Smith Nick: Exclusive Economic Zone and Continental Shelf (Environmental Effects) (Transitional Provisions) Amendment Bill — Second ReadingText is incorporated into the Bound VolumeSmith Nick: Exclusive Economic Zone and Continental Shelf (Environmental Effects) (Transitional Provisions) Amendment Bill — Second Reading[Sitting date: 04 June 2015. Volume:706;Page:4374. Text is incorporated into the Bound Volume.]Hon Dr NICK SMITH (Minister for the Environment): I move That the Exclusive Economic Zone and Continental Shelf (Environmental Effects) (Transitional Provisions) Amendment Bill be now read a second time. This bill makes a technical amendment to the 2012 Act. It ensures that the four existing petroleum production operators in New Zealand’s exclusive economic zone have a smooth transition into the regulatory regime established by the Act.It is worthwhile to first give an overview of the legislative framework. Prior to National coming into Government there were no—no—environmental laws—Hon David Cunliffe: How about prior to the Magna Carta or William the Conqueror or something like that?Hon Dr NICK SMITH: —within the exclusive economic zone. It may seem to members opposite that that is not very significant. Well actually New Zealand has had oil and gas and other activities operating in the exclusive economic zone for over 40 years without any requirement for assessment of environmental effects.I know that members on this side of the House are proud of the fact that that enormous area which is more than 25 times the land area of New Zealand now has an environmental assessments process. I further point out that the view members on this side of the House take is that there are economic opportunities in that huge ocean area but they should be taken in a way that is responsible and with proper environmental assessment and this bill is about improving that regime.This bill was referred to the Local Government and Environment Committee on 26 February this year and I want to acknowledge the work of the chairman Scott Simpson and the other members of the committee for the work they have done on fine-tuning this bill. The committee received five submissions and I think that in itself indicates that there is actually pretty broad support for this measure. Only two submitters sought to be heard in person. I do want to thank those submitters for their submissions and input.The transitional provisions in the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act currently require that existing petroleum operators are able to undertake their marine consenting process before their pre-existing mining permits or privileges under the Crown minerals regime expire. So if a marine consent has not been granted by the Environmental Protection Authority which the National Government established before the expiry date existing operations would have to cease. That is not consistent with other transitional provisions in the law and it inadvertently compromises the supply of New Zealand’s oil and gas.The Environmental Protection Authority is currently considering a marine consent application from Shell Todd Oil Services in its Māui operations. The Māui gas field operates about 35 kilometres off the Taranaki coast. It has been in operation for 35 years. It currently produces about 20 percent of New Zealand’s natural gas. I am expecting the decision from the Environmental Protection Authority in the next few days.Shell Todd Oil Services is the first of four existing operators to begin the full transition into this environmental protection regime and it has been required to undergo a robust consent process. This includes submitting an impact assessment outlining the effects of the activities on the environment the impacts on other interests as well as identifying measures that it would undertake to avoid to remedy or to mitigate any adverse environmental effects. The marine consent application was publicly notified giving interested parties and the public an opportunity to provide input towards the Environmental Protection Authority’s consideration of its application.This bill simply allows those activities in the Māui field to continue if for any unforeseen circumstance the Environmental Protection Authority decision is delayed or in the event that it is appealed. It eliminates any possibility that New Zealand’s energy supply could be put at risk from the Māui field. The implications for Shell Todd Oil Services having to cease its Māui operations would be hugely significant to the New Zealand economy. This situation would have an impact on gas consumers as well as on the Crown’s royalties and tax take. It is estimated that between 2008 and 2013 the Crown received approximately $550 million in royalties in resource levies and company tax from that Māuijoint venture.The Government would have preferred that Shell Todd Oil Services had applied well in advance of the expiry date of its mineral privilege so that this bill would not be needed. We want to ensure the situation is not repeated when the other three existing operators are required to apply for a marine consent transition to the new exclusive economic zone regime.For this reason I am pleased with the refinements that have been made by the Local Government and Environment Committee and that have been recommended in the bill. The select committee has unanimously recommended amending the bill to specify that any of those existing operators must lodge their consent application accepted as complete with the Environmental Protection Authority at least 9 months before the expiry of that operation’s mining permit or privilege. This requirement provides an incentive for operators to engage early with the Environmental Protection Authority well before their mining permit or privilege expires. This is because existing operators will have to ensure that their information and application is in full when it is lodged and is able to be processed by the Environmental Protection Authority.This requirement also addresses the concern expressed by some submitters at the committee that the bill as originally drafted gave petroleum mining operators an open-ended time frame in which they could apply for a consent. The new 9-month time frame in the bill encourages existing operators to submit their marine consent application early and provides sufficient time for the Environmental Protection Authority to consider the application in line with those statutory time frames. The marine consent process will be well established by the time the existing operators come up for the marine consent process with the first not until 2025 so I do not expect that operators will have any difficulty in meeting the time frames in the bill.As New Zealanders we all value our marine environment and the resources that it provides. We need to ensure that New Zealand’s oceans are sustainably managed to support a strong economy and the natural environment as well as our great Kiwi lifestyle. I remind the House that until this Government passed the 2012 Act there was no requirement for an environmental assessment. We have a regulatory regime that is in my view one of the most robust in the world in ensuring that we follow best international practice.This bill is going to ensure that there is not any potential hiccup around the supply of that essential gas. It ensures that it is done in a safe and responsible manner and that we respect the integrity of the process and the courts that may be subject to an appeal. It is now only a matter of providing the additional incentives for future operators as their consents come up for renewal.I am sure we are going to hear long howls of protest from members opposite that the bill was not necessarily perfect the first time round. Let us just simply say that we could have a blame game as to whether the fault is with Shell Todd Oil Servicesfor not applying early enough or whether we should always have provided for consents continuing in the event that there is an appeal. A common-sense Parliament would say that actually having had more than 100 years without any environmental rules in this vast area of ocean this is a huge step forward. This is a relatively minor sensible amendment and I will be surprised if members of this House will not support it.I will finish with one closing point. Labour promised in 1999 that it would pass a law. It did nothing in its 9 years in Government. We have passed a bill and a law that is world’s best practice and I am more than happy to be the Minister who has to make a minor tweak such as this to ensure that it is a robust and fair regime. I hope the House will support the bill.