Chief says yes to fracking
Historic decision ensures cash flow but angers some
FRACKING royalties are expected to begin to flow into the Northern Territory’s depleted coffers within five years.
Under enormous economic pressure, the Northern Territory Government yesterday announced its long-awaited decision to lift its 18-month fracking moratorium.
With the ban gone, exploration for onshore shale gas is expected to restart next dry season.
It won’t be open slather – about 49 per cent of the Territory’s landmass including areas of environmental and cultural significance will be marked as “no-go zones” offlimits for exploration.
Before new exploration permits are granted, the Government will have to put in place 35 recommendations, work on which is expected to take until the year’s end to complete.
A royalties model to determine how money will flow to communities is yet to be decided. At the moment, royalties are paid to the Government at a rate of 10 per cent of the value at the wellhead at production.
The Government has set itself a deadline of July to come up with a cost recovery model and final decisions on its “nogo zones”, make changes to the Environmental Protection Act, and initiate codes of practice for well integrity and decommissioning.
It will take much longer for full-scale gas production to begin. Before production approvals are granted, strategic regional environmental and baseline assessments must be conducted. Those assessments are expected to take about three years to complete.
And they won’t come
cheap. Chief Minister Michael Gunner estimated yesterday the cost of conducting the assessments would be between $20 million and $40 million.
That cost won’t be borne solely by the NT – Northern Australia Minister Matt Canavan yesterday said the Commonwealth would be willing to help through the Gas Industry Social and Environmental Research Alliance program.
Previously, the Commonwealth had indicated only $2 million of a $30 million kitty would be available to the NT.
The Federal Government has held a gun to the head of the Territory since the Gunner Government put its fracking moratorium in place in September 2016. But with the ban lifted, the standoff is over.
Treasurer Scott Morrison chose yesterday to announce his willingness to work with the Territory to plug the hole blown through its budget by changes to GST relativities.
The Territory will lose out on $136 million in GST revenue next financial year and the shortfall is expected to worsen. But hours after Mr Gunner lifted the moratorium, a spokeswoman for Mr Morrison said he and NT Treasurer Nicole Manison were working “in good faith to address the negative impacts of the NT’s GST reduction”.
Mr Gunner said the decision to frack was not influenced by pressure from the Federal Government.
“I understand the Australian Government has made commentary over the last 18 months but for me this deci- sion was always going to come down to this final report,” he said. “Those external issues … were not part of my decisionmaking.”
Prime Minister Malcolm Turnbull said the decision made for a “great day for Territorians” and would lead to thousands of new jobs.
In lifting the ban, the Government endorsed all 135 of the recommendations made by the scientific inquiry into hydraulic fracturing, led by Justice Rachel Pepper.
The Government has allocated $5.33 million over three years to put the recommendations in place. Much of that money will be spent on extra public servants, including $1.8 million for an “implementation team” to sit under the Department of Chief Minister and $220,000 a year for two extra EPA board members.
A “prominent individual” will be appointed to oversee the implementation process independently of government. Mr Gunner said he hoped that prominent individual would be one of the 12 members of the fracking inquiry panel.
One of the report’s key rec- ommendations was to separate the responsibilities for the promotion and regulation of the gas industry to avoid potential conflicts of interest. At the moment, both are the responsibility of the Department of Primary Industries and Resources.
The report presented two options – for environmental regulation to be taken over by the Environment Department with operational approvals to remain with DPIR; or for the creation of an entirely new independent agency to take over all aspects of regulation.
The NT Government has chosen the easier first option. While the power to approve or reject environmental management plans will rest with Environment Minister Lauren Moss, those plans will first be assessed by DPIR experts who will present the plans to the EPA. Mr Gunner rejected suggestions DPIR involvement could potentially contaminate the process.
“EPA is independent, remember. If they’re not happy with the information they are receiving, that’s something they can act on,” he said.
Whether it makes me politically vulnerable or not, that can be someone else’s assessment Michael Gunner, Chief Minister
This is a great day for Territorians and indeed all Australians Malcolm Turnbull, Prime Minister
(The moratorium) was one of the worse political stunts foisted on any jurisdiction in Australia Nigel Scullion, NT Senator
It is hard to get geologists excited. I have a lot of geologists in my department and they are excited about the gas resources in the Northern Territory Matt Canavan, Northern Australia Minister
Chief Minister Michael Gunner at Parliament House yesterday, announcing the fracking ban will be lifted