Oil and gas block offer results due next Tuesday

Thursday 6th December 2012

Energy Minister Phil Heatley is set to announce the results of this year's block offer for oil and gas exploration permits on Tuesday next week, and government officials are confident more activity will follow in the coming years.

General manager of New Zealand Petroleum and Minerals David Binnie told Parliament's commerce committee the 2012 'block offer' will be announced next week, and that officials are halfway through the 2013 tender. Next week's announcement will canvas blocks covering approximately 40,285 square kilometres of offshore seabed and approximately 5,704 square kilometres of land in Waikato, Taranaki, Tasman, the West Coast and Southland.

"We're hopeful ... the results of that will mean more activity for many companies into the next five years of that exploration programme," Binnie said. "Onshore we've made significant progress, in my personal view in Taranaki and on the East Coast. If you look forward, the East Coast is the most prospective on shore."

Heatley's pending announcement comes after Brazilian oil company Petrobras this week handed back exploration licences for deep sea oil and gas prospects after undertaking initial seismic surveys in the lightly explored Raukumara Basin, off East Cape.

The 2013 block offer is seeking expressions of interest from oil and gas explorers for acreage in five offshore areas: the Taranaki, Northland, Reinga, Canterbury and Great South Basins.

Appearing as part of the Ministry of Business, Innovation and Employment's annual review, Binnie talked down a suggestion that exploration companies may be wary of New Zealand given hold-ups in regulations around the Exclusive Economic Zone.

Companies are well aware of where the legislation is sitting at the moment," he said. "The first deep water well from the current block offer will be three, four years ahead of us and I'm pretty confident the legislation will be in place by then."

A Ministry for the Environment spokesperson told BusinessDesk an exposure draft of proposed EEZ regulations is due to be published in mid-2013, with final decisions on the regulations to follow a public submissions process.

Elsewhere at Parliament, the chief executive of the Environmental Protection Authority, Rob Forlong, told the local government and environment select committee that responsibility for compliance and monitoring of the new EEZ regime was under discussion among various government agencies at present.

Answering questions from Green Party MP Eugenie Sage, Forlong said the Ministry for Primary Industries, the petroleum and labour standards arms of the Ministry for Business, Innovation and Employment, and Maritime New Zealand were involved in the discussions.

Asked whether the EPA would have in-house expertise in oil well drilling, Forlong said that would be among issues discussed at a board workshop in February.

"We are talking to other agencies because it may be that between us we have enough critical mass, in which we case we might share (resources)," he said.

Sage also asked whether the EPA was sufficiently well-funded to undertake compliance and monitoring in the EEZ, and whether it faced potential shortfalls created by the fact that even if it could recover costs from applicants for activity in the EEZ, "individual parties can't be asked to fund generic monitoring."

Forlong said the EPA hoped to be able to charge for cost recovery, but that until the EEZ regulations were finalised, he could not judge whether current funding was sufficient to meet its monitoring and compliance obligations.

BusinessDesk.co.nz

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