A group of Queensland farmers say they can’t get adequate insurance and are calling for a national compensation fund to be set up to protect landholders from possible future claims relating to coal seam gas.
- A group of Queensland farmers are calling for a new levy on the gas industry to fund a national scheme to protect against impacts of coal seam gas
- Australia’s largest insurer no longer provides public liability insurance for farms with gas infrastructure
- Farmers can still get public liability insurance, but experts say that will exclude coal seam gas activity
They say insurers won’t commit to cover farmers for liability caused by infrastructure remaining on, or under farm land after a gas company has withdrawn from drilling on private land.
“If I can’t get insurance, I can’t operate my business,” Zena Ronnfeldt said, a farmer from near Dalby in Southern Queensland.
Farmers say they need public liability insurance to protect them if an employee or contractor is injured on their property.
It can also be a condition of lending by the banks.
Last year Australia’s biggest insurer IAG stopped offering public liability insurance to landholders with coal seam gas infrastructure on their properties.
Farmers with gas wells or pipelines can still get public liability insurance from general insurers, but experts say it is dependent on the particular contract between the landholder and the gas company.
“There wouldn’t be one (insurer) that would take on a client without a gas company taking on some sort of indemnification,” Toowoomba-based Insurance broker Jason Johnston said.
Indemnifications are negotiated between the gas company and the host landholders to protect against CSG related risk.
A new levy on gas companies
Southern Queensland farmer Zena Ronnfeldt recently travelled to Parliament House in Canberra to lobby for a national fund to be set up to protect farmers.
“The coal seam gas industry needs to have an industry levy which would be implemented federally to put in place and properly fund a scheme,” she said.
“As the agricultural sector we have lots of levies, we have levies on our grain, levies on our livestock.”
When a gas well is decommissioned, it is cut off one to two metres underground, plugged with cement and the ground is rehabilitated.
Farmers can’t farm without insurance
The GasFields Commission (GFC) is an independent body operating in Queensland, which facilitates interaction between landholders and gas companies.
Acting chief executive Warwick Squire said the GFC has been working with landholders, the gas industry and the state government to create an indemnity clause to help protect farmers.
“We’re very close to an agreement across the Ag, gas and insurance sectors,” Mr Squire said.
Insurance broker Jason Johnston has seen the draft indemnity clause the GFC has been working on.
“It think this indemnity document, that seems to be going in the right direction, that will help,” he said.
But the indemnity clause would only apply during the operation of a gas project.
“We’re exploring the issue of long term liability further with our stakeholder groups at the moment,” Mr Squire said.
The Insurance Council of Australia (ICA) said it is in talks with stakeholders about issue of long term liability for landholders.
“Insurers are equipped to cover farm associated risks, but most Australian insurers do not specialise in underwriting resource and mining activities,” an ICA spokesperson said.
“The industry is committed to working with stakeholders, most particularly farmers and their representatives, to ensure landholders are adequately protected against any loss.”
Chief executive of the Australian Petroleum Production and Exploration Association (APPEA) Andrew McConville said every farmer’s situation was different.
“As with all insurance policies, exclusions apply and farm insurance products therefore generally do not cover third party infrastructure such as telecommunications infrastructure, electricity infrastructure, mining activities, and gas activities,” he said.
As for the long term risk, that was question for State Government regulators.
“The Queensland Government is currently enhancing it’s ‘residual risk’ policy, and the oil and gas industry is working in partnership with government and other stakeholders in this process,” Mr McConville said.
“The oil and gas industry has a long history and excellent safety record investing in the rehabilitation of gas infrastructure.”
Agriculture Minister David Littleproud agreed that landholders shouldn’t be liable for the risk.
Mr Littleproud said the states, which receive royalties from gas companies, should address the farmers concerns.
“The gas companies leave this infrastructure, now if that infrastructure then causes an injury the landholder should not be liable for that and I think the landholders have a legitimate concern here,” he said.
“There’s an opportunity through that royalty process to give confidence to landholders that the states will be an insurer of last resort or that petition off some of that money to make sure there’s an opportunity for redress, if there’s an issue down the track,” Mr Littleproud said.
Farmer Zena Ronnfeldt said the impost on landholders was an extra burden in an already tough business.
“It is unfair that landholders are forced to bare the risk for the national good of a liability that is created by coal seam gas companies that those companies and state governments reap the benefit from,” she said.
The Queensland Government has been contacted for comment.