Australian Indigenous island community halts $3.6bn gas drilling
Australia’s second-largest independent gas producer Santos Ltd argued it had all necessary approvals to begin drilling.
Australia’s Federal Court has ruled in favour of an Indigenous group’s challenge against a drilling permit for Santos Ltd’s Barossa gas development, in what the Santos company called a “disappointing” setback for the $3.6bn project.
Traditional landowners from the Tiwi Islands led by Dennis Tipakalippa had asked the court in June to overturn the drilling approval granted by the industry regulator – the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).
Tipakalippa claimed that he and other Tiwi Islanders hold “sea country” rights including and beyond the Barossa Field, and its traditional land is closest to the gas field.
Santos, Australia’s second-largest independent gas producer, argued it had all necessary approvals following consultation with stakeholders.
The company also argued the Tiwi Islanders were not relevant stakeholders in the project so did not need to be consulted.
Judge Mordecai Bromberg thought otherwise.
“Mr Tipakalippa has established that NOPSEMA … failed, in accordance with the Regulations, to assess whether the Drilling EP (environment plan) demonstrated that Santos consulted with each person that it was required by the Regulations to consult with,” Judge Bromberg said in a ruling released on Wednesday.
“The acceptance (or permission) given by NOPSEMA was legally invalid. NOPSEMA’s decision to accept the Drilling EP must therefore be set aside,” the judge said.
Plans to appeal
Announcing a plan to appeal the decision on Wednesday, Santos said the ruling should be reviewed by the full Federal Court, given the significance of the decision to the company, its international joint venture partners and customers.
Santos’ partners in the Barossa project are South Korean energy company SK E&S and Japan’s top power generator JERA, a joint venture between Tokyo Electric Power and Chubu Electric Power.
“This is a disappointing outcome,” Santos said in a statement to the Australian Stock Exchange, adding that the relevant drilling was to occur at a site in the Timor Sea about 140 kilometres (86 miles) north of the Tiwi Islands.
Tipakalippa, who filed the challenge, said Santos had not properly consulted the traditional owners about the drilling and told the court that the Barossa project posed a risk to sacred sites and their spiritual connection to Sea Country.
“We are so happy and so relieved. We have won. The most important thing for us is to protect our Sea Country,” Tipakalippa said in a statement.
Australian Greens member of parliament Sue Higginson welcomed the ruling in a tweet and congratulated Tiwi elder Tipakalippa.
This is such good news! Well done Dennis Tipakalippa and Thank You EDO … now pack up and move on Santos – don’t suggest you can start again. https://t.co/Kjgbl9464C
— Sue Higginson (@SueHigginson_) September 21, 2022
High stakes for Santos
The stakes are high for Santos.
Barossa is the company’s biggest project, and essential for its Darwin liquefied natural gas (LNG) plant, which will lose supply from its foundation gas source, the Bayu Undan field, later this year.
Santos, which had agreed to suspend drilling for the project pending the court decision, said it had “engaged with” Indigenous representative bodies – the Tiwi Land Council and the Northern Land Council – about the proposed drilling, and the regulator had accepted its efforts to consult with Tiwi islanders.
The Barossa Field is 265km (165 miles) north of the gas-hub city of Darwin on the Australian mainland and 138km (86 miles) north of the Tiwi Islands.
Credit Suisse analyst Saul Kavonic said that if Santos fails in its appeal and has to submit a new environmental plan, that could affect the overall cost and add months or even more than a year to the project’s schedule.
Besides expanding consultations, Kavonic said, there is a risk that the regulator might broaden any review to include other considerations, such as looking at emissions, since the country’s carbon emissions targets are tighter now than when the permit was approved.