A key step to net zero in WA – landmark legislation establishes a CCS regulatory regime

Parliament passes the Petroleum Legislation Amendment Bill 2023 (WA) 5 min read

The recently passed Petroleum Legislation Amendment Bill 2023 (WA) (the Bill) is landmark legislation that establishes a carbon capture and storage (CCS) regulatory regime on and under the lands, coastal waters and territorial sea within Western Australia's jurisdiction.

CCS will play a critical role in the global transition to net zero by 2050, and is central to decarbonising hard-to-abate industries. While Western Australia has always had the key ingredients required to be a global leader in CCS (a skilled workforce, proximity to high-emitting countries, existing infrastructure and suitable geological formations), it has lacked the regulatory framework necessary to facilitate this industry's development.

The Bill paves the way for the development of a CCS industry in Western Australia.  

In this Insight, we provide a snapshot of the Bill and highlight some of the key elements of Western Australia's future CCS regulatory regime.

Key takeaways

• The establishment of a CCS regulatory regime represents a landmark addition to Western Australia's energy landscape, and provides a framework to develop a thriving CCS industry in Western Australia.
• The Bill establishes a CCS regulatory regime that is substantially similar to the regime that applies to offshore waters under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (the OPGGSA) and:
  • provides several pathways to obtain a GHG injection licence, including a 'direct access' pathway and a GHG exploration permit or GHG drilling reservation pathway;
  • expands an existing non-interference principle to GHG titles, with the Department of Energy, Mines, Industry Regulation and Safety (DEMIRS) to manage the priority of operations between overlapping titles; and
  • includes a comprehensive site closing process that broadly reflects the corresponding process under the OPGGSA, including the provision of a limited statutory indemnity for long-term liability.

Snapshot of the Bill

The Bill, passed on 7 May 2024, establishes a regulatory regime for the transportation and permanent storage of a 'greenhouse gas substance' (a substance consisting overwhelmingly of carbon dioxide and other permitted substances such as detection agents)¹ in a geological formation, through amendments to the:

• Petroleum and Geothermal Energy Resources Act 1967 (WA), which will become the Petroleum, Geothermal Energy and Greenhouse Gas Storage Act 1967 (WA) (once amended) (the PGGSA);
• Petroleum (Submerged Lands) Act 1982 (WA), which will become the Petroleum and Greenhouse Gas Storage (Submerged Lands) Act 1982 (WA) (once amended) (the SLA); and
• the Petroleum Pipelines Act 1969 (WA), which will become the Petroleum and Greenhouse Gas Pipelines Act 1969 (WA) (once amended) (the Pipelines Act).²

The Bill also introduces various amendments to the PGGSA, SLA and Pipelines Act, to facilitate:

• the measurement of petroleum recovered using a measuring device installed on third-party infrastructure; and
• exploration for naturally occurring hydrogen,

together with various administrative and ancillary amendments to regulate electronic lodgement and the service of documents.³

The regime established by the Bill is substantially similar to the CCS regulatory regime that applies to offshore waters under the OPGGSA. While this continuity between Federal and state regulatory regimes will provide industry with a level of familiarity, it also means that Western Australia has adopted some of the uncertainty and complexity associated with the OPGGSA regime. It remains to be seen whether these issues are addressed through the accompanying regulations in a manner that imparts additional clarity and certainty to industry.

Key elements of Western Australia's future CCS regulatory regime

Pathway to a GHG injection licence

The Bill creates several licensing pathways to obtain a GHG injection licence (GGIL), which is required to inject and permanently store greenhouse gas substances.⁴

The two key licensing pathways are summarised below:

• ('Direct access' pathway) This pathway allows the holder of a petroleum / geothermal retention lease or a petroleum / geothermal production licence to apply directly for a GGIL. This provides existing titleholders with an expedited pathway to a GGIL by removing the requirement for an acreage release. It also avoids the associated work and expenditure commitments attached to a GHG exploration permit or GHG drilling reservation.⁵
• (GHG exploration permit or GHG drilling reservation pathway) This pathway requires there to first be an acreage release by the Minister, which must be followed by an application for a GHG exploration permit or a GHG drilling reservation (noting that this application process may be competitive).⁶

Once a GHG exploration permit or a GHG drilling reservation has been granted, and subject to satisfaction of the relevant work and expenditure commitments, the titleholder may proceed to apply for a GHG retention lease or a GGIL.⁷

Priority of operations between petroleum titles, geothermal titles and GHG titles⁸

The Bill contemplates that petroleum operations, geothermal energy operations and GHG operations may co-exist for the same block(s), and expands the application of the existing principle of non-interference as between operations being lawfully conducted on petroleum titles and geothermal titles to GHG titles. This means that a titleholder must carry on their operations in a manner that does not interfere with, among other things, the lawful operations of other titleholders to a greater extent than is necessary for the reasonable exercise of their rights and duties.⁹

The Bill does not, however, establish a mechanism or process for resolving competing operations, or provide for a statutory hierarchy between petroleum operations, geothermal energy operations and GHG operations.¹⁰

In response to public submissions made on the Bill, DEMIRS indicated that it and the Minister intend to manage the priority of operations between titles through:

• a consultation mechanism under section 69A of the PGGSA (as amended by the Bill) and s74AA of the SLA (a new section created by the Bill), which effectively provides an existing titleholder with an ability to make submissions to the Minister before an overlapping title is granted (but with no guarantee that any concerns raised in such submissions will be resolved); and
• the extension and application of its existing guidance note, 'Guide note on the management of subsisting petroleum and geothermal titles', to GHG titles.¹¹

Site closing certificate and statutory indemnity for long-term liability

The Bill establishes a complex site closing process that broadly reflects the corresponding process under the OPGGSA, including the provision of a limited statutory indemnity for long-term liability. The site closure process is summarised below:

• (Application period) The holder of a GGIL must apply for a site closing certificate within 30 days after injection operations for the relevant identified GHG storage formation have ceased.¹²
• (Pre-certificate notice) The Minister must, within five years of receiving an application, decide whether to issue a pre-certificate notice to the applicant for a site closing certificate.¹³ The Minister has broad discretion to issue or refuse a pre-certificate notice.¹⁴
• (Site closing certificate) If a pre-certificate notice is issued, and the applicant lodges security for the Western Australian Government's monitoring program, the Minister must issue a site closing certificate.¹⁵
• (Closure assurance period) After a minimum of 15 years following the issue of the site closing certificate, the Minister may declare the end of the closure assurance period (CAP) for the relevant identified GHG storage formation.¹⁶ To issue a CAP declaration, the Minister must be satisfied of various matters, including that there is no significant risk that a greenhouse gas substance injected into the geological formation will have a significant adverse impact on the environment.¹⁷

Once a CAP has been declared, and subject to satisfaction of certain other conditions, the State indemnifies the holder of a current or former GGIL in relation to any liability that meets each of the following criteria:

• for damages;
• that is attributable to an act or omission in carrying out operations authorised by the relevant GGIL and in relation to the relevant identified GHG storage formation;
• incurred or accrued after the end of the relevant CAP; and
• that satisfies any other conditions specified in the regulations.¹⁸

Next steps

If you would like to discuss the issues raised in this Insight or CCS generally, please contact any of the people below.