Chapter 1Introduction
Referral of inquiry
1.1On 5 September 2023, the Senate referred an inquiry into the Middle Arm Industrial Precinct (the inquiry) to the Senate Environment and Communications References Committee (the committee) for inquiry and report by 28 February 2024, with the following terms of reference:
(a)the development of Darwin’s Middle Arm Industrial Precinct, the role and funding intentions of the Northern Territory and Commonwealth governments;
(b)the likely and intended future uses of the site as well as the industries and supply chains that would benefit from those plans;
(c)any climate, environmental, health or cultural heritage impacts as a result of developing the harbour and the industries seeking to establish themselves at Middle Arm;
(d)the conduct, process and implications of the proposed strategic environmental assessment for Middle Arm;
(e)engagement and advocacy by industries and their representatives throughout the Middle Arm proposal, including with First Nations groups and communities and adherence to the principles of free, prior and informed consent; and
(f)any other related matters.
1.2After several extensions,the final reporting date for the inquiry was 21 August 2024.
Conduct of the inquiry
1.3Details of the inquiry were advertised on the committee’s website, including a call for submissions by 31 October 2023. The committee wrote directly to various stakeholders to invite them to make submissions.
1.4The committee received 202 submissions, which are listed at Appendix 1 and are available on the committee’s website. An email campaign through the Do Gooder website resulted in 2067 emails expressing opposition to the proposed Middle Arm Industrial Precinct, gas processing or hydraulic fracturing (‘fracking’) more generally. This campaign was noted on the inquiry webpage, and the correspondence was not published.
1.5The committee held two community roundtables and a public hearing in Darwin on 10 and 11 April 2024. The committee also conducted a site visit to the proposed Middle Arm Industrial Precinct on 10 April 2024 on a chartered vessel at committee members’ expense. The committee thanks the Northern Territory (NT) Government for coordinating the site visit and providing an overview of the proposed development in a private briefing.
1.6The committee expresses its appreciation to Dr Kirsty Howey, Executive Director, Environment Centre NT, Ms Lorraine Williams, Larrakia Traditional Owner, Ms Louise McCormick, NT Infrastructure Commissioner, and MrDaniel Cameron, Project Director, Middle Arm Sustainable Development Precinct for their guidance on the Middle Arm site visit and providing a private briefing.
Figure 1.1Committee members at the site visit to the proposed Middle Arm Industrial Precinct site
Source: Committee Secretariat
1.7Further public hearings were held in Canberra on 17 and 18 June 2024.
1.8A list of witnesses who attended the roundtables and public hearings is available at Appendix 2. Hearing programs, transcripts of hearings, and answers to questions on notice are available from the committee’s website.
Acknowledgements
1.9The committee thanks the organisations and individuals who made submissions, and attended public hearings and the site visit, for their time and contributions to this inquiry.
1.10In particular, the committee thanks the Hon Eva Lawler MLA, the NT Chief Minister, for appearing before the committee at its 11 April 2024 hearing.
1.11The committee also specifically acknowledges the interest and commitment of many hundreds of engaged Darwin residents—both Indigenous and non‑Indigenous—who attended the Darwin proceedings to hear the committee’s evidence firsthand.
Figure 1.2Members of the public observing the public hearing in Darwin
Source: Committee Secretariat
Acknowledgement of Garramilla Country
1.12The committee acknowledges that the Middle Arm Peninsula is on Garramilla Country, the land of the Larrakia, also known as the Gulumirrgin and Danggalaba. The committee thanks Ms Mary Williams of the Larrakia Nation for delivering a Welcome to Country prior to the committee’s roundtables and public hearing in Darwin.
1.13The committee thanks all First Nations witnesses who attended and gave evidence for this inquiry, and acknowledges the frustration expressed by many in relation to the proposed development of the precinct.
Figure 1.3First Nations witnesses giving evidence at the roundtable in Darwin
Source: Committee Secretariat
1.14The committee also thanks various Indigenous witnesses for providing English translations of Indigenous language.
1.15The committee also notes the contribution from PhD candidate Ms Anneke Myers, from the Australian National University’s School of Literature, Languages and Linguistics. Prior to the public hearings held in Darwin, MsMyers briefed the committee on key aspects of her work, which focuses on the use of Indigenous languages in Parliamentary Committee proceedings. MsMyers also travelled to Darwin to observe the hearings in person.
Structure of the report
1.16Chapter 1 provides details of the inquiry and background information, including relevant previous inquiry findings, information about the proposed development, and chronology of key developments.
1.17Chapter 2 outlines current and proposed uses for the Middle Arm area, as well as issues raised regarding the purpose of the precinct, its commercial viability, public information and consultation, and proposed use of offsets and carbon capture and storage technology.
1.18Chapter 3 describes the funding commitments associated with the Middle Arm Industrial Precinct by both the Commonwealth and NT Governments, as well as the views expressed about the precinct’s funding.
1.19Chapter 4 summarises key concerns regarding the potential climate, human health, and environmental impacts of the proposed precinct.
1.20Chapter 5 outlines the distinctions between the Commonwealth and Territory approvals processes, then examines the key issues raised by some submitters in relation to these approvals.
1.21Chapter 6 explores the perspectives of First Nations people and the cultural impacts of the proposed development.
1.22Chapter 7 presents the committee’s view. Recommendations are in individual reports attached to this report.
Terminology
1.23This report uses the term ‘Middle Arm Industrial Precinct’ or ‘precinct’ when referring to the proposed development, as it is the formal title of the inquiry referred by the Senate. Some stakeholders, including the NT Government, refer to the precinct as the ‘Middle Arm Sustainable Development Precinct’ (MASDP).
Background information
Senate inquiry into the Beetaloo Basin
1.24The committee first considered the 2020 announcement of the Middle Arm Industrial Precinct as part of its inquiry into oil and gas exploration and production in the Beetaloo Basin (Beetaloo inquiry), which began in June 2021.
1.25The aims of the proposed precinct were set out as, among other things, capitalising on the NT’s location and solar resources, attracting hydrogen, carbon capture and advanced manufacturing, job creation, and to contribute to the NT economy. Details about the proposal are set out below.
1.26The final report of the Beetaloo inquiry was presented in April 2023. It considered the March 2022 Federal Budget announcement of $2 billion funding for gas-related infrastructure at Middle Arm of Darwin Harbour by the Morrison Government, and the subsequent announcement of funding by the new Albanese Government for the Middle Arm Industrial Precinct.
1.27Recommendation 2 of the Beetaloo inquiry report was that the Senate refer an inquiry into the Middle Arm Industrial Precinct, ‘noting that a future liquified natural gas and petrochemical plant in the area would likely source feedstock from the Beetaloo Basin’. The committee commented that, in view of the significant investment by the Commonwealth and NT Governments, there should be more detailed oversight of the expenditure by the Senate.
Pepper Inquiry
1.28In September 2016, the then Chief Minister of the NT, the Hon Michael Gunner, announced a moratorium on hydraulic fracturing (fracking) of onshore unconventional shale gas reservoirs in the NT.
1.29Chief Minister Gunner also announced an independent scientific panel to inquire into the impacts and risks of fracking. The inquiry was established in December 2016, and was chaired by the Hon Justice Rachel Pepper, a judge of the Land and Environment Court of NSW (Pepper Inquiry). The scientific panel comprised of nine eminent scientists from a range of disciplines.
1.30Coal seam gas, sandstone or ‘tight’ gas and shale oil were excluded, as were an examination of the place and future of renewable energy, and the occupational health and safety implications of any onshore shale gas industry.
1.31The Pepper Inquiry made 135 recommendations which were to be implemented prior to any further exploration approvals being granted. These related to:
codes of practice for the onshore shale gas industry;
water management;
prohibiting exploration and production activity within two kilometres of a habitable dwelling;
public disclosure of all reports and notices on environmental incidents;
cumulative impacts of petroleum and other activities;
open standing for judicial review of decisions made under the Petroleum Act 1984 (NT) and Petroleum (Environment) Regulations 2016 (NT); and
a clear separation between the agencies responsible for environmental and promotional approvals.
1.32The NT Government accepted all 135 recommendations in April 2018 and commenced a process for implementation.
1.33In May 2023, the NT Government announced that a full-scale onshore gas industry would go ahead in the Beetaloo, ending a five-year moratorium on fracking. The NT Government said that it had met the 135 recommendations of the Pepper Inquiry, and that oil and gas companies would be able to apply for onshore gas production projects.
1.34From 2018 to 2022, an Independent Officer, Dr David Ritchie, provided the Chief Minister and NT Government with advice on how the implementation was progressing. In contrast to the NT Government’s claim that all recommendations have been met, in his final advice to the Chief Minister, dated March 2023, DrRitchie noted that:
Despite the Commonwealth agreeing to “work with the Territory to support its implementation of recommendation 9.8 using available technology and policies”, there has been no progress on the crux of this recommendation, that is: to develop a system that would allow the public to see how a specific reduction in GHG elsewhere in the Australian economy is directly attributed to offset GHG emitted in Australia from production and consumption of shale gas produced in the NT. Unless new policies come into effect, along the lines envisioned in recommendation 9.8, the only recognised mechanism for directly attributing an “offset” to an emission of GHG is through the Australian Carbon Credit Unit (ACCU) Scheme, which allows emitters to purchase ACCUs to offset continuing emissions.
1.35This committee’s inquiry also received evidence from environmental and conservation groups that not all Pepper Inquiry recommendations have been implemented or adhered to.
Middle Arm Peninsula, Darwin Harbour
1.36The Middle Arm Industrial Precinct is proposed to be located on the Middle Arm Peninsula of Darwin Harbour, approximately 13 kilometres south of Darwin’s CBD, and ‘less than three kilometres from the outer [Darwin] suburbs of Palmerston’. The Peninsula is approximately 2200 hectares, and the land is currently subject to a variety of land use zones. There are two existing Liquefied Natural Gas (LNG) export terminals in Middle Arm, discussed in Chapter 2.
1.37Approximately half of the NT population lives in or close to Darwin.
1.38The proposed precinct is a staged development of approximately 1500 hectares over a 50-year period. If approved, construction is expected to begin in early 2026. The proposed development is in the planning and environmental assessment stage and is subject to environmental approvals and regulation. The precinct and its surrounds are shown in Figure 1.4 below.
Figure 1.4Middle Arm Industrial Precinct proposed site and surrounds
Source: NT Government, Submission 24, p. 1.
Chronology of key developments
1.39A proposed development at the Middle Arm Peninsula has been considered by the NT Government for some time, with the proposed purpose and associated requirements changing significantly over time. The NT Government advised that planning studies for the development of a gas-based industry had identified the site in the late 1980s. The most relevant history of announcements for the Middle Arm site relate to the period since 2020 and are set out below.
Key developments−2020 to 2022
1.40In August 2020, the NT Government made a Stage 1 submission to Infrastructure Australia identifying the opportunity for common user infrastructure at Middle Arm. The Stage 1 submission, which was mainly focussed on expanding gas production and export, set out that:
With the Northern Territory’s access to world class onshore and offshore petroleum geology, including Browse, Bonaparte, Beetaloo and Amadeus basins, there is the potential for a long-term supply for gas and hydrocarbon liquids.
1.41The relationship between the Beetaloo and the proposed development at Middle Arm was also highlighted:
While there is possible access by new manufacturing proponents on individual agreements to access existing offshore and onshore gas production, Beetaloo Sub-Basin onshore gas presents an opportunity for long term agreements to be put in place at price points that will make manufacturing cost effective. Certainty regarding the supply of gas for downstream manufacturing is a key consideration for the final investment decision by the proponents.
1.42The following diagram was included in the Stage 1 submission, setting out potential gas-derived downstream products which could eventuate from the proposed Middle Arm Industrial Precinct’s development.
Figure 1.5Potential natural gas downstream products
Source: NT Government, Stage 1 Submission to Infrastructure Australia, p. 10
1.43The Stage 1 submission also emphasised the opportunity to ‘develop low cost energy driven manufacturing’ such as ‘high value minerals-processing’ and ‘green hydrogen supported by solar energy’ arising from the NT’s ‘abundance of mineral deposits and renewable energy’.
1.44In November 2020, the Territory Economic Reconstruction Commission (TERC), which was established to advise the NT Government on ways to accelerate the Territory’s economic growth, recommended that the NT Government ‘complete the rapid master planning for low emissions petrochemicals manufacturing’. It also recommended the NT Government ‘work with upstream gas companies to identify and commercialise feedstock sources to support investment in petrochemical and other gas-based manufacturing projects’.
1.45In late 2020, the NT Government released a request for tender for a consultancy to provide infrastructure studies for a period of 12 months. The request for tender sets out that the ‘Middle Arm Project’ on the Middle Arm Peninsula was the ‘development of a gas-based and strategic minerals industrial precinct’. The request for tender contained a base option concept layout which included a potential LNG and petrochemical industry site on the Taranaki Peninsula (adjacent to the Middle Arm Peninsula).
1.46In February 2021, Infrastructure Australia placed the precinct on the National Infrastructure Priority List as an Early stage (Stage 1) proposal. Infrastructure Australia ‘agreed with the evidence in the [Northern Territory Government’s Stage 1] submission and that the value to the economy is nationally significant’. This is discussed further in Chapter 3.
1.47In May 2021, the NT Government released a progress report on the implementation of TERC’s recommendations. It included a response to TERC’s recommendation for petrochemicals manufacturing, stating that: ‘planning activities are underway to rapidly establish low emissions petrochemicals manufacturing at the Middle Arm Peninsula.’
1.48On 31 March 2022, Australian and NT Governments agreed to conduct a Strategic Environmental Assessment (SEA) of the Middle Arm Precinct proposal under the Commonwealth Environment Protection and Biodiversity Conservation Act 1999. The Strategic Assessment for Middle Arm is a broader evaluation of the proposed site and will identify:
areas that are protected from development and activities;
areas where development and activity is allowed; and
the conditions for approval and how to avoid, mitigate and offset impacts on the environment.
1.49In April 2022, the Middle Arm proposal was separately referred to the NT Environment Protection Authority (NT EPA) for environmental impact assessment. These two assessments are being carried out in a coordinated manner and were underway at time of writing. They are discussed in detail in Chapter 4.
Key developments−2023 to 2024
1.50In March 2023, the NT Government made a Stage 2 submission to Infrastructure Australia identifying a short- and long-list of infrastructure options.
1.51In June 2023, the NT Government announced exclusivity commitments to five precinct proponents, known as ‘not to deal’ commitments. Under the ‘not to deal’ arrangements, the proponents’ preferred sites at Middle Arm would be set aside for 12 months. These proponents are discussed in Chapter 2.
1.52In August 2023, Infrastructure Australia progressed the Common user infrastructure at the Middle Arm Precinct on the Infrastructure Priority List as a Potential investment options (Stage 2) proposal. Infrastructure Australia identified that the precinct would provide opportunities for manufacturing investment, as well as green hydrogen and carbon capture and storage.
1.53The Stage 2 submission also emphasised the potential for gas exports:
Darwin Harbour is a key enabler for the national and NT economy. Darwin is recognised as a globally significant liquefied natural gas (LNG) export hub, with exports generating more than a fifth of the Territory’s Gross State Product. The Territory supplies more than 10 percent of Japan and Taiwan’s annual global gas imports and with international disruption to gas supplies due to the war in Ukraine, the LNG industry is set to grow. This changing environment creates opportunities for Australian resource development and value adding… The growing demand for global gas and LNG is expected to be 30% by 2040, with the potential market in the Asia Pacific region growing 82% over the same period... Driven by population growth and increased direct investment in Asia, the Asia-Pacific region has been identified as a region with high demand for gas refined products…
1.54The Stage 2 assessment by Infrastructure Australia set out that, of the locations considered, ‘only Middle Arm was assessed as suitable because of its access (land and sea), size and proximity to existing social and economic infrastructure’. An expansion of East Arm Port in Darwin was considered by the NT Department of Infrastructure, Planning and Logistics (DIPL) as part of its project option long-list for sites, but in their view was flawed due to the proposed development’s disruption to existing industry operating at East Arm, conflict with the ship lift facility and passenger rail terminus, and the small size of the port. Further, the land adjacent to East Arm, which is already developed as an industrial zone, was identified as being too small to accommodate gas-based industries.
1.55In May 2024, the Australian Government released its Future Gas Strategy, which articulates the Government’s plan ‘for how gas will support our economy’s transition to net zero in partnership with the world’. While referencing a number of other gas development projects, the strategy does not mention the proposed Middle Arm Industrial Precinct. The strategy commits Australia to using gas beyond 2050 in decreasing levels. The Prime Minister, the Hon Anthony Albanese MP, told the media that public money would not be spent on gas under the strategy.
1.56At the public hearing in Canberra in June 2024, officials from Infrastructure Australia confirmed that the agency had received a Stage 3 business case submission from the NT Government, adding that the completion of the Stage 3 process will depend on further information that is required by the agency to support the Commonwealth’s final investment decision. No indication of timing was provided by Infrastructure Australia for the evaluation of the Stage3 business case.
Next chapter
1.57The following chapter examines the current and proposed uses for the Middle Arm area, as well as issues raised regarding the purpose of the precinct, commercial viability, public information and consultation, and proposed use of offsets and carbon capture and storage technology.