Santos manager public affairs offshore and NT Tom Baddeley told the Territory's fraccing inquiry panel at a hearing in Darwin yesterday that his company recognised the strong relationship between pastoralists and the land they lease, which in some cases stretches back generations.

 

However, the company does not believe a right of veto - which the NT Cattleman's Association wants - is appropriate. 

 

The NTCA argues that a veto would fix the apparent "power imbalance" between gas companies and pastoralists.

 

One stakeholder had told the inquiry that the "power imbalance" was a result of pastoralists' "limited experience in undertaking such negotiations compared to explorers, who may have negotiated hundreds of such agreements; and the asymmetry of information regarding the potential impact of the exploration activity".

 

That apparent imbalance of power is also there, NTCA argues, because in most cases, rural land holders are legally required to allow explorers to access their land.

 

Other stakeholders raised concerns about pastoralists' limited access to independent and affordable legal advice, limited political influence, limited technical knowledge and limited time to negotiate agreements.

 

There is no right of veto in Queensland; instead there is a legislative requirement to have an agreement and fair compensation in place before any on-property activity.

 

Santos has secured more than 2000 agreements to date in Queensland. 

 

The state also has an established a land access code, which the agriculture and resources industries both support.

 

Baddeley said there needed to be a standard form of land access agreement for the NT's nascent shale industry, and that Santos would also support the creation of an independent body, similar to to the Queensland GasField Commission to facilitate communication between the industry and landholders. 

 

"That body, let's call it the ShaleGas Commission, should include representatives from the land councils, town councils, Charles Darwin University, the cattlemen's association and of course industry," Baddeley said.

 

Companies slugged

 

The fraccing inquiry panel believes gas companies should pay all legal fees associated with the negotiation of land access and compensation agreements.

 

Baddeley addressed this by noting the recent report on the "lessons learned" from the development of the CSG industry issued by the GasFields Commission. 

 

In that report, the commission said it should not be common practice to have lawyers representing a landholder's operational and commercial interests. 

 

It said landholders should be sufficiently informed - through standardised agreements - to engage lawyers only at the end of the negotiation, just prior to signing. 

 

The commission also clearly stated that legal fees, in that context, should be capped, as they are in New South Wales. 

 

"Santos pays a landholder's reasonable legal fees to an agreed value but does not support, nor consider it conducive to constructive relations, an obligation to pay all legal fees," Baddeley said. 

 

"Sadly, there are law firms which would take advantage of this situation. Capping legal fees will minimise the risk of, what the Commission describes, as the bullying of landholders by lawyers."

 

 

The panel's interim report said that while there was considerable uncertainty about the likely scale and rate of development of a shale gas industry in the NT, it was likely that only one or two shale gas resources could feasibly be developed within the next 5-10 years.

 

Bruce Robertson from the anti-fossil fuels Institute for Energy Economics and Financial Analysis, told the inquiry that the NT government should steer clear of shale gas given the global gas glut, cost blowouts at other LNG plants and disappointing royalty returns.

 

"I think we shouldn't be following this rabbit down the hole, that's why it's a misallocation of resources," he said.

 

"You shouldn't actually be here, because the decision should've been made before this inquiry was done that it wasn't a wealth-creating industry for the Territory."

 

Robertson said producing high-cost onshore gas was not economic in a low-cost gas world, particularly that coming out of the US and Qatar.

 

"Qatar is the world's lowest cost producer … the fields that they were looking at developing in the NT, the production costs were $7.50/gigajoule. In Qatar, they're 20c," he said.

 

NT Treasurer Nicole Manison recently said there would be no benefit to the NT economy for four years even if the NT were to lift its moratorium and work started immediately, a claim disputed by MS Contracting's Bill Sullivan, who worked with Pangaea Resources.

 

"We dispute that, it's absolutely a fabrication," the ABC quoted him as saying.