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| Mr VATSKALIS (Primary Industry, Fisheries and Resources): Madam Speaker, I move that the bill be now read a second time. The purpose of this bill is to amend the Petroleum Act to: 1. assist the Northern Territory’s onshore gas and petroleum industries, by allowing flexibility within the act, to more easily accommodate the use of unconventional exploration and production methods; 2. to more efficiently process applications for petroleum exploration permits; and 3. to complete the transfer of responsibility for occupational health and safety matters, on petroleum production sites, to NT WorkSafe, the lead agency for administering the Territory’s Workplace Health and Safety Act. As members are aware, our mining and energy industries continue to be the biggest contributor to the Territory’s economy, and accounts for around a quarter of gross state product. Further, over the past five years the expenditure in exploration and mining and petroleum in the Territory has been increasing. Historically, the knowledge of the Territory’s onshore petroleum and gas resources has been limited when compared to the reserves available offshore. However, in recent times the level of exploration for onshore reserves has been increasing. Traditionally, conventional onshore gas and petroleum exploration activities have centred on targeting sandstone and carbonate rock formations. Increasingly, however, explorers and producers are now identifying and exploring natural gas and petroleum reserves found in low permeability and tight sandstones, gas shales and coal bed methane formations. This new approach, termed unconventional gas plays, is being successfully used overseas, particularly in the United States. Unconventional gas and petroleum reservoirs can exist over much larger areas than conventional deposits, as explorers are targeting different types of source rocks. The use of unconventional gas and petroleum plays allows for the linking of smaller disparate deposits to each other. This in turn can allow for the development of a viable gas and petroleum extraction operations over a large land area which previously was not possible. As a result, it is necessary for companies adopting unconventional gas plays to seek exploration rights over larger areas of land and for longer tenure periods in order to fully explore, identify and prove up viable reservoirs that can then be economically extracted. In light of the of the development of new unconventional exploration and extraction techniques, there is a need for the Petroleum Act to be amended to more readily accommodate the changing requirements of the Territory’s onshore gas and petroleum sector going forward. One of the primary amendments in this bill seeks to provide discretion with respect to the existing requirement under section 24(1) of the Petroleum Act for a mandatory reduction in permit area upon seeking a renewal of an exploration permit. For example, when a holder of a petroleum exploration permit seeks to renew the permit for a further five years, then the holder can only apply for half of the land area granted under the original permit. The purpose of the existing provision is rightly to ensure that those explorers granted a renewed exploration permit focus their activities into a smaller geographical area in order to prove up the presence of petroleum bodies for possible future commercial development. This provision results in the mandatory turning over of land to allow for new exploration activities to be undertaken, possibly by other companies. However, where there are exploration permit holders actively exploring and who meet their expected obligations under the act there are instances in which it is desirable to defer or waiver the reduction in area, subject to ministerial discretion. Such a deferral or waiver can assist permit holders to fully explore the potential of a resource prior to electing to relinquish areas of their permit. Given the emergence of company seeking to identify and exploit unconventional gas and petroleum reservoirs, then providing greater flexibility within the act is of increasing importance. The bill seeks to insert a new section into the act allowing an exploration permit holder who is seeking a renewal of its exploration permit to apply to the minister for an exception from the mandatory requirement to reduce the number of land blocks held. It is important to note that any exemption granted can only be for a period not exceeding 12 months, and an application must provide reasons as to why an exemption has been sought. Such exemptions may be provided for a deferral of the reduction in area, or a reduction of the permit area by a lesser number of blocks than otherwise would be required under the current act. Prior to the end of a period of exemption, the permit holder may reapply to the minister for an extension of the exemption for a period not exceeding 12 months per application, again providing reasons for such a request. In making a decision to grant an exemption, the minister must be satisfied that the applicant: has satisfactorily complied with its obligations as an exploration permit holder under the Petroleum Act; has satisfactorily complied with any conditions of the previously granted exploration permit or renewed permit; and has followed any lawful directions given by the minister when discharging powers under the act. The minister must also be satisfied that the exemption, if granted, will assist the permit holder to more effectively carry out its work program for the discovery of commercially exploitable petroleum and gas resources. Lastly, and most importantly, it must be in the interests of the Territory to grant the exemption. The provision of a discretionary power, with respect to the granting of an exemption from the mandatory reduction rule, is in line with similar provisions dealing with applications for renewed exploration licences granted under the Mining Act. The purpose of the second group of amendments contained in the bill is to more efficiently process applications received for the granting of exploration permits issued under the Petroleum Act. Currently, the act allows for more than one application for an exploration permit to be lodged for the same geographical area. This situation differs to that found in the Mining Act where section 18(aa) specifically excludes … Madam SPEAKER: Minister, resume your seat. There seems to be a UFO-type noise coming from the sound system. Mr Tollner: It does not really matter, Madam Speaker, we cannot understand a thing he is saying, anyhow. Madam SPEAKER: You will have to get a grammar book, member for Fong Lim. We are just trying to find out what is going on, as I understand Hansard cannot hear anything. A most odd noise. I will adjourn the House until the ringing of the bells, which will probably be in only a few minutes. ________________ Sittings suspended until the ringing of the bells. ________________ Madam SPEAKER: We will turn the bells off now. Honourable members, it appears it is the Minister for Indigenous Policy’s microphone which has caused the problem, so we have isolated it. I will be giving my leave, should the minister require to speak, to sit in my seat as the member for Nightcliff during any debates. I would like to say the sound system is being upgraded over this year, so hopefully during the year it will not be a problem. Minister, I would like you to start from the beginning because we do not know how much Hansard has of your speech. If you could start at the beginning of the second reading speech. Mr HENDERSON: In the interest of time, the minister is reading from a set second reading speech; the parts Hansard have not got, surely, can be incorporated rather than being re-read for another 10 minutes. Madam SPEAKER: Minister, would you like to seek leave to have the parts incorporated which may have been affected by the sound problem. Mr VATSKALIS: Absolutely. Yes. Leave granted. Madam Speaker, the purpose of the second group of amendments contained in the bill is to more efficiently process applications received for the granting of exploration permits issued under the Petroleum Act. Currently, the act allows for more than one application for an exploration permit to be lodged for the same geographical area. This situation differs to that found in the Mining Act, where section 18(aa) specifically excludes the acceptance of an application for an exploration licence for the same land, or part of the same land, unless both of the competing applications were received by the department of the same day. Under the Petroleum Act provisions exist for dealing with applications for the same land area received on the same day. Under this scenario each application is assessed and determined which application will be deemed most appropriate to the interests of the Northern Territory, and only it will proceed. At present all competing applications, whether or not they are received on the same day, are processed in parallel to the stage where they are ready for grant. However, for multiple applications to reach the ‘ready to grant’ stage, all companies would need to have spent significant level of time and resources. However, for all companies, bar one, there is a high likelihood their application would be ultimately refused as the first application received preceding their own, which meets the necessary requirements, will be successful and granted the permit. By amending the legislation to allow only one application to be received at a time - and if deemed worthy allowed to proceed to the ‘ready to grant’ stage - will prevent unnecessary resources and time costs being borne by companies and by the regulator. New provisions to be inserted will ensure that: · a person cannot apply for an exploration permit on an area that is already the subject of an exploration permit or licence, or an application for the same area lodged on an earlier business day; · if two or more applications are lodged on the same day, then both will be considered; and · that additional information relevant to the application(s) can be sought by the minister or delegate. Madam Speaker, the third scope of amendments in this bill seek to complete the transfer of responsibility for occupational health and safety matters on petroleum production sites to NT WorkSafe, the lead agency for administrating the Territory Workplace Health and Safety Act. The final proposed amendments to the Petroleum Act are to accommodate transitional matters. These include ensuring that: · any uncompleted determinations of competing applications for an exploration permit, prior to commencement date of the newly amended act, are treated as if the amendment act had not commenced; and · if, on the commencement day, the minister or an inspector or workplace safety officer is exercising a power or performing a function under the Workplace Health and Safety Act, then they can continue to do so to ensure that the matter is appropriately finalised. The proposals put forward in the Petroleum Amendment and Related Matters Bill are in the interests of the Northern Territory, and will assist the onshore petroleum and gas industry with conventional and unconventional activities necessary to identify and exploit the Territory’s valuable energy resources. Madam Speaker, I commend the bill to honourable members, and table the explanatory statement to accompany the bill. Mr Tollner: May I say thank you to the member for Casuarina for slowing down. I could understand him quite well. Madam SPEAKER: Member for Fong Lim, you can only rise for a point of order Debate adjourned. |