A strategic perspective on oil and gas environmental assessment and approval

Abstract

Proponents face a range of risks and uncertainties when undertaking oil and gas exploration and development activities. As well as the normal range of development and execution challenges, proponents also need to manage complex and varied external issues including stakeholder engagement and negotiations with government regulators.

There are numerous examples of oil and gas activities that have faced and are continue to face significant environmental and community issues resulting in schedule delays, impacts on reputation and increased costs. In some cases, these issues have been proved to be showstoppers, causing a major change in the proposed development or withdrawal of the proposal.

Regardless of how straightforward a proposed upstream oil and gas activity might be, there are typically many environment-related statues, regulations and guidelines that need to be satisfied before the development or activity can proceed. A systematic sequence must be followed for a proponent to negotiate their way through multiple application, consultation and approvals rounds. Interdependent approvals processes may run in parallel as a result of multiple jurisdictions. Project details may change and uncertainties or complexities identified part-way through the sequence, are problematic and can result in re-commencement of significant components of the sequence.

The sense of disquiet within the oil and gas industry, caused by the extensive environmental regulatory requirements, has not gone unnoticed by State and Federal Government agencies. Within the past 12 months, several reviews into key pieces of legislation and the overall regulatory burden imposed on the industry have been conducted and are continuing. These reviews have allowed industry to articulate their concerns and identify risks associated with the current legislative framework. It remains to be seen what the influence that this interaction has on review recommendations and ultimately on positive changes in practice.

This paper suggests that the use of a structured environmental approvals strategy is a key tool in meeting legislative requirements and the expectations of stakeholders while still being able to meet the challenges of changes to project design, timing delays and other unanticipated hurdles. This will be illustrated by examining an oil and gas proposal through a typical sequence of environmental approvals processes. It will draw attention to the complexity faced by the industry in seeking these approvals, and will highlight how a well-constructed, environmental approvals strategy can result in a better outcome for both the proponent and stakeholders.