Court rules Morrison government grant to develop gas field in Beetaloo Basin invalid

Environment Centre Northern Territory argued the $21m for drilling program was legally unreasonable on multiple grounds

Environmental and First Nations activists protest against proposed fracking plans in the Northern Territory's Beetaloo Basin, outside the Empire Energy offices in Sydney in May. Photograph: Loren Elliott/Reuters

A Northern Territory environmental group has won a court battle over a Morrison government grant to develop the Beetaloo Basin onshore gas field.

The Environment Centre NT argued in the federal court that the $21m grant for exploration wells was legally unreasonable on multiple grounds.

Justice John Griffiths on Friday rejected arguments that the federal resources minister, Keith Pitt, should have considered the risks of increasing greenhouse gas emissions when he made the grants.

But the judge declared the grant agreements void because a delegate for the minister had signed them after the environmentalists had taken their case to the court, instead of waiting for the legal proceedings to end.

Pitt said he welcomed the decision because it would allow grants for the development of the Beetaloo Basin to proceed.

The ECNT’s lawyers at the Environmental Defenders Office also said Pitt should have considered the potential climate change risks from developing the onshore shale gas field before handing taxpayers’ money to Imperial Oil and Gas.

They failed on those grounds but the judge did agree the funding contract, which was signed on 9 September, just days after ECNT applied for an urgent court hearing over the matter, was legally unreasonable and there had been a jurisdictional error.

He ordered on Thursday that the commonwealth’s decision to enter into three contracts with the Empire Energy subsidiary was invalid and declared them void.

Elaine Johnson, director of legal strategy at EDO, said while Griffiths had rejected the arguments made on climate grounds: “The door has been left open for climate risks to be considered in other decisions around the use of public funds for fossil fuel projects.”

ECNT had lodged its legal case just days before Pitt awarded the grants to Empire Energy.

Johnson said the judge had made the three grants invalid because the minister had awarded them despite an active legal case surrounding them.

Kirsty Howey, a co-director of ECNT, said the judge had found the greenhouse gas emissions from the seven exploration wells were not significant.

“This doesn’t close the door on the scrutiny of fossil fuel grants,” she said. “Fossil fuel subsidies are not a reasonable use of public money.”

Pitt said he welcomed the decision because it had confirmed the legal instruments underpinning the $50m Beetaloo Cooperative Drilling Program were valid “and we welcome that decision so that we can move forward with the program”.

“The Beetaloo Basin has enormous potential to deliver the gas Australia needs for the future,” the minister said.

The Beetaloo sub-basin has been estimated to hold more than 200,000 petajoules of gas. The extraction and consumption of gas from this precinct would equate to a 13% increase on Australia’s 2020 greenhouse gas emissions, according to one expert report.

The $21m contract between the government and the Empire Energy subsidiary is part of a $50m federal grants program.