Oil Resources

Nelson Evening Mail, Volume LXXI, 17 November 1937, Page 7

Oil Resources

The Bill empowers the Minister of Mines in his discretion to grant licenses authorising the holders to prospect for petroleum, and there is a saving clause inserted in it providing that existing rights may remain in force for a period of twelve months as if the Bill had not been passed. At any time during that period, the holders have the right to surrender their rights and obtain a corresponding license 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 of petroleum.. It is laid down that notice of all such agreements may be given to the Under-Secretarv 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 license. Agreements with land owners entered into after 31st December, 1936, are not recognised unless they are renewals of previous agreements. The Bill provides that the maximum size of a license to prospect is 200 square miles, and the term of a prospecting license is for five years. The Minister may impose conditions when granting a license, and a licensee is to interfere as little as possible with the occupation and use of land included in his license by other persons having the right to use or occupy it. An applicant for a license is required to deposit £IOOO as security for compliance with the terms and conditions of the license, and provision is made for the payment half-yearly in advance of a fee of 5s a year for each square mile contained in the prospecting license.

An important operative clause requires that the holder of a license shall, within three months of the granting of the license, 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 continue, 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 license and is drilling on some other prospecting license. Another section of the Bill authorises the Minister to grant licenses enabling the holders to mine for petroleum. The maximum size of a mining license is fixed at 100 square miles, and the maximum term is 42 years. Renewals may be granted, but the original term and the periods of the renewals are not to exceed in the aggregate more than 63 years. As with the prospecting license, the Minister may impose conditions on a mining license in respect of the rights of other people to use the land. The holder of a prospecting license who has complied with the conditions of his license has a preferential right to obtain a mining license. The license, or apy renewals, are granted at the discretion of the Minister. As security for compliance with the conditions of the license, a deposit of £2O per square mile, with a minimum of £250, is required. License holders are also required to pay, half-yearly in advance an annual fee of £lO per square mile. The payment of a minimum royalty to the Crown of five 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 license. 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 he refined and sold in New Zealand. Where more than New Zealand requirements is being produced, there is Dower to relax this clause and allow for the disposal of any surplus elsewhere. The Minister may extend the area of the license to include adjoining lands, provided that the maximum area prescribed in the license is not exceeded. It may be necessary to extend a license so as to include a complete oil structure in one license arid thus ensure economical development. In order that the Minister may havt complete control over dealings in licenses and enable him to check any speculation in licensed areas, them is provision that requires him to give nis consent before a licensee can sell, assign, or transfer, or sub-let any license or interest in a license. A licensee may surrender a license before its expiry by effluxion of time, but surrender does not release a licensee from liability incurred in respect of his license up to the date of surrender. The Minister is empowered to revoke a license where the licensee is not reasonably complying with the conditions of the license. A licensee and his workmen and other assistance may enter on any land comprised in his license, but must do as little damage as possible to other persons’ property. Roads and streets can-

OWNERSHIP TO BE VESTED I THE CROWN PROSPECTING MUST BE UNDER STATE LICENSE PETROLEUM BILL BEFORE PARLIAMENT PROVISIONS OF THE MEASURE (From Our Own Parliamentary Reporter) WELLINGTON. This Day. 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 uhder State license.

not be entered upon, and mining operations cannot be carried out, on, 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 ny 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. Another section of the Bill protects owners and occupiers of land in that compensation must be paid or tendered before entry. In lieu of payment an agreement may be entered into for payment, or, in the event of a dispute, security for compensation may be given to the satisfaction of a stipendiary magistrate. This applies to Crown Land. Licensees must give occupiers of land fourteen clear 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 Court. A licensee is not entitled to compensation for improvements effected to the land comprised in the license, though buildings, machinery and other works may be removed during the currency of a license and up to six months or such further time thereafter the Minister may allow. There is provision for taking under the Public Workers Act any land required by a licensee for mining operations, e.g., for the erection of a refinery. Where land is so taken it is done so 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. The Minister is authorised, on behalf of His Majesty, to carry on mining operations for petroleum, or otherwise deal in petroleum at any time. A further 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 license, the Maori Land Board may act for the Native owners or occupiers. Licensees are required to keep geological records of all drilling and other operations, and furnish the Minister with all these particulars. The information cannot be made public without the consent of the licensee. Provision is made to prevent wasteful and uneconomical drilling by rival concerns operating on adjoining licenses which cover the one oil structure. By providing for a general scheme of cooperation between licensees it should oe 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 submitted within the prescribed time, the Minister shall prepare a scheme. Licensees are entitled to a refund of their deposits, which are interestbearing, and interest thereon, provided they substantially comply with the conditions of their license. A penalty of £IOO 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 license so long as they do not interfere with any petroleum works or petroleum mining operations.

TREMENDOUS INTEREST The introduction of the Bill in the House of Representatives was the signal for a rapid volley of questions from the Opposition benches which gave an indication of the tremendous interest provoked by the Government’s plans for the development of the oil resources of New Zealand. The difficulties which have previous1> 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 to the House that prospecting for oil was an extremely costly and hazardous speculation and could only be carried o.it by persons c organisations possessing abundant capital and experienced and expert staffs. He said the provision of the Mining Act, 1926, which at present governs prospecting and mining for petroleum were not sufficiently encouraging to attract prospecting on an adequate scale. BASED ON ENGLISH ACT I:i reply to the Leader of the Opposition (the Hon. Adam Hamilton) the Minister said that all oil existing in

its natural conditions 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—tlK grant of licenses 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 West Australia had also followed the British Legislation. The lit. 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 new legislation. Mr Coates also inquired whether exi-ling 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. COMPENSATION FOR LOSS Mr Coates asked how the Bill would affect freehold rights and the Minister replied by saying that the interests of landowners 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 patroleum known or supposed to be in or under any land. Compensation was to be paid or tendered on 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 byMr Coates who said that certain rights had been conceded to the Maoris b.y the Treaty of Waitangi. The Rev. Clyde Carr (Government, Timuru): 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 not a question of good governments or not. It is a question of how this House will act. EXISTING RIGHTS AND AGREEMENTS Mr S. G. Smith (National, New Plymouth) asked whether the Bill cancelled all rights and agreements for boring now i i existence. Mr Webb: The Bill provides for the gr -iting of licenses. Mr Smith: And for rights under agreement at present too? The Minister said that complete possession of ail oil rights was taken under the Bill. Answering a question by the Rl. 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.