LEGAL ISSUES FOR COOPERATIVE AND CONCURRENT MINING AND PETROLEUM PRODUCTION

Abstract

Increasingly, miners and petroleum producers are seeking rights of access to the same territory to explore for and extract their favoured resource, particularly in areas where there are commercial quantities of coal seam gas.

Governments are encouraging miners and petroleum producers to maximise the extraction of their respective resources to supply the growing energy needs of Australian and international markets. These powerful drivers have led to legislation in several states including Queensland to encourage cooperative resource extraction by different parties operating in the same area.

But while legislation provides an overall framework, significant issues are left to resource companies to resolve through the development of technical and commercial solutions for the joint extraction of resources with limited government involvement. Once a technical and commercial solution is agreed, a legal agreement is necessary to cement the arrangement.

What legal issues need to be considered in agreements between miners and petroleum producers? Will exploration need to be addressed separately from production? How can flexibility be built into the agreement to allow for a change in circumstance? How can disputes be resolved and what role is there for courts and tribunals in disputes? Will standard boilerplate provisions be adequate for the agreement in hand?

This paper seeks to answer some of these questions by highlighting the commercial and legal issues relevant to negotiations with particular reference to coordination arrangements for overlapping mining leases and petroleum leases under the Queensland coal seam gas regime.