Environment Minister Nick Smith has finally confirmed that New Zealand will have environment protection law covering our massive offshore exclusive economic zone next year – but deepwater drilling will start before it’s in place.

Nick Smith plans to introduce his Exclusive Economic Zone and Extended Continental Shelf (Environmental Effects) Bill to Parliament next month, and says it will come into effect by 1 July 2012.

Unfortunately for him, the oil exploration giant Anadarko – one of the companies linked with the BP disastrous deepwater well blow-out in the Gulf of Mexico – will start drilling an exploration well in the Canterbury Basin, off the coast of Canterbury and Otago, months before the Environmental Protection Agency is in a position to apply Smith’s law.

Anadarko is a 50/50 partner in the exploration venture with Origin Energy. Under the terms of the partnership’s petroleum exploration permit, an exploration well has to be drilled around November this year or the partners have to surrender the permit.

Late last month, Anadarko’s director of external communications, John Christianson, confirmed that deepwater drilling in the Canterbury Basin would start in the last quarter of this year, or the first of next.

This means Anadarko-Origin will not have to produce an environmental impact assessment and there will be no public notification, and no opportunity for submissions or a hearing before the drilling starts. It is also possible that Anadarko will also drill another exploratory well in deeper water off the Taranaki coast during the summer season, before the EEZ environmental protection measures are passed into law.

There was no specific mention of this unfortunate timing problem in Smith’s announcement last week, beyond a general reference to “transitional consent” for activities that are under way before the legislation comes into force. As he puts in his announcement:

“Activities within the scope of the legislation that exist when the legislation comes into force will be issued with a transitional consent, and potentially will have to apply for a new consent at a later date, depending on the scale of the effects of their activity.”

Anadarko will have to provide a discharge management plan to Maritime New Zealand – but they will not be required to post a bond to meet the cost of cleaning up if there is an oil blow-out at either of their two permitted deepwater exploratory wells.

This admission was extracted from Acting Energy Minister Hekia Parata, under close questioning from Green’s co-leader Metiria Turei last month. Parata’s predecessor Gerry Brownlee would have come in for more damaging scrutiny if he was still in the job.

A year ago, Brownlee told Parliament that it would be at least 18 months before deepwater drilling started in the EEZ, and “we expect these new [protection] requirements to be in the new law, and that companies will comply with them”.

Brownlee was right about the timing – but wrong about having the new legal requirements in place.

As matter stand, Maritime New Zealand can try and recover any deepwater well blow-out clean-up costs without limit, but it’s still an open question just how much the explorers would be able or willing to pay.

A government-funded expert review of international best practice says the current level of compulsory insurance that offshore petroleum explorers are required to carry for New Zealand operations - around $30 million – would be “seriously inadequate in the event of an off-shore petroleum accident resulting in a major oil spill which threatened the coastline or other marine resources.”

The same government-funded review advises that the state-held New Zealand Oil Pollution Fund has about $4 million in reserves for use in the event of a significant oil spill, and our Government can call in international funding of about $446 million as a signatory to the IMO Fund 92 Convention.

Given the US$40 billion BP has had to provide for clean-up and compensation after its single, deepwater well blow-out in the Gulf of Mexico, it’s hard to see the New Zealand government’s reserves and funding provisions as anything other than “seriously inadequate” too.

The whistle was blown on the absence of effective environmental protection for the EEZ beyond New Zealand 12 mile territorial limit by the Parliamentary Commissioner for the Environment as long ago as 1989. The legislation has been under development since 2005.

The fact that deepwater drilling will start in our EEZ this year – without the promised protection in place- is both slothful and shameful.

Comments (5)

by Tracey Barnett on June 20, 2011
Tracey Barnett

David, good work here.  Really appreciate you turning your sites to this.  The most damningly accurate word of your piece, "slothful", really sticks in my throat, having read that the legislation has been gathering dust since 2005.

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