Consultation on managing financial risk from onshore wells

Publish date: 22 March 2017

The Ministry of Business, Innovation and Employment (MBIE) has begun consultation on proposals to better manage third party risk exposure from current and future onshore wells.

The options proposed in the discussion document are to:

  • establish non-statutory guidance
  • require MBIE to assess and monitor permit holders’ insurance policies
  • require bonds from permit holders
  • establish a levied fund

The options are not mutually exclusive and require industry to assume the majority of risk exposure. No options propose that individual permit holders would be liable in perpetuity. The amount of financial assurance required under each option has not yet been determined, and MBIE is also seeking feedback on this.

There is a potential for an onshore petroleum well to fail or require plugging and abandonment where the former permit holder is not liable or can no longer be held liable. In these cases, land owners and occupiers are exposed for these costs if the well poses an environmental or health and safety risk. The Crown may also financially exposed as a last resort.

The Onshore Financial Assurance discussion document is available on the MBIE website

Consultation now closes on 28 April 2017.

If you would like to talk with about the discussion document in more detail, please email us. We will set up workshops or face to face meetings if there is high demand.

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