Understanding the Titles System

The prime title for exploration under the State codes is the Exploration Permit.

A full explanation on the process is available here.

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Upon discovery of petroleum or geothermal energy resource, a permittee must notify the authorities, giving details of the discovery. Before applying for a Retention Lease or Production Licence, the permittee must identify and nominate the block or blocks which cover the area of the discovery.

A Declaration of Location is made over the discovery and the permittee may then undertake further exploration and/or appraisal activities within the Location to determine more accurately the nature of the discovery.

The permittee has a two year application period after the Location is Declared in which to apply for either a Retention Lease or Production Licence. This period may be extended for a further two years on application and at the discretion of the Minister. Within this period the permit holder selects from this ‘location’ the blocks to be included in a Production Licence or Retention Lease.

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Where a commercial discovery is made, the successful explorer has a statutory right to the grant of a Production Licence. The grant of a Production Licence is for an indefinite term.

An indefinite term Infrastructure Licence may be granted under the PSLA82 only.  A Production Licence and Infrastructure Licence provide the titleholder with an exclusive right to carry out operations (e.g. installation of production platforms) for the recovery of petroleum within the licence area in accordance with an approved Field Development Plan.

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Retention Leases are awarded for non- commercial petroleum and geothermal energy discoveries. The applicant must demonstrate that the resource is not currently commercially viable, but is likely to become viable within the next 15 years.

The initial term of a Retention Lease is five years and it may be renewed provided it still meets the required commerciality criteria. When the discovery is deemed to be commercial, the Retention Lease must be converted to a Production Licence.

At any time during the five year term the government can request a review of the commercial viability of the field of the lease area.

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Normally, petroleum and geothermal exploration is carried out by the holder of an Exploration Permit. In contrast, a Drilling Reservation is a prospect-size title granted under the Petroleum and Geothermal Energy Resources Act 1967 (PGERA67) for the purpose of drilling wells and other exploratory operations, such as seismic surveying, within a period not exceeding three years tenure.

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Special Prospecting Authorities with an Acreage Option (SPA/AO) are for the purpose of enabling geophysical surveys to be undertaken in vacant areas, as a preliminary means of assessment prior to a more permanent exploration title or drilling reservation being applied for. These authorities are restricted in time to six months for the field work and generally a further six months is allowed for the option to be exercised. Drilling is not to be undertaken under the SPA title.

Application forms for SPAs are available from the DMP Petroleum Division on request, and these forms detail the information which must necessarily be provided when an application is made.

Explorers are encouraged to liaise with the DMP Petroleum Division at the earliest opportunity so that any potential difficulties or constraints may be dealt with prior to the proposed commencement date.

Generally, the grant of a SPA/AO will depend upon the rationale for the proposed program and the applicant’s financial and technical ability.

The approval of an acreage option for a SPA/AO is at the Minister’s discretion as some surveys may not be regarded as worthy of such exclusivity.

The option is only extended to the application for a title and does not infer any obligation on the part of the Minister to grant a title. Such an application will only be granted on the merits of the proposed work program in the same way as a permit application under the competitive bidding system.

Once the SPA/AO period has expired, the data is to be made publicly available.  SPA/AO are only available under the PGERA67.  An SPA for the purpose of conducting a survey can be applied for under the PSLA82.

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An Access Authority enables the holder of a permit, drilling reservation, lease, licence or SPA to conduct limited exploration activities (usually seismic surveys tying into some other known control) in vacant acreage or acreage held under another party’s title.

Where access is required in the above circumstance, the title holder, so affected, needs to be given the opportunity to comment on, but not veto, the proposed access. To hasten the approval process, it is advisable to seek the consent of the other title holder and include this consent with the application.

Access Authorities are usually limited in time to the survey they accompany. To avoid delays, applications should be made at the same time as the application for the geophysical survey or SPA.

Application forms that outline the information to be provided in support of an Access Authority application are available from the DMP Petroleum Division.

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A petroleum pipeline is defined as one that conveys naturally occurring hydrocarbons and is generally in respect to high pressure trunk lines.

Pipelines are defined as including storage tanks and ancillary works. Field gathering lines are not usually licensed as a petroleum pipeline, but are included as part of the Production Licence facilities.

Pipelines under the Petroleum Pipelines Act 1969(PP69) and PSLA82 are granted for an indefinite term.

A Pipeline Licence permits the holder, under a consent to construct approval, to construct a petroleum pipeline, which is generally buried and visually unobtrusive, along a narrow corridor which is accommodated by way of easements registered under the appropriate legislation.

The area required for a Pipeline Licence varies but usually for a pipeline proper it is a narrow corridor of about 50 metres for access purposes. Pipeline Licences are subject to stringent safety and environmental conditions.

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The legislation provides that all titleholders must carry out operations, under approval an according to good oilfield practice, including carrying out operations in a manner that is safe and prevents the escape of petroleum into the environment. In order to retain title, conditions of work must be met, reports and data submitted and annual fees paid.

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