Petroleum and gas exploration - AgForce Queensland

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further notice of entry two business days before that entry, OR ... with the ATP holder on request within 20 business da
Petroleum and gas exploration Exploration laws explained Introduction The following contains information of a general nature only and is intended to demystify aspects of the petroleum and gas exploration process. It should be read in conjunction with the Petroleum and Gas (Production and Safety) Act 2004 and the Petroleum Act 1923. This information is a guide only and does not take into account your specific situation. It is recommended that you seek independent advice from your own legal adviser or an independent advisor with appropriate experience in this field. Greater detail is available from officers of the Department of Mines and Energy listed at the end of this information sheet.

Definitions ATP — means an Authority to Prospect, which is a petroleum exploration tenure granted under either the Petroleum and Gas (Production and Safety) Act 2004 or the Petroleum Act 1923. An ATP is sometimes referred to as an EPP (for “exploration permit for petroleum”). Compensatable effect — is defined under Section 531 of the Petroleum and Gas (Production and Safety) Act 2004 and section 79P of the Petroleum Act 1923. In essence, it means a landowner or occupier will be compensated if all or any of the following apply: ƒ ƒ ƒ ƒ ƒ

deprivation suffered due to possession of the land surface loss of value decrease in the use made or that may be made of the land or any improvements to the property severance of any part of the land any cost or loss arising from the carrying out of activities under the petroleum authority on the land.

DME — Department of Mines and Energy EPA — Environmental Protection Agency

Exploring —for petroleum or gas, means carrying out an activity for the purpose of finding oil or petroleum, natural gas or coal seam gas (also called coal seam methane). Examples include— ƒ ƒ ƒ ƒ

conducting a geochemical, geological or geophysical survey drilling a well carrying out testing in relation to a well taking a sample for chemical or other analysis.

1923 Act — means the Petroleum Act 1923. Petroleum — under both the Petroleum and Gas (Production and Safety) Act 2004 and the Petroleum Act 1923 ‘petroleum’ also means oil, coal seam gas, and natural gas. P&G Act — means the Petroleum and Gas (Production and Safety) Act 2004. private land — means either freehold land; or an interest in land less than fee simple held from the State under another Act.

Main types of exploration activities

Seismic acquisition

Exploring for reservoirs of petroleum (be they natural gas which may include coal seam gas, or crude oil) has advanced dramatically in the past 15 to 20 years, enabling the industry to more accurately define likely areas of petroleum deposits.

Seismic study can be conducted on lands covered by an ATP (subject to the provisions of the P&G Act and the 1923 Act and various other Acts). Seismic data is acquired by transmitting sound waves into the earth and recording, by objects called “geophones”, the reflection of these waves off layers of rocks. It operates like a giant ultrasound machine.

Seismic surveys are used to define and delineate likely areas of petroleum reservoirs or seams of coal.

There are two main resources sought by petroleum exploration companies: ƒ

Conventional petroleum, and

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Coal seam gas.

The recorded data obtained from the geophones is processed by computer to give an indication of the structure of the rocks beneath the surface of the earth.

Reservoirs of conventional petroleum (oil, natural gas) are not found in deep underground lakes. They are found within the tiny spaces of porous rocks such as sandstone, as deep as 3.5 to 4 kilometres below the surface.

Seismic data is generally required along straight lines. Minimal clearing of the site may need to be undertaken.

Coal seams (which contain gas consisting of mostly methane or CH4) are usually saturated with water. The water’s hydrostatic pressure keeps the methane attached onto the coal. To obtain the gas from the coal, water is pumped out via a well, reducing pressure and causing the methane to flow from the coal.

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vibroseis, involving large trucks fitted with a vibrating plate. The plate is placed on the ground and vibrated, giving off a source of sound waves or

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Small explosive charges, generally dynamite, which are placed in shallow holes and fired to produce the sound waves. Note that dynamite as a sound source is now rarely used when explorers wish to acquire seismic data.

The sources for sound waves are usually of two types:

Techniques used by petroleum explorers to identify petroleum deposits include: ƒ ƒ ƒ

in-house geological and geophysical research acquisition of seismic data (a seismic survey) the drilling of wells.

Drilling a well Drilling an exploration well in the search for conventional petroleum in deep reservoirs involves using a series of drill bits of up to 45 centimetres (18 inches) in diameter.

It is usual at this stage for a property to be entered for observation to obtain a geological/geographical overview of the land.

The drilling of a well involves a rig, along with ancillary sheds containing geological equipment and other instrumentation, mud pits, large amounts of casing pipes etc. (A mud pit is an excavation, about the size of a turkey nest dam, that holds the drilling mud needed to lubricate the drill bit). This equipment can occupy a site as large as three hectares.

In-house geological and geophysical research Accounts of all previous petroleum exploration are contained in reports submitted to the DME. They are available as a research tool for explorers in this costintensive process.

Explorers for coal seam gas, drill shallower wells than those drilled for petroleum. They may use truckmounted mobile drill rigs. The areas of land that may be accessed by explorers for coal seam gas are significantly smaller than those required by conventional petroleum explorers.

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However, owing to the area required by all drilling rigs and equipment, closely settled areas including small properties and average household blocks of land are generally avoided by petroleum exploration companies.

Entry to private lands A person acting under the authority of an ATP must not enter private land unless: ƒ

each landowner and occupier has been given a notice of entry 10 business days before the proposed by the ATP holder enters the land, and a further notice of entry two business days before that entry, OR

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each owner and occupier of the land has agreed that an entry notice is not required (waiver of entry notice), OR

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the entry is needed to preserve life or property because of a dangerous situation or emergency. However, in this circumstance, if practicable, the person entering the land must notify each owner and occupier of the land verbally before entering the land, AND

Companies or eligible individuals may apply for ATPs in response to a call for tenders. Calls for tenders over land within Queensland are released by the Minister for Mines and Energy and published in the Queensland Government Gazette.

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a compensation agreement is in place. (For further details about compensation, please see the heading “Compensation”, below.)

An application for an ATP must contain a minimum compulsory proposed work program covering authorised activities for each year of the period stated. This period is generally four years.

Entry notice

Depending on the depth of the well being drilled and the rock structures encountered at the drill bit, drilling may take anything from one week to a couple of months. Drilling costs can be high depending on the total depth of a well and its location in Queensland. The total depth of a hole is dependent upon the geological layers being tested and commonly exceeds 2,200 metres, with the deepest well in Queensland drilled to 4,440 metres.

Applying for an ATP

The entry notice, to be given to each owner and occupier of the land, must be accompanied by the information statement, that details the rights and obligations of ATP holders, owners and occupiers relating to the entry of land under an ATP.

The maximum term for which an ATP may be granted is generally 12 years. However, the Minister may grant an ATP for a term less than this. If the Minister grants an ATP for a period of less than 12 years, the ATP may be renewed at the Minister’s discretion.

The entry notice must include the following information:

ATPs are granted in blocks approximately 5 minutes of latitude and five minutes of longitude. The DMEcreated Block Identification Maps (BIMs) use a linear grid to cover Queensland. The approximate area of a block is 75 square kilometres (7,500 hectares/18,000 acres), depending on where the block is located. The area shown on each BIM consists of 3456 blocks, which are individually numbered from 1 to 3456. Each BIM has a different name linked to a geographical feature shown on the BIM. BIMs are drawn at a scale of 1:1 000 000.

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the land proposed to be entered

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the period during which the land will be entered

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the activities proposed to be carried out on the land

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when and where the activities are proposed to be carried out

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contact details for: (i) the ATP holder or (ii) another person the ATP holder has authorised to discuss the matters stated in the notice.

Each block is identified by combining the name of the BIM with the number of the block (from 1 to 3456), for example, Clermont 1645.

The entry period can not be longer than 6 months for an ATP, unless the person to whom the notice is required to be given agrees in writing. 3

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The further notice of entry must be given to each owner and occupier and must accurately describe where and when activities are proposed to be carried out. This notice may be written or verbal and may be given in any way e.g., in person, by e-mail, by letter or by hand written note).

For example, constructing a road or track, or opening and closing a gate. Access rights may only apply if:

Waiver of entry notice

A waiver of entry notice may only be given in writing and must be signed by the ATP holder. The waiver of entry notice must state: that the owner or occupier has been told they are not required to agree to the waiver of entry notice

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the activities proposed to be carried out on the land

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the period during which the land will be entered

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when and where the activities are proposed to be carried out.

needed to preserve life or property because of a dangerous situation or emergency or

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each owner or occupier has agreed verbally or in writing to the access rights.

An access agreement may include a compensation agreement in relation to the access or future access by the ATP holder. For further details about compensation, please see the heading below.

Each owner and occupier can agree that an entry notice is not required.

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Note that each owner and occupier must have agreed to the access rights where the access rights are likely to have a permanent impact on the access land (for example, building a road). Also note that only the occupier must have agreed to the access rights where the access rights are NOT likely to have a permanent impact on the access land (for example, opening and closing a gate). An owner or occupier cannot refuse to make an access agreement but can ask for reasonable and relevant conditions to be imposed

The owner or occupier cannot withdraw the waiver of entry notice during the period, although the waiver of entry notice ceases to have effect at the end of the period.

If an owner or occupier does not make an agreement with the ATP holder on request within 20 business days, they are considered to have refused to agree to access. To show that access has been unreasonably refused, the ATP holder must show:

Notice after entry

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The ATP holder must give each owner and occupier a notice detailing the activities carried out on the land within three months after the notice period or six months after the waiver of the entry notice.

that it not possible or reasonable to exercise access rights by using an formed road, then the following must be taken into account

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If no activities were carried out on the land during the period, the notice must state this.

the nature and extent of any impact the access rights will have on the land and the owner or occupier’s use and enjoyment of it; and

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how, when and where and the period during which the ATP holder proposes to exercise the access rights.

Access

Where access rights are refused, either party may refer the refusal to the Land Court for a decision.

Access rights of an ATP holder

Further details about how to apply to the Land Court, for the Land Court to determine these matters, can be obtained from their website, www.landcourt.qld.gov.au or by contacting the Land Court on telephone (07) 3247 5193 during office hours.

A person acting under the authority of an ATP has access rights to cross land if it is reasonably necessary and to carry out activities on the land that are reasonably necessary to allow the crossing of the land.

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owner or occupier of land that is within the ATP, for determining compensation as a result of this owner or occupier suffering a compensatable effect caused by authorised activities for the ATP,

The holder of an ATP is liable to pay compensation to each owner or occupier of land or access land that is within the ATP, for any compensatable effect suffered by the owner or occupier due to authorised activities conducted under the authority of the ATP.

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owner or occupier of land that is access land for the ATP, for determining compensation as a result of this owner or occupier suffering a compensatable effect caused by access to the ATP, or

Compensation is also payable for consequential damages the owner or occupier incurs because of a compensatable effect caused by authorised activities for the ATP.

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the ATP holder.

Compensation Principles

The persons listed above may also apply to the Land Court for the Land Court to determine a variation to compensation

For what is a compensatable effect, please see the Definitions heading at the start of this document.

For further details about the Land Court deciding compensation, see sections 533 to 535 (inclusive) of the P&G Act and sections 79R to 79T of the 1923 Act.

Compensation Agreement Each owner or occupier of land that is within the ATP, or is access land for the ATP, may enter into a compensation agreement with the ATP holder.

For further details about the Land Court deciding compensation, see sections 533 to 535 (inclusive) of the Petroleum and Gas (Production and Safety) Act 2004 and sections 79R to 79T (inclusive) of the Petroleum Act 1923.

The compensation agreement may be about the ATP holder’s compensation (or future compensation) payable to the owner or occupier of the land, and may relate to all or part of the compensation (or future compensation) payable by the ATP holder.

Further details about how to apply to the Land Court, for the Land Court to determine these matters, can be obtained from their website, www.landcourt.qld.gov.au or by contacting the Land Court on telephone (07) 3247 5193 during office hours.

Details of what needs to be included in a compensation agreement, plus what must be provided for in such an agreement, are detailed in section 532 of the P&G Act and section 79Q of the 1923 Act.

Security moneys Before the granting of an ATP, the EPA determines an amount for environmental security relative to the proposed work programme and retains this security (called a “financial assurance”) until rehabilitation of any well sites or seismic survey lines has occurred to its satisfaction.

Unless a compensation agreement is in place, an ATP holder cannot enter lands to conduct activities authorised under the ATP. Exceptions to this rule are detailed in section 536 of the P&G Act and section 79U of the 1923 Act.

If, for example, a company goes into liquidation and does not rehabilitate any disturbed lands, the EPA can use part or all of this financial assurance to employ contractors to rehabilitate this site. It should also be noted that future grants of applications for ATPs depend in part on a company’s previous performance.

Decision on compensation by Land Court Compensation (or future compensation) payable to the owner or occupier of the land, or access land, by the ATP holder, may be determined by the Land Court upon application to the Land Court.

The DME may also require that a security be provided by the proposed holder of an ATP, prior to the ATP being granted. This security may be used, among other things, to clean up drilling or seismic equipment left on land where these type of activities occurred.

Any of the following persons may apply to the Land Court, for the Land Court to determine compensation (or future compensation): 5

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DME contact details

Further background

Department of Mines and Energy (DME) PO Box 15216, CITY EAST QLD 4002 www.dme.qld.gov.au

The Petroleum and Gas (Production and Safety) Act 2004 and the Petroleum Act 1923 may be viewed

Registrar, Petroleum and Gas

purchased from Goprint (the Queensland Government printer) via the website www.goprint.qld.gov.au.

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at www.legislation.qld.gov.au or

Ms Tanya Cooney 3238 3803 Email Address: [email protected] The Registrar, Petroleum and Gas deals with the administration of all applications for, and granted, petroleum authorities and tenure. Landholders with questions as to their rights, and the rights and responsibilities of the tenure or authority holders, should contact this officer in the first instance.

Senior Tenure Officer Mr John McCormack 3238 3815 Email Address: [email protected] The Senior Tenure Officer assists the Registrar, Petroleum and Gas, in dealing with the administration of all applications for, and granted, petroleum authorities and tenure. Landholders with questions as to their rights, and the rights and responsibilities of the tenure or authority holders, should contact this officer where the Registrar, Petroleum and Gas is unavailable.

Petroleum Engineer and Petroleum Technologist Mr Andy Kozak 3238 3739 Email Address: [email protected] The Petroleum Engineer and Principal Technical Assessment Officer provides technical advice to all sectors of the petroleum industry. In addition, this officer also assesses the technical aspects of all petroleum authority and tenure applications, and all dealings associated with granted petroleum authorities and tenure.

Executive Director, Statewide Services Mr Jim Grundy 3237 0210 Email Address: [email protected] The Executive Director is in charge of operations for South East Region, where all petroleum authority and tenure applications are processed. 6

Petroleum and gas exploration — Exploration laws explained, July 2008