Overview

On 15 May 2019, the Queensland Parliament passed the Natural Resources and Other Legislation Amendment Act 2019 (NROLA Act). The Act implements a large number of changes across 34 pieces of land, water and mining legislation.1 Relevantly, the NROLA Act includes reforms to the administration of coal and petroleum exploration tenements in Queensland.

This note provides a summary of the key amendments to the Mineral Resources Act 1989 (MRA) and the Petroleum and Gas (Production and Safety) Act 2004 (PAGA) and the effects on holders of exploration permits (EP) and authorities to prospect (ATP). The relevant amendments discussed below are set to commence next year, upon proclamation.

Tenure reforms

Minister’s power to unilaterally vary conditions

EPs and ATPs

The NROLA Act inserts new provisions in the MRA and PAGA that allow the Minister to unilaterally vary the conditions of an existing EP or ATP, without notifying or consulting the tenement holder.2

The new power may only be exercised if the Minister considers it necessary because of an ‘exceptional event’, and will apply retrospectively to EPs and ATPs granted before and after the commencement of the NROLA Act.

‘Exceptional event’ is defined as an event that:

  • affects the carrying out of authorized activities under the authority/permit; and
  • is beyond the control of the holder of the authority/permit; and
  • could not reasonably have been prevented by the holder of the authority/permit.3

The explanatory notes clarify that ‘exceptional event’ is expected to capture industry-wide events such as natural disasters or economic crises.

The QRC and QLS have both raised concerns to the State Development, Natural Resources and Agricultural Industry Development Committee,4 submitting that the power is too wide because:

  • the Minister’s decision to vary conditions would not be subject to internal review, meaning that tenement holders will only be able to challenge the decision by way of judicial review; and
  • ‘exceptional event’ is defined relatively broadly under the NROLA Act.

Despite these objections, the provisions passed without further amendment. The explanatory notes state that the Minister’s power is intended to assist tenement holders by reducing or delaying work program requirements or relinquishment requirements, in light of ‘exceptional events’.5 Nevertheless, how the Minister will apply and exercise the power is uncertain and not fettered by any requirement to consult with permit holders or subject to any internal review or objection process.

ATPs granted via tender

Where there is a call for tenders for an ATP, the NROLA Act allows the Minister to impose additional conditions they consider appropriate, when deciding whether or not to grant tenure.6

The discretion is significantly wide, but has received relatively little public (and parliamentary) scrutiny. Prospective ATP holders should be particularly wary when applying for an ATP through tender processes, as additional conditions may be imposed without prior notice to the applicant.

Limit on applications to vary conditions

The NROLA Act introduces limitations to the grounds under which the holder of an EP or ATP can apply to have the conditions of a tenement varied. The Act limits variations to:

  • the occurrence of an ‘exceptional event’; or
  • circumstances arising from the permit forming part of an exploration project.7

The amendment is a significant shift in the legislative position with respect to varying conditions of a tenement. Prior to the NROLA Act, there was no limit to the grounds on which a tenement holder could apply to have the conditions of their tenements varied.

The explanatory notes state that this change is intended to improve turnover of exploration land. For EP and ATP holders who struggle to meet work program or relinquishment requirements, the amendment would incentivise holders to apply for higher tenure or surrender the tenement, instead of applying for a variation.

Capped term for mineral and coal EPs

To accelerate land turnover, the NROLA Act imposes a 15-year cap on the total life of a mineral or coal EP, which applies to the entirety of:

  • the initial term of an EP;
  • all renewed term/s of an EP;8 and
  • if the holder has surrendered an EP on the condition that a new EP be granted over the same area – the life of the surrendered EP.9

Permit holders may apply for a one-off extension of up to 3 years on top of the 15-year limit if an ‘exceptional event’:

  • prevented the holder from complying with the approved work program; and
  • occurred in the last renewed term of the EP.10

Introduction of ‘outcomes-based’ work programs

In an Australian first, the NROLA Act allows EP and ATP holders to submit ‘outcomes-based’ work programs alongside tenement applications.

Currently in all other Australian jurisdictions, EP and ATP holders are required to submit ‘activities-based’ work programs that outline specific exploration activities to be undertaken during the term of the tenement.

Under the NROLA Act, the ‘outcomes-based’ work program will serve as an alternative for Queensland tenement holders and ‘over the counter’ applications, and must outline:

  • the outcomes proposed to be pursued during the term of the tenement;
  • the strategy for pursuing the outcomes;
  • the information and data to be collected; and
  • the estimated human, technical and financial resources proposed to be committed.11

The benefit of an outcomes-based work program, as envisioned by the explanatory notes, is that explorers can adjust their activities in response to exploration results without the need to seek approval from the Minister to vary the work program.

Prospective explorers should note that activities-based work programs will still be the default requirement for EPs and ATPs awarded through competitive processes (subject to the Minister’s directions otherwise). The Minister may also request an activities-based work program from applicants when considering the priority of EP applications.12 Outcomes-based work programs will generally be accepted in non-competitive, non-tender applications.

Less onerous relinquishment requirements

EPs

Under the NROLA Act, permit holders will be required to relinquish 50% of the permit area at the end of year 5, and 50% of the remaining area at the end of year 10.13

Further, the Minister has the discretion to change the relinquishment requirements of EPs due to:

  • an ‘exceptional event’ (as discussed above); or
  • circumstances arising from the permit forming part of an exploration project.14

In this instance, an exploration project is a ‘project involving 2 or more exploration permits that have a unifying exploration purpose’.15 According to the explanatory notes, the exploration project exception is intended to allow permit holders to adjust the relinquishment percentages of individual permits within the same project, so long as 50% of the area for the project (as a whole) is relinquished by the due date.16

Compared to current relinquishment obligations, the NROLA Act reduces the total area to be relinquished before the expiry of the permit, and extends the time between relinquishment intervals. Early explorers will be given an extra two years before the first relinquishment due date.

If the area to be relinquished is covered by an application for higher tenure (ie a mining development licence or mining lease), permit holders can defer its relinquishment until:

  • if the application is successful – the day the tenure is granted; or
  • if the application is withdrawn or refused – 20 business days after the day of the withdrawal/refusal.17

ATPs

Under the NROLA Act, authority holders will be required to relinquish 50% of the area at the end of year 6.18 Compared to current relinquishment obligations, the NROLA Act reduces the total area to be relinquished before the expiry of the authority and will give early explorers an extra two years before the relinquishment due date.

Implications on existing EPs, ATPs and related applications

EPs

Existing EPs will be limited to further renewals of up to 10 years from the first renewal after commencement of the NROLA Act. For example, an EP granted in 2006 and due for renewal in 2021 may be renewed multiple times for up to 10 years, and will expire in 2031.

The NROLA Act will also affect existing applications to renew. Applications will be restricted by the 15-year life cap and applicants can update their proposed work programs within 3 months after the commencement of the NROLA Act (if they so choose).

With respect to relinquishment requirements, existing EP holders will only be required to relinquish 50% of the area if the EP is renewed after commencement, 5 years after the date of renewal.19 If no exploration activities was undertaken because the EP is locked-out/overlapping with a petroleum lease, the permit holder will be exempt from any relinquishment requirements.20

On the other hand, existing tenders, approved programs of work and applications to vary the conditions of an EP will not be affected by the NROLA Act and will be dealt with under the MRA as if the provisions have not been amended.

ATPs

Existing ATPs will not be affected by the new relinquishment requirements under the NROLA Act.

However, the NROLA Act will affect existing applications to renew. Applicants can update their proposed work program within 3 months after the commencement of the NROLA Act (if they so choose).21

Other amendments

Area of  petroleum leases (PL) and potential commercial areas (PCL)

The NROLA Act removes the 75 sub-block area limit for PLs and PCLs, and will allow existing PLs and PCLs to be amalgamated. Tenement holders will no longer be required to apply for multiple PLs and PCLs over the same area at the same time.22

Access to public and private land for rehabilitation purposes

The NROLA Act amends the Mineral and Energy Resources (Common Provisions) Act 2014 to allow tenement holders to access land for the purposes of rehabilitation and environmental management. This right applies to both private and public land.23

Next steps

As at the date of this summary, the amending provisions discussed have not come into effect as they will commence on proclamation. The Minister for Natural Resources, Mines and Energy has released a statement advising that proclamation is expected to occur sometime next year.24

In the meantime, exploration tenement holders and prospective explorers should be mindful of the changes to the tenure management system, and plan to make adjustments to their activities as necessary.

Annexure 1

Legislation amended

  • Aboriginal and Torres Strait Islander Land Holding Act 2013
  • Aboriginal Land Act 1991
  • Aboriginal Land Regulation 2011
  • Electricity Act 1994
  • Foreign Ownership of Land Register Act 1988
  • Geothermal Energy Act 2010
  • Greenhouse Gas Storage Act 2009
  • Land Access Ombudsman Act 2017
  • Land Act 1994
  • Land and Other Legislation Amendment Act 2017
  • Land Holding Act 2013
  • Land Regulation 2009
  • Land Title Act 1994
  • Land Title Regulation 2015
  • Land Valuation Act 2010
  • Mineral and Energy Resources (Financial Provisioning) Act 2018
  • Mineral and Energy Resources(Common Provisions) Act 2014
  • Mineral Resources Act 1989
  • Nature Conservation Act 1992
  • Petroleum Act 1923
  • Petroleum and Gas (Production and Safety) Act 2004
  • Planning Act 2016
  • Planning Regulation 2017
  • Right to Information Act 2009
  • South-East Queensland Water (Distribution and Retail Restructuring) Act 2009
  • South-East Queensland Water (Restructuring) Act 2007
  • Surveyors Act 2003
  • Surveyors Regulation 2014
  • Torres Strait Islander Land Act 1991
  • Torres Strait Islander Land Regulation 2011
  • Valuers Registration Act 1992
  • Water Act 2000
  • Water Supply (Safety and Reliability) Act 2008
  • Vegetation Management Act 1999

Endnotes

  1. For a full list of legislation amended by the NROLA Act, see Annexure 1.
  2. NROLA Act, ss 260 and 279.
  3. NROLA Act, ss 274 and 313.
  4. Submission of the QRC (https://www.parliament.qld.gov.au/documents/committees/SDNRAIDC/2019/NROLAB2019/submissions/003.pdf); Submission of the QLS (https://www.parliament.qld.gov.au/documents/committees/SDNRAIDC/2019/NROLAB2019/submissions/011.pdf)
  5. See the Department’s operational policies for further guidance. https://www.dnrme.qld.gov.au/?a=109113:policy_registry/operational-policy-exceptional-circumstance.pdf&ver=1.01
  6. NROLA Act, s 277.
  7. NROLA Act, ss 261 and 304.
  8. NROLA Act, s 265.
  9. NROLA Act, ss 254 and 271.
  10. NROLA Act, s 267.
  11. NROLA Act, ss 247 and 280.
  12. NROLA Act, s 249.
  13. NROLA Act, s 258.
  14. NROLA Act, s 258.
  15. NROLA Act, ss 274 and 313.
  16. See Annexure 2 for an example provided by the NROLA Bill’s explanatory notes.
  17. NROLA Act, s 258A.
  18. NROLA Act, ss 294 and 295.
  19. NROLA Act, s 273.
  20. NROLA Act, s 857. See also section 232 of the Mineral and Energy Resources (Common Provisions) Act 2014.
  21. NROLA Act, s 311.
  22. NROLA Act, ss 303 and 307.
  23. NROLA Act, s 209.
  24. http://statements.qld.gov.au/Statement/2019/5/15/parliament-cuts-resources-red-tape

Annexure 2: Example – adjustment of relinquishment percentages for multiple EPs within an exploration project

EP1EP2EP3EP4Total
Sub-blocks held 100100100100400
Number of sub-blocks relinquished for mandatory relinquishment of 50% for individual EP 50505050200
Minister’s discretion to apply more or less than mandatory relinquishment of 50% for EPs within a project Less by 50%

Total percentage required = 0%

More by 25%

Total percentage required = 75%

More by 15%

Total percentage required = 65%

More by 10%

Total percentage required = 60%

N/A
Number of sub-blocks relinquished for after relinquishment for project EP 0756560200

 

Whilst the example provided in the explanatory notes is not as clear as it could be, the intention is that if EP1 is the most prospective EP within the ‘exploration project’ a permit holder will not be required to relinquish any sub-blocks within that EP but will instead be required to relinquish additional sub-blocks of other EPs within the ‘exploration project’.