The report of the inquiry, the latest following ones conducted by the NT's last three governments to address and alleviate community concerns, was overall received as good news for industry, with the moratorium now widely expected to be lifted … but not just yet.

 

The inquiry suggested that environmental studies spanning up to three years should be done before the shale gas industry can be developed via hydraulic fracturing - one of 120 recommendations for the Gunner government which commissioned the inquiry.

 

Justice Pepper said the report's overall conclusion was that risk is inherent in all development and that an onshore shale gas industry is no exception. 

 

"However, if the recommendations made in this draft Report are adopted and implemented in full, those risks may be mitigated or reduced - and in many cases eliminated altogether - to acceptable levels having regard to the totality of the evidence," she said.

 

The panel has received and considered more than 500 submissions, 105 public hearings have been conducted, and the inquiry has held 29 community forums across the Territory. 

 

Five more are scheduled in February in Darwin, Katherine, Alice Springs and Tennant Creek, where Jemena is building the compressor station for the Northern Gas Pipeline which will need shale gas to extend far enough to help alleviate the east coast gas crisis.

 

Geoscience Australia says the NT has 257,276 petajoules of shale gas resources, with almost 70% of that in the Beetaloo Sub-basin where Origin Energy recently delineated a potential 6.6 trillion cubic feet 2C shale play around the successfully flowed Amungee NW-1H well, prompting the company to up its interest in that play to 70% when Sasol withdrew.

 

Santos, Origin and Pangaea Resources say between 1000-1200 wells will be needed with around 150 pads.

 

Several other potential basins in the NT have not been extensively or successfully tested to date, including the McArthur, Wiso, Georgina and Perdika basins, plus the onshore component of the Bonaparte Basin.

 

Given the long lead time, the most likely area for development inside the next decade is the Beetloo, which recently prompted RBC Capital Markets to speculate that the NT government could just initially relax the frac ban to allow Origin to carry out its work.

 

The report said using surface water resources for shale gas development should be banned, and to ensure it does not cause unacceptable aquifer drawdown it said drilling wells within 1km of existing or proposed groundwater bores be banned unless hydrogeological work and groundwater modelling indicate that a different distance is apt, or if the landholder agrees with a closer distance.

 

It also wants wastewater reinjection into deep aquifers and conventional reservoirs to be banned until comprehensive geotechnical investigations are done to show it won't cause seismic activity.

 

Legislation also needs to be amended to recognise underground indigenous sacred sites, such as water bodies and aquifers.

 

The report recommended a a clear separation between the regulator and the agency responsible for promoting the industry, as the current regulator is not independent.  

 

The report also recommended a code of practice for well abandonment that includes cement integrity tests prior to abandonment, and for defects to be rectified and further testing to ensure the plugs have been properly set.

 

It also recommended a program for ongoing monitoring of abandoned shale gas wells; that companies develop and implement a well integrity management system in compliance with ISO 16530-1:2017; and, importantly, that frac fluid composition be made public.

 

The government also needs to develop a wastewater management framework for the shale gas industry, and the absence of any treatment and disposal facilities in the NT for wastewater and brines needs to be fixed as a priority.

 

The report also called for a "traffic light system" for measuring seismic intensity similar to that in the UK to minimise the risk of felt seismic events during fraccing.

 

The Water Act also needs to be amended to require gas companies to obtain water extraction licences, and the companies will have to pay for that water.

 

It also recommended the NT government request the Commonwealth to amend the EPBC Act to apply the "water trigger" to all onshore shale gas development.

 

The NT government also needs to develop guidelines for human and environmental risk assessments, and called for a strategic regional environmental and baseline assessment including a regional groundwater model for any prospective shale gas basin before any production licences are granted, starting with the Beetaloo.

 

 

While the NT government said it would wait until the final report is delivered before making any decisions on lifting the frac ban, the Australian Petroleum Production and Exploration Association said investors and industry needed certainty, though the group was encouraged by the draft final report.

 

APPEA Director South Australia / Northern Territory Matthew Doman said it was important that the draft report confirmed that shale gas development would have significant economic and employment benefits for the NT.

 

"The report … has also debunked many of the myths spread by activists opposed to onshore gas development," he said.

 

"Justice Pepper's draft report echoes the conclusion reached by numerous other scientific inquiries and reviews that any risks associated with hydraulic fracturing can be minimised or eliminated with proper regulation."

 

He said it was crucial that the final report be finalised as quickly as possible so that the Territory government can make decisions about the industry's future. 

 

"Uncertainty will remain until a new regulatory regime is confirmed," Doman said.