Canning Basin Bill marks new chapter of gas development

by Jonathan Fulcher, Courtney Smith, Kylie Panckhurst

On 7 November 2012 the State of Western Australia entered a joint venture agreement with Buru Energy Limited, Diamond Resources (Fitzroy) Pty Ltd, Diamond Resources (Canning) Pty Ltd and Mitsubishi Corporation (as guarantor) (the Agreement).

The Natural Gas (Canning Basin Joint Venture) Agreement Bill 2013 (the Bill) ratifies and authorises the implementation of the Agreement.  The Bill has been introduced, and received its first and second reading in the Legislative Assembly on 8 May 2013.

The Bill marks a new chapter in unconventional gas exploration, with the key purposes including:

  • to encourage accelerated investment in exploration and evaluation of the natural gas resources in the Canning Basin.
  • to promote industrial development in Western Australia generally.
  • to create security by giving preference to domestic gas market demand over export.
  • to facilitate the development of pipelines and other infrastructure to deliver gas to the domestic gas network.

The Bill does not affect the rights of Canning Basin exploration tenement holders or applicants who are not party to the Agreement.

The Agreement

The Agreement is for an initial term of 25 years, with a possible extension of 25 years and provides for the evaluation, development and exploitation of natural gas resources in the Canning Basin region. The Agreement initially applies within the area of five exploration permits (E 371(R1), 391(R2), 428, 431, 436) which cumulatively equate to 17,000km2 of tenure.  These exploration permits are geographically located between Broome and Fitzroy Crossing.

The Agreement provides that if commercially viable gas is discovered by mid 2016, the parties must submit a plan for construction of the domestic gas project, which will include a 600km pipeline south to Western Australia’s existing Pilbara gas network.  Meeting domestic market demand has priority over exports under the Agreement (in accordance with the State's policy published in August 2012 in the Strategic Energy Initiative: Energy 2031).

The Agreement provides for the use of local labour and materials as well as the creation and implementation of a community development plan and local industry participation plan.

Under the terms of the Agreement, the joint venture will still be required to obtain relevant environmental, health and safety, heritage and Native Title approvals for the proposed exploration, development and infrastructure.  Such approvals will require close interaction with overlapping tenure holders, Aboriginal Traditional Owners and other interested third parties. 

The Bill

Importantly, the Bill confirms the State’s power to take any land considered necessary for the purposes of the Agreement, excluding port or Dampier to Bunbury Natural Gas Pipeline corridor areas (which land will be compulsorily acquired under the Land Administration Act 1997 (WA) on the basis that it is required for a public work).

In keeping with the Government Agreements Act 1979 (WA), the Bill also ensures that, once enacted, its provisions will override any other inconsistent enactment or other law.

The operative provisions of the Bill (including the ratification of the Agreement) commence the day after the Bill receives Royal Assent.

For further information on the Agreement, please contact HopgoodGanim’s Resources and Energy team.

 

With offices in Brisbane and Perth, HopgoodGanim offers commercially-focused legal advice, coupled with reliable and responsive service to clients throughout Australia and across international borders.



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