SEARCH FOR OIL

Otago Daily Times, Issue 23351, 17 November 1937, Page 12

SEARCH FOR OIL

ISSUE OF PROSPECTING LICENCES OWNERSHIP VESTED IN CROWN A COMPREHENSIVE MEASURE (From Our Parliamentary Reporter) WELLINGTON, Nov. 16. A more intensive search for oil supplies in the Dominion appears to be foreshadowed by the provisions of the Petroleum Bill, which was introduced in the House of Representatives by Governor-General's Message to-night. The Bill is a comprehensive measure of 47 clauses and covers exhaustively all aspects of oil prospecting and mining.

Probably the most important provision in the Bill is that vesting in the Crown the ownership of all petroleum existing in its natural condition on or below the surface of any land in New Zealand. It is also laid down that prospecting and mining for petroleum can only be carried on pursuant to licences granted under the new legislation by the Minister of Mines, although existing rights may remain in force for a period of 12 months. In cases where persons have already entered into agreements with the owners of lands for the prospecting and mining of oil, notice of such agreements must be given to the Under-secretary of Mines, and any person giving notice will have a preferential right for three months after the legislation comes into force to obtain prospecting or mining licences. Agreements with landowners entered into since December of last year, however, will not be recognised unless they are renewals of previous agreements. Conditions of Licence Prospecting licences will not apply in any individual case to an area greater than i!00 square miles, and the term of each licence will be for five years. The Minister may impose conditions in the granting of a prospecting licence, and the licensee will be required to interfere as little as possible with the occupation and use of the land by other persons who have a right to use or occupy it. A deposit of £IOOO will- be required from each holder of a prospecting licence as security for compliance with the terms and conditions of his licence. An annual fee of 5s for each square mile in area covered by the prospecting licence will also be required by the Government, and this sum will be payable by the licensee half-yearly in advance. When a prospecting licence has been granted, the holder will be required to commence an investigation of his area within three months, and to continue his investigation until such time as he commences drilling operations. The drilling of at least one well must be commenced within two years, and the drilling of each well must be continued until it becomes productive or until it can be proved to the satisfaction of the Minister that it is unproductive. The time fixed for the starting of drilling ooerations may be extended by the Minister if the licensee is carrying out an investigation of the land covered by his licence and at the same time is engaged in drilling on land covered by some other licence. Mining Operations Mining licences are to be issued entirely distinct from prospecting licences. A mining licence will cover a maximum area of 100 square miles, and will be for a maximum term of 42 years, although renewals will be permitted to bring the term up to 63 years in the aggregate. Ab with prospecting licences, conditions may be imposed by the Minister, and the holder of a licence will have to renew his undertaking to interfere as little, as possible with the normal use of the land. The holder of a prospecting licence who has complied with the condi tions of his licence will have a preferential right to obtain a mining licence, but the granting or renewal of mining licences will be at the discretion of the Minister. Monetary deposits will also be required by the Government in case of mining opera tions. As security for compliance with the conditions of a mining licence, the licensee will have to pay a deposit of £2O per square mile for land in his area, with a minimum deposit of £250, and, in addition, an annual fee of £lO per square mile will be required, payable halfyearly in advance.

Destination of Royalty The Bill also provides for the payment of a royalty to the State in the event of mining operations proving successful. The royalty is to be at the rate of not less than 5 per cent. of the selling value of the crude petroleum, casing, head spirit, and natural gas produced; and the actual rate of the royalty is to be fixed by the Minister when the licence is granted. The selling value is to be agreed upon by the Minister and the licensee, or, failing agreement, is to be determined by arbitration. No royalty will be payabJe on petroleum products used in production or unavoidably .lost. Internal Marketing Another important provision requires all petroleum produced to be refined and sold in the Dominion until the requirements of the internal market have been met. If at any time there is a surplus the provision of the Bill in this direction may be relaxed by the issue of regulations. The Minister is to be empowered to extend the area of a licence by including adjoining lands provided that the maximum area is not exceeded. No licence may be sold, transferred, assigned, or sub-let without the consent of the Mini.ster. although a licensee will be permitted to surrender a licence before its expiry as long as he meets all the liabilities incurred up to the date of surrender. The Minister is to be given power to revoke licences in cases where there has not been reasonable compliance with the conditions. Right to Enter Land A licensee is to have full right of entry to the land comprised in his licence, but mining operations will be prohibited on or under any road or street. There are also restrictions on the right of entry to scenic reserves, tourist and health resorts, cemeteries and land held by the Crown for public purposes, except with the consent of the Minister, and also to small domestic areas except with the permission of the occupier. The owners and occupiers of all land are to be protected in that corn-

pensation will have to be paid or tendered before entry. This provision applies also to Crown lands. A licensee is to be required to give the occupiers of land other than Native land 14 clear days' notice in writing of his intention to enter. In the case of Native land, 28 days' notice must be given to a Native Land Court. No compensation is to be payable to a licensee for improvements which he has effected in the land comprised in his licence, but a licensee will be permitted to remove buildings and machinery. There is also provision that land may be taken under the Public Works Act if it is required for mining operations. All expenditure in such cases is to be met by the licensee. Event of Emergency In the event of war or at other times when such a course may be necessary in the public interest, the Government is to be empowered to seize petroleum products or petroleum and the works associated with the industry. The Minister is also to be authorised to carry on mining operations for petroleum or to deal in petroleum if the necessity arises. In cases were Native land is affected by any licence and a request is made for action by the licensee or by the Native owners and occupiers the Maori Land Board of the district is to be empowered to act in all respects on behalf of the Natives concerned.

An Economic Precaution

Another clause in the Bill is designed to prevent wasteful and uneconomic drilling by rival concerns operating on adjoining or adjacent areas. In such cases licensees will be required to submit to the Minister for his approval a joint scheme of development, and if they fail to do so the Minister himself will be empowered to prepare a scheme. Machinery clauses are included dealing with the appointment and duties of the inspectors, the serving of notices, the lodging of deposits by licensees, and the making of regulations. It is stipulated that the desions of the Minister in all matters affected by the legislation will not be subject to appeal, and will not be liable to proceedings in any court except on the ground of lack of jurisdiction. The portion of the Mining Act which at present governs prospecting and mining for petroleum is repealed. A SHEAF OF QUESTIONS THE COMPENSATION ISSUE RIGHTS OF NATIVE RACE (From Our Parliamentary Reporter* WELLINGTON, Nov. 16. An assurance that the Petroleum Bill had been based entirely on the English Act dealing with the industry was given to the Opposition by the Minister of Mines (Mr P. C. Webb) when introducing the Bill in the House of Representatives tonight. The Minister explained that he proposed to send the Bill to the Goldfields and Mines Committee to allow an investigation of its provisions, and the taking of evidence from interested parties. The Minister was asked many questions about the measure by Opposition Mr J. G. Coates (Opposition, Kaipara) asked whether the Bill made provision for compensation on the same lines as the English Act and whether all the oil wells now producing in the Dominion were involved.

The Minister: All oil is involved. Mr Coates (in some surprise): All oil?

The Minister: Yes, but those interests you speak of will be considered. Mr Coates: Then the Minister, I take it, has an open mind about that matter? The Minister: Yes.

Mr Coates raised the issue of the effect the Bill might have on existing freeholds. "It seems that in the acquisition of the rights provided for in the Bill," he said, " such action must have an effect on all freehold rights in the Dominion. It seems that it must at least interfere with the value of those rights." "All property is well protected," replied the Minister. Mr Coates: Yes, but unless it is known what the basis of compensation is to be for trespass and damage done it could quite easily prejudice freehold rights of any standing relating to that property. "Of course, simply that the Minister has followed the legislation of the United Kingdom is not a guarantee that it will suit New Zealand," Mr Coates said. " Here we have two races. Certain rights were ceded to oui aboriginal race, and because of those rights we are not in the same position as the United Kingdom. One of our races has definite rights under treaty obligations. The main thing is to see that nothing is done to interfere with the rights of those Native .peoole." " Does the Bill provide for the cancelling of all oil rights and agreements now in existence? " asked Mr S. G. Smith (Opposition, New Plymouth). The Minister: The Bill provides for the granting of licences over those areas.

Mr Smith: And overrides any agreements? Mr Webb: Provision is made for taking complete possession of oil rights and ample compensation is provided for. Replying to a question by Mr W. P. Endean (Opposition, Parnell), the Minister said that the Bill was on all fours with the English Act and provided compensation, not for oil discovered on a property but for all surface damage done.

Replying to another question, Mr Webb ' told Mr G. W. Forbes (Opposition, Hurunui) that the Government would encourage any company or person with sufficient capital, knowledge, and equioment to do the job to apply for a licence. The Bill was read a second time pro forma and referred to the Goldfields and Mines Committee.