OMV’s plans for exploration in the Great South Basin

17 December 2019

Find out more about OMV GSB’s consents and plans for oil and gas exploration in the Great South Basin, and the EPA’s role.

OMV GSB’s marine and marine discharge consents

On 9 August 2019, OMV GSB Ltd (OMV GSB) lodged applications for a marine consent and a marine discharge consent to undertake the drilling of up to 10 exploration and appraisal wells, as well as the associated discharges, within its Petrol Exploration Permit 50119 in the Great South Basin. These consents were granted by a Decision-making Committee appointed by the Environmental Protection Authority (EPA) on 16 December 2019.

In making its decision, the Committee had to take into account sections 59, 60 and 61 of the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (EEZ Act). These sections include considerations such as:

  • the importance of protecting the biological diversity and integrity of marine species and  ecosystems (s59 ((2)(d))
  • the economic benefit to New Zealand of allowing the application(s59 ((2)(f))
  • matters to be considered in deciding extent of adverse effects on existing interests (s60)
  • making full use of its powers to request information from the applicant, obtain advice, and commission a review or a report (s61(1)(a)).

The Committee imposed conditions on these consents (under s63 of the EEZ Act) to deal with the adverse effects of the proposed activity on the environment or existing interests. These conditions will be monitored and enforced by the EPA.

The Committee also took into account potential effects of low probability but high potential impact – such as an unplanned oil spill. The Committee members were satisfied that the drilling programme will be undertaken in accordance with industry best practice and that the risk is therefore very low.

They were also satisfied that other requirements OMV GSB must comply with under other legislation and regulations will minimise the risk of an oil spill occurring from a loss of well control. Of particular note is the Safety Case, which must to be approved by WorkSafe New Zealand before drilling commences. The Committee noted that records show that over 200 wells have been drilled offshore in New Zealand, with no loss of well control incidents resulting in the release of oil to the sea.

OMV’s consents, and plans for exploration 

On 7 July 2007, OMV NZ Limited was granted a Petroleum Exploration Permit (PEP50119) under the Crown Minerals Act 1991 for a ‘block’ – or area – offshore in the Great South Basin. On 12 April 2018, the Government announced its decision to ban new offshore exploration permits. The ban does not affect existing permits.

An application by OMV GSB for a marine discharge consent in the Great South Basin was granted, subject to conditions, on 17 September 2019. The application sought permission to discharge trace amounts of harmful substances from the deck drains of a Mobile Offshore Drilling Unit. The discharge was associated with OMV’s Exploration and Appraisal Drilling (EAD) programme within PEP 50119.

The consent was granted by a Decision-making Committee appointed by the EPA. The application was publicly notified, and a hearing was held in Dunedin over three days between 30 July and 1 August 2019.

Now that OMV has received all the necessary approvals from the EPA, and other government agencies, it can begin oil and gas exploration drilling and appraisal activities in PEP 50119.

The water in PEP 50119 is an average of 1,300 m deep, and the area is almost 17,000 km². OMV already has some information about the seafloor, and what lies beneath it. OMV will use this information to choose where it will drill each of three proposed exploration wells.

Exploration wells are used to test for the presence of oil and gas under the ocean floor. To drill an exploration well, OMV will need to use a specially designed ship, or a drilling platform. Due to the depth of the permit area, OMV’s drilling unit will not place any anchors on the seafloor, it will self-stabilise using on-board dynamic positioning systems.

What will happen if OMV finds oil or gas

If an exploration well shows there is oil or gas, OMV may choose to drill ‘appraisal’ wells. Appraisal wells are used to test how much oil or gas is present, and how far the reservoir of hydrocarbons extends. This will allow OMV to determine if there are enough hydrocarbons to invest in extracting the oil and gas reserves.

Next steps

Production drilling

After completion of its exploration and appraisal drilling programme, if OMV wishes to proceed to production drilling in the Great South Basin, it will need to make publicly-notified applications. These will be considered by a Board of Inquiry appointed by the Minister for the Environment.

Public submissions can be made on marine consent applications for the production phase of petroleum operations.

Board of Inquiry

A three to five member Board of Inquiry is appointed by the Minister for the Environment to consider the EEZ Act applications required for production drilling. Board members are chosen for their knowledge and skills, and for their experience of: the EEZ Act, the type of activity and tikanga Māori; and for their legal and technical expertise. The board considers all submissions, holds a hearing, and makes a final decision on the matter. The board runs its own process and makes a decision independently from the EPA and the Minister.

The EPA provides administrative support services to all boards of inquiry. This ranges from organising the logistics of the hearing to commissioning specialist advice to assist the board.

As production drilling is a publicly-notified activity, the EPA must notify the public by calling for submissions in the four main daily newspapers, and the local newspaper. We also give copies of the application to a range of parties, such as iwi authorities, regional councils, existing interests and Government agencies. The application and public notice are also published on our website.

All decisions by a board of inquiry are required to be made within nine months of the date of public notification of the matter. This means a board must consider an application, hold hearings, consider the matter, and make a decision within nine months.

EPA's role in the EEZ Plus

The Exclusive Economic Zone and the Continental Shelf (EEZ) is a mapped area of ocean that extends from 12 to 20 nautical miles from New Zealand's coast. In our role as New Zealand’s Environmental Protection Authority, we make sure that certain activities that take place within the EEZ follow the rules set out in New Zealand law.

The EPA does not make or write the rules; our role is written into the Exclusive Economic Zone (EEZ) and Continental Shelf (Environmental Effects) Act 2012 (EEZ Act) and associated regulations.

Under the EEZ Act, anyone wishing to carry out certain activities associated with oil and gas exploration and development must apply to the EPA for marine consents for each stage of the development of an oilfield.

Once a consent is granted, we monitor compliance with any consent conditions, as well as with the EEZ Act and relevant regulations. The duration of a consent will vary depending on the activity. 

Other key agencies involved Plus

Worksafe New Zealand

Worksafe is responsible for the rules that ensure the risk of a well failure and associated hydrocarbon spill is as low as reasonably practicable. OMV GSB will need to submit a safety case which ensures that a well will be managed through its life cycle, in relation to its design, construction, operation maintenance, modification, suspension and decommissioning. WorkSafe NZ inspectors maintain regulatory oversight throughout the life cycle of an oil rig to ensure the operator is complying with its safety case.

Maritime New Zealand

In the unlikely event of a significant oil spill, Maritime New Zealand is the lead response agency. It is responsible for ensuring OMV GSB has plans in place to manage the waste from their work as well as emergency response plans if that work causes a leak or spill into the sea.

For oil and gas work, the emergency response plan needs to include how the operator would stem the flow of oil in the unlikely event of a well blowout. It is also responsible for maintaining New Zealand’s oil spill response capability and preparedness, and for coordinating any major, national-level oil spill responses.