EDS calls for deepwater drilling regs to be scrapped as Anadarko plugs first well

The Environmental Defence Society is calling for the government to scrap its draft regulations governing deep sea oil exploration on the same day as Texan oil explorer Anadarko said it was plugging and abandoning the first of the two deepwater wells it's drilling this summer.

While there were some oil and gas shows in the Romney-1 well, drilled in 1.5 kilometre deep waters off the Taranaki coast, Anadarko said the well was found to be water-bearing and "did not encounter commercial quantities of oil or natural gas."

The well was drilled without incident to a depth of 4.6 kilometres and demonstrated that deepwater wells could be safely drilled in New Zealand waters, said Anadarko spokesman Alan Seay.

"We always learn an awful lot from unsuccessful wells. It will be useful to determine next steps," said Seay.

The drill-ship Noble Bob Douglas will now head south to drill another deepwater well off the Canterbury coast in the Caravel prospect, and was expected to be ready to spud in by late next week.

Anadarko is conducting both wells under transitional arrangements ahead of the government setting regulations for oil and gas exploration in the country's vast Exclusive Economic Zone, extending 200 kilometres out from shore.

Submissions on draft regulations closed at the end of last week, with EDS calling for the government to go back to the drawing board, as the proposals were "inadequate and weak", with the intention to leave exploration wells as "non-notified" activities not requiring resource consent hearings creating unacceptable levels of environmental risk.

Instead, oil exploration should be treated as a notifiable, discretionary activity, rather than as currently proposed, both non-notifiable and permitted. The draft regulations envisage resource consent hearings only at the production well drilling stage, after commercially exploitable quantities of oil have been discovered.

"If we are to have oil and gas exploration in our deep oceans, we should have world class environmental oversight," said EDS chairman Gary Taylor.

"The proposal to make exploration drilling non-notified leaves the environmental approvals process up to the Environmental Protection Authority with no public scrutiny, involvement or hearing. We are being asked by the EPA to 'trust us - we know what we're doing'."

"This creates a real possibility of regulatory capture by the industry, one of the factors that a Presidential Inquiry found contributed to the Deepwater Horizons spill," said Taylor, referring the catastrophic oil spill in the Gulf of Mexico in 2010.

"Regulatory capture is made even more likely by the fact that Ministers are acting as outspoken advocates for the sector in order, presumably, to counter pressure from interest groups that don't want any oil and gas exploration."

Taylor said the draft regulations were not based on any risk analysis of the threat from oil spills.

"Ministers are contending that there is a low probability of an oil spill. But risk is calculated by multiplying probability by consequences - and the consequences of a spill in New Zealand waters are enormous."

"In order to make regulations under the EEZ Act, the Minister must have adequate information. In the absence of a proper risk assessment, we cannot see how this test can be met," said Taylor.

(BusinessDesk)