1 December 2011
By JAMIE WALKER and BEN PACKHAM
FARMERS and other property owners would reap 1 per cent of the value of coal-seam gas extracted from their land under a proposal by Nationals senators to appease rural anger at the industry.
The "default agreement", to put a floor on the income paid by CSG companies to the owners of land with gas wells, would augment land-access measures proposed by the all-party Senate Rural Affairs and Transport Committee in its landmark examination of the booming coal-seam gas sector.
In an addendum to the joint report, Queensland Nationals Senate leader Barnaby Joyce and NSW Nationals senator Fiona Nash argue that a return of 1 per cent of the gross income from each gas wellhead to the land owner was "logical and fair".
"If 99 per cent is shared between the state and the miners then 1 per cent for farmers should hardly be deemed unreasonable for an asset that is extracted from their place and an asset that historically in many instances they owned," the senators said.
Senator Joyce said last night the committee had heard evidence that some landholders received only 75c for every $1000 of gas extracted. "There is a complete disparity in bargaining terms," he said. "One party has all the laws on their side, the other doesn't even know where they are starting from."
Industry sources, while not dismissing the proposal, said a standardised payment could work against property owners hosting a poor-yielding well or wells.
Santos, one of the major players in CSG development, generally paid landowners $5000 per well as a drilling fee and an annual royalty of $1500-$3000 per well in production. Some farmers signed up by the company had up to 60 active wells on their land, returning six-figure incomes.
The report debunks claims that farmers have no control over their land when targeted by CSG interests, finding "an array of legal protections", although no absolute right of refusal of access.
The Senate committee blames the industry for generating the hostility that has led to the lock-the-gate campaign by an alliance of green activists, farmers and community groups.
The committee heard "extensive evidence of offhand, patronising and simply insulting behaviour by companies", including unannounced arrivals, phones calls at odd hours and "gratuitous, not to say stupid" advice on how farmers should deal with gas exploration.
"In too many cases it appears that the gas companies adopted a take it or leave it attitude to negotiations with farmers, shifting the onus to the farmer to seek to negotiate reasonable conditions of entry and appropriate compensation for CSG activity on their land," the report says.
CSG could co-exist with agriculture, but it was unreasonable and unwise to expose farm and grazing land to the risk of long-term damage through water depletion, erosion or salt contamination, it said.
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