Notifying landholders before commencing coal seam gas drilling
Recently on The Project, reports surfaced highlighting the need for coal seam gas companies to issue notices of entry to landholders when conducting directional drilling under their property.
Given the relative lack of impact on the land caused by directional drilling, mining and petroleum tenement holders may be under the impression that a landholder does not need to be notified before conducting directional drilling underneath their land.
However, the Mineral and Energy Resources (Common Provisions) Act (MERCP Act) requires a notice of entry to be issued to a landholder before drilling can be undertaken under a landholder’s land. In fact, the Department of Resources cites directional drilling as an example of an activity that requires a notice of entry in its template form Entry notice for private land (PDF 948 KB).
Earlier this year, the Department of Resources released a fact sheet clarifying this requirement to notify landholders when conducting directional drilling: Considerations when accessing private land to carry out directional drilling on adjacent land (PDF 218 KB).
Mining and petroleum tenement holders should also be aware of the potential for directional drilling to require the proponent to enter into a conduct and compensation agreement (CCA) with the landholder. A CCA will be required where the activity is deemed to be an ‘advanced activity’ under the MERCP Act.
Whilst this assessment needs to be made on a case-by-case basis, directional drilling will typically be classed as a ‘preliminary activity’ under the MERCP Act being an activity that has no impact, or only a minor impact, on the business or land use activities of any owner or occupier of the land. As such, in most instances, directional drilling will require a notice of entry but no CCA.
Despite directional drilling typically being classed as a preliminary activity, landholders have nevertheless voiced fears about the effect directional drilling may have on their properties including subsidence, devaluation of land and insurance risks.
There are not yet any court decisions providing guidance for when directional drilling will be an advanced or a preliminary activity.
Given this uncertainty, as well as the Department’s increased attention on directional drilling, we recommend companies intending to conduct directional drilling seek advice as to their legislative requirements before commencing activities.