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Yuleba grazier shares insights on gas negotiation

Posted on 17 September 2015

Sourced from GasFields Commission Queensland

Third generation Yuleba grazier Brett Griffin reckons it takes a lot of homework, hard negotiating and the right attitude to develop a beneficial and workable relationship with the onshore gas industry and shares his insights and tips on landholder negotiation.

This is another in a series of stories where landholders have shared lessons learnt with the GasFields Commission to help inform and assist other landholders and continue to improve understanding between the rural and onshore gas industries in Queensland.

Brett and Di Griffin run cattle on their 16,000 acre forest grazing block in the Yuleba district, north-west of Miles in Queensland's Surat Basin. Over the past few years they have negotiated with a gas company for 128 wells, 150 kilometres of gathering lines and 3 kilometres of major pipeline.

The first knock on the door by the gas company came in 2012, and for Brett the timing couldn't have been worse, coming just one month after he'd received the freehold deeds for the property which his family had been paying off for three generations.

"Initially I was angry - I was never going to sell it and no matter what the valuer said - I had a different sort of value on the property because this was our home," Brett says.

He says, it was only when that fact finally got through to them (the gas company) that things started to change for the better when it came to trying to negotiate an agreement.

Do your homework

Brett says, the big challenge was trying to get information about the gas resource under their property and the scale of the infrastructure they were planning to develop to extract the gas.

"It was a long tough road and the hardest thing was to get information - without a doubt. How do you argue for something when you don't know what you are sitting over is worth?

"When we kicked off we were arguing from the point of zero knowledge and with people (the gas company) who had every ace in the hand and not afraid to use it," Brett says.

So Brett, who describes himself as an old cattle dealer, set out to try and understand the gas business and what the proposed wells on his property might be worth to the gas company.

"We did heaps of homework - we went and had a look at some gas fields and tried to get an idea of the impact - but still don't get your head around it completely because we thought the well sites would be the most impacted thing which is wrong - there's lot of other things to consider.

He also suggests where possible it is better to go independently and talk directly to other landholders with gas infrastructure on their properties and don't just rely on the gas company.

"It's like an agent taking you to a bull sale - they'll only show you the ones they are selling!

He urged landholders to play their cards carefully during the negotiations.

"This is the biggest poker game you're going to play and it's for keeps so be very careful about stating your price first - work on the theory that I'll wave my hand when the bidding is high enough - that is real important," he says.

Work with neighbours

Brett also recommends working with like-minded neighbours to support each other and share knowledge. In his case there were two other neighbours he supported and worked with during the negotiations of his own Conduct and Compensation Agreement (CCA).

"When you sit here on your own and there's six of them walk in here you know it's fairly daunting trying to talk and think on your feet.

"In a way we were fortunate there were three of us together who were negotiating CCAs at the same time and we weren't shrinking violets.

"When we finally started to get our head around our CCA there were some pretty frank discussions and banging on the table - but that's the way you've got to be sometimes," Brett says.

He acknowledges and respects that some landholders have preferred to negotiate solely through their lawyer, but Brett chose to only use his lawyer to check the fine print of his CCA.

Those CCA negotiations took the best part of a year and he signed up on 30 June 2013. The construction of the first phase of 70 wells began in September 2013.

Relationship managers are key

Brett says when the negotiations first started there were land access officers from the gas company who would say what you wanted to hear and then would shoot through without doing anything.

He says that all changed one day with one bloke who turned up and became their full-time company contact which he says without a doubt signified the turnaround in their relationship absolutely.

"If he told you a lie, you found out tomorrow when he had to look at you in the face. And so they didn't tell you a lie and they became a lot better for us.

"We don't want 'yes' men, we want someone who is blunt and down the line and can tell you where to pull your head in. But you also must have that rapport, and once you have that, your life will be much easier," Brett says.

Good relationships can create additional opportunities

Once having established a good working relationship with the gas company, Brett says he was able to negotiate a number of additional things that have benefited both him and the company.

For example, he shared a new Precipice bore and storage tank on the boundary of his neighbour's property which produced about 2ML per day that had been provided by the company.

At that time, Brett says, the drought had really started to bite and we had to get water to the northern end of our property, but I was worried that if I put pipe in, they might come behind me and cut it up accidentally and then I was going to be very difficult to deal with.

"So they turned up and said righto you clear the line and put some turkey nests (dams) in and we'll put the pipe and water in.

"It had been in my long term plan to clear those suckers along that boundary, so I went whoosh and was able to get all that tidied up in one hit because I had the where with all to do it, without getting too stretched.

"Well that's just turned my life around there were 16 troughs I ran off that line including water to the house (which I had to pay for) and that's come in the form of compensation for laydowns and other things we were able to negotiate.

"We've managed to make other property improvements such as cleaning out dams and building new ones. We've also been able to sell other water and gravel, and even set up my sons in a water trucking business supplying the gas industry in this area.

"The gas company had 1000 tonne of rubble they were going to have to transport to Roma and pay to dump it. We've been able to negotiate to use that rubble for by-wash areas on some of our steep country we were doing each other a favour.

"Suddenly you can make things work with a good relationship and a bit of horse trading - but don't be stupid, because they aren't stupid people," he says.

Next phase - monitoring rehabilitation work

The second tranche of wells are currently under construction and the land rehabilitation works are well advanced though recovery has been slowed by the persistent drought conditions.

However, there has also been issues with the rehabilitation of some of the pipeline easements as a result of what Brett describes as flawed trenching techniques.

"We are having a bit of a donnybrook with them (the gas company) at present because unfortunately in some areas they haven't put (soil) layers back in right from the trenches - it's a big fix I'm not signing off on this till it's right.

"I've even done my own experiment with an agronomist to try and rehabilitate the sodium subsoil layers using gypsum and water, and I've got the paperwork to prove it.

Brett says when in a dispute with a gas company, it's important to have proper evidence.

"If you gonna make an argument don't sit here banging on with a bit of bush theory or old wives tales - you need to go and get some evidence because they will just sit here and argue with you - they've got plenty of smart people," he says.

Don't rollover, but try and get along

In reflecting on his experience with the onshore gas industry over the past few years, Brett says, we didn't get off to a great start but we now have a very good relationship (with the gas company).

"It was like a giant arm wrestle and finally when we sort of got the better of this, then everything fell into place. I don't mind going and having a row with them, because I think I can handle them and they've done some wonderful things for me as far as the property goes.

"They've taken away our privacy and our sense of isolation - but you can't live in yesterday - you can only look forward and for taking that privacy away I don't have any guilt about extracting some dollars out of them and the plus side of that is that we are now drought proof.

"I say to people you don't have to roll over but try and get along and your life will be a lot happier," Brett says.

Brett's top tips for CCA negotiation
  • Do your homework - go inspect gas fields and talk to other landholders
  • Work with a neighbour - one you get along with and can support each other
  • Be firm but reasonable in your negotiations - don't ever state your price first
  • Be careful choosing your own professional advisory team
  • Get to know who's who in the gas company identify the right decision makers
  • A good working relationship can create additional opportunities
  • If have a dispute - make sure you have proper evidence to back your claims.