Second Reading

Resumed from 22 May.

HON KATE DOUST (South Metropolitan — Deputy Leader of the Opposition) [7.43 pm]: On behalf of the Labor opposition, I rise to comment on the Natural Gas (Canning Basin Joint Venture) Agreement Bill 2013 and the agreement.

The agreement in this legislation we are dealing with had already been made late last year. I understand that the bill was read into Parliament last year but, due to the prorogation of Parliament, fell away and has had to be reintroduced. The bill is made up of six clauses and an extensive schedule in which the agreement itself is attached, and it is the agreement that provides all the detail of the arrangements that will exist with the passage of this bill between the state government and Buru Energy and its other partners. I will therefore take my time to work through this bill. This is probably the first state agreement I have had to manage and I find it a quite interesting learning process to work through it.

This bill is quite interesting because it is about a relatively new initiative. It is new not just because of the type of agreement being struck, but because it is quite narrow in scope in terms of the area with which we are dealing. I do not mean that the area itself is narrow; I understand that the Canning Basin encompasses something like 17 000 square kilometres. In itself that is, therefore, an extremely large area to deal with, but it is not the total area of all the holdings of the companies involved. The agreement also deals with a new type of mining in our state. Our traditional oil and gas fields are now shifting back onto land and into areas associated with shale gas. I had a very interesting and a quite educational meeting with the advisers on this particular area, the Canning Basin. They provided me with lots of very colourful maps, which I found quite useful for trying to get my head around the area. I do not know the north of our state as well as I perhaps should, but I understand that the Canning Basin is an extremely large area. The advisers explained, with the use of the map provided, that the potential for shale gas in the Canning Basin is approximately 229 trillion cubic feet. I do not know about members on the other side of the chamber, but when people talk about those kinds of numbers, I cannot get my head around the exact volume and enormity of such a size. It was explained to me that one trillion cubic feet of shale gas would provide approximately 20 years’ worth of energy for one million people. When it can be broken down into simple language and that kind of concept—as was reported in the media when the debate was going on in the other chamber—I understand that 229 TCF of this type of gas using this type of extraction method has the potential to provide almost 300 years’ worth of energy supply.

A lot of discussion has taken place over the last couple of years about the work being done with shale gas, not only in Australia but also in the United States, and flow-on debates have occurred about fracking. I let the minister know that I will not have an extended debate about fracking tonight, as I am sure my colleague from the Greens will have a spirited discussion about that. It is interesting to note, though, that there is a shift in the way we will be sourcing this type of gas. There has also been a quite seismic shift in the US, which was struggling to find enough gas for its market. With the discovery several years ago of shale gas, I understand that the US has now obtained enough shale gas to export gas for the first time in a long period, and that those gas exports will start in the US from about 2016. That has made a significant difference to the market in the US, and it will also have flow-on implications to our markets and to the cost of gas in Western Australia.

There was a very interesting article in The Australian Financial Review on Friday, 24 May this year headed “Shale gas a trigger for major reform”. It quotes an economist and former Reserve Bank of Australia board member, Warwick McKibbin, who talked extensively about shale gas. He warned —

… the slowdown in the natural resources sector will accelerate due to the competitive threat of the shale gas revolution in the United States.

Launching a scathing critique of successive governments “wasting” the proceeds of the mining boom, Professor McKibbin said the economy faced headwinds from falling coal prices as shale gas emerged as an alternative.

He went on to make a range of other comments. That same article contains a quote from Grattan Institute energy program director Tony Wood, who said —

… shale gas was already contributing to the decline in thermal coal prices, from well above $100 to about $90 a tonne as American coal producers exported supplies in response to the shale gas flooding the domestic US market.

We are seeing quite an interesting shift in the type of product coming into the market. Although it is solving significant problems for the domestic market in the US, it will cause flow-on effects for us. This bill is significant because it will help Western Australia address some of the concerns in the marketplace and the community about our domestic gas arrangements here. I will come to that as I work through the issues with this bill.

I will return to this map that I was provided. Western Australia is fortunate because we will certainly have significant amounts of gas, offshore and onshore, available to us into the future. Potentially, 229 trillion cubic metres is available in the Canning Basin and another 71 trillion cubic metres is available in the Perth Basin area. There are some exciting opportunities in Western Australia. When we compare that with what is happening in the eastern states, where they are looking at mining coal seam gas, we see that we are dealing with different types of issues. We will probably have further discussions tonight on the different views and the pros and cons of shale gas. To come back to the Canning Basin area, it has the potential to make some significant long-term contributions to our economy and to stimulate our economic growth. I did not pluck the figure of 229 trillion cubic feet out of the air; that figure came from the US Energy Information Administration, which has said that this number is roughly double WA’s known offshore gas resources and it is the largest shale gas accumulation in Australia. According to the Energy Information Administration, shale gas will become a very important resource in years to come. We have already talked about how it has transformed the US energy situation. I have referred to the fact that the US is now exporting gas. I am not too sure how long ago the US started resourcing shale gas. It is not something from 20 or 30 years ago; it is a relatively recent arrangement. A number of Western Australians were involved in the discovery of shale gas in parts of the US and have brought some of their technology and experience to the Canning Basin area.

The agreement attached to the bill is between the state government and the joint venture partners, which are Buru Energy Limited, Diamond Resources (Fitzroy) Pty Ltd and Diamond Resources (Canning) Pty Ltd, and the guarantor for the joint venture partners is Mitsubishi Corporation. The second reading speech states —

The purpose of this bill is to ratify and authorise the implementation of an agreement … between the state and —

The various partners —

… to promote the natural gas exploration and development of the area of certain petroleum exploration permits in the Canning Basin region of Western Australia.

That is all fairly straightforward. The agreement seeks to do a range of things. It is quite different from other agreements. I am not somebody who has had extensive experience in agreements, but, as I understand it, it deals with only five areas of the Buru leases. Those five areas highlighted in this agreement cover some 17 000 square kilometres, which is not insignificant. A number of questions have been raised in the other place about why this agreement was struck in this manner. As I understand it, in a normal state agreement, every five or six years either the parties to the agreement would have to go back and rebid or they would lose 50 per cent of the land space that they had. The five areas highlighted in this agreement are being quarantined for an additional period so that the joint venturers will not have to go back and face loss. It gives those partners to the agreement an extended time to do their research into development; carry out any testing or surveying; and ensure that they are able to gain whatever financing arrangements they need to comply with all the other parts of the agreement that they have struck with the state government. It is an unusual arrangement; I am not too sure whether any other state agreement has been struck in the same way. The minister might advise me on that, but that is my understanding. This agreement is slightly different. Questions have to be raised about why this agreement has been struck in this manner. New and different opportunities in the gas industry are opening up in this part of the state. Will the government then use this agreement as the precedent to establish agreements of a similar vein with other companies or other joint venturers? It would be interesting to hear back from the minister about why the government decided to go down that path with this agreement with Buru. Does it open the door to similar types of agreements in the future?

I ask the minister to bear with me because there is so much information on this agreement. I will work my way through a raft of documents until I have covered most of the points. The bill has several effects. The first one is that it saves the joint venture companies from needing to hand back acreage in certain key leases while they prove up their reserve. We have already dealt with that. It mandates the construction of the domestic gas infrastructure. We will come back and talk about the pipelines that need to be set up as part of the agreement. It permits the construction of liquefied natural gas export facilities if the domestic gas project proves viable. It is also important to note that the bill does not set aside any environment regulations, and the ability for the companies to use fracking is neither enhanced nor hindered by this bill. The bill is technologically neutral. As we have already said, there are a range of other factors that we would look at. The fracking issue, as I saw it as I was going through the bill, is not a core issue with this agreement. Those are the key issues with this agreement. When we dealt with another state agreement last week, we discussed that the earliest one was established in the early 1950s.

When we look at the Petroleum and Geothermal Energy Resources Act 1967, at that point in our history nobody would have given consideration to shale gas being discovered in the Canning Basin, or even understood how to extract it or transport it, just as they probably did not give consideration to the existence of tight gas as we come down into other parts of the city. The original legislation did not contemplate that we would be dealing with unconventional forms of gas. Therefore, the reason that these sorts of agreements have come into play is that we are trying to keep up with changing knowledge and the changing resources that are available now and to pick up on those gaps and those differences.

I must say that I should have asked my daughter, who is studying geology, to give me a briefing, because she is certainly up to boot. In future, I will be doing homework sessions with her to make sure that I better understand how all these things fit together in terms of gas and oil. I understand that another bill dealing with this sector will be coming our way in the future, and I will be sitting down with my daughter and going through it clause by clause. Given that a lot of the legislation that deals with this sector is relatively aged, and that technology and the use of the resource has changed in recent times, it is perfectly understandable that we need to update this type of legislation.

This agreement requires Buru and its joint venture partners to undertake field and office investigations, appraisals and studies, and marketing and finance studies, and any other matters necessary for them to prove up sufficient reserves of natural gas within the title areas so as to underpin the establishment and sustained operation of a technically and economically viable domgas project, and also to finalise and submit proposals for a domgas project within the specified time frames. When I had the briefing, it was explained to me that there is a difference between using the word “resources” and using the word “reserves”. I am still not sure where those words should apply, but I am sure that once we have dealt with a few of these bills I will have a much better understanding.

The agreement recognises the current uncertainty about the extent of natural gas reserves within the title areas and the technical and economic viability of a domgas project. Accordingly, the state has agreed that the agreement be determined upon notice from the joint venturers, to be given not earlier than 31 December 2015 and not later than 31 March 2016, under clause 35 of the agreement—the agreement therefore sets a time frame—for any one or more of the following reasons: the joint venturers have been unable to prove up sufficient reserves of natural gas within the title areas to underpin the establishment and sustained operation of a technically and economically viable domgas project; the joint venturers’ preparatory work under the agreement leads them to conclude that the production of natural gas to underpin the establishment and sustained operation of a domgas project is not technically viable; or the joint venturers’ preparatory work under the agreement leads them to conclude that the establishment and sustained operation of a domgas project is otherwise not economically viable. The agreement does not include oil discoveries and their commercialisation. These are quite stringent arrangements that the partners to the agreement will need to comply with.

I have already talked about the specific areas that have been set aside in this agreement. The minister might be able to explain to us why these particular areas have been chosen and not other parts of the holdings of Buru and its partners in the Canning Basin. I do not know whether an extensive amount of work has been done on the five areas that are highlighted on the other map that has been provided to me, the plan A map. It might simply be the case that there is greater potential in these particular areas. Therefore, it would be useful if the minister could explain that.

Clause 46 of the agreement provides for an initial term of 25 years for this agreement, with the ability for the state agreement minister to extend it for a further period of up to 25 years. I am not sure how many members will still be in this place in 25 years. Hon Norman Moore might be back for his second stint, and he would probably be quite happy to sign up to this agreement for another 25 years. That is quite an extended period of time. But given the type of testing and drilling that will need to occur, and albeit that it is a different type of mining, if I can use that word, from our traditional forms of mining, I dare say that it would take an extended period of time to extract this shale gas. It will be interesting to see where this project is at in 25 years and whether the then government seeks to extend the agreement for another 25 years.

As I explained in my opening remarks, a significant part of this agreement is to ensure domgas supply. Members will recall that when Alan Carpenter was Premier, he set up the domgas agreement to ensure that Western Australian industry and the community would be guaranteed a supply of domestic gas. All governments since that time, regardless of their political persuasion, have continued to support the domgas agreement. One of the challenges has been to ensure that enough gas is available to comply with that agreement. This type of agreement is important, because it provides for an alternative method of extracting gas. Obviously, as we have already said, there is an enormous capacity of supply to tap into. This makes the longevity of the period that is provided for accessing this gas very attractive. The trick for Buru and its partners will be to ensure that they are able to, firstly, get the finance to build their pipeline, and, secondly, build the pipeline. It will be interesting to see, given the extended period of time that is involved with these arrangements, whether those companies will still be engaged down the track or whether it will be another company or companies. This is, therefore, a very important agreement to ensure continuity of domgas supply, rather than have the gas go straight offshore. These arrangements are set out in clause 8 of the agreement, in which the parties acknowledge their aspiration to comply with the domgas arrangements and to develop their domgas project. There are a range of issues, as we know, particularly in the north west of our state, about access to pipelines, and the sheer cost of the construction of pipelines is quite mind-blowing, so there are some real challenges ahead for the companies involved in this project to find the financial resources to develop the infrastructure, if you like, to deliver the gas. That will prove to be interesting as well, given that the companies have quite an interesting time frame in which to demonstrate to the government that they can bring to the table not only the finances, but also the project plans for developing the pipeline.

In these types of agreements there are always issues around what are the benefits to our community and, at a much more local level, what are the native title benefits to the traditional owners. I noted that clause 6 of the agreement deals with the need to have community and social benefits flow from the agreement. However, when I looked at the debate that occurred in the other place, I was struck by the comments made by the member for Kimberley, Josie Farrer, who, coming from that area, obviously knows what is happening up there. She talked about the extensive groups involved; I think she said that there are 10 language groups in and around that area and they are all quite different. She made the really good point that, although the government was very keen to work with a multicultural organisation such as Mitsubishi, it had not actually sat and had that discussion with all those different groups that live and work in the area. She posed what I thought was a really salient question—

Why is our Premier supporting large multicultural joint venture partners such as Mitsubishi, which we hear are foreign owned, and not protecting the rights of some of his most disadvantaged constituents?

I thought that was quite pertinent. Further in her contribution to the second reading debate on the Natural Gas (Canning Basin Joint Venture) Agreement Bill 2013, the member for Kimberley said that the government —

… should remember that these lands are home to a large number of Aboriginal people. Respect should be shown to these people and their families. After all, their native title rights have been recognised as only they can speak for their country. I believe that the Premier should meet with members from these 10 different language groups within the claim area that Buru has outlined. After all, it is their country and lands and it is recognised under the national Native Title Act as belonging to them and their families. Respect should be shown at all times. If some mining companies can do this, surely this government should be able to do this. After all, we are elected into government for only a few years, not forever.

I thought that the member made some really salient points. I know that this bill went through the other place some time ago and that it was treated as an urgent bill. Obviously, people are keen to get on with this. I am interested to hear from the minister about the type of engagement that has occurred with those people in those local communities, how native title has been dealt with by the companies involved, what type of discussion has occurred with the traditional owners of those areas and what type of commitments have been made about benefits and outcomes for people in those areas. Certainly, if this is a key part of the agreement that the government has locked in, it needs to ensure that the local traditional owners are included in the process and have a say in the types of benefits that they would like to have in their community. I will be interested to hear from the minister about that in due course.

Another part of the agreement deals with local industry participation benefits. We had a debate in this place about that a few weeks ago. There was an example of it last week at Parliament, in the parking lot actually, where people demonstrated about local content issues and the loss of opportunity for local content. There was some extended debate about that in the other place and, during consideration in detail, amendments were moved to try to tighten the issue of local content. Unfortunately, I understand that that was not successful. However, this is an ongoing issue and I firmly believe that the government needs to ensure that there is more engagement of our local industry in these types of projects. I do not have it in front of me, but today we received a report put out by the minister about local participation. I think it talked about success and increased numbers and more companies being engaged, but from having last week seen the number of people who were protesting about having been locked out of jobs and from having myself listed the number of people who have lost jobs in our manufacturing sites in Henderson and Kwinana, I would question the veracity of the document that came out today. I link it to this type of agreement because I think it is a very serious issue and one that government needs to place more emphasis on when it strikes these agreements of such significance and with such long-term arrangements in our state. Local industry participation is dealt with in clause 7 of the agreement.

This is an unusual agreement because it is narrow, if you like, in terms of the parts of the project that it will pick up on, albeit the physical scale of the project is not narrow. It is an agreement that will sit in this state for 25 years with the potential for a further extension. It is unusual because it does not play out in the same way as normal state agreements in which, at the time of every renewal, companies potentially lose part of that land; this agreement quarantines those parts of the titles for the joint venture companies for an extended period. The number of issues that arise from it are, I think, matters that the government certainly needs to give consideration to. We have dealt with the first issue; that is, it does not relinquish 50 per cent of the obligation on the land. There are concerns, about which I am sure Hon Robin Chapple will go into more detail, about native title and the comparison of negotiations with the traditional owners for the James Price Point agreement as opposed to the arrangements for this agreement that have been put in place with the traditional owners. There are issues around the domestic gas reservation, which is a matter of concern. The Conservation Council of Western Australia has written to most members articulating its concerns about fracking and some of the myths associated with that. I have touched on the community and social benefits and the local content issues.

We in the opposition will support this bill on this occasion. Perhaps if we were in government, we may have approached it in a different manner from the way in which this has been dealt with. We understand the significance of the shale gas find in the Canning Basin and we certainly understand the opportunities for the state that arise from that in employment and ensuring our domestic gas arrangements are sustained into the future; and that hopefully arise for the traditional owners in that area. We understand all those things and we know these agreements are significant, but we have some concerns about whether this particular type of agreement will set a precedent for the manner in which future agreements will be struck between the state government and various companies involved in the resources sector throughout our state. I think the Petroleum and Geothermal Energy Resources Act was passed in the 1950s or 60s, and the proponents were fairly traditional in their thinking about how they mined those resources. People talk about tight gas and shale gas as a fairly common type of gas resourcing. Who is to say what will happen in 25 years? Something new and different will always arise. Will these agreements constantly evolve to try to deal with the new way of accessing those resources into the future? I think they are some quite interesting things to look at as we go down the track.

If the minister is able to provide some responses to a couple of the matters that I have raised, we do not see the need to go into committee at this stage, but I am not too sure about my colleague. He may have entirely different views, but at this point we agree with this bill and we understand why this agreement needs to be signed off on. Buru and its partners have time limitations within which to comply with the terms of the agreement between 2015 and 2016 to prove up the resources and enable it to source funding for its infrastructure projects so that it can comply with the terms of the agreement for the domestic gas components.

With those few words, the opposition will support this bill.

HON ROBIN CHAPPLE (Mining and Pastoral) [8.22 pm]: I think it goes without saying that the Greens will oppose this bill. We will not oppose it just because it is a state agreement act; we do not think it will do what the government says it will. It has an interesting aspect in relation to native title and, indeed, the way we are dealing with the various native title parties in that area. Obviously, it is about fracking and there are a lot of proposals around the state for fracking. We need to also establish under the permit proposal what is or is not in or out of this issue. Finally, there is the greenhouse component and the recent reports of today and yesterday that cast some doubt on this issue and, to a large degree, whether the project will ever come to fruition.

I want to go back to the Energy WA conference of 24 October at which there were a number of presenters. It was fairly well articulated there that it is assumed that WA will run out of domestic gas by 2016–17. All the North West Shelf gas is committed to around 2020. Apache, Santos, Devil Creek and Macedon will also run out about then, and Pluto, which is coming on stream, has no domgas requirements as part of its deal. Chevron’s Gorgon and Wheatstone have an allocation of only five per cent of their reserves for domestic gas supply. The state had an option to forward purchase 700 petajoules at $3 a gigajoule from the North West Shelf project, but did not do so, with the result that the new amount it will have to take on board will be about twice that amount. This was fairly well articulated at the conference.

As we know, at a domestic level, the market is dominated by Verve and Synergy and there is little or no competition there. As I say, declining gas supplies will commence about 2016 unless new reserves are found. This, I suppose, is one of the new reserves we are talking about; that is, the North West Shelf supplies will drop to about 60 per cent at 600 petajoules; Apache and the rest at about 300 petajoules; and the North West Shelf is on the decline and will be roughly all out by about 2020. Apache will be all out by about 2025. I am raising this because we need to know where this project might fit within that. There are about 9 600 terajoules of gas reserves in WA, and all the gas fields were discovered prior to the 1980s. I think about 2 400 terajoules can come from the North West Shelf and 1 000 terajoules from Pluto. But, as I say, Pluto does not have a domestic aspect to it. Both will probably decline completely by 2030. Gorgon has 2 250 terajoules and Wheatstone has about 1 200 petajoules, which will start to come onstream about 2015. That is quite interesting. But Buru Energy Ltd, the proponent under this bill, is still an explorer, not a supplier, nor indeed is it a serious market player. Maybe, because of the access to drill rigs and others, it will be 20 years away from becoming a supplier. It will be interesting to see how that fits within the structure of gas supplies for Western Australia. I have certainly heard commentary that the Canning Basin will provide energy for the future. In a broader context I will come back to dealing with some of the issues around climate change and how this will fit in the forward energy supply for the state and, indeed, the marketplace.

As we have identified, this bill is unique. It is a state agreement act over exploration, which is something that has never been done before. It would not normally come before the Parliament at this early stage. I am puzzled about why we are going down that path. I will touch on that a little later. This project is effectively with an explorer, Diamond Resources, which is part of Mitsubishi Corporation and which wants to develop the project here. We have been told repeatedly that, because of the fold associated with the joining of the northern and western cratons, the Canning Basin contains significant amounts of gas and oil at some depth. The US Energy Information Administration says there is about 229 trillion cubic feet of shale gas in the area and Buru says there is about another 100 trillion cubic feet. One thing that my colleague Dee Margetts repeatedly used to identify was that we were really puzzled why we went into state agreement acts because, by their very nature, they are anti-competitive. When we see the number of other exploration permits in the immediate area, some owned by Buru and some owned by others that I will identify shortly, one wonders whether we will end up with state agreement acts over all those EPs or indeed over many of the EPs that exist in the state, or whether Buru will just be the recipient of this one state agreement act. I suggest that we will either have state agreement acts over all fracking and deep gas provinces or we will have none. In the other house, the Premier indicated that in fact it did not matter whether or not we had a state agreement because we had an agreement. That is the point we have always raised; that is, we can have these agreements but they do not need to be done through the state. The state almost provides a surety to corporations, which they cannot get in the normal corporate world. That is why we believe them to be fairly anti-competitive.

The next point I want to touch on is the issue of negotiation. Here we have a state agreement act over an exploration process that has no perceived agreement contained within it with native title parties in the region. We have recently seen the development—or failure to develop in many ways—of the Browse Basin joint venture. The government sunk $16 million into assisting the native title parties in the process of negotiating through a state agreement act. We are not aware of any negotiation with the many native title parties in this case.

Many aspects of this are really a dichotomy of approach over virtually similar areas with different stakeholders. I cannot get why we have an agreement with native title parties in one area of gas development, which will bring in $1.5 billion in royalties to the native title parties, and here, theoretically, we have a gas development that is larger than the Browse development, and on land, and we actually have no negotiated process with the native title parties. I believe the native title parties in the area should have a significant role in this proposal. The Nyigina, Djuraballan, Walmadjari, Yawuru, Karajarri and Bunuba people all have interests in this area. I am perplexed about why we are going down this path.

I refer to an article in The West Australian on Thursday, 26 August 2010. Mr Wayne Bergmann is reported to have said —

… the Premier unfairly criticised the $16 million cost of negotiations which needed extensive consultation on social, cultural and environmental effects as well as complex talks with experienced deal-makers from big corporations.

Here we have no such negotiation. No such support has been provided to the Indigenous communities. I believe the minister has a question on notice that he will answer in the next few days in relation to the sites that the Nyikina Mangala people identified had been desecrated by Buru. On 8 March 2012 I asked the Minister for Indigenous Affairs —

I refer to the Buru Energy Ltd Canning Superbasin exploration program and its operations at Ungani, Valhalla and Yulleroo.

(1) Has Buru reported the existence of Aboriginal heritage sites in these areas to the Department of Indigenous Affairs?

(2) Is DIA aware of Aboriginal heritage sites in these areas?

(3) Did DIA advise Buru of the need for Indigenous site clearances at the locations of Ungani, Valhalla and Yulleroo?

(4) If yes to (3), when were these site clearances carried out ….

Bear in mind this was on 8 March 2012. The Minister for Indigenous Affairs responded —

(1) Buru has not reported any site information to the Department of Indigenous Affairs.

(2) DIA has no record of any sites in the area. The Kimberley Land Council indicated to the DIA and to Buru that sites exist in this area.

(3) DIA has advised Buru that the DIA holds no records of sites in the area and that the KLC has indicated Aboriginal sites exist in the area. The DIA has encouraged both Buru and KLC to meet to resolve this matter.

They did not resolve it. A little later, in October, it was stated that Buru had bulldozed Aboriginal sites. There were two articles pertaining to that. One article stated —

Kimberley Aboriginal leader Wayne Bergmann has demanded Buru Energy halt works at its Ungani oilfield operations in the Canning Basin, claiming the company had bulldozed a significant Aboriginal site without permission and damaged artefacts tens of thousands of years old.

Mr Bergmann has lodged a complaint with the Department of Indigenous Affairs, which has said it is investigating the matter.

The question I asked the minister, which I hope he will answer, is whether that investigation has now concluded. The article continues —

Test production of oil began at Ungani, about 100km east of Broome, earlier this year …

We are talking about October 2012. Continuing —

Mr Bergmann said Buru had been warned by traditional owners not to conduct ground disturbing works in the sandhills, which contained extensive evidence of human habitation.

“The ‘Blue Hills’ is an area that had a high Aboriginal population,” he said.

“There is rock art, grinding stones … there’s about 50 of them and spear sharpening tools in the area they’ve bulldozed. We’re talking about material that is 10, 20, 30 thousand years old.

“We are outraged at the lack of respect Buru Energy has for Aboriginal people and our heritage; Buru Energy needs a lesson on how to work with Kimberley Aboriginal people.”

The article went on to say that the Nyikina Mangala people, working as cultural monitors, identified they had witnessed the whole proposal. Whereas we had a very rigorous and thorough process of dealing with the Kimberley mob, here we have a process that is not engaging in any way, shape or form. We are talking about an area of about 17 000 square kilometres.

I will now talk about fracking. I will deal with the Conservation Council of Western Australia’s concerns a little later. We are told that in fracking for oil and gas extraction, as far as CO2 emissions are concerned, coal is the worst followed by distillate and condensate, gas and liquefied natural gas, and that in fact oil and gas extracted from deep wells during fracking is next. If members ask a person who suffers from lung cancer whether they smoked filtered, menthol, unfiltered cigarettes or a combination of all, the net result would be the same. We are pulling out of the ground stored carbon. Stored carbon can be either a solid, a liquid or a gas. Releasing the carbon has varying impacts, but the impact is releasing stored carbon into the atmosphere. Although one might be slightly better than the other, its impact is dramatic. We have seen that with the two reports that came out yesterday out of Alice Springs and from the commission’s report released today.

This is a state agreement over a development that has no approval from the Environmental Protection Authority and has not undergone an environmental assessment. My colleague Hon Alison Xamon referred the fracking matters to the EPA and it said it would not assess any of the work for this new detailed technology until a project was up and running. By then we will have already done a significant number of fracks. It is remiss of us to have a bill of this type before us that does not require an EPA assessment to be done. About six per cent of fracking wells, whether they are shale or coal seam, leak dangerous pollutants within three years. That is the experience internationally. This agreement puts the cart before the horse before we have even assessed whether the technology is suitable. Who will be doing the fracking and where, and will we need a state agreement over all of them? We did some research into the number and location of exploration permits that deal with this across the state. They range from Gingin, Whicher Range, Mingenew, Eneabba, the Canning Basin—we are dealing with that now—the south west of Derby, a block between Carnarvon and Mandurah, the Gascoyne sub-basin, the Carnarvon Basin, the Noonkanbah formation and also near Busselton, Margaret River, Dongara, Harvey and Collie. I would like to know from the minister whether this bill stands alone for these three components of the many tenements that Buru has in the region or will we need state agreement acts for exploration for all the other similar developments in the state? If so, we will need a plethora of state agreement acts right across the state. Another new one that has just come onstream is Central Petroleum Limited in the Larapinta shale region of the Central Desert in Western Australia.

The Greens were in a privileged position to test some of the frack water using the ICP-MS—inductively coupled plasma mass spectrometry—metals in water process. Testing was carried out on samples from one of the Buru ponds using arsenic and hydride atomic adsorption, mercury by cold vapour and atomic adsorption. It was interesting that not much showed up in the results. They were all well below natural levels. It was curious that we did not come up with any boron in the sediment water. There was 0.53 megagrams per litre, which is very low. It was also peculiar that we found strontium. There are no guidelines for strontium in Australia. It would be interesting to note what the impacts of strontium are. We know what the effects are from a nuclear medical radiation perspective. The levels of strontium dissolved in the sediment water at 1.1 megagrams, which is exceptionally high. That was a novel discovery in that water.

There has been one frack conducted in the Canning Basin. I am looking at a question we asked in the house. Yulleroo 2 was the only well to have undergone a fracture stimulation. I am prevented by legislation from revealing the chemicals used. However, Buru provides the environmental plans for well operations on its website once they have been approved by the Department of Mines and Petroleum. I am pleased to see that we have some legislation in the state that now ensures that the details of what is being used in the fracking process is made public. In the Canning Basin, Australia Zhongfu Oil and Gas Resources, Budside Pty Ltd, Exceed Energy, Gujarat NRE Oil Limited, Gulliver Productions Pty Ltd, Hess Australia (Canning) Pty Ltd and New Standard Onshore Pty Ltd are all looking at EPs in the area. I will go into that in more detail shortly.

In July 2011, Buru presented a PowerPoint presentation to its ASX partners that identified where Buru was working in the area. It also referred to some of the other wells it had been looking at. Buru is working around the two regional centres of Broome and Derby and did some work with New Standard Energy at Point Torment. Buru holds exploration permits and miner production assets that were formally held by ARC Energy Ltd in the Canning Basin. That is just behind where I live in Derby on the Gibb River Road. Last year I asked the former Minister for Mines and Petroleum, who is no longer a member of this place, some questions about the oil ponds that were associated with those wells and the ingress and eventual flooding and removal of all the material in those ponds into the creek system around there. We provided photographs to the minister of what had gone on in a couple of causeways that ran out into exploration permits EP438 and EP448. Therefore, the record of development in that region does not seem to be particularly good. That was Stokes Bay well 1.

When we get into the committee stage, I will ask the minister to explain what will happen to all the other EPs in the area held by Buru, either in the Buru and Mitsubishi joint ventures or indeed in the Buru exploration permits, which are not the same; and whether as those matters come to fruition they will be added to the state agreement act or whether they will need a new state agreement act. It will also be interesting to find out what will happen to the other New Standard Energy permits that surround Buru. Will they also get a state agreement act? If they do not, again it will be quite clearly anti-competitive and will provide a leg-up and assistance to Buru that other corporations will be unable to get. It will be interesting to find out what the program will be and whether this agreement will cover Blina oil fields, which are a bit further up near Derby.

In moving to the next part of this legislation, we must acknowledge that the industry generally has already been assisted. The then Minister for Mines and Petroleum, Hon Norman Moore, said on Friday, 24 July 2009 —

The State Government has announced it will reduce the royalties rate for tight gas, a decision which has the potential to significantly boost Western Australia’s gas supply.

It will be really interesting to find out what the royalty rate will be for the leases covered by this state agreement act.

Geological Survey of Western Australia has been doing some significant work in this area. GSWA actively assesses and promotes oil and gas and tight gas in this state, and geothermal energy for many of the basins in Australia. However, GSWA has been progressively assessing and reporting on the Carnarvon, Canning, Officer and Perth Basins to promote conventional and unconventional petroleum, coal, carbon storage and geothermal energy. This government agency is therefore working quite heavily in support of this industry. We know from the royalties for regions’ exploration incentive scheme that innovative drilling in greenfields areas was significant. We also know that in the 2011–12 round of funding, New Standard Energy, which is in the same area as Canning, got $200 000 for Lawford 1; in round four of the funding, Buru Energy got $200 000 for Woolnough 1; in the 2012–13 round of funding, Buru Energy got $200 000 for Hope 1; Officer Petroleum received another $200 000; and New Standard Energy received some similar amounts for two other onshore developments—Teichart and Crostella. We know that $1.5 million for exploration and environmental coordination went to a large degree from the Department of Mines and Petroleum into this area broadly; $26.9 million for innovative drilling programs; $32.5 million for geophysical and geological surveys; and $13.9 million into 3-D geographical mapping. All of those funds to some degree or another were to assist this industry.

The Australian Petroleum Production and Exploration Association has had a lot to say in support of these developments and has gone out of its way to be fairly forward in supporting Buru in its developments. I refer to a briefing for us by APPEA on 25 August 2011. On page 13 it is certainly promoting the Canning Basin and supporting Buru in that area. It also went on to articulate on page 14 what Buru and Mitsubishi were up to in New Standard Energy and ConocoPhillips.

In discussions around other legislation for the Browse Basin liquefied natural gas project, we asked whether that facility was available for gas from unconventional fields. It became apparent that the answer was yes, so we followed it up a little further. Through a freedom of information application on James Price Point, the government of Western Australia identified James Price Point, approximately 50 kilometres north of Broome, as the preferred location for liquefied natural gas processing. The government looked at a multi-user infrastructure, and also said that in letters of confirmation of interest in the proposed LNG precinct to potential users of the Kimberley LNG precinct. One letter of confirmation quite clearly went to the Australian Petroleum Production and Exploration Association, which, as we know, has been a long-time supporter of this Buru development. APPEA put in a submission identifying that it certainly had an interest on behalf of some of the parties it represented. I cannot say, as I do not know, whether Buru was one of those parties because in the notice of decision under the Freedom of Information Act 1992, it denied access to documents 1, 10, 11, 12, 13 and 15, as they might have contained commercial or business information. Those documents were indeed company responses to the application, information or interest in using the James Price Point facility. There are a number of documents in relation to the Kimberley LNG precinct from a range of companies. We therefore do not know who those people were but quite clearly a number of people were showing interest.

Unfortunately, I am getting rather short on time. I have an awful lot to do yet. We were all recently sent a letter from the Conservation Council of Western Australia. I will provide a summary of the concerns that it raised and the comments it made —

The depth of shale deposits in WA means fracking is safe. This claim is false—the depth of gas bearing rocks has little relevance to the two main causes of water contamination from this activity.

WA has a lot of experience with shale gas fracking. This claim is highly misleading—only a handful of shale gas wells have been fracked in WA during exploration to date.

Opponents of shale gas fracking are confusing it with Coal Seam Gas. This claim is untrue—there is no confusion although similarities do exist.

Shale gas is a ‘clean’ source of energy.

I have identified that it is not a clean source of energy. It is stored carbon. There is black stored carbon, liquid stored carbon and gaseous stored carbon; they are all stored carbon. When we release them, we release carbon dioxide. The comments continue —

There is a robust regulatory framework for shale gas in WA. This claim is highly questionable …

As we have seen, the referrals that went to the Environmental Protection Authority asking for an assessment were denied and, therefore, we have no idea what the EPA thinks about this or what it can even manage. The Conservation Council sent through this document and I hope that members of Parliament found it useful. The council sent through at the same time a document headed “Clean Water Healthy Land: Five myths about shale gas fracking in WA”. I will not go through much of that given that I have only five minutes, but it is useful to read in detail because it goes to the very nature of the concerns that the Conservation Council has outlined to members of this place.

It is important to quickly touch on the Climate Commission’s latest report, “The Critical Decade 2013: A summary of climate change science, risks and responses”. As already mentioned, the climate will suffer as a result of our continued expansion of the use of fossil fuels and the development of fossil fuel resources. As we have previously identified, in 1995, the year Australia signed the Kyoto Protocol, Western Australia had emissions of about 54 million tonnes of CO2 per annum. The last official figure was 74 million tonnes. We did some quite detailed peer-reviewed estimates, which identified that we are currently sitting on around 89 million tonnes of CO2 per annum, which means that we have just about doubled our CO2 emissions, predominantly coming from the gas industry in Western Australia. We have not factored in in any way, shape or form the CO2 emissions coming from the Canning Basin. Based on the modelling for Gorgon, Browse, Scarborough, Wheatstone and all those new developments, we believe that once they come onstream, emissions will be around 125 million tonnes of CO2 per annum. If we factor in what will come out of this area, given that it is stated that the area is one of the most significant gas developments in Western Australia, WA emissions will be pushed up to at least 150 million tonnes, if not towards 200 million tonnes of CO2 per annum. That will be a quadrupling of our commitment under the Kyoto Protocol. All in all, we find no reason to rejoice at this legislation and we find no reason to support it.

HON PETER COLLIER (North Metropolitan — Leader of the House) [9.15 pm] — in reply: I thank both members for their contributions and the opposition for its support for the Natural Gas (Canning Basin Joint Venture) Agreement Bill 2013. Did Hon Robin Chapple say that the Greens were not supporting it?

Hon Robin Chapple interjected.

Hon PETER COLLIER: I did not think so, but it was worth a try. It is a perplexing question with regards to gas because in Western Australia, as we all know, we are much more reliant on gas for energy supplies in domestic use across the board than any other state in the nation. It is constantly a moving feast and new gas contracts come up and there is new expansion in onshore and offshore development of gas supplies. There will be new innovative ways to develop gas fields and this is no exception. I will go through and identify the issues raised by Hon Kate Doust and Hon Robin Chapple and, hopefully, at the same time give more of an explanation to members present about why we have moved down this rather unusual path with this agreement.

First of all, the question asked by both members was on the necessity for a joint agreement as opposed to merely requiring the development under the Petroleum and Geothermal Energy Resources Act 1967 and the Petroleum Pipelines Act 1969. Basically, the government recognises the importance of energy security for Western Australia and that was never more typified than in 2008 when we had the Varanus Island explosion. It identified our vulnerabilities in gas supply. The government decided in this instance that a state agreement was the best mechanism to facilitate accelerated expenditure, exploration and the supply of natural gas from the joint venture operations as it would provide the joint venture with extended security of petroleum titles while prioritising a domestic gas project. That is the important part—the domestic component. However, most of the overall development will still be governed under existing legislation. It was struck this way for three reasons, which I will briefly go through. First of all, the agreement, as I mentioned earlier, prioritises domestic gas as the first phase of development. A large offshore gas project may have extremely high capital costs and may require a liquefied natural gas core component to make it economic with domestic gas being an afterthought. The early stage of this project, combined with Buru’s existing commercial arrangement to supply early gas to Alcoa, makes it possible for domestic gas to be the foundation development.

Secondly, there is much global interest in shale gas acreage, as we know, and this is reflected in corporate activity. As with all state agreements, in the event of a corporate takeover of a joint venture partner, the obligations and privileges of the agreement will remain. The enduring obligation to submit a proposal for a domgas project reduces the risk that a future owner of the petroleum permits would focus either exclusively on LNG oil exploration or on another global opportunity.

Finally, the Petroleum and Geothermal Energy Resources Act 1967 was not drafted with unconventional gas reservoirs in mind. For example, shale gas occurs over larger areas than conventional accumulations and the geology may require that more land be held for longer to allow for a lengthy program of evaluation and development. The agreement recognises this. That is in clause 14 of the bill. It is unusual because the agreement has been struck at an early exploration phase. The importance of future domestic supply is one reason. Possible takeover activity is another reason. The agreement obligations will be transferred. I should say this is in a very general sense in terms of the motivation behind this form of agreement.

The specific comment from Hon Kate Doust concerning the community development plan refers to the town services and facilities that joint venturers may be required to contribute towards given the impact of the domgas or LNG projects and how it will be measured in a general sense. The minister takes advice from the relevant ministers and agencies such as the Departments of Education, Health, Local Government and State Development. The local government authority will also be consulted.

Clause 6(3)(a) of the schedule requires that the joint venturers are to prepare a plan that describes the joint venturers’ proposed strategies for achieving community and social benefits in connection with the developments proposed. The plan must be submitted to the minister and the joint venturers are to confer with the minister on the plan. The plan is to be approved by the minister. Under these processes, the population impact of the joint venturers’ activities will be measured.

In a moment I will talk about the Aboriginal groups and consultation questions that were raised by both Hon Robin Chapple and Hon Kate Doust concerning comments made in the other place. With regard to the enforcement of local industry participation, it is not policy in all areas to enforce such participation. To do so would be anti-competitive and impractical. However, the joint venturers acknowledge the need for local industry participation benefits flowing from the agreement. Therefore, the agreement requires the joint venturers to provide the minister with a detailed local industry participation plan outlining their strategies to involve local industry in their development, either directly or through third-party suppliers. The plan has to be provided to the minister at the time of the submission. A detailed proposal is under the agreement. The approach is similar to other recent agreements.

Hon Robin Chapple specifically asked about native title holders or claimants under the commonwealth’s Native Title Act. He inquired whether the bill or the agreement modified the rights of native title holders or claimants under the Native Title Act. The answer is no, the bill and the agreement do not modify the provisions of the commonwealth Native Title Act or any statutory rights of the native title holders or claimants under that act or any obligations of the state and the joint venturers under that act. I refer, for example, to clause 2(a) of the agreement. In any event, the Native Title Act as a commonwealth law would prevail by virtue of section 109 of the commonwealth Constitution, even if the bill were inconsistent with the Native Title Act, which it is not. Furthermore, the agreement as a contract between the state and joint venturers could not modify the statutory rights of the Native Title holders or claimants under the Native Title Act. To my knowledge, I say to the honourable member that good-faith discussions on native title are taking place between the joint venturers and the native title parties, as would be expected, especially for the potential grant of production licences. That is all taking place under normal laws; namely, the Native Title Act.

As to the alleged disturbance of artefacts, at this stage I cannot comment on those specific allegations. Of course, the joint venture partners must comply with the Aboriginal Heritage Act, as the honourable member would well know. I am very conscious of his very forensic interest in that area; I am sure it will continue. The agreement does not actually deal with that particular matter and it will continue to be dealt with under the Native Title Act.

Hon Robin Chapple also asked to what extent fracking will be required. It may be required, but this is not yet known. If required, fracking will be dealt with under normal laws as it has been for many, many years. The agreement does not affect the situation in this regard. Normal laws include the Environmental Protection Act, the Petroleum and Geothermal Energy Resources Act, and the Rights in Water and Irrigation Act. It would extend to include the incorporation of other projects. Given that the state recognises the deficiencies of the Petroleum and Geothermal Energy Resources Act, Hon Robin Chapple further asked whether the state intends to enter into state agreements with other companies to address the PGERA limitations or whether the PGERA limitations will be amended.

Carefully thought out changes may be made to the Petroleum and Geothermal Energy Resources Act in due course. Several of the issues will be addressed in the resource management regulations that will be open to public comment in the near future and are planned to be in place this year. However, it seems likely that other companies will take some years to reach a comparable situation to that of Buru and Mitsubishi, who have pioneered the exploration of the Canning Basin, expended large amounts of time and money, and expressed a commitment to the future supply of domestic gas. The government will examine any requests carefully. In other words, the need for an agreement in this case matches the circumstances. Other proponents are not in a position to accept the obligations and will not be for some time. Additional permits may be rolled in, under clause 14(2) of the agreement, if the minister agrees that such action would more effectively pursue the agreement’s objective—namely, domestic gas supply, which is imperative.

Once again I thank all members very much for their comments. I hope I have responded accordingly. I believe that there is no appetite on the part of the opposition to go into committee, or is there? Having said that, I commend the bill to the house.


Question put and a division taken, the Deputy President (Hon Liz Behjat) casting her vote with the ayes, with the following result —

Ayes (25)

Hon Martin Aldridge Hon Stephen Dawson Hon Alyssa Hayden Hon Simon O’Brien

Hon Ken Baston Hon Kate Doust Hon Col Holt Hon Samantha Rowe

Hon Liz Behjat Hon Sue Ellery Hon Peter Katsambanis Hon Sally Talbot

Hon Jacqui Boydell Hon Donna Faragher Hon Mark Lewis Hon Phil Edman (Teller)

Hon Paul Brown Hon Adele Farina Hon Rick Mazza

Hon Alanna Clohesy Hon Nick Goiran Hon Robyn McSweeney

Hon Peter Collier Hon Dave Grills Hon Helen Morton

Noes (2)

Hon Robin Chapple Hon Lynn MacLaren (Teller)


Hon Nigel Hallett Hon Ken Travers

Hon Jim Chown Hon Darren West

Hon Brian Ellis Hon Ljiljanna Ravlich

Hon Michael Mischin Hon Amber-Jade Sanderson

Question put and passed.

Bill read a second time.


The Deputy Chair of Committees (Hon Liz Behjat) in the chair; Hon Peter Collier (Leader of the House) in charge of the bill.

Clause 1: Short title —

Hon ROBIN CHAPPLE: Madam Chair, I intend to put most of my points on this bill during the debate on clause 1, because I think in that way we will be able to deal with this bill more quickly than if we were to deal with it clause by clause, if that is okay with the minister.

Hon Peter Collier: Yes.

Hon ROBIN CHAPPLE: The Buru–Mitsubishi joint venture permits are quite large and expansive over the area. I think we are dealing with four or five of those permits. Can other permits be added to this state agreement act?

Hon PETER COLLIER: Yes, if the minister believes that the objectives of the agreement can be pursued more effectively. That is dealt with in section 14(2) of the schedule.

Hon ROBIN CHAPPLE: I have referred to the Buru–Mitsubishi joint venture permits. I turn now to EP 474 and EP 129, which are Buru exploration permits; they are not Buru–Mitsubishi permits. Can those permits be added? If the minister would like, I can give him a map. Those permits are marked in orange on the map.

Hon PETER COLLIER: Yes. That is also covered in section 14(2) of the schedule, which states the minister may approve any petroleum exploration permit or petroleum drilling reservation held solely by any one or more of the joint venturers.

Hon ROBIN CHAPPLE: Thank you. I now declare a pecuniary interest, because one of those permits is over my house—seriously!

The minister has talked about the requirements of this agreement act in relation to native title. Is there any particular reason why the state in this agreement act has not negotiated in the same way with the native title parties as it did over the Browse development, which was an offshore development, as opposed to this development, which is onshore and therefore I would have thought would have a greater social impact and would have accrued a greater return to Indigenous communities?

Hon PETER COLLIER: James Price Point was a specific agreement with the native title holders. This is not an agreement with the native title holders.

Hon ROBIN CHAPPLE: Is there any particular reason why the minister chose not to go down the path of having an agreement with the native title parties, as opposed to what he did at James Price Point?

Hon PETER COLLIER: This is a traditional state agreement. James Price Point was not a traditional state agreement. That was an agreement with the native title holders.

Hon ROBIN CHAPPLE: I now want to go to the other tenement holders in the region—that is, the NSE permits, which are EP 456, EP 450, EP 451 and EP 443. This might be hypothetical, but if those permits come to fruition, will those tenement holders be able to get a similar state agreement act?

Hon PETER COLLIER: Yes. They could come to the government and seek a state agreement. There would need to be a request, and they would need to fulfil all the obligations associated with the agreement.

Clause put and passed.

Clauses 2 to 6 put and passed.

Schedule put and passed.

Title put and passed.


Bill reported, without amendment, and the report adopted.

Third Reading

Bill read a third time, on motion by Hon Peter Collier (Leader of the House), and passed.

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