exempts the permittee or lessee from compliance with any
of the conditions to which the permit or lease is subject. This ability is not considered
necessary, given that in the event of an exemption a titleholder will not be required to
undertake work that was previously committed to, and should therefore not require more time
within the permit or lease term. As a result of the amendment, the Joint Authority will only
be able to grant an extension of the term of an exploration permit or retention lease where the
Joint Authority suspends any of the conditions to which the permit or lease is subject.
Secondly, if the Joint Authority suspends any of the conditions to which a permit or lease is
subject, the Joint Authority will have the ability to extend the term of the permit or lease by a
period that the Joint Authority considers appropriate. Previously, the Joint Authority could
only extend the term of the permit or lease by a period not more than the period of the
suspension.
Revising the provision in this way will ensure flexibility, in case instances arise where it may
be appropriate to extend the term of the permit or lease by a period longer than the period of
the suspension. It is likely that, in practice, the period of extension will for the most part
continue to reflect the period of suspension. Indeed, under new subsection 265(3), the Joint
Authority must have regard to the period of suspension in considering the period of extension
that may be appropriate. However, it is considered prudent to provide flexibility for cases in
which the circumstances may be such that a longer period of extension is justified.
New section 265A will ensure that if a titleholder submits an application for a suspension of
any of the conditions to which an exploration permit or retention lease is subject, and the
permit or lease would otherwise expire before the Joint Authority makes a decision on the
application, the permit or lease will continue in force until the Joint Authority makes a
decision.
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There have been some instances in practice where a title has been close to expiring due to a
decision not being made on an application for a suspension until just before the title expiry
date. This may be, for example, due to the timing of the application, and/or the level of
complexity of considerations to be taken into account by the Titles Administrator and the
Joint Authority in determining whether to grant the suspension. There was previously no
provision that would extend the duration of a petroleum title, in other words keeping it in
force, pending a suspension decision.
There are two possible outcomes that may apply where a permit or lease is kept in force
pending a decision on an application to suspend a condition to which the permit or lease is
subject. If the Joint Authority subsequently gives a notice suspending the condition, and
consequently extends the term of the permit or lease, the permit or lease will continue in
force until the end of the extended term.
If, on the other hand, the Joint Authority subsequently gives a notice refusing to suspend the
condition, the permit or lease will continue in force until the end of the period of two months
beginning when the notice of refusal was given to the titleholder, or such longer period as the
Joint Authority approves in writing. This is to ensure that the permittee or lessee will have
time to apply for a renewal of the permit or lease, or a successor title such as a petroleum
production licence, and thereby retain tenure of title, prior to the expiry of the permit or lease.
Subsection 265A(3) will ensure that if the permit or lease is being kept in force for two
months following a decision by the Joint Authority to refuse an application for a suspension
of a condition, the permittee or lessee cannot apply again during that time for a suspension of
any of the conditions to which the permit or lease is subject. This is to close a potential
loophole to ensure that a permittee or lessee does not repetitively apply for a suspension of
conditions during the period following a refusal simply in order to keep the permit or lease in
force without having to submit an application for a renewal or successor title. Although the
Joint Authority would in all likelihood again refuse the application for suspension, the permit
or lease would again remain in force pending the decision, and then a further two month
period following notification of the refusal decision.
It is acknowledged that it is a matter of general Government policy that an administrative
decision that is likely to affect the interests of an individual should be reviewable on its
merits unless it would be inappropriate, or there are factors justifying the exclusion of merits
review. Neither the amendments implemented by this item nor the existing general
application of Part 9.1 of the OPGGS Act provide for merits review of any decisions made by
the Joint Authority under the OPGGS Act.
The proposed amendments seek to provide the Joint Authority with additional decision-
making powers, which are predominantly discretionary in nature. These amendments
complement existing sections in the OPGGS Act. The policy rationale for excluding merits
review is that the decision being made is based entirely on the economic resource
management policy of the Government. It would therefore be inappropriate to provide for
merits review in these circumstances, as to allow an avenue of appeal would in effect amount
12
to contesting the Government`s resource management strategy and policy of effectively
managing the nation`s resources in the public interest.
Item 9: Subsection 293(2) (note 4)
This item amends note 4 to section 293 to reflect that the duration of a greenhouse gas
assessment permit will no longer be able to be extended following a decision by the
responsible Commonwealth Minister to exempt the permittee from compliance with any of
the conditions to which the permit is subject - see item 15.
Item 10: Subsection 293(2) (after note 4)
This item inserts a new note after section 293 to advise the reader of the effect of new section
437A, which provides that the duration of a greenhouse gas assessment permit will be
extended, or in other words the permit will be kept in force, pending a decision by the
responsible Commonwealth Minister to suspend any of the conditions to which the permit is
subject, if the permit would otherwise expire prior to the decision being made - see item 15.
Item 11: Subsection 322(3) (note 5)
This item amends note 5 to section 322 to reflect that the duration of a greenhouse gas
holding lease will no longer be able to be extended following a decision by the responsible
Commonwealth Minister to exempt the lessee from compliance with any of the conditions to
which the lease is subject - see item 15.
Item 12: Subsection 322(3) (after note 5)
This item inserts a new note after section 322 to advise the reader of the effect of new section
437A, which provides that the duration of a greenhouse gas holding lease will be extended, or
in other words the lease will be kept in force, pending a decision by the responsible
Commonwealth Minister to suspend any of the conditions to which the lease is subject, if the
lease would otherwise expire prior to the decision being made - see item 15.
Item 13: After subsection 436(1)
This item inserts a new subsection 436(1A), which specifically enables a titleholder to apply
for a variation and suspension of title conditions within the one document, instead of treating
these as separate applications.
Under current section 436 of the OPGGS Act, the holder of a greenhouse gas assessment
permit, greenhouse gas holding lease or greenhouse gas injection licence may apply to the
responsible Commonwealth Minister for a variation or suspension of any of the conditions to
which the permit, lease or licence is subject. However it is acknowledged that in practice, a
titleholder may wish to apply at the same time for both a variation and a related suspension of
a condition to which a title is subject.
The amendment made by this item therefore clarifies that an application for the variation and
suspension of title conditions can be made at the same time and in the same document. This
13
will ensure that the titleholder does not need to submit two separate applications, and that it is
clear to the decision-maker that the applications for the variation and suspension are related.
Item 14: Subsection 436(3)
This item repeals current subsection 436(3). This subsection could potentially be interpreted
to suggest that section 436 would otherwise enable the responsible Commonwealth Minister
to give a notice varying, suspending, or exempting a titleholder from compliance with any of
the conditions to which a greenhouse gas title is subject that would affect the term of the title.
However, this is not the policy intent of section 436. Section 436 only enables the responsible
Commonwealth Minister to make a decision to vary, suspend or exempt compliance with title
conditions. Section 437 then separately provides for any consequential extension of the term
of a greenhouse gas assessment permit or greenhouse gas holding lease, following a decision
of the responsible Commonwealth Minister to suspend any of the conditions to which the
permit or lease is subject.
The repeal of subsection 436(3) by this item will also ensure that a decision to suspend a
condition to which an assessment permit or holding lease is subject, and extend the term of
the permit or lease, can be made in the final year of the permit or lease term. The current
effect of subsection 436(3) is that the responsible Commonwealth Minister could not, on a
technical reading, suspend a title condition in the final year of the title, as the titleholder
cannot be given more time, in the final year, to comply with the condition unless the term of
the title is also affected. However, the ability for the responsible Commonwealth Minister to
extend the term of a permit or lease under section 437 also could not apply to enable
extension of the term of the permit or lease in these circumstances, as section 437 only
applies if the responsible Commonwealth Minister has first made a decision to suspend any
of the conditions to which the permit or lease is subject under section 436. As noted above,
the responsible Commonwealth Minister cannot do so where the permit or lease is in its final
year, as a result of the application of subsection 436(3).
The removal of the references to a greenhouse gas assessment permit and greenhouse gas
holding lease as a result of the repeal of subsection 436(3) will therefore enable the
responsible Commonwealth Minister to suspend a permit or lease condition under section
436, and at the same time grant a corresponding extension of the permit or lease term under
new section 437, during the final year of the term of the permit or lease.
With respect to a greenhouse gas injection licence, this title remains in force indefinitely in
any case (unless surrendered, cancelled or terminated) so that the reference to affecting the
term of an injection licence in subsection 436(3) is redundant.
This item also inserts new subsections 436(3) and (3A). New subsection 436(3) clarifies that
the responsible Commonwealth Minister can make a concurrent decision to vary and suspend
any of the conditions to which a title is subject, and provide notice of the decision to the
titleholder in the same document.
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As discussed under item 13, new subsection 436(1A) will specifically enable a titleholder to
apply for a variation and suspension of title conditions within the one document, instead of
treating these as separate applications. New subsection 436(3) ensures that, if such an
application is submitted, the responsible Commonwealth Minister can make a combined
decision in relation to both the variation and suspension, and notify the titleholder
accordingly.
New subsection 436(3A) is inserted as a consequence of the insertion of new section 437A
(see item 15).
New section 437A continues a greenhouse gas assessment permit or greenhouse gas holding
lease in force, if the permit or lease would otherwise expire before the responsible
Commonwealth Minister makes a decision in relation to an application for a suspension of
any of the conditions to which the permit or lease is subject. If the responsible
Commonwealth Minister subsequently refuses the application, the permit or lease then
continues in force until the end of the period of two months that began when notice of the
refusal was given to the permittee or lessee. However, there is no specific reference in the
OPGGS Act to a notice of refusal that the new provision can be tied to.
This item therefore inserts a new subsection 436(3A) to specifically require the responsible
Commonwealth Minister to give a titleholder a written notice of a refusal to grant an
application by the titleholder for a variation, suspension or exemption from compliance with
any of the conditions to which the title is subject.
Item 15: Section 437
This item repeals current section 437 and inserts new sections 437 and 437A, relating to the
extension of the term of a greenhouse gas assessment permit or a greenhouse gas holding
lease.
The amendment to section 437 achieves a couple of purposes. Firstly, the responsible
Commonwealth Minister will no longer have the ability to extend the term of an assessment
permit or holding lease if the responsible Commonwealth Minister, under section 436,
exempts the permittee or lessee from compliance with any of the conditions to which the
permit or lease is subject. This ability is not considered necessary, given that in the event of
an exemption a titleholder will not be required to undertake work that was previously
committed to, and should therefore not require more time within the permit or lease term. As
a result of the amendment, the responsible Commonwealth Minister will only be able to grant
an extension of the term of an assessment permit or holding lease where the responsible
Commonwealth Minister suspends any of the conditions to which the permit or lease is
subject.
Secondly, if the responsible Commonwealth Minister suspends any of the conditions to
which a permit or lease is subject, the responsible Commonwealth Minister will have the
ability to extend the term of the permit or lease by a period that the responsible
Commonwealth Minister considers appropriate. Previously, the responsible Commonwealth
15
Minister could only extend the term of the permit or lease by a period not more than the
period of the suspension.
Revising the provision in this way will ensure flexibility, in case instances arise where it may
be appropriate to extend the term of the permit or lease by a period longer than the period of
the suspension. It is likely that, in practice, the period of extension will for the most part
continue to reflect the period of suspension. Indeed, under new subsection 437(3), the
responsible Commonwealth Minister must have regard to the period of suspension in
considering the period of extension that may be appropriate. However, it is considered
prudent to provide flexibility for cases in which the circumstances may be such that a longer
period of extension is justified.
New section 437A will ensure that if a titleholder submits an application for a suspension of
any of the conditions to which an assessment permit or holding lease is subject, and the
permit or lease would otherwise expire before the responsible Commonwealth Minister
makes a decision on the application, the permit or lease will continue in force until the
responsible Commonwealth makes a decision.
There are two possible outcomes that may apply where a permit or lease is kept in force
pending a decision on an application to suspend a condition to which the permit or lease is
subject. If the responsible Commonwealth Minister subsequently gives a notice suspending
the condition, and consequently extends the term of the permit or lease, the permit or lease
will continue in force until the end of the extended term.
If, on the other hand, the responsible Commonwealth Minister subsequently gives a notice
refusing to suspend the condition, the permit or lease will continue in force until the end of
the period of two months beginning when the notice of refusal was given to the titleholder, or
such longer period as the responsible Commonwealth Minister approves in writing. This is to
ensure that the permittee or lessee will have time to apply for a renewal of the permit or lease,
or a successor title such as a greenhouse gas injection licence, and thereby retain tenure of
title, prior to the expiry of the permit or lease.
Subsection 437A(3) will ensure that if the permit or lease is being kept in force for two
months following a decision by the responsible Commonwealth Minister to refuse an
application for a suspension of a condition, the permittee or lessee cannot apply again during
that time for a suspension of any of the conditions to which the permit or lease is subject.
This is to close a potential loophole to ensure that a permittee or lessee does not repetitively
apply for a suspension of conditions during the period following a refusal simply in order to
keep the permit or lease in force without having to submit an application for a renewal or
successor title. Although the responsible Commonwealth Minister would in all likelihood
again refuse the application for suspension, the permit or lease would again remain in force
pending the decision, and then a further two month period following notification of the
refusal decision.
It is acknowledged that it is a matter of general Government policy that an administrative
decision that is likely to affect the interests of an individual should be reviewable on its
16
merits unless it would be inappropriate, or there are factors justifying the exclusion of merits
review. The amendments implemented by this item do not provide for merits review, and the
existing general application of Part 9.1 of the OPGGS Act only provides for merits review of
decisions made by the responsible Commonwealth Minister under the OPGGS Act that relate
to the release of technical information.
The proposed amendments seek to provide the responsible Commonwealth Minister with
additional decision-making powers, which are predominantly discretionary in nature. These
amendments complement existing sections in the OPGGS Act. The policy rationale for
excluding merits review is that the decision being made is based entirely on the economic
resource management policy of the Government. It would therefore be inappropriate to
provide for merits review in these circumstances, as to allow an avenue of appeal would in
effect amount to contesting the Government`s resource management strategy and policy of
effectively managing the nation`s resources in the public interest.
Division 2 - Application provisions
Item 16: Application - extension of term of permits and leases
This item provides application provisions for the purposes of the amendments made to the
OPGGS Act by Part 1 of Schedule 1 to this Act.
Subsection (1) of this item provides for the amended sections 265 and 437 of the OPGGS Act
to apply in relation to a suspension of any of the conditions to which a petroleum exploration
permit, petroleum retention lease, greenhouse gas assessment permit or greenhouse gas
holding lease is subject if notice of the suspension was given after the commencement of this
item. The application for a suspension may, however, have been submitted prior to the
commencement of this item.
The effect of this subsection is that, where notice of a suspension is given to a permittee or
lessee after the commencement of this item, the Joint Authority or responsible
Commonwealth Minister (as applicable) has the discretion to extend the term of the permit or
lease by a period that the Joint Authority or responsible Commonwealth Minister considers
appropriate, rather than by a period that is not more than the period of the suspension.
Subsection (2) of this item ensures that the repeal of the existing sections 265 and 437 does
not affect an extension of a permit or lease if notice of the extension was given before the
commencement of this item. However, if a titleholder has submitted an application for
exemption from compliance with any of the conditions to which a permit or lease is subject
before the commencement of this item, the Joint Authority or responsible Commonwealth
Minister (as applicable) will not have the ability to extend the term of the permit or lease if a
decision is made to grant the exemption after the commencement of this item.
Subsection (3) of this item provides for the amended sections 265A and 437A of the OPGGS
Act to apply in relation to an application for a suspension of any of the conditions to which a
petroleum exploration permit, petroleum retention lease, greenhouse gas assessment permit or
greenhouse gas holding lease is subject if the application is made after the commencement of
17
this item. For applications submitted prior to the commencement of this item, a decision to
grant the suspension will need to be made by the Joint Authority or responsible
Commonwealth Minister (as applicable) before the expiry date of the permit or lease to
ensure that the permit or lease does not expire.
Part 2 - Automatic revocation of a petroleum exploration permit to the
extent to which it relates to a block not taken up
Offshore Petroleum and Greenhouse Gas Storage Act 2006
One of the core objectives of the OPGGS Act is the timely development of Australia`s
offshore petroleum resources. In line with this objective, holders of Commonwealth
petroleum titles are expected to progress as quickly as is commercially feasible from
exploration to production, taking into account the need to adequately and optimally develop
the resource and ensure its continuing viability.
To this end, section 188 of the OPGGS Act is designed to actively encourage holders of a
petroleum exploration permit in which a petroleum pool has been identified to apply, in a
reasonable timeframe, for a petroleum retention lease or petroleum production licence. In
particular, subsection 188(1) operates to revoke blocks from the permit in circumstances
where the permittee could apply for a petroleum production licence, because a location has
been declared over one or more permit blocks and this has triggered commencement of the
relevant application period, but has failed to submit an application within the application
period as set out in section 169. The blocks covered by the location are, in such
circumstances, revoked to return to vacant acreage so that they can be re-released in future
acreage releases for development.
Clause 8 of Schedule 4 to the OPGGS Act replicates the requirements in section 188 and
applies it to petroleum titles that are subject to the Offshore Petroleum (Royalty) Act 2006
(Royalty Act).
The full policy intent, consistent with the structure and operation of the overall regime, is that
location blocks should not be revoked from a permit if a permittee has applied for either a
petroleum production licence or a petroleum retention lease within the relevant application
period. (Noting that the period to apply for a production licence and retention lease are the
same and run concurrently, i.e. the period of two years after the day on which the block or
blocks that constitute a location were declared to be a location, or such longer period that
NOPTA allows, but not more than four years after the block or blocks were declared to be a
location.) However, on a technical reading of current subsections 188(1) and subclause 8(1)
of Schedule 4 as currently drafted, permit blocks will not be revoked only in circumstances
where a permittee has applied for a production licence, or where a retention lease has been
granted, over the relevant block or blocks within the application period. This could mean, on
a technical reading, that blocks may be lost from an exploration permit where an application
for a retention lease is lodged and the application period expires before a decision has been
made to grant or refuse to grant the retention lease. Also, the additional time that is given to
18
apply for a production licence where a retention lease application is rejected on the grounds
that the Joint Authority is not satisfied that recovery of petroleum is not currently
commercially viable, as is clearly contemplated in subsection 169(3), is not reflected in the
automatic revocation consequences of section 188.
The amendments in this Part therefore clarify the operation of section 188 and clause 8 of
Schedule 4 to the OPGGS Act, by making it clear that the holder of a petroleum exploration
permit can apply either for a production licence or for a retention lease within the appropriate
application period in order to avoid revocation of relevant permit blocks. Clear linkages to
the operation of other relevant sections are established and underscored by these
amendments.
The amendments will also make clear that if a permittee has applied for and been refused a
retention lease in relation to a block or blocks, and the reason for the refusal is that the Joint
Authority is not satisfied that recovery of petroleum from the block or blocks is not currently
commercially viable, the permittee must then apply for a production licence within the period
contemplated in subsection 169(3), or the relevant block or blocks will be revoked from the
permit. The provision will not apply in relation to a block or blocks, on the other hand, if a
retention lease is refused because either the Joint Authority is not satisfied that the relevant
block or blocks contain petroleum, or that recovery of petroleum from the area comprised in
the block or blocks will be commercially viable within 15 years.
These amendments are technical amendments consistent with current policy and
administrative practice and are intended to provide clarification and ease and streamline
administrative arrangements for both titleholders and decision makers.
Item 17: At the end of subsection 141(4)
This item inserts a note at the end of section 141, to inform the reader that there are
consequences of a failure to apply for a petroleum retention lease, or a petroleum production
licence, within the application period set out in subsection 141(3), and direct the reader to the
relevant provision.
Item 18: Subparagraph 142(b)(ii)
This item restructures paragraph 142(b) by separating the two commercial viability criteria
that are currently combined within subparagraph 142(b)(ii) into two subparagraphs. This will
enable
cross-references to each specific decision-making criteria in provisions of the OPGGS Act
that are inserted or amended by this Act, and thereby ensure greater clarity for those
provisions.
Currently, subparagraph 142(b)(ii) provides that a criterion for the grant of a retention lease
over a block or blocks is that the Joint Authority is satisfied that recovery of petroleum from
the area comprised in a block or blocks (a) is not, at the time of the application, commercially
viable but (b) is likely to become commercially viable within 15 years. However, by contrast,
under subsection 143(2), the Joint Authority could refuse to grant a retention lease in relation
19
to a block or blocks if the Joint Authority is not satisfied either that recovery of petroleum
from the area comprised in the block or blocks (a) is not, at the time of the application,
commercially viable or (b) is likely to become commercially viable within 15 years.
Furthermore, different consequences apply if the Joint Authority refuses to grant a retention
lease for either reason - see, for example, new subsections 188(1A) (see item 29) and
132(7A) (see item 42), and amended subsection 132(7) (see item 40). This item therefore
separates the two commercial viability grounds for a decision in relation to an application for
a retention lease into two subparagraphs.
The amendment of paragraph 142(b) made by this item is a restructure only, and does not
change the decision-making criteria for the grant of a retention lease.
Item 19: Subsection 143(2)
This item amends subsection 143(2) as a consequence of the amendment to subparagraph
142(b)(ii) - see item 18. The Joint Authority must refuse an application for a retention lease
in relation to a block or all of the blocks specified in the application if the Joint Authority is
not satisfied as to one or more of the matters referred to in the restructured paragraph 142(b).
Item 20: Paragraph 143(3)(b)
This item amends paragraph 143(3)(b) as a consequence of the amendment to subparagraph
142(b)(ii) - see item 18. The Joint Authority must refuse an application for a retention lease
in relation to one or some of the blocks specified in the application if the Joint Authority is
not satisfied as to one or more of the matters referred to in the restructured paragraph 142(b)
in relation to that block or blocks.
Item 21: Subsection 143(3)
This item amends subsection 143(3) as a consequence of the amendment to paragraph
143(3)(b) - see item 20.
Items 22 and 23: At the end of paragraph 169(3); After paragraph 169(3)(b)
The combined effect of these items is to confine the period set out in subsection 169(3) in
which an exploration permittee, having applied for but been refused a retention lease, can
apply for a production licence to the circumstance where the refusal was based on the reason
that the Joint Authority was not satisfied that recovery of petroleum was not commercially
viable at the time of the application for the retention lease. This amendment provides
consistency with new subsection 188(1A) - see item 29.
Item 24: Subsection 169(3) (note)
This item repeals the existing note at the end of section 169 as a consequence of the
amendment to subsection 188(1) which clarifies that certain blocks will be revoked from a
petroleum exploration permit if the permittee does not apply for either a petroleum
production licence or a petroleum retention lease within the application period - see item 26.
20
The existing note implies that a failure to apply for a production licence only will result in
revocation of relevant blocks.
A new note is inserted to inform the reader that there are consequences of a failure to apply
for a petroleum production licence, or a petroleum retention lease, within the application
period, and direct the reader to the relevant provision.
Item 25: Subsection 188(1) (heading)
This item replaces the existing heading to subsection 188(1) as a consequence of the
amendment to that subsection which clarifies that certain blocks will be revoked from a
petroleum exploration permit if the permittee does not apply for either a petroleum
production licence or a petroleum retention lease within the application period - see item 26.
Item 26: Paragraph 188(1)(b)
This item amends paragraph 188(1)(b) to clarify that certain blocks will be revoked from a
petroleum exploration permit if the permittee does not apply for either a petroleum
production licence or a petroleum retention lease in relation to those blocks within the
relevant application period.
Section 141 of the OPGGS Act outlines the process for a petroleum exploration permittee to
apply for a petroleum retention lease. If an exploration permit is in force over a block that
constitutes, or the blocks that constitute, a location, the permittee may, within the application
period, apply for the grant of a retention lease over one or more of those blocks. Subsection
141(3) sets out the application period as being the period of two years after the day on which
the block or blocks were declared to be a location, or such longer period (up to a total of four
years) as the Titles Administrator allows.
Section 168 of the OPGGS Act outlines the process for a permittee to apply for a petroleum
production licence. If an exploration permit is in force over a block that constitutes, or the
blocks that constitute, a location, the permittee may, within the application period, apply for
the grant of a production licence over one or more of those blocks. Subsection 169(1) sets out
the application period as being the period of two years after the day on which the block or
blocks were declared to be a location, or such longer period (up to a total of four years) as the
Titles Administrator allows (i.e. the same as the application period for a petroleum retention
lease - and as noted previously, these applications period run concurrently from the same
trigger point which is the time a location is declared). Alternatively, if the permittee has
applied for a retention lease under section 141, and a notice refusing to grant the lease has
been given to the permittee, subsection 169(3) applies so that the application period for a
permittee to apply for a production licence is either (a) the remainder of the period applicable
under subsection 169(1), or (b) the period of 12 months after the day on which the notice
refusing to grant the retention lease was given, whichever period ends last.
Juxtaposed to the above, current subsection 188(1) states that if a permittee could apply for a
production licence, and a licence has not been applied for during the application period in
section 169, the permit will be revoked to the extent to which it relates to the block or blocks
21
that form the location. However, section 188 does not, on a technical reading, take into
account that a permittee may have in fact instead applied for a retention lease during this
period. It is not the policy intention that permit blocks should be revoked under subsection
188(1) if a permittee has applied for a retention lease within the application period; on the
contrary, the permittee should have the reasonable opportunity to apply for the appropriate
successor title as the case may be, without having blocks revoked.
The amendment to paragraph 188(1)(b) therefore clarifies that a petroleum exploration permit
will be automatically revoked in relation to relevant blocks only if a permittee does not
either: (a) apply for a petroleum production licence within the application period in
subsection 169(1), or (b) apply for a petroleum retention lease within the application period
in subsection 141(3).
Item 27: Paragraph 188(1)(d)
This item amends paragraph 188(1)(d) as a consequence of the amendment to paragraph
188(1)(b) made by this Act - see item 26. The amendment to paragraph 188(1)(b) will ensure
that certain blocks will only be revoked from a petroleum exploration permit if the permittee
has failed to apply for a petroleum retention lease or petroleum production licence by the end
of whichever of the application periods mentioned in paragraph 188(1)(b) finishes last.
On face value, the application periods mentioned in paragraph 188(1)(b) (i.e. the periods set
out in subsection 141(3) and 169(1)) are the same. However, it is conceivable that the Titles
Administrator could allow the permittee a longer time to apply for a retention lease, but not a
production licence (or vice versa). The amendment to paragraph 188(1)(d) takes account of
this possible scenario.
Item 28: Subsection 188(1) (note)
This item repeals the note that directs the reader to the application period for a petroleum
production licence in section 169. This section is now specifically referenced in the
substantive provision - see item 26.
Item 29: After subsection 188(1)
This item inserts a new subsection 188(1A) in the OPGGS Act. The new subsection ensures
that if a petroleum exploration permittee has applied for a petroleum retention lease over a
block or blocks, but the application is subsequently refused because the Joint Authority is not
satisfied that recovery of petroleum from the area comprised in the block or blocks is not
currently commercially viable, the relevant block or blocks will be revoked from the permit if
the permittee fails to apply for a petroleum production licence within the period contemplated
in subsection 169(3). Subsection 169(3) applies so that, in the circumstance outlined above,
the application period for a permittee to apply for a production licence is either (a) the
remainder of the period applicable under subsection 169(1), or (b) the period of 12 months
after the day on which the notice refusing to grant the retention lease was given, whichever
period ends last.
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New subsection 188(1A) will operate in conjunction with subsection 188(1) as follows.
When a location is declared over a block or blocks within a petroleum exploration permit, the
application period to apply for both a petroleum retention lease (see subsection 141(3)) and a
petroleum production licence (see subsection 169(1)) commences. If the permittee fails to
apply for either a retention lease or production licence within the application period, the
block or blocks will be revoked from the exploration permit.
If the permittee does apply for either a retention lease or a production licence over the block
or blocks within the application period, subsection 188(1) will no longer apply to revoke the
block blocks.
If the permittee had applied for a retention lease over the block or blocks, and the lease was
subsequently refused in relation to one or more of the blocks because the Joint Authority was
not satisfied that recovery of petroleum from the area comprised in those blocks was not
commercially viable, the application period for a production licence in subsection 169(3)
commences, so that the permittee can apply for a production licence either within (a) the
remainder of the period applicable under subsection 169(1), or (b) the period of 12 months
after the day on which the notice refusing to grant the retention lease was given, whichever
period ends last. If the permittee fails to apply for a production licence within that time, the
relevant block or blocks will be revoked from the permit.
The permittee will only lose the relevant permit block or blocks under new subsection
188(1A) in circumstances where the Joint Authority has refused to grant a retention lease
over the block or blocks because it is not satisfied that recovery of petroleum is not
commercially viable at the time of the application for the retention lease. If an application for
a retention lease is refused because either the Joint Authority is not satisfied that there is
petroleum in the relevant block or blocks, or that identified petroleum will be commercially
viable within 15 years, it is not intended to revoke the relevant permit block or blocks if the
permittee does not then submit an application for a production licence. In such a case, it is
unlikely that the permittee would be inclined to apply for a production licence, or would be
successful if they did so, as they are not considered to have a currently commercially viable
petroleum resource to produce. Indeed, as a result of amendments to subsection 132(7) of the
OPGGS Act made by this Act (see items 40 and 42), the declaration of location in respect of
the block or blocks will be revoked in these circumstances, and the permittee cannot apply for
a production licence unless they apply again for a declaration of location. These blocks will
remain in the exploration permit with ordinary treatment of them as such; for example,
having the continued right to explore and renewal (if available) subject to the halving rules.
Items 30 and 31: At the end of paragraph 3(3)(b) of Schedule 4; After paragraph 3(3)(b) of
Schedule 4
The combined effect of these items is to confine the period set out in subclause 3(3) in which
a Royalty Act exploration permittee, having applied for but been refused a retention lease,
can apply for a production licence to the circumstance where the refusal was based on the
reason that the Joint Authority was not satisfied that recovery of petroleum was not
23
commercially viable at the time of the application for the retention lease. This amendment
provides consistency with new subclause 8(1A) - see item 37.
Item 32: Subclause 3(3) of Schedule 4 (note)
This item repeals the existing note at the end of clause 3 of Schedule 4 to the OPGGS Act as
a consequence of the amendment to subclause 8(1) which clarifies that certain blocks will be
revoked from a petroleum exploration permit to which the Royalty Act applies if the
permittee does not apply for either a petroleum production licence or a petroleum retention
lease within the application period - see item 34. The existing note implies that a failure to
apply for a production licence only will result in revocation of relevant blocks.
A new note is inserted to inform the reader that there are consequences of a failure to apply
for a petroleum production licence, or a petroleum retention lease, within the application
period, and direct the reader to the relevant provision.
Item 33: Subclause 8(1) of Schedule 4 (heading)
This item replaces the existing heading to subclause 8(1) of Schedule 4 to the OPGGS Act as
a consequence of the amendment to that subsection which clarifies that certain blocks will be
revoked from a petroleum exploration permit to which the Royalty Act applies if the
permittee does not apply for either a petroleum production licence or a petroleum retention
lease within the application period - see item 34.
Item 34: Paragraph 8(1)(b) of Schedule 4
This item amends paragraph 8(1)(b) of Schedule 4 to the OPGGS Act to clarify that certain
blocks will be revoked from a petroleum exploration permit to which the Royalty Act applies
if the permittee does not apply for either a petroleum production licence or a petroleum
retention lease in relation to those blocks within the relevant application period.
Section 141 of the OPGGS Act outlines the process for a petroleum exploration permittee to
apply for a petroleum retention lease. If an exploration permit is in force over a block that
constitutes, or the blocks that constitute, a location, the permittee may, within the application
period, apply for the grant of a retention lease over one or more of those blocks. Subsection
141(3) sets out the application period as being the period of two years after the day on which
the block or blocks were declared to be a location, or such longer period (up to a total of four
years) as the Titles Administrator allows.
Clause 2 of Schedule 4 to the OPGGS Act outlines the process for the holder of a petroleum
exploration permit to which the Royalty Act applies to apply for a petroleum production
licence. If an exploration permit is in force over a block that constitutes, or the blocks that
constitute, a location, the permittee may, within the application period, apply for the grant of
a primary production licence over a certain number of those blocks. The permittee may
further apply for a variation of a primary production licence or for a secondary production
licence, within the same application period. Subclause 3(1) sets out the application period as
being the period of two years after the day on which the block or blocks were declared to be a
24
location, or such longer period (up to a total of four years) as the Titles Administrator allows
(i.e. the same as the application period for a petroleum retention lease - and as noted
previously, these applications period run concurrently from the same trigger point which is
the time a location is declared). Alternatively, if the permittee has applied for a retention
lease under section 141, and a notice refusing to grant the lease has been given to the
permittee, subclause 3(3) applies so that the application period for a permittee to apply for a
production licence is either (a) the remainder of the period applicable under subclause 3(1),
or (b) the period of 12 months after the day on which the notice refusing to grant the retention
lease was given, whichever period ends last.
Juxtaposed to the above, current subclause 8(1) states that if a permittee could apply for a
production licence, and a licence has not been applied for during the application period in
clause 3, the permit will be revoked to the extent to which it relates to the block or blocks that
form the location. However, clause 8 does not, on a technical reading, take into account that a
permittee may have in fact instead applied for a retention lease during this period. It is not the
policy intention that permit blocks should be revoked under subclause 8(1) if a permittee has
applied for a retention lease within the application period ; on the contrary, the permittee
should have the reasonable opportunity to apply for the appropriate successor title as the case
may be, without having blocks revoked.
The amendment to paragraph 8(1)(b) therefore clarifies that a petroleum exploration permit
will be automatically revoked in relation to relevant blocks only if a permittee does not
either: (a) apply for a petroleum production licence within the application period in subclause
3(1), or (b) apply for a petroleum retention lease within the application period in subsection
141(3).
Item 35: Paragraph 8(1)(d) of Schedule 4
This item amends paragraph 8(1)(d) of Schedule 4 to the OPGGS Act as a consequence of the
amendment to paragraph 8(1)(b) made by this Act - see item 34. The amendment to
paragraph 8(1)(b) will ensure that certain blocks will only be revoked from a petroleum
exploration permit to which the Royalty Act applies if the permittee has failed to apply for a
petroleum retention lease or petroleum production licence by the end of whichever of the
application periods mentioned in paragraph 8(1)(b) finishes last.
On face value, the application periods mentioned in paragraph 8(1)(b) (i.e. the periods set out
in subsection 141(3) and subclause 3(1) of Schedule 4) are the same. However, it is
conceivable that the Titles Administrator could allow the permittee a longer time to apply for
a retention lease, but not a production licence (or vice versa). The amendment to paragraph
8(1)(d) takes account of this possible scenario.
Item 36: Subclause 8(1) of Schedule 4 (note)
This item repeals the note that directs the reader to the application period for a petroleum
production licence in clause 3. This clause is now specifically referenced in the substantive
provision - see item 34.
25
Item 37: After subclause 8(1) of Schedule 4
This item inserts a new subclause 8(1A) of Schedule 4 to the OPGGS Act. The new
subclause ensures that if the holder of a petroleum exploration permit to which the Royalty
Act applies has applied for a petroleum retention lease over a block or blocks, but the
application is subsequently refused because the Joint Authority is not satisfied that recovery
of petroleum from the area comprised in the block or blocks is not currently commercially
viable, the relevant block or blocks will be revoked from the permit if the permittee fails to
apply for a petroleum production licence within the period contemplated in subclause 3(3).
Subclause 3(3) applies so that, in the circumstance outlined above, the application period for
a permittee to apply for a production licence is either (a) the remainder of the period
applicable under subclause 3(1), or (b) the period of 12 months after the day on which the
notice refusing to grant the retention lease was given, whichever period ends last.
New subclause 8(1A) will operate in conjunction with subclause 8(1) as follows. When a
location is declared over a block or blocks within a petroleum exploration permit, the
application period to apply for both a petroleum retention lease (see subsection 141(3)) and a
petroleum production licence (see subclause 3(1)) commences. If the permittee fails to apply
for either a retention lease or a production licence with respect to a particular block within the
application period, that block will be revoked from the exploration permit. (Note that, with
respect to a particular block, a permittee may apply within the application period for a
primary production licence, a secondary production licence, or a variation of a primary
production licence to include that block.)
If the permittee does apply for either a retention lease or a production licence over the block
or blocks within the application period, subclause 8(1) will no longer apply to revoke the
block blocks.
If the permittee had applied for a retention lease over the block or blocks, and the lease was
subsequently refused in relation to one or more of the blocks because the Joint Authority was
not satisfied that recovery of petroleum from the area comprised in those blocks was not
commercially viable, the application period for a production licence in subclause 3(3)
commences, so that the permittee can apply for a production licence either within (a) the
remainder of the period applicable under subclause 169(1), or (b) the period of 12 months
after the day on which the notice refusing to grant the retention lease was given, whichever
period ends last. If the permittee fails to apply for a production licence within that time, the
relevant block or blocks will be revoked from the permit.
The permittee will only lose the relevant permit block or blocks under new subclause 8(1A)
in circumstances where the Joint Authority has refused to grant a retention lease over the
block or blocks because it is not satisfied that recovery of petroleum is not commercially
viable at the time of the application for the retention lease. If an application for a retention
lease is refused because the Joint Authority is either not satisfied that there is petroleum in the
relevant block or blocks, or that identified petroleum will be commercially viable within 15
years, it is not intended to revoke the relevant permit block or blocks if the permittee does not
26
then submit an application for a production licence. In such a case, it is unlikely that the
permittee would be inclined to apply for a production licence, or would be successful if they
did so, as they are not considered to have a currently commercially viable petroleum resource
to produce. Indeed, as a result of amendments to subsection 132(7) of the OPGGS Act made
by this Act (see items 40 and 42), the declaration of location in respect of the block or blocks
will be revoked in these circumstances, and the permittee cannot apply for a production
licence unless they apply again for a declaration of location. These blocks will remain in the
exploration permit with ordinary treatment of them as such; for example, having continued
right to explore and renewal (if available) subject to the halving rules.
Part 3 - Revocation of locations
Division 1 - Amendments
Offshore Petroleum and Greenhouse Gas Storage Act 2006
Under the OPGGS Act, a petroleum exploration permittee may nominate one or more blocks
for declaration as a location, if a petroleum pool has been identified in the permit area, and
the permittee or another person has recovered petroleum from the pool. Where a nomination
has been made, the Joint Authority is required to declare a location over the relevant block or
blocks, if the Joint Authority is of the opinion that the permittee is entitled to nominate the
block or blocks.
A declaration of location is a prerequisite to an application by a permittee for a petroleum
retention lease or petroleum production licence over the particular block or blocks.
Moreover, once a location has been declared, the permittee must apply within a specified
timeframe for a retention lease or a production licence, or the permittee will lose tenure over
the block or blocks constituting the location (section 188 of the OPGGS Act). Declared
locations also have ramifications for the renewal of an exploration permit. Under Division 5
of Part 2.2 of the OPGGS Act, renewal may generally only be applied for over half the
number of non-location blocks, but the application may also include all location blocks. In
other words, location blocks receive the benefit of an exemption from the halving rules.
Once a location has been declared, it will not in all circumstances be appropriate for a block
or blocks to remain subject to that declaration of location. For example, where a permittee
has been refused a retention lease because the Joint Authority is not satisfied that either there
is petroleum in the relevant block or blocks or that recovery of petroleum will become
commercially viable within 15 years, it is considered inappropriate for the location to remain
over the relevant block or blocks. If the declaration were to remain, the permittee may have
an unwarranted advantage in relation to the number of blocks over which the permit might be
renewed. This may allow a permittee to maintain tenure over blocks from which the recovery
of petroleum will not become commercially viable in the foreseeable future. This is contrary
to the policy of renewal of exploration permits and the associated halving rules. Maintaining
the declaration in the face of such conclusions also poses adverse consequences for the
titleholder in that once a location is declared and application periods commence under
sections 141 (application for a retention lease) and 169 (application for a production licence),
27
those blocks become subject to section 188 automatic revocation of blocks as referenced
above.
In order to manage locations and avoid such unintended outcomes, section 132 of the
OPGGS Act sets out the circumstances in which the Joint Authority may or must revoke a
declaration of location over a block or blocks. For example, current subsection 132(6)
requires that if a petroleum retention lease is granted in relation to a block or blocks forming
part of a location, the Joint Authority must revoke the declaration of location to the extent to
which it relates to a block or blocks that are not within the retention lease area.
In addition, subsection 132(7) requires the Joint Authority to revoke a declaration of location
in the event that the Joint Authority refuses to grant a petroleum retention lease in relation to
a block or blocks that constitute or form part of a location, if the reason for the refusal is that
the Joint Authority is not satisfied that the recovery of petroleum from the area comprised in
the block or blocks is not, at the time of the application, commercially viable but is likely to
become commercially viable within 15 years. In other words, the declaration must currently
be revoked if a retention lease is refused in relation to a block either because recovery of
petroleum is currently commercially viable, or because recovery of petroleum is not likely to
become commercially viable within 15 years.
The operation of these subsections has several unintended consequences. For example, if a
petroleum exploration permit is in force over a block or blocks constituting a location, one
effect of revoking the declaration of location, as a result of a decision in relation to an
application for a retention lease over some of the blocks constituting the location, is that the
permittee loses the location in relation to the remainder blocks and therefore must re-
nominate the remaining block or blocks as a location if they wish to apply for another
retention lease or a petroleum production licence. This is especially undesirable if the reason
for the revocation of the declaration is that the Joint Authority refused to grant a retention
lease because the Joint Authority was not satisfied that recovery of petroleum from the block
or blocks is not currently commercially viable. A requirement to re-nominate for a
declaration of location in these circumstances may therefore unnecessarily slow development
of the resource. This is inconsistent with the regime and Government policy of timely
development of an identified resource. The loss of the location also results in those blocks
losing the protection from the halving rules through a renewal, until the location is re-
nominated by the titleholder.
Revoking the declaration in this case also means that the permittee is no longer subject to
subsection 188(1), which applies so that if the permittee could apply for a petroleum
production licence over a block or blocks that constitute a location, but does not do so within
the application period, the permit is revoked to the extent that it relates to the block or blocks.
If the location is revoked the permittee may subsequently nominate the block or blocks for a
new declaration of location, but the application period in subsection 188(1) would then
commence again. This reduces the encouragement for a titleholder to move to a production
licence as soon as possible in the event that they have discovered a commercial petroleum
28
resource, contrary to the timely development objective of the regime and the Australian
Government.
This Part therefore amends the provisions relating to revocation of declarations of location
following a decision by the Joint Authority to grant, or refuse to grant, a retention lease, to
better reflect the policy objectives of the OPGGS Act. This Part also includes amendments to
clarify the provisions relating to revocation of declarations following a decision by the Joint
Authority to grant, or refuse to grant, a petroleum production licence.
Item 38: Subsection 132(6)
This item repeals current subsection 132(6). If a petroleum retention lease is granted over a
block or blocks forming part of a location, the remaining block or blocks in the location will
either have:
(a) Been part of the application for a retention lease, but the lease was refused in relation
to the block or blocks; or
(b) Not formed part of the application for the retention lease.
Where the former case, (a), applies with respect to a block or blocks, the declaration of
location over that block or blocks will only be revoked where the retention lease was refused
on the grounds that there is no petroleum in that block or those blocks, or recovery of
petroleum will not be commercially viable within 15 years (see discussion regarding
subsections 132(7) and (7A) in items 40 and 42).
In the latter case, (b), the declaration of location will not be revoked over any block or blocks
that did not form part of the lease application. Revocation of the declaration over such blocks
reverses a decision already made by the Joint Authority to declare the location over the block
or blocks without any further consideration or a decision by the Joint Authority in relation to
(a) whether there is any petroleum and (b) the commercial viability of any petroleum, in
relation to the block or blocks.
Revoking a declaration of location over a block or blocks that were not the subject of an
application for a retention lease will also cease the application period during which a
permittee must apply for a retention lease or production licence over the block or blocks, or
have the block or blocks revoked from the exploration permit. This is inconsistent with the
objective of encouraging exploration permittees to promptly apply for successor titles,
particularly where commercially recoverable petroleum has been discovered.
Item 39: Paragraph 132(7)(a)
This item amends subsection 132(7) so that the subsection will only apply in a case where the
Joint Authority refuses to grant a petroleum retention lease in relation to a block or blocks
that constitute a location. New subsection 132(7A) is inserted to deal with the case where the
Joint Authority refuses to grant a petroleum retention lease in relation to a block or blocks
that form part of a location - see item 42.
29
Item 40: Paragraph 132(7)(b)
This item amends subsection 132(7) to clarify that, where the Joint Authority refuses to grant
a petroleum retention lease in relation to a block or blocks that constitute a location, the
declaration of location must be revoked where the reason for refusing the application for the
lease was that the Joint Authority was not satisfied that either (a) there is petroleum within
the block or blocks (the matter referred to in subparagraph 142(b)(i)), or (b) recovery of
petroleum will be commercially viable within viable within 15 years of the application being
made (the matter referred to in subparagraph 142(b)(iii)).
The amendment ensures that a declaration of location will not be revoked where an
application for a retention lease over a block or blocks that constitute a location was refused
by the Joint Authority because the Joint Authority was not satisfied that recovery of
petroleum from the area comprised in the block or blocks was not commercially viable at the
time of the application. This will ensure that holders of a petroleum exploration permit which
includes a commercially viable petroleum resource do not need to re-apply for a declaration
of location in order to apply for a production licence. It also means that, consistent with the
use it or lose it` policy, if the permittee does not apply for a production licence within the
application period mentioned in subsection 169(3) of the OPGGS Act, the relevant block or
blocks will be revoked from the exploration permit as a result of subsection 188(1A) - see
item 29.
It was not previously clear in section 132 that a declaration of location would be revoked if
an application for a retention lease was refused in relation to a block or blocks if the reason
for the refusal was that the Joint Authority was not satisfied that the area comprised in the
block or blocks contains petroleum. However, in such as case, there is little purpose in
maintaining the declaration of location over the block or blocks, as the permittee is unlikely
to apply for a production licence over the block or blocks (and would be unlikely to be
successful if they did so). Furthermore, location blocks create a supplementary entitlement to
the number of blocks qualifying for renewal under the halving rule when an exploration
permit renewal is being considered. If a location over a block persisted past a retention lease
refusal decision, this could give the permittee an unwarranted advantage in the number of
blocks over which the permit could be renewed.
Item 41: Subsection 132(7) (note)
This item repeals the existing note to subsection 132(7). The note is no longer applicable as a
result of the amendment to paragraph 132(7)(b) - see item 40.
This item also inserts a new note to subsection 132(7), to draw to the attention of the reader
that the grounds for granting a petroleum retention lease are set out in section 142.
Item 42: After subsection 132(7)
This item inserts a new subsection 132(7A) which has the same effect as subsection 132(7)
(see discussion at item 40), but applies in a case where the Joint Authority refuses to grant a
petroleum retention lease in relation to a block or blocks that form part of a location. If the
30
reason for the refusal of the application for the lease was that the Joint Authority was not
satisfied that either (a) there is petroleum within the block or blocks (the matter referred to in
subparagraph 142(b)(i)), or (b) recovery of petroleum will be commercially viable within
viable within 15 years of the application being made (the matter referred to in subparagraph
142(b)(iii)), the declaration of location must be revoked to the extent to which it relates to the
block or blocks. The declaration of location will remain in place over the remaining location
block or blocks.
It may be the case that, with respect to a particular application, a retention lease is refused in
relation to one or more blocks because the Joint Authority is not satisfied that the area
comprised in the block or blocks contains petroleum, and is refused in relation to another
block or blocks because the Joint Authority is not satisfied that recovery of petroleum from
the area comprised in the block or blocks will become commercially viable within 15 years.
In this case, both new paragraphs 132(7A)(c) and (d) would apply, so that the declaration of
location over all relevant blocks would be revoked.
As for subsection 132(7), the new provision ensures that a declaration of location will not be
revoked to the extent to which it relates to a block or blocks forming part of a location, where
an application for a retention lease over the block or blocks was refused by the Joint
Authority because the Joint Authority was not satisfied that recovery of petroleum from the
area comprised in the block or blocks was not commercially viable at the time of the
application.
Item 43: At the end of paragraph 132(8)(d)
This item makes a consequential amendment as a result of the insertion of additional
paragraphs within subsection 132(8) - see item 44.
Item 44: After paragraph 132(8)(d)
This item inserts new paragraphs 132(8)(e) and (f) to have the effect that a location will only
by revoked over a block or blocks in relation to which an application for a petroleum
production licence has been refused, where the licence is granted in relation to one or more,
but not all, of the blocks contained within the application for the licence, but was refused by
the Joint Authority in relation to the remaining blocks due to the fact that the Joint Authority
was not satisfied that the block(s) contained petroleum. In circumstances where a block does
not contain petroleum, there is little purpose in maintaining the declaration of location over
the block.
Item 45: Subsection 132(8)
This item clarifies that the location is only revoked in relation to the block(s) for which the
Joint Authority refused to grant the production licence on the ground that it was not satisfied
the block(s) contained petroleum.
31
Item 46: At the end of section 132
This item inserts a new subsection 132(9) to deal with circumstances where an application is
submitted for a production licence over location block(s) and the Joint Authority refuses the
application in relation to all of the blocks on the ground that the block or blocks, which form
part or the whole of a location, do not contain petroleum. While admittedly this eventuality is
highly unlikely, it is a decision point missing from the current arrangements and has been
included to ensure that every eventuality is covered off, regardless of its likelihood.
Where the relevant block or blocks constitute the whole of the location, the entire location
will be revoked. Where the relevant block or blocks constitute only part of a location, the
location will only be revoked to the extent to which it relates to that block or blocks.
Division 2 - Application provisions
Item 47: Application - revocation of locations
This item provides application provisions for the purposes of the amendments made to the
OPGGS Act by Part 3 of Schedule 1 to this Act.
The sub-items specify that the effect of each of the operative repeals and amended and new
subsections dealing with revocations of locations only apply in relation to refusals and grants
of a retention lease or production licence, as applicable, after commencement of this item.
Part 4 - Changes to the boundary of the coastal waters of a State or
Territory
Division 1 - Amendments commencing on 20 June 2014
Offshore Petroleum and Greenhouse Gas Storage Act 2006
Items 48 to 92 introduce new provisions that are intended, as far as is within Commonwealth
legislative power, to mitigate the potential loss of title rights that could otherwise occur as a
result of a change of location of the territorial sea baseline. The territorial sea baseline is the
line from which the 3 nautical mile coastal waters of a State or the Northern Territory is
measured. This in turn marks the inner limit of the Commonwealth offshore area` (referred
to here as Commonwealth waters`). A change to the baseline therefore results in a change to
the boundary between Commonwealth waters and State or Territory coastal waters.
When a boundary change occurs, title blocks or parts of title blocks may cease to be within
the waters of the jurisdiction that granted the title and become located in another jurisdiction.
One or more blocks of a Commonwealth title, or a whole Commonwealth title may,
following a boundary change, be located in State/NT coastal waters. Conversely, State or
Territory title blocks may become located in Commonwealth waters.
When this occurs, the jurisdiction that granted the title no longer has legislative power to
grant a renewal of or successor to the part of the title that is no longer within that jurisdiction,
32
or even to maintain it in force. Without further legislative action by the jurisdictions on
either side of the boundary, the affected blocks will go into vacant acreage on the receiving`
jurisdiction`s side of the new boundary.
There is currently a provision in the Commonwealth OPGGS Act that delays the effect of the
boundary change in respect of title blocks that have entered` Commonwealth waters.
Subsections 283(3) and (4) provide for the relevant State or Territory coastal waters Act to
remain in force in respect of a State or Territory title area that has entered` Commonwealth
waters. This preserves the operation of the relevant State or Territory Act, as well as the title,
until the title ceases to be in force under the State or Territory Act. (For an exploration
permit, this will be a maximum of six years and for a retention lease it will be a maximum of
five years.) The provisions inserted by this Part deal, in large part, with maintenance of
tenure of title over the State or Territory title area that has entered` Commonwealth waters
once the title ceases to be in force under the State or Territory Act.
Item 48--After subsection 11(1)
This item inserts new subsections 11(1C) and (1D), for avoidance of doubt.
They apply if a petroleum retention lease has been granted on the basis that an area (the
relevant area) is within Commonwealth waters and, as a result of a boundary change, the
relevant area` ceases to be in Commonwealth waters and falls within State or Territory
coastal waters. The provisions are concerned with title blocks in the retention lease area that
remain in Commonwealth waters (remainder blocks`).
The purpose of the new subsections is to remove any potential doubt about the renewal of the
Commonwealth retention lease over the remainder blocks. The potential doubt arises from
the meaning given by item 2 of the Table in subsection 11(1) of the OPGGS Act to references
in the Act to the renewal of a retention lease. Item 2 provides that a reference to the renewal
of a retention lease is a reference to the grant of a retention lease over all of the blocks in
relation to which the (previous) lease was in force. If part of the title area has ceased to be
within Commonwealth jurisdiction, this cannot occur in relation to all of the blocks. There is
accordingly a possible argument that a petroleum retention lease over remainder blocks
cannot be renewed.
Given that section 283 expressly contemplates that part of a title area can cease to be within
Commonwealth jurisdiction, and given also that no policy purpose would be achieved by
making remainder blocks of a retention lease non-renewable, section 15AA of the Acts
Interpretation Act 1901, as well as other principles of statutory interpretation would
presumably operate so that the Table item in section 11 would be taken as referring only to
all blocks remaining within Commonwealth waters. Nevertheless, new subsections 11(1C)
and 11(1D) are being enacted to remove whatever doubt can be considered to remain.
The effect of new subsections 11(1C) and 11(1D) is that, for the purpose of determining what
constitutes a renewal of a retention lease, item 2 of the Table has effect as if the lease had
been varied to exclude any area that is not within Commonwealth waters. The notional
33
variation is taken to have occurred immediately after the boundary change. It is immaterial
whether the change occurred before, at or after the commencement of the new subsections.
As mentioned in the discussion in relation to clause 2 of this Bill, the reason the date
20 June 2014 was chosen as the commencement date for these amendments is that it was the
date on which an application was lodged by the titleholders of Commonwealth title WA-30-R
for renewal of their retention lease over the remainder blocks covered by the title.
Item 49: Validation
Item 49 is a validation provision that deals with the possibility that the renewal of WA-30-R
might take place before new subsections 11(1C) and 11(1D) come into force. It provides that
a renewal is as valid and effective as it would have been if subsections 11(1C) and 11(1D)
had been in force at all material times before the day after this Act receives Royal Assent`.
The previous item ensures that, where there has been a change to the boundary of the coastal
waters of a State or Territory that caused an area of a Commonwealth petroleum retention
lease to cease to be in Commonwealth waters and instead fall within State/Territory coastal
waters, an application for and renewal of the lease may be granted over the part of the lease
that remains in Commonwealth waters.
Although this provision will apply generally, it is of particular relevance to the holders of an
existing retention lease within the Browse Basin, which has been affected by a seaward shift
in the coastal waters boundary. An application for renewal of that lease was made on 20 June
2014, and a decision on renewal may be made by the Joint Authority at any time (which may
be before or after the amendments made by this Bill commence). This item therefore
provides a validation provision to specifically deal with the renewal of the relevant retention
lease. The provision will ensure that any renewal of a retention lease granted by the Joint
Authority before this Bill receives Royal Assent is as valid as it would have been if new
subsections 11(1C) and (1D) had been in force at all material times before that day.
The validation provision will operate in conjunction with retrospective commencement of the
relevant provisions on 20 June 2014 (see clause 2 of the Bill), to ensure the validity of both
the application for the renewal of the lease over the remainder blocks, and any grant of the
renewal before this Bill receives Royal Assent, thereby providing certainty to the holders of
the lease.
Division 2 - Amendments commencing on the day after Royal Assent
Offshore Petroleum and Greenhouse Gas Storage Act 2006
Item 50: Section 7
This item inserts new definitions in section 7 of the OPGGS Act for terms inserted into the
OPGGS Act as a consequence of the amendments in this Bill.
34
Item 51: Section 7 (at the end of the definition of petroleum exploration permit)
This item provides that a petroleum exploration permit` includes a boundary-change
petroleum exploration permit. This ensures that, whenever there is a reference to a petroleum
exploration permit` in a provision in the OPGGS Act, the reference will apply to a boundary-
change petroleum exploration permit, so that a boundary-change permit will operate in the
same way as other types of petroleum exploration permit under the Act.
Items 52 and 53: Section 7 (at the end of the definition of post-commencement petroleum
production licence); Section 7 (at the end of the definition of post-commencement petroleum
retention lease)
These items ensure that petroleum retention leases and petroleum production licences granted
as a result of a change to the boundary of the coastal waters of a State or Territory will be
post-commencement petroleum titles.
Broadly speaking, if a title is a post-commencement petroleum title, and the responsible
Commonwealth Minister is satisfied that there is a significant risk that any key petroleum
operations that could be carried on under the title will have a significant adverse impact on
greenhouse gas injection or storage operations that could be carried out under an existing or
future greenhouse gas title, the responsible Commonwealth Minister may determine that the
title is a declared` title. A declared` title is always subject to the statutory condition that the
titleholder will not carry on key petroleum operations unless the responsible Commonwealth
Minister has approved the operations.
Furthermore, if the holder of a post-commencement petroleum exploration permit or a post-
commencement petroleum retention lease applies for a production licence, the Joint Authority
must consider whether or not it is satisfied that operations that could be carried out under the
licence will have a significant adverse impact on operations that are being, or could be,
carried out under a greenhouse gas title in deciding whether to grant the licence.
For administrative simplicity and clarity, any Commonwealth title that is granted to the
former holder of a State/Territory petroleum title, as a result of a change to the coastal waters
boundary, will be a post-commencement petroleum title. It is acknowledged that the title may
therefore be subject to restrictions that would not have applied if the change in coastal waters
boundary had not occurred. However, given the small number of existing greenhouse gas
titles, and the anticipated low frequency of grant of Commonwealth petroleum titles as a
result of a change in the coastal waters boundary, there is not considered to be a sufficient
basis to justify the insertion of potentially complex amendments and practical administration
to determine which new Commonwealth titles would be pre- or post-commencement titles.
An amendment is not required to ensure that a petroleum exploration permit granted as a
result of a change to the boundary of the coastal waters of a State or Territory will be a post-
commencement petroleum exploration permit. The definition of post-commencement
petroleum exploration permit` in section 7 includes an original petroleum exploration permit
granted after 22 November 2008, and a renewal of such a permit. A boundary-change
35
petroleum exploration permit is an original petroleum exploration permit`, as defined in
section 7, as it is not granted by way of renewal.
Item 54: Section 7
This item inserts new definitions in section 7 of the OPGGS Act for terms inserted into the
OPGGS Act as a consequence of the amendments in this Bill.
Items 55 and 56--Before subsection 11(1C); After subsection 11(1D)
Item 55 inserts new subsections 11(1A) and 11(1B) into the OPGGS Act to make the same
provision for renewals of Commonwealth exploration permits over remainder blocks as
subsections 11(1C) and 11(1D) do in relation to renewals of retention leases - see discussion
under item 48. Item 56 inserts new subsections 11(1E) and 11(1F) to make the same
provision for renewals of Commonwealth fixed-term production licences over remainder
blocks as subsections 11(1C) and 11(1D) do in relation to renewals of retention leases.
While the Table in subsection 11(1) of the OPGGSA in fact refers to renewals of exploration
permits over some or all` of the blocks of the former title, so no amendment is strictly
necessary for permits, the new provisions are included for all renewable titles so as not to
cause unintended differences between them.
Item 57: Section 96
This item revises the simplified outline of Part 2.2 of the OPGGS Act to include a reference
to the grant of a boundary-change petroleum exploration permit as a result of a change in the
boundary of the coastal waters of a State or Territory (see item 62).
Item 58: After subsection 99(2)
Subsection 99(1) of the OPGGS Act provides that the Joint Authority may grant a petroleum
exploration permit subject to whatever conditions the Joint Authority thinks appropriate.
However, a boundary-change petroleum exploration permit is granted automatically by
operation of the OPGGS Act on the cessation in force of a State/Territory petroleum
exploration title in certain circumstances, and therefore the Joint Authority does not itself
grant the title. This item therefore inserts a new subsection 99(2A), to make it clear that
subsection 99(1) does not apply to a boundary-change petroleum exploration permit.
Specific provisions for the imposition of conditions on a boundary-change petroleum
exploration permit are inserted by item 59 of this Bill - see discussion in relation to that item.
Item 59--At the end of section 99
Normally, conditions imposed on the grant of a title by the Joint Authority are required to be
specified in the title. In the case of the statutory grant of an exploration permit by operation
of section 118A, however, the normal granting process does not take place. There is no offer
document to contain a summary of conditions and the statutory grant itself does not involve
the issue of a title document that could contain the conditions. New subsections 99(17)
36
to (24) therefore provide a different process for the imposition of conditions on an
exploration permit granted by operation of section 118A (i.e. a boundary-change petroleum
exploration permit).
Subsection 99(17) provides for the Joint Authority, by written notice given to the permittee,
to vary the permit by imposing one or more conditions to which the permit is subject. The
notice must be given within 14 days of the grant of the permit, to ensure certainty for the
permittee with respect to the conditions to which they will be subject. In practice, given that
the Commonwealth and the holder of the State/Territory title will become aware of the
boundary change before the State/Territory title ceases to be in force, there will be a process
of negotiation between the Commonwealth and the titleholder with respect to appropriate
conditions to which the boundary-change exploration permit will be subject once it has been
granted under section 118A.
The kinds of conditions that may be imposed are the same as can be imposed on an
exploration permit of the same kind granted under the normal granting process.
Subsection 99(17) is intended to have the same scope as subsection 99(1). If the
State/Territory exploration permit was a work-bid permit or a special permit, the Joint
Authority is able to impose work program conditions on the permit granted by section 118A
and any subsequent renewal (subsections 99(20), (21)). If the State/Territory permit was a
cash-bid permit, work program conditions may not be imposed (subsections 99(23), (24)).
This again applies to the permit granted by section 118A and any renewal.
Item 60: Subsection 102(1) (table item 1, column headed This kind of permit...)
Item 1 of the table in subsection 102(1) sets out how long an original petroleum exploration
permit remains in force. An original petroleum exploration permit` is defined in section 7 of
the OPGGS Act as a petroleum exploration permit granted otherwise than by way of renewal.
A boundary-change petroleum exploration permit is granted automatically by operation of the
OPGGS Act on the cessation in force of a State/Territory petroleum exploration title in
certain circumstances, and therefore is not granted by way of renewal (even though it
operates, in practice, as though it were a renewal of title over the blocks of a State/Territory
title that have moved into Commonwealth waters).
It is not intended that a boundary-change petroleum exploration permit remain in force for the
same length of time as an original petroleum exploration permit. Therefore, this item amends
item 1 of the table in subsection 102(1) to specifically exclude a boundary-change petroleum
exploration permit. Item 61 makes amendments to provide for how long a boundary-change
petroleum exploration permit will remain in force - see discussion in relation to that item.
Item 61: Subsection 102(1) (at the end of the table)
This item sets out how long a boundary-change petroleum exploration permit will remain in
force.
In the case of a boundary-change petroleum exploration permit granted under subsection
118A(4) (see discussion in item 62), the permit will remain in force for a period of five years.
37
This is equivalent to the duration of a petroleum exploration permit granted by way of
renewal.
In the case of a boundary-change petroleum exploration permit granted under subsection
118A(5) (see discussion in item 62), the permit will remain in force for a period of 12
months. The purpose of granting this title is to give the permittee a reasonable period in
which to apply either for a retention lease or a production licence, which is what the
titleholder would have needed to do under the relevant State/Territory Act in order to avoid
losing the blocks.
Item 62--After Division 4 of Part 2.2
This item inserts a new Division 4A of Part 2.2 of the OPGGS Act (new section 118A) which
provides for a grant of a petroleum exploration permit over the whole or part of a State or
Northern Territory exploration permit area that, following a boundary change, falls within
Commonwealth waters. The grant is a statutory grant, which occurs by operation of the
section. Apart from the attachment of conditions (see discussion regarding item 59), no
discretionary act of the Joint Authority is required. The grant occurs only if all of the
conditions precedent set out in the section are met.
Subsection 118A(1) provides that the section applies if a State/Territory exploration permit
has been granted on the basis that an area (the relevant area) is within the coastal waters of
the State or Territory and, as a result of a boundary change, the relevant area ceases to be
within coastal waters and falls within Commonwealth waters. In addition, either the
conditions set out in subsection (2) or the conditions set out in subsection (3) must be
satisfied.
Subsection (2) applies in the case where only part of the State/Territory title area now falls
within Commonwealth waters and subsection (3) applies where the whole of the
State/Territory title area now falls within Commonwealth waters.
In subsection (2), there is a condition that the State/NT title ceases to be in force as to all of
the section 33 blocks` that remain in State/Territory coastal waters at the same time and
otherwise than as a result of cancellation or surrender. This condition can be satisfied where
the blocks remaining in coastal waters cease to be covered by the State/Territory title as a
consequence of the renewal of the title, or the grant of a successor title or by expiry of the
title.
In subsection (3) there is a condition that the State/NT title ceases to be in force as to all of
the section 33 blocks` in the relevant area at the same time and otherwise than as a result of
cancellation or surrender. Since no blocks are left in State/NT waters, there can be no
State/Territory renewal or successor title granted, so this condition can only be satisfied if the
State/Territory title expires by reaching the end of the term of the title.
Subsections 118A(4) and (5) contain the title grant provisions. The exploration permit that is
granted is, in practical terms, similar to a renewal of the State/Territory exploration permit. It
is not in fact a renewal, as it is the first title granted over the area by the Commonwealth.
38
However, it has the characteristics of a renewal of a Commonwealth exploration permit. In
particular, where the title grant takes place under subsection 118A(4), the duration of the title
and the renewability of the title are the same as if it had been a renewal of a Commonwealth
exploration permit. Whether subsection (4) or subsection (5) applies depends on the status of
the former title under the State/Territory Act.
Subsection 118A(4) applies if, assuming the boundary change had not occurred, the
State/Territory titleholder would have been entitled under the State/Territory Act to apply for
a renewal of the permit in respect of all of the section 33 blocks in the relevant area`. The
subsection then provides that, unless section 267A applies to the blocks (see item 88), the
Joint Authority is taken to have granted the holder a petroleum exploration permit over those
relevant area` blocks.
Note that there is no requirement that the State/Territory titleholder have been eligible to be
granted a renewal of the permit under the State/Territory Act. There must merely have been
an entitlement to apply for one. Furthermore, as a result of subsection 118A(6), in
determining whether the State/Territory titleholder would have been entitled to apply for a
renewal of the permit in respect of all of the section 33 blocks in the relevant area`, the
halving rules (which would otherwise not entitle the titleholder to apply for all of the non-
location blocks within the permit) are to be disregarded.
Subsection 118A(5) applies if, assuming the boundary change had not occurred, the
State/Territory titleholder would not have been entitled under the State/Territory Act to apply
for a renewal of the permit in respect of all of the section 33 blocks in the relevant area`.
This will be the case if the permit was, under the State/Territory Act, on its last renewal.
Subsection (5) then provides that, unless section 267A applies to the blocks, the Joint
Authority is taken to have granted the holder a petroleum exploration permit over those
relevant area` blocks. Under subsection 102(1), however, the duration of this title is only 12
months - see item 61. The purpose of granting this title is to give the titleholder a period in
which to apply either for a retention lease or a production licence, which is what the
titleholder would have needed to do under the State/Territory Act in order to avoid losing the
blocks. The titleholder therefore in effect receives additional time in which to decide what to
do with the blocks.
Whether subsection (4) or subsection (5) has been the applicable provision, the grant of the
permit is taken to have been made immediately after the relevant time` - ie immediately
after the State/Territory title ceased to be in force as described in the applicable subsection.
There is therefore no time when the titleholder did not have a valid title over the area.
Item 63: After paragraph 119(2)(c)
This item inserts a reference to new section 122A in subsection 119(2). The ability for a
permittee to apply for a renewal of a boundary-change petroleum exploration permit is
subject to section 122A - see item 65.
39
Item 64: At the end of section 122
This item is related to item 55 and concerns the renewal of a Commonwealth exploration
permit where, as a result of a boundary change, some of the blocks of the permit have ceased
to be within Commonwealth waters and now fall within State/Territory coastal waters. The
provisions are concerned with the remainder blocks` that remain within Commonwealth
waters. New subsections 122(3) and (4) provide that the halving rules do not apply to the
renewal of the permit over the remainder blocks`. The halving rules would generally apply
to an application for a renewal of an exploration permit so that the permittee cannot apply for
renewal of the permit over approximately half of the non-location blocks to which the permit
relates.
This amendment is in part intended for simplicity. If the halving rules were to apply to such a
renewal, complex questions would arise as to whether the rules should apply in relation to all
of the blocks that had been in the permit before the change, or only to those blocks that
remain in Commonwealth waters. Also, as a result of the boundary change, the permittee will
be unable to apply for a renewal of the Commonwealth permit over certain blocks anyway, as
those blocks now fall within State/NT coastal waters. In effect, the permittee is therefore
already losing` permit blocks from the Commonwealth title (although it is acknowledged
that, subject to the States/NT enacting mirror amendments, the permittee would be granted an
equivalent title over the block or blocks that now fall within State/NT coastal waters).
Item 65--After section 122
This item inserts a new section 122A, which sets out the characteristics of a boundary-change
exploration permit. If the State/Territory exploration permit was an initial grant of a permit,
then the Commonwealth permit granted under subsection 118A(4) can be renewed once. If
the State/Territory permit was on its first renewal, then the Commonwealth permit granted
under subsection 118A(4) cannot be renewed (i.e. it is effectively a permit that is on its
second renewal). If the Commonwealth permit was granted under subsection 118A(5), it
cannot be renewed.
When a boundary-change permit granted under subsection 118A(4) can be renewed, the
standard halving rules apply to the renewal.
Item 66: At the end of subsection 123(2)
This item clarifies that the standard halving rules in section 123 of the OPGGS Act apply to
an application for renewal of a boundary-change petroleum exploration permit. See also item
65.
Item 67: After subsection 123(2)
Subsection 123(2) sets out the types of application for renewal of a petroleum exploration
permit to which the standard halving rules apply. However, new subsection 122(3) provides
an exception to the application of the standard halving rules in a case where, as a result of a
change to the coastal waters boundary, a part of the permit ceases to be within
40
Commonwealth waters and falls within the coastal waters of a State or Territory - see item
65. This item therefore inserts a new subsection 123(2A) to clarify that subsection 123(2) is
subject to new subsection 122(3).
Item 68: After subsection 124(2)
Subsection 124(2) sets out the type of application for renewal of a petroleum exploration
permit to which the modified halving rules apply. However, new subsection 122(3) provides
an exception to the application of the modified halving rules in a case where, as a result of a
change to the coastal waters boundary, a part of the permit ceases to be within
Commonwealth waters and falls within the coastal waters of a State or Territory - see item
65. This item therefore inserts a new subsection 124(2A) to clarify that subsection 124(2) is
subject to new subsection 122(3).
Item 69--At the end of section 31
New subsection 131(5) provides that, where a boundary-change exploration permit is granted
over one or more section 33 blocks and, immediately before the grant, those blocks were, or
were part of a location, the Joint Authority is taken to have declared a location over those
blocks and to have done so immediately after the grant of the permit.
New subsection 131(6) makes equivalent provision in relation to blocks merged into an
existing Commonwealth title under section 267A.
The significance of the declaration of the location being a new declaration, instead of the
original location declared under the State/Territory title being continued in force, is that the
application period` for the purposes of section 188 of the OPGGS Act begins again, instead
of continuing to run. (Section 188 can operate to revoke location blocks of an exploration
permit, unless the titleholder takes certain actions within the relevant application period`.)
Item 70: At the end of section 134
This item revises the simplified outline of Part 2.3 of the OPGGS Act to include a reference
to the grant of a petroleum retention lease as a result of a change to the boundary of the
coastal waters of a State or Territory (see item 73).
Item 71: After subsection 136(2)
Subsection 136(1) of the OPGGS Act provides that the Joint Authority may grant a petroleum
retention lease subject to whatever conditions the Joint Authority thinks appropriate.
However, under new section 152A, a petroleum retention lease is granted automatically by
operation of the OPGGS Act on the cessation in force of a State/Territory petroleum retention
title in certain circumstances (see item 73), and therefore the Joint Authority does not itself
grant the title. This item therefore inserts a new subsection 136(2A), to make it clear that
subsection 136(1) does not apply to a petroleum retention lease granted under section 152A.
41
Specific provisions for the imposition of conditions on a petroleum retention lease granted
under section 152A are inserted by item 73 of this Bill - see discussion in relation to that
item.
Item 72: Subsection 136(10)
This item clarifies that subsection 136(9), which sets out several types of condition that could
be specified in a petroleum retention lease, does not limit new subsection 136(20) (which
provides for the imposition of conditions on a petroleum retention lease granted under section
152A - see item 73).
Item 73--At the end of section 136
New subsection 136(20) provides that the Joint Authority may, by written notice given to the
lessee of a retention lease granted under section 152A, vary the lease by imposing one or
more conditions to which the lease is subject. The notice must be given within 14 days of the
grant, to ensure certainty for the permittee with respect to the conditions to which they will be
subject.
Normally, conditions imposed on a title by the Joint Authority are required to be specified in
the title. In the case of the statutory grant of a retention lease by operation of section 152A,
however, the normal granting process does not take place. There is no offer document to
contain a summary of conditions and the statutory grant itself does not involve the issue of a
title document that could contain the conditions. New subsections 136(20), (21) and (22)
therefore provide a different process for the imposition of conditions on a retention lease
granted by operation of section 152A.
The power to impose conditions in subsection 136(20) is intended to have the same scope as
existing subsection 136(1) - i.e. the Joint Authority may impose whatever conditions the
Joint Authority thinks appropriate. The remaining provisions of section 136 apply equally to
a retention lease granted under section 152A as they would to a retention lease granted in
accordance with the normal` process (e.g. subsection 136(5) with respect to re-evaluation of
commercial viability).
Item 74: Subsection 139(1)
Subsection 139(1) sets out how long a petroleum retention lease remains in force. A lease
remains in force for the period of five years beginning on either (a) the day on which the
lease is granted, or (b) a later day, if specified in the lease as the day on which the lease is to
come into force.
A petroleum retention lease granted under section 152A is granted automatically by operation
of the OPGGS Act on the cessation in force of a State/Territory petroleum retention title in
certain circumstances. The grant of the lease happens immediately after the State/Territory
title ceases in force to ensure there is no gap in time that may bring into question whether the
titleholder has retained tenure of the title. Paragraph (b) therefore cannot apply with respect
to a petroleum retention lease granted under section 152A.
42
This item therefore specifically excludes a petroleum retention lease granted under section
152A from subsection 169(1). Item 75 makes an amendment to provide for how long a
petroleum retention lease granted under section 152A will remain in force - see discussion in
relation to that item.
Item 75: After subsection 139(1)
This item inserts a new subsection 139(1A) to provide for the duration of a petroleum
retention lease granted under section 152A. The lease will remain in force for the period of
five years beginning on the day on which the lease is granted by operation of section 152A -
see item 77.
Item 76: Subsection 139(2)
This item amends subsection 139(2) as a consequence of the insertion of new subsection
139(1A) - see item 75. New subsection 139(1A) will have effect subject to the other
provisions of Chapter 2 of the OPGGS Act.
Item 77: At the end of Division 2 of Part 2.3
New section 152A provides for a grant of a petroleum retention lease over the whole or part
of a State or Northern Territory retention lease area that, following a boundary change, falls
within Commonwealth waters. The grant is a statutory grant, which occurs by operation of
the section. Apart from the attachment of conditions, no discretionary act of the Joint
Authority is required. The grant occurs only if the conditions precedent set out in the section
are met.
Subsection 152A(1) provides that the section applies if a State/Territory retention lease has
been granted on the basis that an area (the relevant area) is within the coastal waters of the
State or Territory and, as a result of a boundary change, the relevant area ceases to be within
coastal waters and falls within Commonwealth waters and either the conditions set out in
subsection (2) or the conditions set out in subsection (3) apply.
Subsection (2) applies in the case where only part of the State/Territory title area now falls
within Commonwealth waters and subsection (3) applies where the whole of the
State/Territory title area now falls within Commonwealth waters.
In subsection (2), there is a condition that the State/NT title ceases to be in force as to all of
the section 33 blocks` that remain in State/Territory coastal waters at the same time and
otherwise than as a result of cancellation or surrender. This condition can be satisfied where
the blocks remaining in coastal waters cease to be covered by the State/Territory title as a
consequence of the renewal of the title, or the grant of a successor title or by expiry of the
title.
In subsection (3) there is a condition that the State/NT title ceases to be in force as to all of
the section 33 blocks` in the relevant area at the same time and otherwise than as a result of
cancellation or surrender. Since no blocks are left in State/NT waters, there can be no
43
State/Territory renewal or successor title granted, so this condition can only be satisfied if the
title ceases to be in force by reaching the end of the term of the title.
The statutory grant of a Commonwealth retention lease takes place under
subsection 152A(4). The Joint Authority is taken to have granted a retention lease over all of
the blocks in the relevant area` and to have done so immediately after the time when the
State/Territory title ceased to be in force as described in whichever of subsection (2) or (3) is
applicable. There is therefore no time when the titleholder did not have a valid title over the
blocks.
Item 78: Section 159
This item revises the simplified outline of Part 2.4 of the OPGGS Act to include a reference
to the grant of a petroleum production licence as a result of a change to the boundary of the
coastal waters of a State or Territory (see item 81).
Item 79: After subsection 162(2)
Subsection 162(1) of the OPGGS Act provides that the Joint Authority may grant a petroleum
production licence subject to whatever conditions the Joint Authority thinks appropriate.
However, under new section 183A, a petroleum production licence is granted automatically
by operation of the OPGGS Act on the cessation in force of a State/Territory petroleum
production title in certain circumstances (see item 85), and therefore the Joint Authority does
not itself grant the title. This item therefore inserts a new subsection 162(2A), to make it clear
that subsection 162(1) does not apply to a petroleum production licence granted under section
183A.
Specific provisions for the imposition of conditions on a petroleum production licence
granted under section 183A are inserted by item 81 of this Bill - see discussion in relation to
that item.
Item 80: Subsection 162(6)
This item clarifies that subsection 162(5), which sets out a general type of condition that
could be specified in a petroleum production licence, does not limit new subsection 162(19)
(which provides for the imposition of conditions on a petroleum production licence granted
under section 183A - see item 81).
Item 81: At the end of section 162
New subsection 162(19) provides that the Joint Authority may, by written notice given to the
licensee of a production licence granted under section 183A, vary the licence by imposing
one or more conditions to which the licence is subject. The notice must be given within
14 days of the grant.
Normally, conditions imposed on a title by the Joint Authority are required to be specified in
the title. In the case of the statutory grant of a retention lease by operation of section 183A,
however, the normal granting process does not take place. There is no offer document to
44
contain a summary of conditions and the statutory grant itself does not involve the issue of a
title document that could contain the conditions. New subsections 162(19), (20) and (21)
therefore provide a different process for the imposition of conditions.
The power to impose conditions in subsection 162(19) is intended to have the same scope as
existing subsection 162(1) - ie the Joint Authority may impose whatever conditions the Joint
Authority thinks appropriate. The remaining provisions of section 162 apply according to
their tenor.
Item 82: Subsection 165(1) (table item 1, column headed This kind of petroleum production
licence...)
Item 1 of the table in subsection 165(1) sets out how long an original petroleum production
licence granted on or after 30 July 1998 remains in force. An original petroleum production
licence` is defined in section 7 of the OPGGS Act as a petroleum production licence granted
otherwise than by way of renewal. A petroleum production licence granted under section
183A is granted automatically by operation of the OPGGS Act on the cessation in force of a
State/Territory petroleum production title in certain circumstances, and therefore is not
granted by way of renewal.
It is not intended, however, that a petroleum production licence granted under section 183A
remain in force for the same length of time as an original petroleum production licence
granted on or after 30 July 1998. Therefore, this item amends item 1 of the table in subsection
165(1) to specifically exclude a petroleum production licence granted under section 183A.
Item 83 makes amendments to provide for how long a petroleum production licence granted
under section 183A will remain in force - see discussion in relation to that item.
Item 83: Subsection 165(1) (at the end of the table)
This item inserts a new item 5 at the end of the table in subsection 165(1) to provide for the
duration of a petroleum production licence granted under section 183A. The licence will
remain in force for the period of 21 years beginning on the day on which the licence is
granted by operation of section 183A - see item 85. This is the same length of time that other
fixed-term petroleum production licences remain in force under the OPGGS Act.
Item 84: Subsection 165(4)
This item provides that a petroleum production licence granted under section 183A is a fixed-
term petroleum production licence. This ensures that, whenever there is a reference to a
fixed-term petroleum production licence` in a provision in the OPGGS Act, the reference
will apply to a petroleum production licence granted under section 183A, so that the licence
will operate in the same way as other fixed-term petroleum production licences under the
Act.
45
Item 85: After Division 4 of Part 2.4
New section 183A refers only to a fixed-term petroleum production licence. It does not refer
to a life of field production licence. This is because a State/Territory life of field production
licence has no end date and will typically only cease to be in force by surrender of title or
perhaps cancellation in particular cases. Assuming that the relevant State or Territory has
mirrored` section 283 appropriately, the section will protect a life of field licence from the
effects of a boundary change indefinitely.
Subsection 183A(1) provides that the section applies if a State/Territory fixed-term
production licence has been granted on the basis that an area (the relevant area) is within the
coastal waters of the State or Territory and, as a result of a boundary change, the relevant area
ceases to be within coastal waters and falls within Commonwealth waters, and either the
conditions set out in subsection (2) or the conditions set out in subsection (3) apply.
Subsection (2) applies in the case where only part of the State/Territory title area now falls
within Commonwealth waters and subsection (3) applies where the whole of the
State/Territory title area now falls within Commonwealth waters.
In subsection (2), there is a condition that the State/NT title ceases to be in force as to all of
the section 33 blocks` that remain in State/Territory coastal waters at the same time and
otherwise than as a result of cancellation or surrender. This condition can be satisfied where
the blocks remaining in coastal waters cease to be covered by the State/Territory title as a
consequence of the renewal of the title or by expiry of the title.
In subsection (3) there is a condition that the State/NT title ceases to be in force as to all of
the section 33 blocks` in the relevant area at the same time and otherwise than as a result of
cancellation or surrender. Since no blocks are left in State/NT waters, there can be no
State/Territory renewal, so these titles, if they are to qualify, will only cease to be in force by
reaching the end of the term of the title.
The statutory grant of a Commonwealth retention lease takes place under
subsection 183A(4). The Joint Authority is taken to have granted a production licence over
all of the blocks in the relevant area` and to have done so immediately after the time when
the State/Territory title ceased to be in force as described in whichever of subsection (2) or
(3) is applicable. There is therefore no time when the titleholder did not have a valid title
over the blocks.
Item 86: At the end of section 184
New subsections 184(8) and (9) are concerned with the renewability of fixed-term production
licences granted under section 183A. If the State/Territory licence was an initial grant of a
licence, the Commonwealth licence granted under section 183A can be renewed once. If the
State/Territory licence was a renewal, the Commonwealth licence granted under
section 183A cannot be renewed.
46
Item 87: At the end of section 188
Item 87 adds subsections to section 188 of the OPGGS Act that remove from the operation of
section 188 Commonwealth exploration permits that are affected by a boundary change.
These amendments apply to ordinary` Commonwealth exploration permits where part or all
of the permit area is, as a result of a boundary change, located in State/Territory coastal
waters, but where the State/Territory has enacted a mirror` equivalent to section 283 of the
OPGGS Act that preserves the operation of the Commonwealth Act in relation to that permit.
This amendment to section 188 is intended to enable the Commonwealth permittee to
qualify` for the grant of an exploration permit by the State/Territory under a State/Territory
provision equivalent to new Commonwealth section 118A.
It is a pre-requisite for the grant of a boundary-change exploration permit under the new
Commonwealth section 118A that all relevant area` blocks have ceased to be in force at the
same time. If States/NT enact an equivalent to section 118A, that requirement will have to be
satisfied by a Commonwealth permittee in order to obtain the grant of an exploration permit
under the State/Territory section 118A-equivalent provision. However, section 188 of the
OPGGS Act operates to revoke location blocks at the end of the relevant application period,
which may be 2 or 4 years, if a retention lease is not obtained or an application for a
production licence is not made in respect of the location blocks. If the declared location does
not extend to all of the Commonwealth permit blocks remaining in Commonwealth waters
after the boundary change, the permittee is likely to be unable to satisfy the ceases to be in
force at the same time` requirement in the State/NT section 118A-equivalent. Item 87,
therefore, will remove Commonwealth exploration permits that are affected by a boundary
change from the application of section 188.
This amendment will have no operation in relation to an affected Commonwealth exploration
permit unless the relevant State/Territory has enacted provisions corresponding to
section 118A and related provisions.
Nor will this Commonwealth amendment benefit a State/Territory exploration permittee
whose permit is affected by a boundary change. The relevant State/Territory would need to
enact provisions equivalent to new subsections 188(4) and (5) in order to avoid the risk that
its titleholders will be unable to benefit from the grant of a boundary-change exploration
permit under section 118A of the Commonwealth Act.
Item 88: At the end of Division 1 of Part 2.11
The previous title-granting provisions inserted by Part 4 of this Schedule to the Bill have
provided for the statutory grant of new Commonwealth titles over title areas or parts of title
areas that, following a boundary change, have ceased to be in State/Territory coastal waters
and now fall within Commonwealth waters. In these same circumstances, section 267A
provides, as an alternative, for the blending` of blocks of a State/Territory title into an
existing Commonwealth title, where the same titleholder holds a corresponding title on both
47
sides of the new boundary and where there is contact between blocks of both titles. There is a
prior requirement of the making of an election by the titleholder in respect of each title.
Subsection 267A(1) provides that the section applies if a State/Territory title has been granted
on the basis that an area (the relevant area) is within the coastal waters of the State or
Territory and, as a result of a boundary change, the relevant area ceases to be within coastal
waters and falls within Commonwealth waters, and either the conditions set out in
subsection (2) or the conditions set out in subsection (3) apply. The subsection (2) and (3)
conditions are the same as in the previous title-granting provisions in sections 118A, 152A
and 183A.
The difference is in paragraph 267A(d), which contains a number of requirements. These are
that:
immediately before the State/Territory title ceased to be in force, it was held by the
registered holder of a Commonwealth title that corresponds` to the State/Territory
title;
at least one block covered by the Commonwealth title immediately adjoined at least
one other block that was covered by the State/Territory title and that is in the
relevant area`; and
before the State/Territory title ceased to be in force, the holder of the State/Territory
title and the registered holder of the Commonwealth title gave the Joint Authority a
written notice electing to accept the variation of the Commonwealth title under
section 267A.
Subsections 267A(4) and (5) provide for the identification and declaration of the relevant
title` by the Titles Administrator, where more than one Commonwealth title meets the above
conditions.
Where the above conditions/requirements are all met, subsections (6), (7) and (8) require the
Titles Administrator, by written notice, to vary the Commonwealth permit, lease or licence,
respectively, to include the relevant area` blocks that were covered by the State/Territory
title immediately before the boundary change. While this does involve an administrative
action by the Titles Administrator, there is no discretion to be exercised.
Subsection 267A(11) contains the criteria for deciding whether a section 33 block`
immediately adjoins another section 33 block`. These are that the relevant graticular
sections have a side in common or are joined together at one point; or that the two section 33
blocks` are in the same graticular section.
Subsection 267A(12) contains the criteria for deciding whether Commonwealth and
State/Territory titles correspond`. These are:
exploration permits must be on the same renewal;
retention leases all correspond; and
fixed-term production licences must be on the same renewal.
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Item 89: Subsection 282(1) (note)
This item revises the note to subsection 282(1) to ensure it is clear to the reader that the
situation set out in the note is an example only of a circumstance in which an area in relation
to which a title is in force includes one or more portions of a section 33 block. The note was
always intended to be an example only, and not definitively set out the circumstances in
which an area in relation to which a title is in force includes one or more portions of a section
33 block. However, the addition of the words for example` will ensure this is clear.
Item 90: After paragraph 695M(1)(b)
Section 695M of the OPGGS Act makes provision for several matters in relation to annual
titles administration levy imposed on a range of titles under the Offshore Petroleum and
Greenhouse Gas Storage (Regulatory Levies) Act 2003 (Regulatory Levies Act), including
when levy becomes due and payable, and for the imposition and recovery of late payment
penalty if levy is wholly or partly unpaid after it becomes due and payable. For the purposes
of section 695M, subsection 695M(1) sets out the titles in relation to which annual titles
administration levy is imposed by the Regulatory Levies Act.
Amendments to the Regulatory Levies Act, which are made as a consequence of the
amendments in this Bill, will provide for annual titles administration levy to be imposed in
relation to a boundary-change petroleum exploration permit. This item therefore includes a
boundary-change petroleum exploration permit in the list of titles to which section 695M
applies.
Item 91: Before paragraph 775A(2)(e)
This item amends subsection 775A to ensure that written notice given by the registered
holder of a Commonwealth title electing to accept variation of the Commonwealth title under
subsection 267A(1)(e) (see item 88) will not be an eligible voluntary action. All of the
holders of that title must sign the notice accepting the variation of the title.
Item 92--At the end of clause 8 of Schedule 4
Schedule 4 is concerned with petroleum production licences to which the Offshore Petroleum
(Royalty) Act 2006 applies. Clause 8 is headed Revocation of petroleum exploration permit
or petroleum retention lease to the extent to which it relates to a block not taken up`. The
clause performs a function corresponding to section 188 of the Act, in relation to titles to
which the Royalty Act does not apply.
Two new sub-clauses are added to clause 8 by item 92. These exclude the application of
clause 8 to an exploration permit an area of which has, as a result of a boundary change,
ceased to be located in Commonwealth waters and falls within the coastal waters of a State or
Territory.
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This means that the operation of clause 8, which could otherwise result in the revocation of
location blocks within the permit, does not apply to an exploration permit that is affected by a
boundary change.
See the clause note to item 87 for an explanation of why this is considered necessary.
Part 5 - National Offshore Petroleum Safety and Environmental
Management Authority
The amendments in Part 5 relate to section 646A to the OPGGS Act.
They are intended to:
clarify the operation of that provision by dealing separately with the attachment of
conditions on the conferral of functions on NOPSEMA in respect of petroleum activities
from the attachment of analogous conditions on the conferral of functions in respect of
greenhouse gas storage (GHG) activities; and
prescribe the basis for arrangements for the recovery of NOPSEMA`s costs of performing
its conferred functions in waters of the sea landward of the territorial sea baseline.
Separation of conditions of conferrals in respect of petroleum and GHG activities
Section 646 of the OPGGS Act permits the States and the Northern Territory to confer
functions on NOPSEMA in relation to petroleum and GHG activities that take place in
certain waters under the States` jurisdiction (i.e. designated coastal waters` as defined in
s 644).
Section 646A qualifies s 646. It provides that s 646 does not authorise NOPSEMA to perform
certain functions unless various conditions are satisfied. It deals with the conferral of
functions on NOPSEMA in respect of both petroleum and GHG activities.
The amendments to section 646A will reduce that provision`s complexity and clarify its
intended operation by separating the conditions that apply to the conferral of petroleum and
GHG functions. Under s 646A as amended, there will be separate subsections specifying the
conditions attaching to the conferral of functions on NOPSEMA in respect of:
petroleum activities (subsections (1), (2), (3) and (4) of s 646A); and
GHG activities (subsections (5), (6), (7) and (8) of s 646A).
In addition, the amendments would replace the requirement that a State may only confer
environmental management functions on NOPSEMA in relation to GHG activities if it makes
regulations that substantially correspond to the petroleum provisions of the Offshore
Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (the Environment
Regulations) with a requirement that a State or the Northern Territory may only confer such
functions if it makes regulations that substantially correspond to the GHG provisions of the
Environment Regulations.
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Cost recovery for waters landward of the baseline
The Offshore Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Measures)
Bill 2014 (the Miscellaneous Measures Bill) was introduced into Parliament on 3 December
2014. If enacted, the Miscellaneous Measures Bill would, inter alia, modify the definition of
designated coastal waters` in the OPGGS Act to include waters of the sea that are landward
of the territorial sea baseline. The new definition of designated coastal waters would,
therefore, include all waters of the sea landward of the old, pre-United Nations Convention
on the Law of the Sea territorial sea boundary (i.e. the line 3 nautical miles seaward of the
territorial sea baseline), including waters that are within the limits of a State or the Northern
Territory.
The purpose of that change is to enable the States or the Northern Territory to confer
functions on NOPSEMA in respect of all waters of the sea landward of the offshore area`
(the zone of Commonwealth jurisdiction) under s 646 of the OPGGS Act.
However, the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies)
Amendment (Designated Coastal Waters) Bill 2014 (the Regulatory Levies Bill) would
amend the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003
(the Regulatory Levies Act) to ensure that the cost recovery arrangements that presently
apply to functions conferred on NOPSEMA by a State or the Northern Territory would not be
affected by the change to the definition of designated coastal waters` proposed to be made
by the Miscellaneous Measures Bill. Specifically, the Regulatory Levies Bill would exclude
waters of the sea landward of the territorial sea baseline from the operation of the Regulatory
Levies Act.
Accordingly, should the Miscellaneous Measures Bill and the Regulatory Levies Bill be
enacted, the States will be able to confer functions on NOPSEMA in respect of waters
landward of the baseline, but there will be no mechanism available to support recovery of
NOPSEMA`s costs of performing functions in those waters.
The present amendments would supply such a mechanism by making it a condition of a State
conferring any functions on NOPSEMA in respect of waters landward of the baseline that the
State has established a mechanism for the recovery of NOPSEMA`s costs which it has agreed
with the Commonwealth. Therefore, should a State or the Northern Territory wish to confer
functions on NOPSEMA in respect of waters landward of the baseline, it will be required to
implement measures to establish cost recovery arrangements (such as legislation imposing
charges that correspond to the levies imposed under the Regulatory Levies Act).
This requirement would only apply to waters of the sea landward of the territorial sea
baseline. For conferrals in waters seaward of the baseline, the current arrangements (whereby
cost recovery is enabled under the Regulatory Levies Act) would be preserved.
Item 93: Before subsection 646A(1A)
Item 93 inserts a new heading for subsection 646A(1A).
Item 94: Before subsection 646A(1)
Item 94 inserts a new heading for subsections 646A(1), (2), (3) and (4).
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Item 95: Paragraph 646A(1)(a)
Item 95 replaces the reference in paragraph 646A(1)(a) to State functions provision` with the
more focussed State petroleum functions provision`. The effect of this amendment, together
with the related changes to section 646A, is to confine the operation of the conditions
imposed by subsection 646A(1) to conferrals in respect of petroleum activities.
Item 96: Paragraph 646A(1)(c)
Paragraph 646A(1)(c) currently relates to both occupational health and safety (OHS)
functions and structural integrity functions conferred on NOPSEMA in respect of both
petroleum and GHG activities.
New paragraphs 646A(1)(c) and (ca) are confined in their operation to conferral in respect of
petroleum activities, and make it a condition of conferral of a function mentioned in a State
petroleum functions provision (i.e. paragraphs 646(b) and (gb) (to the extent that they relate
to petroleum activities) and paragraph 646(gi)), that OHS and structural integrity functions
both be conferred on NOPSEMA.
The effect of the new paragraphs prevent a State or the Northern Territory from conferring
OHS functions in respect of petroleum activities on NOPSEMA unless it also confers
structural integrity functions in respect of petroleum activities (and vice versa). The new
paragraphs also prevent a State from conferring environmental management functions in
respect of petroleum activities on NOPSEMA unless it also confers both OHS and structural
integrity functions in respect of petroleum activities.
However, a State or the Northern Territory would still be able to confer OHS and structural
integrity functions on NOPSEMA in respect of petroleum activities without also conferring
environmental management functions.
Item 97: Paragraph 646A91)(g)
Item 97 removes the reference to paragraph 646(gj) (which is concerned with the conferral of
environmental management functions on NOPSEMA in respect of GHG activities) in
paragraph 646A(1)(g). The reference is no longer be required as amended
subsection 646A(1) is concerned only with conditions on conferrals of functions on
NOPSEMA in respect of petroleum activities.
Items 98: Subsection 646A(1) (note 1)
Item 98 replaces the reference in the note to subsection 646A(1) to State functions provision`
with the more focussed State petroleum functions provision`. The effect of this amendment,
together with the related changes to s 646A, is to confine the operation of the conditions
imposed by subsection 646A(1) to conferrals in respect of petroleum activities.
Item 99: Subsection 646A(3)
Item 99 replaces the reference in subsection 646A(3) to State functions provision` with the
more focussed State petroleum functions provision`. The effect of this amendment, together
with items 100 and 101, is to establish a definition of State petroleum functions provision`
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that is confined to relevant paragraphs of s 646 to the extent that they relate to petroleum
activities.
Items 100 and 101: Paragraphs 646A(3)(c) and (d)
Items 100 and 101 remove the reference to paragraph 646(gj) (which is concerned with the
conferral of environmental management functions on NOPSEMA in respect of GHG
activities) in paragraph 646A(3)(c). The reference would no longer be required as
subsection 646A(1) would be concerned only with conditions on conferrals of functions on
NOPSEMA in respect of petroleum activities.
Item 102: At the end of section 646A
Item 102 inserts a number of new subsections into s 646A.
Subsections 646A(5), (6), (7) and (8): Separation of conditions of conferrals in respect of
petroleum and GHG activities
New subsections 646A(5), (6), (7) and (8) are broadly analogous to subsections 646A(1), (2)
and (3) (as amended by this Bill), insofar as they impose conditions on the conferral of
functions on NOPSEMA. However, whereas the latter are concerned exclusively with
conferrals in respect of petroleum activities, the former deal exclusively with conferrals in
respect of GHG activities.
However, the operation and structure of the GHG provisions differ from their petroleum
analogues. Whereas the petroleum provisions prevent a State from conferring:
OHS functions on NOPSEMA without also conferring structural integrity provisions (and
vice versa); or
environmental management functions on NOPSEMA without also conferring OHS and
structural integrity functions,
the GHG provisions permit a State or the Northern Territory to confer functions of any type
on NOPSEMA (OHS, structural integrity or environmental management) without conferring
any other type of function (subject to the requirements of substantial correspondence
discussed below).
Specifically, new subsection 646A(8) defines the expression greenhouse gas storage
provisions`, and is analogous to s 646A(4) (which defines the expression petroleum
provisions`). This new definition is then applied in new subsections 646A(5), (6) and (7), as
follows.
New subsection 646A(5) makes it a condition of conferral of OHS functions on NOPSEMA
in respect of GHG activities that the relevant State enact provisions that substantially
correspond to:
Schedule 3 to the OPGGS Act; and
the GHG provisions of the Offshore Petroleum and Greenhouse Gas Storage (Safety)
Regulations 2009.
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New subsection 646A(6) makes it a condition of conferral of structural integrity functions on
NOPSEMA in respect of GHG activities that the relevant State enact provisions that
substantially correspond to the GHG provisions of the Offshore Petroleum and Greenhouse
Gas Storage (Resource Management and Administration) Regulations 2011.
As noted above, the effect of s 646A(g) in its present form is that a State or the Northern
Territory may only confer environmental management functions on NOPSEMA in relation to
GHG activities if it makes regulations that substantially correspond to the petroleum
provisions of the Environment Regulations. New subsection 646A(7) (taken together with the
amendments that confine the scope of subsection 646A(1) to petroleum activities) eliminates
this anomalous requirement. In its place, subsection 646A(7) makes it a condition of
conferral of environmental management functions on NOPSEMA in respect of GHG
activities that the relevant State enact provisions that substantially correspond to the GHG
provisions of the Environment Regulations.
Subsections 646A(9) and (10): Cost recovery for waters landward of the baseline
New subsections 646A(9) and (10) are concerned with the cost recovery arrangements
applicable to the performance of NOPSEMA`s functions in waters of the sea that are
landward of the territorial sea baseline.
New subsection 646A(9) makes it a condition of conferral of functions of any sort on
NOPSEMA in respect of waters landward of the baseline that:
there is an agreement between the responsible Commonwealth Minister and his or her
State or Northern Territory counterpart that deals with the measures to be implemented by
the State or the Northern Territory for the payment of amounts to NOPSEMA in respect
of the performance of its functions in those waters; and
the State or the Northern Territory has implemented the agreed measures.
New subsection 646A(10) provides that the reference to the territorial sea` in the preceding
subsection is to be treated as a reference to the old, 3 nautical mile territorial sea.
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