BusinessDesk: Parliament’s environment watchdog launches fracking inquiry

The Parliamentary Commissioner for the Environment is to undertake an independent inquiry into the oil and gas mining practice known as “fracking” amid growing public concern about its capacity to pollute groundwater and cause earthquakes.

While hydraulic fracturing has been used for at least two decades in New Zealand for oil and gas exploration and extensively to tap geothermal resources to generate electricity, its widespread and poorly regulated use in the United States has led to bans in France and some Australian and American states.

Its intended use in Taranaki and Hawke’s Bay by Canadian and American oil and gas explorers TAG Oil and Apache Corporation has excited protest in New Zealand and the Green Party has begun a national petition for a moratorium.

The commissioner, Jan Wright, said initial scoping work has been stepped up to an official investigation by her office, which operates independently of the government, as an Office of Parliament.

“The preliminary work … shows a substantive case for an official investigation under the Environment Act,” said Wright in a statement. “Over the next few months my staff and I will conduct this investigation and produce a report to Parliament.

“I realise this is a hugely contentious issue and I would hope to have a report tabled in the House before the end of this year.”

The Petroleum Exploration and Production Association of New Zealand, an oil industry lobby group, welcomed the decision as “an opportunity to dispel mistruths”.

“As an industry we have nothing to hide and everything to gain from participating in an open and honest dialogue with all interested parties,” said PEPANZ chief executive David Robinson.

“The practice of hydraulic fracturing has occurred in oil and natural gas reservoirs in Taranaki since 1993 in 28 wells. In that time there have been no incidents of drinking water contamination, land contamination or earthquakes linked to hydraulic fracturing.

“We are confident that this inquiry will dispel misinformation about the environmental impacts of hydraulic fracturing and will show what great lengths the industry goes to ensure the practice is done safely with proper precaution taken,” he said.

PEPANZ is understood to be preparing a voluntary code of practice relating to fracking. The industry acknowledges fracking can cause issues with groundwater where oil and gas deposits are near freshwater reservoirs, and should not be used in such circumstances. The underground explosions used in the process can create seismic tremors, but are considered to be of a “background” nature and are not linked to catastrophic earthquakes.

Petroleum was New Zealand’s fourth biggest export earner in 2010 worth around $3 billion and could quadruple to $12 billion “with careful management,” said Robinson. “The use of hydraulic fracturing is part of that careful management.”

Energy and Resources Minister Phil Heatley said the inquiry dove-tailed with the current review of the Crown Minerals Act, and would “enable us to consider all our options around fracking, from the consenting process through to work in the field.”

Green MP Gareth Hughes welcomed the decision, saying a moratorium should be put in place until its results were known.

Wright has been influential in framing national debate on contentious environmental issues in the past, issuing a report in the last week on deep problems with freshwater quality and recommending last year strongly in favour of the use of 1080 poison to control opossums destroying native bush.