Greymouth Petroleum has been granted consent to drill an exploration well on Stewart Island.
Southland District Council approved the company's application to drill one well during the next four months.
Environment Southland also needs to approve drilling before it can begin. It said it had yet to grant it yesterday, but expected to today or early next week.
The well will be drilled in an abandoned quarry in Horseshoe Bay. All adjacent landowners have given their permission for the work to go ahead.
Greymouth management executive Lara Walker said work on the well started yesterday afternoon.
District council resource management planner Jennifer Green said several conditions had been imposed.
The drilling rig will run 24 hours a day, and the council will monitor the noise. When work is complete the site should be returned as near as possible to its original condition.
No drilling discharge would be allowed to go into the island's sewerage scheme, no drilling sludges would be put into oxidation ponds and no discharge would be allowed into the sea through stormwater drains.
"Council is satisfied that the adverse effects on the environment will be minor," the consent says.
"This determination takes into consideration that the resource consent is temporary and is only sought for a short duration."
The council acknowledged there would be visual impact but allowed it because it would be temporary.
Testing of the well would require a new consent, Ms Green said, as would new wells.
"The key thing is it's an exploration well. Anything further would be a separate consent application."
She said the council would closely monitor what happened at the site. "We will be keeping an eye on things and making sure everything (is correct)."
Ms Green said whether future applications were notified – open for submissions and appeals – would depend on what was asked for in the application.
Greymouth has the right to explore for oil and gas on the island as part of its Great South Basin permit, granted in 2008. Most of the inhabited part is within the permit area, which does not include Rakiura National Park land.
Greymouth shipped the equipment for the well to the island last month.
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