Move to lift ban on oil and gas exploration draws flak

An anti-government protest rally in Auckland (Photo credit : Julia Maskill)

Venu Menon
Wellington, June 11,2024

Amid public protest and criticism from the environmental lobby and Opposition parties, the coalition Government is going ahead with its decision to reverse the ban on oil and gas exploration.

The Crown Minerals Act 1991 will be amended, via a bill to be tabled in Parliament in the second half of 2024, against the backdrop of declining gas reserves as a result of “producers lacking certainty that they can economically extract the natural gas in their fields, as well as believing there is less natural gas available in those fields,” the government says.

It says oil and gas together contribute billions of dollars to New Zealand’s GDP and earns “hundreds of millions of dollars in royalties.”

Oil exports, valued at around $900 million in 2022, and Crown revenue from petroleum valued at $214 million in 2022-2023, are at stake.

The mining sector also creates high-paying jobs, with 6,000 people employed by the sector in 2023, the government points out.

Proposed changes to the Act include reversing the 2018 ban on new petroleum exploration outside onshore Taranaki, removing the restrictions on new petroleum permit holders from accessing select conservation areas in Taranaki for mining activities, changes to permit rules, and welcoming international investors to New Zealand, among others.

The government also proposes to reverse the changes made to the Act in 2023 with regard to its purpose and the minister’s functions under the Act.

The Act will no longer just “manage” but also “promote” prospecting, exploration and mining of minerals, while the minister will not simply “offer” permits for application by public tender but “attract permit applications.”

The government says these changes are “intended to signal that the Government wants to increase petroleum exploration and production in recognition of the important role gas will play as a transition fuel.”

The government also proposes to permit “small-scale, non-commercial gold mining, all in the South Island and mostly in regions with historical gold fields such as Otago and the West Coast.”

The government notes that, currently, “the same regulatory burden that can be applied to a medium-sized coal mine is applied to a person who wants to use  a small suction dredge to look for gold in a river.”

But the proposed changes will not impact the way “iwi and hapu engage with permit holders.”

Resources Minister Shane Jones says the proposed amendments to the Crown Minerals Act are aimed at dealing with the “energy security challenges posed by rapidly declining natural gas reserves.”

He says natural gas is “critical to keeping our lights on and our economy running, especially during peak electricity demand and when generation dips because of more intermittent sources like wind, solar and hydro.”

The ban introduced by the previous Labour Government in 2018 “not only halted the exploration needed to identify new sources, but it also shrank investment in further development of our known gas fields which sustain our current levels of use,” the minister notes.

But he acknowledges that rebuilding investor confidence will require more than lifting the ban:

“As well as removing the ban, we are proposing changes to the way petroleum exploration applications are tendered and allocated, aligning the petroleum decommissioning regime with international best practice, and improving regulatory efficiency.”

However, Labour energy spokesperson Megan Woods, who introduced the ban as energy minister in 2018, says the policy would not help the transition to renewable energy and would give fossil fuel companies free rein to exploit the environment.

“This will lock in emissions for decades to come.”

Green Party co-leader Chloe Swarbrick says the “science is clear that fossil fuels must stay in the ground to limit global warming within 1.5 degrees of warming.”

She says lifting the ban on exploration contradicts the government’s campaign pledge to curb emissions.

Labour’s Willie Jackson is more trenchant in his criticism of the government’s move to lift the ban on oil and gas exploration:

“The arrogance of this government to push ahead with mining conservation land and open New Zealand back up to oil and gas exploration was met over the weekend with 30,000 protestors who had the courage to yell back no!”

Venu Menon is an Indian Newslink reporter based in Wellington

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