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Bill To Strengthen Decommissioning Regime

Hon Dr Megan Woods

Minister of Energy and Resources

The Government is preventing taxpayers picking up the bill for the decommissioning of oil fields, says Energy and Resource Minister Dr Megan Woods.

“After the Crown had to take responsibility for decommissioning the Tui oil field, it became clear to me that the current requirements around decommissioning are inadequate and we need to prevent taxpayers carrying the can again,” Megan Woods said.

New proposals in a Bill introduced to Parliament today will impose an explicit statutory obligation on petroleum permit and licence holders to carry out and fund decommissioning of petroleum fields.

“It will apply to current and future permit and licence holders and the obligation to fund decommissioning will be extended to former permit and licence holders if a permit is transferred after the Bill is enacted. This is to ensure those who have enjoyed the benefits of a permit can’t avoid the responsibility of cleaning up after themselves.

“The suite of proposals in the Bill will also enable more effective monitoring of a permit or licence holder’s financial position and plans for field development. It will require permit and licence holders to maintain a financial security that can be used for decommissioning purposes if required, expand enforcement powers across petroleum and minerals activities and make other minor and technical changes.

“The Bill will enable me to consider a number of factors, including for example the circumstances of a particular permit or licence holder, when determining the amount and type of financial security required.

“It also raises the bar for permit acquisitions, to ensure that only companies with sufficient financial and technical capability will be able to acquire a permit in New Zealand.

“These proposals will strengthen the regulatory framework and build on the changes to the Crown Minerals Act made in February 2019 to close a loophole that allowed Tamarind to acquire the Tui permit without us being able to undertake a full assessment of its capabilities.

“This Bill takes a long term view, and requires petroleum permit and licence holders to make payments towards any future remediation that may be needed to wells and any infrastructure left in place, after decommissioning has been completed.

“Decommissioning fields is an issue governments are grappling with the world over as we transition away from fossil fuels. As New Zealand’s oil and gas fields approach the end of their productive lives it is imperative to have a regime that is up to the job,” Megan Woods said.

Regulations to support changes in the Bill are likely to be consulted on in the coming months, so that they can come into effect as soon practicable after the Bill is passed.

It is anticipated that the Bill will be passed late in 2021.

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