Amendments to the Crown Minerals regime and related health and safety requirements

Significant and extensive changes have been made to the Crown Minerals regime. Specifically, the Crown Minerals Act 1991 and the Crown Minerals (Petroleum) Regulations 1997 have been substantially amended in a number of key respects and a new Petroleum Programme (i.e. a minerals programme for petroleum) has been released – these changes all come into effect on 24 May. Further, substantial amendments are proposed to the Health and Safety in Employment Act (Petroleum, Exploration and Extraction) Regulations (HSE Petroleum Regulations), which are expected to come into effect on 30 June.

Points of particular significance include:

  • Under the amended Crown Minerals Act, there are now offences for damaging or interfering with structures or ships being used offshore in mining or related operations and incursions into "specified non-interference zones". NZP&M may create specified non-interference zones on a case by case basis with a duration of up to three months. Such zones can extend up to 500m from the edge of the relevant structure, ship or towed seismic array. Further, enforcement officers will have powers to stop and detain ships within specified non-interference zones, remove people and ships from non-interference zones and prevent people and ships from entering non-interference zones. Essentially, this amendment allows the creation of zones around explorer's activities into which protestors (or other members of the public) may not encroach and provides measures to ensure that they do not do so.

  • There is a renewed focus on health, safety and environmental (HSE) matters under the Crown Minerals Act amendments. A new requirement is the (much discussed) requirement for a preliminary assessment of the proposed operator's capability and systems likely to be required to meet the relevant HSE requirements. Such assessment must be completed before an exploration or mining permit relating to petroleum (or any "Tier 1" category mineral) can be issued. The Petroleum Programme has provided useful clarification on how preliminary assessments will work, providing that if a permit applicant is currently undertaking similar activities (as operator) to those proposed under the relevant application, the Minister will be satisfied that the operator is likely to be able to meet the expected HSE requirements for the types of activities proposed under the permit (unless there is clear evidence to the contrary).

  • The proposed new HSE Petroleum Regulations also demonstrate the renewed focus on HSE matters. Under the new HSE Petroleum Regulations, most operators (both onshore and offshore) will be required to prepare a safety case and submit it to the Ministry for acceptance before the commencement of operations. Operators of smaller scale, lower risk onshore production installations will be required to prepare an overview of the measures in place to protect the health and safety of those at or near the installation in lieu of a safety case. All operators will have to report 'near miss' incidents that could have led to a major accident. The regulatory regime will cover the whole lifecycle of the well from design to abandonment with a focus on ensuring operators reduce the risks to a level that is as low as is reasonably practicable. In addition, the HSE Petroleum Regulations contain detailed transition provisions for the implementation of the new regime.

  • The new Petroleum Programme provides that petroleum prospecting permits (PPPs) may be either exclusive or non-exclusive (although normal practice will be to grant PPPs on a non-exclusive basis). Further, multiple PPPs may be granted over the same or overlapping areas (although there are restrictions on the ability to grant PPPs over areas which are subject to prior exploration or mining permits). The provision for both exclusive and non-exclusive PPPs represents a significant change from the draft Petroleum Programme released last year (which provided that PPPs would only be granted on a non-exclusive basis). Overall, however, the general impetus behind the changes to how PPPs will be granted seems to be a desire to encourage a market for speculative offshore surveys.

  • The Minister may set different durations (of up to 15 years) for petroleum exploration permits. In setting the period for blocks offered under a blocks offer, the Minister will take into consideration factors such as whether blocks are onshore or offshore, geographic remoteness, water depth, the extent of previous exploration in (and relevant geological information about) the area. However, the Petroleum Programme does not set out the periods which will be granted for different areas, indicating that decisions will be made on a case by case basis.

  • The holders of existing permits will have the option to opt-in to the new Petroleum Programme. However, the new Petroleum Programme may also apply to holders of existing permits on the occurrence of certain events – key examples of such events include making an application to change permit conditions, making an application for a consent to transfer of some or all of a permit holder's participating interest in a permit, making an application for consent to a dealing in relation to a permit and giving notice of a change of control of a permit holder.

EEZ Regulations

In addition, there have been developments relating to the Exclusive Economic Zone Environmental Effects Regulations (EEZ Regulations), with the release of a Cabinet paper giving some guidance on the content of the regulations (which have not yet been released publically, although there has been industry consultation).

Importantly, Cabinet has decided that certain activities (including seismic surveying, subject to compliance with the Department of Conservations 2012 Code of Conduct for Minimising Acoustic Disturbance to Marine Mammals from Seismic Survey Operations, but not exploratory well drilling for petroleum) will be included within the "permitted" category of activities, therefore not requiring a marine consent provided that the activity complies with any terms and conditions specified for the activity in the EEZ Regulations. In addition, operators will be required give notice of a permitted activity at least two months prior to its commencement. Operators will also be required to provide the EPA with an Initial Environmental Assessment which will be published by the EPA on its website. Further, relevant iwi and hapu will have to be separately notified at least six weeks prior to conducting the activity and a report on this notification and any dialogue must be provided to the EPA.

Also, the government has announced that a new non-notified discretionary classification will be introduced into the Exclusive Economic Zone regime. This will mean that exploratory wells will be subject to the same requirements for consent as other discretionary activities, but explorers will not have to go through the consultation process which would otherwise apply. This is less than industry had hoped for (i.e. having exploratory wells classified as a permitted activity) but should go some way to giving operators more certainty as to timeframes when contracting rigs and planning drilling campaigns.