SPE 88491
Underground Gas Storage: Issues Beneath the Surface
Kanaga Dharmananda, Corrs Chambers Westgarth and Neil Kingsbury, Corrs Chambers Westgarth and Harnesh Singh, Law School,
University of Western Australia
Copyright 2004, Society of Petroleum Engineers Inc.
This paper was prepared for presentation at the SPE Asia Pacific Oil and Gas Conference and
Exhibition held in Perth, Australia, 18–20 October 2004.
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presented, have not been reviewed by the Society of Petroleum Engineers and are subject to
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Introduction
The storage of natural gas by re-injection into the surface has
become quite commonplace in various developed countries
around the world. It is a relatively new phenomenon in
Australia, and issues, not yet resolved, remain.
The ability to store gas underground has enormous implications
for the competitiveness of the gas market in Australia.
Underground storage allows producers effectively to manage
their gas flow in times of high and low demand. For gas users,
underground storage has the potential to increase the choice of
suppliers. For gas commodity traders, underground storage
provides increased ability to hedge gas contracts which in turn
will help to foster a strong spot market for gas in Australia.
As a result of the increased interest in, and the development of,
underground gas storage facilities in Australia, most of the
relevant petroleum legislation in each State and Territory in
Australia has been amended, or is currently being reviewed, in
order to deal with the legal and technical issues that arise with
underground gas storage.
Some of the issues that arise, and yet to be finally resolved
from underground gas storage include:
(a) Who owns the re-injected gas? The Crown or the
producer? This is particularly relevant to avoid the
double payment of royalties. The issue becomes quite
complex where processed gas is injected into a partially
depleted petroleum reservoir.
(b) What regulatory regime should regulate underground
gas storage?
(c) Who is responsible in the event that liability arises from
the underground storage of gas?
(d) What rights do the owners of land affected by an
underground gas storage facility have to the
underground gas?
Our paper discusses these issues and provides a brief overview
of the current legislative regime regulating the underground
storage of gas in specific Australian jurisdictions.
Underground Gas Storage
Background. Underground storage has been proved to be
one of the most efficient ways of storing gas. Indeed, nature
has been storing gas under the surface for millions of years.
The use of underground storage reservoirs has also been found
to be a far cheaper alternative than storing gas in pipelines and
tanks that are expensive to build and to maintain1.
Underground storage is also safer. Natural gas that is stored
underground is inert due to the lack of oxygen. This means
that the gas cannot burn or explode2.
For many years, countries throughout the world have been
using underground reservoirs to store gas for use at a later
stage.
In 1997, the world already had over 580 underground storage
facilities that offered a storage capacity 260 Bcm, or
approximately 10% of the world’s annual consumption3.
How gas is stored underground. The technology for
reinjecting gas back into sub-surface reservoirs has been
around for a long time. Underground gas storage has been
used in North America since the early part of last century4.
The first experimental underground gas storage facility was
built in Ontario, Canada in 19155.
1
J Dietert and D Pursell, “Underground Natural Gas Storage”, Energy
Industry Research, Simmonds & Company, 28 June 2000.
2
Noble D D: “Ten Years of Federal Underground Gas Storage
Condemnations”, Eastern Mineral Law Institute, 1988 9 16.
3
M Chebrelie et al.: “Underground Gas Storage: Technological Innovations
for Increased Efficiency”, paper presented at the 17th World Energy
Conference Congress, Houston, 1998.
4
T Kennedy: “Filling Cavities: Storing Natural Gas Naturally”, AMPLA
Yearbook (1999) 521.
5
M Chebrelie et al.: “Underground Gas Storage: Technological Innovations
for Increased Efficiency”, paper presented at the 17th World Energy
Conference Congress, Houston, 1998
2 SPE 88491
Gas is usually injected into the same underground reservoir
that it was extracted from, or in a depleted or partially depleted
underground gas reservoir that is located close to the consumer
market.
However, there are many types of underground reservoirs that
can be used to store gas. Aquifers, salt cavities and man made
reservoirs (such as disused coal mines)6 can all be used to
store gas. There are advantages and disadvantages in each
type of underground reservoir.
The most ideal underground reservoirs for storing gas are
depleted gas fields. In part, this is because the characteristics
of the depleted field are already quite well known, in terms of
its capacity, pressure and production history. Another reason
is that depleted gas reservoirs are capable of storing vast
quantities of gas (relative to other types of underground
reservoirs). This provides producers with the ability to be able
to meet large demands for gas during the peak winter season.
One other obvious advantage of depleted gas reservoirs is that
the reservoir already has the geological characteristics that are
ideal for gas storage. It contains the required porosity and
permeability that is favourable for gas storage and an
impermeable layer of rock to trap the gas. In addition, the
above-ground infrastructure that was originally used to
produce gas from the depleted field can also be used to inject
and store the gas underground.
In simple terms, in order to convert an underground gas
reservoir into a storage facility, the existing wells must be
refurbished and plugged and connected to a compression
station in order to maintain the integrity of the reservoir. Once
the impermeable layer has been re-established, gas is injected
into the reservoir to raise the pressure of the field to the
required level for gas to be injected back into the reservoir.
This gas is called the base gas.
After the base gas is injected, working gas is injected into the
reservoir. The maximum capacity of the underground gas
reservoir will be reached when the pressure of the reservoir
reaches the original pressure of the production reservoir.
The working gas is then extracted during peak times and
replacement working is injected to replenish the working gas
extracted.
Australia has only recently started to utilise underground
reservoirs for the storage of gas. The first commercial
underground gas storage facility was built in western Victoria
by TXU Corp in 19997. The construction of the underground
gas storage facility was in direct response to the Longford gas
disaster in Victoria which severely disrupted the supply of gas.
Reasons for storing gas underground. The main reasons
for storing gas underground are that:
6
K Graff: “Under Pressure: Developments in Regulating Underground Gas
Storage”, AMPLA Yearbook (2001) 503
7
www.txu.com.au
(a) Gas producers and transporters can better manage gas
production so as to keep in line with market demand.
The ability to stockpile gas means that suppliers can
balance the level of consumption and supply.
(b) The continuity of gas supply can be secured by
stockpiling reserves of processed gas in large
underground reservoirs that are ready for use when
regular supplies are curtailed or at times of peak
demand. For example, gas storage allows suppliers
to store gas in summer (low load period) for use in
the winter (the high or peak load period), effectively
reducing price volatility.
(c) Gas storage can stimulate competition by increasing
the number of gas suppliers to a market.
(d) Underground gas storage lowers the costs of storage
for producers and transporters because it minimises
the number of large pipelines needed to store gas.
This cost savings helps to lower the cost to the end
user.
(e) Gas storage also facilitates the creation of a gas spot
market by allowing the hedging of gas contracts to
cater for differentials in gas prices.
Issues arising from underground gas storage.
Several legal issues arise from storing gas underground.
The most important issue in relation to underground gas
storage is the ownership of injected gas. When gas is injected
into the surface, does the stored gas belong to the person who
injected it or does ownership revert back to the Crown?
Another issue is that when storing gas underground there is the
risk that the stored gas may leak from the reservoir and
migrate to adjoining gas fields. What are the consequences for
an injector when gas migrates away from the storage
reservoir? Does the injector lose ownership of the gas that has
leaked? Is the injector liable for trespass or nuisance to the
owner of the adjoining land, or the holder of underground
storage rights to the adjoining land?
A person that injects gas into an underground reservoir is also
concerned about the integrity of the storage reservoir. In order
to keep gas stored within the underground reservoir, it is
necessary to keep the impermeable rock layer completely
sealed. Any disruption to the impermeable layer can ruin the
entire gas field.
In particular, given that it is not always the case that an
underground reservoir may be completely or accurately
defined, it is not uncommon for an operator to discover that its
storage facility has been ruined due to the drilling of
exploration or production wells in areas that were not thought
to be within the “protective zone” of the underground
reservoir.
SPE 88491
The Issue of Ownership
Background. Under the common law, the geographical
limits of land is best described by the maxim cujus est solum,
ejus est usque ad coelum ed ad infernos which is literally
translated as “to whom belongs the soil, his it is even to
heaven and to the middle of the earth”8.
The courts have interpreted this to mean that land comprises
the surface of the earth (and all things fixed to or growing on
the surface), the space directly below (to the centre of the
earth), the space directly above and all minerals except for
royal minerals (gold and silver) and other minerals excluded
by virtue of the tenure granted by the Crown.
In each Australian State and Territory, the presumption that an
owner of land owns all minerals directly under his land
(except for the royal minerals) has been abolished by
legislation. Under the petroleum legislation passed in each
each Australian State and Territory, the Crown owns all
petroleum located in the subsurface within their relevant
boundary.
Similarly, under the Commonwealth petroleum legislation, the
Crown in right of the Commonwealth owns all the petroleum
in the waters lying between State and Territory waters and
Australia’s continental shelf.
As a concession, each Australian jurisdiction allows licensed
producers to extract the petroleum in exchange for royalties.
Where petroleum in its gaseous state is injected back into the
sub-surface for storage purposes, the question of ownership of
the injected gas arises.
The paper discusses the legal position of underground gas
storage in the context of the on-shore petroleum legislation
applicable in Victoria, South Australia and Western Australia.
Does the gas vest back to the Crown or does the
producer who extracted the gas still own the injected
gas?
(a) Victoria
In Victoria, the Petroleum Act 1998 (“Victorian Act”)
provides that the Crown owns all petroleum that came to be on
or below the surface of the soil, except petroleum that came to
be on or below the surface with human assistance9.
Section 13 of the Victorian Act states:
The Crown owns all petroleum on or below the
surface of any land in Victoria that came to be on or
below that surface without human assistance
8 11
Halsbury’s Laws of Australia at [355-20].
9 12
Section 13 of the Petroleum Act 1998 (Vic)
3
The Victorian legislation is therefore expressly clear that
injected gas (which is put under the surface with human
assistance) does not vest back to the Crown.
(b) South Australia
In South Australia, the Petroleum Act 2000 (“SA Act”) is not
as clear on whether a person still retains ownership of gas
which is first extracted but then re-injected underground for
storage.
Under the SA Act, section 5 states that the Crown owns all
petroleum10. The section provides:
5. (1) The property in petroleum and other
regulated resources is vested (or continues to
be vested) in the Crown.
(2) On the production of petroleum, or some
other regulated substance, by a person
lawfully entitled to produce the petroleum or
other regulated substance, it becomes the
property of the person who produced it.
The definition of petroleum in the SA Act covers any naturally
occurring substance consisting of a hydrocarbon or a mixture
of hydrocarbons11.
"petroleum" means a naturally occurring substance
consisting of a hydrocarbon or mixture of
hydrocarbons in gaseous, liquid or solid state but
does not include coal or shale unless occurring in
circumstances in which the use of techniques for coal
seam methane production or in situ gasification
would be appropriate
It is clear under the SA Act that petroleum becomes the
property of a person once the petroleum is produced12.
The question of whether injected gas is “naturally occurring”
and therefore falls within the definition of petroleum under the
SA Act is not entirely clear.
Is gas naturally occurring once it has been extracted but is then
injected back into an underground reservoir? One can argue
that the gas has been injected with human assistance and
therefore the gas is no longer “naturally occurring”.
Is gas naturally occurring if it has been extracted but injected
back into the same reservoir for storage purposes?
If the gas has been processed, it could be argued that the gas is
no longer naturally occurring, because it is no longer in its
naturally occurring state. If the gas has not been processed
then the argument may become more difficult to make.
However, it has been argued that, even without any
10
Section 5(1) of the Petroleum Act 2000 (SA)
Section 4 of the Petroleum Act 2000 (SA)
Section 5(2) of the Petroleum Act 2000 (SA)
4 SPE 88491
processing, once gas has been extracted it loses its natural state
because its temperature and pressure have changed13. But
once the gas is injected into the underground reservoir does
the gas revert back to its natural state? If it does, presumably
the gas then reverts to the Crown. If it does not, it can be
argued that the injected gas, even though injected back into the
same reservoir, is no longer naturally occurring and therefore
ownership should not revert back to the Crown.
In the case where the gas is injected into a man-made storage
reservoir or a natural reservoir which is different from the
reservoir where the gas was originally extracted, the argument
raised above is strengthened.
In the case where the gas is injected into a man-made storage
reservoir, it can be strongly argued that the gas could not be
“naturally occurring” because it is held in a man made
reservoir.
In the case where the gas is injected into a reservoir that is
different from the reservoir that it was extracted from, it could
also be argued that the injected gas is not “naturally occurring”
because it did not naturally occur in the new natural reservoir.
(c) Western Australia
In Western Australia, the situation under the Petroleum Act
1967 (“WA Act”) is quite similar to the SA Act. There is
however one slight difference.
Similar to the SA Act, the WA Act provides that petroleum
vests in the Crown14. Also similar to the SA Act, the
definition of petroleum means:
(a) any naturally occurring hydrocarbon,
whether in a gaseous, liquid or solid state;
(b) any naturally occurring mixture of
hydrocarbons, whether in a gaseous, liquid
or solid state; or
(c) any naturally occurring mixture of one or
more hydrocarbons, whether in a gaseous,
liquid or solid state, and one or more of the
following, that is to say, hydrogen-sulphide,
nitrogen, helium and carbon dioxide,
and includes any petroleum as defined by
paragraph (a), (b) or (c) that has been returned to a
natural reservoir, but excludes oil shale15.
Petroleum becomes the property of a person licensed to extract
the petroleum once the petroleum has been recovered16.
13
D Murphy: “Regulation of Commercial Gas Storage Operations in Western
Australia” AMPLJ (2001) 20, 65
14
Section 9 of the Petroleum Act 1967 (WA)
15
Section 5 of the Petroleum Act 1967 (WA)
16
Section 120 of the Petroleum Act 1967 (WA)
However, unlike the SA Act, the WA Act specifically provides
that petroleum also includes naturally occurring hydrocarbons
which have been returned to a natural reservoir17.
The definition appears to be quite complex.
Does the WA Act mean that gas is still petroleum within the
meaning of that Act (ie it belongs to the Crown) even if the
gas has been extracted but has been injected back into the sub-
surface? The question turns on whether the injected gas can
be considered a “naturally occurring” hydrocarbon, given that
the gas will need to be injected with human assistance.
It has been suggested that if the injected gas has not been
processed, the answer to the above questions is likely to be
yes. But if the injected gas has already gone through some
degree of processing, there is an argument that the gas is not
naturally occurring because its original natural state has been
altered18.
It is arguable that, in almost all cases, once gas has been
extracted, its natural state has already been altered. This is
because as soon as gas is brought to the surface, its
temperature and pressure has changed – even without any
man-made processing having occurred. But once the gas is
injected into an underground reservoir, presumably the gas
reverts back to its natural state.
The WA Act specifically provides that ownership of
petroleum gas is vested in the Crown where the petroleum
“has been returned to a natural reservoir”. A strict
interpretation of this wording is that the gas must be returned
to the natural reservoir from which it was extracted. This
follows from the meaning of the word “returned”.
Arguably, if gas is extracted and injected into a man-made
reservoir, the gas does not revert to the Crown.
Similarly, if gas is extracted and injected in a different
reservoir than the one from which it was extracted, it is
arguable that the gas does not fall within the definition of
petroleum and does not revert back to the Crown.
Similar to the situation in South Australia, the question of
ownership of injected gas in Western Australia is far from
clear.
(d) Conclusion
At law, there is an argument that unless there is a clear
intention provided in the relevant legislation, once ownership
of petroleum vests in a person, that ownership cannot be
extinguished. 19 This argument is based on Windeyer J’s
comments in the case of Wade v NSW Rutile Mining Company
Ltd and Others (1969) 121 CLR 177.
17
Section 5 of the Petroleum Act 1967 (WA)
18
D Murphy: “Regulation of Commercial Gas Storage Operations in Western
Australia”, AMPLJ (2001) 20 65
19
R M Willcocks: “Underground Gas Storage In Australia” (1988) 6(2)
Journal of Energy and Natural Resources Law (1988) 6(2) 77
SPE 88491
In Victoria, it is clear that injected gas does not vest in the
Crown. However, the situation in both South Australia and
Western Australia is not so clear cut. The legislation in those
states does not show a clear intention to vest ownership of the
injected gas back to the Crown. It is arguable that, provided
that the injected gas does not fall within the definition of
petroleum, the injected gas will not vest in the Crown.
Other legal issues
Other legal issues that arise in the context of underground
storage of gas include:
(a) What if the injected gas is still owned by the producer
but commingles with gas owned by the Crown?
(b) How is ownership affected if the injected gas
migrates to another location which is subject to a
different petroleum production licence?
(c) Whilst statute may displace the common law
presumption that an owner of land owns all minerals
directly under the surface of his land, does the owner
still own the cavern directly underneath his land that
is used to store the gas?
None of these issues have been specifically addressed in
Australia.
As to the question raised in (a) above, there does not appear to
be any case law specifically on the issue of the commingling
of injected gas with natural gas. However, in the case of Mills
v Stokman20 it was held that tailings that came to sink into the
earth belonged to the land and the owner of the land could take
title to the tailings. This case has been used to argue that
commingling of injected gas with natural gas will mean that
ownership of the injected gas will revert back to the Crown.
As to the question raised in (b) above, this issue has not yet
been specifically addressed in Australia. However, it will be
useful to consider the US approach to this issue, which is
discussed below.
As to the question raised in (c) above, the relevant petroleum
legislation does not actually displace an owner’s right to the
cavern underneath his land. Therefore, it can be argued that an
owner still owns the cavern underneath his land.
The US Approach
The issue over ownership of injected gas also does not appear
to have been completely resolved in other jurisdictions,
particularly in the United States which has been at the
forefront of underground gas storage for many years.
One ownership issue that has been the subject of numerous
decisions in the United States is the issue of who owns the
20
(1967) 1166 CLR 61
5
underground caverns used to store gas. Does the cavern
belong to the land owner or the owner of the mineral rights?
In Oklahoma, a state which is at the forefront of developing
regulations for underground gas storage in the United States,
the issue still remains unresolved. There have, however, been
a number of cases in Oklahoma which have looked at the
rights that a surface owner has to the cavern underneath its
land.
In Oklahoma, the leading argument appears to be that, the land
owner retains title to the cavern underneath his land and to all
the minerals that are still underneath the land. The holder of
the right to produce minerals from the land does not actually
hold title to the minerals in place but only to the minerals that
have been produced. All the other rights to the land (including
the substrata) remain with the land owner. However, this
argument has not always been accepted by the courts in
Oklahoma. Therefore, the law on this issue is not quite
settled21.
Another ownership issue that does not yet appear to be
completely decided in the United States is who owns gas
which migrates outside its permitted boundaries? The
majority view is that the stored gas remains the property of the
person who injected the gas (the injector) but the injector will
be liable for damages to the other landowner for unauthorised
use of property. However, in Kansas, the courts have
suggested that in some limited circumstances, the injector can
lose title to gas that has migrated outside of its permitted
boundaries.
One unique remedy under US law is the ability of a person to
gain certain easements over land by condemnation.
Condemnation suits have been used by underground storage
operators in the US to protect underground gas storage fields
from activities which may disrupt the integrity of their
underground gas storage facilities.
A number of well known test cases in Ohio have provided a
series of well established principles in the US in relation to an
underground gas storage operator’s right to condemnation.
In one case, known as the Parrott case22, a rule known as the
“map rule” was established. In this case, the Columbia Gas
Transmission Corp tried to condemn land owned by a local
farmer, Stanley Parrot, to acquire an easement over Mr
Parrott’s land to prevent any drilling occurring on the land
which may disrupt an underground gas reservoir (the Weaver
Storage Field) which was close to the boundary of Mr
Parrott’s farm. The judge in this case denied the
condemnation action because Mr Parrott’s farm was more than
a mile from the certified boundary of the Weaver Storage
Field. In the US, an underground gas storage operator must
file maps with the Federal Power Commission (FPC) in order
21
E R King and D D Junker, “Developments in Underground Storage” Gable
& Gotwals, paper published on the internet at www.gablelaw.com
22
Columbia Gas Transmission Corp v An Exclusive Gas Storage Easement
(Parrott), 578 F.Supp. 930 (N.D Ohio 1984), aff d. 776 F 2d 125 (6th Cir 1985)
6 SPE 88491
to gain authorisation for the operation of an underground gas
storage facility.
Whilst the judge denied the condemnation action, the case
confirmed the right of an underground gas storage operator to
obtain by condemnation an easement protecting their
underground storage reservoir. However, this right only
extends to the boundaries of the map filed with the Federal
Energy Regulatory Commission (FERC).
One flaw in this rule that has been pointed out is that it is not
always the case that an underground storage operator will be
able accurately to define the geological boundaries of an
underground storage reservoir. What may have been
considered the boundaries of an underground gas reservoir
may later be found to actually be only a small area of the
actual reservoir and this means that to protect an operator’s
right of condemnation, updated maps will need to be filed with
the FERC.
23
In subsequent cases, namely the Johnson case and the
Hostettler case24, the extent of the “map area” was clarified.
This area allows for the inclusion of what is known as an
active area and a protective area of the underground gas
storage reservoir. The protective area is the area of the
impermeable barrier that traps the gas in the reservoir. This
area is of high importance to an underground gas storage
operator so that invasive drilling operations do not destroy the
underground gas field.
Many of these legal issues have not arisen in Australia, due to
the relatively short period of time that underground gas storage
has been utilised in Australia. However, these issues will
undoubtedly arise as the number of underground gas reservoirs
in Australia increase and operators are confronted with the
need to protect their investments from invasive drilling or the
unintentional migration of stored gas.
Judging from the relevant petroleum legislation in Australia,
there are three things that are clear:
(a) The Crown will want something in exchange for the
grant of underground gas storage rights and easements
to protect those rights.
(b) The response in Australia to many of the issues arising
in the US is likely to be dealt with by legislation not
through case law.
(c) Competition law and access issues are still required to
be addressed. Although, there already has been some
legislative action on this issue. This is discussed below.
The Regulatory Regime and Third Party Rights
Because underground gas storage is a recent phenomenon in
Australia, the regulation of underground gas storage, until
23
Johnson, 705 F. Supp. 1242 (N.D. Ohio 1988)
24
Hohstettler, 688 F. Supp. 1245 (N.D. Ohio 1988)
recently, was not specifically dealt with. In many
jurisdictions, this is still the case. However, recent legislative
reforms have implemented a regulatory regime for the
underground storage of gas.
Victoria. Under the Victorian Act, a production licence
authorises a holder to inject and store petroleum in reservoirs
for the purpose of later extracting it.25
The Victorian Act also requires the development of an
underground storage plan by a person wishing to reinject gas
before re-injection operations can start26. The underground
storage plan must be adhered to at all times27.
The Victorian Act allows a person to apply to the Minister for
access to a reservoir within another person’s production
licence where the applicant is unable to obtain the agreement
of the other party.28
The Minister is required to seek the views of the other party
and can only grant access if the reservoir is not being used,
there is no present intention for the other party to use the
reservoir and the use of the reservoir will not interfere with the
operations of the other party.29
South Australia. Under the SA Act, a production licence
authorises (subject to its terms) the holder to use a natural
reservoir for the storage of petroleum30.
The SA Act also allows third parties to apply for access to
natural reservoirs to store petroleum31. If an applicant cannot
reach agreement with the relevant parties, the Minister is
empowered to impose fair and reasonable commercial terms
for the applicant to obtain access to the underground
reservoir32.
An applicant for third party access to a natural reservoir may
be required to apply for an associated facilities licence under
the SA Act. It is not clear whether the associated facilities
licence is sufficient for the recovery of gas stored under a third
party access regime or whether the applicant would be
required to convert its associated facilities licence to a
production licence33. One view is that the production licence
of the existing licensee will have to be used by the applicant
for access in order to recover its stored gas.34
Western Australia. The WA Act allows the underground
storage of gas for the purpose of storage, and later recovery, if
the approval of the Minister is first obtained. The applicant is
required to enter into an agreement with the Minister on the
25
Sections 8 and 46 of Petroleum Act 1998
26
Sections 68 and 69 of Petroleum Act 1998
27
Section 70 of Petroleum Act 1998
28
Section 74 of Petroleum Act 1998
29
Section 76 of Petroleum Act 1998
30
Section 34(1) of the Petroleum Act 2000
31
Section 79 of the Petroleum Act 2000
32
Section 79 of the Petroleum Act 2000
33
Peter H Holden “The South Australian Petroleum Act 2000: A New
Approach” AMPLA Yearbook (2000) 557
34
D Murphy: “Regulation of Commercial Gas Storage Operations in Western
Australia”, AMPLJ (2001) 20 65
SPE 88491 7

details and methods for injecting, storage and subsequent

recovery of the gas. 35.

There is no requirement under the WA Act that a person must

hold a production licence. Darren Murphy in his article
examined whether a production licence would be needed in
order to recover stored gas. His conclusion was that if the gas
does not fall within the definition of petroleum (ie the gas is
no longer naturally occurring), there is uncertainty as to
whether a production licence is required.

However, if the stored gas is petroleum as defined in the WA

Act, a production licence would be required in order to recover
the petroleum because of the operation of section 49 of the
WA Act which states that a person can only recover petroleum
under a licence.
The WA Act does not provide any guidance on how a third
party may which has identified an underground reservoir for
storing gas may obtain access to that reservoir. It is arguable
whether the Trade Practices Act 1974 (Cth) could redress this
issue.

Conclusion

The issues lurking behind the surface of the sophisticated and

burgeoning area of underground storage are both intricate and
delicate.

The intricacy emerges from the interconnections between

different regulatory regimes and legal principles that affect
dealings with the land and matter beneath it.

The delicate nature of the topic is due to the involvement of

the Crown, the prospect of political interest, given the
perception of environmental harm sometimes attached to
dealings with, or under, any land.

These considerations ensure that future legal developments,

affecting the underground storage of gas in Australia, will be
charged with many layers of activity and interpretation. In
some respects, this active state of affairs concerning the live
legal issues is somewhat in contrast to the inert state of gas
stored underground. But, as this paper sought to show, there
are many issues beneath the surface of the storage of inert gas.

35
Section 67