Report on Phase 2 Audit of Coal and Petroleum Exploration...

Audit of Coal and Petroleum Exploration Licences in NSW

PHASE 2 – REPORT

April 2012

CONTENTS

1. EXECUTIVE SUMMARY …………………………………………………….. 3

2. TASK – PHASE 2 .……………………………………………………………. 5

3. BACKGROUND ……………………………………………………………..... 5

4. METHODOLOGY …………………………………………………………….. 7

5. SUMMARY OF RESULTS …………………………………………………... 13

6. DETAILED ANALYSIS ………………………………………………………. 18

7. CONSULTATION …………………………………………………………….. 30

8. LEGAL …………………………………………………………………………. 32

9. RECOMMENDATIONS ………………………………………………………. 33

10. APPENDIX ……………………………………………………………………..

a) Summary of Typical Conditions ELs and PELs

b) List of ELs and PELs Audited in Phase 2

c) Summary of significant risk non-compliances identified by auditors

d) Project Plan and Timetable

e) Audit of Exploration Licences in NSW – August 2011 Guideline

f) Key Results of Audit

g) Breakdown of Results into Resources & Energy Units

h) Mining Act 1992, Part 11, Division 6

i) Petroleum (Onshore) Regulation 2007, Clause 27A

37

Report on Audit of Coal and Petroleum Exploration Licences in NSW – Phase 2 3

1. EXECUTIVE SUMMARY

This report provides the results of Phase 2 of the Audit of Coal and Petroleum (coal

seam gas) Exploration Licences in NSW. The audit forms part of the staged

implementation of the Government’s Strategic Regional Land Use Policy.

Phase 1 involved a desktop audit of all Exploration Licences (ELs) for coal and

Petroleum Exploration Licences (PELs) to identify areas or specific licences warranting

more detailed audits against all conditions. For a summary of typical EL and PEL

conditions please refer to Appendix A.

Out of a total 187 coal ELs and 49 PELs, 20 coal ELs and 22 PELs were identified and

then targeted for the Phase 2 audit (see Appendix B).

Phase 2 involved a detailed independent audit to identify licence holder compliance with

all conditions of ELs and PELs. The aim was to measure compliance with conditions

and from that recommend changes to process or conditions where considered

appropriate.

The audits were undertaken against all licence conditions pertaining to each licence

respectively, with the exception of EL 7223 which was not audited against

environmental conditions as it was subject to a full compliance audit against these

conditions earlier this year.

Conditions were divided into groupings for analysis by the Department of Trade and

Investment, Regional Infrastructure and Services – Division of Resources & Energy

(Resources & Energy). They included Titles, Coal Advice, Petroleum Geoscience,

Environment and Safety.

Consultation with the Office of the Environment & Heritage (OEH) and the Department

of Planning & Infrastructure (DP&I) was undertaken during the audit program and

review process.

The audits were undertaken at the licence holder’s expense by independent auditors,

approved by Resources & Energy. Requests to conduct audits were sent on 30 August


2011. All 42 audits were completed and submitted to Resources & Energy by 31

October 2011.

A Government official attended approximately 55% of the audits to observe and verify

evidence of compliance. This included officers from Resources & Energy, as well as

officers from OEH and DP&I.

The results indicate an overall high level of compliance with licence conditions. In total 87%

of the conditions audited were either fully compliant, with no observations, or not applicable

(as they had not been triggered yet). Observations, which referred to conditions that were

technically compliant but where improvements to performance could be made, were

reported against 8% of conditions.

Of the total 1355 individual conditions audited, 5% were found to be non-compliant.

There were 11 level NC1 (significant risk) non-compliances and 55 level NC2 (low risk)

non-compliances. For a summary of the significant risk non-compliances, identified by

auditors, please refer to Appendix C.

Of the 11 NC1 level non-compliances identified, on review by Resources and Energy

four were considered by to be low risk or NC2 level non-compliances, (for example the

conditions for storage of drill core).

Resources & Energy officers have acted upon, or are continuing to act upon, the

significant risk non-compliances identified. Corrective actions are also to be followed up

with licence holders for those NC1s that had no previous enforcement action.

Some reasons for non-compliance were:

Not meeting reporting requirements for geological and environmental conditions;

Environmental actions not completed satisfactorily;

Approvals not sought from Resources & Energy; and

Lack of documentation or updating of documentation required.

A total of nine recommendations have resulted from this audit. Four pertain to changes

to conditions and five pertain to changes to process.


2. TASK – PHASE TWO

Phase two required undertaking a detailed audit of licence holder compliance with all

conditions of Exploration Licences (ELs) for coal and Petroleum Exploration Licences

(PELs). Responses to the audit were then compiled, analysed and this report provides

detailed results identifying areas of non-compliance and recommends changes to

process or conditions where considered necessary.

3. BACKGROUND

On 12 May 2011, Cabinet approved a state-wide audit of coal and coal seam gas

exploration licences to review their current status and ensure holders are adhering to

conditions of their licences. In order to complete the audit within a timeframe of six

months and reduce the level of resources required, it was undertaken in two phases.

Phase 1 Phase 1 involved a desktop analysis of all existing licences to identify areas of non-

compliance including a review of:

Grant date, number of renewals, last renewal date, pending title dealings, current

expenditure commitment and security held;

Status of geological reporting; and

Surface Disturbance Notifications, list of approved activities, number of site

inspections carried out, incident reports received, enforcement actions,

rehabilitation reporting status, pending dealings, Rehabilitation and

Relinquishment Reports (only if security release is requested) and individual EL

approval requirements regarding reporting.

Following compilation of data and analysis, a report was prepared to outline the areas of

non-compliance and identify areas or specific licences warranting more detailed audits

against all conditions.


Phase 2

Phase 2 involved a detailed assessment of the licences identified through the desktop

audit process (Phase 1). Licence holders were required to provide additional

information, including evidence of compliance, to enable an effective audit of

compliance against all of the licence conditions.

Audits were carried out by independent auditors engaged at the licence holder’s

expense, including targeted field compliance inspections.

Following compilation and analysis of the results, this report has been prepared to

provide a summary of the results and recommendations for changes to process and

conditions where considered necessary.

The audit process has been the responsibility of the Department of Trade and

Investment, Regional Infrastructure and Services – Division of Resources & Energy

(Resources & Energy). It has been undertaken in consultation with the Office of

Environment & Heritage (OEH) and the Department of Planning & Infrastructure (DP&I).

Resources & Energy is also responsible for reporting the status of the audit process to

the Strategic Land Use Working Group (SLUWG).

Resources & Energy is responsible for enforcing compliance with EL and PEL

requirements.


4. METHODOLOGY

A project plan for the audit was developed, setting out responsibilities, actions to be

taken and a timetable for the audit to be completed by 30 November 2011. A copy of

the Project Plan is attached as Appendix D.

The audit covers the responsibility of a number of separate units within Resources &

Energy. The responsibilities of these units are:

Titles

Administers the grant and renewal of exploration and mining titles, including

special conditions, under the Mining Act 1992 and the Petroleum (Onshore) Act

1991.

Coal Advice

Assesses exploration reports. Checks that reports follow the guideline

(Exploration Reporting: A Guide for Reporting on Exploration and Prospecting

in NSW) and contain the relevant technical information and geological data.

Prepares the report for archiving in DIGS.

Compiles a list of titles which are not complying with exploration reporting

Condition 44/Section E and follows up non-compliance.

Provides recommendations to the Titles section with respect to the granting and

renewal of titles based on proposed and completed exploration work programs

and reporting compliance.

Provides advice on title conditions to licence holders, such as Condition 20

Core and Samples.

Engages with other Government Departments that require notifications, as per

conditions, from licence holders.

Petroleum Geoscience

Titles Management

- Reviews applications, renewals, variations and suspensions of PELs by

providing technical comments as to their merit, sufficiency and compliance.

- Receives, evaluates and accepts all reports by matching them with title

conditions, compliance and archiving.


- Monitors and gives advice on exploration work program commitment.

- Receives technical presentations on work programs, visits field operations

and monitors exploration activities of licence holders.

- Facilitates the performance of work programs and submission of reports by

giving advice and administering guidelines and policy.

- Evaluates end of title or surrender/cancellation of permit reports and

recommends release of security.

Database Management

- Receives, catalogues, analyses and accepts all reports, field data,

processed data and interpretation reports for archiving and database

management.

- Provides data to clients.

Environment (Environment Sustainability Unit)

Assesses environmental impacts of exploration activities in accordance with

Part 5 of the Environmental Planning and Assessment Act 1979.

Regulates environmental sustainability performance of exploration activity.

Provides recommendations to the Titles section with respect to the granting and

renewal of titles based on environmental performance of the explorer.

Mine Safety Operations

Regulates Occupational Health & Safety (OHS) of exploration activity.

Audit Process

A letter requesting an audit be undertaken against all of the licence conditions was sent

to 42 licence holders on 30 August 2011. A number of requirements were included

stating that the:

Audit (including preparation of the audit report) be carried out by an independent

auditor directly engaged by the licence holder, at the holder’s expense.

Auditor be accredited to undertake site audits and be approved by the Executive

Director Mineral Resources. Prior to the audit commencing, approval of the


auditor was sought in writing and had to include details establishing

independence and the absence of conflict of interest. Where possible, the auditor

was accompanied by an officer of the NSW Government to verify the audit

process.

Licence holder was to notify Resources & Energy of the date of commencement

of the audit, giving seven days prior notice and include a timetable for the audit.

Audit report was to be returned to Resources & Energy no later than 14 October

2011.

Audit was undertaken in accordance with the template and guideline provided

titled “Audit of Exploration Licences in NSW – August 2011” (refer to Appendix E).

Audit report comprise details of the audit carried out including purpose, scope,

audit team details, pre-audit planning, audit timetable, opening meeting between

auditor and licensee, audit procedure, audit outcome, discussion, closing

meeting between auditor and licensee, conclusions, recommendations and

corrective action reports.

A number of licence holders requested an extension of time to complete the audit and

these were granted. All audits were completed as requested by 31 October 2011.

To assist licence holders and their auditors review the current status of the exploration

licences and to facilitate responses for the audit, a guideline document was prepared by

Resources & Energy. The purpose of the guideline was to provide a basis to understand

the intent of the audit process, with suggested questions and methodologies to assist in

obtaining the evidence required to verify compliance or otherwise. The auditor

conducting the audit was advised that they may amend, or add to, the questions as

necessary to verify compliance with all of the exploration licence conditions. To ensure

that all conditions of the licence were audited, the auditor was to obtain, and use, the

conditions of authority specified in the exploration licence current at the time of audit.

The audit provides an examination of compliance with conditions at the time of the

audit. The audit included a review of relevant documents referred to in the exploration


licence and conditions, interviews with licensee personnel and/or inspection of the

operational areas of the site to confirm the results of the audit interviews.

Each of the licence holders submitted details of their proposed auditor to Resources &

Energy for approval prior to commencement. A review panel consisting of three

Resources & Energy staff was established to review the auditor proposals and to make

recommendations as to their suitability to the Executive Director Mineral Resources

(EDMR). This panel was established to provide some rigour to the "acceptability" test,

and included representatives from Environmental Sustainability Unit, Coal Advice Unit

and Minerals & Land Use Assessment Unit.

The licence holder was requested to provide information about the auditor including:

Qualifications

Affiliations

Experience

A statement regarding conflict of interest.

As part of the review process several of the licence holders were requested to provide

additional information prior to the approval of auditors, to enable the panel to adequately

evaluate the appropriateness of the auditor.

All of the detailed audits, conducted as Phase 2, took place between 30 August and 31

October 2011.

A number of the audits were also attended by officers from either Resources & Energy,

OEH or DP&I to validate and review the audit process. Government officers attended

55% of the audits undertaken. The audits were generally conducted over a number of

days and included both documentation review and field inspections.

The officers ensured that the auditors understood the scope of the audit, as well as

checked that enough information was being sourced to complete the audit and the

auditors had the full co-operation of the licence holders.

Feedback from these officers, indicated that the auditors were thorough and sought the

relevant information.


Analysis

A consultant experienced in the undertaking and analysis of audits, Umwelt (Australia)

Pty Ltd (Umwelt), was engaged to undertake the initial assessment of the audit reports.

The methodology used by Umwelt to review the audit reports submitted is summarised

below:

The review team reviewed each audit report and used the audit analysis

spreadsheets to record each auditor’s assessment scores for each licence

condition.

Each reviewer then undertook a brief adequacy assessment of the audit findings

by reviewing the list of audit evidence provided by the auditor and any

comments made by the auditor.

Collation and analysis of the audit findings were undertaken for both coal and

petroleum exploration licences.

Audit review findings have been documented in the analysis spreadsheets with

graphical summaries of key issues. Key results of the audit outlining levels of

compliance and observations are included in Appendix F.

The results of the initial review, as well as the final audit reports, were then further

reviewed by each of the specialist units within Resources & Energy to determine the

degree of compliance with licence conditions and the number of non-compliances and

observations.

The non-compliances and observations were then reviewed in further detail by the units

to examine the reasons for any non-compliance and to identify if they were significant or

otherwise. Recommendations on improvements to process or changes to licence

conditions were also made (refer to Chapter 9 Recommendations).


The test of compliance and/or breaches of conditions

The following table outlines the definitions used in the Compliance Audit Checklist that

was circulated to auditors as part of the audit guideline document and subsequently

used in their reports.

Table 1: Compliance Definitions C

Compliance

Adequate and appropriate implementation against current Departmental approval or conditions, or compliance with commitments made.

O

Observation

A finding which is not likely to significantly affect the operation, which does not strictly relate to the scope of the audit of compliance and which could lead to performance improvement.

NC

Non-Compliance

An inadequacy in the design and/or implementation against current Departmental approvals, licence conditions or management commitments. There are two subcategories of non-compliance: Category 1 (NC1) - a total absence of planning or implementation of a required operations element which presents an immediate risk or an isolated lapse in control in the implementation of an operations element which will lead to a significant risk, or Category 2 (NC2) - an isolated lapse or absence of control in the implementation of an operations element which may not be of significant risk.

NA

Not Applicable

Used where a condition may not have been triggered or was not applicable for that particular licence.


5. SUMMARY OF RESULTS

Level of compliance The audit results indicate an overall high level of compliance with licence conditions. In

total 87% of the conditions audited were either fully compliant with no observations or not

applicable (as they had not been triggered yet). Observations, which referred to conditions

that were technically compliant but where improvements to performance could be made,

were reported against 8% of conditions.

Of the total 1355 individual audit conditions audited, 5% were found to be non-

compliant. There were 11 level NC1 (significant risk) non-compliances and 55 level NC2

(low risk) non-compliances.

Compliance Results – Coal Exploration Licences The level of compliance recorded by the auditors was very high with only four of the 20

coal ELs audited having a reported NC1 (significant risk) non-compliance. Out of these

four ELs, there were a total of 8 NC1 non-compliances reported. There were 30 NC2

(low risk) non-compliances reported across 12 ELs. Seven of the ELs audited reported

no non-compliances. All audits, however, had some level of observation recorded. It is

noted that there are a number of instances where multiple non-compliances recorded

against a licence relate to a single incident. A number of these incidents had already

been investigated by Resources & Energy and enforcement action taken.

A number of licence conditions were noted as not assessed. This may have been

because no activity, such as drilling, was occurring at the time of the audit. EL7223 was

not assessed against environmental conditions as a full environmental audit was

completed by Resources & Energy earlier this year.

The only NC1 non-compliances reported in the category of Environment was in relation

to EL 6288, which had four reported. Three of these reported non-compliances all

related to the same incident, where an exploration activity was carried out without

appropriate secondary approvals from Resources & Energy. Enforcement action had

already been undertaken in relation to this incident. The fourth NC1 related to the use of

non-native pasture grass in the revegetation of a drill site in a woodland area.


Most non-compliances (NC1 and NC2) reported under the Coal Advice category related

to reporting requirements or the incorrect storage of drill core samples. Following further

inquiry, Resources & Energy have concluded that storage is adequate. These non-

compliances are all matters that should be readily observable by the Resources &

Energy through its administration of exploration licences.

A number of observations by auditors noted discrepancies between the reporting

requirements under the terms of the licence and the obligations required by the Mining

Regulation 2010.

There were two reports of NC1 level non-compliance and four NC2 level non-

compliances regarding safety related conditions. The NC1 recorded against EL6433

related to risk assessment process and inadequate documentation. The NC1 recorded

against EL7223 related to non-conformance with safety management plan (SMP)

requirements and poor maintenance of records. Following further inquiry, Resources &

Energy have concluded that these two NC1 level non-compliances regarding safety

related conditions were in fact lower level NC2 level non-compliances.

There were no non-compliances reported for any ELs under the category of Titles. Out

of the 42 licences, five were audited regarding their compliance with special conditions.

Auditing of these conditions was variable due to the nature of the requirements under

the conditions.

The following charts show a breakdown of the audit results for each EL and the status

against individual Resources & Energy categories of responsibility.


0

5

10

15

20

25

30

35

40

45

50

Auth

404

EL

4968

EL

5883

Auth

438

Auth

315

Auth

311

Auth

342

Auth

444

EL

4443

EL

5072

EL

5297

EL

5410

EL

5892

EL

6288

EL

6433

EL

6505

EL

6523

EL

7223

EL

7270

EL

7406

Compliance Status by Licence Coal ELs

Not Assessed NA C O NC2 NC1

0

50

100

150

200

250

300

350

400

Summary of Compliance Status by DRE Category Coal ELs


NC1 4 2 2 0 0

NC2 16 8 4 0 2

O 18 9 2 4 0

C 231 75 23 73 37

NA 103 45 8 30 4

Not Assessed 21 2 1 9 2

Environment Coal Advice Coal Safety Titles Special Conditions


Compliance Results – Petroleum Exploration Licences The level of compliance recorded by the auditors was very high with only two of the 22

PELs audited having a reported NC1 (significant risk) non-compliance. Out of these two

PELs, there were a total of three NC1 non-compliances reported. There were 25 NC2

(low risk) non-compliances recorded across 13 PELs and nine of the PELs audited were

fully compliant. All audits, however, had some level of observation recorded.

Two licences reported NC1 level non-compliances. The non-compliance reported for

PEL445 related to the suspected dumping of drilling muds. Two NC1 level non-

compliances were reported for PEL458. One related to the failure to properly

rehabilitate a site, while the other non-compliance related to possible acid sulphate soil

issues and the lack of appropriate surface water and groundwater monitoring.

The NC2 level non-compliances reported under the Petroleum Geology category

generally related to deficient, absent or late exploration reports.

There is only one safety condition specifically prescribed in the PEL, however licence

holders are also required to comply with the Schedule of Onshore Petroleum

Exploration and Production Safety Requirements as outlined in Clause 27 of the

Petroleum (Onshore) Regulation 2007. A number of the requirements of the Schedule

of Onshore Petroleum Exploration and Production Safety Requirements were audited

as these were included as typical questions in the safety and environment categories in

the audit guideline.

No NC1 level compliances were reported for any PELs under the safety category.

No NC1 level non-compliances were reported under the Titles category for PELs.

The following charts show a breakdown of the audit results for each PEL and the status

against the Resources & Energy categories of responsibility.


0

5

10

15

20

25

30

PEL 1 PEL 2 PEL 4 PEL 6 PEL 12 PEL 13 PEL 16 PEL

238

PEL

267

PEL

285

PEL

427

PEL

428

PEL

437

PEL

443

PEL

445

PEL

450

PEL

452

PEL

455

PEL

456

PEL

458

PEL

461

PEL

479

Compliance Status by Licence Petroleum PELs


0

50

100

150

200

250

300

350

400

450

Summary of Compliance Status by DRE Category Petroleum PELsNot Assessed NA C O NC2 NC1

NC1 3 0 0 0

NC2 15 5 2 2

O 37 15 5 18

C 299 15 13 65

NA 49 0 1 15

Not Assessed 19 5 0 6

EnvironmentPetroleumGeology

Petroleum Safety Titles

Please refer to Appendix G for a full summary of compliance by Resources & Energy

category.


6. DETAILED ANALYSIS

Each of the specialised units within Resources & Energy analysed the audit results, in

particular the non-compliances and observations.

Overall, the level of compliance across conditions for both coal and petroleum

exploration licences was high, with 87% of the conditions having no non-compliances or

observations recorded against them.

The following comments were provided:

Titles (Coal)

Only one coal exploration licence (Authorisation 444) was reported as being non-

compliant (NC2) against two conditions:

In regard to these two non-compliances, the licence holder had provided the

required information, however it was outside the timeframe given. The reason

being that this particular title is jointly held and both parties have been operating

independently.

Observations were made against four coal exploration licences, three of which were

against condition 32. The other was made against condition 21:

Condition 32 is an overarching condition that indicates that for the purpose of

condition 29 (the security held against the title), the licence holder shall be

deemed to have failed to fulfil the obligations of the licence if they fail to comply

with any condition, provision, condition of consent or approval, any provisions of

the Mining Act 1992 or Mining Regulation 2010 or any direction or instruction

given by the Resources & Energy. For the purpose of the audits, as per advice

from Coal Advice, Mine Safety and Environment Sustainability Unit, no non-

compliance or observation from the audit would result in the security being taken

and used for the fulfilment of the licence holder’s obligations. As such, it is

considered that condition 32 would not come into effect for any of the

observations made.

Condition 21 relates to the notification of utility holders in relation to transmission

lines, communication lines, pipelines and other public utilities where exploration


activities may impact on the infrastructure. The auditor indicated that no drilling

had occurred during the current licence period, therefore there is no non-

compliance with this condition, however previous notifications were considered to

be inadequate.

Titles (Petroleum)

Only two petroleum exploration licences (PEL 2 & PEL 443) were reported as being

non- compliant (NC2) against one condition each:

PEL 2 was reported as non-compliant for condition 17 (the work program

specified in the third Schedule is to be completed by the licence holder to the

satisfaction of the Minister). Whilst the auditor gave a status as NA for Condition

17, the assessment of the work program against the requirements of Schedule 3,

which was included in the auditor's compliance tables, indicated non-compliance

in relation to a variation to the work program which was not notified and approved

by the Resources & Energy. Work programs are often varied due to delays

caused by approvals, weather, land access and equipment availability. These

reasons are acceptable and licence holders do not have influence over these

factors. The licence holder is in contact (via email or phone) with the Manager

Petroleum Geoscience when such circumstances occur, which is considered

satisfactory.

PEL 443 was also reported as non-compliant for condition 17. The auditor

assessed this condition with two items, NC2 and O. It was noted that Item 1 of

the program of work was completed and a report submitted to Resources &

Energy, however Item 2 had not been completed. The auditor commented that

the current management team were understaffed which led to delays in report

submission. The technical manager consults with Manager Petroleum

Geoscience (via email or phone) about the works undertaken and the planned

work, which is considered sufficient.

From the comments provided by Petroleum Geoscience in relation to these reported

non-compliances, Resources & Energy does not consider that non-compliances have

occurred.


Observations were made against 12 petroleum exploration licences, most of which were

against conditions 16 (nomination of an exploration manager) and 17 (completion of a

work program):

For condition 16, many licence holders provided details to Resources & Energy

of the technical advice that they have access to without actually nominating a

technical manager and providing that persons details. This is considered to be

acceptable to Resources & Energy.

In regards to the observations for condition 17, some titles have variation

dealings recorded in the Titles Administration System so variations to work

programs have been applied for by the licence holders (specifically PELs 4, 267

and 427). Additionally, if the licence holders have not complied with the proposed

program of work when the licence is due for renewal, they will have to justify why

the program hasn’t been met and substantiate why a licence should be renewed.

In relation to the observation regarding condition 27(security) against PEL 445,

additional security for the drilling program approved in February 2011 has been

provided.

The observation made against PEL 6 regarding plug and abandonment of one

CSG core hole, in accordance with engineering specifications but without

detailed assessment of implementation or Resources & Energy approval is

noted. It was also noted that other nearby core holes were suitably assessed and

approved by Resources & Energy.

Coal Advice

Eight coal exploration licences were noted as being non-compliant against either

condition 38 (core samples), 42 (technical management) or 44 (geological reports). Two

of these licences recorded NC1 non-compliances:

The audit for EL 7223 reported inadequate storage of drill core. Resources &

Energy does not consider the storage of core to be an NC1 non-compliance.

While the auditor believed that plastic shrink wrapping of core was necessary, it

is not typically done. Ease of access to stored core is also typically not an issue

as reviewing logged and sampled core occurs infrequently. Drill core is


reasonably durable and there is low risk of core damage if it is temporarily

exposed to weather before final storage. Malicious damage is a very low risk

due to the remote location of the site.

The audit for EL 5072 reported inadequate geological reporting. Inadequate

geological reporting is not considered a NC1 non-compliance by Resources &

Energy. The implementation of amendments to the Mining Act 1992 in

November 2010 brought in new reporting formats and compliance requirements,

with a 12 month transition period to ensure all companies became compliant with

the new requirements. All reporting on EL5072 is now up to date, adequate and

in the correct format.

The additional non-compliances were rated as NC2:

There were a number of non-compliances reported against condition 38. The

auditor noted that no drilling has occurred during the current licence period for EL

5297, however, previous management relating to the requirements of this

condition were inadequate.

For condition 42, Authorisation 311 and 315, as well as EL 5297, were noted as

non-compliant as no formal advice to Resources & Energy of a change of

technical manager was provided. It has been noted that advice was provided to

the Coal Advice section via e-mail.

For condition 44, a number of licences, EL 5297, EL 5892, EL 4968 and

Authorisation 404 had non-compliances identified due to reports being late or not

submitted at all. Coal Advice has noted that all of these reports have been

provided and the non-compliance has been reported because they have been

late or provided inadequate information. A possible reason is companies could

not provide evidence they had submitted the reports so auditors noted a non-

compliance. All current reporting is up to date for these licences.

Of all the observations raised that are the responsibility of the Coal Advice section,

conditions are being complied with and are not considered an issue, except for

submission of annual reports from EL 5883. The audit report stated that two annual

reports were sighted and that they were accepted by Resources & Energy. Resources &


Energy’s evidence suggests that the report submitted was rejected and that a

replacement has not yet been received.

It has been noted that there are a number of conditions where the auditor has reported

a ‘not applicable’ response. This is considered to be appropriate as many conditions

would not have been triggered in the activities of the licence.

The Mining Act 1992 has provision for fines for non-compliance with reporting. A fine is

a last resort and Resources & Energy now does a monthly check and notifies licence

holders if they are late and requests reports be submitted promptly.

There is a lack of awareness of what some of the licence conditions mean or an

ignorance of conditions amongst employees of the licence holders, which will need to

be addressed in an ongoing education process.

Petroleum Geoscience

Five petroleum exploration licences were noted as being non-compliant against

condition 21 (reports and format for fixed agenda operations):

PEL 2, PEL 4, PEL 267, PEL 285 and PEL 285 had non-compliances reported

due to reports being submitted outside the required timeframe or for reports

lacking sufficient detail, as required by the licence condition. A reason for this

may be inconsistency between the guidelines and condition, regarding the

expected content of reports.

All the observations raised in the audit reports that fall under Petroleum Geoscience’s

responsibility relate to conditions 21 and 22 (reports and format for fixed agenda

operations). The following comments were made:

Cuttings and core were not always submitted (not accepted) even though they

were offered and made available to Resources & Energy. This raises a question

of how long samples should be kept by licence holders and if they will be made

available to Resources & Energy in the future. A review of storage capacity at

Resources & Energy’s Londonderry storage facility is also required.

Some licence holders did not submit all of the required data.


Observations relating to the late submission of reports were also raised. In some

cases interim reports were submitted. Petroleum Geoscience does not penalise

companies for delayed submission, as long as the report was submitted in a

reasonable timeframe. It is also not considered a faulty submission to provide a

non-dated report. EROL (Exploration & Environmental Reports Online

Lodgement) has a tool indicating when the report was submitted.

Observations also indicate that receipt of submission is not always provided by

Resources & Energy. It should be noted that EROL sends an auto response that

the report was submitted (even if the report is not satisfactory). There is no

receipt for submission of statistics and reminders are only issued if statistical

returns are not submitted.

Restrictions on file size submission via EROL were communicated to Resources

& Energy.

The reasons for delay and non-compliance in report submission are as follows:

The Petroleum Act guideline is not attuned to the coal seam gas exploration and

production conditions. The Act must be reviewed and amended.

Submission of well completion reports six months after completion of operations

is not realistic. One (1) year might be considered.

There are too many reports to submit (such as annual, operational, end of work

program, relinquishment, interim, statistics etc).

The audit reports suggest a trend that Resources & Energy does not provide feedback

regarding the submission of reports. Resources & Energy’s approach has been to

provide “negative feedback”, such as report rejection when important information is

missing. If the report is accepted there is no feedback given to the company as there is

no tool in EROL to automatically send a message that the report is satisfactory. This

feedback is provided to the company upon request.

Safety (Coal)

Five coal exploration licences were noted as being non-compliant against either

condition 26 (maintenance of open drillholes) or 36 (safety of operations). Two of these

licences recorded NC1 non-compliances:


The audit of EL 7223 identified NC1 non-compliances relating to inadequacies

with Safety Management Plans, specifically relating to:

o Not all drill rig sites undertake or maintain risk management

documentation in line with site Safety Management Plan (SMP)

requirements. This relates to the "Take 5" hazard awareness tool, which

was not being used as required in the SMP. Given that a SMP was in

place for the site and there is no requirement to develop an SMP in the

legislation referred to in the licence condition, Resources & Energy

believe this non-compliance is more appropriately categorised as an NC2

(an isolated lapse or absence of control in the implementation of an

operations element which may not be of significant risk).

o Records not being maintained. This is related to administrative elements

of the licence condition, and as such does not have an immediate risk and

is more appropriately categorised as an NC2.

The audit of EL 6433 identified that risk was not adequately documented or

aligned with a recognised risk assessment process (International or Australian

Standards). This is not considered an NC1 non-compliance in that there is no

specific requirement to do the Risk Management Plan to the specifications that

the auditor has indicated. This again is more appropriately categorised as an

NC2.


For condition 26, the audit report for Authorisation 404 noted that Resources &

Energy was not notified that two holes were left open. The audit report for EL

6433 noted that a landowner had requested that a hole be left open, but no

evidence was sighted to confirm this request.

For condition 36, audit reports for EL 5410 identified non- compliances relating to

inadequacies with Safety Management Plans. EL 6288 identified that material

safety data sheets (MSDS) were not available for all for materials held by the

drilling contractors on site and some MSDS were more than five years old.

Coal Safety believes these non-compliances are related to administrative elements and

a failure of licence holder’s safety management systems, rather than an immediate risk.


As such no serious problems are anticipated. Completion of corrective actions and a

review of systems by licence holders are expected to rectify these issues.

The observations raised in the audit reports that fall under Coal Safety’s responsibility

relate to condition 36 (safety of operations):

EL 5883 audit report indicates the licence holder is relying on the implementation

of the Quarry Safety Management Plan to address safety.

EL 5297 audit report indicated that while no drilling has occurred during the

licence period, previous management relating to the requirements of this

condition were noted as inadequate. This was not seen as an immediate risk.

Safety (Petroleum)

Two petroleum exploration licences were noted as being non-compliant against

condition 18 (safety):

The audit report for PEL 445 noted that two non-compliances were raised

relating to no evidence of strata leak off tests being undertaken and a lack of

safety signs at well sites.

PEL 458 noted that two non-compliances were detected relating to site F-3

where the cellar cover plate handles were considered a hazard to people and

animals and the hazard was not properly fenced off.

The reasons for non-compliance can be attributed to a failure of risk management in the

case of PEL 458 where a risk control measure has itself introduced a hazard. The non-

compliances appear to be isolated incidents and no serious problems are anticipated in

undertaking corrective actions. A review of systems by licence holders is expected to

rectify these issues.

The observations recorded in the audit reports regarding safety relate to condition 18

(Safety):

PEL 445 noted an observation in relation to the lack of a site specific safety

management plans (SMPs) for Keerrong 1 or Tunglebung 1, although specific

SMPs had been prepared for other sites.


PEL 13 and PEL 16 identified an opportunity to better integrate risk identification

documentation and/or develop a 'roadmap' which describes how separate risk

identification tools interact with each other.

PEL 238 noted that some job safety analysis (JSA) documents had become

separated from the permit to work documents.

PEL 285 identified two observations in relation to a damaged para-webbing

fence, with the licence holder unable to demonstrate follow-up and completion of

corrective actions identified during a previous drill rig audit on one of its

contractors.

The audit report for PEL 437 noted lack of awareness and understanding of

emergency response procedures.

It is anticipated that all these observations will be addressed with a review of the licence

holder’s safety management systems.

Environment (Coal)

Eleven coal exploration licences were noted as being non-compliant against at least

one of the many environmental licence conditions:

Four NC1 level non-compliances were reported in relation to EL 6288. Three of

these reported non-compliances all related to the same incident, where an

exploration activity was carried out without appropriate secondary approvals from

Resources & Energy. Enforcement action by Resources & Energy has already

been undertaken in relation to this incident and subsequent performance of the

company has been reported as very good. The fourth NC1 related to the use of

non-native pasture grass in the revegetation of a drill site in a woodland area. It is

agreed that this is an NC1, or serious non-compliance, and Resources & Energy

will resolve corrective action with the licence holder involving modification of their

environmental management procedures for revegetation.

All other non-compliances were classified as NC2 level and spread across a

number of conditions relating to environment. Examples include not having

Environmental Management Plans approved by Resources & Energy, minor

rehabilitation issues, lack of detail in rehabilitation reports, minor diesel spill,

rubbish on site, lack of formal landholder liaison programs and lack of risk


assessments for gas blowouts not being provided to Resources & Energy for

approval.

Where non-reporting has been identified, this may indicate new or inexperienced

personnel whose main functions are that of geologist or engineer. For the smaller

explorers the provision of experienced reporting staff may not be cost effective.

The exploration sector appears to be dynamic in the level of vested corporate interests.

This is reflected in changing joint venture partners and to some degree the

management nexus between authorised licence holder and exploration program

operator. This can result in inadequate systems of environmental management or poor

communication of those systems at operator/contractor level. In particular, sector

improvement in the areas of due diligence and internal auditing should apply to address

these non-compliances.

A number of observations have been reported against a range of the environmental

conditions, again noting lack of formal submission of information to Resources & Energy

or weaknesses in licence holders documentation systems and processes.

All licence holders have been requested to confirm that corrective actions have been

implemented or have a plan in place to implement them as soon as possible.

Environment (Petroleum)

Nine petroleum exploration licences were noted as being non-compliant against at least

one of the many environmental licence conditions. Three NC1 level non-compliances

were reported:

The non-compliance reported for PEL 445 related to the suspected dumping of

drilling muds. Resources & Energy agree with the classification of the non-

compliance to be of significant risk. Corrective action and improved procedures

are to be sought from licence holder and confirmed by Resources & Energy.

Two NC1 level non-compliances were reported for PEL 458 and Resources &

Energy agree with the classifications. One of these related to the failure to

properly rehabilitate a site. Resources & Energy note the audit findings in relation

to drill site rehabilitation and the status of these sites will be reviewed prior to


completion of the title and release of the security deposit. The other related to

possible acid sulphate soil issues and the lack of appropriate surface water and

groundwater monitoring. These matters have been addressed by the licence

holder in subsequent activity applications to Resources & Energy.


The NC2 level non-compliances were spread across a number of environment

conditions including minor spills, poor documentation or landholder agreements,

not gaining Resources & Energy approval for changes to work program, reports

not being submitted to Resources & Energy and slow rehabilitation of sites.

For PELs the non-compliances appear to demonstrate poor record keeping and lack of

timeliness in project management, lack of progressive completion and rehabilitation of

well sites. In most cases the non-compliances are not likely to have a significant impact

on the environment. They would be addressed in corrective actions arising from the

audit and in the final rehabilitation and relinquishment reporting process, which is prior

to expiry of the exploration title and security deposit review. Where poor record keeping

was noted, it is not suggested that the event did not occur, but rather that documentary

evidence was not provided.

A number of observations have been reported against a range of the environmental

conditions again noting lack of formal submission of information to Resources & Energy,

weaknesses in licence holder’s documentation systems and processes and minor on

site issues.

All licence holders have been requested to confirm that corrective actions have been

implemented or have a plan in place to implement them as soon as possible.

Variations in audit reporting

The following variations in audit reporting were raised when analysing the audit report

information:

The quality of the auditing undertaken varied considerably across the range of

auditors. Some auditors undertook a comprehensive assessment against the


specific conditions of the licence, whilst others generally only addressed the

Resources & Energy template questions.

An initial review of the audits indicated that a large percentage of the auditors had

simply followed the template document and had not considered whether the

template contained all conditions present in the EL being audited. As a result,

licence holders for 7 PELs and 5 ELs were asked to provide a revised audit report

addressing all of the conditions of the title.

Where a licence condition had several different components, some auditors

assessed compliance against each specific component, whilst others only provided

a compliance status for the condition as a whole.

Where Category 2 or 3 activities had been undertaken within a licence area and

additional approvals obtained from Resources & Energy, some auditors also

undertook an assessment of compliance against the specific conditions of the

approvals given. However, this was not common and was only undertaken by a

select group of auditors.


7. CONSULTATION

The Government decision stated that the Audit process will be undertaken in

consultation with OEH and DP&I.

On the 16 June 2011 copies of the project plan and the top level spreadsheets of data

for coal and petroleum were forwarded to OEH and DP&I. The matter was placed on the

agenda for the Coal Seam Gas Working Party (CSGWP) which includes representatives

of OEH and DP&I plus others, for a status report. The status report on the audit was

provided to the CSGWP at their meetings on 6 July, 2 August, 30 August, 29

September and 4 November 2011 respectively.

A face to face meeting between Resources & Energy and OEH representatives was

held on 1 August 2011. DP&I were unable to provide a representative for the meeting.

A face to face meeting between Resources & Energy, OEH and DP&I was held on 15

August 2011. From this meeting, it emerged that OEH and DP&I were strongly of the

opinion that more focus needed to be put on the environmental breaches, and as such it

was agreed that all non-compliant ELs in the area of environment would go straight

through to Phase 2 of the audit. It was agreed that the non-complying PELs for

Petroleum Geoscience would be filtered to identify the licences that had multiple and/or

significant non-compliances, as opposed to less significant non-compliances. Only the

PELs with significant non-compliances would progress to Phase 2 of the audit.

Following the meeting on 15 August it was also agreed that PEL 2 (Camden) and EL

6505 (Caroona) would be included in Phase 2 of the audit due to the sensitivity and

contentiousness of each of the licence areas respectively.

A further meeting on 22 August concluded that officers from Resources & Energy, OEH,

DP&I would attend some of the initial audits to see if the audit program is robust and to

make any minor changes as required. It was agreed that Resources & Energy would

establish the geographic areas and the licences to form part of the initial audits, and

provide these to OEH and DP&I to then indicate who would contribute from their specific

Departments. It was also agreed that DP&I would indicate if a number of ELs and PELs


need further assessment in relation to being in a sensitive or contentious area. It was

decided to add PEL 2 to the list of titles to be audited.

A further meeting was held on 5 September 2011. DP&I were unable to attend this

meeting, with officers from OEH attending via teleconference. At this meeting it was

agreed that government officers would attend audits in a verification role. It was also

agreed the number of licences to be visited would be between 30% and 50% of the total

being audited. Officers from OEH confirmed their commitment to attend some of the

audits in a verification role. Subsequent discussions with DP&I personnel also

confirmed their commitment to provide officers to attend some audits. It was also

agreed at this meeting that once audits had been returned, that consultation between

Resources & Energy, OEH & DP&I take place during the review and analysis stage to

provide appropriate input.

A briefing session to explain the role of government officers attending audits in a

verification role was held on 13 September 2011. Officers from OEH and DP&I attended

the briefing sessions to gain a clearer understanding of their role. Discussion regarding

the role was included in the briefing session and clarification of the role was made.

Following attendance at some of the audits, the officers provided feedback on the

adequacy of the auditor performance, confirming that the audits were being conducted

thoroughly and professionally.

Another meeting was held on 1 November 2011 with Resources & Energy staff, with

OEH and DP&I personnel attending via teleconference, to discuss the audit findings and

the level of compliance reported. An outcome of the meeting was for Resources &

Energy to confirm with all licensees audited that they would implement necessary

corrective actions to follow up on non-compliances and observations noted in the audit

reports.

The progress of the audit has been provided to the monthly meetings of the

Government’s Strategic Land Use Working Group.


8. LEGAL

Authority to require independent audits to be undertaken

Power exists in respect of coal licences under Part 11, Division 6 of the Mining Act 1992

to impose a condition on the licence that an audit can be required, including the

accreditation and regulation of the auditor. The Mining Act 1992 No 29, Part 11, Division

6 is attached at Appendix H.

Regulatory amendment was undertaken to provide a similar power under a condition in

respect of petroleum licences. The Petroleum (Onshore) Regulation 2007 has been

amended to include clause 27A that allows a condition to be imposed on a petroleum

licence requiring a mandatory audit. Clause 27A, attached at Appendix I was gazetted

on 2 September 2011.

In respect of the coal and petroleum licences audited, licence holders were requested to

undertake compliance audits utilising independent auditors. The reason for a formal

“request” was to provide as much notice as possible to meet the Government’s audit

timetable for collating the responses, analysing results and completing the report by 30

November 2011.

Although legislation was in place should any licence holder object to the audit, all

licensees identified for a Phase 2 audit undertook the audits voluntarily.


9. RECOMMENDATIONS

The recommendations below outline proposed changes to process and conditions,

following detailed analysis of the audit results.

Changes to Conditions

1. All conditions on both ELs (Exploration Licences) and PELs (Petroleum Exploration Licences) be reviewed to ensure conditions are enforceable and represent best practice.

A number of the conditions are very general in nature, which makes them

difficult to enforce. Some conditions contain references to documents that have

been superseded or prescribed practices that no longer represent best practice

in the exploration industry.

Other items that need to be reviewed include a:

Requirement for timeframes to be specified for certain actions that must be

undertaken by the licence holder.

Review of delegations to ensure they are the most appropriate.

Requirement that limits exploration activity within set hours of operation.


2. All reporting requirements be reviewed to improve efficiency and effectiveness of the reporting process.

As part of the review of conditions, a detailed review of all reporting requirements

is required. This review needs to take into consideration consolidation of reports,

timeframes for reporting, frequency and who they need to be submitted to.

As exploration reporting requirements are now identified in the Mining Regulation

2010 and Petroleum (Onshore) Regulation 2007, reporting conditions need to

compliment those listed in the Regulations.

3. The assessment of exploration activities by the category system be reviewed and clarified so that explorers have a clear understanding of when further approvals are required.

The system of requiring further approval for more intensive activities is sensible

in that it potentially provides a good balance between excessive regulatory

burden and environmental protection. The problem is that some of the Category

1 activities are poorly defined and open to broad interpretation. In some cases

the requirements are not uniform across all ELs.

The same category assessment and approval requirements need to also apply to

both coal and petroleum (and other minerals). It is also not clear why the

category approval conditions for petroleum and coal are different given so many

of the category triggers for coal would also be appropriate for petroleum

exploration activities.

4. The Petroleum Legislation and the Schedule of Onshore Petroleum

Exploration and Production Safety Requirements be reviewed in line with new government requirements.

The Schedule is currently under review and it is planned to implement changes in

a staged manner. Revisions will clearly differentiate between environmental and

safety conditions. Guidelines will be released initially to cover drilling

competency, well integrity, well head emission detection and reporting and


hydraulic fracturing. Legislation needs to be reviewed to address specific industry

risk areas and to take into account implementation of the overarching Model

Work Health & Safety Act and Regulation.

Changes to Process

5. An audit program be implemented to ensure licence holders are complying with conditions with a focus on poor performers.

An audit program, would ensure that any potential issues regarding the granting

and regulation of exploration licences are raised and dealt with as early as

possible.

6. A business case be prepared looking at the feasibility and cost of improving linkages between departmental exploration licence information systems within the Division of Resources & Energy.

Although information on exploration licences is filed appropriately, units currently

administer their own databases. Better linkages between systems would allow

units to review and take into consideration all aspects of an exploration licence,

rather than the isolated components that individual units have responsibility for.

There needs to be a more consistent approach to electronic filing and

standardised naming conventions. Improved document management, in addition

to better liaison across Resources & Energy units, will ensure that the monitoring

and regulation of licences is more effective.

7. Following the development of the new Environmental Assessment Guidelines, a review of the auditing and assessment processes for environmental performance be undertaken.

This needs to include the frequency and application of voluntary and targeted

compliance audits. The review needs to include environmental incident reporting,

investigation and enforcement.


8. Undertake a review of government agency referral and approval process for Review of Environmental Factors (REFs) and Surface Disturbance Notices (SDNs).

When other government agencies, such as DP&I, OEH, Office of Water, have

overlapping approval and environmental assessment roles, inconsistencies have

been noted in the referral and approval process. To limit any inconsistency, a

nominated determining agency protocol is recommended.

9. Undertake an internal review of the effectiveness of the EROL (Exploration & Environmental Reports Online Lodgement) system.

Undertake an internal review to gauge the effectiveness of issues such as:

notification if a report is satisfactory; automated reminders; and streamlining to

cater for recording of submitted reports and rejection reminders.


Appendix A i) Typical Summary of Exploration Licence Conditions Definitions

A Categories of Prospecting Operations

B. Sensitive Areas

C. Other Definitions

Section A APPROVAL OF PROSPECTING OPERATION

1. Prospecting Operations Permitted under the Exploration Licence

2. Prospecting Operations Requiring Further Approval

Section B SPECIAL AREA CONDITIONS

3. Exempted Areas

4. State Conservation Areas (SCAs)

5. Additional Sensitive Land

6. Additional Sensitive Land

7. Sydney Catchment Authority Areas

8. Native Title Areas

9. Wetland Areas

Section C ENVIRONMENTAL MANAGEMENT OF PROSPECTING OPERATIONS

10. Environmental Management Conditions

11. Environmental Harm

12. Environmental Management Plan

13. Trees and Vegetation

14. Roads and Tracks

15. Prevention of soil erosion and pollution

16. Refuse, Chemicals, Fuels and Waste Materials

17. Public and Private Property

18. Drilling

19. Drilling (Additional for Group 8 and 9 Minerals)

20. Core and Samples

21. Rehabilitation of land

22. Environmental Management Report

23. Environmental Incident Report

24. Additional Environmental Reports

25. Security


26. Single Security

27. Single Security (extended)

Section D GENERAL CONDITIONS

28. Aboriginal Land Council Notification

29. Safety of Operations

Section E EXPLORATION PERFORMANCE

30. Expenditure

31. Completion of Exploration Program

32. Technical Management of Exploration

33. Cooperation Agreement

34. Community and Landholder Liaison Program

Section F: OWNERSHIP

35. Minister’s Approval of Change in Control

Section G: SPECIAL CONDITIONS

36.


ii) Typical Summary of Petroleum Exploration Licence Conditions ENVIRONMENTAL ASSESSMENT

ENVIRONMENTAL PROTECTION

Catchment Areas Roads and Tracks

Miscellaneous Cultural Heritage Exploration Management

Work Program

Safety

Drilling

SEISMIC LINES

Reports and Format for Fixed Agenda Operations

REHABILITATION

Native Title

Control of Operations

Indemnity

Security

WELL LOCATION AND INTERACTION WITH FUTURE POTENTIAL COAL MINING

COOPERATION AGREEMENT

COMMUNITY AND LANDHOLDER LIAISON PROGRAM

MINISTER’S APPROVAL OF CHANGE IN CONTROL

SPECIAL CONDITIONS (including):

Aboriginal Land Council Notifications

Sydney Catchment Authority Areas


Appendix B

Exploration licences and Petroleum Exploration Licences Audited

Exploration Licences

LICENCE LICENCE HOLDER LOCATION

Auth 311 Gloucester Coal Ltd & CIM Stratford Pty Ltd About 16 SSW of Gloucester

Auth 315 Gloucester Coal Ltd & CIM Stratford Pty Ltd About 20 km S of Gloucester

Auth 342 Kepco Bylong Australia Pty Ltd About 43 km ESE of Ulan

Auth 438 Bengalla Mining Company Pty Limited About 8 km W of Muswellbrook

Auth 404 Centennial Mandalong Pty Limited About 7 km NNW of Wyee

Auth 444 Wambo Coal Pty Limited & CFMEU About 9 km WNW of Warkworth

EL 4443 Centennial Mandalong Pty Limited About 7 km SW of Awaba

EL 4968 Centennial Mandalong Pty Limited About 11 km NW of Wyee

EL 5072 Coalex Pty Ltd & Clarence Coal Investments Pty Limited About 16 km ENE of Lithgow

EL 5297 Cumnock No. 1 Colliery Pty Limited and Icra Cumnock Pty Ltd

About 6 km WSW of Ravensworth

EL 5410 Enviro-mining Pty Ltd & Colmine Consulting Pty Limited About 6 km NE of Cessnock

EL 5883 Callaghans Creek Holdings Pty Ltd About 12 km ESE of Kurri Kurri

EL 5892 Centennial Mandalong Pty Limited About 7 km NW of Wyee

EL 6288 Moolarben Coal Mines Pty Limited, Kores Australia Moolarben Coal Pty Limited & Sojitz Moolarben Resources Pty Ltd

About 4 km E of Ulan

EL 6433 Renison Coal Pty Ltd About 8 km N of Inverell

EL 6505 Coal Mines Australia Pty Ltd About 28 km WNW of Quirindi

EL 6523 Gloucester Resources Limited About 4 km SSW of Gloucester

EL 7223 Shenhua Watermark Coal Pty Ltd About 32 km SSE of Gunnedah

EL 7270 Doyles Creek Mining Pty Limited About 17 km WNW of Warkworth

EL 7406 Mt Penny Coal Pty Ltd About 31 km ESE of Ulan


Petroleum Exploration Licences

LICENCE LICENCE HOLDER LOCATION

PEL 1 Australian Coalbed Methane Pty Limited About 26 km SSE of Gunnedah

PEL 2 AGL Upstream Investments Pty Limited About 18 km SSE of Penrith

PEL 4 AGL Upstream Investments Pty Limited About 4 km WSW of Denman

PEL 6 Orion Petroleum Limited, Robert Michael Kennedy & Philip Leslie Laffer

About 39 km NNE of Moree

PEL 12 Australian Coalbed Methane Pty Limited About 53 km E of Coonabarabran

PEL 13 Metgasco Ltd About 36 km WSW of Lismore

PEL 16 Metgasco Ltd About 17 km W of Lismore

PEL 238 Eastern Star Gas Limited About 36 km SW of Narrabri

PEL 267 AGL Upstream Investments Pty Limited About 12 km NNW of Cessnock

PEL 285 AGL Upstream Investments Pty Limited About 19 km S of Gloucester

PEL 427 Comet Ridge Ltd & Orion Petroleum Limited About 35 km WNW of Moree

PEL 428 Comet Ridge Ltd, Davidson Prospecting Pty Ltd and Orion Petroleum Limited

About 76 km WNW of Narrabri

PEL 437 Pangaea PEL 437 Pty Limited About 55 km WNW of Ashford

PEL 443 Harlow Australia Pty Ltd About 94 km ENE of Tibooburra

PEL 445 BNG Pty Ltd & Arrow CSG (Australia) Pty Ltd About 39 km WNW of Lismore

PEL 450 Santos QNT Pty Ltd About 5 km NW of Coonabarabran

PEL 452 Santos QNT Pty Ltd About 36 km SW of Quirindi

PEL 455 Orion Petroleum Limited About 66 km ENE of Mungindi

PEL 456 Macquarie Energy Pty Ltd About 44 km ENE of Ulan

PEL 458 Macquarie Energy Pty Ltd About 19 km NE of Raymond Terrace

PEL 461 Macquarie Energy Pty Ltd About 14 km ENE of Wyee

PEL 479 Clarence Moreton Resources Pty Limited About 21 km SW of Lismore


Appendix C Summary of Significant Risk Non-compliances identified by auditors

EL / PEL Company Significant Risk Non-compliance Action Undertaken by Division of Resources & Energy (DRE)

Exploration activity carried out without appropriate secondary approval

Enforcement Action Already Undertaken





EL 6288

Moolarben Coal Mines Pty Limited, Kores Australia Moolarben Coal Pty Limited & Sojitz Moolarben Resources Pty Ltd

Use of non-native pasture grass in the revegetation of a drill site in a woodland area.

Corrective action required involving modification of environmental management procedures for revegetation

EL 6433

Renison Coal Pty Ltd Risk assessment process and inadequate documentation

Correspondence sent requesting review of system and to advise DRE of actions taken to address non-conformance

Non-conformance with Safety Management Plan requirements and poor maintenance of records

Correspondence sent requesting review of system and to advise DRE of actions taken to address non-conformance

EL 7223

Shenhua Watermark Coal Pty Ltd

Inadequate storage of drill core samples No action – storage deemed adequate on review by DRE

EL 5072

Coalex Pty Ltd & Clarence Coal Investments Pty Ltd

Inadequate reporting of the results and conclusions of all surveys and other operations

Reports requested, received and accepted. Submitted to the correct standard

PEL 445

BNG Pty Ltd & Arrow CSG (Aust.) Pty Ltd

Suspected dumping of drilling muds Corrective action sought from licence holder

Failure to properly rehabilitate the site Status of sites to be reviewed by DRE prior to completion PEL 458

Macquarie Energy Pty Ltd Possible acid sulphate soil issues and the

lack of appropriate surface water and groundwater monitoring

Subsequent activity and Review of Environmental Factors includes actions to identify and mitigate acid sulphate soil impacts


Appendix D

Detailed Project Plan


APPENDIX E

Audit of Exploration Licences in NSW

August 2011

Contents 1. AUDIT GUIDELINES 1.1. ..........................................................................................................Titles 1.2. ............................................................................................... Coal Advice 1.3. ........................................................................................... Environmental 1.4. ........................................................................................................ Safety

2. COMPLIANCE AUDIT TEMPLATE


1. AUDIT GUIDELINES On 13 July 2011 the Government announced it would undertake a state-wide audit of all coal and coal seam gas exploration licences as part of the staged implementation of its Strategic Regional Land Use Policy. This policy aims to achieve a better balance in the growth of regional areas of NSW. A key activity in implementing this policy is that a review be conducted into exploration licences.

A desktop audit has been conducted by DTIRIS of all Exploration Licences (EL’s) across NSW. As a result of this desktop audit a number of EL’s warranting more detailed audits against all auditable conditions have been selected

The objective of this audit is to review the current status of exploration licences and to ensure licence holders are adhering to all conditions obtained in their licences including evidence of compliance or otherwise. The auditor is to obtain the conditions of authority of the specified exploration licence current at the time of audit.

The Guidelines below have been prepared to assist auditors and to facilitate responses for the audit. The auditor is not constrained by the guidelines described. The guidelines do provide a basis that auditors can use to understand the intent of the audit process with suggested methodologies to assist with obtaining the evidence required to verify compliance or otherwise.

The Activity column reflects the sample questions from the Compliance Audit Template included in Section 2.

The audit could include a review of relevant documents referred to in the exploration licence and conditions, interviews with licensee personnel and/or inspection of the operational areas of the site to confirm the results of the audit interviews.

1.1. Titles

Item Activity Guideline

T1 – Special Conditions

T1a Provide evidence of compliance with each individual special condition / provide statutory declaration / statement that notifications such as the Sydney Catchment Authority notification has not been triggered.

Intent: To determine compliance with each of the Special Conditions associated with the exploration licence.

Method: Verify by examination of / sight copies of relevant reference material, approvals, records, letters, manuals, reports, meeting minutes, policies, procedures, observation, visual inspection.


1.2. Coal Advice


C1 – EL Condition 20 - Core and Samples

C1a Are all drill core and samples labelled and stored correctly? Provide evidence

Intent: To determine compliance with licence condition.

Method: View documentation and storage.

C1b Have any drill cores or samples been disposed of? Provide evidence of where and when.

Intent: To verify that core samples have been disposed of.

Method: View records of disposal of drill core samples including to whom, where and when.

C1c If yes, have the drill core and samples been offered to the Department prior to disposal? Provide evidence (ie correspondence.

Intent: To verify that drill core samples have been offered to the Department.

Method: View documentation of core offered and/or approval to dispose of.

C2 – EL Condition 44 – Exploration Reports

C2a Have all required exploration reports been lodged and accepted by the Department? Provide evidence.

Intent: To verify that reports have been prepared and submitted as required.

Method: View documentation including submission documentation and responses from Department in writing confirming acceptance of reports.


1.3. Environmental Item Element Guideline

E1 – Conditions 1 & 2 – Prospecting Operations Permitted under the Licence and Prospecting Operations Requiring Further Approval EL

E1a Provide a copy of any REF prepared for Category 3 activities.

Intent: To determine if REF’s have been prepared.

Method: View documentation

E1b For Category 3 activities provide evidence of written approval of the Assistant Director, Environment of the Department.

Intent: To verify approval has been granted.


E1c For Category 3 activities if written approval has been granted are there any conditions attached and provide evidence that these conditions have been met.



E2 - EL Condition 11 – Environmental Management

E2a Does the titleholder have an Environmental Management Plan for the exploration program?

Confirm by presenting a controlled copy.

Has this EMP document been accepted by DPI? Provide evidence of this.

Intent: To determine that an Environmental Management Plan has been prepared and implemented.

Method: View documentation including a controlled copy of an approved Environmental Management Plan, correspondence that it has been provided to the Dep’t and correspondence that it has been accepted.

E2b Are drilling sumps used and are they designed to contain slurry and dirty water? Provide evidence

Intent: To verify that drilling sumps are used and are adequate.

Method: View documentation, including drawings, sketches, design reports, view site.

E2c What provisions are there to check and ensure adequate surface storage capability?

Intent: To verify that consideration has been given to the adequacy of surface storage.

Method: View documentation including records of quantities, assessments. View site to view storage areas and confirm they are not overloaded.

E2d What records are maintained to ensure containment of slurry and dirty water?

Intent: To verify that records are maintained.

Method: View documentation including records of water quantities

E2e What drilling contractors are used for exploration drill holes in the project?

Intent: To verify which drilling contractors are used and that they are appropriately qualified.

Method: View documentation of engagement of drilling contractors


Item Element Guideline

including details of their qualifications and experience.

E2f What are the qualifications of drilling contractors? Confirm with documentation?

Intent: To verify that drilling contractors are licenced.

Method: View documentation.

E3 – EL Condition 12 – Aboriginal Cultural Heritage

E3a Have any Aboriginal objects or Aboriginal place been identified on site? If yes has the appropriate authority been issued under the National Parks and Wildlife Act, 1974. Provide evidence.

Intent: To verify that cultural heritage conditions are being met and that appropriate authority has been sought and gained.


E3b Have any items of heritage significance been identified on site? If yes has appropriate authority been issued under the Heritage Act 1977.

Intent: To verify that heritage conditions are being met and that appropriate authority has been sought and gained.


E4 – EL Condition 15 – Trees and Vegetation

E4a For 3 sites identify vegetation clearing & whether native vegetation was cleared. For each site, demonstrate compliance with the Native Vegetation Act.

Intent: To verify if the environmental protection conditions of the licence are being met.


E5 – EL Condition 16 – Roads and Tracks

E5a Have any roads or tracks been affected? If yes has the Department’s written approval been obtained? Provide evidence.

Intent: To determine if roads and tracks have been affected and that appropriate approval has been obtained.


E6 – EL Condition 17 – Streams and Watercourses

E6a Have any streams or watercourses been affected? If yes has the Department’s written approval been obtained? Provide evidence.

Intent: To determine if streams and watercourses have been affected and that appropriate approval has been obtained.


E7 – EL Condition 18 – Erosion and Sediment Controls

E7a Does an REF set out the proposed methods for minimising erosion and controlling sediment? Is this being implemented on site?

Intent: To determine if an REF has been prepared and implemented including methods for minimising erosion and controlling sediment.

Method: View documentation, observe site conditions.

E8 – EL Condition 19 – Prevention and Monitoring of Pollution

E8a Are surface disturbing exploration operations controlled against air pollution, water pollution or soil contamination?

Intent: To verify that operations are planned and carried out in a manner that does not aggravate air pollution, water pollution or soil contamination.

Method: View documentation including exploration procedures,



Environmental Management Plan. Inspect a sample of field operations to view operations.

E8b Have there been instances of completing and sealing exploration drill holes in the project?

How and when are drill holes sealed?

Intent: To verify if there has been any sealing of drill holes

Method: View documentation of sealing of holes including dates, locations, hole ID.

E8c What are the DPI requirements for completing and sealing drill holes/

Intent: To verify that the licensee understands the DPI requirements

Method: View copies of documentation showing DPI requirements.

E8d What records are prepared and maintained for drill hole sealing?

Intent: To verify that records are produced and saved for drill hole sealing.

Method: View copies of records for drill hole sealing including hole location, date, sealing records,

E9 – EL Condition 20 – Refuse, Chemicals, Fuels and Waste Materials

E9a What procedures apply to refuse and waste materials handling at exploration drill sites?

Intent: To determine if procedures exist for dealing with refuse and waste material handling.

Method: View documentation including waste records, waste disposal receipts, copies of procedures. Interview drillers to confirm their understanding of procedures.

E9b What is the nature of waste materials that are removed to an approved landfill?

Intent: To determine if any waste material has been removed to landfill and its nature.

Method: View records of waste disposal dockets or receipts.

E9c What approved landfill receives waste materials from exploration drill sites?

Intent: To determine the waste disposal procedures.

Method: View documentation including waste disposal procedures, waste disposal receipts, quantities.

E9d What constitutes ‘drilling mud’ for exploration drill holes?

Intent: To determine the definition used for drilling mud.

Method: View documentation of drillers records

E9e What additives are used?

Intent: To determine what additives are used in drilling mud.

Method: View records of drilling including details of drilling mud used, additives included.



E9f Are there Material Safety Data Sheets for chemicals used at drill sites available on site?

Intent: To verify that MSDS’s are kept on site and referred to.

Method: View copies of MSDS sheets, view references to MSDS’s in Safety and Environmental Management Plans, interview staff about their knowledge of the existence and location of MSDS sheets.

E9g Are there hazardous materials used on site and what quantities?

Intent: To determine if there are any hazardous materials used on site

Method: View records of a register of hazardous substances, quantities, view a hazardous substances storage area, confirm the hazardous substances storage is locked and bunded. Who has the key?

E9h Have sample drill cuttings been classified as waste material under the NSW Waste Management Act?

Intent: To determine if there are any sample drill cuttings classified as waste

Method: View documentation including classification testing results,

E9i What is the likelihood of encountering potentially high concentrations of metals or metalloids in drill holes?

Intent: To determine if the risk of encountering high concentrations of metals or metalloids has been considered.

Method: View records of samples, risk analysis, reports detailing risks of encountering metals or metalloids.

E9j How is environmental management of the operational activities at drill sites monitored, checked and recorded?

Intent: To determine if an environmental management plan is in place and followed.

Method: View documentation including Environmental Management Plan. View copies on site. Interview staff as to their knowledge of the Plan’s existence and its content.

E9k Are incidents of uncontrolled spills at drill sites recorded?

Intent: To determine if there is a record keeping program for uncontrolled spills.

Method: View documentation including procedures, records of any spills. Interview personnel regarding uncontrolled spills.

E9l What are the procedures for rehabilitation of drill sites?

Intent: To determine if a procedure exists for rehabilitation of drill sites.

Method: View documentation including where rehabilitation is



covered in Management Plans.

E10 – EL Condition 21 – Transmission Lines, Communication Lines, Pipelines and other Public Utiltiies

E10a Have any transmission lines, communication lines, pipelines or other public utilities been affected? If yes has the Department’s written approval been obtained? Provide evidence.

Intent: To determine if any public utilities are to be affected and if procedures are in place to manage.


E11 – EL Condition 23 – Drilling

E11a Has the Department of Environment been notified of intention to drill exploratory holes?

Intent: To determine if notification has been provided of intention to drill.


E11b What is the nominal design for an exploration drill hole in the project?

Intent: To determine what level of design is undertaken for exploration drill holes.

Method: View documentation including design reports.

E11c To what extent is casing and / or grouting used in the drilling procedure?

Intent: To determine if casing or grouting is used.

Method: View records of casing installed and locations, quantities.

E11d What would be considered to be an anomalous loss of drilling fluid within the borehole?

Intent: To determine if fluid loss has been considered.

Method: View records of drilling including quantities of drilling fluid used.

E11e What circumstances would attribute to such a loss of drilling fluid?

Intent: To determine if records are kept of drilling fluid loss.

Method: View records of drilling including quantities of drilling fluid used, special circumstances encountered.

E11f What operational responses apply to such a loss of drilling fluid?

Intent: To determine a procedure is in place for dealing with loss of drilling fluid.

Method: View documentation including a procedure to follow for loss of drilling fluid.

E11g What would be considered to be an anomalous make of water within the borehole?

Intent: To determine if water in the borehole has been considered.

Method: View documentation including drilling procedure, waste records sampling records.

E11h What circumstances would attribute to such a make of water?

Intent: : To determine if records are kept of water in the borehole

Method: View records of drilling including quantities of drilling fluid used, samples, special



circumstances encountered.

E11i What operational responses apply to such a make of water?

Intent: To determine a procedure is in place for dealing with anomalous make of water within the borehole.

Method: View documentation including a drilling procedure and procedures to follow when identifying anomalous water in the borehole.

E11j What measures and procedures are applied during drilling to prevent the cross contamination of aquifers?

Intent: To determine if a procedure exists to manage cross contamination of aquifers.

Method: View documentation including drilling procedures, interview drilling staff about procedures.

E11k Have there been circumstances of encountering artesian flow in any drill hole? Have these been recorded?

Intent: To determine if there is a procedure for dealing with encountering artesian flow

Method: View documentation including drilling procedures, interview drilling staff about procedures.

E11l Has there been any sub-artesian flow encountered in any drill hole? Have these been recorded?

Intent: To determine if any sub artesian flow has been encountered.

Method: View documentation including records of sub artesian flows identified.

E11m What procedures are followed to seal the aquifer in the event of artesian or sub-artesian flow in any drill hole?

Intent: To determine if procedures exist for sealing aquifers.

Method: View documentation including records of sub artesian flows identified, procedures to be followed, records of any that have been dealt with.

E12 – EL Condition 27 – Rehabilitation of Land

E12a Select 3 sites each that have had rehabilitation carried out in the last month, the last 2-12 months and greater than 12 months. For these sites report on:

How they were properly drained and protected from soil erosion

That they are compatible with the surrounding land use

That the type of vegetation is appropriate

That there is no threat to public safety

Intent: To verify that rehabilitation conditions are being met.

Method: View documentation, view sites



E13 – EL Condition 28 – Environmental Reporting

E13a Has an Environmental and Rehabilitation Report been prepared and submitted to the Department? If yes provide evidence. Does it meet the satisfaction of the Department?


Method: View documentation including report, letters of submission to Department, responses from the Department.

E13b Has there been a serious environmental incident? If yes, has an Incident and Complaints report been prepared and submitted to the Department within 24 hrs of the incident. Provide evidence.

Intent: To verify that rehabilitation conditions are being met and that appropriate procedures are in place relating to incidents and complaints.


E14 – EL Condition 56 - The licence holder shall hold regular open days, the event of which is to be well publicised in the local area to keep the public fully informed of the progress of the exploration and feasibility program

E14a Has the public been informed on progress of the exploration and feasibility program?

Intent: To determine if public information has been carried out or is scheduled.

Method: View records of public notifications, letters, meetings, procedure in Management Plans.

E14b What is the nature of information and how is information made available?

Intent: To determine what information has been provided to the public

Method: View documentation including letters, meeting records

E15 – EL Condition 57 - The licence holder shall make data relating to completed hydrological studies carried out during the exploration and feasibility stage available though the Community Consultative Committee.

E15a Have there been any reports received of incidents and complaints concerning the exploration program?

Intent: To determine of there has been any complains or incidents and if there is a procedure to follow.

Method: View documentation including procedures, content within Management Plans, register of Complaints or Incidents.

E15b How are incidents and complaints recorded? Show records.

Intent: To determine of there has been any complains or incidents and if there is a procedure to follow

Method: View documentation including procedures, content within Management Plans, register of Complaints or Incidents.

E15c Has an Incidents and Complaints Report been presented to DTIRIS? Show a copy.

Intent: To verify that if there have been any Incidents of complaints that a register has been prepared and submitted to DTIRIS.

Method: View documentation including a copy of an Incident



and/or Complaints Register.

E16 – EL Enforcement Actions

E16a Have there been any environmental Enforcement Actions pursuant to the EEL and the Mining Act been issued by the Department for non-compliance of an exploration activity or operation within the last 5 years.

Intent: To identify if any non compliances have led to enforcement actions.

Method: View documentation, interview

1.4 Safety Item Element Guideline

S1 – Section 78 CMHSA 2002 and EL Condition 29 Safety of Operations – Section ‘D’ General Condition

S1a Provide evidence that the Exploration Licence holder has given notice of drilling operations to the Chief Inspector at least 7 days prior to commencement of drilling.

Intent: To determine that notice was provided to the Chief Inspector in the required timeframe.

Method: View documentation confirming notice was given and received by the Chief Inspector.

S2 – Clause 63CMHSR 2006 and EL Condition 29 Safety of Operations – Section ‘D’ General Condition

S2a Provide evidence that the Notice of drilling operations contains the following:

1. details of authority (title) that allows the drilling

2. details of the entity that will conduct the drilling

3. details (including contact details) of the person to be in charge at the drill site

4. details of the location of drill holes (easting, northing from 1:25000 series topographic map)

Provide details of any precautions to be put in place (for example, blow out protection) including documentation.

Intent: To determine that drilling is proceeding with all necessary approvals.

Method: View documentation including the details as required, maps, precautions to be undertaken

S3 - EL Condition 29 Safety of Operations – Section ‘D’ General Condition

S3a Confirm that measures are in place to control hazards including preparation of a Safety Management Plan (provide a copy) that demonstrates:

1. identification of risk 2. assessing the risks from those

Intent: To determine that a Safety Management Plan has been prepared, approved and is being implemented.

Method: View a controlled copy of the approved Safety Management Plan, risk assessments, risk



hazards 3. eliminating or controlling those

risks 4. providing instruction, training

and information 5. requires audit review

registers, training plans or other documentation.

S3b Provide evidence that risks to safety of landholders and members of the public, stock and wildlife in the vicinity of operations are identified and measures taken to ensure their safety.

Intent: To verify that risks have been adequately assessed and measures taken to control risks

Method: View documentation of risk assessments, risk registers including possible consequences, control philosophy

S3c Provide evidence that safety matters are included when assessing tenders for exploration drilling contracts and associated activities.

Intent: To verify that safety has been included as an assessment item in tender reviews for exploration drilling.

Method: View documentation including tender documentation, tender assessment plans and tender assessment reports.

S4 – EL Condition 29 Safety of Operations – Section ‘D’ General Condition and IGA-003 Mine Safety Operations ‘Exploration Drilling Hazard Checklist’ published on Dep’t website)

S4a Does the SMP contain the following procedures or requirements:

1. Definition of responsibilities for OH&S

2. Legislative compliance requirements

3. Incident reporting and investigation procedures

4. Minimum operator training requirements including induction

5. Well control philosophy 6. Access including ladders,

stairways and working at height 7. Handrails, fences around sumps 8. Working with electricity including

isolation and tagging 9. Working with pressured fluids 10. Safe use of generators 11. Hazardous substance control and

MSDS requirements 12. Pipe handling strategy 13. Use of hand tools 14. Use of power tools including

inspection, testing and unwanted pressure releases

15. Guarding including rotating rods 16. PPE 17. Fatigue 18. Drug and alcohol 19. Mobilising and demobilising 20. Safe system for leaving a site with

Intent: To verify that the Safety Management Plan includes all the relevant procedures and requirements.

Method: View a controlled copy of the Safety Management Plan to verify that the items listed have been included. Inspect sites to verify (sight) that some of these actions have been taken. This may include Statutory Declaration that sealing of boreholes has occurred.



hazards removed eg sumps filled, wells filled and sealed, residual equipment fenced and signposted

21. First Aid 22. General site safety and security 23. Continuous improvement

strategies.

S5 – EL Condition 19 Drilling (Additional for Group 8 & 9 Minerals) Condition

S5a Provide evidence that risk of gas blowouts within the exploration licence area has been assessed. If there is a risk then provide evidence of blow out protection and safety controls.

Intent: To verify that a risk assessment of gas blowouts has been undertaken.

Method: View documentation including risk assessments, risk registers including details of possible likelihood and consequences and control philosophies to be enacted.

S5b Provide evidence that gas blowout risk assessment was provided to the inspector responsible for the area in which the prospecting is carried out at least 7 days prior to commencement of drilling.

Intent: To verify that the risk assessment was provided to the inspector prior to commencement of drilling.

Method: View documentation confirming the risk assessment details were provided to the inspector and any correspondence in return from the inspector.



This audit template is provided as a guide to the typical type of questions that would be anticipated. The auditor conducting the audit may amend, or add to, these questions as necessary to achieve the intent of verifying compliance with all of the exploration licence conditions. The auditor is to obtain, and use, the conditions of authority of the specified exploration licence current at the time of audit.

Definitions to be used in the Compliance Audit Checklist:

C Compliance adequacy and appropriateness of implementation against current Departmental Approval or Conditions, or compliance with commitments made

O Observation a finding which is not likely to significantly affect the operation, which do not strictly relate to the scope of the audit of compliance and which could lead to performance improvement

NC Non Compliance

an inadequacy in the design and/or implementation against current Departmental approvals, licence conditions or management commitments. There are two subcategories of non-compliance:

Category 1 (NC1) - a total absence of planning or implementation of a required operations element which presents an immediate risk or an isolated lapse in control in the implementation of an operations element which will lead to a significant risk, or

Category 2 (NC2) - an isolated lapse or absence of control in the implementation of an operations element which may not be of significant risk.

NA Not Applicable


TITLES

Item Activity / Requirement Assessed

Evidence Verified Compliance

(C, NC,NA,O)

Comment


T1a Provide evidence of compliance with each individual special condition / provide statutory declaration / statement that notifications such as the Sydney Catchment Authority notification has not been triggered.

COAL ADVICE



(C, NC,NA,O)

Comment

C1 – EL Condition 20 - Core and Samples

C1a Are all drill core and samples labelled and stored correctly? Provide evidence

C1b Have any drill cores or samples been disposed of? Provide evidence of where and when.

C1c If yes, have the drill core and samples been offered to the Department prior to disposal? Provide evidence (ie correspondence.




(C, NC,NA,O)

Comment

C2 – EL Condition 44 – Exploration Reports

C2a Have all required exploration reports been lodged and accepted by the Department? Provide evidence.

ENVIRONMENT



(C, NC,NA,O)

Comment

E1 – Conditions 1 & 2 – Prospecting Operations Permitted under the Licence and Prospecting Operations Requiring Further Approval EL

E1a Provide a copy of any REF prepared for Category 3 activities.

E1b For Category 3 activities provide evidence of written approval of the Assistant Director, Environment of the Department.

E1c For Category 3 activities if written approval has been granted are there any conditions attached and provide evidence that these conditions have been met.




(C, NC,NA,O)

Comment

E2 - EL Condition 11 - Environmental Management

E2a Does the titleholder have an Environmental Management Plan for exploration program?

Confirm by presenting a controlled copy.

Has this EMP document been accepted by DPI? Provide evidence of this.

E2b Are drilling sumps used and are they designed to contain slurry and dirty water? Provide evidence

E2c What provisions are there to check and ensure adequate surface storage capability?

E2d What records are maintained to ensure containment of slurry and dirty water?

E2e What drilling contractors are used for exploration drill holes in the project?

E2f What are the qualifications of drilling contractors? confirm with documentation.




(C, NC,NA,O)

Comment

E3 – EL Condition 12 – Aboriginal Cultural Heritage


E3b Have any items of heritage significance been identified on site? If yes has appropriate authority been issued under the Heritage Act 1977.

E4 – EL Condition 15 – Trees and Vegetation

E4a For 3 sites identify vegetation clearing & whether native vegetation was cleared. For each site, demonstrate compliance with the Native Vegetation Act.

E5 – EL Condition 16 – Roads and Tracks

E5a Have any roads or tracks been affected? If yes has the Department’s written approval been obtained? Provide evidence.

E6 – EL Condition 17 – Streams and Watercourses

E56 Have any streams or watercourses been affected? If yes has the Department’s written approval been obtained? Provide evidence.




(C, NC,NA,O)

Comment

E7 – EL Condition 18 – Erosion and Sediment Controls

E7a Does an REF set out the proposed methods for minimising erosion and controlling sediment? Is this being implemented on site?

E8 – EL Condition 19 – Prevention and Monitoring of Pollution

E8a Are surface disturbing exploration operations controlled against air pollution, water pollution or soil contamination?

E8b Have there been instances of completing and sealing exploration drill holes in the project?

How and when are drill holes sealed?

E8c What are the DPI requirements for completing and sealing drill holes/

E8d What records are prepared and maintained for drill hole sealing?

E9 – EL Condition 20 – Refuse, Chemicals, Fuels and Waste Materials

E9a What procedures apply to refuse and waste materials handling at exploration drill sites?




(C, NC,NA,O)

Comment

E9b What is the nature of waste materials that are removed to an approved landfill?

E9c What approved landfill receives waste materials from exploration drill sites?

E9d What constitutes ‘drilling mud’ for exploration drill holes?

E9e What additives are used?

E9f Are there Material Safety Data Sheets for chemicals used at drill sites available on site?

E9g Are there hazardous materials used on site?

E9h Have sample drill cuttings been classified as waste material under the NSW Waste Management Act??

E9i What is the likelihood of encountering potentially high concentrations of metals or metalloids in drill holes?




(C, NC,NA,O)

Comment

E9j How is environmental management of the operational activities at drill sites monitored, checked and recorded?

E9k Are incidents of uncontrolled spills at drill sites recorded?

E9l What are the procedures for rehabilitation of drill sites?

E10 – EL Condition 21 – Transmission Lines, Communication Lines, Pipelines and other Public Utiltiies

E10a Have any transmission lines, communication lines, pipelines or other public utilities been affected? If yes has the Department’s written approval been obtained? Provide evidence.

E11 – EL Condition 23 - Drilling

E11a Has the Department of Environment been notified of intention to drill exploratory holes?

E11b What is the nominal design for an exploration drill hole in the project?




(C, NC,NA,O)

Comment

E11c To what extent is casing and / or grouting used in the drilling procedure?

E11d What would be considered to be an anomalous loss of drilling fluid within the borehole?

E11e What circumstances would attribute to such a loss of drilling fluid?

E11f What operational responses apply to such a loss of drilling fluid?

E11g What would be considered to be an anomalous make of water within the borehole?

E11h What circumstances would attribute to such a make of water?

E11i What operational responses apply to such a make of water?

E11j What measures and procedures are applied during drilling to prevent the cross contamination of aquifers?




(C, NC,NA,O)

Comment

E11k Have there been circumstances of encountering artesian flow in any drill hole? Have these been recorded?

E11l Has there been any sub-artesian flow encountered in any drill hole? Have these been recorded?

E11m What procedures are followed to seal the aquifer in the event of artesian or sub-artesian flow in any drill hole?

E12 – EL Condition 27 – Rehabilitation of Land

E12a Select 3 sites each that have had rehabilitation carried out in the last month, the last 2-12 months and greater than 12 months. For these sites report on:








(C, NC,NA,O)

Comment

E13 – EL Condition 28 – Environmental Reporting

E13a Has an Environmental and Rehabilitation Report been prepared and submitted to the Department? If yes provide evidence. Does it meet the satisfaction of the Department?

E13b Has there been a serious environmental incident? If yes, has an Incident and Complaints report been prepared and submitted to the Department within 24 hrs of the incident. Provide evidence.

E14 – EL Condition 56 - The licence holder shall hold regular open days, the event of which is to be well publicised in the local area to keep the public fully informed of the progress of the exploration and feasibility program

E14a Has the public been informed on progress of the exploration and feasibility program?

E14b What is the nature of information and how is information made available?

E15 – EL Condition 57 - The licence holder shall make data relating to completed hydrological studies carried out during the exploration and feasibility stage available though the Community Consultative Committee.

E15a Have there been any reports received of incidents and complaints concerning the




(C, NC,NA,O)

Comment

exploration program?

E15b How are incidents and complaints recorded? Show records.

E15c Has an Incidents and Complaints Report been presented to DTIRIS? Show a copy.

E16 – EL Enforcement Actions

E16a Have there been any environmental Enforcement Actions pursuant to the EEL and the Mining Act been issued by the Department for non-compliance of an exploration activity or operation within the last 5 years.


SAFETY



(C, NC,NA,O)

Comment

S1 – Section 78 CMHSA 2002 and EL Condition 29 Safety of Operations – Section ‘D’ General Condition

S1a Provide evidence that the Exploration Licence holder has given notice of drilling operations to the Chief Inspector at least 7 days prior to commencement of drilling.

S2 – Clause 63CMHSR 2006 and EL Condition 29 Safety of Operations – Section ‘D’ General Condition

S2a Provide evidence that the Notice of drilling operations contains the following:

5. details of authority (title) that allows the drilling

6. details of the entity that will conduct the drilling

7. details (including contact details) of the person to be in charge at the drill site

8. details of the location of drill holes (easting, northing from 1:25000 series topographic map)

Provide details of any precautions to be put in place (for example, blow out protection) including documentation.




(C, NC,NA,O)

Comment

S3 - EL Condition 29 Safety of Operations – Section ‘D’ General Condition

S3a Confirm that measures are in place to control hazards including preparation of a Safety Management Plan (provide a copy) that demonstrates:

6. identification of risk 7. assessing the risks from those

hazards 8. eliminating or controlling those

risks 9. providing instruction, training

and information 10. requires audit review

S3b Provide evidence that risks to safety of landholders and members of the public, stock and wildlife in the vicinity of operations are identified and measures taken to ensure their safety.

S3c Provide evidence that safety matters are included when assessing tenders for exploration drilling contracts and associated activities.

S4 – EL Condition 29 Safety of Operations – Section ‘D’ General Condition and IGA-003 Mine Safety Operations ‘Exploration Drilling Hazard Checklist’ published on Dep’t website)

S4a Does the SMP contain the following procedures or requirements:

3. Definition of responsibilities for




(C, NC,NA,O)

Comment

OH&S 4. Legislative compliance requirements5. Incident reporting and investigation

procedures 6. Minimum operator training

requirements including induction 7. Well control philosophy 8. Access including ladders, stairways

and working at height 9. Handrails, fences around sumps 10. Working with electricity including

isolation and tagging 11. Working with pressured fluids 12. Safe use of generators 13. Hazardous substance control and

MSDS requirements 14. Pipe handling strategy 15. Use of hand tools 16. Use of power tools including

inspection, testing and unwanted pressure releases

17. Guarding including rotating rods 18. PPE 19. Fatigue 20. Drug and alcohol 21. Mobilising and demobilising 22. Safe system for leaving a site with

hazards removed eg sumps filled, wells filled and sealed, residual equipment fenced and signposted

23. First Aid 24. General site safety and security

Continuous improvement strategies.




(C, NC,NA,O)

Comment

S5 – EL Condition 19 Drilling (Additional for Group 8 & 9 Minerals) Condition

S5a Provide evidence that risk of gas blowouts within the exploration licence area has been assessed. If there is a risk then provide evidence of blow out protection and safety controls.

S5b Provide evidence that gas blowout risk assessment was provided to the inspector responsible for the area in which the prospecting is carried out at least 7 days prior to commencement of drilling.


Audit of Petroleum Exploration Licences in NSW

August 2011

Contents 1. AUDIT GUIDELINES 1.1 ...........................................................................................................Titles 1.2 .................................................................................... Petroleum Geology 1.3 ............................................................................................ Environmental 1.4 ......................................................................................................... Safety



1 AUDIT GUIDELINES

On 13 July 2011 the Government announced it would undertake a state-wide audit of all coal and coal seam gas exploration licences as part of the staged implementation of its Strategic Regional Land Use Policy. This policy aims to achieve a better balance in the growth of regional areas of NSW. A key activity in implementing this policy is that a review be conducted into exploration licences. A desktop audit has been conducted by DTIRIS of all Petroleum Exploration Licences (PEL’s) across NSW. As a result of this desktop audit a number of PEL’s warranting more detailed audits against all auditable conditions have been selected.

The objective of this audit is to review the current status of exploration licences and to ensure licence holders are adhering to all conditions obtained in their licences including evidence of compliance or otherwise. The auditor is to obtain the conditions of authority of the specified exploration licence current at the time of audit.

The Guidelines below have been prepared to assist auditors and to facilitate responses for the audit. The auditor is not constrained by the guidelines described. The guidelines do provide a basis that auditors can use to understand the intent of the audit process with suggested methodologies to assist with obtaining the evidence required to verify compliance or otherwise.

The Activity column reflects the sample questions from the Compliance Audit Template included in Section 2.

The audit could include a review of relevant documents referred to in the exploration licence and conditions, interviews with licensee personnel and/or inspection of the operational areas of the site to confirm the results of the audit interviews.

Titles



T1a Provide evidence of compliance with each individual special condition / provide stat dec / statement that notifications such as the Sydney Catchment Authority notification has not been triggered.

Intent: To determine compliance with each of the Special Conditions associated with the exploration licence.

Method: Verify by examination of / sight copies of relevant reference material, approvals, records, letters, manuals, reports, meeting minutes, policies, procedures, observation, visual inspection.


Petroleum Geology


P1 - Reporting

P1a Are there any reports that have not been submitted?

Intent: To determine what reports have not been submitted and why.

Method: View documentation including copies of reports and copies of correspondence supporting the submission of the reports to the Department.

P1b If yes, what is the reason/s? provide details

Intent: To determine why the reports have not been submitted.

Method: Interview relevant personnel and view documentation.

Environmental


E1 - PEL Condition 1 – Environmental Assessment

E1a Has any Category 1, 2 or 3 exploration activity been conducted? Provide evidence of the categorisation.

Intent: To determine the Category of exploration activity on site.

Method: Assess by interview the category assessment process and application. View any relevant documentation to support categorisation.

E1b Provide evidence that the register of critical habitat kept by the Director-General of the Department of Environment and Conservation under the Threatened Species Conservation Act 1995 has been referred to and that consideration has been given to the significance of any notations in respect of the area of any proposed exploration activity.

Intent: To determine if the requirement to refer to the register has occurred.

Method: View documentation supporting referral to the Act and any decisions outcoming from this action.

E1c If there was activity categorised as Category 2 provide documentary evidence that notification was provided to an Environmental Officer of the Department where required by the conditions.

Intent: To determine if Category 2 exploration activity has occurred on site and that notifications as required have been adhered to.

Method: View Surface Disturbance Notification (SDN) and other documentation.



E1d If there was activity categorised as Category 3 provide documentary evidence that notification was provided to an Environmental Officer of the Department.

Intent: To determine if Category 3 exploration activity has occurred on site and that notifications as required have been adhered to.

Method: View documentation and interview personnel.

E1e Provide a copy of any REF prepared for Category 3 activities.

Intent: To determine if REF’s have been prepared.


E1f For Category 3 activities provide evidence of written approval of the Assistant Director, Environment of the Department.



E1g For Category 3 activities if written approval has been granted are there any conditions attached and provide evidence that these conditions have been met.



E2 – PEL Condition 2, 3, 4, 5, 6, 7 – Environmental Protection

E2a Select 3 sites of current operation and advise if there is any activity likely to aggravate air or water pollution, soil contamination or erosion. Provide documentary evidence and photos.


Method: View documentation, inspect sites, view photos

E2b For 3 sites that are, or were in, a 1km radius of an identified noise receptor, demonstrate how noise was minimised.


Method: View documentation, inspect sites

E2c Have there been any noise complaints? Is a complaints register kept? (provide evidence)


Method: View documentation, interview personnel

E2d For 3 sites identify vegetation clearing whether native vegetation was cleared. For each site, demonstrate compliance with the Native Vegetation Act.


Method: View documentation, inspect sites, interview personnel



E2e Has there been any burning off of grass, foliage or herbage on site? If so provide evidence of consent from the owner or occupier of the land and the local fire authority.


Method: View documentation, inspect sites, interview personnel

E3 – PEL Condition 8 – Catchment Areas

E3a Are there any regulations in force for the protection from pollution of any catchment area? If yes, have they been complied with? (provide evidence)

Intent: To verify if the environmental conditions in relation to catchment areas are being adhered to.


E4 – PEL Condition 9, 10 – Roads and Tracks

E4a Have any roads or tracks been affected? If yes has the Director General’s written approval been obtained? Provide evidence.

Intent: To determine if roads and tracks have been affected and that appropriate approval has been obtained.


E5 – PEL Condition 15 – Cultural Heritage


Intent: To verify that cultural heritage conditions are being met and that appropriate authority has been sought and gained.


E6 – PEL Condition 19 - Drilling

E6a Have all drill holes been filled with cement grout during drill rod withdrawal and plugged? If yes provide evidence of placement of grout and plug.

Intent: To verify that drilling requirements are being met


E7 – PEL Condition 20 – Seismic Lines

E7a Has there been any vegetation clearing for seismic lines?

Intent: To verify that conditions relating to seismic lines are being met.


E7b If yes, have the appropriate steps been taken to limit clearing, control drainage, control access and reinstate any disrupted watercourse? Provide evidence.

Intent: To verify that conditions relating to seismic lines are being met

Method: View documentation, interview, inspect

E8 – PEL Condition 23 - Rehabilitation

E8a Select 3 sites each that have had rehabilitation carried out in the last




month, the last 2-12 months and greater than 12 months. For these sites report on:





Method: View documentation, view sites

E8b Has an Environmental and Rehabilitation Report been prepared and submitted to the Department? If yes provide evidence. Does it meet the satisfaction of the Department?


Method: View documentation including report, letters of submission to Department, responses from the Department.

E8c Has there been a serious environmental incident? If yes, has an Incident and Complaints report been prepared and submitted to the Department within 24 hrs of the incident. Provide evidence.

Intent: To verify that rehabilitation conditions are being met and that appropriate procedures are in place relating to incidents and complaints.


E9 – PEL Condition 25 – Control of Operations

E9a Have any directions been given to cease working the licence or that part of the licence not complying with the Act? If yes, have all the directions given been complied with?

Intent: To verify compliance with Control of Operations conditions.


E10 – PEL Enforcement Actions

E10a Have there been any environmental Enforcement Actions pursuant to the PEL and the Petroleum (Onshore) Act been issued by the Department for non-compliance of an exploration activity or operation within the last 6 years.

Intent: To identify if any non compliances have led to enforcement actions.



Safety


S1 –Condition 18 - Operation must be carried out in a manner that ensures the safety of persons and stock in the vicinity of the operation. All drill holes, shafts and excavations must be appropriately protected, to the satisfaction of an inspector, to ensure that access to them by persons and stock is restricted. Abandoned shafts and excavations opened up or used by the licence holder must be filled in or otherwise rendered safe to a standard acceptable to the Inspector

S1a Are all the drilling sites adequately fenced?

Intent: To verify that all sites are fenced as per Schedule 525 of the “Schedule of Onshore Petroleum Exploration and Production Safety Requirements – Aug 1992” published by the Department of Mineral Resources.

Method: View documentation. Inspect fences and determine they are of sufficient construction to prevent access.

S1b Is the fence height acceptable? Intent: To determine the fence height is acceptable as per Schedule 525.

Method: View documentation. Inspect fences and determine they are of sufficient construction to prevent access.

S1c Have the risk related to these sites, installed equipments and operation been identified? If yes, please provide the evidence

Intent: To determine that an appropriate risk assessment has been carried out as per Schedule Sec 201 (b) and Sec 102.

Method: View documentation including completed risk assessment signed off by participants.

S1d If no, why the risk has not been identified?

Intent: To determine why risks were not identified or not considered important.

Method: interview with personnel, view documentation supporting risk assessment.

S1e Is there a Safety Management Plan to ensure that the design and operation of any installation or site and its equipment are adequately safe?

Intent: To determine that a Safety Management Plan has been prepared, approved by management and implemented as per Schedule Sec 201 (1)

Method: View documentation including a signed copy of the Safety Management Plan. Are copies held on site for working personnel to refer to?



S1f Are the potential major hazards and risks relating to the sites, equipment and operation recorded? Provide the evidence?

Intent: To determine if a risk assessment has been carried out.

Method: View documentation including risk assessment signed off by participants, recording system and updating system.

S1g Is an emergency management plan for all the sites available?

Intent: To verify that an emergency management plan exists and is in use as per Schedule 210 (1).

Method: view a copy of the Emergency Management Plan. View a copy on site. Determine by visual inspection and personnel interviews that they are aware of the plan.

S1h Have strata leak off tests been conducted and recorded for all the wells?

Intent: To verify that tests have been carried out as required by Schedule Sec 505

Method: View documentation including drillers logbook.

S1i Have the signs for PPE, Hazardous area and all other related issues been in placed during and after operation?

Intent: To verify that signs are in place as per Schedule Sec 213

Method: View documentation and inspect signs on site.

S2 – Condition 19 - If the licence holder drills exploratory drill holes he must satisfy the Director General that;-

(a) all core holes are accurately surveyed and permanently marked so that their locations can be easily established;

(b) all core holes or otherwise are provided with surface casing to prevent the collapse of the surrounding surface;

(c) all drill holes are provided with “BOP” apparatus to control the escape of natural or noxious gases;

(d) once any drill holes ceases to be used the land and its immediate vicinity is left in clean, tidy and stable condition.

(e) Unless instructed otherwise by an Inspector once a drill hole ceases to be used the hole must be completely filled with cement grout during drill rod withdrawal and plugged so that it

Prevents leakage and cross contamination of aquifers; Prevent the escape of natural or noxious gases; Prevent the surface discharge of ground waters; Prevent any collapse of the surrounding surface; and Does not constitute a danger to persons and stock.



S2a Have the location of wells been surveyed and ISG co-ordinates provided to the Director-General?

Intent: To verify the survey has been completed and submitted as per Schedule Sec 503 (1).

Method: View documentation including survey records, letters to Director General and any correspondence in return.

S2b What standard was casing manufactured to?

Intent: To verify compliance to standard as per Schedule Sec 505 (2).


S2c Is there a written procedure for cementing casing? Please provide a copy?

Intent: To determine if a procedure exists as per Schedule Sec 505 (2).


S2d Are centralizers run on all casings? Show the driller’s logs or other documents to verify?

Intent: To determine if records exist as per Schedule Sec 505.

Method: View documentation including drillers log book and drilling records.

S2e Has BOP been installed on all the wells during operation?

Intent: To determine if records exist as per Schedule Sec 507 (1).


S2f Are tests undertaken for BOP? If yes, at what pressures are they tested?



S2g Are the test results recorded? Intent: To determine if records exist as per Schedule Sec 507 (2).


S2h Have all the details of all casing cement operation been recorded?





S2i Was there any abnormal situation happened in cementing operation?



S2j If yes was the inspector informed about it?


Method: View documentation including drillers log book and drilling records, copy of notification to DII.

S2k What was the wait on primary cement



S2l Were the wells leaking any gas after plugged and abandoned

Intent: To determine if any records exist of gas leaks.

Method: View documentation, interview personnel.

S2m Identify each well as being either:

a. In the process of drilling and testing

b. Suspended c. Plugged and abandoned d. in production

Intent: To determine the status of well development and records kept.


S2n Provide evidence of inspector approval of wells suspended or p & A’d

Intent: To verify that approval has been obtained.

Method: View documentation including correspondence to inspector and approval responses.


2 COMPLIANCE AUDIT TEMPLATE This audit template is provided as a guide to the typical type of questions that would be anticipated. The auditor conducting the audit may amend, or add to, these questions as necessary to achieve the intent of verifying compliance with all of the exploration licence conditions. The auditor is to obtain, and use, the conditions of authority of the specified exploration licence current at the time of audit.

Definitions to be used in the Compliance Audit Checklist:

C Compliance adequacy and appropriateness of implementation against current Departmental Approval or Conditions, or compliance with commitments made

O Observation a finding which is not likely to significantly affect the operation, which do not strictly relate to the scope of the audit of compliance and which could lead to performance improvement

NC Non Compliance

an inadequacy in the design and/or implementation against current Departmental approvals, licence conditions or management commitments. There are two subcategories of non-compliance:

Category 1 (NC1) - a total absence of planning or implementation of a required operations element which presents an immediate risk or an isolated lapse in control in the implementation of an operations element which will lead to a significant risk, or

Category 2 (NC2) - an isolated lapse or absence of control in the implementation of an operations element which may not be of significant risk.

NA Not Applicable


TITLES



(C, NC,NA,O)

Comment


T1a Provide evidence of compliance with each individual special condition / provide statutory declaration or statement that notification such as the Sydney Catchment Authority notification has not been triggered.

PETROLEUM GEOLOGY



(C, NC,NA,O)

Comment

P1 - Reporting

P1a Are there any reports that have not been submitted?

P1b If yes, what is the reason/s? provide details


ENVIRONMENT



(C, NC,NA,O)

Comment

E1 - PEL Condition 1 – Environmental Assessment

E1a Has any Category 1, 2 or 3 exploration activity been conducted? Provide evidence of the categorisation.

E1b Provide evidence that the register of critical habitat kept by the Director-General of the Department of Environment and Conservation under the Threatened Species Conservation Act 1995 has been referred to and that consideration has been given to the significance of any notations in respect of the area of any proposed exploration activity.

E1c If there was activity categorised as Category 2 provide documentary evidence that notification was provided to an Environmental Officer of the Department where required by the conditions.




(C, NC,NA,O)

Comment

E1d If there was activity categorised as Category 3 provide documentary evidence that notification was provided to an Environmental Officer of the Department.

E1e Provide a copy of any REF prepared for Category 3 activities.

E1f For Category 3 activities provide evidence of written approval of the Assistant Director, Environment of the Department.

E1g For Category 3 activities if written approval has been granted are there any conditions attached and provide evidence that these conditions have been met.

E2 – PEL Condition 2, 3, 4, 5, 6, 7 – Environmental Protection

E2a Select 3 sites of current operation and advise if there is any activity likely to aggravate air or water pollution, soil contamination or erosion. Provide documentary evidence and photos.

E2b For 3 sites that are, or were in, a 1km radius of an identified noise receptor, demonstrate how noise was minimised.




(C, NC,NA,O)

Comment

E2c Have there been any noise complaints? Is a complaints register kept? (provide evidence)

E2d For 3 sites identify vegetation clearing whether native vegetation was cleared. For each site, demonstrate compliance with the Native Vegetation Act.

E2e Has there been any burning off of grass, foliage or herbage on site? If so provide evidence of consent from the owner or occupier of the land and the local fire authority.

E3 – PEL Condition 8 – Catchment Areas

E3a Are there any regulations in force for the protection from pollution of any catchment area? If yes, have they been complied with? (provide evidence)

E4 – PEL Condition 9, 10 – Roads and Tracks

E4a Have any roads or tracks been affected? If yes has the Director General’s written approval been obtained? Provide evidence.




(C, NC,NA,O)

Comment

E5 – PEL Condition 15 – Cultural Heritage


E6 – PEL Condition 19 - Drilling

E6a Have all drill holes been filled with cement grout during drill rod withdrawal and plugged? If yes provide evidence of placement of grout and plug.

E7 – PEL Condition 20 – Seismic Lines

E7a Has there been any vegetation clearing for seismic lines?

E7b If yes, have the appropriate steps been taken to limit clearing, control drainage, control access and reinstate any disrupted watercourse? Provide evidence.

E8 – PEL Condition 23 - Rehabilitation

E8a Select 3 sites each that have had rehabilitation carried out in the last month, the last 2-12 months and greater than 12 months. For these




(C, NC,NA,O)

Comment

sites report on:





E8b Has an Environmental and Rehabilitation Report been prepared and submitted to the Department? If yes provide evidence. Does it meet the satisfaction of the Department?

E8c Has there been a serious environmental incident? If yes, has an Incident and Complaints report been prepared and submitted to the Department within 24 hrs of the incident. Provide evidence.

E9 – PEL Condition 25 – Control of Operations

E9a Have any directions been given to cease working the licence or that part of the licence not complying with the Act? If yes, have all the directions given been complied with?




(C, NC,NA,O)

Comment

E10 – PEL Enforcement Actions

E10a Have there been any environmental Enforcement Actions pursuant to the PEL and the Petroleum (Onshore) Act been issued by the Department for non-compliance of an exploration activity or operation within the last 6 years.

SAFETY



(C, NC,NA,O)

Comment

S1 –Condition 18 - Operation must be carried out in a manner that ensures the safety of persons and stock in the vicinity of the operation. All drill holes, shafts and excavations must be appropriately protected, to the satisfaction of an inspector, to ensure that access to them by persons and stock is restricted. Abandoned shafts and excavations opened up or used by the licence holder must be filled in or otherwise rendered safe to a standard acceptable to the Inspector

S1a Are all the drilling sites adequately fenced?

S1b Is the fence height acceptable?

S1c Have the risk related to these sites, installed equipments and operation been identified?

S1d If no, why the risk has not been identified?




(C, NC,NA,O)

Comment

S1e Is there a Safety Management Plan to ensure that the design and operation of any installation or site and its equipment are adequately safe?

S1f Are the potential major hazards and risks relating to the sites, equipment and operation recorded? Provide the evidence?

S1g Is an emergency management plan for all the sites available?

S1h Have strata leak off tests been conducted and recorded for all the wells?

S1i Have the signs for PPE, Hazardous area and all other related issues been in placed during and after operation?

S2 – Condition 19 - If the licence holder drills exploratory drill holes he must satisfy the Director General that;-

(f) all core holes are accurately surveyed and permanently marked so that their locations can be easily established; (g) all core holes or otherwise are provided with surface casing to prevent the collapse of the surrounding surface; (h) all drill holes are provided with “BOP” apparatus to control the escape of natural or noxious gases; (i) once any drill holes ceases to be used the land and its immediate vicinity is left in clean, tidy and stable condition. (j) Unless instructed otherwise by an Inspector once a drill hole ceases to be used the hole must be completely filled with cement grout

during drill rod withdrawal and plugged so that it

Prevents leakage and cross contamination of aquifers; Prevent the escape of natural or noxious gases; Prevent the surface discharge of ground waters; Prevent any collapse of the surrounding surface; and Does not constitute a danger to persons and stock.




(C, NC,NA,O)

Comment

S2a Have the location of wells been surveyed and ISG co-ordinates provided to the Director-General?

S2b What standard was casing manufactured to?

S2c Is there a written procedure for cementing casing? Please provide a copy?

S2d Are centralizers run on all casings? Show the driller’s logs or other documents to verify?

S2e Has BOP been installed on all the wells during operation?

S2f Are tests undertaken for BOP? If yes, at what pressures are they tested?

S2g Are the test results recorded?

S2h Have all the details of all casing cement operation been recorded?

S2i Was there any abnormal situation happened in cementing operation?

S2j If yes was the inspector informed about it?

S2k What was the wait on primary cement

S2l Were the wells leaking any gas




(C, NC,NA,O)

Comment

after plugged and abandoned

S2m Identify each well as being either:

e. In the process of drilling and testing

f. Suspended g. Plugged and abandoned h. in production

S2n Provide evidence of inspector approval of wells suspended or p & A’d


Appendix F Key Results of Audit - Outlining Level of Compliance and Observations Exploration Licences

Summary of Licences by Condition Compliance Status

EL Compliant Level 1 Non-compliances

Level 2 Non-compliances Observations NA

Not Assessed

Total Conditions

Auth 311 26 2 5 1 34

Auth 315 26 2 5 1 34

Auth 342 33 1 1 1 36

Auth 404 21 3 3 6 2 35

Auth 438 11 23 34

Auth 444 26 4 7 37

EL 4443 5 31 36

EL 4968 21 2 3 6 2 34

EL 5072 17 1 1 11 4 34

EL 5297 1 3 5 26 35

EL 5410 16 3 6 10 35

EL 5883 18 2 12 2 34

EL 5892 18 2 4 8 1 33

EL 6288 18 4 1 12 35

EL 6433 12 1 6 14 3 36

EL 6505 43 6 49

EL 6523 34 2 36

EL 7223 25 2 4 18 49

EL 7270 37 8 45

EL 7406 31 1 2 34

Grand Total

439

8

30

33

190

35

735

100% compliant and no observations

Level 1 non-compliance

Level 2 non-compliance and/or observations


Petroleum Exploration Licences

Summary of Licences by Condition Compliance Status

PEL Compliant Level 1Non-compliances

Level 2 Non-compliances Observations NA

Not Assessed

Grand Total

PEL 1 26 1 2 29 PEL 12 24 1 2 27 PEL 13 13 6 6 4 42 PEL 16 13 3 5 3 3 38 PEL 2 18 2 3 4 36 PEL 238 17 1 8 38 PEL 267 19 1 4 3 40 PEL 285 20 2 3 3 39 PEL 4 20 1 4 5 43 PEL 427 24 4 1 40 PEL 428 20 6 4 41 PEL 437 18 1 3 7 31 PEL 443 8 1 1 17 2 31 PEL 445 9 1 4 7 2 6 29 PEL 450 25 1 2 28 PEL 452 25 1 2 28 PEL 455 20 3 3 37 PEL 456 25 1 1 1 28 PEL 458 14 2 4 1 2 4 27 PEL 461 16 3 4 4 2 29 PEL 479 23 1 5 31 PEL 6 20 8 1 40 Grand Total

417

3

25

75

70

30

620

100% compliant and no observations

Level 2 non-compliance and/or observations

Level 1 non-compliance


Appendix G Breakdown of Results into Resources & Energy Units – Coal ELs

0

5

10

15

20

25

Auth

404

EL

4968

EL

5883

Auth

438

Auth

315

Auth

311

Auth

342

Auth

444

EL

4443

EL

5072

EL

5297

EL

5410

EL

5892

EL

6288

EL

6433

EL

6505

EL

6523

EL

7223

EL

7270

EL

7406

Environment


Licence Compliance Status by DRE CategoryLicence Compliance Status by DRE Category

0

1

2

3

4

5

6

7

8

Auth

404

EL

4968

EL

5883

Auth

438

Auth

315

Auth

311

Auth

342

Auth

444

EL

4443

EL

5072

EL

5297

EL

5410

EL

5892

EL

6288

EL

6433

EL

6505

EL

6523

EL

7223

EL

7270

EL

7406

Coal Advice




0

1

2

Auth

404

EL

4968

EL

5883

Auth

438

Auth

315

Auth

311

Auth

342

Auth

444

EL

4443

EL

5072

EL

5297

EL

5410

EL

5892

EL

6288

EL

6433

EL

6505

EL

6523

EL

7223

EL

7270

EL

7406

Coal safety



0

1

2

3

4

5

6

7

8

Auth

404

EL

4968

EL

5883

Auth

438

Auth

315

Auth

311

Auth

342

Auth

444

EL

4443

EL

5072

EL

5297

EL

5410

EL

5892

EL

6288

EL

6433

EL

6505

EL

6523

EL

7223

EL

7270

EL

7406

Titles


Licence Compliance Status by DRE Category


0

2

4

6

8

10

12

14

16

18

Auth 444 EL 5410 EL 6505 EL 7223 EL 7270

Special Conditions




Breakdown of Results into Resources & Energy Units – Petroleum PELs

0

5

10

15

20

25

PEL 1 PEL 2 PEL 4 PEL 6 PEL

12

PEL

13

PEL

16

PEL

238

PEL

267

PEL

285

PEL

427

PEL

428

PEL

437

PEL

443

PEL

445

PEL

450

PEL

452

PEL

455

PEL

456

PEL

458

PEL

461

PEL

479

EnvironmentNot Assessed NA C O NC2 NC1


0

1

2


12

PEL

13

PEL

16

PEL

238

PEL

267

PEL

285

PEL

427

PEL

428

PEL

437

PEL

443

PEL

445

PEL

450

PEL

452

PEL

455

PEL

456

PEL

458

PEL

461

PEL

479

PetroleumGeologyNot Assessed NA C O NC2 NC1



0

1


12

PEL

13

PEL

16

PEL

238

PEL

267

PEL

285

PEL

427

PEL

428

PEL

437

PEL

443

PEL

445

PEL

450

PEL

452

PEL

455

PEL

456

PEL

458

PEL

461

PEL

479

Petroleum SafetyNot Assessed NA C O NC2 NC1


0

1

2

3

4

5

6

7


12

PEL

13

PEL

16

PEL

238

PEL

267

PEL

285

PEL

427

PEL

428

PEL

437

PEL

443

PEL

445

PEL

450

PEL

452

PEL

455

PEL

456

PEL

458

PEL

461

PEL

479

TitlesNot Assessed NA C O NC2 NC1



Appendix H

Mining Act 1992 No 29 Part 11 Division 6

Division 6 Audits

246M Relationship of this Division to other provisions

This Division does not affect any other provision of this Act that:

(a) enables an authorisation to be subject to a condition requiring monitoring or reporting, or

(b) relates to functions exercisable by persons for the purpose of auditing compliance with this Act, the regulations or conditions of authorisations.

246N Nature of audit

An audit under this Division is a periodic or particular documented evaluation of prospecting or mining operations (including management practices, systems and plant) for any one or more of the following purposes:

(a) to provide information on compliance or otherwise with obligations under the authorisation or other related legal requirements under this or any other law (including in relation to the protection of the environment from the impacts of, or the rehabilitation of land affected by, activities under the authorisation),

(b) to provide information on compliance or otherwise with codes of practice or policies relevant to the authorisation,

(c) to enable a determination of whether the way activities are being carried out under the authorisation can be improved in order to protect the environment.

246O Accreditation and regulation of auditors

The regulations may make provision for or with respect to either or both of the following:

(a) the accreditation of auditors for the purposes of this Division,

(b) the carrying out of audits by auditors.

246P Conditions for mandatory audits

(1) A condition that requires one or more mandatory audits to be undertaken, to the satisfaction of the Director-General, for any one or more of the purposes referred to in section 246N (a mandatory audit condition) may be imposed on an authorisation.

(2) A mandatory audit condition must specify the purpose or purposes of the audit.

(3) A mandatory audit condition may require any one or more of the following:

(a) appointment of an auditor to undertake the audit,

(b) approval by the Director-General of the auditor before being appointed,


(c) preparation of particular written documentation during the course of the audit,

(d) preparation of an audit report,

(e) production to the Director-General of the audit report.

(4) A mandatory audit condition may also:

(a) specify the format and level of detail required for the audit, or

(b) require the auditor to submit the proposed format and level of detail to the Director-General for approval.

(5) A mandatory audit condition may be varied or revoked by written notice served on the holder of the authorisation.

(6) A condition imposed under this section takes effect on the date on which written notice of the condition is served on the holder of the authorisation or on any later date specified in the notice.

(7) This section does not affect the operation of section 75V (Approvals etc legislation that must be applied consistently) or 93 (Granting and modification of approval by approval body) of the Environmental Planning and Assessment Act 1979.

246Q Certification of audit report

The audit report for a mandatory audit is taken not to have been duly produced to the Director-General unless it is accompanied by:

(a) a declaration signed by the holder of the authorisation certifying that the holder has not knowingly provided any false or misleading information to the auditor and has provided all relevant information to the auditor, and

(b) a declaration signed by the auditor:

(i) setting out the auditor’s qualifications, and

(ii) certifying that the report is accurate, and that the auditor has not knowingly included any false or misleading information in it or failed to include any relevant information in it.

246R Offences relating to audit information

(1) A person who provides information to an auditor in connection with a mandatory audit, knowing the information to be false or misleading in a material respect, is guilty of an offence.

(2) The holder of an authorisation who fails to provide information to an auditor in connection with a mandatory audit being carried out in relation to the authorisation, knowing the information to be materially relevant to the audit, is guilty of an offence.

(3) An auditor who includes information in an audit report produced to the Director-General in connection with a mandatory audit, knowing the information to be false or misleading in a material respect, is guilty of an offence.

(4) An auditor who fails to provide information in an audit report produced to the Director-General in connection with a mandatory audit, knowing the information to be materially relevant to the audit, is guilty of an offence.

(5) The holder of an authorisation who:

(a) fails to retain any written documentation required to be prepared by the holder in connection with a mandatory audit for a period of at least 5 years after the audit report concerned was produced to the Director-General (or such other period as is prescribed by the regulations), or


(b) fails to produce during that period any such documentation to the Director-General on request,

is guilty of an offence.

Maximum penalty:

(a) in the case of a corporation—1,000 penalty units, or

(b) in the case of a natural person—500 penalty units.

246S Self-incriminatory information not exempt

Information must be supplied by a person in connection with a mandatory audit, and this Division applies to any such information that is supplied, whether or not the information might incriminate the person.

246T Use of information

(1) Any information in an audit report or other documentation supplied to the Director-General in connection with a mandatory audit may be supplied by the Director-General to, and taken into consideration by, any person who has functions under this Act, the Environmental Planning and Assessment Act 1979 or the environment protection legislation and may be used by that person for the purposes of those laws.

(2) Without limiting subsection (1):

(a) the Director-General is authorised, despite any other Act or law, to provide a relevant agency with any such information, and

(b) any such information is admissible in evidence in any prosecution of the holder of an authorisation for any offence (whether under this Act or otherwise).

(3) In this section, relevant agency means the Department, or a public authority engaged in administering or executing the environment protection legislation, the Environmental Planning and Assessment Act 1979 or such other legislation, if any, as may be prescribed by the regulations.

246U Nature of voluntary audit

(1) For the purposes of this Division, a voluntary audit is an audit commissioned or carried out voluntarily, whether or not in relation to activities carried out under an authorisation.

(2) An audit is not voluntary if there is a contemporaneous requirement for a mandatory audit in relation to the same or substantially the same activity or other matter and the audits are to be carried out by the same person.

246V Protected documents

(1) Documents prepared for the sole purpose of a voluntary audit are protected documents for the purposes of this Act.

(2) The protected documents include the final report of the audit and any documents prepared during the course of the audit for the sole purpose of the audit.

(3) Without affecting the generality of subsection (1) or (2), documents are not protected if they are prepared wholly or partly in connection with monitoring or reporting that is required by any conditions of an authorisation or by a direction under section 240.


246W Nature of protection

(1) A protected document:

(a) is not admissible in evidence against any person in any proceedings connected with the administration or enforcement of this Act, the environment protection legislation or such other legislation, if any, as may be prescribed by the regulations, and

(b) must not be inspected, copied, seized or otherwise obtained by the Department, any authority prescribed by the regulations or by any other person for any purpose connected with such administration or enforcement.

(2) Neither the Department, a prescribed authority nor any other person may, for the purpose referred to in subsection (1) (b), require a person to answer any question or provide any information about the existence of the document or about what it contains.

(3) The onus of establishing that a document is a protected document lies on the person asserting that it is protected.

(4) A court may inspect any document that is claimed to be a protected document for the purpose of determining whether it is or is not a protected document.

(5) The regulations may prescribe procedures for making and determining claims that a document is a protected document.

246X Lifting of protection

(1) Documents prepared in relation to a voluntary audit cease to be protected if the person asserting or relying on the protection uses or relies on (or attempts to use or rely on) the whole or any part of one or more of the documents, whether directly or indirectly, in any proceedings connected with the administration or enforcement of this Act, the environment protection legislation or such other legislation, if any, as may be prescribed.

(2) This section does not apply where the person is using or relying on (or attempting to use or rely on) a document for the purpose of establishing that the document is protected.


Appendix I

Petroleum (Onshore) Regulation 2007

27A Audits

(1) The Director-General may by notice in writing direct the holder of a petroleum title to cause an audit to be carried out in respect of any matter specified in the notice that relates to the title or to activities carried on under the title.

(2) The notice may specify any one or more of the following:

(a) the persons who may carry out the audit (including whether any such person is required to be approved by the Director-General),

(b) the manner and time in which the audit must be carried out,

(c) the documents that must be produced in relation to the audit and the content and form of any such documents,

(d) the persons to whom, and the time and manner in which, such documents are to be provided.

(3) More than one notice may be served under this clause in respect of a title holder or in respect of a particular audit.

(4) It is a condition of every petroleum title that the holder of the title must comply with any notice given under this clause.

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