OIA22 004 letter from Hon Dr Megan Woods.pdf

Chuck Schooner
[FYI request #18300 email]

Ref: OIA22-004

Dear Mr Schooner

Thank you for your email of 25  January  2022 requesting the following under the Official
Information Act 1982 (the Act) regarding oil exploration analysis:

Please provide any analysis done on doing ten years of oil exploration that New
Zealand could complete and what this might do to alleviating the National Debt and
enabling the New Zealand economy to bounce back.

Are there any moratoriums/signed contracts whereby New Zealand has signed away
our access to the tril ions of oil reserves around New Zealand. For example

•  by New Zealand entering agenda 2030 what countries if any have access to oil
around the country
•  are there any penalties associated with contractual agreements if New Zealand
was to begin oil exploration
•  what would be the tax take on oil exploration for ten years and the impact on
oil prices for kiwis  who have had there lives destroyed by this incompetent
government.

I have identified two documents that fall within scope of your request: the Cabinet Paper Final
policy decisions for tranche one of the Crown Minerals Act 1991 review, and its Regulatory
Impact Statement. Both of these documents can be found on the Ministry of Business,
Innovation & Employment’s (MBIE’s) website via the following links:
  •  https:/ www.mbie.govt.nz/assets/18e95c38ab/tranche-one-crown-minerals-act.pdf

•  https:/ www.mbie.govt.nz/assets/1bad579c3a/regulatory-impact-analysis-proposed-
changes-to-the-crown-minerals-amendment-act-1991.pdf

Therefore, I am refusing your request under section 18(d) of the Act, as the information is
publicly available.

However, I would like to provide some detail on the settings around how petroleum activities
are regulated in New Zealand, which I believe may be of interest to you.

Under the Crown Minerals Act 1991 (the CMA), a permit is required to prospect, explore or
mine for minerals that are part of the Crown Minerals Estate, including petroleum. MBIE is
responsible for granting petroleum permits.

Records of all petroleum permits granted by the Crown can be accessed on the New Zealand
Petroleum and Minerals’ website, here: ht ps://www.nzpam.govt.nz/permits/online-permitting-
system/.

Exploration since 2012 has been facilitated by the annual block offer tender process. After
nominations of land by industry, and a period of consultation with our Treaty partners, the
block offer release area is confirmed and made available for applications in a public closed
tender. This is not a financial tender. To be successful, bids must set out how the company
proposes to explore its desired permit area (block), including the methods and technologies
the bidder  plans  to use. Competing bids for the same area are ranked based on their
information gathering value. Bids can be made by individual companies or joint ventures, and
bidders must demonstrate sufficient technical, financial and HSE (health, safety and
environmental) capabilities.

Bidders propose staged work programmes, comprising committed work activities followed by
later, contingent (optional) stages of work. Staged work programmes may start with a series
of studies and broad surveys of the permit area, followed by more expensive or focussed
activities (for example, well drilling).  At the same time, portions of the permit area found to be
less prospective may be relinquished.

At any stage, a permit may be surrendered in full. Al  data generated by permit holders must
be provided to the Crown, which improves our knowledge of the resource. If a petroleum
discovery is made, the next step is for the permit holder to appraise the commercial feasibility
of petroleum production (mining). If mining is feasible, a mining permit would be granted to
produce the petroleum, subject to the permit holder meeting all relevant  legislative
requirements.

Moratoriums on Offshore Oil Exploration

In  April 2018, the Government announced a new approach to managing Crown-owned
petroleum exploration, aligned to its goal of transitioning New Zealand to a low-emissions
economy. This included two commitments:
  1.  that there would be no further offshore exploration permits issued; and

2.  that allocation of onshore exploration acreage would be limited to onshore Taranaki.

At the time, the Government also commit ed to three further Block Offers (Block Offers 2018,
2019 and 2020) for onshore Taranaki, followed by a review. When this occurred, MBIE carried
out an analysis of the decision not to grant new offshore petroleum exploration permits. This
analysis is the Regulatory Impact Statement available on the MBIE website
(https://www.mbie.govt.nz/assets/1bad579c3a/regulatory-impact-analysis-proposed-
changes-to-the-crown-minerals-amendment-act-1991.pdf).

This included a section that summarised the potential benefits and costs.  No further analysis
of the tax take on oil exploration and the impact on oil has been identified.

The paper that I took to Cabinet seeking agreement for this decision is the paper referred to
earlier that is publicly available on the MBIE website (Final policy decisions for tranche one of
the Crown Minerals Act 1991 review: https://www.mbie.govt.nz/assets/18e95c38ab/tranche-
one-crown-minerals-act.pdf).

The prohibition on new offshore exploration permits preserved existing rights and privileges,
enabling a continuation of existing work programmes of exploration, as well as work to develop
existing fields.

Three offshore exploration wells have been dril ed since 2018; two did not identify
hydrocarbons, and the third requires further investigation to determine whether an economic
accumulation has been discovered.

New Zealand’s gas producers appear to be continuing to invest in developing our gas reserves
with dril ing programmes being undertaken under several permits and licences. Recent
announcements around dril ing planned by OMV demonstrate this, such as the significant
campaign at Māui B.

New Zealand Oil and Gas Reserves

The latest updates to New Zealand’s oil and gas reserves were published in July 2021. Gas
reserves stood at 2,074 Petajoules (PJ) at 1 January 2021 up from 2,021PJ a year earlier
which equates to approximately 10 years of gas supply remaining based on recent demand.

Reserves data is provided annually, with the next release due in July 2022. Details can be
found here: https:/ www.nzpam.govt.nz/about/news/petroleum-reserves-data-released/.

I trust you find this response helpful. However, you have the right to seek an investigation and
review by the Ombudsman of my decision to refuse your request, in accordance with section
28(3) of the Act. The relevant details can be found at: www.ombudsman.parliament.nz.

Warm regards

Hon Dr Megan Woods
Minister of Energy and Resources