Crown Minerals Act Law Changes

Find out about changes to the Crown Minerals Act 1991 (the CMA) and its regulations.

Crown Minerals Amendment Act 2023

The 2023 Amendment Act changed the CMA to provide greater flexibility in how the government manages Crown-owned petroleum and minerals. Changes were also made that impact how Tier 1 permit holders engage with iwi and hapū.

The key changes made by the 2023 Amendment Act are:

The purpose statement (section 1A) and the functions of the Minister (section 5) have been amended to shift emphasis away from the promotional intent of the CMA and give more flexibility around future petroleum Block Offers.
Changes have been made to the annual iwi engagement reports that Tier 1 permit holders are required to provide, these changes:
- require permit holders to provide their iwi engagement reports to relevant iwi and hapū so that they can review the reports and provide feedback. Iwi and hapū must be provided with a reasonable opportunity to review the report and their feedback must be included in the final report.
  Guidance on iwi engagement reports
- provide a power for iwi and hapū to request a meeting with NZP&M and permit holders to discuss an iwi engagement report, and
- allow minimum content of these iwi engagement reports to be prescribed in regulations.
A new requirement has been created (section 29C) for the Minister to consider iwi and hapū feedback provided in iwi engagement reports and in iwi engagement review meetings when determining some new permit applications. The change also allows the Minister to take into consideration other iwi and hapū feedback when deciding whether to grant some new permit applications.
Clarifications were made to the considerations for decision-makers when someone applies for a petroleum permit. Before granting a permit, the Minister must be satisfied that the proposed permit holder is highly likely to be able to comply with the decommissioning and post-decommissioning obligations under the CMA. Before the passing of the 2023 Amendment Act this was not an explicit test under the CMA.

Most of these changes came into effect on 31 August 2023, except for the new requirement (section 29C of the CMA) for the Minister to consider iwi and hapū feedback before granting some new permit applications. This change comes into force on 1 April 2024.

Read the 2023 Amendment Act — Legislation.govt.nz

Crown Minerals (Decommissioning and Other Matters) Amendment Act 2021

The 2021 Amendment Act came into force on 2 December 2021.

Most of the changes made by the 2021 Amendment Act aim to strengthen the petroleum sector’s responsibility for decommissioning of petroleum infrastructure and wells.

Decommissioning usually happens at the end of life of a petroleum permit or licence. It is the process of taking petroleum infrastructure and wells out of service. This may include removing the infrastructure, plugging and abandoning wells, and doing site restoration activities.

The 2021 Amendment Act also made changes that apply to the minerals sector too.

Some of the changes are summarised below.

For further information you can read the 2021 Amendment Act on the New Zealand Legislation website:

2021 Amendment Act — Legislation.govt.nz

Decommissioning requirements

The 2021 Amendment Act introduced a legal requirement on all petroleum exploration and petroleum mining permit and licence holders to carry out decommissioning activities according to all relevant laws and standards. If those requirements do not exist, they must ensure all wells are plugged and abandoned, and infrastructure is completely removed.
It requires petroleum exploration and petroleum mining permit and licence holders to meet the full financial costs of decommissioning activities, even if they transfer out of a permit (in the event that the new permit holder fails to carry out and fund decommissioning).
It sets out timeframes for decommissioning.
It introduced new record and reporting requirements relating to decommissioning such as decommissioning plans, decommissioning cost estimates, financial information, asset registers and a decommissioning completion report. The requirements for this information will be detailed in regulations expected to come into force in 2024.
It introduced the ability to exempt or defer petroleum exploration and petroleum mining permit and licence holders from carrying out a decommissioning obligation in respect of a specific well or item of petroleum infrastructure or a class of well or petroleum infrastructure.
It introduced the ability for the Minister to carry out a financial capability assessment at any point in time to determine if the permit or licence holder is highly likely to have the financial capability to carry out and meet the costs of decommissioning.
It requires permit and licence holders to have and maintain 1 or more financial securities that may be accessed if they fail to carry out or fund decommissioning. It allows the Minister to set the amount and type of financial security required. This is to minimise the risk of decommissioning liabilities being transferred to the Crown or third parties or both.
It introduces new financial penalties and criminal sanctions for not decommissioning petroleum infrastructure and wells.
It requires petroleum exploration and petroleum mining permit and licence holders to either make a payment, or obtain and maintain a financial security, to meet the costs of any post-decommissioning work, as directed by the Minister. Post-decommissioning work could include activities carried out to the remediation of wells that have been plugged and abandoned, or any infrastructure left in place after decommissioning has been completed.

New enforcement tools

The 2021 Amendment Act gave us new enforcement tools to improve compliance and respond to non-compliance. These new tools can be used on offences that take place on or after 1 December 2021. The new tools apply to petroleum and minerals permits.

They include:

Compliance notices: A notice that we can give a person if we believe, on reasonable grounds, that they are breaching the requirements of the CMA. The notice will say what the breach is and a time when it will need to be remedied.
Enforceable undertakings: An agreement not to prosecute if the party breaching the CMA agrees to meet certain conditions or take action to fix the problem.
Infringement notices: Instant fees for non-compliance with certain requirements. These can’t be used until regulations defining the infringement offences are made. This is likely to be in 2024.

Changes to the tests used when someone acquires a permit

The 2021 Amendment Act changed the tests used by us when:

someone applies for a new permit
if there is a change of operator
someone transfers their interest in a permit
a change of control for a Tier 1 permit operator is consented.

It requires us to be satisfied that a proposed permit holder will be highly likely (instead of ‘likely’) to comply with work programmes, permit conditions, health and safety requirements, environmental requirements and obligations relating to fees and royalties (as appropriate).

This change is intended to reduce the chance of people getting a permit if they:

don't have the right technical or financial capability, or
have a poor history of compliance.

Other amendments made by the 2021 Amendment Act

Other changes include:

clarifying the type of records and reports expected to be kept by permit and licence holders
enabling the proactive release of reports once the relevant non-disclosure periods have passed
removing the need for annual reassessments by us of the tier status of mineral permits
reclassifying all minerals prospecting permits as Tier 2 permits.

Crown Minerals (Petroleum) Amendment Regulations

These regulations are in development and are expected to come into force in 2024.

They will support the changes introduced in the Crown Minerals (Decommissioning and Other Matters) Amendment Act 2021.

They will set out detailed technical and financial information requirements related to decommissioning.

For example, they will detail what information and when it will be required for:

field development plans
asset registers
decommissioning plans, cost estimates and completion reports
financial information.

Last updated: 15 December 2023

Find this helpful? Give us your feedback