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Oil & Gas

Report deems fracking in New Zealand safe

November 29, 2012
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WELLINGTON, New Zealand — Hydraulic fracturing, also known as fracking, is a safe method to obtain gas and oil if it is managed and regulated properly, a new interim report from New Zealand''s Parliamentary Commissioner for the Environment Jan Wright has found.

The report gave a cautious approval of fracking as a technology to be more widely adopted in the country. The proposed idea of having a moratorium imposed on fracking has been ruled out at present but Wright noted that regulation should be reviewed. She claimed that there is no evidence of any danger of water contamination but she would not hesitate to recommend a moratorium if any issues arise during the next phase of her investigation.

Hydraulic fracturing is used for increasing well production and facilitating gas and oil extraction from rocks by pumping liquid, usually water, under high pressure and creating fractures in them. The method is not new to New Zealand''s gas and oil industries, as it has been implemented in certain areas, mostly onshore wells like Taranaki, for more than two decades.

Despite the generally positive assessment in the interim report, the Petroleum Exploration and Production Association of New Zealand (Pepanz) stated that a surge in fracking projects is unlikely because of the relatively high costs involved. Creating a well costs about NZ$30 million ($24.6 million) just in drilling, and if any fracking operations are necessary each of them can add between NZ$5 million ($4.1 million) and NZ$7 million ($5.75 million). This is the main reason why oil and gas producers say the report is not expected to lead to a boom in fracking but they will continue to apply it only when necessary. Up to this point in 2012, three wells in New Zealand have been fracked a total of 11 times, the New Zealand Herald reported.

Wright''s report noted that in order to ensure fracking is safely implemented, introduction of more stringent regulation should be considered. In addition she said that the public still needs to build trust towards the use of the method and explorers need to demonstrate that they are socially engaged in their operations.

According to Pepanz CEO David Robinson, the industry is aware of the hard work it needs to do before gaining support from the public but is determined to achieve this by being open and transparent about the projects it undertakes. The industry realizes that, if it wants to grow, it needs to work together with local communities but people should know that fracking opens up great opportunities for development where previously gas and oil have not been accessible by conventional methods of production.

Environmentalists and members of local communities have raised concerns about potential contamination of ground water and increased earthquake frequency. The report''s conclusion that fracking can be safely applied in New Zealand would hopefully reassure the public and lay the foundation for future cooperation between communities and the industry, Robinson added.

New Zealand''s government will now look into possible ways to review regulation, so that Wright''s recommendations are taken into account.

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