Coalition Senators cannot support the majority report which is characterised by overtly political and ideological selection of evidence, resulting in biased conclusions and recommendations being made on the basis of unfounded imputations. The majority report ignores science-based evidence provided to the committee throughout the inquiry by credible stakeholders such as the Commonwealth Scientific and Industrial Research Organisation (CSIRO). An example of this egregious bias in the selection of evidence is how the majority report deals with replies to several questions on notice from Empire Energy Group Ltd (Empire). One answer is used to support an imputation, while another answer, which directly refutes the imputation, is ignored.
The Beetaloo Cooperative Drilling Program (the BCD Program) is a component of the Beetaloo Strategic Basin Plan (the Strategic Plan), which is part of the Australian Government's Gas-fired recovery plan. The program has two key objectives:
to accelerate exploration and appraisal activities for prospective petroleum resources in the Beetaloo; and
to incentivise drilling in the Beetaloo to deliver approximately 10 additional wells to build a comprehensive understanding of the resources.
The BCD Program will support the development of the Northern Territory gas industry and assist in the establishment of downstream industrial development. It also builds on the Australian Government's commitment to unlocking gas supply and contributing to energy security across Australia.
The BCD Program is intentionally designed to operate on a first-come-first-served basis as opposed to a competitive or merit-based process. The design also ensures the grants avoid duplicating existing industry activity or activity that might have occurred without support from the grant.
Independent scientific research
The attempt by selected witness and the majority report to discredit scientific organisations because the evidence did not support a given ideological position is disappointing. One such example is the Gas Industry Social and Environment Research Alliance (GISERA), a collaboration between CSIRO, Commonwealth and state governments, and industry established to undertake publicly reported independent research. The characterisation by representatives from The Australia Institute that GISERA is being run by gas companies is a misrepresentation. This criticism has been rebutted by the CSIRO in both 2017 and 2020, for example:
CSIRO flatly rejects the implication by the Australia Institute in its "discussion paper" that research and researchers' independence and integrity are compromised by industry funding. GISERA has established processes to ensure the independence, transparency and integrity of all research undertaken.
The CSIRO is an impartial, authoritative, and respected source of independent science-based information for the community and government. GISERA's role is to provide quality-assured, peer reviewed scientific research and information to the communities living in the gas development regions and focus on social and environmental topics including groundwater and surface water, biodiversity, land management, greenhouse gas emissions, human health and socioeconomic impacts.
Of the funding GISERA has received, 45 per cent is from the Commonwealth government, 22 per cent is from CSIRO and 33 per cent is from industry, being members of the alliance agreement. The alliance agreement includes natural gas companies operating onshore within Australia. In the Northern Territory, 48 per cent of the $5 million in funds that has gone into the Northern Territory has come from the Commonwealth government, 13 per cent has come from the Northern Territory government, 22 per cent has from CSIRO and 15 per cent has come from the industry partners.
GISERA research in the Northern Territory (as with other states where it operates) is directed by local communities. For the Northern Territory the Research Advisory Committee consists of nine members including two members from farming organisations, a representative from the Northern Land Council and one from the Central Land Council, a business representative, a NT Government representative, two representatives from oil and gas companies and one independent member (a former Central Land Council representative).
In September 2016 the NT Government implemented an election commitment, by announcing an independent Scientific Inquiry into Hydraulic Fracturing in the NT. The Hon Justice Rachel Pepper chaired the inquiry, which presented its final report to government in March 2018. The report made 135 recommendations that were accepted by the NT Government in April 2018. In delivering the report, Justice Pepper summarised the overall conclusion of the Panel as follows:
That risk is inherent in all development and that any onshore shale gas industry is no exception. However, if the recommendations made in this Final Report – all 135 of them – are adopted and implemented in full, those risks may be mitigated or reduced – and in some cases eliminated altogether – to acceptable levels having regard to the totality of the evidence before the Panel.
Coalition Senators also note the conclusions of the Pepper Inquiry and support the implementation of its recommendations.
Economic benefits of the BCD Program
The majority report relies on evidence which is critical of forecast employment and revenue figures, claiming that only the lower end of the potential range of outcomes is valid. The submission by the Australia Institute, for example, cites studies by ACIL Allen and Deloitte to assert minimal economic development will arise from development in the Beetaloo, and states that modelling commissioned by the Pepper Inquiry found the least likely outcome was a "gale" of 365 petajoules of unconventional gas produced each year.
However, ACIL Allen also project a shale gas industry development could result in a net real income increase of between $937.2 million, $2.8 billion and $5.8 billion under each of the scenarios. The same report found that "The increase in gas supply to eastern Australia as a result of imports of Northern Territory shale gas under the GALE Case assumptions results in significant and sustained downward pressure on wholesale delivered gas prices".
A 2015 Deloitte Access Economics report commissioned by the Australian Petroleum Production and Exploration Association (APPEA) indicated that the development of the Beetaloo Basin could inject as much as $17 billion and 6000 jobs into the Northern Territory economy over the next 20 years, a level of activity that would generate almost $1 billion of government revenue.
As with most industries, there is risk in developing something new and obtaining better information about the prospects for the Beetaloo is an important step towards assessing risk and benefit. The BCD Program (capped at $50 million) is specifically designed to leverage investor contributions and is expected to deliver several additional exploration wells by 2022 by bringing forward at least $150 million in private investment to the basin.
Coalition Senators note that the shale revolution in the United States demonstrated how this important resource has the potential to transform economies and energy security. The US has gone from being a large importer of gas in the form of LNG in 2008 to being one of the world's fastest growing LNG exporters today. The shale revolution has assisted in revitalising US manufacturing and in reducing US greenhouse gas emissions.
The NT Government is actively pursuing opportunities to develop a range of downstream industries including in methanol production, fertiliser manufacture, ethane-based products, other petrochemicals and condensate refining. The NT Government also identifies natural gas an important energy source for industries like onshore minerals processing. Land has been put aside at Middle Arm on Darwin Harbour to host future industrial development based in part on natural gas. This is part of the NT Government's ambitious plans to grow its Gross State Product by 3.9 per cent a year out to 2030.
Estimates of the gas resource in the region vary but the results from preliminary exploration are encouraging. The NT Government estimates that there are over 200 000 petajoules of gas in place in the region. Geoscience Australia's 'best estimate' of prospective shale gas resources in the NT is approximately 275 211 P – or 259.7 trillion cubic feet.
It is uncertain how much of this gas will be commercial to recover. However, even at a very conservative recovery rate of between 10 and 20 per cent this is up to 20 years' worth of total Australian domestic gas demand (which is 1,167 PJ a year according to the 2020 Australian Energy Update).
Results to date also show the presence of liquids-rich gas and potential oil resources. The presence of liquids in the Beetaloo is likely to improve the commerciality of developments. The work of GISERA and others in the basin is establishing the environmental and geological baselines which the impacts of gas developments can be measured against.
The majority report relies on evidence of critics of the BCD Program which appear to overstate the scale and impacts of the oil and gas industry in the Basin to date. The Environment Centre NT, for example, questioned the adequacy of baseline studies, stating in oral evidence that drilling has continued "unabated" in the Beetaloo.
However, this seriously misrepresents the situation in the Basin where a total of three new wells (and two side-tracks from a single well pad) have been drilled across the entire Basin since the lifting the moratorium in 2018. The Beetaloo is around 28 000 square kilometres or nearly half the size of Tasmania with the three well pads requiring less than 20 hectares to be cleared in total.
The nature of ideological opposition to the BCD Program is evidenced by the action being taken by the Environment Centre NT. The Environment Centre NT's Notice of filing and hearing argues:
…the Minister failed to make reasonable inquiries in respect of the Climate Change Risks, the Transition Risks and/or the Paris Agreement Risks.
In a subsequent ABC radio interview, however, a spokesperson for the Environment Centre NT admitted when asked, that they did not have any evidence that the matter had not been properly considered and that they would "certainly be investigating that as part of the court case". This appears to be a "lawfare" measure designed to delay and frustrate the lawful function of government in supporting industry to develop a resource in the national interest.
Due process and probity
The majority report relies on the opinion of witnesses who use words such as "can" and "have potential" to suggest that Empire used personal connections and donations to influence or secure funding grants under the BCD Program.
The Guardian report of 20 October 2020 that ‘Pitt and the energy minister, Angus Taylor, visited the Beetaloo basin over the weekend’ was seized on as evidence of such behaviour. The majority report did not take into account that mine and exploration drilling sites are often in remote areas and it is common practice for companies to provide transport for a range of stakeholders. Former Labor minister Martin Ferguson for example flew to the Alpha project ‘on a charter provided by’ Ms Gina Rinehart's Hancock Coal while in Government according to NewsCorp.
Coalition Senators note for the record that Minister Pitt was in fact not in the NT that weekend and has not visited the Beetaloo to date, and that The Guardian has never corrected its reporting on this. Coalition Senators also note that Minister Taylor is not the decision maker for grants under the BCD Program and that he made appropriate declarations of interest regarding the visit to the Beetaloo with Empire.
The majority report seizes on such circumstantial evidence to draw conclusions and make recommendations which impute inappropriate behaviour in respect to the development and communication of BCD Program Guidelines and the awarding of a grant to Imperial Oil and Gas (a wholly owned subsidiary of Empire). The majority report glosses over direct evidence provided by the Department of Industry, Science, Energy and Resources that the BCD Program was modelled on similar schemes operating in other jurisdictions, and ignores written evidence from Empire confirming that there had been no discussion with Ministers or staff regarding the BCD Program and its guidelines.
Northern Land Council / consultation
The majority report accepted evidence from a range of witnesses to the inquiry who presented their views that the traditional owners of the land associated with the Beetaloo had not been adequately consulted. The Northern Land Council (NLC) in particular came in for criticism from a number of submissions for "failing to consult" with First Nations people and Traditional Owners. Submitters claimed that the NLC had also failed to provide sufficient information on the impacts or otherwise of onshore gas development. The NLC rejected that criticism stating:
The NLC does not agree that native title holders have been given insufficient information. On the contrary, consultations were extensive. The NLC provided native title holders with detailed but accessible legal and technical advice throughout the negotiation process.
Coalition Senators note that the NLC is the legitimate and appropriate organisation for working within the laws of the Native Title Act and Aboriginal Land Rights Act to identify who are the correct Native Title holders and engaging them in the consultation process.
Exploration agreements were executed for EP76 and EP98 in 2003 and for EP117 in 2005. The parties to the exploration agreements were the company that held the exploration permits at the time (Sweet Pea Corporation Pty Ltd), local Aboriginal groups and the NLC. 'Local Aboriginal Groups' describes those who claim or hold Native Title, noting these agreements preceded the native title determinations under the Native Title Act that now cover the project area.
The exploration agreements with Native Title holders and Native Title claimants for the project area (EP76, EP98 and EP117) include consent to the grant of tenure and exploration activity.
In negotiating the exploration agreements, local Aboriginal groups were represented by the NLC, in its capacity as the Representative Body under the Native Title Act. The NLC's role as the Representative Body is set out in the Native Title Act and includes the responsibility to ensure Native Title holders are identified and consulted in negotiating and concluding agreements, providing independent legal advice and other expertise. The NLC is one of the most experienced representative bodies in Australia, having been established in 1973, with the additional expertise of also discharging representation/consultation functions under the Aboriginal Land Rights (Northern Territory) Act.
Between 1973 and today, the NLC has conducted considerable ethnographic work in the Beetaloo Basin that informs the identification of Native Title holders, the traditional decision-making processes, and information relating to sacred sites.
Coalition Senators note that current legislative requirements and subsequent practices support the principles of Free, Prior and Informed Consent (FPIC), which are being followed by oil and gas companies operating in the Beetaloo.
Before any company can undertake an exploration activity (eg undertaking surveys or drilling a well) on land that is subject to Native Title (ie most of the Northern Territory includes pastoral leases that cover most of the Beetaloo) they need an exploration permit from the NT Government. As part of the award of exploration permits, companies must also reach agreement with Native Title holders.
The principles of FPIC include continual and transparent sharing of information and consultation which occurs during exploration activity.
All applications for regulatory approval are shared with the Native Title holders through the NLC. In the case of the most substantive regulatory approvals, the Environmental Management Plans, the NLC has the opportunity to review and comment on the draft prior to formal lodgement. All work programs are shared with Native Title holders in advance of the proposed commencement of that work activity, providing an opportunity for Native Title holders to review the work program and initiate a sacred site avoidance and clearance survey.
Origin is one exemplar in this regard and its exploration work only proceeds once it has been cleared by Native Title holders and must comply with any conditions set by them. As an example of best practice in this regard, Origin states that it adheres to all relevant domestic legislation and works to the principles of FPIC. Origin applies the definition of FPIC set out in the International Finance Corporation Performance Standard 7 (IFC PS7) and seeks to apply the principles of FPIC across all current and future engagement with Native Title holders.
Origin meets formally with Native Title holders on an annual work program basis to detail current and planned exploration activity and answer any questions or concerns that may arise. Native Title holders are also invited to site to view and inspect activity.
For example, Native Title holders visited the Beetaloo site during drilling work in 2015 and undertook a Welcome to Country ceremony. In 2016 Native Title holders visited the Amungee site prior to fracture stimulation, inspecting the site and the equipment. In September 2020 Native Title holders visited the Kyalla 117 site during fracture stimulation. Site inspections such as these are an important opportunity for Native Title holders to spend time with on-site specialists to see up close how work is safely undertaken and importantly to answer any questions about how their land and water is protected.
There are also frequent meetings between Origin and the NLC to provide project updates, plan engagement activities, plan work program clearances and prepare for the negotiation of a possible Indigenous Land Use Agreement. The Origin Chairman and CEO are planning to meet with Native Title holders for areas of current exploration activity this year, subject to COVID-19 restrictions.
Origin's continued engagement with Native Title holders and the NLC affirms its view that it continues to have the support of Native Title holders for areas of exploration activity.
Coalition Senators note that there are no provisions in the exploration agreements preventing the Native Title holders from raising concerns about the protection of sacred sites (ie gag clauses).
The majority report bases comments regarding the NLC on evidence by Ms Rikki Tanika Dank for example, who was critical of the NLC for not consulting with her. The NLC, however, in its evidence provided to the committee said:
The NLC acknowledges and respects Ms Dank's connections to her family and their country. However, the NLC is not aware of any legitimate basis on which it could accept Ms Dank's claim to be Ngnimirringki for Karranjini Rrumburriya country.
Under their traditional laws and customs, the Karranjini Rrumburriya group do not regard Ms Dank as either Ngnimirringki or Djunggayi.
Coalition Senators note that the NLC has been diligent in its approach to identifying, consulting and decision making with traditional owners and that this has helped facilitate effective engagement by industry with recognised traditional owners.
Conclusion
The evidence provided to the committee throughout this inquiry which has been based on science and fact, rather than from a political and ideological basis, supports the conclusion that due process has been followed and the BCD Program has been managed with probity.
While estimates of the benefits of the Beetaloo vary, Coalition Senators note that in the BCD Program is specifically designed to leverage private sector investment to expand exploration to better understand the risk-benefit of developing this resource. The science shows that the environmental risks can be managed and as such, efforts to quantify the opportunity to increase energy security, decrease emissions, increase revenue and employment in the NT is in the national interest.
Recommendation 1
Coalition Senators recommend that the NT Government complete its implementation of the Pepper Review in a timely manner.
Recommendation 2
Coalition Senators recommend that the Industry Research and Development (Beetaloo Cooperative Drilling Program) Instrument 2021 proceed.
Senator the Hon David Fawcett
Deputy Chair
Senator Sam McMahon
Member