Towards the end of 2023, the WA Government introduced the State’s proposed carbon capture and storage bill, the Petroleum Legislation Amendment Bill 2023 (Bill), into the WA Parliament. The introduction of the Bill follows the release earlier in the year of a consultation draft by the then Department of Mines, Industry Regulation and Safety, which was reviewed in our previous article “WA’s proposed carbon capture and storage bill: A readiness review”. This article considers the Bill as introduced and highlights key aspects (and omissions) of the Bill. It also briefly considers the implications of amendments made to the Environment Protection (Sea Dumping) Act 1981 (Cth) at the end of 2023. 

Key takeaways 

  • The Bill is substantially the same as the bill that was released for consultation at the beginning of 2023. 
  • The two major changes are that a greenhouse gas (GHG) exploration permit can only be renewed once and there is no longer a pathway for a petroleum or geothermal exploration permit or drilling reservation holder to apply for an identified GHG storage formation. 
  • Environmental plans are not addressed in Bill and we expect this to be clarified through regulations. 
  • The Bill has not addressed the issue of plume migration, meaning that GHG injected into a licence area is not allowed to migrate into a third party’s licence area, even where the parties agree to co-develop a project. 
  • GHG storage formations that straddle the boundary between State and Commonwealth jurisdictions are likely to be regulated under the relevant Commonwealth legislation. 

Differences between carbon capture and storage bill and consultation draft  

The Bill largely accords with the consultation draft released at the beginning of 2023. The key changes arising under the Bill as compared with the consultation draft are: 

  • a GHG exploration permit can only be renewed once; and 
  • there is no pathway for a petroleum or geothermal exploration permit or drilling reservation holder to apply for an identified GHG storage formation, although petroleum and geothermal production licence holders may apply for a GHG injection licence. 

The Bill otherwise largely accords with the consultation draft and essentially extends WA’s existing approach to petroleum permitting to include GHG transport and storage. 

Under the Bill, there are four types of permits: 

  • GHG exploration permits, to explore for injection sites or storage formations. The term is 6 years from grant of the permit. This permit allows for the injection of GHG on an appraisal basis. Where appropriate sites or formations are discovered, the Minister must be immediately informed. 
  • GHG drilling reservations, to drill for injection sites or storage formations, which are effective for the term specified by the Minister. 
  • GHG retention leases, which allow for exploration of potential GHG storage formations and injection sites, as well as storing and injecting GHG on an appraisal basis. This lease has a term of 5 years with one renewal permitted. 
  • GHG injection licence, which allows for the permanent storage of GHG in GHG storage formations and injection sites, among other things. This remains in force indefinitely, though the site can be closed by the proponent or the licence terminated by the Minister. 

The Minister must advertise releases for GHG exploration permits and drilling reservations in the Government Gazette, as well as notifying the public of nominations for the declaration of locations for drilling activities and declarations of GHG storage formations. 

The Bill sets out criteria for the identification of storage formations, including eligibility requirements. “Reasonably foreseeable technological developments” can inform the identification of such potential GHG storage formations. For “eligible GHG storage formations”, the site must be suitable for storing at least 100,000 tonnes of a particular GHG substance and must meet “fundamental suitability requirements”, including that the formation has an “effective sealing feature or attribute” to enable permanent storage. The Bill also defines the nature of GHG activities authorised by the GHG authorities and the standard to which a GHG permittee or lessee must undertake the work. 

Finally, GHG can be transported via pipeline to depleted reservoirs through amendments to the Petroleum Pipelines Act 1969 (WA)

Long-term liability for closure, monitoring and accidental releases of GHG 

Under the Bill, GHG licensees are required to inform the Minister of “serious situations”, such as the leakage of a GHG substance that has been (or is being) injected into a storage formation or where the GHG substance, once stored, behaves in a way that does not accord with predictions. In such situations, the Minister may issue directions to the licensee regarding the reasonable steps the licensee must take. Such directions may, among other things, require the licensee to inject or store the GHG substance in a certain way, or even to stop or suspend injection operations. 

The Bill also makes provision for the closing of GHG storage formations by a proponent or under a site closure direction issued by the Minister on certain grounds. Where a proponent has ceased injecting GHG into a storage formation, it must apply for a site closing certificate. The application must include a report modelling and analysing the behaviour of the GHG that has been injected, mitigation pathways of the GHG substance, short-term and long-term consequences of migration of the GHG substance, and the suggested approach to monitoring the GHG substance as stored. 

Prior to issuing a site closing certificate, the Minister will provide the proponent with a pre-certificate notice, which will specify the monitoring programme the State will undertake, an estimate of the total cost of that programme as well as the security amount that the proponent must provide to the State, which the State can draw from in the event it incurs reasonable costs in carrying out the monitoring programme. 

Once granted, a site closing certificate remains in force indefinitely. If, after at least 15 years, the State is satisfied of certain things, including that the GHG injected into the storage formation is behaving as expected and there is no significant risk to the environment or human health, then the State will assume liability (subject to certain conditions being met) for damages arising after that 15-year period ends. 

Issues arising under carbon capture and storage bill 

Despite the consultation process undertaken prior to the introduction of this Bill to Parliament, certain issues still remain unaddressed. 

One such issue is environmental approval. Environmental impact is conceptually built into the Bill, to the extent that it refers to regulations that may provide for the “preparation, submission and approval of environment plans”. Otherwise, environmental impact will largely be covered by the extant Environmental Protection Act 1986 (WA) (EP Act).  The primary environmental impact assessment will therefore occur under the EP Act, which allows for proposals that are “likely, if implemented, to have a significant effect on the environment” to be referred to the WA Environmental Protection Authority for approval.  This means proponents will be familiar with the environmental impact assessment process and requirements, thereby ensuring continuity and consistency. Consultation forms a key aspect of environmental approval and we expect that regulations drafted under any amended legislation will likely apply existing environment plan requirements in relation to petroleum and geothermal operations, with consultation, to GHG operations. 

The Bill also does not address the issue of plume migration. A GHG injection licence allows a licensee to “inject a greenhouse gas substance into an identified GHG storage formation that is wholly situated in the GHG licence area, so long as the relevant well is situated in the GHG licence area”. While this wording reflects the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGSA), it also replicates the issues arising under that legislation, namely that a plume cannot leave a proponent’s licence area even in circumstances where it travels into another GHG injection licence area and the two licence holders have agreed to to-develop the project. There is no mechanism under the Bill to amalgamate adjacent licences meaning that if plume migration is anticipated, adjacent licence holders are likely to need to commercially agree arrangements between themselves before making any applications under the legislation for storage of GHG substances in order to avoid breaching the legislation.  

Lastly, the Bill does not regulate offshore GHG storage formations that straddle the boundary between State and Commonwealth jurisdictions. Where this occurs, we expect that this will be regulated under OPGGSA, under which GHG permittees holding adjoining permits under the OPGGSA and a relevant State law can apply for a cross-boundary GHG assessment permit to explore for potential GHG storage formations and GHG injection sites within the area of that cross-boundary permit. The relevant State law must be a law declared by the Commonwealth Minister to be a compatible cross-boundary State law. This is the case with the Offshore Petroleum and Greenhouse Gas Storage Act 2010 (Vic), which was declared a compatible cross-boundary law under the Offshore Petroleum and Greenhouse Gas Storage (Compatible Cross‑boundary Laws) Declaration 2021 (Cth). Once the Bill passes the WA Parliament, it remains to be seen if the Commonwealth Minister will declare the equivalent WA Act as a compatible cross-boundary law. It would seem reasonable that a similar approach is taken in relation to WA and, given that almost all GHG licences issued under the OPGGSA are situated in offshore WA waters, we would advocate such an approach.  

Changes to Australia’s national framework for carbon dioxide seabed storage 

At a federal level, the Australian Government has recently amended the Environment Protection (Sea Dumping) Act 1981 (Cth) (Sea Dumping Act) to allow permits to be granted for the permanent storage of carbon dioxide in Australian territorial waters, alongside the ability to export carbon dioxide for storage in other countries. The Sea Dumping Act was originally passed to ratify the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter 1972 (1972 Convention), created to control sources of marine pollution and to protect the marine environment from human activities, and the 1996 London Protocol (1996 Protocol), created to modernise and ultimately replace the 1972 Convention. Both the 1972 Convention and the 1996 Protocol in their original iterations prohibited the storage and dumping of waste products into the ocean and in the seabed, including carbon dioxide. However, amendments made by signatories in 2006 added carbon dioxide to the list of allowable waste products due to the development of carbon capture and storage as a measure to combat climate change and global warming. A further amendment sought to be made to the 1996 Protocol was to allow for export of carbon dioxide from one country to another for storage, however that amendment has received insufficient ratifications to date and, as such, parties must rely on a temporary work-around that rests on bilateral country-level agreements.  

The recent changes to the Sea Dumping Act look to modernise the legislation to allow Australia to export its carbon dioxide to other countries for seabed sequestration. However, the changes do not include any provisions specifically referring to the importation of carbon dioxide produced by other countries, and it is anticipated that Australia will use state-to-state agreements with key partners such as Japan and South Korea to develop carbon dioxide import projects. For example, it was recently announced by Minister for Resources Madeleine King that Australia and South Korea were in the process of negotiating an agreement to import South Korean carbon dioxide and to store it in the Australian seabed through sequestration processes, and South Korea’s National Assembly recently passed legislation to allow carbon capture projects to proceed. There has also been progress in the private sector, for example through the signing of a memorandum of understanding between Australian energy giant Santos and Korean energy company SK E&S on the development of a low-carbon hub in Darwin and an off-shore carbon dioxide storage project in Western Australia, with the view to later store Korean carbon dioxide off the coast of Australia.  

Gilbert + Tobin to attend 2024 Australia and Southeast Asia CCS Forum  

Clare Pope (partner) and Christopher Marchesi (special counsel) will be attending the 2024 Australia and Southeast Asia CCS Forum on 11 – 12 March, and look forward to connecting and answering any questions.