Report: Rules too loose to allow fracking

Environmental protection in New Zealand is too weak to manage the risks posed by the proliferation of oil and gas drilling, a new report has found.

Parliamentary Commissioner for the Environment Dr Jan Wright has released her final report on fracking - the hydraulic fracturing of rock to release fossil fuels - saying exploratory drilling could spread quickly as the price of oil rose and more sophisticated fracking techniques were used.

While the drilling was largely still exploratory "this could change quite rapidly" and and authorities needed to ensure they were not left "scrambling to catch up" to ensure protection was adequate.

Rules and regulations were inconsistent and more direction from the Government was needed as well as greater oversight of wells and drilling waste.

An immediate priority was the East Coast Basin where the shales near Dannevirke, Gisborne and Hawke's Bay were being drilled, she said.

They were likely to require fracking and potentially held billions of barrels of oil.

Wright said the shale in the basin had been compared with the Bakken and Eagle Ford rock formations in the United States where the number of wells has boomed in just a few years.

Striking oil here would "radically change both the environment and economy in this part of the country".

But Wright said drilling in the basin would need to be managed differently to drilling in Taranaki where it had largely been concentrated previously.

"The region is drier and very reliant on a number of key aquifers," she said.

"There are major known earthquake faults, so wells would be more vulnerable to damage from seismic activity, and therefore more likely to leak into groundwater.

"Increasingly, the region identifies itself as a producer of premium food, and there would be conflicts between this and a mushrooming oil and gas industry".

Wright pointed to differing regulations in different councils and where responsibilities for the same wells were split between different bodies.

For example, while the Crown received the royalties, the responsibilities for managing the environmental impacts rested with local councils who were unprepared for an expansion, and whose rules and regulations "often vary widely without justification".

The Government needed to support those councils and provide more guidance such as through a national policy statement, as the challenges were "nationally significant".

The public also deserved more of a say on where drilling was allowed, wells needed to be better designed to ensure they did not contaminate water supplies, and there needed to be measures to ensure old wells were monitored and that drilling companies would cover the cost of any clean-up.

Wright also said the practice of land-farming, the spreading of drilling waste on farmland, needed to be reviewed.
The Fonterra botulism scare last year had shown that perceptions of contamination could have serious repercussions and therefore needed to be managed.

Wright's preliminary report on fracking, released in 2012, found fracking was probably safe providing it was well-regulated, but she said more investigation was needed.

In March, Environment Minister Amy Adams released best-practice guidelines for undertaking fracking.

The guidelines cover landfarming and say that fracking fluids needed to be controlled to ensure they did not contaminate water supplies.

Wright said the guidelines "contain a great deal of useful information, but do little more than describe how the industry is managed in Taranaki".

She added she did not want her report to be seen as an endorsement of drilling for fossil fuels, saying she would rather see the focus on green growth.

Fracking has been carried out in New Zealand for about 25 years though concerns about its impact on the environment have placed it under recent scrutiny.


- The Government should develop a national policy statement paying particular attention to "unconventional" oil and gas.

- Regional council plans should include better rules for dealing with oil and gas wells as most do not even distinguish between drilling for water and drilling for oil and gas.

- Wells need to be designed to minimise the risk of contaminating aquifers.

- Processes around who pays if something goes wrong need to be improved. Abandoned wells need to be monitored as the older a well is, the more likely it is to leak.

- Regulations on hazardous substances at well sites need to be better enforced.

- Landfarming - the disposal of waste from wells by spreading it on farmland - needs review. There have been instances of farm animals grazing these areas before the breakdown of hydrocarbons is complete.