Onshore petroleum authorities

The Petroleum Act 1998 provides a framework for the regulation of onshore petroleum exploration and development activities (excluding transmission pipelines). The Act addresses licensing, approvals and other issues including compensation, rehabilitation, access to Victoria’s petroleum geological information and royalties.

The Act seeks to ensure that petroleum exploration and development have regard for economic, social and environmental interests by taking into account the views and interests of Victorians during decision-making.

Legislation

Notes:

  1. Hydraulic fracturing is prohibited during any petroleum operation.
  2. Coal seam gas is regulated under the Minerals Resources (Sustainable Development) Act 1990, which has prohibited that it may be explored for or mined.

Authority requirements

Onshore oil and gas exploration, development and production authorities are issued and administered under the Act. The relevant authorities are required when targeting petroleum.

Notes:

  1. Petroleum is defined as any naturally occurring mixture of hydrocarbons, whether it is in a gaseous, liquid or solid state; and includes hydrocarbon mixtures with hydrogen sulphide, nitrogen, helium or carbon dioxide.
  2. Petroleum does not include coal seam gas which is regulated under the Mineral Resources Development Act 1990.

Authorities granted under the Petroleum Act 1998

Flow chart showing the tenenent process from start to finish.

Exploration permit

An exploration permit authorises the holder to carry out petroleum exploration and do anything necessary for, or incidental to, this purpose.

Applications for exploration permits are only available when the Minister for Resources invites tenders for acreage that has been released.

The Minister for Resources publishes areas of vacant acreage from time to time in the Victoria Government Gazette, inviting tender applications for exploration permits.

The tendering process allows up to 6 months for the applicants to examine data available before lodging applications based on offers to perform specified work programs. Additionally, anyone can request us to release a particular area of interest.

The work programs must set out what activities will be carried out, when those activities will be carried out, and the estimated expenditure of carrying out those activities.

The respective merits of the work programs; applicant's financial and technical ability to carry out the proposed work program; and any other criteria mentioned in the tender are taken into account in making a decision whether to grant a permit.

In granting the permit, certain elements of the work program submitted are declared as key objects. The permittee must ensure that these key objects are achieved to the maximum extent that is practicable.

An exploration permit is granted over a maximum area of 12,500 square kilometres and for a period of five years. The permit can be renewed once for another five years with a reduction in area of at least 50%.

The Permit Conditions and Administration Guideline provides information to assist industry in managing the administration of an exploration permit under the Act.

Retention lease

The holder of an exploration permit can, after making a petroleum discovery apply for a retention lease within the area of the permit.

A retention lease enables the holder to retain certain rights to a petroleum discovery where it is not currently commercially viable to develop, but might become viable within 15 years.

A retention lease can be granted for a term of up to 15 years and cannot be renewed.

The Minister may request the lessee to re-evaluate the commercial viability of petroleum production at any time during the term of the lease.

Subsequently, if the Minister is of the opinion that extraction of the petroleum is commercially viable, the Minister may direct the lessee to apply for a production licence for the purpose of extracting the petroleum.

Production licence

A production licence authorises the holder to produce and explore for petroleum from the licence area, and to do anything that is necessary or incidental to, this purpose.

The holder of an exploration permit or a retention lease can apply for a production licence within the permit or lease area. The Minister can also invite applications for a production licence over an area, which is not part of any exploration permit or retention lease, where a reservoir is already known to exist.

A production licence continues in force until it is surrendered or cancelled.

The holder of a production licence can construct pipelines (gathering lines) to convey petroleum from one place to another within the licence area. The Minister may exempt a gathering line from provisions from the Pipelines Act 2005 and consent to its construction.

Special access authorisations

A special access authorisation gives the holder the right to carry out petroleum exploration, as specified in the authorisation, but does not include the right to drill a well, or rights to petroleum in the area.

If the special access authorisation will overlap an existing authority, consent must be obtained from the holder of the existing authority before the special access authorisation can be granted.

A special access authorisation is granted for a period up to one year and can be extended for a further year (one time only).

Special drilling authorisations

A special drilling authorisation may only be applied for by the holder of an authority under the Act, or the holder of an authority under the Offshore Petroleum and Greenhouse Gas Storage Act 2010, for an area that is adjacent to the existing authority.

The special drilling authorisation gives the holder the right to carry out petroleum exploration operations, but does not include the rights to petroleum in the area.

The special drilling authorisation gives the holder of a production licence or an offshore production licence the right to carry out petroleum production, but does not include the rights to petroleum in the area.

If the special drilling authorisation will overlap an existing authority, consent must be obtained from the holder of the existing authority before the special drilling authorisation can be granted.

A special drilling authorisation continues in force until it is surrendered or cancelled, or the adjacent existing authority is no longer in force.

All authorities issued under the Act can be varied, or transferred to another party, with the approval of the Minister.

Operational requirements

Operation plan

An operation plan must be accepted by the Minister before petroleum operations are carried out. There are numerous petroleum operations that require an operation plan, and can include activities such as conducting seismic surveys, geochemical surveys and drilling a well.

An operation plan must:

  • Describe the proposed petroleum operation and the equipment to be used;
  • Describe the environment where the petroleum operation will be conducted;
  • Identify the risks that the petroleum operation may pose to the environment, to any member of the public, land or property in the vicinity of the operation and to any petroleum, source of petroleum or reservoir that the operation might affect;
  • Specify what will be done to eliminate or minimise those risks;
  • Include an emergency response manual;
  • Specify the performance objectives and standards;
  • Specify what monitoring, auditing, record keeping and reporting will be carried out;
  • Specify what will be done to rehabilitate the land affected by the operation;
  • Detail the consultation that has been, and will be, carried out with the landowner and other relevant stakeholders;
  • Detail when the operation plan will be reviewed.

Operation plans are in force for the duration of the petroleum operation, and until all rehabilitation has been completed, and may be varied if necessary.

Petroleum production development plan

A petroleum production development plan must be approved by the Minister before petroleum production may occur. The petroleum production development plan outlines how petroleum production will be undertaken within a production licence area.

The petroleum production development plan must:

  • Describe each stage of the proposed petroleum operation and the equipment to be used;
  • Describe the existing geological and reservoir data and its interpretations;
  • Detail any further studies to enhance the geological and reservoir understanding;
  • Include a reservoir management plan;
  • Specify the proposed rate of recovery of petroleum;
  • Detail when the petroleum production development plan will be reviewed.

Petroleum production development plans are in force for the duration of petroleum production, and may be varied if necessary.

Storage development plan

Petroleum may also be stored in a reservoir for future use to balance supply and demand from Victorian consumers.

A storage development plan must be approved by the Minister before petroleum storage may occur. The storage development plan outlines how petroleum storage in a reservoir will be undertaken within a production licence area.

The storage development plan must:

  • Describe each stage of the proposed petroleum operation and the equipment to be used;
  • Describe the existing geological and reservoir data and its interpretations;
  • Detail any further studies to enhance the geological and reservoir understanding;
  • Include a reservoir management plan;
  • Specify the proposed rate of injection and recovery of petroleum;
  • Detail when the petroleum production development plan will be reviewed.

Storage development plans are in force for the duration of petroleum storage, and may be varied if necessary.

Other requirements before commencing operations

In addition to the above plans, the Act requires a number of items to be in place before petroleum operations may commence. These include, but are not limited to:

  • The written consent of the Minister to carry out petroleum operations;
  • The written consent of the landowner or land manager;
  • An approved cultural heritage management plan, if required;
  • A written notice given 21 days prior to the commencement of the operation to the landowner or land manager;
  • An insurance policy for unintended consequences caused by the petroleum operation;
  • A rehabilitation bond is submitted that is suitable to the Minister.

The Minister may impose conditions when issuing the written consent to carry out petroleum operations.

Page last updated: 02 Jun 2021