Editorial: Drilling safeguards needed

22:33, Dec 16 2012

The name Deepwater Horizon is synonymous with major environmental disaster. The well in the Gulf of Mexico was responsible for enormous damage in 2010 when it spewed billions of litres of oil into the sea, wiping out marine and bird life and the incomes of fishermen and tourist operators.

Given the scale of the disaster, it is not surprising that Minister of Energy and Resources Phil Heatley's decision to grant offshore oil and gas exploration permits to United States company Anadarko, a 25 per cent partner in Deepwater Horizon, has caused controversy. However, Anadarko's involvement in the Deepwater Horizon venture and the granting of permits for it to prospect in the Pegasus Basin off the south coast of Wellington must be kept in perspective.

Although the company was a financial backer of Deepwater Horizon, it did not plan or operate the BP well. The permits granted for the Pegasus Basin are also only investigative in nature. While they include provision for an exploratory well in each site, most of the work will be via seismic surveys.

That does not mean, of course, that there is any room for complacency when it comes to offshore commercial oil operations. Given the enormous value Kiwis place on the environment, it is incumbent on the Government to impose the most robust regulatory measures possible before there is any expansion of offshore drilling.

The oil and gas reserves that lie beneath the waves off New Zealand's coast are estimated to be worth tens of billions of dollars. Any government that did not want to exploit such a lucrative resource would have to be mad.

However, it would be equally mad to allow new drilling operations without strict rules. Those must include the requirement that wells comply with world best practice in the areas of health and safety and environmental protection. Operators must also be subjected to close monitoring to ensure standards are being met, with stiff penalties for non-compliance.


Above all else, it is crucial that the Government imposes watertight provisions regarding compensation and liability for cleanups in the event of a spill. Foreign companies allowed to extract oil from the ocean floor must have no wriggle room when it comes to paying for any harm they might cause.

New Zealand has recent experience of the damage that can be wrought when even a few hundred tonnes of oil are spilt into the sea. The effects of last year's Rena disaster, in which 350 tonnes of heavy fuel oil leached into the water off the Bay of Plenty coast, linger to this day.

Yet offshore oil wells have operated in New Zealand for decades without major mishaps. They have also made a significant contribution to the national economy, with the Taranaki fields adding more than $2 billion a year to gross domestic product and supporting more than 5000 jobs.

The Government is right to want to tap into the full potential of New Zealand's oil reserves. However, the first item on the checklist when it comes to granting licences must always be the protection of the environment.

The Dominion Post