The Search for Oil in New Zealand Waters - Work to be Done?

• Author: Paul David
• Position: Barrister, Auckland. A summary version of this paper was delivered at the MLAANZ New Zealand Branch Conference at Taupo in April 2011
• Pages: 49-68

(2011) 25 A&NZ Mar LJ

THE SEARCH FOR OIL IN NEW ZEALAND WATERS:

WORK TO BE DONE?

Paul David∗

1 Plans for development

New Zealand is currently committed to unlocking the petroleum potential within its waters. The

government introduced the Petroleum Action Plan (‘Plan’) in November 2009 which aims to lift the

value of petroleum exports from NZ$3 billion (as at November 2009) to NZ$30 billion by 2025.1

Currently, some new permits for exploration have been granted. The work under the five year

exploration permit granted to the Brazilian oil and gas company, Petrobras, in June 2010 to explore a

12 333 square kilometre block of sea bed in the Raukumara Basin off the East Cape of the North

Island, has recently become headline news as a result of protest actions by environmentalists and iwi

which have sought to disrupt the wor k of the Petrobr as seismic survey sh ip.2

New Zealand has a large exclusive economic zone (‘EEZ’) and extended continental shelf which, as a

state party to UNCLOS, it has the right to explore and exploit.3 Although several onshore and offshore

oil and gas fields have started production in the Taranaki Basin since 1970, to date, the exploration and

exploitation of seabed resources has been carried out at a fairly modest level. The scientific data

suggests that there is a further significant opportunity to develop New Zealand’s resources.4

Given the

national and global economic situation and the central role of oil and gas in developed economies, the

New Zealand government’s desire to increase oil exploration in the near future is understandable.

2 Areas of exploration

Currently, most of New Zealand’s producing oil and gas fields are located in the Taranaki Basin. The

Maui field now only produces natural gas, although its gas reserves are dwindling. Previously, for

about 10 yea rs, it produced oil. The Kupe field produces natural gas and some light condensate, as does

the smaller Pohukura field. The largest oil field is the Maari field. Tui is a smaller oil field.

Prospecting or exploration permits have recently been issued to several major international companies.

While most exploration currently occurs in the Taranaki Basin, the Great South Basin and the New

Zealand Orogenic Belt Basin are seen as having potential for devel opment. The activity in the Taranaki

Basin takes place at water depths of approximately 200 metres to 300 metres. Some current exploration

is taking place in much deeper environments.5

The ‘blow-out’ at the Macondo well in the Gulf of Mexico in April 2010 which caused the death of 11

workers and gave rise to the largest ever oil spill in US waters, has highlighted the risks in offshore

exploration, particularly where deepwater drilling is involved. The spill underlined the importance of

ensuring that exploration within New Zealand waters is carried out within an appropriate regulatory

∗ Barrister, Auckland. A summary ver sion of this paper was delivered at the MLAANZ N ew Zealand Branch Co nference at

Taupo in April 2011.

1 See Ministry of Ec onomic Development website <htt p://www.med. govt.nz>.

2 In March/April 2011 a flotilla of vessels operated by environmental groups such as Greenpeace and Te Whanau A Apanui, the

East Coast of the North I sland iwi, ha s sought to disrupt the work of the Ocean Explorer, the Petrobras seismic survey ship.

Protester s were ser ved with not ices under the Maritime Transport Act 1994 (NZ) ordering them to stay at least 200 metres

away from the survey ship and its support vessel. On 23 April 2011 the skipper of a fishing vessel owned by the local iwi was

arrested by police for allegedly operating his vessel in an u nsafe manner i n the vicinit y of the surve y ship and its support

vessel. See, ‘Skipper charged over safety concerns’, The Sunday Star Times (online), 24 April 2011.

<http://www.stuff.co.nz/national/4922307/Skipper-charged-over-safety-concerns>. At the time of writing the protest and

actions by the rele vant authorities in relatio n to it are ongoing.

3 UNCLOS arts 56(1) and 77(1).

4 A recent survey, the Fraser Institute Global Petr oleum Survey, which is referred t o in the Comparative Review of Health and

Safety an d Environmental Legi slation for Offshor e Petroleum O perations (‘ Review’), concludes that New Zealand was the 18th

most favou rable country for p otential oil explora tion of 133 countrie s surveyed: Fraser Institute, Global Petroleum Survey

2010 (June 2010) 12 <http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-

news/resear ch/publicat ions/global-p etroleum-survey-2010.pdf>. As part o f its Petr oleum Actio n Plan, th e Government has

made a sizea ble investmen t in publishing e xisting seismic data and acquiring furt her data to provide bett er information

concerning the possible resources for the industry.

5 By way of example, the US deepwat er exploration compa ny Anadarko Petr oleum has in terests in thr ee exploratio n permits in

the Taranaki and Canterbury Basins.

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The Se arch Fo r Oil in New Zea land Wa ters: Wo rk to be Done ?

(2011) 25 A&NZ Mar LJ

regime and that New Zealand has the necessary technical expertise to monitor offshore exploration and

respon d appropriatel y, should accident s occur.

3 New Ze aland Review

As part of the Plan, the government commissioned an initial comparative review of the New Zealand

legislative regime relating to offshore petroleum operations (‘Review’).6 After the Review was

published in September 2010, the Report to the President of the National Commission on the

Deepwater Horizon Oil Spill and Offshore Drilling was produced in January 2011.7

Both documents

provide a good background to the issues arising in relation to offshore oil exploration which all those

with an interest in the area should consider.

At this time in the proposed process of further exploration in New Zealand waters it seems appropriate

that the legislative regime relating to the permission process for offshore exploration, the operational

control of such exploration and the capacity to respond to a spill or other accident, and the technical

resources available to ensure compliance should be reviewed.

4 Outline of paper

This paper seeks to outline the legislative regime which applies to offshore exploration in New Zealand

waters,8

to discuss how that regime might respond to a major pollution incident involving an escape of

oil from an offshore installation, and to suggest the areas where amendment to the regime might be

considered, particularly in the light of the findings of the Review and the Report into the Deepwater

Horizon oil spill.

5 Current legislative regime

As noted, New Zealand’s rights to explore and exploit the sea and seabed are derived from the United

Nations Law of the Sea Convention 1982 (‘UNCLOS’).9 New Zealand legislation has established an

EEZ and New Zealand’s rights over its EEZ and extended continental shelf.10

Generally, the New

Zealand legislative regulation of matters such as pollution from ships, dumping, civil liability for oil

pollution damage, oil pollution preparedness and response and intervention on the high seas in case of

oil pollution casualties is based on the relevant international conventions. The conventions are

implemented, for the most part, by provisions of the Maritime Transport Act 1993 (NZ) (‘MTA’) and

maritime or marine protection rules made under th e MTA.

There is no specific legislative en actment solely concerned with the regulation of offshore explorati on -

this mirrors the international position where there is no specific convention directed at this activity. The

regulation of offshore exploration and offshore installations even in relation to specific areas such as

the control of discharges into th e environment is to be found in a range of legi slative provisions.

The grant of permits for prospecting, exploration and mining of oil and other minerals is regulated by

the Crown Minerals Act 1991 (NZ) (‘Crown Minerals Act’). The health and safety of employees on

offshore installations is governed by the Health and Safety in Employment Act 1992 (NZ) (‘HSEA’) and

industry-specific regulations made under s 21 of the Act. Provisions of the Resource Management Act

1991 (NZ) (‘RMA’) and the MTA (and delegated legislation under both Acts) regulate the operation of

offshore installations from the environmental perspective and provide for civil and criminal liability for

discharges from offshore installations. While these are the principal legislative provisions applicable in

6 New Zealand Ministry of Economic Development, Comparative Review of Health and Safety and Environmental Legislation

for Offshore Petroleum Operations (September 2010) <http://www.me d.govt.nz/upl oad/Offshore%20Petroleum%20-

%20Final%20Report%20and%20Annexures.pdf>.

7 National Commissio n on the BP Deepwater Ho rizon Oil Spill and Offsh ore Drilling, Deepwater: the Gulf Oil Disaster and the

Future of Offshore Drilling – Report to the President (January 2011)

<http://www .oilspillcommission.gov/ sites/default/files/documents/DEEPWATER_ReporttothePresident_FINAL.pdf>.

8 For more detail on the regime as at 2008, insofar as it relates to marine pollution, see Paul David, ‘Marine Pollu tion’ in D Nolan

(ed), Environmental and Resource Management Law (LexisNexis Butterworths, 3rd ed, 2005) ch 9.

9 United Nations Convention on the Law of the Sea, opened for signature 10 December 1982, 1833 UNTS3 (entered into force 14

November 1994) (‘UNCLOS’).

10 See, Territorial Sea, Contiguous Zone and Exclusive Economic Zone Act 1977 (NZ), and Continental Shelf Act 1964 (NZ) ss

3-5A.

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