Tender for oil and gas exploration permits opens

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Tender for oil and gas exploration permits opens

The government’s annual tender process to attract gas and oil exploration interest in 2012 is now underway, the Ministry of Economic Development announced today.

“By 15 October 2012, the government expects to receive work programme bids from reputable companies interested in investing in exploration over 23 onshore and offshore areas designated for exploration from next year,” says David Binnie, General Manager of New Zealand Petroleum & Minerals, a branch of the Ministry of Economic Development.

The 23 “blocks” have been chosen based on current knowledge of the geology and oil and gas prospectivity of the areas.

“The blocks cover a number of petroleum basins and a variety of environmental settings and resource types to attract a range of potential explorers with different expertise and interests,” says Mr Binnie.

“The blocks have been selected because there is a likelihood that they contain significant quantities of oil and gas.”

The blocks cover 40,198.5 square kilometres of offshore seabed and 3,305.5 square kilometres of land in Waikato, Taranaki, Tasman, the West Coast and Southland.

The areas finalised for the tender follow consultation with iwi and local authorities on 25 proposed blocks.

“Following careful consideration of the 25 submissions received, it has been decided to defer tendering of two onshore Taranaki basin blocks until a future block offer. A number of other blocks have been revised in shape or had conditions attached,” says Mr Binnie.

“It was encouraging to see submissions that sought practical solutions to local concerns, without being overly restrictive to impede responsible resource development.

“Officials are now contacting local government and iwi submitters to ensure they understand how their submission has been considered in detail.”

A number of submitters emphasised the need to ensure stringent health, safety and environmental controls on exploration activity; and for on-going engagement on the block offer and resource development more generally.

“It is important that New Zealanders have confidence in how we manage oil and gas resource development on their behalf,” says Mr Binnie.

“It was encouraging to see general support for the block offer only approach to allocating exploration permits, and for abolishing first-in, first-served permits.

“The introduction of new environmental legislation for the Exclusive Economic Zone, and the current reviews of the Crown Minerals Act and health and safety regulations for petroleum operations will also ensure New Zealand has a best international practice regime for the safe and responsible development of oil and gas,” says Mr Binnie.

A number of improvements in process, including government engagement with iwi and local government in the lead up to the tender and as part of the on-going resource allocation process, will improve the way resource development is managed.

“We expect gas and oil companies to give high regard to the importance of engaging locally. The expectation for engagement with iwi and hapū has been set out in the terms and conditions of the competitive tendering process,” says Mr Binnie.

Following the closing of bids on 15 October 2012, the Ministry of Economic Development will evaluate applications received on a number of criteria including the applicants’ proposed work programme, corporate profile, technical and financial capability, risk management practices and operating experience.

Further information on the tender and decisions arising from the consultation process are available at www.nzpam.govt.nz/cms/petroleum/block-offers.

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Background

Exploration permits allow for investigation of the potential for oil and gas development.

Being awarded an exploration permit is the first of many steps an operator is required to take in order to develop Crown-owned minerals. Should commercially viable reserves be discovered in the process of exploration, a resource could take up to 50 years to produce.

Once an operator is granted an exploration permit onshore or out to 12 nautical miles off the coast, they are also required to apply for any necessary environmental consents under the Resource Management Act 1991, make access arrangements with land holders, and meet health and safety requirements.

The new Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill will apply to activities beyond 12 nautical miles offshore in the Exclusive Economic Zone (EEZ). The Bill establishes a new regime to manage environmental effects of activities in the EEZ and continental shelf. The Bill is currently before Parliament. The Bill will come into effect once a complete set of regulations is developed later this year.

Last year the government put in place a number of interim measures in environmental regulation before the EEZ legislation comes into effect and to ensure a smooth transition to the new regime.

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