15 June 2012

New Queensland Government with new (and refreshing) change to mining related infrastructure

Although it is still early days, the Queensland Government has displayed a radically different and refreshing approach to mining infrastructure to that of the previous Labor government.

The previous government’s approach was light handed. It left planning of ports to GOCs, and believed that coordination was best achieved by the forces of competition and commercial resolution.

While in theory the previous government’s approach has merit, in practice it meant that infrastructure delivery was delayed while miners hedged their bets by applying for capacity at every planned port. This is turn lead to delays in QR Network’s ability to determine what coal systems needed expansion.

In a relatively short period the Queensland Government has made significant changes to key mining infrastructure projects. The most significant of these changes is the re-setting of development at Abbot Point T4-T9. The government seems to have taken a view that the planned MCF was not feasible (economically or environmentally) and that 6 terminals was overkill. Both of these views were correct.

The government’s changes to T4-T9 signals a radically different approach to mining infrastructure generally. In particular, that the government will be very hands on and will act decisively with a view to bringing on development. That new approach should be applauded.

The government do however face a number of challenges:

  • Understanding a very complicated coal chain, including:
    • unlocking capacity through coordination; and
    • developing an efficient process for development of rail expansions (where SUFA will be crucial);
  • Developing a new model for development of Abbot Point T4-T9;
  • Water transportation issues.

This post is written by Freehills Mining Lead Partner Jay Leary.

13 June 2012

CSG: The state of play in Victoria

In recent weeks, the approach to coal seam gas (CSG) mining in Victoria has been explored and debated both in the Victorian Parliament and out in the farming lands of the State.

Recent Developments

In moves to understand how better to develop and regulate Victoria’s CSG potential the Victorian Parliament’s Economic Development and Infrastructure Committee released a report entitled ‘Inquiry into greenfields mineral exploration and project development in Victoria’ (Report) on 22 May. The Victorian Government also recently became a signatory to the National Partnership Agreement on Coal Seam Gas and Large Coal Mining Development (Partnership Agreement) with the Commonwealth, Queensland, New South Wales and South Australia.

The Report recommends the Victorian Government establish an appropriate process to enable open consultation with stakeholders, including local communities, for issues regarding future coal seam gas exploration and development.

If adopted, increased communication between different stakeholders may lead to more balanced and informed views. The risk, however, is that increased communication may not be sufficient to stymie the conjecture and angst surrounding unconventional gas extraction, with the result being that any potential mutual benefit for farmers and miners is buried beneath the noise.

The Partnership Agreement advocates a strengthening of the science underpinning the regulation of these industries by establishing the Independent Expert Scientific Committee on CSG and Large Coal Mining (IESC). The IESC aims to address public concerns about the actual and potential impacts of CSG and coal mining activities on water resources by increasing public access to information as the IESC will make public its advice and findings from any research it oversees.

Community Murmurs

Community groups in Toongabbie, Forrest, Colac and Wonthaggi are all calling for a ban on CSG and at minimum, a full scale public inquiry.

The concerns of the community groups campaigning against CSG are echoed by Mark Wakeham, Campaign Director at Environment Victoria (EV). In his presentation to the Committee, Mark raised a number of concerns, in particular the imbalances between:

  • the assumption that exploration will be beneficial for the State and the continued environmental unknowns; and 
  • the levels of strategic assessment of conflicting land uses, namely mining and agriculture.

In support for those community groups calling for a ban on CSG, EV has recommended a moratorium on CSG, as adopted by the NSW Government until:

  • quantified measures indicate CSG operations actually operate at a lower emission level than coal fired energy generation; and 
  • the full environmental impact of hydraulic fracturing is known. 

The Environment Protection Authority (EPA) has already identified a number of environmental impacts associated with coal seam gas extraction, including impacts on groundwater and also wastewater generation. It has been argued that the EPA could take a more active role in the exploration process to aid conservation. Of course this would add to the already increasing costs and pressures on mining companies.

What happens next

There is currently no CSG production in Victoria, or any applications to begin CSG production in the State. However ExxonMobil recently showed appetite to investigate CSG potential in Victoria when it entered into a farm-in agreement with Ignite Energy Resources to evaluate the scope for commercial production of CSG in the Gippsland Basin. It remains to be seen how the impacts of the Report, the Partnership Agreement and campaigning by the growing number of community groups will play out.