Exploration and access
Exploration and access policy
Petroleum exploration has four key drivers – geological prospectivity, access to explore, geoscientific information, and an appropriate fiscal and regulatory setting.
APPEA has put forward comprehensive policy proposals in each of these areas to stimulate exploration. While governments have taken positive steps in some areas, further action is needed in others.
Without major new discoveries, Australia’s petroleum trade deficit will grow to around $30 billion per annum by 2015. Addressing this deficit requires major exploration programs. Australia is underexplored – vast onshore and offshore basins potentially containing enormous untapped resources remain undrilled. New incentives are needed to attract exploration investment and enhance Australia's energy security.
Legislation and regulation
APPEA remains engaged with the Federal Government on the offshore legislation. APPEA provided comments on consolidation of regulations under the Offshore Petroleum and Greenhouse Gas Storage Act 2006, particularly on reservoir management and data management regulations.
In 2009/10, APPEA also made a landmark submission on the need to preserve the existing legislative framework for retention leases within the offshore regime and to improve transparency in granting and renewing retention leases.
Similarly, APPEA continues to advocate that legislative frameworks for new resources such as geothermal energy do not impinge on existing oil and gas exploration and production rights. APPEA argues that wherever possible legislation should allow the petroleum sector and new industries to coexist. APPEA has also proposed the introduction of a reconnaissance form of exploration permits for acreage releases in new frontiers.
APPEA also continues to provide input to various state and territory reviews of specific onshore petroleum legislation to ensure that the rights of the upstream oil and gas industry titleholders continue to be preserved.
Across Australia, APPEA has been working with federal and state government ministers and senior bureaucrats to address the country’s complex and overlapping regulatory systems.
Revised regulations have streamlined processes and reduced the compliance burden. Particular progress has been made in Western Australia, which has made legislative changes to appeals processes and improved the environmental impact assessment process. WA has also established a lead agency framework. But the state has yet to follow through in implementing many of its good ideas. Indeed, further reform is needed in all Australian jurisdictions and APPEA will continue working with the relevant ministers and departments to achieve this.
Land Access
Timely access to land and sea is necesssary to facilitate exploration and assessment of prospective hydrocarbon resources. The uncertainties of native title in the early 90s are now becoming less of an issue as States and Northern Territory undertake various successful native title processes. APPEA continues to call on various State and Northern Territory Governments to facilitate negotiations between applicants for petroleum tenure and indigenous native title holders to reach an agreement in an expedient manner. This will facilitate early exploration and lead to the development of petroleum discoveries.
Priorities for regulatory reform
A 2009 Productivity Commission report (Review of the Regulatory Burden on the Upstream Petroleum (Oil and Gas) Sector) found that current regulatory arrangements for the industry were overly complex, imposing unnecessary regulatory burdens and increasing costs.
This report made several recommendations to improve the system in Australia, including measures to:
- improve cross-jurisdictional approvals processes
- improve consistency by enhancing the role of the Environment Assessors Forum
- streamline heritage processes
- develop transparent policy principles for environmental offsets
- review legislation to ensure it complies with best practice principles
- clarify the role of government
- develop improved approvals tracking systems
- establish a lead agency in each state and territory
- set up a new national offshore petroleum regulator.
The Commission said a 50 per cent reduction in approval times is achievable and an across-the-board one-year reduction in total approval time for major projects could increase future national income by billions of dollars each year.
In December 2009, jurisdictions agreed to 25 of the 30 recommendations in the Commission’s review. But they could not reach consensus on the remaining five recommendations on setting up a National Offshore Petroleum Regulator for state and Commonwealth waters.In early 2010, the Ministerial Council on Mineral and Petroleum Resources decided to defer its consideration of a national offshore regulator until the Montara Commission of Inquiry’s report had been completed and its recommendations considered.
In November 2010, the Montara Commission found Australia’s offshore oil and gas regulatory regime to be seriously wanting in its oversight of safety and environmental management. This reinforced the findings of the Productivity Commission and made a compelling case for setting up a single integrated offshore regulatory authority for these critical operational areas.
The Australian oil and gas industry has welcomed the Australian Government’s May 2011 responses to the Productivity Commission and Montara Commission of Inquiry reports.
The Government announced it would introduce legislation to establish the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) and the National Offshore Petroleum Titles Administrator (NOPTA).
Australia also needs a more efficient regulatory regime that continues to attract vital investment in the nation’s oil and gas resources without compromising health, safety or environmental outcomes.
Fiscal incentives
Australia’s declining oil production and declining exploration are of great concern. Clearly, new incentives are needed to increase exploration activity.
APPEA’s preferred exploration incentive is a flow-through shares scheme that would allow up-front tax deduction for investors to encourage them to put more money into exploration. A flow-through shares scheme has been used in Canada for nearly 20 years and is credited with dramatically lifting that country’s resources exploration activity. With access to capital restricted in the wake of the global financial crisis, the need for a flow-through share scheme is even greater than it was a few years ago.
Petroleum data and precompetitive geoscience
Petroleum data acquired through work program activities within Australian jurisdictions must be lodged with governments. This data is invaluable in helping governments and the industry assess the future potential for hydrocarbon exploration and development in Australia.
APPEA advocates that governments contribute to collecting, managing and providing precompetitive geoscientific datasets through Geoscience Australia as well as state and territory geosurvey agencies. APPEA has participated in the Australian National Audit Office’s review of Geoscience Australia’s activities. APPEA’s Petroleum Data Working Group also continues to work with the federal government’s Petroleum Data Consultative Group, aiming to improve and streamline data management regulations and guidelines.
High-quality precompetitive petroleum data packages are a major factor in attracting new exploration activity into new frontiers. Preserving this data and making it more accessible is vitally important in maintaining a vibrant industry and meeting Australia’s future demand for hydrocarbons. Transferring existing data to more modern and user-friendly media will enable searching and downloading of such data using web browsers. This will make data transfer almost instant and will remove highly resource-intensive physical data transfers.
APPEA has called for the establishment of a national virtual geoscience library through common data standards that will give nationwide streamlined access. Over the past two years, federal and state governments have been working hard to create a virtual repository, with work ongoing. Similar projects have been initiated in New Zealand, Norway, the UK and other parts of the world.
The industry welcomes actions taken by various geosurvey bodies to bring petroleum geoscientific data under one nationally accessible database. APPEA will be working to see that momentum is maintained so that Australia’s petroleum data can soon be accessed from anywhere in the world.
Policy
