The West Australian government has backed away from establishing a petroleum industry environmental fund despite previously saying it accepted all the recommendations from the independent fracking inquiry.

A fund similar to WA's mining rehabilitation fund, in which companies contribute money to ensure abandoned mines are environmentally rehabilitated without costs falling to the taxpayer, was one of the recommendations made by the scientific panel established by the government to investigate the fracking industry.

The government committed to accepting all of the inquiry's recommendations when they released the report and lifted a moratorium on fracking in Western Australia in 2018.

Mines and Petroleum Minister Bill Johnston spoke to the ABC in 2019 about a petroleum exploration company that was financially unable to rehabilitate wells drilled in the remote WA desert.

He said he had been developing plans to introduce a petroleum rehabilitation fund to protect taxpayers when companies failed to meet obligations.

"Arising from the enquiry into hydraulic fracturing, there's been a recommendation for the creation of a new system for managing the rehabilitation obligations," Mr Johnston said at the time.

"The one that I most favour is the establishment of a petroleum rehabilitation fund modelled on the mining rehabilitation fund, and we're well advanced on that."

But less than a year later, the Department of Mines, Industry Regulation and Safety (DMIRS) published their proposed amendments on the issue that said a petroleum rehabilitation fund was not justified.

"It is not anticipated from the current level of activity that future long-term risks will cumulatively justify the establishment of a special-purpose fund," the report said.

'More complicated'

Mr Johnston did not respond to questions from the ABC about a petroleum rehabilitation fund but his senior media adviser said the Minister had not committed to the proposal.

"He never said that the state government would establish a petroleum rehabilitation fund," the adviser said in an email.

"He said that oil and gas was different to mining so a fund was more complicated, but the state government is considering options."

Tom Hatton, recent past chair of the WA Environmental Protection Authority, said the apparent backing away from a petroleum rehabilitation fund would be reasonable if there was another way to ensure environmental rehabilitation.

Dr Hatton also spoke as the chairman of the independent scientific inquiry into fracking, which made the recommendation.

"The specific recommendation was to have something that doesn't mean that when a company is done, or has a problem with its activities in the petroleum area, that the public liability is covered."

WA's mining rehabilitation fund (MRF) was introduced in 2014 and requires companies to make a non-refundable contribution to help prevent the taxpayer picking up the bill when mines go bust.

Shortly after its inception, the state's auditor-general credited the MRF as a significant improvement on environmental rehabilitation of mines previously found to be severely lacking.

But the DMIRS's recommendation for the petroleum industry was to adopt aspects of Commonwealth petroleum regulations to maintain insurance, bank guarantees, and indemnities.

The department's report acknowledged that a shortcoming of the Commonwealth regulations was that it could leave the taxpayer liable where a company failed to meet long-term environmental rehabilitation.

DMIRS was unable to provide a spokesperson for an interview during the pre-election caretaker period but responded in writing to questions from the ABC.

In relation to a question about the taxpayer becoming liable for long-term rehabilitation under regulations adopted from the Commonwealth, DMIRS said changes were being made.

"The Commonwealth financial assurance and decommissioning framework is currently under review," the department's written response said.

"WA will most likely consider any changes to this framework."

Fundamental disagreement

The move away from a petroleum rehabilitation fund was welcomed by Claire Wilkinson, the WA director of the Australian Petroleum Production and Exploration Association.

"You couldn't just take the mining rehabilitation fund and apply it to oil and gas activities.

"There's simply not enough activity there and we already have a framework in place that assures you have to abide by certain insurance provisions."

Rather than more stringent regulations, Ms Wilkinson said a more effective application of existing regulations could prevent the taxpayer being left with the bill to rehabilitate the environment.

"I think that's where a good diligent regulator can really ensure that that sort of situation doesn't happen," she said.

"What we're waiting for now is exactly what those tweaks may be that will further reinforce the current system to really, really make sure it's completely watertight."

The industry view remained opposed to that of Martin Pritchard, the director of Environs Kimberley, the environmental organisation active in the WA region where a number of onshore petroleum and fracking proposals had been made.

Mr Pritchard said a freedom of information request into the Nicolay 1 well in the Great Sandy Desert, which had not been rehabilitated after stocks in the exploration company New Standard Energy crashed to less than a cent, demonstrated the need for a rehabilitation fund.

"In those documents, it actually shows that the clean-up of the well is estimated at more than $1.5 million," Mr Pritchard said.

Mr Pritchard also accused the WA government of breaking trust with the public when they announced that they accepted all the recommendations of the state's independent scientific fracking inquiry in 2018, which included a rehabilitation fund.

"The McGowan government said it was going to accept all the recommendations of the fracking inquiry, and here we are now with the government backing away from that," Mr Pritchard said.

"When there are only a couple of wells that have been fracked so far then we are very fearful for the future, which could include thousands of wells across the Kimberley if this industry takes off."

Despite the government's apparent move away from a petroleum rehabilitation fund, Dr Hatton remained hopeful that when new regulations were introduced they would ensure petroleum wells would no longer be left unrehabilitated.

"That's a good example of why you need to effectively pursue the opportunities to get those assurances," he said.

"The proof will be in the pudding with whatever approach they decide to take on assurances … should they authorise such activities again in the state, that it will reflect substantial protections of the public interest."