Parliamentary Commissioner

New Zealand Parliamentary Commissioner Jan Wright has called for government regulations monitoring onshore oil and gas drilling to be upgraded. Image courtesy of NZ Parliament.

By Neil Ritchie

THE NEW Zealand Parliamentary Commissioner for the Environment has found regulations for monitoring and managing the environmental risks of onshore oil and gas drilling need to be improved, particularly if fracking is involved.

Commissioner Jan Wright released her second report into hydraulic fracturing in early June as a follow-up to her initial 2012 study and found much of the public concern about fracking was associated with the expansion of the industry beyond Taranaki, this country’s sole petroleum producing province.

She said that in some parts of the United States and Australia the exploration for and production from unconventional oil and gas resources had meant the number of wells rising so rapidly that regulators sometimes found themselves “scrambling to catch up”.

Several unconventional exploration wells have been drilled on the east coast of the North Island in recent years and more are planned, often targeting the shale formations of the East Coast basin. “The shale in this part of the country has been compared with the Bakken and Eagle Ford rock formations in the United States where the number of wells has proliferated in just a few years,” Dr Wright said.

“The East Coast basin is very different to Taranaki in a number of relevant ways, apart from the difference in rock formations”.

“The region is drier and very reliant on a number of key aquifers. There are major known earthquake faults, so wells would be more vulnerable to damage from seismic activity, and therefore more likely to leak into groundwater. Increasingly, the region identifies itself as a producer of premium food, and there would be conflicts between this and a mushrooming oil and gas industry”.

Wright also said there were still some deficiencies in the way the oil and gas industry was managed in Taranaki – “some fresh thinking is needed”.

She has made the following six recommendations:
• The government should develop a national policy regarding environmental oversight and regulation, paying particular attention to unconventional petroleum resources.
• Revision of regional council plans should include better rules for dealing with oil and gas wells. Most council plans do not even distinguish between drilling for water and drilling for oil and gas.
• Wells need to be designed to minimise the risk of leaking into aquifers.
• Processes around who pays if something goes wrong need to be improved and that abandoned oil or gas wells need to be monitored – “the older a well is, the more likely it is to leak”.
• Regulations on hazardous substances at wellsites need to be better enforced.
• The disposal of waste from wells by spreading it on farmland needs review.
There have been instances, in Taranaki, of farm animals grazing these areas before the breakdown of hydrocarbons is complete.

While stating she would prefer to see a focus on “green growth,” Dr Wright acknowledged that natural gas can play a role in the transition to a low carbon economy when it is used to replace coal.

The Green Party and Taranaki environmentalists said the report painted a negative picture of the petroleum sector, highlighting the potential pitfalls involved in oil and gas exploration and production.

Energy and Resources Minister Simon Bridges and Environment Minister Amy Adams welcomed the report, saying it was a “useful contribution to the discussion on how best to manage the environmental effects of onshore petroleum development” and they were pleased the commissioner recognised those environmental impacts could be effectively managed if best practice was followed.

The Petroleum Exploration and Production Association of New Zealand also welcomed the report, saying the sector was already serious about environmental safeguards, health and safety and robust regulations.

“We look forward to further discussions about working together with the regulators and our communities to continuously improve the way our sector operates . . . getting regulations right is important to us and to New Zealanders and we support looking at how they can be strengthened.”

However, it is known that explorers remain frustrated by the differing rules and regulations of different regional or district authorities and would like to see more consistency in standards, particularly in regard to consenting and permitting matters.