The Department of Mines, Industry Regulation and Safety in Western Australia (WA) recently released for comment a draft amendment bill, the Petroleum Legislation Amendment Bill (B) 2023 (Bill), which proposes to amend the Petroleum and Geothermal Energy Resources Act 1967 (WA) (PGERA), Petroleum Pipelines Act 1969 PPA ) and Petroleum (Submerged Lands) Act 1982 (WA) (PSLA) “to provide a legislative framework for the transport and geological storage of greenhouse gases in Western Australia.” This Bill, previously known as the Greenhouse Gas Storage and Transport Bill, has been anticipated since the Minister for Mines and Petroleum announced in March last year that he had approved the drafting of the Bill (see our previous article: Reform rumbles along in the West - carbon capture in Australia set to play key role).
In this article we provide an overview of what the Bill does and an analysis of whether it provides for a robust legislative framework to regulate carbon capture and storage (CCS) in WA. To assess this, we consider the amendments proposed by the Bill against The Carbon Capture and Storage Readiness Index 2018 (Index). We also look closely at the issue of liability post-closure and consider the position under the Bill in relation to other Australian legislative approaches to CCS.
Key takeaways in relation to carbon capture storage in Western Australia
The Bill integrates greenhouse gas (GHG ) transport and storage into existing petroleum legislation, with clear permitting requirements for onshore and offshore GHG operations by way of amendments to the PGERA and PSLA (as applicable).
Much detail remains to be captured in regulations around CCS, such as the detailed requirements relating to approving site plans for GHG injection sites.
CCS will be subject to environmental requirements under existing legislation, and we expect consultation requirements to be included in regulations.
Liability for CCS sites will be assumed by the WA government following a 15-year post-closure period, subject to prescriptive site closure requirements, which is broadly in line with other Australian and international legislative requirements.
The Bill also provides for the transport of GHG via pipelines to depleted petroleum reservoirs by way of amendments to the PPA.
The amendment legislation is intended to aid WA’s transition to a clean energy, net zero emissions future by providing opportunities for WA industry to decarbonise through carbon capture and storage.
WA’s readiness for carbon capture storage
In Reform rumbles along in the West - carbon capture in Australia set to play key role , we considered the Index, which identifies countries leading the development and regulation of the commercial deployment of CCS technology. The Index sets out five principles that are required for a robust legal framework for CCS. We have assessed the Bill against these principles below.
1. Provide a clear and efficient administrative process under the CCS legal framework to apply for, and obtain, regulatory approval for CCS projects
The Bill provides for GHG transport and storage (in geological formations) by incorporating property rights for GHG storage formations, new provisions for release of acreage, title provisions for the grant of GHG exploration titles, retention leases, injection licences, access authorities and special prospecting authorities, as well as injection, site closure and long-term liability requirements. It provides for GHG operations in both onshore Western Australia and in offshore territorial waters, as it amends the PGERA and PSLA (as applicable).
The Bill essentially extends WA’s existing approach to petroleum permitting to include GHG transport and storage. In this way, it takes an approach that has been tried and tested, adapting it for the purposes of CCS. Consequently, it provides a clear and efficient administrative process with the added advantage that petroleum proponents will be familiar with the general procedures and concepts that currently apply under WA law.
The Bill provides for various GHG authorities, licences or permits, being:
GHG exploration permits, to explore for injection sites or storage formations. The initial term is 6 years from grant of the permit.
GHG drilling reservations, to drill for injection sites or storage formations, which are effective for the term specified by the Minister.
GHG retention leases, which allow for exploration of potential GHG storage formations and injection sites, as well as storing and injecting GHG on an appraisal basis. This lease has a term of 5 years with one renewal permitted.
GHG injection licence, which allows for the permanent storage of GHG in GHG storage formations and injection sites, among other things. This remains in force indefinitely, though the site can be closed by the proponent or the licence terminated by the Minister.
The Bill also sets out the criteria for the identification of storage formations (including eligibility requirements), the nature of GHG activities authorised by the GHG authorities and the standard to which a GHG permittee or lessee must undertake the work.
One aspect not addressed by the Bill is the regulation of offshore GHG storage formations that straddle the boundary between State and Commonwealth jurisdictions. Where this occurs, we expect that this will be regulated under Commonwealth legislation. Under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGSA), GHG permittees holding adjoining permits under the OPGGSA and a relevant State law can apply for a cross-boundary GHG assessment permit to explore for potential GHG storage formations and GHG injection sites within the area of that cross-boundary permit.
The relevant State law must be a law declared by the Commonwealth Minister to be a compatible cross-boundary State law. This is the case with the Offshore Petroleum and Greenhouse Gas Storage Act 2010 (Vic), which was declared a compatible cross-boundary law under the Offshore Petroleum and Greenhouse Gas Storage (Compatible Crossboundary Laws) Declaration 2021 (Cth). Once the Bill passes the WA parliament, it remains to be seen if the Commonwealth Minister will declare the PSLA a compatible cross-boundary law.
Broadly speaking, the approach to GHG permitting under the Bill is aligned with the OPGGSA in terms of the range of titles available for GHG operations.
2. Provide a comprehensive legal framework for all aspects of a CCS project, including siting, design, capture, transport, storage, closure and monitoring for potential releases of stored CO2
The Bill provides a comprehensive framework in relation to certain aspects of CCS projects. For instance, the Bill provides permits for site identification, which process can include the injection of substances into potential sites on an appraisal basis. The Minister must also be immediately informed of any discovery of potential GHG storage formations or injection sites. The Bill also provides for GHG transport via pipelines to depleted reservoirs through amendments to the PPA, and deals with GHG storage and site closure.
Permissioning of CCS activities at an operational level is not dealt with in detail in the Bill and we expect that these aspects will be dealt with (more appropriately) by regulations. For instance, the Bill includes a mechanism for regulations to provide for approving of ‘site plans’ to be developed by a GHG licensee and in respect of which GHG operations must be undertaken. Indeed, under the Petroleum and Geothermal Energy Resources (Resource Management and Administration) Regulations 2015 (WA) , petroleum operations are required to have various approved plans depending on the activities to be undertaken: for instance, prior to undertaking a well activity in a title area, the title holder must ensure that it has an approved well management plan. It is therefore likely that the regulations will, in due course, adopt a similar approval regime for CCS.
3. Provide an appropriate siting of CCS projects and adequate environmental impact assessment processes
The Bill provides for the siting of CCS projects by setting out the requirements relating to identification of “potential GHG storage formations” or “eligible GHG storage formations”. “Reasonably foreseeable technological developments” can inform the identification of such potential GHG storage formations. For “eligible GHG storage formations”, the site must be suitable for storing at least 100,000 tonnes of a particular GHG substance and must meet “fundamental suitability requirements”, including that the formation has an “effective sealing feature or attribute” to enable permanent storage. We expect these siting requirements will be subject to close technical review as part of consultation on the Bill.
Under the Bill, the Minister will also be able to release blocks inviting applications for GHG exploration permits, and the current approach to locating and declaring petroleum discoveries is extended to GHG injection sites or storage formations, which require that a discovery be notified to the Minister, who may then declare the location.
Environmental impact is conceptually built into the Bill, to the extent that it refers to regulations that may provide for the “preparation, submission and approval of environment plans”. Otherwise, environmental impact will largely be covered by the extant Environmental Protection Act 1986 (WA) (EP Act). The primary environmental impact assessment will therefore occur under the EP Act, which allows for proposals that are “likely, if implemented, to have a significant effect on the environment” to be referred to the WA Environmental Protection Authority for approval. This means proponents will be familiar with the environmental impact assessment process and requirements, thereby ensuring continuity and consistency.
4. Provide meaningful and effective stakeholder and public consultation
The Bill extends the consultation provisions already inherent in the PGERA to cover GHG and CCS operations. For instance, the Minister will advertise releases for GHG exploration permits and drilling reservations in the Government Gazette, as well as notifying the public of nominations for the declaration of locations for drilling activities and declarations of GHG storage formations.
Consultation forms an important part of the environmental review process in respect of petroleum and geothermal operations. Under the Petroleum and Geothermal Energy Resources (Environment) Regulations 2012 (WA) , operators undertaking petroleum or geothermal activities must obtain approval of an environment plan, which environment plan will only be approved if sufficient consultation has occurred with “relevant authorities and interested persons and organisations”. Currently, this does not apply to GHG operations. However, we expect that adequate consultation will be identified as an important issue through the Bill consultation process. Further, given the Bill amendments largely adapt the existing petroleum regime to allow for GHG operations, it can be expected that regulations drafted under any amended legislation will likely apply existing environment plan requirements, with consultation, to GHG operations.
5. Deal with long-term liability for closure, monitoring and accidental releases of CO2
Perhaps the part that will garner the most scrutiny and interest is the provisions relating to closure and long-term liability.
Under the Bill, GHG licensees are required to inform the Minister of “serious situations”, such as the leakage of a GHG substance that has been (or is being) injected into a storage formation or where the GHG substance, once stored, behaves in a way that does not accord with predictions. In such situations, the Minister may issue directions to the licensee regarding the reasonable steps the licensee must take. Such directions may, among other things, require the licensee to inject or store the GHG substance in a certain way, or even to stop or suspend injection operations.
The Bill also makes provision for the closing of GHG storage formations by a proponent or under a site closure direction issued by the Minister on certain grounds. Where a proponent has ceased injecting GHG into a storage formation, it must apply for a site closing certificate. The application must include a report modelling and analysing the behaviour of the GHG that has been injected, mitigation pathways of the GHG substance, short-term and long-term consequences of migration of the GHG substance, and the suggested approach to monitoring the GHG substance as stored.
Prior to issuing a site closing certificate, the Minister will provide the proponent with a pre-certificate notice, which will specify the monitoring programme the State will undertake, an estimate of the total cost of that programme as well as the security amount that the proponent must provide to the State, which the State can draw from in the event it incurs reasonable costs in carrying out the monitoring programme.
Once granted, a site closing certificate remains in force indefinitely. If, after at least 15 years, the State is satisfied of certain things, including that the GHG injected into the storage formation is behaving as expected and there is no significant risk to the environment or human health, then the State will assume liability (subject to certain conditions being met) for damages arising after that 15 year period ends.
The approach to closure and liability under the Bill largely reflects the approach taken in the OPGGSA as well as the Barrow Island Act 2003 (WA), under which liability is assumed by the State at least 15 years following cessation of GHG injection activities. The practice within Australia indicates that the assumption of liability by the State after a specified post-closure period is therefore standard practice.
Implications of GHG Bill & CCS Opportunities in Australia
The 12-week consultation period for the Bill ends on 14 April 2023. The Bill provides for a robust regime insofar as it incorporates GHG operations into existing petroleum legislation, which means proponents should be generally familiar with the statutory framework. However, further and specific detail remains to be drafted under regulations.
While it appears that the Bill adopts a best practice approach to GHG and CCS, given the approach under other Australian legislation, we expect the technical aspects of the siting regime and the issues such as transfer of the long-term liability will attract the most attention as part of consultation on the Bill.
Gilbert + Tobin has deep experience in advising on CCS project development and the legal frameworks for carbon capture and storage in Australia, including the structuring of projects to access income streams through Australian Carbon Credit Units. Please contact us to learn more about the opportunities.