Oil and gas exploration: 'Priority action' recommendation on disused wells not followed through

10:52 am on 7 February 2020

The government is being taken to task for failing to act on a 2017 report that found more than 100 'orphan oil and gas wells' around the country had not been properly decommissioned.

Oil and Gas Drilling Rig onshore (stock photo)

An onshore oil and gas drilling rig (stock photo). The Petrofac report identifies 104 in wells in total, 14 of which it says need "priority action". Photo: 123rf

Released to RNZ under the Official Information Act, the Petrofac report says the onshore wells "represent an unknown risk to health and safety, and the environment" and that some had the "potential to flow oil or gas to the surface".

But the Ministry for Business, Innovation and Employment, which commissioned the report, says none of the most at-risk wells is leaking and there is no "immediate danger to personnel or the environment".

Orphan wells are those that have been abandoned, have no current permit holder and have outstanding plugging and decommissioning commitments.

The Petrofac report identifies 104 in total, 14 of which it said needed "priority action".

It said six, for which there was good data, had "the potential to flow oil or gas to surface if they are not properly abandoned".

Four of these were drilled near Wairoa by Westech Energy New Zealand, which suspended its drilling operations between 1998 and 2007.

Ngāti Kahungunu Iwi environment and natural resources director Ngaio Tiuka said the iwi had been left in the dark about the status of the Wairoa wells.

"We definitely have had any kanohi to kanohi (face to face) engagement and we haven't heard of any engagement occurring in Wairoa directly with the locals so it is a concern that this is happening and that some of the wells for priority action are located in Wairoa."

Ngati Kahungunu formalised its opposition to oil and gas exploration in 2016 over fears about infiltration into water aquifers.

Tiuka said it was disappointing the Wairoa wells had not been properly decommissioned.

"Well, first of all it should be the responsibility of the people who did the oil drilling or those who contracted the oil drillers. It's up to those responsible for the exploration to clean up the mess they are doing as part of their business and it's not acceptable that this has just been left as it is."

As the law stands, the landowners are responsible for the remediation of orphan wells - which in 2017 Petrofac estimated would cost up to $19 million.

Gisborne/Wairoa Federated Farmers president Charlie Reynolds found it incredulous that farm owners could be liable for decommissioning costs for well on their property.

"I would've thought there would have been something written into the contract that Westech were fully responsible for decommissioning and tidying up and I kind of would have thought by the law as well that yes okay the landowner might be in the gun for a bit but certainly the operator would be equally in the gun."

The 14 priority action wells include two in Taranaki that could not be found and the Blackwater 1 well near Murchison where, according to the report, locals had been setting alight gas build-up for their own amusement.

Potentially dangerous

Taranaki Energy Watch spokesman Sarah Roberts said orphan wells were potentially dangerous.

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Taranaki Energy Watch spokesman Sarah Roberts. Photo: RNZ / Robin Martin

"The list that the experts provided to MBIE said things like pollution, loss of agricultural land, fire on the land. There's a risk of fire, potentially a risk of fire and explosion. And they also talked about the damage that might occur to oil and gas industry's reputation if something like that was to occur."

Roberts said the government should get some boots on the ground.

"So basically I think they need to get on with it and make sure this work is completed in a timely fashion and have some form of framework to make sure, as I said before at the outset it's an ongoing issue. It's not going to go away so it needs some form of framework that keeps people out in the field keeping an eye on things."

Many orphan wells are historical in nature but the Wairoa wells fall well within the period when importance of modern abandonment standards were understood.

'Crown should pick up bill'

Petroleum Exploration and Production Association spokesperson Phil Rennie said it was disappointing that Westech - which removed its New Zealand listing from the Companies Office in 2015 - had not decommissioned the Wairoa wells correctly.

"Under the law companies are responsible for properly decommissioning their wells and by and large that is what happens. Over time there are some historic sites where issues arise no one was aware of, but by and companies are responsible and that is what happens."

Rennie said he had no idea why Westech had not fulfilled its commitments.

But he did not think it was right that the burden of responsibility now fell on landowners.

"We don't think that's fair. We think it would be more appropriate for the Crown to pick up the bill in these very rare cases given that oil and gas resources are publicly-owned through the Crown.

"Especially when you consider the government has earned billions of dollars in royalties and taxes from these publicly-owned resources so we think the Crown, as the owner, should be responsible in these rare cases rather than the landowner."

Rennie was comfortable that the orphan wells presented no immediate risk.

MBIE confirmed it had not undertaken any plugging and abandonment of the wells identified in the Petrofac Report at this stage.

It said the 2017 Petrofac report indicated "none of the six most urgent wells were leaking or an immediate danger to personnel or the environment - and therefore did not require immediate action".

Instead the ministry had commissioned a subsequent report, the Onshore Well Abandonment Strategy, to map out the timelines and approach to plugging and abandonment of 36 of the highest risk orphaned wells.

It was unable to divulge what that report said.