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The Parliamentary Commissioner for the Environment has given a guarded final clearance for hydraulic fracturing, confirming her 2012 report that there are sufficient environmental safeguards, while calling for a National Policy Statement as a guide for local authorities facing applications from oil and gas companies.
However, commissioner Jan Wright's final report on fracking finds that "regulation in New Zealand is not adequate for managing the environmental risks of oil and gas drilling, especially if the industry expands beyond Taranaki."
She pointed to plans by explorers to frack in the Hawke's Bay and East Cape regions, exploring shale fields rather than the tight sands environment of Taranaki, New Zealand's only area where oil and gas production is occurring on a commercial scale.
"There are some deficiencies in the way the industry is managed in Taranaki, but beyond that, some fresh thinking is needed," she said.
Among issues to consider are weather patterns, different regions' degree of reliance on particular freshwater sources, the potential for a proliferation of onshore wells, the seismic characteristics of a region where fracking is proposed, and such related activities as regulation of so-called "land farming", where oil and gas waste is allowed to break down on pasture land for future grazing.
She expressed again a broader concern that her report should not be seen as supporting greater exploration for hydrocarbons because of their impact on climate change, and called for greater emphasis on "green growth" in government policy-making.
"That said, we need to be careful about what we mean by ‘green growth’," she said. "Natural gas is the most benign of the fossil fuels, and when it is used as an energy source instead of coal, carbon dioxide emissions are generally lower. However, the potential for using natural gas as a ‘transition fuel’ to a lower carbon economy is very limited in this country."
Inconsistencies and inexperience with the oil and gas industry among local governments outside of Taranaki prompted Wright to recommend the development of a National Policy Statement, as allowed for under the Resource Management Act, to guide the consenting of oil and gas activity.
For example, most councils made no distinction between drilling wells for water and drilling for oil and gas.
"An NPS could give clear direction to both regional and district councils on how they should deal with the onshore oil and gas industry in their policy statements and plans, focusing on areas where industry expansion is likely," said Wright, who urged New Zealand to take the opportunity to "get ahead of an expanding oil and gas industry and put in place policies and rules to protect the environment.
"In many parts of the world, regulators are scrambling to catch up with a rapidly expanding industry, but we can avoid this situation by establishing ground rules now while we remain mostly in an exploration phase."
Wright suggested that while fracking had become a major public issue in 2011, concerns in New Zealand had shifted more to deep sea oil drilling and that some of the 17 countries or states that initially banned fracking were now allowing it to occur.
A major challenge for the oil and gas industry would be the potential for proliferation of onshore oil rigs to overwhelm communities.
"Opposition toward fracking has grown as wells have multiplied across a region. The impacts of an individual well are generally small – it is the cumulative effect of many wells on the landscape, on the risk to groundwater, and so on, that matters most. The Resource Management Act has never been well-suited to managing cumulative effects because of the way precedents are created.
"The straw that breaks the camel's back generally receives consent more readily than the first straw."
On land farming, Wright noted "unacceptable" recent instances of cattle grazing land where natural "bio-remediation" had not been completed.
Trucking waste material from East Coast drilling sites to Taranaki for disposal, as occurs at present, would be "untenable if wells begin to multiply there (on the East Coast)."
She also recommends clear liability for contamination from wells, including after their abandonment, and more proactive regulatory oversight than occurs at present in Taranaki, where regulators generally react to events.