New Zealand: A tougher fracking regime in prospect

Brief Counsel

Download: PUB BC A tougher fracking regime in prospect - 29 Nov.pdf

The Parliamentary Commissioner for the Environment will be recommending a tougher regulatory regime for fracking when she delivers her final recommendations to Parliament next year.

This is clear from her interim report, released on Tuesday, which concluded that:

  • the risks associated with fracking can be managed effectively by the implementation of operational best practice, enforced through government regulation, but
  • the current New Zealand framework is fragmented and may not be adequate to the task.

Although the report did not deliver formal recommendations, it outlined seven interim findings relating to the environmental risks of oil and gas production and to regulatory oversight. Crucially, the Commissioner states that a moratorium on fracking is not presently justified.

Fracking (or 'hydraulic fracturing') is a process of injecting fluid containing sand and chemicals at high pressure to fracture rock in order to extract previously inaccessible oil and gas.

The context

The Commissioner decided to conduct the fracking investigation after receiving requests from MPs on both sides of the House, local councils and members of the public. Several local authorities are looking to the Commissioner for guidance in developing their own fracking policies, delivered through their district and regional plans.

Fracking has been in use in New Zealand since 1989 but has been pretty much confined to the Taranaki Basin. However oil and gas exploration permits have now been granted in other parts of the country, particularly in the East Coast of the North Island, where fracking techniques may be required for extraction. The geology of this area is very different to the Taranaki, having a greater mix of rock types, including shales, and much higher seismicity.

Public concerns about the safety risks associated with fracking are not confined to New Zealand. A number of studies have been conducted or are underway in other jurisdictions, among them a recent UK study by the Royal Society of London which found that fracking can be made safe provided "operational best practices are implemented and enforced through regulation". This finding was influential with the Commissioner and is quoted by her.

Inquiry part of a broader work stream

A few hours before the release of the Commissioner's interim report, the Government announced new health and safety (HSE) regulations to cover the oil and gas sector. These will bring New Zealand into line with UK and Australian practice and will apply from June next year.

New requirements are:

  • operators of larger, higher risk installations (both onshore and offshore) will be required to prepare a safety case to be submitted to and accepted by the Ministry of Business, Innovation and Employment (MBIE) before work can commence
  • fees of between $70,000 and $100,000 will be required to cover MBIE's costs for the assessment of these safety cases, depending on the type of installation. A revised safety case will cost between $34,000 and $54,000
  • operators of smaller scale, lower risk onshore installations will be required to prepare an HSE overview in lieu of a safety case
  • all operators will have to report 'near miss' incidents to ensure that MBIE has sufficient data to inform its regulatory priorities
  • the regime will cover the whole life cycle of the well – from design and construction to decommissioning – and operators will be required to ensure that all phases are subject to independent and competent outside scrutiny.

The Government also introduced a Supplementary Order Paper to strengthen the HSE provisions in the Crown Minerals (Permitting and Crown Land) Bill. Changes include:

  • extending the definition of 'good industry practice' to include HSE considerations
  • requiring the Minister of Energy and Resources to seek the view of the appropriate health and safety regulator before issuing a Tier 1 exploration or mining permit, and
  • providing that HSE requirements must have been met before mining can begin.

In addition, the Independent Taskforce on Workplace Health and Safety, appointed as part of the Government's response to the Pike River coal mining tragedy, is preparing a reform package for presentation to Ministers in April next year.

And the Environment Minister has instructed the Ministry for the Environment to produce clear guidelines on the respective functions of central and local government in relation to the control of fracking.

These developments will affect the context into which the Commissioner will deliver her final report.

Key findings

Four of the seven interim findings relate to the different stages of oil and gas production that are key to protecting the environment from the risks of fracking.

They provide an indication of the areas in which the Commissioner feels that more regulatory guidance or direction may be required.

  • Choose the well site carefully (ensuring that the geology and hydrology of the site is well understood both by the regulators and by the companies).
  • Design and construct wells to prevent leaks (the integrity of the well is very important, the number of layers of casing, how far the casing extends, the quality of the cement that binds the well to the surrounding rock, the ability of the structure to survive earthquakes).
  • Prevent spills and leaks on the surface (the risk of contamination from waste storage can be reduced by minimising the use of toxic chemicals, lining storage pits, using tanks as much as possible).
  • Store and dispose of waste with care (currently in New Zealand wastewater is generally injected back into deep rock layers. How safe this practice is will depend on local geological factors).

The remaining three findings are concerned with the quality of regulation and enforcement and will be examined further in the second phase of the Commissioner's inquiry. The Commissioner notes that:

"When fracking is done well, the chance and severity of environmental damage is small compared to some other economic activities. On the other hand, when it is done badly, the risks are higher. Thus, managing operations well right through the process is very important".

Problems with the current framework are:

  • oversight is complex and fragmented
  • regulation may be too light-handed so that operators are perhaps being trusted too much to do 'the right thing', and
  • a 'social licence' for fracking has yet to be earned as there has not always been sufficient communication and engagement with local communities to build up the requisite trust.

The Commissioner comments that there are many regulators – MBIE, the High Hazards Unit and the territorial authorities – and that it is not clear how their different areas of responsibility intersect. It is unclear, for example, who is responsible for:

  • assessing site-specific risks to the environment from fracking fluid
  • examining well integrity for environmental risks, and
  • monitoring abandoned wells.

This lack of clarity is exacerbated by wide variation in regulation among councils. Some examples:

  • drilling a well is a permitted activity in Taranaki so is only controlled by conditions set out in the regional plan whereas, in Hawke's Bay, it is a controlled activity, meaning that a resource consent under the Resource Management Act (RMA) is required, and
  • Waikato Regional Council requires only that decommissioned wells be sealed and abandoned in a manner that prevents cross-contamination between water bodies or changes in water pressure while Gisborne District Council is highly prescriptive in its approach.

Specific regulatory gaps which the Commissioner discusses in some detail are:

  • once a company has been granted a permit, it seems to be free to decide where to drill within the permitted area without any input from either central or local government
  • although the operator must take "all practicable steps" to notify the High Hazards Unit in MBIE 20 days before drilling begins, the actual drilling plans do not require the approval of the Unit
  • it is not clear who is responsible for well integrity – the High Hazards Unit or regional councils
  • in the absence of New Zealand standards for well design and construction, companies are tending to follow the specifications applying in their home jurisdiction
  • New Zealand's HSE regulation is completely separate from its environmental regulation
  • there is no central guidance to councils on fracking (the Commissioner suggests that the Environmental Protection Authority may be the appropriate body to provide this, given the expertise it will need to develop to perform its regulatory responsibilities in relation to off-shore drilling), and
  • even where operators are required to provide (often highly technical) data to councils, MBIE, New Zealand Petroleum & Minerals and to the High Hazards Unit, there is "no guarantee that the information is always being understood and used to enforce best practice – or even good practice".

Where to from here

Because the Commissioner is an independent Officer of Parliament, she reports to Parliament rather than to the Cabinet.

However, her recommendations will be influential because of the political sensitivities created by the Pike River disaster and because the Government recognises that the public needs to have confidence in how the practice of fracking is managed.

Ministers have asked MBIE to prepare a detailed response to the Commissioner's interim report so that this can inform her final recommendations, due in mid 2013.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions