Petroleum Royalties

Press, Volume XCVIII, Issue 29008, 24 September 1959, Page 12

Petroleum Royalties

The Minister of Mines (Mr Hackett) was surely not thinking when, replying to a question about royalties if a commercial flow of oil should be obtained at Kapuni, he said that the owner of the property upon which a well was drilled “ must be considered ”. A new principle for New Zealand was enunciated in the Petroleum Act, 1937, when mineral oil and gas were alienated from the title to land and became the possession of the Crown. The purpose was to encourage an orderly search for oil Large oil concerns were not interested in exploring in the conditions then obtaining in New Zealand. These involved dealing with a multiplicity of landowners to obtain a block of land sufficiently extensive to justify expensive investigations. It was easier to justify the alienation of oil rights from a land title than it would have been in the case of coal, for example, because of the migratory nature of both oil and gas; no-one can say from under whose. land oil or gas from a well has come. These points Were fully debated before the Petroleum Act, 1937, was

passed; and a special discussion on the question of royalties was taken on the presentation of the Mines Statement in the 1938 session. It was decided that, while the landowner would receive full compensation for all his surface land involved in exploration operations, he would receive no royalty on oil coming from a well drilled on his property; the royalty would go to the Government. Since the Petroleum Act was passed, a score or more of wells have been drilled on this understanding. Though Mr Hackett was not in Parliament at the time, he no doubt remembers the debates. If he re-reads Hansard he will find that the course he appears to advocate was then the subject of an abortive amendment—that “ a “ portion of the royalty provided for . . . be paid to all “owners of land, etc”. The amendment was moved by the then Leader of the Opposition, Mr Adam Hamilton, was seconded by Mr G. W. Forbes, and was resisted by the then Minister of Mines, Mr P. C. Webb. It was rejected by 44 Labour votes to 16 Opposition votes.