The Queensland government has fined coal seam gas company Arrow Energy $1m for breaches of land access rules over four years, after an investigation into allegations the company drilled diagonally beneath farmland without notifying the landholders.
The fine is among the most significant non-compliance penalties ever issued to a resources company in Queensland. Groups that have raised concerns against the rapid spread of the coal seam gas wells in Queensland’s farming communities say the penalty is a “small start”, but that landholders’ rights to object to gas drilling must now be strengthened.
The investigation began last year after farmers in the Darling Downs discovered Arrow Energy – a joint venture between global giants Shell and PetroChina – had drilled “deviated” wells from neighbouring properties and underneath their land.
State authorities have spent more than 10 months assessing allegations that such activity was done in breach of land access rules, which required formal entry notices and for landholders to be notified.
Queensland law classifies directional drilling as a “preliminary activity”, generally allowing companies to drill under private land without a prior agreement in place but regulations require them to notify the landholder before starting.
Relationships between farmers and the gas industry in the area have become fraught, to the extent the GasFields Commission Queensland issued a statement calling on the state government to take “immediate action” to conclude its investigation and resolve “coexistence” issues.
In a statement, the Queensland resources minister, Scott Stewart, said the $1m fine was for breaches of the land access framework by Arrow between 2018 and 2022.
“The significance of this penalty takes into account Arrow’s indiscretions,” Stewart said in a statement.
“As a government, we make no apologies for holding businesses to account if they do the wrong thing.
“Queensland’s resources framework promotes the coexistence of landholders, regional communities, and industry, however coexistence is a fragile concept, and it needs to be nurtured by all parties to be truly sustainable.
“Arrow Energy has acknowledged it has made mistakes in the past and in more recent times the company has taken tangible steps towards fostering genuine coexistence with landholders impacted by their operations.
“A line will now be drawn under this historical behaviour for industry and the focus from now on is ensuring that this doesn’t happen again.”
Stewart said the GasFields Commission is also investigating the issue of coal seam gas-induced subsidence, its potential impact on farming operations and the adequacy of the existing regulatory framework.
Guardian Australia has reported on concerns that Queensland law ascribes no environmental value to farmland, and that landholders have little recourse in the event coal seam gas drilling causes subsidence on their properties.
Lock the Gate, a group of conservationists and farmers opposed to gas extraction, said the fine was unlikely to act as a deterrent, noting the wealth of Arrow’s parent companies. Shell posted a profit of more than $19bn this year.
The group said the fine was a “small step” but that more needed to be done to hold the industry to account.
“This is ultimately just a slap on the wrist for a massive multinational company like Shell/PetroChina,” said Lock the Gate’s Queensland spokesperson, Ellie Smith.
“Minor changes to company procedures won’t fix this. Farmers want an unequivocal right to say no to mining on or under their land and Queenslanders want the farms that produce their food and fibre protected and prioritised over short-term, damaging gas.”
In a statement, Arrow Energy said it accepted the decision and penalty.
“We recognise we made mistakes in the earlier implementation of the deviated wells model,” the statement said.
“We have acknowledged this publicly and made substantial improvements to our operations.
“We remain deeply committed to continually improving the way we engage with all landholders.”