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Shell's offshore NZ assets keep local programme viable, OMV says

Tuesday 4th September 2018

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OMV says its purchase of Shell’s offshore assets in New Zealand will help the enlarged group maintain a sufficient exploration and development programme to keep its local activities viable.

Gabriel Selischi, the firm’s vice president for its Australasian operations, said hydrocarbons are an important part of New Zealand’s energy mix and that the firm wants to have a sustainable business here.

But the small level of exploration activity is a challenge. Bringing rigs to New Zealand is expensive and offshore drilling historically has been sporadic.

“That’s part of our idea with Shell, in creating this larger operator in order to have enough scope of work to be able to have a comprehensive programme,” he told an Environmental Protection Authority hearing in New Plymouth today.

“We are here in order to establish a sustainable business and be fully integrated into the economic environment of New Zealand,” he said. “In order to ensure the sustainability of our presence and production and to give New Zealand the energy that the country needs, we will need to perform exploration.”

OMV has operated in New Zealand for almost 20 years. It operates the Maari oil field and has stakes in the Maui and Pohokura gas fields. Earlier this year OMV agreed to buy Shell’s offshore interests in New Zealand, including operatorship of those two gas-condensate fields, for US$578 million.

Selischi was giving evidence in support of a marine discharge consent the firm is seeking for the rainwater run-off from any rigs the firm and its partners use for the drilling of up to nine exploration wells and three appraisal wells off the Taranaki coast during the next seven years.

The hearing is to approve the immeasurably small trace quantities of harmful material that may wash from the decks of a drilling rig after any accidental spill – of things such as lubricants or chemicals - has been cleaned up. The much larger discharges resulting from actual drilling will be subject to separate consents that the EPA will determine without public input.

The need for the EPA process for deck drainage is disputed by the industry, which says this type of consent was not intended for exploration rigs, but for production platforms and vessels that could be operating at fixed sites for decades.

The EPA considers a notified consent – which allows for public submissions - is required as the activity is classed as discretionary under the 2015 discharge and dumping regulations and that the authority doesn’t have the discretion to treat it any differently.

OMV counsel James Winchester noted that while the firm recognises the requirement for the consent, he said its treatment in the Exclusive Economic Zone legislation requiring a notified consent appears to be “anomalous” given other discharges and other consents related to exploration activities are dealt with through non-notified processes.

The application is being heard by a three-member committee chaired by planner and independent hearings commissioner Greg Hill. The other members are engineer and EPA board member Nicki Crauford and lawyer and resource planning consultant Sheena Tepania

Submitters to be heard include Climate Justice Taranaki and Frack Free Kapiti and Beyond.

SLR Consulting prepared the 145-page environmental impact assessment OMV lodged as part of its application.

It modelled the potential risks assuming 250 ml – a cupful - of the most toxic likely chemicals were washed into a rig’s deck drains and oily water treatment system. The modelling also assumed the rig’s settling tank was only half full at about 2,500 litres, and used a range of potential rain conditions.

SLR then looked at the most harmful products typically used in drilling operations. Citing CI-111 – a corrosion inhibitor - as an example, the modelled spill into the deck drains would leave only 31.8 milligrams of its active ingredient for each litre in the settling tank.

The committee heard that the material would be immediately diluted in the sea to a point there would be nothing to measure if any type of post-accident monitoring was carried out.

Reid Forrest, associate consultant at SLR, told the hearing that any impact on marine life would be “trivial.”

He also noted that the EPA had already approved use of CI-111 at Maari in far greater quantities than likely in any run-off event and had considered the risks to marine life from its use at Maari as negligible.

OMV’s application attracted 44 submissions, more than three-quarters of which were lodged on a template developed by Climate Justice Taranaki.

Most were opposed to drilling of any sort due to concerns about climate change, potential oil spills and other environmental impacts. Some were also concerned that this was the only aspect of the exploration programme the public could comment on.

DMC member Tepania questioned OMV on the level of consultation it had carried out on the deck drainage issue, given that several iwi groups felt they had not been consulted on it and were also struggling to understand the context for the current application relative to the wider planned activities.

While there clearly had been broader engagement with many groups, she was concerned that there was not more evidence from OMV on the consultation it had carried out for this application.

Matiu Park, OMV’s New Zealand safety, security and environment manager, said the firm had been consulting with about 26 iwi and hapu groups since the permits involved were granted in 2016.

The firm is committed to on-going consultation and engagement will talk more with specific groups as plans are developed for the exploration wells they may be most affected by.

He said some of the comments from submitters appeared to reflect the “anomalous” nature of the regulation requiring a separate consent for the deck drainage – separate from the other consents it has now sought from the EPA for the wider drilling programme.

It was also conscious of the potential for stakeholder “fatigue” given the consultation firms are required to enter into with iwi and other interested parties across the wide range of consents required by multiple agencies, he said.


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