CarbonNet and Hydrogen Energy Supply Chain projects enabled under the Victorian OPGGS Amendment Bill

Articles Written by Peter Rose (Partner), Cloe Woodward (Associate)

Various commercial projects are now permitted following implementation of a cross-boundary title regime which removes legislative barriers to greenhouse gas storage activities which overlap jurisdictional boundaries.

The Commonwealth Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (Commonwealth OPGGS Act) was amended in 2020 to provide for the grant of single greenhouse gas titles that straddle the boundary between Commonwealth and State/Northern Territory coastal waters. The Offshore Petroleum and Greenhouse Gas Storage Amendment Bill 2021 (Victorian OPGGS Amendment Bill) will amend the Offshore Petroleum and Greenhouse Gas Storage Act 2010 (Vic) (Victorian OPGGS Act) to enable the cross-boundary title regime established under the Commonwealth OPGGS Act to operate in Victoria.

The titles will be granted under the Commonwealth OPGGS Act and the Victorian coastal waters that are subject to the relevant title will be taken to be Commonwealth waters for the duration of the term of that title, and will revert to regulation under the Victorian OPGGS Act when the title expires.

We note that a cross-boundary title may include a cross-boundary greenhouse gas assessment permit which allows exploration for a greenhouse gas storage formation, a cross-boundary greenhouse gas holding lease which enables the holder of the lease to retain rights to an identified greenhouse gas formation, or a cross-boundary greenhouse gas injection licence under which a licence holder can undertake injection activities.

How the cross-boundary title framework operates

Below is a summary of how the cross boundary title regime is intended to operate:

  • the Victorian Minister will be able to participate in the Cross-Boundary Authority established under the Commonwealth Act. In his Second Reading Speech Mr Pallas, Minister for Economic Development and Industrial Relations, told Parliament that the main function of the Cross-Boundary Authority will be to make decisions regarding cross-boundary greenhouse gas titles, including granting, reviewing, and imposing conditions on cross-boundary titles. The Minister also stated that upon closure of the storage site, the Victorian area of the cross-boundary title will revert to Victoria but long-term civil liability for the stored greenhouse gas will remain with the Commonwealth;
  • the Victorian Minister’s role would be to share information and make major title-related decisions by consensus with the Commonwealth to ensure the effective regulation of the entire cross-boundary title area;
  • the Cross-Boundary Authority will have the ability to deem an area in Victorian offshore waters to be regulated under the Commonwealth OPGGS for the express and limited purpose of greenhouse gas title and greenhouse gas storage regulation. Other activities and State interests in that area, such as petroleum resources and fishing rights are unaffected, and all other Victorian legislation will continue to apply; and
  • The National Offshore Petroleum Safety and Environmental Management Authority will have regulatory responsibility for environmental management, safety and well integrity in the areas of Victorian coastal waters that form part of a cross-boundary title area for the duration of the term of that title.

Benefits of the cross-boundary title framework

By permitting the creation of cross-boundary greenhouse gas titles which straddle the boundaries between State or Northern Territory coastal waters and Commonwealth waters, the Victorian OPGGS Amendment Bill will remove the legislative barriers to various commercial projects including the CarbonNet and Hydrogen Energy Supply Chain (HESC) projects. CarbonNet is a $150 million project established by the Victorian and Commonwealth Governments as a potential solution to reducing greenhouse gas emissions by creating a commercial scale carbon transportation and storage system which will support Victoria’s decarbonisation of its manufacturing and industrial base. CarbonNet is unable to progress to the next stage of project approvals because its preferred offshore storage site straddles the Commonwealth and Victorian boundaries, and the Victorian OPGGS Act currently requires a storage formation to be contained wholly within a single assessment permit area. The cross-boundary title framework would resolve this issue.

Also, both the Commonwealth and the Victorian Governments each invested $50 million into the $500 million HESC project which aims to create a new hydrogen export industry in Victoria and open access to hydrogen for domestic use. CarbonNet is a critical enabler of the HESC project which is unable to proceed without a carbon capture and storage solution.

Other greenhouse gas amendments

The Victorian OPGGS Amendment Bill also makes a number of minor amendments to support greenhouse gas storage regulation in Victorian waters. Relevantly, it will enable the consolidation of adjacent Victorian greenhouse gas titles, permit an additional three year renewal period for greenhouse gas assessment permits and restrict petroleum retention lease holders from applying for a greenhouse gas title over the same area if a greenhouse gas title holder already exists.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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