Dick Adams (Lyons, Australian Labor Party) Share this | Hansard source

by leave—I thank the honourable member for Forrest for his contribution to this debate on the Down under: greenhouse gas storage report and his contribution to the committee’s work. He always brings his expertise in engineering to committees dealing with such matters. The Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008, which was introduced into parliament by the Minister for Resources and Energy, the Hon. Martin Ferguson MP, on 18 June 2008, will allow for the storage of greenhouse gas in offshore Commonwealth waters.

I am pleased the committee had an opportunity to look at this legislation. It is pretty rare that House committees get an opportunity to do so. It is important. It is a new thing that we should encourage. We should be asking the executive to do this. I think we get better legislation if committees get the chance to look at legislation. The mother parliament, the House of Commons, does this quite regularly on major legislation. It means that not only do ministers have to be up to date a bit but also that government and opposition members have some input and understanding and have a go at the legislation before it hits the parliament. I think this provides opportunities to improve the legislation before it is enacted.

The inquiry reviewed the draft Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 to establish legal certainty for access and property rights for the injection and long-term storage of greenhouse gases in offshore Commonwealth waters. It ascertained whether it would provide a regulatory regime that would enable management of greenhouse gas injection and storage activities in a manner which would respond to community and industry concerns. It was also important to provide a predictable and transparent system to manage the interaction between greenhouse gas injection and storage operators with pre-existing and co-existing rights that prevail under that act, including but not limited to those of petroleum and fishing operators, if there is likely to be any conflict. Of course, the committee was able to deal with some of that. We also needed to promote certainty for investment in injection and storage activities and establish a legislative framework that will provide a model for adoption on a national basis. People are waiting for opportunities to do further work in the states in this area.

The committee received over 20 submissions, conducted many public hearings and heard from a variety of witnesses. The proposed management of interactions between greenhouse gas storage proponents and pre-existing petroleum title holders was of particular interest to the committee during its deliberations. In discussions, the petroleum industry indicated that they were not totally happy with allowing other companies to drill holes where they already have rights to abstract oil and gas. They felt that it would or could have a considerable impact on their operations and may compromise their leases where they have the right to drill or are already drilling and abstracting oil and gas.

Those companies which are looking for greenhouse gas storage space believe that pre-existing abstraction areas would be the most appropriate to develop for storage. Of course, this is true in the Gippsland Basin in Victoria and offshore there. A lot of work has already been done in that area, where much gas and oil are abstracted, and a lot is known about that basin and the opportunities for storing CO2 there. Those companies with CO2 streams to store would be seeking to do so especially in those areas.

The oil industry have the technical expertise as they are already in the business of extracting oil and resubmitting CO2 into these underground basins and have been doing so for many years. They have great expertise in this area. So the natural conclusion would be that they should work together with what is essentially a new industry so that both of these commercial interests—the petroleum industry and the companies looking for storage for their CO2 stream—could benefit.

The committee thought that somehow we needed to bring these two groups together and explain their possible common interest, both economically and technically. The petroleum industry is the prime body to inject, store and monitor the sequestration, value adding to their production cycle, while those collecting the CO2 could have a ready and highly competent technical partnership to dispose of their product. It needs to be an open and commercial relationship, where they come together in a fair and proper manner.

The committee recommended that the current bill be amended to provide for the responsible Commonwealth minister to direct parties to negotiate in good faith where there is potential for actual overlapping greenhouse gas storage and petroleum titles under both recommencement petroleum titles and post commencement petroleum titles and for the responsible Commonwealth minister to be empowered to direct an outcome.

Petroleum companies are still a bit reluctant but, with further negotiations, we believe not only that it would it have both financial and technical advantages for them but also that they would be on the ground floor of a brand-new industry and could attract some financial assistance. In recommendation 13, the committee recommend that the government consider further financial incentives for the earliest movers in this new industry. To make it a transparent process, this should be made public at the earliest opportunity.

The issue of where there is just gas drilling came up during the inquiry. The gas and the petroleum industry have to deal with the CO2 that is currently coming from their production or future production. This issue arose in the good state of Western Australia, just outside the Broome area, where there is a new opportunity. There will probably be four or five different well sites offshore. Companies will look at using their planning and engineering expertise to bring that together so that they can bring the gas ashore, remove the CO2 and put it underground in one of those areas. I do not think the old pearl shells of the Broome area have, as yet, been rotting long enough to produce coal, so it does not look as though there will be another stream of CO2 that needs to be dealt with from that production.

There are two different situations to deal with. We think that this will need to be dealt with in an area that the bill does not really look at in any way. This would somewhat take away an open tender process, but when we are just dealing with the one area and the one region it can probably be dealt with in the public good. We have the waste product and areas have been identified as to where it might be safely contained in the long term. The petroleum companies can exercise their rights over their existing titles, but if they are prepared to look at storage too then there need not be an open tender process as long as they are prepared to bring the two together. If new supplies of gas and oil are found under pre-existing title during the carbon storage development, that would convert to the original title owner, as we heard in evidence. I think everybody was of the opinion that, if somebody has got to have a pre-right to that, even if someone else was drilling the hole to seek storage of carbon, the original title holder should benefit from anything found and that if nobody has a title over it then it should convert to the Commonwealth.

As you can see, it made for a very interesting inquiry with sunrise industry opportunities but with conflicting ideas. So it was important to try to achieve a nationally consistent framework, with the public interest being the main theme in what we were trying to achieve. It will require further work between the Commonwealth and the states. Already a number of states are making progress on the development of greenhouse gas storage legislation designed to fit their own pre-existing legislative frameworks. In addition, it is evident that a number of industry and community groups prefer the legislative framework to be developed in the states. The best hope would appear to be that active cooperation between the different levels of government and industry may be achieved despite legislative differences in that area. I believe the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 will allow these differences to be explored and that a new industry can be born to assist in helping Australia to meet its greenhouse gas targets while still using the predominant world energy source of coal.

The world is very interested in what we are doing here. This is a brand new piece of legislation for the world in the sense of having a legislative process that can deal with CO2 storage. The committee heard evidence from the Norwegians, who have been abstracting CO2 from gas production offshore at a place called Slagen for around 10 years. They have been very successful in making that work and have gained a lot of expertise and knowledge from that. In other parts of the world, including the United States, CO2 is used by the petroleum industry to put pressure back into their oil and gas abstraction holes to build pressure to allow them to gain more of the oil and gas from those wells.

Coal is the world’s dominant energy product. We have 400 years of reserves in the ground—probably more, I think, from some of my reading. That is based on the present production use. So it is still a major energy source for our country and of course a very cheap one. So it is logical that we should endeavour to spend money to find the expertise and find the way that we can extract the CO2 from it, and then store that in a very sensible and responsible way. I think we can do that. We have made recommendations which I hope the government will pick up and, therefore, improve the bill that is before the parliament. I look forward to this industry emerging and dealing with a part of the greenhouse gas abatement that we have to deal with as a country.

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