Unconventional Resources Exploration and Development in the Northern Territory - Challenges from a Regulator's Perspective

Abstract

Abstract The production of conventional onshore oil and gas in the Northern Territory began in 1983 from the Palm Valley gas field, Amadeus Basin South of Alice Springs. Up until 2010the industry relied on conventional oil and gas development technology albeit with substantial technological advances over time. In recent years the focus of the industry has shifted to unconventional resource exploration, particularly the highly prospective shale gas resources in the McArthur and Georgina Basins. Current estimates indicate that the Northern Territory has more than 200 trillion cubic feet of prospective unconventional natural gas resources in six basins. The technologies and techniques to explore and develop petroleum resources from deep shale are innovations on technologies and practices employed for exploration and development of conventional resources with revolutionary consequences, particularly in North America. Those techniques relate to innovations and improvements in horizontal drilling with greater precision and high volume hydraulic fracturing allowing for the development of source rock with extremely low porosity and permeability. The scale and impact of the unconventional oil and gas industry in North America has led to increased public scrutiny of the oil and gas sector. In particular environmental concerns are being raised regarding contamination of potable water aquifers, sustainable water use and disposal of flowback fluids, induced seismicity, fugitive emissions, well integrity issues and Naturally Occurring Radioactive Materials (NORM) among socio-economic and moral issues. The Northern Territory Department of Mines and Energy (DME) continually adapts its procedures and regulatory framework to maintain effective regulation of the industry. This paper outlines the key issues that must be addressed from a regulators perspective in regards to the development of an onshore unconventional gas industry in the Northern Territory and DME's approach to regulation and the challenge of maintaining a current legislative framework in a rapidly evolving and highly technical industry sector.