Controversy likely over onshore oil exploration acreage in new block offer

The government is courting controversy with Northland iwi over deep-sea drilling in new acreage being offered for oil and gas explorers in the 2013 block offer announced at the AdvantageNZ petroleum conference in Auckland.

Energy Minister Simon Bridges announced a total of 1500sq km of onshore exploration territory and 190,000sq km of offshore territory, much of it very lightly explored and including the Northland/Reinga Basin for the first time.

Offshore from the West Coast of the North Island appears highly prospective for oil and gas, but the area was left out of the 2012 block offer to allow time for formal consultations to occur with Northland and other iwi with rights and interests in the acreage involved.

Also scaled back was acreage offered on the East Coast of the North Island, where Canadian company TAG Oil last week spudded in the first of a series of exploration wells planned at sites near Dannevirke and Gisborne.

The potential use of hydraulic fracturing, or "fracking", to release oil and gas deposits in shale sands found onshore East Coast is controversial in an area with no previous experience of the oil and gas industry.

Resistance emerging

While Taranaki is dubbed the "oil and gas province", resistance to the industry has begun emerging in response to intensified onshore activity, including by TAG, and plans for deep-sea offshore drilling over the next two summers.

"Following careful consideration of all submissions, including the 30 received between November 2012 and January 2013, the number of onshore blocks in Taranaki was reduced from five to three and the relative size of both onshore East Coast blocks has been reduced," says David Binnie, general manager of New Zealand Petroleum & Minerals, a government agency.

The sizes of the offshore permits in the Northland/Reinga, Taranaki, Canterbury and Great South Basins were unaffected by the iwi consultations, the form of which were created after Brazilian oil giant Petrobras was the subject of protests against seismic surveying in deep water off the East Cape in 2011.

Organised by Greenpeace and a local iwi, Te Whanau a Apanui, the protest flotilla provoked action by the New Zealand Navy and police and was the catalyst for a rushed provision added to the Crown Minerals Act preventing any vessel from being within 500m of oil industry infrastructure in the 200 mile exclusive economic zone (EEZ).

A Greenpeace High Court challenge to the original granting of the exploration permit failed to establish a failure to consult with iwi, as required already by law, but saw NZP&M devise a formal set of consultation guidelines before offering oil and gas exploration blocks in the future.

Most sites raised in consultations remained in the block offer, with iwi and oil explorers urged to find solutions that protect sites of significance, as allowed for by law and local government plans.

However, two Taranaki and two East Coast onshore blocks were "deferred in whole or in part for a future block offer".

"The areas were notable by the density of wāhi tapu sites and the time needed for more consultation with iwi and the gathering of information on the wāhi tapu sites in the areas concerned," Mr Binnie says.

This year's block offer is the second in a new system where the government offers specific areas for exploration that are regarded as strategic prospects, rather than letting oil companies choose where they go.

Offered for first time

For the first time, the block offer for offshore licences will use the so-called "graticular" system, where explorers can bid to extend licence zones by the addition of 250sq km blocks of ocean floor, known as graticules.

Offshore licences permit up to 2500sq km of additional graticules in the offshore Taranaki prospects, reflecting greater knowledge about the basin, and 10,000sq km of additional graticules for the other offshore blocks.

Shell, OMV and Anadarko already have deep-sea drilling plans covering the Great South Basin, where deep-sea exploration wells were first drilled in the 1970s, the Canterbury Basin, and offshore Taranaki, with Anadarko due to drill over the 2013-14 summer in the Taranaki prospect.

The Northland and Reinga basin offerings, which stretch from above Cape Reinga to south of Auckland, cover 54,000sq km. The Canterbury and Great South Basin blocks cover 111,000sq km.

(BusinessDesk)