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News 19 June 2016

 

Response to 60 Minutes

60 Minutes on the Nine Network provided questions to QGC for their program on Sunday 19 June 2016. Responses to 60 Minutes from QGC are below.

About QGC

QGC is a leading natural gas explorer and producer supplying gas to domestic and international markets. We are the developer and operator of the $20 billion Queensland Curtis LNG (QCLNG) Project, the world’s first project to liquefy natural gas from coal seams.

QGC’s operations include gas production in Queensland’s Surat Basin, a 540km pipeline network, and production and export of liquefied natural gas from Curtis Island at Gladstone. In 2014, QGC supplied the equivalent of about 36 per cent of Queensland’s gas demand.

QGC values the co-existence of the agricultural, pastoral and natural gas industries and we are committed to conducting our natural gas operations to the highest safety, environmental and social performance standards. We negotiate in good faith with landholders and, as part of the community, we are committed to being good neighbours in everything we do.

Our landholder engagement process complies with the requirements of Queensland’s Petroleum and Gas (Production and Safety) Act 2004 (Qld) (P&G Act) and QGC has more than 2,100 voluntary land access agreements across 3,800 square kilometres in the Surat Basin.

QGC undertook two years of environmental assessments to ensure the long-term impacts of our Queensland Curtis LNG (QCLNG) project could be appropriately understood and managed sustainably.QGC’s recent submission to the Senate Select Committee on Unconventional Gas provides a comprehensive overview of how we work in partnership with landholders.

60 Minutes Question:

The methods used to sign Kane Booth to the CCA covering Brentleigh?

QGC response:

QGC negotiated in good faith with Mr Booth as it does with all landholders. QGC has three wells and a pipeline easement on Mr Booth’s property Brentleigh. Mr Booth obtained independent legal advice and voluntarily entered into conduct and compensation agreements with QGC for this infrastructure.

QGC had proposed to build five additional wells, and associated access tracks and underground gathering pipelines, on the property but advised Mr Booth in April 2015 that we would not pursue negotiations for these wells unless he wished to do so.

In May 2015 Mr Booth served QGC with a claim for $11 million damages in the Supreme Court of Queensland. This claim is on the public record and the statement of claim includes the same allegations about QGC’s activities that Mr Booth has made to 60 Minutes. In February this year the Supreme Court of Queensland struck out the statement of claim after Mr Booth accepted it was deficient.

60 Minutes Question:

A statement on those methods: ie; what is standard practice and the company’s guidelines on negotiations with landholders.

QGC response:

QGC’s respectful and constructive relationship with our landholders has underpinned the successful development of the QCLNG project. As at 31 December 2015, we had entered over 2,100 land access agreements. We place a high value on maintaining landholder relationships through trust, integrity and the open, honest and two-way flow of information.

We have developed detailed and thorough policies for working with landholders to ensure we minimise our impact and give landholders a strong voice in ensuring our work co-exists with their individual requirements.

The key principles of our Land Access Strategy are:

  • QGC values the co-existence of agricultural, pastoral and natural gas industries, and we are committed to being a good neighbour in everything we do.
  • We negotiate in good faith to agree compensation and access rules with landholders.
  • We go above and beyond compliance with Queensland’s Petroleum and Gas (Production and Safety) Act 2004 (Qld) to reach voluntary access agreements.
  • Landholders have the ability to negotiate on terms and conditions of the access to their land, as well as the level of compensation to be paid for this access.
  • QGC encourages landholders to seek legal advice to ensure their informed consent and will cover the reasonable costs of legal, valuation and accounting advice throughout the negotiations.
  • QGC’s compensation agreements always include a significant commercial premium in addition to statutory compensation payments.
  • We respect that our relationship with landholders is a long-term prospect of 15-20 years in line with the life of the wells or infrastructure on their property. The individual relationship between QGC and the landholder as well as our behaviour on neighbouring properties and in the community are all important.
  • We seek to minimise the effects of our operations on landholders and make a positive contribution to the protection of the environment. We run our business in accordance with all government regulations, industry standards and the access rules that we agree with landholders.

While there is a transparent and clear process involved, there is no one-size-fits-all approach. We work with landholders to listen to their questions, provide detailed information and proceed to the next steps only after full consultation.

QGC’s practices are fully explained in our “Information for landholders” document,. which is given to all landholders.

 

Forming a Conduct and Compensation Agreement (CCA)

The ‘Planning, Investigation and Negotiation’ phase of the engagement process takes a methodical and collaborative approach to planning for infrastructure on landholder properties. This phase is centred on a comprehensive process of information gathering and feedback.

An initial consultation is held with the landholder at the conceptual stage of design. At this early stage, QGC provides an overview of activities considered for the property and seeks to understand the way the land is used by the landholder, how they operate their business and any future plans.

This allows QGC to develop our plans while taking account of factors such as existing farm tracks, areas of personal or business significance, water flow, buildings or planned improvements. QGC considers these factors in conjunction with any additional social, cultural heritage environmental, engineering, construction and operational factors to produce a conceptual design.

Once the conceptual design process is complete, a QGC representative will meet with the landholder to take them through the proposed plans for the property by providing a map showing the initial design layout. At this stage, QGC works with the landholder to schedule an appropriate time to undertake survey work.

A team of technical experts visits the property to conduct an on-site review of proposed infrastructure locations. The survey team will assess environmental, construction or cultural heritage constraints that can only be evaluated on the ground. We invite landholders to participate in the survey and explain any property information that is important to them. This is an opportunity to provide input into infrastructure location. The survey findings are then used to verify the location of proposed infrastructure and allow for detailed engineering design work to begin. Once detailed engineering design is complete, QGC presents the post-survey map to the landholder as an opportunity to review the layout in detail.

QGC provides the post-survey map to a Certified Practicing Valuer along with additional information obtained from previous consultation on grazing and farming practices so that the valuer can understand the potential impacts of CSG development. QGC instructs an independent Certified Practicing Valuer to determine compensation according to the Petroleum and Gas (Production and Safety) Act 2004 (Qld). The factors considered within an assessment for CSG development are: 

  • Value of the property
  • Areas of proposed CSG infrastructure 
  • Diminution in value to direct areas and indirect areas of impact 
  • Disturbance during construction.

Sales of similar properties in the local area are used as primary evidence to determine the value of the land.

Compensation calculations

In fundamental terms, the compensation payable to a landowner is assessed as the difference between:

(a) The value of the property before the gas impacts; and then

(b) What the market would pay for the property (on the basis of no further payments from the gas company and that the gas infrastructure is constructed).

Compensation is also paid for any disturbance during construction. This is typically calculated on a basis of costs to mitigate the loss during the construction timeframe. For example, agistment may be used to mitigate production loss during construction for a grazing enterprise. Costs considered in this scenario are mustering, trucking, agistment fees, animal husbandry and travel time.

The value of compensation paid is confidential under the terms and conditions of the CCA unless the landholder agrees to waive this confidentiality.

Landholder Support

  • QGC acts to ensure landholders have access to support and advice during the negotiation process:
  • Legal advice: QGC encourages landholders to seek legal advice to ensure their informed consent and will cover the reasonable costs of legal, valuation and accounting advice throughout the negotiations. 
  • Alternate Dispute Resolution: In the event an agreement cannot be reached, alternative avenues include a conference or an independent Alternative Dispute Resolution process. 
  • Land Court: As a last resort, either party may also apply to the Land Court to make a decision.

Once an agreement is made, landholders are welcome to contact QGC through their dedicated Land Access Consultant or through our toll-free 1800 number any time day or night.

60 Minutes Question:

The conversations and correspondence between Kane Booth and QGC’s land assessment officers before and since the signing of the CCA

QGC response:

QGC will maintain the confidentiality of Mr Booth’s conversations and correspondence with QGC.

In May 2015 Mr Booth served QGC with a claim for $11 million damages in the Supreme Court of Queensland. This statement of claim is on the public record and includes the same allegations about QGC’s activities that Mr Booth has made to 60 Minutes. In February this year the Supreme Court of Queensland struck out this statement of claim after Mr Booth accepted it was deficient.

60 Minutes Question:

Clarification on QGC’s environmental impact statement in relation to the placement of wells in proximity to intensive animal activity.

QGC response:

A number of landholders with feedlots have voluntarily agreed to coexistence of their feed lotting activities with QGC’s gas activities.

Mr Booth does not have a feedlot on his property and never has. Mr Booth obtained a development approval for a feedlot in 2007, which is still current, but has never developed a feedlot.

60 Minutes Question:

And subsequently what knowledge QGC had of animal activity on the property from the start of dealings-The timeline of installing wells on this property

QGC response:

Mr Booth obtained a development approval for a feedlot in 2007, which is still current, but has never developed a feedlot. Mr Booth, with independent legal advice, voluntarily signed agreements with QGC in 2011 and 2012, a number of years after the feedlot approval was obtained. The three wells were not drilled until August 2014.

60 Minutes Question:

The purpose of the wells – appraisal versus production

QGC response:

There are three production wells on Brentleigh, all are covered by compensation and conduct agreements (CCAs) voluntarily signed by Mr Booth.

60 Minutes Question:

The timeline of those wells being initiated for production purposes and the authority to allow production

QGC response:

The authority to allow production is Petroleum Lease 278, granted in 2011. The wells were drilled in 2014.

60 Minutes Question:

QGC’s position on those wells currently being shut down

QGC response:

QGC last conducted wellsite checks on 20 May 2016 when the wells were shut in. QGC will bring them back into production in accordance with our operations and maintenance plans.

60 Minutes Question:

QGC’s position on the standoff between Kane Booth and the company over locked gates and access to the property

QGC response:

QGC will continue to honour the agreements we have with Mr Booth to access his property. As we have done in the past we will meet with him in person to resolve his grievances.

60 Minutes Question:

What action QGC proposes in regard to the re-activation of the wells on Mr Booth’s property, and a required access to the property

QGC response:

QGC will follow the usual land access processes provided for in our agreements with Mr Booth, the Queensland Land Access Code and the Petroleum and Gas Act.

 

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