Greens dismayed at ‘drill or drop’ pause

The Green Party is urging Energy Minister Megan Woods to rethink plans to give oil companies facing deadlines more time to consider whether they will drill.

Woods has opened the door to giving oil companies additional time to decide whether they ‘‘drill or drop’’, potentially breathing life into the sector, while the Government changes the Crown Minerals Act.

Just hours before announcing a law change to give effect to the new offshore oil exploration ban, Woods met oil industry figures to discuss their request for more leniency on the conditions of existing exploration permits.

Woods said she agreed that, on a case-by-case basis, she will consider giving oil companies more time to fulfil their commitments on the permits, describing it as ‘‘a little bit of a pause’’.

Although she did not put a time limit on the pauses or say under what conditions they might be granted, Woods said the pause was designed to give the industry time while the Government considered more wideranging changes to the Crown Minerals Act.

Environmental groups had lauded the Government for its stance on oil exploration, but Woods’ decision was described as ‘‘terrible’’ by Greenpeace executive director and former Green Party co-leader Russel Norman.

Greens energy spokesman Gareth Hughes is also urging the Government to reconsider.

‘‘I struggle to see the point in banning offshore exploration for oil and gas if existing companies with huge blocks can hold off from exploring until way later down the track.’’

While the conditions on permits vary, holders tend to make commitments to drill exploratory wells by a certain date, or face relinquishing the permits to the Crown, so-called drill or drop clauses. Oil companies have lobbied for more flexibility around the clauses in the past, but because the Government has offered large areas for exploration each year, the industry had expected new space to become available.

Woods said the decision to stop offering new offshore permits, announced in April, was behind her decision to give greater flexibility.

‘‘Obviously they [the oil companies] have to figure out how to manage their permits differently given that there aren’t more being offered,’’ she said.

‘‘Previously people would be quite content to just let stuff drop off because they would pick up stuff in the next block offer round.’’

Cameron Madgwick, the chief executive of the Petroleum Exploration and Production Association of New Zealand (Pepanz), welcomed the move, but said the earlier Government decision had ‘‘seriously damaged’’ investor confidence.

‘‘This is a welcome signal from the minister that could give operators a little more breathing space, given we are operating in a new environment.’’

‘‘This is a welcome signal from the minister.’’ Cameron Madgwick, Pepanz chief executive