Hematite Petroleum Pty Ltd v Victoria [1983] HCA 23

High Court of Australia Gibbs C.J. Mason, Murphy, Wilson, Brennan and Deane JJ. Hematite Petroleum Pty Ltd v Victoria [1983] HCA 23

ORDER Demurrer overruled with costs. Declare that s. 2 of the Pipelines (Fees) Act 1981 is invalid. Remit the action to a single justice of this Court for further consideration.

Cur. adv. vult.

The following written judgments were delivered:—

1983, Aug. 5 Gibbs C.J.

This demurrer raises for consideration the question of the validity of s. 2 of the Pipelines (Fees) Act 1981 Vict.. That section substituted for s. 35(2) of the Pipelines Act 1967 Vict. as amended, ("the Pipelines Act ") seven new sub-sections (sub-ss. (2) to (8)) which, inter alia, fix the amount payable as pipeline operation fees under that Act.

The facts which must be accepted as correct for the purposes of the demurrer may be summarized as follows. The plaintiffs, as joint venturers, carry on the business of the exploration for, recovery, production and processing of petroleum, and have since 1968 produced petroleum from wells located in Bass Strait more than three miles from the coast of Victoria. Their operations are now, and have at all material times been, carried on as follows. Hydrocarbons in the form of oil or gas derived from the wells in Bass Strait are carried from offshore production platforms to a gas processing and crude oil stabilization plant at Longford in Gippsland in Victoria. There the hydrocarbons are processed and separated into stabilized crude oil, liquefied petroleum gas and natural gas. The stabilized crude oil is conveyed by a pipeline ("the crude oil pipeline"), which is the subject of pipeline licences nos. 35 and 126, to a fractionation plant and crude oil tank farm at Long Island Point on Westernport Bay in Victoria. The liquefied petroleum gas is conveyed by another pipeline ("the gas liquids pipeline") the subject of pipeline licences nos. 27 and 34, to the plant at Long Island Point. The natural gas is conveyed by a third pipeline ("the Gas and Fuel Corporation pipeline"), the subject of pipeline licences nos. 75, 117, 120 and 135, to Melbourne. The plaintiffs are the co-owners of the crude oil pipeline and the gas liquids pipeline and the co-holders of licences nos. 27, 34, 35 and 126, which are issued under the Pipelines Act; they also hold the permits which under that Act must be held by a person to whom a licence is issued. They are the co-owners of the substances that pass through those two pipelines. All the petroleum recovered from the wells in Bass Strait is conveyed to the Longford plant and all of the products of the Longford plant (except the natural gas) are conveyed by the crude oil pipeline and the gas liquids pipeline to the Long Island Point plant. There is a continuous flow of crude oil and gas liquids respectively through those two pipelines, and no other substances have been conveyed by them. At the Long Island Point plant further processing occurs; the products are propane and butane (which are marketed as liquefied petroleum gas), ethane (which is marketed separately) and crude oil. Approximately 90 per cent of the propane and butane is exported by ship from Long Island Point and a substantial part of the crude oil, which is sold by the plaintiffs, is transported to its destination by sea. It does not appear from the statement of claim how the ethane is disposed of. There is no other practicable way of conveying the crude oil and the liquefied petroleum gas from Longford to Long Island Point other than by the pipelines. There is no port at Longford; Long Island Point is the nearest deep water port. The recovery of the petroleum from Bass Strait, its processing and production at Longford and Long Island Point and the delivery of the products transported by sea is virtually a continuous process and the transportation of the crude oil and liquefied petroleum gas through the crude oil pipeline and the gas products pipeline is an integral step in the production of the products sold by the plaintiffs. The natural gas produced at Longford is sold and delivered by the plaintiffs to the Gas and Fuel Corporation of Victoria at Longford, and is conveyed to Melbourne by the Gas and Fuel Corporation pipeline, which is owned by the Gas and Fuel Corporation of Victoria, which holds licences nos. 75, 117, 120 and 135.