New Zealand upstream decommissioning bill becomes law

Market: Crude oil, Natural gas
03/12/21

Upstream operators of oil and gas fields in New Zealand will now be required by law to carry out and fund the decommissioning of projects at the end of their productive life, after legislation was given Royal assent this week, said New Zealand energy and resources minister Megan Woods.

The passage of the Crown Minerals (Decommissioning and Other Matters) Amendment bill, which was first introduced to parliament in June will mitigate the risk to the New Zealand government and taxpayer of having to fund decommissioning if a permit or licence holder is unable to do so, Woods said in a statement.

"The amendments to the Crown Minerals Act 1991 address a fundamental gap in the legislation to provide greater protection in respect to decommissioning obligations," the minister said.

The New Zealand government has introduced legislation that includes new provisions to mitigate a risk to the government and other third parties of having to carry out and fund decommissioning, instead of the upstream sector. All upstream exploration permits contain a plan to decommission infrastructure associated with field development.

The legislation includes financial and criminal penalties for upstream firms and their executives for failing to meet this obligation, the New Zealand government said.

The bill also requires permit holders to be liable for meeting the costs of decommissioning even if they transfer out of a permit, in the event that the new permit holder fails to carry out and fund decommissioning, the explanatory memorandum to the legislation said.

Petroleum exploration and production activities in New Zealand are regulated by the Crown Minerals Act 1991. Production activities are undertaken through a mining permit issued by the government that entitles the permit holder to undertake exploration and extraction activities under an approved work programme. Under the previous petroleum programme, there was an obligation for each permit holder to properly decommission production facilities and abandon wells, but not a binding requirement.

The New Zealand government in November 2018 banned further offshore upstream exploration permits and restricted onshore permits to the Taranaki region, located on the west coast of the North Island. The offshore ban is part of New Zealand's plan to be carbon neutral by 2050.

The legislative change in New Zealand aim to avoid some of the issues facing the upstream sector in Australia, where the industry is at loggerheads with the Australian government over its plans to impose a levy for the decommissioning of infrastructure for just one upstream project. The Australian government introduced the Offshore Petroleum (Laminaria and Corallina Decommissioning Cost Recovery Levy) bill 2021 into the lower house of parliament in October, which has not passed neither house of the Australian parliament so far.

Canberra has no plans yet on funding for the decommissioning of upstream infrastructure for all depleted oil and gas fields.

By Kevin Morrison

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Flooding on US rivers mires barge transit

Houston, 7 April (Argus) — Barge transit slowed across the Arkansas, Ohio and lower Mississippi rivers over the weekend because of flooding, which prompted the US Army Corps of Engineers (Corps) to close locks and issue transit restrictions along the waterways. The Corps advised all small craft to limit or halt transit on the McClellan-Kerr Arkansas River Navigation System (MCKARNS) in Arkansas because flows reached above 200,000 cubic feet per second (cfs), nearly three times the high-water flow. The heavy flow is expected to persist throughout the week, posing risks to those transiting the river system, said the Corps. Some barges have halted movement on the river, temporarily miring fertilizer resupply efforts in Arkansas and Oklahoma in the middle of the urea application season. The Corps forecasts high flows to continue into Friday, and the National Weather Service predicts several locations along the MCKARNS will maintain a moderate to minor flood stage into Friday as well. Both the Arthur V Ormond Lock and the Toad Suck Ferry Lock, upriver from Little Rock, Arkansas, shut on 6 April because of the high flows. Flows along the Little Rock Corps district reached 271,600cfs on 7 April. The Corps forecasts high flows to continue into Friday. Ohio and lower Mississippi rivers The Corps restricted barge transit between Cincinnati, Ohio, and Cairo, Illinois, on the Ohio River to mitigate barge transportation risks, with the Corps closing two locks on the Ohio River on 6 April and potentially four more in the coming days. Major barge carrier American Commercial Barge Line (ACBL) anticipates dock and fleeting operations will be suspended at certain locations along the Mississippi and Ohio rivers as a result of the flooding. NWS forecasters anticipate major flooding levels to persist through the following week. Barge carriers also expect a backlog of up to two weeks in the region. To alleviate flooding at Cairo, Illinois, where the Ohio and Mississippi Rivers meet, the Corps increased water releases at the Barkley Dam on the Cumberland River and the Kentucky Dam on the Tennessee River. The Markland Lock, downriver from Cincinnati, Ohio, and the Newburgh lock near Owensboro, Kentucky, closed on 6 April. The Corps expects the full closure to remain until each location reaches its crest of nearly 57ft, which could occur on 8 or 9 April, according to the National Weather Service (NWS). Around 50 vessels or more are waiting to transit each lock, according to the Lock Status Report published by the Corps on 7 April. The Corps also shut a chamber at both Cannelton and McAlpine locks. The John T Myers and Smithland locks may close on 7 April as well, the Corps said. The Olmsted Lock, the final lock before the Ohio and Mississippi rivers, will require a 3mph limit for any traffic passing through. The NWS expects roughly 10-15 inches of precipitation fell along the Ohio and Mississippi River valleys earlier this month, inducing severe flooding across the Ohio and Mississippi River valleys. A preliminary estimate from AccuWeather stated an estimated loss of $80-90bn in damages from the extreme flooding. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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