Zombie PELs Explainer

Sydney Knitting Nannas and Friends will be at the top of Martin Place today from 11am to 1pm as the NSW parliament debates Justin Field’s bill to extinguish the zombie PELs. So here’s an explainer……….

The campaign against the Narrabri Gas Project is continuing even though the project was given conditional approval by the Independent Planning Commission (IPC) last September.

One of the focus points for continuing community opposition to the Project is the expected expansion of gas in NSW if the Project goes into production. Communities are demanding the NSW government cancel the expired Petroleum Exploration Licences (“Zombie” PELs) which cover 56,000km2 of the North West from Dubbo to the Queensland border.

PELs and electorates

PEL Title Holders see Reference (*5)

PELs and “Zombie” PELs

Before exploring for gas in NSW, an explorer must first obtain a Petroleum Exploration Licence (PEL) under the Petroleum (Onshore) Act 1991. Currently these licences are regulated by the Department of Regional NSW (*1).

PELs are issued for a period of 6 years (*2). Under NSW law, a licence can remain current despite being past the expiry date as long as a renewal application has been submitted. The licence will remain in force until the renewal application is dealt with by government, and there is no requirement that the government deal with them in any particular time frame. The fact that some licences expired over seven years ago and have not been dealt with by government makes a mockery of the concept of the licences expiring. In fact, the government can choose to either reactivate or extinguish them at their convenience. This phenomenon has given rise to the idea of “Zombie” PELs – entities which are dead but still operating.

IPC Hearing on the Narrabri Gas Project

During the IPC Hearing on the Narrabri Gas Project, many people expressed fears similar to those of ecologist and farmer Phil Spark, who said (*3),  “I’m deeply concerned that my worst fear of runaway expansion of coal seam gas will eventuate if the Narrabri Gas Project gets approved. Santos has been concealing their intentions for a much larger operation across the North West with partners Comet Ridge and Carbon 30 Minerals. The Santos CEO and other Santos spokespersons have stated in the media that Santos has no planned activities beyond Narrabri Gas Project. [But] there is strong evidence that behind the scenes, Santos is partnering with Carbon Minerals to open up mines and PELs 1 and 12 that include the Gunnedah Basin and Liverpool Plains, and is partnering with Comet Ridge to open up wells to the north and the west of the Narrabri Gas Project in PELs 428, 427 and 6.  Those PELs cover a huge expanse of the North West that is regarded as prime agricultural land and they cover a large area of bushland, including a larger area of Pilliga Forest surrounding the Narrabri Gas Project.”

Mr Spark was interrupted at this point in his presentation by Richard Beazley, Counsel Assisting the Commissioners, who said, “As a matter of planning law, I don’t think it’s a lawful approach to assess a project application on the basis of speculation there might be future project applications. That’s my understanding of the law… I understand your concerns, but I don’t think the Commissioners can assess this project by speculating there might be further gas projects applied for in the future.”(*3)

It is clear that the IPC felt it was not able to accept evidence regarding the existence and implications of PELs over land surrounding the Narrabri Project. The realisation that the law makes no provision for cumulative environmental effects arising in the future angered participants in the IPC process. It is widely believed that the Narrabri Gas Project as it stands will not be commercially viable without more gas projects in the North West.

Zombie PELs

“Twelve dormant PELS are shaping [up] as the next frontier for gas”, as ABC Landline puts it. “The licences cover 55,000 square kilometres of land from the Hunter, up through New England to the Queensland border…  Among them is Comet Ridge, who announced to the ASX shortly after Narrabri was approved, that it ‘anticipates a return to exploration and appraisal’ on two [of] the permits it holds near Moree.” (*4)

Santos is either the titleholder or co-titleholder in nine of the eleven Zombie PELs . (*5) The other two PELs are held by Comet Ridge with whom Santos has a strong historical relationship. (*6)

Independent upper house MP Justin Field’s Bill to extinguish the PELs

Independent MLC Justin Field introduced a Bill, Petroleum (Onshore) Amendment (Cancellation of Zombie Petroleum Exploration Licences) Bill 2020, to the Legislative Council in October 2020 (*7). His introduction reads (*8), “These expired and unused exploration licences have been hanging over the heads of communities for too long and the Government should give communities certainty about their future and cancel these licences.

“The Government acted in 2014 and 2015 to revoke licenses across the Sydney Basin and NSW Coast but left these 12 licences in place. This bill is an opportunity to address the community concerns about the impact on farmland and water from a return to widespread CSG exploration across the region.

“The Bill follows the conditional approval of the Santos Narrabri Gas project and the public announcements by licence holders that they intend to pursue the renewal of expired licences and recommence exploration across the region.”

John Barilaro and the Future of Gas Policy

Deputy Premier and leader of the NSW Nationals, John Barilaro, will soon be announcing a Future of Gas policy. He was quoted on ABC Landline (*4) foreshadowing action on a number of the dormant PELs. “When I do release the gas strategy, and hopefully not too far off, I’m going to use that at the same time to extinguish a number of PELS across the state,” he said. “I have no question about that. I believe a number of those are not economically or environmentally viable.”

A spokesperson of Barilaro’s was quoted in The Land newspaper as saying (*9), “Following the Independent Planning Commission’s determination to approve the Narrabri Gas Project, the Department of Regional NSW will now recommence the assessment of outstanding PELs.”

The spokesperson said action was being taken to act on the motion passed at the 2019 State National Party Conference. At the Conference, the Boggabri Branch of the party submitted a motion that called on the NSW Government to extinguish the expired zombie licences. The motion passed unopposed.

In December last year the Boggabri Nationals branch president, Pat Murphy, appeared to shift away from this position however. He said he was confident the party could help reach a happy medium between the agriculture and gas sectors, adding that  ‘’ a lot of people, myself included, are happy and excited that John [Barilaro] and his department are continuing to assess the outstanding expired PELs.”(*4)

The political outlook for Justin Field’s Bill

It is difficult to know whether or when Justin Field will be able to bring forward his legislation. It is also difficult to know how the bill would fare if it were to be voted on. The ALP and some cross-benchers would need to support it in both houses for it to have a chance. However, it seems likely that an agreement will be reached between the Nationals and the Liberals outside the parliamentary process about which PELS to extinguish, as this is such a pivotal part of their Future of Gas policy.

Barilaro has said he will extinguish some of the PELs, which means he will not extinguish all of them. He claims his actions will be guided by economics and environmental concerns, but with the opposition to the PELS within his party’s rank and file and from voters in the North West he will also be guided by politics.

PELs & approximate NSW Electoral Boundaries

Five State electorates are affected by the zombie PELs and three of them have sitting National MPs – Dubbo with Dugald Saunders, Northern Tablelands with Adam Marshall and Tamworth with Kevin Andrews. The latter two, because of community pressure, oppose the development of CSG within their electorates. Saunders, when elected, reneged on a previously stated anti-CSG position. The other electorates are Barwon (MP Roy Butler SFF – against CSG) and Upper Hunter where a by-election on 22 May could prove crucial.

Federal Government involvement

The moves by gas companies to reactivate the PELs were also in response to the Federal Government sinking taxpayer money into five gasfields across the country. The entire Gunnedah Basin, where the Narrabri Gas Project is located, is one of the targets.

Mulalley farmer Margaret Fleck, whose property is included in PEL 12, owned by Santos’ joint venture partner Carbon Minerals says, “It’s what we feared would happen if the Narrabri gasfield was approved, and it’s shattering news to hear these gas companies and the Morrison Government are so eager to put our land, water and communities at risk”. (*10)


(*1) https://www.epa.nsw.gov.au/your-environment/gas-industry/planning-and-approval

(*2) https://www.lawsociety.com.au/sites/default/files/2018-04/MINING%20AND%20COAL%20SEAM%20GAS%20LAND%20ACCESS.pdf

(*3) https://www.ipcn.nsw.gov.au/resources/pac/media/files/pac/projects/2020/03/narrabri-gas-project/public-hearing/transcripts/200722-day-3-narrabri-gas-project-public-hearing-transcript.pdf

(*4) https://www.abc.net.au/news/2021-03-14/dormant-gas-licences-reemerge-as-new-gas-battle-in-nsw/13241568

(*5) The following is a list of titleholders for each zombie PEL.
PEL 1 Australian Coalbed Methane, Santos QNT
PEL 6 Comet Ridge Gunnedah, Santos NSW
PEL 12 Australian Coalbed Methane, Santos QNT
PEL 238 Santos NSW Pty Ltd
PEL 427 Comet Ridge Gunnedah, Comet Ridge
PEL 428 Comet Ridge Gunnedah, Comet Ridge, Davidson Prospecting
PEL 433 Santos NSW, Santos QNT
PEL 434 Santos NSW, Santos QNT
PEL 450 Santos QNT
PEL 452 Santos QNT
PEL 456 Hunter Gas, Santos QNT
PEL 462 Santos QNT

(*6) https://www.cometridge.com.au/projects-nsw/

(*7) https://www.parliament.nsw.gov.au/bills/Pages/bill-details.aspx?pk=3806

(*8) https://www.moreechampion.com.au/story/6970518/legislation-to-extinguish-zombie-pels-introduced-to-nsw-parliament/

(*9) https://www.theland.com.au/story/7064078/nats-urged-to-put-up-or-shut-up-on-expired-pels/

(*10) https://www.csgfreenorthwest.org.au/zombie_pels_farmers_worst_fears_confirmed

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