Hon Phil Heatley
Minister of Energy and Resources

7 March 2012

Crown Minerals Act review gets under way

The Government is asking New Zealanders for feedback on proposals to improve the legislation governing oil, gas and mineral permitting.

Minister of Energy and Resources Phil Heatley today released a discussion paper outlining the proposed changes to the Crown Minerals Act 1991, and associated regulations and programmes.

“Energy and mineral resources are major export earners for New Zealand and there is huge potential for them to contribute even more to the economy,” he said.

“This review of the regulatory regime for Crown minerals is a key part of the Government’s work to ensure that we have legislation that allows these important industries to grow while responsibly managing health, safety and environmental matters.”

The Crown Minerals Act 1991 regime regulates how permits are allocated to prospect, explore for and mine oil, gas and minerals. It also establishes the royalty rate that companies pay to the Government over and above company tax. Royalties and tax revenue combined already account for over 40% of the profits from current oil and gas operations in New Zealand.

“This is all revenue that can go into better schools, hospitals and core infrastructure,” the Minister said.

Key proposals in the discussion paper include:

• developing a front-end process to ensure companies’ health, safety and environmental capabilities are well known as they enter the permitting process
• ensuring regulatory efforts are proactive, co-ordinated and focus on operations that have the highest technical and geological complexity, and that generate the bulk of royalty income
• developing a pragmatic, streamlined management regime for low-risk activities associated with minerals like industrial rocks and alluvial gold
• improving dialogue between regulatory agencies, iwi and other important stakeholders, as it relates to the Crown Minerals Act regime.

“All submissions will be considered as part of the development of a Bill to amend the Act. The Bill is expected to be introduced and progress through Parliament this year. The public will have another chance to input at the select committee stage,” Mr Heatley said.

“As the Bill goes through the House, new minerals programmes and regulations will be developed, and this will involve further public input.”

Background

The review is part of the Government’s commitment to robust, best-practice regulations for the development of petroleum and mineral resources.

The Government is taking care not to duplicate processes, so there are other reforms in hand which will affect wider elements of the regulatory framework for petroleum and minerals.

• The Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill: this Bill, which is currently before the House, sets up an environmental management regime in the exclusive economic zone and the continental shelf – the area beyond the 12 nautical mile limit of the territorial sea. The environmental effects of deepwater exploration for oil, gas and other minerals will be regulated under the EEZ Bill if passed.
• Establishment of a High Hazards Unit within the Department of Labour: in August 2011, the Government announced that a dedicated unit of inspectors will oversee and regulate health and safety practices on oil and gas platforms, in geothermal installations, and mines, tunnels and quarries.
• A targeted review of health and safety regulations that apply to well-drilling operations (onshore and offshore) and of the safety case regime that applies to offshore installations: this will also examine whether the safety case regime should be extended to onshore petroleum operations.
• The Government’s response to the Royal Commission of Inquiry into the Pike River tragedy.
• Maritime New Zealand’s recent review of oil spill preparedness.
• The Ministry of Transport’s proposed review of minimum insurance requirements for offshore oil installations in the territorial sea and EEZ.
• Inland Revenue’s review of the “specified minerals” tax regime.

The outcomes of the CMA review will be progressed in concert with these other processes, where possible, as an integrated package of reform.

This discussion paper builds on a previous discussion paper released for consultation in August 2010.

To read the latest discussion paper and other supporting materials, and to make a submission, visit the Ministry’s website here.

ENDS

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