A government-established review into Australia's titles management system released three days before Christmas was applauded for encouraging exploration, particularly in frontier or lightly explored areas, but gas users were troubled by a proposal to move from a fixed five-year-plus retention lease renewals system to a more flexible 5-15 year renewal cycle.
This would be based on resource development prospects, with "increased compliance monitoring to promote timely development".
It also recommended introducing a voluntary project concept approach to titles administration that would allow the grouping of individual fields destined for commercialisation as part of the same project.
However, Brown told Energy News yesterday that given a government has never, to his mind, stepped in to force a company to develop fields in the middle of the five-year system, he failed to see how a 15-year system would provide greater scrutiny or stricter rules.
While both the Australian Labor Party and the Malcolm Turnbull-led Coalition have reserved comment on the interim report, despite previous ‘use-it or lose-it rhetoric' Brown is concerned about a pre-determined outcome given the working group that came up with the contentious recommendations consisted entirely of industry and various government departments and consultants, with no voice for gas users.
The working group included the Australian Petroleum Production and Exploration Association, Apache (whose Australian assets are now owned by Quadrant Energy), BP, Chevron Corporation, ExxonMobil, Inpex, Origin Energy, Santos, Shell, Woodside Petroleum and Finder Exploration.
Shell and BP are in Woodside's Browse joint venture, along with Japan Australia LNG and PetroChina International Investment. The Browse JV is now seeking a new RL.
Brown said the draft report unsurprisingly rewarded oilers for not bringing gas on by bringing in even more lenient policies than the previous system, which the Alliance considers a paper tiger.
He said the proposals stripped the community of any control over what happens with the public's undeveloped gas resources.
He has urged both major political parties to hold fire on the final report, due this month, until after a new parliament is constituted, then we wants the new Senate to establish an inquiry to take note of independent analysis to give the interim report's proposals the scrutiny they deserve.
"If they are good for Australia then they should stand up to a Senate inquiry," Brown said.
"We believe they're not in the national best interest, and that any independent analysis will see the retention system needs to be tightened up.
"If [industry and government] are really committed to a free market, let's test it. Allow the producers a set period to bring [the resources] on, if they then say they can't do it, put it to the market. If no one else takes it up, then they can renew the retention lease."
The issue came to a head again recently when Woodside and its joint venture partners decided to shelve the $US40 billion Browse floating LNG development.
While Woodside has said it wants to develop Browse as soon as possible, it has indicated it believes that the current oil price downturn is a structural one that would not be fixed when the cycle next turns.
Fortescue Metals Group CEO Nev Power turned the screws last month when he told The Australian that Woodside and its JV partners should be stripped of their interests when the Browse licences are next up for renewal, arguing it was time for other parties to have the chance to develop the resource.
The Browse fields, located offshore about 425km north of Broome, Western Australia, have contingent resources of 16 trillion cubic feet of dry gas and 466 million barrels of condensate across the Torosa, Brecknock and Calliance fields.
Brown says it's laughable that fields as old as Torosa (discovered in 1971) and Brecknock (1979) are still undeveloped, and yet the companies involved get to influence a government working group which will decide the fate of the RL regulatory regime.
Commonwealth resources minister Josh Frydenberg, who has spoken at length with both Woodside and FMG about the issue, conceded that the "use-it-or-lose-it" principle that Power advocated had been critical in allowing new players into markets, particularly in the iron ore space.
Frydenberg noted that FMG itself was built upon surplus tenements that iron ore behemoths BHP Billiton and Rio Tinto had been required to surrender in the past.
"Bring the process out from behind closed doors, shed light on the deals that were done behind closed doors, and have some real rigorous scrutiny of what's being proposed, and bring in some non-producer view so we can understand the true impact of the proposals, which we believe will be detrimental," Brown said.
"The whole purpose of the retention lease system should be commercialisation of resources at the earliest date, but our [Offshore Petroleum Retention Licencing Policy Benchmarking Report, issued in February] says it's doing the opposite, and producers are working the system to sit on them for as long as they can, and they get almost automatic renewal."
