Woods MeganCROWN MINERALS (DECOMMISSIONING AND OTHER MATTERS) AMENDMENT BILLFirst ReadingHon Dr MEGAN WOODS (Minister of Energy and Resources): I present a legislative statement on the Crown Minerals (Decommissioning and Other Matters) Amendment Bill.ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon Dr MEGAN WOODS: I move That the Crown Minerals (Decommissioning and Other Matters) Amendment Bill be now read a first time. I nominate the Economic Development Science and Innovation Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 11 November 2021. I intend to move that the committee have the authority to meet at any time while the House is sitting except during oral questions during any evening on a day in which there has been a sitting of the House and on a Friday in a week in which there has been a sitting in the House and outside the Wellington area despite Standing Orders 193 195 and 196(1)(b) and (c).We know that decommissioning costs are an increasing concern both in terms of health and safety and environmental risk. Decommissioning can cover many things. It can include removing infrastructure plugging and abandoning wells and undertaking site remediation and restoration. The activities required to decommission a particular operation vary hugely from field to field. The costs also vary according to field to field—there is no one size fits all when it comes to the decommissioning requirement for our oil- and gasfields but these costs can run into hundreds of millions of dollars. These costs fall firmly within the responsibility of the permit or licence holder. However if a permit or licence holder cannot afford to carry out this work then the Crown may be left as the only party that can fund the decommissioning. When it comes to decommissioning an oilfield this is not a choice about whether or not it is done; it is something that simply has to be done. This is not a hypothetical risk that policy makers have dreamt up; this is all too real. In April 2020 the Crown took on the responsibility for the decommissioning of the Tūī oilfield after the operator Tamarind Taranaki Ltd went into liquidation. To protect the marine environment the Crown stepped up as the provider of last resort to decommission the Tūī infrastructure. The Crown initially set aside $155 million to do this based on a 2015 study commissioned by the previous permit holder. While we have made good progress on decommissioning those costs have far exceeded those initial estimates and further funding was necessitated through Budget 2021. I am proud of the team decommissioning Tūī and what they have achieved and there are some silver linings to be found there. But when you consider the costs involved to the taxpayer I am very clear: we cannot let this happen again. We've already taken the necessary steps—well some of the necessary steps—to avoid a repeat of the situation that we find ourselves in with Tūī.We changed the legislation in our first term of Government to close the loophole that allowed us to get into this situation in the first place. When that change came into law in 2019 I signalled my intent to go further to strengthen the regulation of decommissioning. That is what the bill that I am introducing today does and what it is intended to do. At its core this is a very simple bill. It is about making clear what was always expected that those who undertook and profited from petroleum activities would pay for the cleaning up—not the Crown not landowners and not taxpayers. The bill does that by introducing an explicit obligation on petroleum permit and licence holders to carry out and fund decommissioning. There are three pillars to the proposed regime that this bill introduces: a clear and consistent obligation to decommission greater monitoring powers and a requirement to obtain and maintain a financial security to carry out that decommissioning.The first pillar setting this clear and consistent obligation clarifies to permit and licence holders what is expected of them. That is who the obligation applies to and what they must decommission. Failure to fulfil this obligation will attract a civil pecuniary or criminal penalty depending on the circumstances. The potential criminal penalty reflects the high level of public interest involved and the potential health and safety and environmental risks that are associated with this work. As part of this obligation I'm also introducing the concept of perpetual liability which is a trailing liability meaning if somebody transfers their interest in a permit they will continue to be held liable for the costs of decommissioning in the event that the current permit holder fails to fulfil their obligations. The second pillar of the regime allows us carry out more effective monitoring. It is designed to enable us to build a more accurate picture of a permit holder's decommissioning liabilities and the associated financial plan that the holder has to meet those obligations. A permit holder's financial position can change and better monitoring means that we can work with permit holders and better understand the current or the emerging risks that are associated with that permit. The final pillar of the regime requires a permit and licence holder to maintain a financial security. We hope that we do not have to access these funds but this requirement provides a degree of assurance that money will be there if it is needed. In deciding the type and the amount of the security that will be required I will keep a degree of flexibility in the decision making so that the specific requirements can be tailored to the individual circumstances and minimise the impact on businesses where possible. These three pillars in combination with clear consequences for failure to decommission are the basis of a more proactive regime.The provisions of the bill that is being introduced tonight also bring New Zealand more into line with other countries which have over the years been increasing their ability to more effectively manage the risk to their taxpayers. We're not alone in recognising the need to make this change. In 2020 the Australian Government announced it would step in and decommission the Northern Endeavour field after the field was sold from a large industry player to a smaller company. Australia is now also making change to enhance their framework for decommissioning.In preparing this bill I also became aware of the need to think of the future and the legacy that decommissioned petroleum fields present for the Crown and for the taxpayer and the potential need to pick up the tab for any remediation work. Even if a well is plugged and abandoned to the highest standard there does remain a possibility that problems can arise over time. Materials can degrade there could well be a leak or a natural disaster could change the integrity of a plugged or abandoned well. There have fortunately been very few examples of this but the likelihood of an abandoned well leaking increases with their age and as we know we are entering a phase where that could become a real possibility. If there were to be a problem with an abandoned well in the future there is no guarantee that the company that drilled it would still even be operating in New Zealand that they would have a presence in our country. So I propose to change this by requiring permit and licence holders to make a payment or multiple payments towards any post-decommissioning work that is required. I intend to consult on the factors that should be considered when setting this amount and this could include things such as where the well is located and the type of hydrocarbon that it contains.It's important to note that this bill does not entirely eliminate the risk of the Crown having to step in and fund decommissioning or pay costs related to post-decommissioning activities. There are further costs to the Crown as a result of the existing petroleum regulatory regime in the form of royalty refunds that will likely need to be made to some permit and licence holders. We know this. This is part of what is currently in people's permits and the basis of which they are carrying out their activities in New Zealand. I have asked officials to put some time and some effort into looking at what that total royalty liability with refunds is likely to be there. We have consulted on these policy processes—ASSISTANT SPEAKER (Hon Jenny Salesa): Order! Unfortunately the Minister's time is up.