Decommissioning of petroleum infrastructure and wells
Petroleum exploration and mining permit and licence holders must carry out decommissioning activities and meet the full financial cost of those activities.
Find a summary about what is required and by when. For more detailed information see the legislation:
On this page
- What is decommissioning
- What is required
- What information is required
- When decommissioning must take place
- Exemptions and deferrals
- What happens if decommissioning obligations are not met
What is decommissioning
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.
What is required
Petroleum infrastructure and wells must be decommissioned
The Crown Minerals (Decommissioning and Other Matters) Amendment Act 2021 introduced a legal requirement on all petroleum exploration and mining permit and licence holders to carry out decommissioning activities according to all relevant laws and standards.
If those requirements do not exist, all wells must be plugged and abandoned, and the infrastructure completely removed.
See the legislation for more information, including definitions for infrastructure and wells.
Crown Minerals Act 1991, Section 89E – Decommissioning of petroleum infrastructure and wells — Legislation.govt.nz
Crown Minerals Act 1991, Section 89D – Interpretations — Legislation.govt.nz
Permit and licence holders must meet the financial costs of decommissioning
Petroleum exploration and mining permit holders and mining licence holders must carry out and meet the full financial costs of decommissioning activities, even if they transfer out of a permit (in the event that the new permit or licence holder fails to carry out and fund decommissioning).
To help make sure that permit and licence holders can meet the full costs of decommissioning:
- we may carry out a financial capability assessment to assess the permit or licence holder’s financial capability to meet the costs.
- permit and licence holders must obtain and maintain one or more financial securities that may be used if they fail to carry out or separately meet the costs of decommissioning.
What information is required
Permit and licence holders will be required to submit technical and financial information related to their decommissioning obligations.
The Crown Minerals (Petroleum) Amendment Regulations are in development and expected to come into force in 2023. They will set out detailed technical and financial information requirements related to decommissioning, however we can ask for information without the regulations being in place.
The information below will be updated when these regulations come into force.
Field development plans
Permit and licence holders will be required to provide a detailed plan of the development of the field over its anticipated productive life.
Asset registers
Permit and licence holders will be required to provide a complete and accurate list of the petroleum infrastructure and wells that must be decommissioned.
Decommissioning plans and cost estimates
Permit and licence holders will be required to provide a Crown Minerals Act decommissioning plan and cost estimates for decommissioning.
Financial information
Permit and licence holders will be required to provide information to help us monitor their financial position. This information is used to assess their ability to meet the costs of decommissioning. The records permit and licence holders must keep will be detailed in regulations
Decommissioning completion reports
A decommissioning completion report will be required on request from the Minister. The information required in this report will be detailed in regulations.
When decommissioning must take place
The obligations for decommissioning of petroleum infrastructure and wells must be carried out before the earliest of the following:
- in the case where production permanently ends before the permit or licence expires
- by a date(s) agreed with the Minister for completion, or
- if no date is agreed, a date that is 2 years before the expiry date of the current permit or licence.
- by the expiry or surrender date of the current permit or licence, or
- before a permit or licence area is submitted as partially surrendered or relinquished.
Exemptions and deferrals
If certain criteria are met, the Minister may exempt or defer permit and licence holders from carrying out a decommissioning obligation for a specific well or item of petroleum infrastructure or a class of well or petroleum infrastructure.
Crown Minerals Act 1991, Section 89 – Exemptions and deferrals — Legislation.govt.nz
What happens if decommissioning obligations are not met
Pecuniary penalties
If a person or body corporate has not met their decommissioning obligations they may have to pay a financial penalty.
The amount could be
- up to $500,000 for an individual, or
- up to $10 million for a body corporate.
Crown Minerals Act 1991, Section 89 – Pecuniary penalties — Legislation.govt.nz
Criminal liability
If a person or body corporate knowingly fails to carry out certain decommissioning obligations, they may be convicted of a crime and sentenced to
- imprisonment for a term not exceeding 2 years, or a fine not exceeding $1 million, or both; or
- the greater of the following:
- a fine of up to $10 million
- a fine of up to 3 times the cost of decommissioning.
Crown Minerals Act 1991, Section 89 - Criminal liability for knowingly failing to carry out certain obligations — Legislation.govt.nz