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Who does this affect?

Project financiers, Project developers, Energy companies.

What do you need to do?

Prepare to take advantage of the opportunities offered by the new geothermal energy title system.

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Nicholas Creed  
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Nicholas Creed  
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Geothermal Energy now regulated by WA Petroleum Act - 23 January 2007

The Petroleum Amendment Act 2007 (WA) amends the Petroleum Act 1967 (WA) (Petroleum Act) to provide for the exploration and recovery of geothermal energy in Western Australia.

The amended Act will be known as the Petroleum and Geothermal Energy Resources Act 2007 (WA). According to Resources Minister Francis Logan, it will enable the State Government to attract investment for this renewable energy source, paving the way for a geothermal industry in WA.

What is geothermal energy?

Geothermal energy is a sustainable source of energy created naturally within the crust of the earth. It is capable of generating base-load electricity with negligible greenhouse gas emissions.

There are two types of geothermal energy, both of which are covered by the new legislation:

  • geothermal energy created by extracting the heat from hot geothermal springs, and
  • geothermal energy created by passing water over hot dry rocks and using the heated water to generate power.

The amending Act inserts the following definitions of geothermal energy into the Petroleum Act:

  • ‘Geothermal energy’ - means thermal energy that results from natural geological processes and is contained in geothermal energy resources.
  • ‘Geothermal energy resources’ - means subsurface rock or other subterranean substances that contain geothermal energy and, where the context so requires, includes the geothermal energy contained in those resources.

Reasons for the new legislation

The new legislation creates a system of allocating and regulating land titles for the exploration and recovery of geothermal resources. The government introduced the legislation in response to expressions of interest in geothermal titles it has received over the past two years from geothermal exploration proponents. The new legislation is considered by the government to be a significant milestone in its commitment to providing renewable energy.

Several options were considered for incorporating the new scheme governing geothermal energy into existing statutory frameworks:

  • The first option, adopted by New South Wales and Tasmania, was to include geothermal energy provisions in the state’s existing mining legislation. The government did not consider this approach suitable for Western Australia because the minerals covered by the Mining Act 1978 (WA) are located much closer to the earth’s surface than geothermal energy resources and are therefore subject to different occupational safety issues and drilling regimes.
  • The second option, adopted by Victoria and Queensland, was to draft new stand alone legislation. This option was rejected as being too costly and time consuming.
  • The final, and ultimately adopted option, was to follow the example of South Australia and include the legislation in the state’s existing petroleum legislation. The Resources Minister gave the following reasons for choosing this option:

 
  • geothermal energy and petroleum operations are similar
  • the processes contained in the Petroleum Act have widespread industry acceptance, and
  • there is an existing administrative body (the Department of Industry and Resources) that is familiar with the Petroleum Act and has the expertise best suited to manage geothermal exploration and recovery.

History of the legislation

  • The Petroleum Amendment Bill 2007 (WA) was introduced in the Legislative Assembly and received its second reading speech on 16 August 2007.
  • The Bill was assented to on 21 December 2007.
  • Sections 1 and 2 of the Petroleum Amendment Act 2007 (WA) commenced on assent. The remaining sections, other than Part 2 Division 2 and section 99 commenced on 19 January 2008. Part 2 Division 2 and section 99 have not yet been proclaimed.

Key amendments made by the Petroleum Amendment Act 2007 (WA)

The Petroleum Amendment Act 2007 (WA):

  • amends the short and long titles of the original Act to include geothermal energy resources
  • inserts provisions vesting WA’s geothermal energy resources in the Crown and deeming all Crown grants and leases to contain a reservation of geothermal energy resources
  • clarifies that certain operations for recovery of geothermal energy will not be regulated by the Act, including small scale, non-commercial operations (such as for the heating of public swimming pools), and
  • inserts provisions into the original Act for the regulation of geothermal energy mining and geothermal energy.

The new provisions regulating geothermal energy mining include:

  • provisions regarding land access and compensation for geothermal energy resources
  • provisions providing for a full range of geothermal energy titles including exploration permits, drilling reservations, retention leases and production licences
  • provisions providing that if a geothermal title holder recovers geothermal energy, that energy becomes their property
  • provisions ensuring that the right to recover geothermal energy does not entitle proponents to petroleum discoveries and vice versa
  • provisions allowing for geothermal special prospecting authorities and access authorities
  • provisions regarding geothermal energy recovery development plans, whereby geothermal licensees will be required to submit to the minister, for approval, a plan outlining how the geothermal energy resources will be recovered, and
  • provisions clarifying that petroleum and geothermal titles may cover the same areas.

As is currently the case with petroleum, a person or company is required to have a title under the Act before they explore for or recover geothermal energy resources. The sections in the Petroleum Act that currently apply to petroleum titles are extended by the Petroleum Amendment Act 2007 (WA) to apply to geothermal energy titles. These sections cover:

  • procedures for applying for, cancelling and renewing titles
  • the rights and obligations of title holders, including reporting, work practice and insurance requirements
  • transfers or dealings in titles
  • transitioning from an exploration permit or drilling reservation to a retention lease or production licence following the discovery of the resources (known as ‘location’ provisions), and
  • offences and fees, including a royalty for geothermal energy of 2.5%.

Next steps

The State Government will soon be releasing geothermal acreage for competitive bids through the Department of Industry and Resources. Geothermal explorers will be able to select and apply for application areas of up to about 3,200km2 in coastal and adjacent inland areas, between Geraldton and Busselton.

Applications will need to contain a work program covering the initial six years and must include a commitment to drill a shallow well to approximately 400m within the first two years. According to the Resources Minister, this is to ensure the acceleration of focussed on-ground exploration drilling for geothermal energy resources in WA.

Following this initial acreage release, the Department of Industry and Resources will co-ordinate a systematic release of all the remaining onshore acreage of the State.

This publication is only a general outline. It is not legal advice. You should seek professional advice before taking any action based on its contents.