Why a Compensation Estimator?

The Compensation Estimator was years in the making.

Why a Compensation Estimator?

The GasFields Commission's Compensation Estimator was years in the making.

The need for an estimate tool became clear when Robert Scott conducted an independent review of the GasFields Commission and its functions in 2016.

In his final report Mr Scott noted that, “When it comes to negotiating an amount of compensation in particular, there can be a real information asymmetry between a landholder and a CSG company as a CSG company will have negotiated many such agreements”. 

His review also found that, “Landholders expressed an overwhelming sense of powerlessness from the perceived imbalance in the land access framework and their inability to afford the legal and technical expertise necessary to understand the impacts on their land from CSG activities and to negotiate workable access arrangements and appropriate compensation”.

Stemming from those observations was a series of recommendations including, “… the Commission needs to critically review its current communication activities and develop an extension and communication program that leads to landholders becoming informed and self-reliant in their dealings with the CSG companies, both in terms of what they know and in terms of their capacity to source information and advice as required.

And so we did.

The Compensation Estimator was one of the tools we set about building to meet that need.

Resource companies all have their own ways of calculating compensation agreements so we decided to build a simple tool for landholders as well.

By building the Compensation Estimator into a phone app it can be constantly reviewed and improved.

It can be updated to include new legislation, court precedents, operational considerations and incorporate feedback from users, government and industry.

The compensation estimator is good use of modern technology to fix an old-fashioned communications problem.

Phone apps aren’t for everyone, we know that, but the estimator is another important tool in a suite of information solutions the Commission is working on to, in the words of Robert Scott, … empower landholders in their negotiations and increase self-reliance …”

 

Case studies

The GasApp Compensation Estimator is proving to be a great tool to assist discussions between landholders and resource companies. Below are just some examples of how it is being used.

CASE STUDY 1, 2018: Landholder with existing exploration infrastructure on a grazing property had been advised more activity would be a number of years away and possibly involve multiple resource companies.

Background:

The landholder had been speaking with a number of others in the area currently involved in negotiations with resource companies.

They were interested in what to discuss around compensation when the resource company or companies approached.

GasApp discussions: 

The landholder used the GasApp Compensation Estimator to establish the sort of information that would be required to negotiate a compensation agreement.

They were surprised by the sort of information that could be raised as part of the negotiation and advised the Commission that they had never considered discussing these factors with a resource company in the past.

The discussion also helped raise awareness of how resource companies may splice up upfront and annual payment over the life of the gas field.

Outcome:

The landholder admitted to the Commission that they had no idea they should discuss some of the impacts to their business that the Compensation Estimator raised.

They advised that in the past they felt they just had to accept what was being offered and assume that it was fair.

The landholder told the Commission that their knowledge had increased and they felt a bit more confident about having the conversation about the impacts to their business and lifestyle.

CASE STUDY 2, 2018: A couple was negotiating compensation for a high impact development activity on their grazing property.

Background:

The landholders had existing infrastructure on the property and were aware there were more phases to come.

They advised the Commission that while one of them was able to clearly articulate what compensation they felt they were entitled to the other was more emotionally attached to the process and couldn't articulate confidently their compensation claim.

GasApp discussions:

The couple used the GasApp Compensation Estimator to work through the process and discuss what inputs were required and how to "reality check" the inputs.

The Compensation Estimator input fields allowed them to test their concern about the worst case scenario of what might go wrong against the reality and remove a lot of emotion from the discussion.

The discussions also highlighted the need for the inputs to be backed up with evidence.

Outcome:

The landholders advised the Commission that they were more confident about what they had to discuss with the resource company.

Conversations held with the resource company are improving and now include a "reality check" around impacts to their business based on the Compensation Estimator inputs.

The landholders have negotiated a favourable agreement within the resource company timeframe and now have a better business relationship with the company.