Gas & Energy Transition Research Centre

Natural gas social licence: how Queensland stacks up

15 May 2020

Natural gas social licence: how Queensland stacks up

With gas expected to grow to account for a quarter of the world’s energy mix by 2040 as a key strategy to meet the global imperative of producing vastly more energy for the growing global population (at an affordable cost, and while achieving lower emissions), it is essential to understand what is involved for proponents and governments in new gas developments to meet and exceed their social licence obligations.

Research centre of excellence, The University of Queensland Centre for Natural Gas, has tested Queensland’s experience against the 'Golden Rules' of gas - a set of principles developed by the International Energy Agency to guide what it takes for natural gas developments globally to gain better social acceptance.

The ‘Golden Rules’ were developed largely against a back-drop of US shale gas developments. While Queensland’s coal seam gas (CSG) development experience has been very different, the rules were designed to be relevant for gas developments across the globe, and are generally recognised to be insightful.  

The Golden Rules are a set of 22 principles designed to guide the gas industry and governments in establishing new gas developments. It includes rules such as: the need to measure, disclose and engage; to watch where you drill; to isolate wells and prevent leaks; to treat water responsibly; to eliminate venting, minimise flaring and other emissions; to be ready to 'think big'; and to ensure a consistently high level of environmental performance.

Social research expert Dr Kathy Witt led the investigation, with a view to identifying opportunities to improve industry performance in Queensland and to show how the Golden Rules could be updated for future projects or application in other jurisdictions.

The social licence imperative

Director of UQ’s Centre for Natural Gas, Professor Andrew Garnett, says the importance of achieving and maintaining a ‘social licence’ is imperative for industry to survive and thrive.

“If the legitimacy of industry hinges, at least in part, on whether people can come to believe that they have been treated fairly and will benefit from developments, then a set of high level guidelines or rules may help set initial expectations and provide a baseline guide for ongoing monitoring of performance and identifying areas where focussed effort may be needed,” he says.

“That leaves the big question – what are the right rules?”.

With some regional tweaking, strong potential for use as an evaluation framework

Professor Garnett drove the intensive 6-month study, examining the International Energy Agency’s “Golden Rules of Gas” against the Australian context.

Using interviews with high level industry and government personnel, science and policy experts, and community leaders, the research team drilled down into the extent to which the experience of coal seam gas development in Queensland aligned with the Golden Rules, and if the rules could be used as a relevant measure of industry and regulator performance here in Australia.

The key research findings were:

  • The performance of the CSG industry in Queensland in relation to the Golden Rules was generally thought to have improved over time as the industry and the regulatory environment matured.
  • Community acceptance is underpinned by the quality and completeness of information disclosure and stakeholder engagement over the lifecycle of the industry.
  • While government granted licenses and regulatory compliance may be sufficient for the industry to get started, demonstrating a clear trajectory of improvement in social and environmental performance may be the most critical factor in gaining and maintaining social licence to operate.
  • The International Energy Agency’s Golden Rules are, in the most part, applicable to the Queensland context, and have a strong potential for use as an evaluation framework for natural gas development in Australia and overseas.

Professor Garnett said it was interesting that many of the respondents talked about the improvement they’d seen over time and the expectation that this would continue.

“The strongest expectation coming through in the analysis was for even more transparency and disclosure from both the industry and government,” he said.

“It is not about only being seen to be doing the right thing, or extensive reporting to government; it’s about demonstrably improving and transparently reporting the information - and making it widely accessible.”

Project lead, Dr Kathy Witt says the findings align with two other major socio-economic research projects being led by the UQ Centre for Natural Gas.

“Key themes are mirrored in a community indicators tool developed at UQ which measures the socio-economic impacts of large projects on local communities, and a soon to be released project which measured stakeholder trust in the CSG industry, and how and why that trust changes over time,” she said.

Dr Kathy Witt noted that, perhaps due to their origin, the research team found the rules to be rather industry-centric and recommended an evaluation tool that placed greater emphasis on community concerns and opportunities.

“There is room to improve when it comes to measures of social performance or local community impact,” she says. “However overall the study showed that with some local tailoring, the ‘Golden Rules of Gas’ form an excellent check-list for gas development projects – both established and new.”


More details:

  1. What
    • A pilot study was conducted by The University of Queensland Centre for Natural Gas aimed at understanding how the CSG experience in Queensland reflects the International Energy Agency’s Golden Rules and whether these rules can be used as a framework for the evaluation of industry performance and community acceptance in Australia.
  2. How
    • Researchers conducted interviews and surveys with selected stakeholders to gather qualitative and quantitative data in a mixed methods approach. The stakeholders included industry representatives, government representatives, community representatives, and experts.
    • Stakeholders were asked to rate on a scale of 1 to 5 (1 being poor to 5 being excellent), in their experience, (1) how well they thought Queensland CSG industry practice adhered to the Golden Rules (2) how well they thought the policy and regulatory environment reflected the Golden Rules and (3) how important they thought each of the Golden Rules were for community acceptance of the industry.
  3. Project findings
    • Measure, disclose and engage was considered the most important rule for community acceptance of the industry, but also had the largest gap between policy and regulation and importance for community acceptance. This rule addresses information disclosure, community engagement and regional benefit sharing.
    • Disclosing information and engaging with communities was seen as the most important driver of community acceptance of the industry – more important than technical and environmental compliance.
    • Across all of the Golden Rules, industry practice was rated higher than the policy and regulatory environment. Respondents commented how the development of the regulatory framework did not appear to keep pace with the rapid development of the industry.
    • Nearly all respondents pointed out that allocating a single score to the experience was difficult, as industry practice had improved considerably over time, and that the role of government as both the regulator and the enabler is complex.
    • Notwithstanding, the regulatory frameworks around groundwater management and well integrity were described as exemplary cases, with some respondents referring to these as ‘world leading’ and ‘world class’.
    • Although scoring relatively lower, engagement and integration with communities was seen to have improved over time as the industry began “to understand the need to operate as a part of the social and economic fabric of the regions it operates in”.
    • The importance of demonstrating a trajectory of improvement in each of the rules over time emerged as key to maintaining social licence to operate.
    • Be ready to think big is about planning at the appropriate scale of development, regional coordination and cumulative effects, but shows a large gap between industry and regulatory performance and importance for community acceptance. In the Queensland experience, this represents a legacy gap, where capital investment decisions made in the past and the results of those decisions and cannot easily be changed now - such as large-scale investment in infrastructure.
    • The Golden Rules translate well into an effective evaluation framework for industry performance and community acceptance.
    • The Golden Rules could be strengthened with an increased focus on social as well as environmental performance. More specifically, including social baseline assessment and monitoring of social and economic indicators, transparency in performance reporting, community engagement and benefit sharing.
    • For areas where natural gas development has not yet occurred, these findings highlight the importance of coordination and management of cumulative impacts.
  4. Full report

The International Golden Rules of Gas

The International Energy Agency devised 22 rules. These are clustered into seven key overarching categories:

Measure, disclose and engage

  • Integrate engagement with local communities, residents, and other stakeholders into each phase of a development starting prior to exploration; provide sufficient opportunity for comment on plans, operations and performance; listen to concerns and respond appropriately and promptly.
  • Establish baselines for key environmental indicators, such as groundwater quality, prior to commencing activity, with continued monitoring during operations.
  • Measure and disclose operational data on water use, on the volumes and characteristics of waste water and on methane and other air emissions, alongside full, mandatory disclosure of fracturing fluid additives and volumes.
  • Minimise disruption during operations, taking a broad view of social and environmental responsibilities, and ensure that economic benefits are also felt by local communities.

 

Watch where you drill

  • Choose well sites so as to minimise impacts on the local community, heritage, existing land use, individual livelihoods and ecology.
  • Properly survey the geology of the area to make smart decisions about where to drill and where to hydraulically fracture: assess the risk that deep faults or other geological features could generate earthquakes or permit fluids to pass between geological strata.
  • Monitor to ensure that hydraulic fractures do not extend beyond the gas bearing formations.

 

Isolate wells and prevent leaks

  • Put in place robust rules on well design, construction, cementing and integrity testing as part of a general performance standards that gas bearing formations must be completely isolated from other strata penetrated by the well, in particular freshwater aquifers.
  • Consider appropriate minimum-depth limitations on hydraulic fracturing to underpin public confidence that this operation takes place only well away from the water table.
  • Take action to prevent and contain surface spills and leaks from wells, and to ensure that any waste fluids and solids are disposed of properly.

Treat water responsibly

  • Reduce freshwater use by improving operational efficiency; reuse or recycle, wherever practicable, to reduce the burden on local water resources.
  • Store and dispose of produced water safely.
  • Minimise use of chemical additives and promote the development and use of more environmentally benign alternatives.

 

Eliminate venting, minimise flaring and other emissions

  • Target zero venting and minimal flaring of natural gas during well completion and seek to reduce fugitive and vented greenhouse-gas emissions during the entire productive life of a well.
  • Minimise air pollution from vehicles, drilling rig engines, pump engines and compressors.

 

Be ready to think big

  • Seek opportunities for realising the economies of scale and co-ordinated development of local infrastructure that can reduce environmental impacts
  • Take into account the cumulative and regional effects of multiple drilling, production and delivery activities on the environment, notably on water use and disposal, land use, air quality, traffic and noise.

 

Ensure a consistently high level of environmental performance

  • Ensure that anticipated levels of unconventional gas output are matched by commensurate resources and political backing for robust regulatory regimes at the appropriate levels, sufficient permitting and compliance staff, and reliable public information.
  • Find an appropriate balance in policy-making between prescriptive regulation and performance-based regulation in order to guarantee high operational standards while also promoting innovation and technological improvement.
  • Ensure that emergency response plans are robust and match the scale of risk.
  • Pursue continuous improvement of regulations and operating practices.
  • Recognise the case for independent evaluation and verification of environmental performance

 

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