Bridges Simon: Crown Minerals Amendment Act 2013 Amendment Bill — First Reading Second Reading In CommitteeText is incorporated into the Bound VolumeBridges Simon: Crown Minerals Amendment Act 2013 Amendment Bill — First Reading Second Reading In Committee[Sitting date: 16 May 2013. Volume:690;Page:10213. Text is incorporated into the Bound Volume.]Hon SIMON BRIDGES (Minister of Energy and Resources): I moveThat the Crown Minerals Amendment Act 2013 Amendment Bill be now read a first time. The Crown Minerals Amendment Act 2013 established a new approach to the Crown’s management of the petroleum and minerals estate. It streamlined and simplified the regime where appropriate bringing it into line with the regulatory reform agenda and made it better able to deal with future developments. Regulatory attention has been focused on key industry work programme deliverables that have the potential togenerate significant value to New Zealand. Equally tighter controls have been introduced so that when non-compliance arises swift and decisive action is possible.It has been brought to my attention that there was a significant omission in the transitional provisions for the Crown Minerals Amendment Act. This meant that a small number of existing privileges in the form of licences to mine a range of minerals that were granted under Acts that have now been repealed such as the Mining Act 1971 would not be covered by the Crown Minerals Amendment Act. In order to guarantee certainty for the operators affected and to ensure that the Crown can manage these resources effectively I have decided to amend the Act at this time. I also propose a small number of other amendments. The amendments that I propose to make can be summarised in four categories: those resulting from a minor policy change those that deal with transitional issues such as the one that I have just outlined amendments to drafting to implement policy intent and amendments clarifying drafting where necessary.It has been brought to my attention by officials and by the industry that operators who seek to obtain a permit to begin to explore for petroleum with a view to bringing on board a joint-venture partner at a later stage to confirm the resource through drilling and to operate a subsequent mining permit could be excluded from the current regime. This is because the initial operator would not be able to pass the increased financial technical and health and safety capability assessments that the new Act requires as these currently apply to all activities up to and including drilling a well. In order to allow these operators to be awarded permits through a competitive bidding round I propose to include an alternative option where the assessment can be applied to the initial elements of the exploration work programme. Any permit awarded through this process will contain additional conditions to ensure that the operator including any operating partner that they bring in is able to satisfy the financial technical and health and safety requirements for the later stages of the exploration work programme. This approach ensures that the newly strengthened capability assessment remains in place but is more responsive to the way in which parts of the industry operate.Another newly identified issue relates to the tier status of permits for platinum group elements. Tier 1 permits are those that are subject to a high degree of regulatory oversight and a mining permit’s tier status is determined based on the estimated annual production with different thresholds for different minerals. The threshold for metallic minerals other than gold and silver is currently set too high meaning that future platinum tier 1 mining permits would be unlikely. I propose to lower this threshold for platinum group elements to ensure that the definition of tier 1 permits captures permits for these high-value complex operations as is consistent with the policy intent of the two-tiered permit management regime that the Act introduced. The proposed change is to set the threshold for platinum group elements at the same level as that for gold and silver.As I have already mentioned there are elements of the transitional provisions for existing privilege holders that I propose to amend. I propose to amend the Act to ensure that it applies to licences applied for prior to the Crown Minerals Act but granted after the Act came into effect in 1991. These are the existing privileges that are currently omitted from the Act. I also intend to clarify how certain elements of the Act apply to existing privilege holders including clarifying that if there is a change of operator they must be approved and pass the health and safety capability assessment; that data can be shared between regulators and the management of these existing privileges; and that there is consistent treatment of conditions for holders of permits in existing privileges regarding data confidentiality reporting requirements and the treatment of pending applications.There are some instances where I propose to amend the drafting of the Act to reflect the original policy intent. A new offence was included in the Act relating to interference with offshore petroleum and mineral activities. The offshore area to which the new offences apply was intended to include all of the continental shelf and exclusive economic zone. Parts of the exclusive economic zone that are not above the continental shelf have been inadvertently excluded as are parts of the continental shelf that extend beyond the exclusive economic zone and I propose to rectify this.The Act refers to providing information on reserves. Reserves are mineral resources that are commercially recoverable. Resources are all quantities of minerals naturally occurring in the ground including all reserves. It is important that the Crown is able to collect data on mineral resources in order to manage effectively New Zealand’s petroleum and minerals estate. I propose that all instances of “reserves” should be changed to “resources” to ensure that regulations under the Act can set out the information on mineral resources that is provided by permit holders. I also propose to make minor amendments to the definition of “underground gas storage facility” to clarify the confidentiality provisions of certain data classes and the treatment of a permit as property. Through this bill Government is continuing work on all fronts to ensure that the industry is bound by rules that appropriately reflect the risk profile associated with it. This bill also ensures that the changes to the regime can be implemented to their fullest extent in a consistent manner across the industry.This bill is important for the future of responsible development of New Zealand’s oil gas and mineral resources and will ensure the future contribution of these resources to the New Zealand economy. I commend this bill to the House.