New Zealand commissioner rules out ban on fracking of oil, gas wells
Sydney (Platts)--27Nov2012/429 am EST/929 GMT
A New Zealand parliamentary commissioner has found there is no
justification for a ban on hydraulic fracturing of oil and gas wells, and
that the practice is safe provided it is properly regulated and managed.
"However I have significant concerns about how fragmented and
complicated the regulatory environment for fracking is and about how these
rules are being applied," Parliamentary Commissioner for the Environment Jan
Wright said Tuesday after releasing an interim report. "If fracking is not
done well it can have significant environmental impacts including polluting
water and triggering earthquakes," she added.
"I am also concerned that regulation may be too light-handed,
particularly if fracking opens the door to a large-scale and widespread oil
and gas boom with a lot of different companies involved," Wright said. "These
concerns form the basis of the next stage of my investigation into fracking
which I hope to conclude before the middle of next year."
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Wright's interim finding that the environmental risks associated with
fracking can be managed, provided the best operational practices are
implemented and enforced through regulation, were welcomed by Energy and
Resources Minister Phil Heatley and Environment Minister Amy Adams.
"We acknowledge the Commissioner's interim view that the evidence she
has considered to date suggests a nationwide moratorium on fracking is not
justified," Heatley and Adams said in a statement.
"We agree that it is important to have strong and consistent regulation
of fracking and to improve regulation and monitoring where necessary," the
ministers said. "It is important that New Zealanders are confident in how the
practice of fracking is managed."
The government has already implemented a number of measures to allow New
Zealand to keep pace with international best practice, Heatley said. Adams
added that she had instructed the Ministry for the Environment to consider
and produce clear guidelines on the respective roles of central and local
government in relation to the control of fracking.
According to Wright, oil and gas producers should choose well sites
carefully, and design and construct wells to prevent leaks and spills. In
addition, the industry has not yet earned a social licence to operate, the
Although fracking of oil and gas wells is widespread around the world,
it has a short history in New Zealand, according to the commissioner's
report. The first known fracking took place in 1989 at Petrocorp's Kaimiro-2
gas well in Taranaki, New Zealand's major oil and gas province and home to
almost all the 100 fracking procedures that have taken place in the country,
mainly aimed at extracting oil and gas from tight sands.
There have been two unsuccessful attempts of fracking coalseam gas wells
in Ohai in the South Island's Southland Basin, as well as at Solid Energy's
coalseam gas pilot in Waikato in the North Island. Currently Baker Hughes is
the only contractor with the equipment and ability to carry out hydraulic
fracturing in New Zealand, the report added.
Although some of the many new wells expected to be drilled in Taranaki
will rely on the use of fracking, others will not. There are also no current
plans for large-scale production of coalseam gas using fracking.
"The greatest potential for a rapid scaling up of fracking lies in the
shale rock along the east of the North Island -- spanning the Wairarapa
through to East Cape," according to the report.
"The presence of oil and gas on the east coast has long been known -- to
Maori long before Europeans arrived. Since 1955, more than 40 conventional
wells have been drilled on the east coast but none produced an economic flow
of oil and/or gas. However, fracking is poised to change this," the report
Two joint ventures currently hold exploration permits that cover most of
the North Island east coast from East Cape to Castlepoint. At the time the
report was written, one exploration well site was being established near
Gisborne and two near Dannevirke.
The Ministry of Business, Innovation and Employment will now prepare a
full response to the interim findings, prior to the completion of the
commissioner's final report.
--Christine Forster, firstname.lastname@example.org
--Edited by Haripriya Banerjee, email@example.com