Coal Seam Gas Extraction: Does Landholder Compensation Match the Mischief?

Abstract

Coal seam gas (CSG) extraction is set for expansion in New South Wales. However, controversy accompanies its introduction in that the present law grants miners access to private lands for the purposes of exploration and production. The NSW Petroleum (Onshore) Act 1991 regulates compensation for land access, and a number of questions have been raised about the adequacy of its compensation provisions. Additionally, compensation for coal seam gas poses a challenge for the valuation profession in that valuation theory has yet to be developed in this emerging sphere of practice. This paper compares the legal and physical impacts of coal seam gas infrastructure on private lands with the current provisions of the NSW Petroleum (Onshore) Act 1991 and questions if the present compensation provisions match the injury inflicted upon the holders of private land by coal seam gas occupation. The paper reviews the NSW legislation and case law relating to coal seam gas acquisition to identify the legal affects, whilst field observation and remote sensing techniques identify physical effects. The physical effects are then categorised according to the heads of compensation that apply to the compulsory taking of parts of property in Australia. A comparative analysis determines if all of the various “harms” that result from coal seam gas occupation are compensable under the current law. The research indicates that “severance” and “injurious affection” are key issues for landholder compensation where CSG plant occupies parts of land; however, the right to claim for “injurious affection” is unclear in the present legislation.