NT Fracking Update #31

135 Recommendations

The NT Fracking Inquiry’s report is in and it clearly states that there are 135 regulatory and legislative changes that would need to be implemented before the risks of fracking could be ‘reduced to acceptable levels.’

They say that the recommendations are a package deal, and can’t be cherry picked by government or industry, otherwise significant risks remain.

What this means is that fracking should not proceed unless ALL 135 measures are adopted.

Fracking should not proceed.

This poses significant problems for the government.

Cost prohibitive to implement recommendations.

First, there is the sheer scale of the financial outlay required to fund these recommendations – not least of which is the setting up of independent regulatory body to oversee this new industry.

Overhaul of resource royalty system required.

There is also the desperate overhaul required for the royalties’ system which exists in the NT.  A very tidy loophole exists here which means that royalties are only paid on the profit generated and not the actual resource value taken from the land.  This bonus is the legal doorway through which royalties can be walked off-site by multi-nationals or shonky local companies with creative accountants.  To give you an example of the scale of this sort of corporate robbery, two of the biggest fracking hopefuls in the NT, Santos and Origin, paid no company tax on a combined $15 billion in profit last financial year.

Recommendations based on good faith not reality.

The report’s recommendations rest precariously on the hope that all parties act in good faith and honestly.

But public trust is something both the fracking industry and NT Government are hopelessly short on, given a long track record of leaks, spills, accidents, contamination incidents and breaches from the resource sector at home, and gas fracking industry abroad.

Issues with the inquiry.

The Inquiry itself has been plagued by poor process, with many believing its findings that fracking risks can be managed was a forgone conclusion. Concerns include:

  1. Corruption of the social impact assessment

The social impact assessment was the headliner for a while. Contractors were brought in to determine the views of communities in the firing line of new fracking gas fields – from Katherine, down to Elliott and out to Borroloola. But they were caught out trying to coerce Indigenous landholders into accepting fracking was inevitable, and so rather than dissent they should be asking for favours from the industry and government.

An audio recording of the contractor’s behaviour by savvy community members was brought to light in the media after the Fracking Inquiry panel failed to act on local complaints about the process. Once the news broke they were excused from the study and the second stringers came in and tried it again.  But the problems with community consultation were not specific to this incident – communities right across the Territory have complained that despite strong opposition to fracking, and near unanimous support for a ban on fracking, little by way of community views made it into the final report.

It beggars’ belief that anyone of any intelligence could consider the report to come out of that anything but tainted by the original effort.

  1. Incomplete Economic Assessment of costs and benefits

One of the things which came out in the many forums was that you do not actually need any real formal qualifications to do an economic assessment.  What this means is that ANYONE can call themselves a financial assessment company and make up some algorithms, decide on some parameters, move the goal posts a bit and write a report.  Based on those reports decisions about whether to proceed with a development are mainly made.

ACIL Allen, an economic consultancy firm with major clients in the oil and gas industry was appointed to undertake an assessment of the financial viability of the industry.

But even they couldn’t put a shiny spin on its high probability findings that a fracking industry in the Territory was unlikely to be commercially successful. It found, at best, a fracking industry would employ 524 people over 25 years, and attract just $29 million in revenue per year once production began.

By comparison to the Territory’s other sustainable industries like farming, fishing and tourism which annually bring in approximately $2.2 billion apiece to the budget, the fracking industry looks more and more like a high risk/no reward experiment at our expense.

Concerns also remain about what costs aren’t factored in when looking at the fracking industry’s promises. Chiefly among those missing were the massive cost involved in the ongoing monitoring, maintenance and repair of the wells, and costs of fixing any environmental issues which could occur.

Firstly, the ongoing costs after production.

As it stands when the industry pulls out at the end of the production phase in 30-40 years it will be the responsibility of the government and tax payers to pay for the ongoing cost associated with monitoring the sites and fixing any issues.

To get an idea of the scale of the monitoring which would be required try and imagine an area 100’s km wide and long crisscrossed with 1000’s km of dirt roads linking thousands of wells which due to their construction material (concrete and steel) will at best only maintain their integrity for 100 years or so. In fact, most likely based on historical precedent these wells will start to fail within the life-time of the project.

The impact of well failure have been talked about theorised about and the probabilities weight up yet there was NO contingency plan nor pricing for ANY type of response to such incidences put forward.  The reason is simple yet sobering.  If these wells fail, there is NO FIXING the problem.  The land and water will cease to be healthy and able to support human use.  Try pricing that into your algorithm and suddenly the project becomes decidedly unappealing.

So, these wells will need to be monitored regularly and if something were amiss like fugitive methane emissions or contamination of groundwater or surface water then actions would need to be taken.

Under this arrangement if fracking is allowed then the TAX PAYER needs to be prepared to pay for the clean up and maintenance of the wells forever.

  1. Environmental Impact Assessment

Key issues revolved around where the water would come from that would be used in the fracturing process Then what to do with the water when it comes back out of the hole.

As troubling as water supply issues are it is the treatment or disposal of used water which is of bigger concern.  The chemical, mud and water cocktail which is used to fracture the earth is toxic however by being subjected to such pressures at significant depth in geological formations which have natural elements such as radioactive ores or toxic elements this cocktail can be supercharged into a very hazardous by product.  In small volume this could be treated however to undertake a SINGLE fracture each well requires about 16 Olympic swimming pools worth of water.

There is no treatment facility nor secure storage facility proposed for this industry with one plan to create ground tanks in the earth and let natural evaporation processes remove the water.  But what about the toxic crud left behind?

Sadly, even if they were able to evaporate the water and remove the crud some of the industry will be in the topics and the wet season will flood these storage areas and release this toxic mess into the land which will then percolate down through the earth to the ground water … contamination.  This process is like what has occurred with the carcinogenic runoff from firefighting foam which has come of Tindall Airbase in the NT and other locations around Australia.

Another issue with water storage ponds is the likely impact on our internationally renowned birdlife, which will be attracted to drink from these.  Massive bird deaths have been recorded at frack sites across the US and QLD.

Conclusion

At this stage it is apparent that the inquiry, although of apparent good intent, has underplayed the risks and put too much faith in our failed resource regulatory system to provide the answers.

With the fracking industry already pushing back against implementation of the entire suite of recommendations, it is likely the NT Government will face further pressure to cut costs for the industry and reduce regulation – an action that puts our communities and the environment at risk.

The report says further regional studies and the collection of baseline data is needed to determine what risks fracking gas fields will have on targeted regions. But, in what appears to be a political compromise with the fracking industry, it creates a loophole allowing these studies to take place while exploration for gas occurs.

There is NO DIFERENCE between a gas producing ‘research well’ and a well from a commercial field of wells. The impacts of large scale land clearing for well pads, pipelines, processing stations, waste water ponds, and the transportation of chemicals and polluted water all still occur during exploration, and would render regional assessments and baseline data collection meaningless to protect our regions from harm.