Public liability for petroleum, gas and CSG infrastructure

When petroleum and gas activities (including coal seam gas activities) end, some infrastructure may be left behind. This infrastructure is referred to as 'legacy infrastructure'. This infrastructure is any infrastructure that has been decommissioned, abandoned or rehabilitated.

There are a number of regulatory frameworks that help manage public liability regarding legacy infrastructure. These frameworks:

  • set out the responsibilities of the resource companies and the Queensland Government
  • protect landholders against liability caused by legacy petroleum and gas infrastructure.

Under current regulations:

  • landholders are protected from liability for harm caused by, or arising from, the failure of any legacy petroleum and gas infrastructure on their properties, unless they have caused or contributed to the harm
  • the State takes responsibility for legacy infrastructure.

Legacy infrastructure regulatory framework

A resource company carrying out gas and petroleum activities in Queensland must conduct their activities in accordance with the applicable legislation, regulations and codes. These are commonly referred to as the regulatory framework.

The regulatory framework that we use to manage legacy infrastructure is made up of multiple pieces of legislation. They include the:

Obligations under the P&G Act

At the end of the resource authority's term, the holder must apply to surrender both the resource authority and environmental authority (EA). The resource authority cannot be surrendered until the State is satisfied that the conditions of the EA have been met, including rehabilitation (see Obligations under the EP Act below). Until the resource authority and EA have been surrendered, the resource authority holder remains responsible for decommissioning obligations under the resource authority and rehabilitation obligations under the EA.

The resource authority holder has an obligation to decommission any petroleum well, water injection bore, water observation bore or water supply bore drilled by, or for the holder before the tenure ends or the land on which they are located ceases to be in the area of the authority (i.e. in circumstances where the tenure is partially relinquished or cancelled).

A petroleum well is only decommissioned if it is done in the manner prescribed under a regulation. The well decommissioning standards are set out in the Code of Practice for the construction and abandonment of petroleum wells and associated bores in Queensland (PDF, 923KB).

Well integrity is fundamental to ensuring risk can be managed to an acceptable level and protecting aquifers during the well life cycle. The code addresses safety and environmental issues during the construction, operation and decommissioning of petroleum wells and associated bores.

The code has been developed based on good industry practice – these are recommended practices, methods and techniques used to assist resource authority holders satisfy the means of compliance and achieve the required standards of decommissioning.

The well decommissioning objectives include:

  • isolating aquifers from each other and from permeable hydrocarbon zones
  • recovering and removing surface equipment so as to not adversely interfere with the normal activities of the owner or occupier of the land on which the well or bore is located
  • ensuring the site is left safe and free from contaminants.

Despite being decommissioned, the holder has responsibility for any well or bore until such time when the petroleum tenure ends or the land ceases to be part of the authority.

The decommissioning of a pipeline must be done in a way that complies with Australian Standard 2885.

The resource authority holder must decommission any pipeline in the areas of a resource authority before the authority ends, or the land on which they are located ceases to be in the area of the authority.

The pipeline generally remains the personal property of the holder even if the authority ends, or the land on which it is located ceases to be part of the authority.

In the event that the holder no longer exists (i.e. there has been a disclaimer or it has been deregistered), the pipeline can be remediated under the State's abandoned operating plant framework contained in the P&G Act.

Equipment includes machinery and plant associated with the authorised activities of the tenure. Improvements include works constructed in connection with a well or bore (e.g. a well pad and/or access track). Improvements do not include a pipeline, petroleum well, water injection bore, water observation bore or water supply bore.

The resource authority holder must remove any equipment or improvements from the land on or before the day the authority ends, or the day the land ceases to be in the area of the authority (whichever is earlier) unless the landholder otherwise agrees.

If the holder of the resource authority fails to remove equipment or improvements, the State may authorise a person to enter land to remove it. At this point it becomes the property of the State.

The State has a range of powers to authorise persons (including the former resource authority holder) to enter land under the P&G Act to remove equipment, decommission petroleum wells, remediate legacy boreholes, and comply with end of authority or area reduction obligations.

Obligations under the EP Act

Environmental authorities granted under the EP Act may impose conditions on resource authority holders about the decommissioning of infrastructure and rehabilitation of any land disturbance.

The environmental authority includes rehabilitation requirements that must be achieved before it can be approved for surrender and the relevant petroleum and gas authority can be returned to the State. These requirements vary depending on the condition of the land and its use prior to the start of the authorised activities. The requirements may include measures such as:

  • ensuring that disturbed land is reinstated to a condition that enables the land to be rehabilitated to the pre-disturbance state
  • reinstating the top layer of the soil profile
  • promoting the establishment of vegetation of the same species and density of cover to that of the surrounding undisturbed areas.

Generally, rehabilitation requires any disturbance caused by the authorised activity to be rehabilitated, leaving a site that will not cause environmental harm and that is suitable for a future use.

The surrender of an EA may be approved where site features remain on the site. The site features include both legacy infrastructure (e.g. pipelines and wells) as well as infrastructure that the landholder has agreed to use and take responsibility for (e.g. water bores and dams).

The surrender process includes an assessment of compliance with the EA conditions in relation to rehabilitation. The State can approve surrender subject to some residual risks being transferred to the State, and a residual risk payment being made. However, if the landholder has agreed to take responsibility for any legacy infrastructure, that infrastructure would not be considered in the evaluation of residual risk calculations.

Once the surrender of an EA is approved, the resource company is generally no longer responsible for the monitoring, maintenance and rectification of the site. However, following surrender there may be ongoing requirements for the State to monitor and manage aspects of the site.

The State may also need to rectify any failures of rehabilitation that occur after the surrender has been approved. Therefore, the State needs to secure sufficient funds from the resource authority holder to undertake this work, should it be necessary or desirable to do so. The EP Act provides authority for the State to secure such funds through a residual risk payment.

Residual risks are those risks to the environment that remain at a rehabilitated resource site after the EA is surrendered. Residual risks are only relevant once all rehabilitation requirements have been met (i.e. after disturbance and/or infrastructure associated with authorised activities has been decommissioned and/or rehabilitated to the required standards).

Where residual risks are identified before surrender, the management of those risks and the assumptions regarding the rehabilitation undertaken will be described in a risk management plan which must be included as part of the post-surrender management plan.

When surrendering an EA, the resource company must carry out a risk assessment of the land. If the risk assessment identifies relevant residual risks, the administering authority must estimate the residual risk payment. The payment estimate considers all potential associated costs and expenses of remediating a potential future failure. These costs could include any ongoing management activities to monitor the residual risks. These details are captured in a residual risk post-surrender management plan.

The residual risk payments are held in a residual risk fund and managed by the State to ensure sufficient funds will be available for the State to undertake future remediation activities to protect the environment, should it be necessary or desirable to do so.

The residual risk payments and fund are only designed to cover the management of residual risks of the land where the State may need to undertake activities. Therefore, if the landholder has agreed to take over ownership of rehabilitated or decommissioned resource infrastructure, the fund does not cover the risk presented by its failure.

Under the residual risk framework, there are no obligations placed on the landholder to monitor or manage residual risks on their property.

The existence of a residual risk post-surrender management plan does not require the landholder to undertake any work or legally restrict them from undertaking any activities on their land.

There is flexibility for the State to use residual risk funds to engage third parties to manage residual risks where it is appropriate, cost-effective and efficient. This could in fact be the landholder where their capabilities suit the work to be undertaken. However, where this is the case, it will be subject to contractual arrangements by agreement.

There may be circumstances where the State or authorised person needs to access a landholder’s property to undertake the monitoring, management, or remedy of an issue. In these circumstances, the applicable land access provisions (in the relevant resources legislation) will be used to provide an entry notice prior to access, advising the landholder when access will occur and the work that needs to be done.

Environmental harm

In the event of the occurrence of environmental harm caused by the failure of legacy infrastructure, the responsibility generally rests with the State to undertake the relevant remediation activities to repair, manage and/or prevent any further environmental damage. Exceptions to this position may include:

  • where the State has lawfully transferred ownership of a decommissioned gas well or bore to the owner of the land on which the well or bore is located or the holder of a geothermal tenure or mining tenement for the area which includes that land
  • where ownership of a decommissioned pipeline is retained by the relevant tenure holder
  • or
  • where the relevant tenure holder has disposed of a decommissioned pipeline to another person.

Depending on the circumstances, the residual risk fund may be applied.

Third party liability

The issue of liability for personal injury, property damage or other loss caused by legacy infrastructure will ultimately depend on all the relevant facts and circumstances. These situations need to be dealt with on a case-by-case basis. If harm is caused to a third party as a result of a failure of legacy infrastructure, the individual circumstances that led to the harm being caused will determine where legal responsibility lies.

The intent of the regulatory framework is that in most circumstances landholders will not be liable for harm caused by or arising from the failure of any legacy infrastructure on their properties, provided the landholder's actions did not cause or contribute to the failure or the resulting harm. In most circumstances the regulatory framework is designed so that the State takes responsibility for dealing with issues arising from legacy infrastructure.

Queensland Government insurance fund

The Queensland Government Insurance Fund (QGIF) is an internal Queensland Treasury managed fund that oversees the State Government's self-insurance scheme.

All Queensland Government agencies, as well as eligible statutory bodies, are covered by QGIF for any loss or damage to State assets, as well as any compensation claims made by third parties.

The Government understands that if injury, loss or damage occurred to a third party as a result of the failure of legacy infrastructure and it was found the failure was the fault of the State, then the State would be liable to pay compensation.

It is acknowledged that each claim against the State would need to be considered and investigated on a case-by-case basis to determine the contributing factors, including:

  • the nature of the failure
  • the cause of the failure
  • the actions that the State did or did not take that caused fault
  • the actions that the third party did or did not take that contributed to the injury, loss and or damage.