PETROLEUM RESOURCES

Evening Post, Volume CXXIV, Issue 120, 17 November 1937, Page 8

PETROLEUM RESOURCES

PLAN FOR DEVELOPMENT

GOVERNMENT BILL OUTLINED

The first step in the Government's plan for the development of the Dominion's oil resources was taken last night with the introduction of the Petroleum Bill by Governor-General's Message in the House of Representatives. The Bill, which was read a first time

and referred to the Goldfields and Mines Committee, vests in the Crown the ownership of all petroleum existing in its natural condition in New Zealand, and prohibits" prospecting and mining for petroleum except under State licence. '

The Bill empowers the Minister of Another section of the Bill protects Mines, in his discretion^ to grant owners and occupiers of land ur that .... .. , ~ , • compensation must be paid or tendered licences authorising the holders to pros- bef( £ e entry> In Ueu of payment an pect for petroleum, and there is a say- agreement may be entered into for ing clause inserted in it providing that payment, or, in the event of a dispute, existing rights may remain in force security for compensation may be . . . .. , ~ .. given to the satisfaction of a Stipenfor a period of twelve months as if g^ Ma gi str ate. This applies to the Bill had not been passed. At any Crown land.

time during that period, the holders have^he right to surrender their rights and obtain a corresponding licence under the Bill.

The final clause in the Bill covers those cases where persons have entered into agreements with owners of land for the prospecting and mining -lot petroleum. It is laid down that notice of all such agreements may be given 'to the Under-Secretary; of Mines, who; is to keep a register of notices. Any person" who gives notice of his agreement has a preferential right for three months after the commencement of the operation of the Act to obtain a petroleum prospecting or mining' licence. Agreements with land owners entered into after December 31, 1936, are hot recognised unless they are renewals of previous agreements. '-. The Bill provides thai the maximum size of a licence to prospect is 200 square miles, and the term ot a prospecting licence is for five years. The Minister may .impose conditions when granting a licence, and a licensee is to interfere as little as possible with the occupation and use of land included in his licence by other persona having the right to use or "occupy it.

An applicant for a licence Is required to deposit £1000 as security for compliance with the term 3 and conditions of the licence, and provision "is made for the payment half-yearly in advance of a fee of 5s a year for each square mile contained-ih the prospecting licence. An important operative clause requires that the holder of a licence shall, within three months of the granting of the licence, commence an investigation of his area, and shall continue such investigation until such time as he commences to drill a well or wells. ' It also requires him to commence, within two years, the drilling of at least one .well, and to continue the drilling of each well until it is productive or proved to the satisfaction of the Minister to be unproductive.

The time fixed for ; the commencement of drilling may be extended by the Minister if the licensee is carrying out an investigation of the land comprised in the licence and is drilling on some other prospecting licence. ' LICENCES fOR MINING. Another section of. the Bill authororises the Minister to grant licences enabling the holders to mine for petroleum. • -. The maximum size of a mining licence is fixed at 100 square miles, and the maximum term is 42 years. Renewals may be granted, but the original terms and the periods of the renewals are not to exceed in the aggregate more than S3 years.. As with the prospecting licence, the Minister may impose conditions on a mining licence, .in .respect of the rights of other people to use the land. The holder of a prospecting licence who has complied with the conditions of his licence has a preferential right to obtain a mining licence. The licence, or any renewals, are granted at the discretion of the . Minister. . As security for compliance with the conditions of the licence, a deposit of £20 per:"'squire mile, with a minimum of £250, is required. Licence holders are also required to pay, half-yearly in advance, an annual fee of £10 per square mile. The payment of a minimum royalty to the Crown of 5 per cent, of the selling value on crude petroleum, casing head spirit, and natural gas, is provided for in another section, the rate to be fixed by the Minister when granting a licence. ;- ; ; ,';;.;;■., v^.\,.

* The -.selling value -'of these products is as agreed upon between the Minister and the licensee, or, failing agreement, as determined' by arbitration. Royalty is not payable, on any;of these products used, in. production or unavoidably lost. . The question of refining and selling is dealt with in another section, which requires* that, petroleum shall be refined and sold in New Zealand. Where more than New Zealand requirements is being produced, there is power to relax this clause and allow for the disposal of any surplus elsewhere. EXTENSION OP AREA. The Minister may extend the area of the licence to include adjoining lands provided that the maximum area prescribed in the licence is not exceeded. It may be necessary to extend a licence so as to include a complete oil structure in one licence, and thus ensure economical development. In order that the Minister may have complete control over dealings in licences and enable him to check any speculation in licensed areas, there is provision that requires him to give his consent before a licensee can sell, assign, or transfer or sublet any licence or interest in a licence.

A licensee may surrender a licence before its expiry by effluxion of time,' but surrender does not release a licensee from liability incurred in respect of his licence up to the date of surrender. . . •

The Minister is empowered to revoke a licence where the licensee is not reasonably complying with the conditions of the licence.

A licensee and his workmen and other assistants may enter on any land comprised in his licence, but must do as little damage as. possible to other persons' property. Roads and streets cannot be entered upon, and mining operations cannot be carried out, c*i, or under any road or street.

A succeeding section restricts the right of 'entry upon certain classes of land such as scenic reserves, tourist and health resorts, cemeteries, land held by the Crown for public purposes, etc. No one may enter any of the land covered by this section without first obtaining the consent of the Minister in charge of the, land. Consent may be refused or given subject to conditions

The right of entry upon yards, gardens, orchards, plantations, small areas in boroughs and town districts, and plantations is restricted, and ' no entry may be made, without the precedent consent of the owner and occupier. In the event of consent not being given, or being given subject to conditions which are not acceptable, provision is made for appeal to the Minister of Mines.

Licensees must give occupiers of land fourteen dear days' notice in writing of intention to enter; and in the case of Native land, 28 days' notice must be given to the Native Land CourV

A licensee is not entitled to compensation for improvements effected to the land comprised in the licence, though buildings, machinery, and other works may be removed during the currency of a licence and up to six months or such further time thereafter the Minister may. allow. ■:f'-';':;.V--./IAKING'6F.LAND. There is .provision for taking under the' Public Works Act any land required by a licensee for mining operations, e.g., for the erection of a refinery. Whefe land is so taken it is done at the full expense of the licensee. The Governor-General is empowered to seize all petroleum,,products of petroleum, or petroleum works when necessary in the public interest. Such a provision is considered essential in the case of war or other national emergency, and exists in the legislation of nearly every country in the British Empire.' .;;;';' ; -.';.'; "-v'Vv The Minister is authorised, on behalf of his Majesty, to carry ,on mining operations for petroleum, or otherwise

deal- in petroleum at any time. !), AiurtHer section provides'''that any person injuriously affected by any operations under the Bill shall be entitled to full compensation for the loss, injury, or damage suffered. ■ Compensation is not payable for any. petroleum existing in its natural condition. ■ Where Native land is affected by any licence, the Maori Land Board may act for the ■.Native-, owners or .occupiers. are*required to keep geological records of all drilling and other operations,V arid -furnish the, 'Minister with all these particulars. The : information cannot be rriade public: without the consent, of the licensee. Provision is made to prevent wasteful and uneconomical drilling by rival concerns' operating on; adjoining licences which cover; the one oil structure. By providing for a general

scheme of co-operation , between licensees it should be possible to work an oil structure to the best advantage. The licensees are first required to submit to the Minister for his approval a joint scheme; If a scheme is not subV. mitted within the prescribed time, the Minister shall prepare a scheme. j ; Licensees are entitled to a refurid of their deposits, which are interestbearing, and interest thereon, provided they substantially comply with the conditions of their licence. A penalty of £100 is provided for any breach of the Act. The decisions of the Minister shall not be subject to appeal, and are not liable to proceedings in any Court except upon the ground of lack of Jurisdiction. Coal-mining rights may be granted over land held under a petroleum licence so long as they do not interfere with any petroleum works or petroleum mining operations. MANY QUESTIONS. The introduction of the Bill was the signal for a rapid volley of questions from the Opposition benches, which gave. an indication of the tremendous interest evoked by the Government's proposals. The difficulties which have previously hindered a real and exhaustive search being made for petroleum are removed by the Bill. The Minister of Mines (the Hon, P. C. Webb), who is in'charge of the .measure, indicated to1 the House that prospecting for oil was an extremely costly and hazardous speculation, and cpuld only.'; be carried out by persons or organisations possessing abundant capi-

tal and experienced and expert staffs. I He said the provisions of the Mining Act, 1926, which at present governed prospecting and mining for petroleum, were not sufficiently encouraging to attract prospecting on an adequate scale. In reply to the Leader of the Opposition (the Hon. Adam Hamilton), the Minister said that all oil existing in its natural condition whether on or under Crown, Native freehold, or other land would be vested in the Crown. This made it practicable to meet-two of the greatest difficulties of the past— the granting of licences over sufficiently large areas and the troubles involved in respect of the payment of royalties. Under the Bill royalties would be paid to the Crown only. The measure was framed on the English Act of 1934. Victoria and Western Australia had also followed the British legislation. • The Rt. Hon. J. G. Coates (National, Kaipara) asked whether the Bill made provision for compensation on the same basis as the British Act, and whether only new fields were to be affected by the legislation. Mr. Coates also inquired whether existing rights would be interfered with. In reply the Minister said that all oil was involved under the Bill. Mr. Coates: All oil? Mr. A. F. Moncur (Government, Rotorua): Even neck oil. FREEHOLD RIGHTS. * Mr. Coates asked how the Bill would affect freehold rights, and the Minister replied by saying that the interests of land owners would be protected, and compensation would be paid for all loss suffered by them. Replying to another question, Mr. Webb said that compensation was not payable for any petroleum known or supposed to be in or under any land. Compensation was to be paid or tendered or security given to all owners or occupiers before entry was made on the land. In addition, occupiers were also to receive notice in writing before entry was made to their property. The fact that there were two races of people in New Zealand compared with one in England was stressed by Mr. Coates, who said that certain rights had been conceded to the > Maoris by the Treaty of Waitangi, r .'r The Rev. C. C. Carr (Government,1Tirnaru): Petroleum was not contemplated then. Mr. Coates: No member of this House would flagrantly interfere.with the rights conceded under the Treaty. Mr. H. M. Christie (Government, Waipawa): A good Government is in now.

Mr. Coates: It is hot a question of good Governments or not, it is a question of how this House will act. Mr. S. G. Smith (National, New Plymouth) asked whether the Bill can-

celled all rights and agreements for boring now in existence. Mr. Webb: The Bill provides for the granting-of licences. Mr- Smith: And for rights under agreement at present, too? The -Minister said that complete possession of all oil rights was taken under the Bill.

Answering a question by the <■ Rt. Hon. G. W. Forbes (National, Hurunui) the Minister said the Government would encourage any company or any person with sufficient capital, knowledge, and equipment to do the prospecting work in New Zealand. The Bill was read a first time pro forma and referred <to the Goldfields and Mines Committee.