Speech to Advantage NZ: 2013 Petroleum Conference

  • Simon Bridges
Energy and Resources

It’s a great pleasure to be speaking at this very important event for the New Zealand oil and gas industry.

As I said in my opening address last night, it’s wonderful to see so many people here, particularly our international guests. Welcome.

Already today, our Prime Minister and other key speakers have spoken much about ‘opportunity’.

In oil and gas terms, New Zealand truly is a land of opportunity.

The demand for – and exploration of – oil and gas has never been greater.

And New Zealand has never been a better place to explore, as we have clarified the rules and expectations that apply.

We have the world’s fourth largest Exclusive Economic Zone with some exciting geology across 18 basins.

We are recognised as one of the world’s most promising regions, but we remain relatively unexplored.

We have a strong regulatory environment that is supportive of responsible exploration and development.

The Government and local industry are receptive to new players and new investment.

So we’re ready and willing to talk about how to make the most of this country’s potential.

As the Prime Minister also said this morning, this Government is committed to developing our oil, gas and mineral resources in a sensible, safe and environmentally responsible way.

I am confident we can achieve that by adopting new technologies, developing sound policies and good regulation, and, as industry, by operating to the highest international standards.

Shortly I will announce the areas to be included in the 2013 Block Offer.

The 2013 Block Offer is our second one as a country since we introduced the block offer strategy in 2011.

The Government has moved to an annual offering of defined areas for bidding. This ensures the more strategic management of New Zealand’s oil and gas resources.

For me, block offers demonstrate the Government’s commitment to delivering better and more transparent policies and processes to ensure we maximise the returns from a well-managed expansion of resource development.

It is through this we are able to attract the most competitive bids and allocate permits to the companies best able to meet our expectations.

That is, to operate efficiently, safely and in an environmentally responsible manner.

The block offer process is putting us, as a country, on the international stage.

We know companies are interested. We awarded 10 strategically important exploration permits in the 2012 Block Offer.

So, let’s talk about 2013.

This year, we have introduced a new approach to defining offshore permit areas.

The graticular methodology has been introduced. It is designed to give maximum flexibility while ensuring robust work programmes over defined permit areas.

It is now up to companies to define their permit area as they wish, up to a pre-determined limit.

I see this as an important step forward, bringing New Zealand’s approach to offshore acreage releases in line with other key jurisdictions worldwide.

It also gives line of sight on areas that may be considered in future block offers.

This year, companies will be able to bid to explore one or more areas of up to 250 square kilometres – known as graticules – in the offshore release areas.

Permit areas will include adjacent graticules up to a limit of 2,500 square kilometres in the offshore Taranaki Basin release area; and up to a limit of 10,000 square kilometres in the Northland/Reinga Basin and the Canterbury/Great South Basin release areas.

To get to today, the process for the 2013 Block offer started in June 2012.

That was when we sought nominations from industry on areas of commercial and geological interest to be included in this year’s permitting round.

Subsequently, the Government developed its proposal for Block Offer 2013, and has consulted with iwi and councils on the areas of interest.

I am now pleased to announce that the following areas will be available for competitive tender for exploration, in Block Offer 2013:

The Northland and Reinga Basins offshore release area. This area totals almost 54,000 square kilometres of prospective acreage off the north-west coast of the North Island.

The Reinga Basin is one of the most prospective frontier basins within the territories of New Zealand.

The Canterbury and Great South Basins offshore release area. This area totals 111,000 square kilometres of acreage off the east and south-east coast of the South Island.

We anticipate a lot of competitive interest in this frontier area of New Zealand, which is already being explored by Shell, Anadarko and OMV.

The first deep-water wells in New Zealand were drilled in the Great South Basin in the 1970s, proving the presence of an active petroleum system over a large area.

The Taranaki Basin offshore release area. This totals just over 24,000 square kilometres of acreage in our centrepiece of current production – Taranaki.

Over 400 onshore and offshore exploration and production wells have been drilled in Taranaki to date. The basin remains under-explored and there is still considerable potential for further discoveries.

Onshore, five defined blocks will be offered in 2013.

Three onshore blocks will be offered in Taranaki. These areas will encourage continued exploration in the highly prospective and proven onshore Taranaki Basin.

Finally, two onshore blocks will be offered on the East Coast of the North Island.

These areas are expected to add to the programme of exciting development in the region that has been growing in recent times, with consent recently granted to TAG Oil for exploration activity in the region.

Overall, Block Offer 2013 includes around 1500 square kilometres of onshore, and almost 190,000 square kilometres of offshore acreage.

Of course, there is plenty more information available here at the Conference and New Zealand Petroleum & Minerals staff are on hand to answer any questions that you may have.

Companies interested in exploring in these blocks will have until 26 September this year to submit work programme-based bids.

I expect to announce the outcome of Block Offer 2013 in December.

Permits awarded as a result will be governed by the new Crown Minerals Act regime. This new Act will come into force on Friday 24 May, and this is also the date that bidding for Block Offer 2013 will formally open.

I encourage you to dig deep into the information that’s available and talk to the team.

And I look forward to hearing about the work programmes you will present.

I’m also pleased to announce today that the industry nomination process for Block Offer 2014 is open.

It is through this process that we are able to identify areas of commercial interest that you want to see included in future block offers. It is important that you get involved and nominate.

As I have just mentioned, in just over three weeks, the new Crown Minerals Act regime will come into force.

This new regime is in step with the times and allows for efficient and effective management of the Crown’s oil, gas and minerals estate.

This legislation will enable investors to have confidence and certainty about the regulatory environment they will be operating in.

At the same time, it will give New Zealanders confidence and certainty that regulators have the tools to adequately scrutinise all aspects of exploration and production.

Where resources are becoming scarce or there is increasing demand for them, it is a complex decision-making process to make appropriate allocations between competing uses and users.

We must take into account environmental limits and scientific and other evidence, Maori rights and interests, and social preferences as well economic factors.

The new legislation gives us a better framework for doing this.

So what does this mean for you as operators?

There will be clear expectations set on permit applicants and holders and increased monitoring and oversight.

But this will happen in a way that leaves you clear about the future and that will build a better relationship between you and regulators, with more interactive engagement over the life of the permit.

Introduction of the new Crown Minerals Act regime is but one part of the Government’s commitment to ensuring New Zealand has a world-class regulatory system that ensures the safety of its people and its environment, alongside greater resource development.

I appreciate there has been a significant period of change and discussion.

Many of you have actively engaged with the Government on the review of the Crown Minerals Act, the introduction of environmental legislation into the Exclusive Economic Zone and on new health and safety regulations for petroleum operations.

I thank you for your tireless efforts to help make our laws and regulations world-class.

We are now at a stage where we can see the benefits of the review processes and we can have confidence that businesses can operate in a stable and word-class regulatory environment.

I look forward to businesses enjoying greater certainty as we bed in the products of these reviews, and the public develops confidence that the new regime takes into account New Zealand’s important values and priorities.

Thank you again for inviting me to speak here today.

This event is a timely opportunity to discuss and debate the important issues facing our sector.

Importantly, it is a timely opportunity to show what promise New Zealand, as a country, has to offer.