Block Offer 2014 Permit Awards

Good morning.

As Minister of Energy and Resources, it’s my pleasure to welcome and host you here, in Parliament, this morning to award permits for the Government’s Block Offer 2014.

We are here today because New Zealand has a petroleum potential that needs to be better understood. 

The oil and gas industry is already a vital part of the New Zealand economy.  Oil is our fourth largest commodity export after dairy, meat and wood, and oil and gas combined contribute more than $2.7 billion to GDP each year.

Those of you who have heard me speak before will know of my commitment to the oil and gas sector as one of our most significant and promising prospects for growth. 

To date all production in New Zealand has come from just one of our 18 basins – Taranaki.  If any of the other 17 basins has anything like the success of Taranaki, it would truly be an economic game-changer for our country.

Of course this is not and never can be about development at any cost.   The Government is committed to developing our resources in a sensible, safe and environmentally responsible way, and we have made multiple changes to our regulatory regime to ensure we are at world’s best practice in these areas.

I believe we need to expand our understanding of New Zealand’s petroleum potential.  Over the last three years the Government has made significant changes to how the sector is regulated, to help make this happen in a safe and responsible way.

During this time we have: introduced new legislation to govern activities in the Exclusive Economic Zone; amended the Crown Minerals Act to ensure industry can operate without disruption from unlawful protest; put in place a world-class regulatory regime; and established a Health and Safety regulator, WorkSafe New Zealand, with a High Hazards Unit to oversee health and safety practices.  

One of our real success stories this year is data.  We have committed to positioning New Zealand ahead of other jurisdictions by working with the sector to build better data.

Last year the Government introduced significant changes to data confidentiality provisions in the Crown Minerals Act that have enabled multi-client seismic acquisition companies to acquire data and then on-sell it to industry. 

Since this change came into force we have seen significant increases in how much data has been acquired allowing us to secure global interest.   Multi-client companies have taken the story of New Zealand’s potential to the world, supported by state of the art data.

Finally, of course, we have moved to the exclusive use of annual Block Offers to allocate exploration permits. 

The Block Offer has allowed the Government to position New Zealand as an investment destination where companies can manage their financial risk, recognising their imperative to make the best use of their limited reserves.

Our first annual Block Offer in 2012 saw ten petroleum exploration permits granted to seven companies.   The following year, Block Offer 2013 saw another 10 exploration permits granted.

Today, I’m delighted to announce that we will grant 15 exploration permits for Block Offer 2014.  This is the most successful Block Offer the Government has run to date, and the most competitive.

The total area we will permit for Block Offer 2014 is 47,690 square kilometres.  The permits we will grant include six onshore permits and nine offshore permits.

Collectively these permits have a committed work programme expenditure of around NZ$110million, with a potential one billion dollars of further activity, if contingent work and drilling is realised.

I am very pleased that as part of Block Offer 2014 we will welcome three new entrants to petroleum exploration in New Zealand.  

Two are major overseas companies with significant resources and extensive worldwide experience – welcome to Chevron and ONGC Videsh.  The third new entrant is a new local company, New Endeavour Resources – welcome.

This is not just about the numbers.   A major success of Block Offer 2014 has been the quality we have seen in the bids received and the operators we are attracting.

My officials tell me that the calibre of bids for Block Offer 2014 was exceptional, including detailed work programmes targeted to specific acreage.

The feedback I have from the sector is that the process is working well for the industry too, for incumbents and new entrants alike.  We have quickly and clearly established a transparent and consistent tender process.

What we have seen this year is a deepening and strengthening of exploration in New Zealand.  New players continue to enter our market, and existing players cement and expand their work here. 

This tells me that the Government’s strategy is a success.

As Minister, I remain committed to the future of the Block Offer – I hope to see you all for the launch of Block Offer 2015 in March next year.