BEFORE THE ENVIRONMENTAL PROTECTION AUTHORITY

OMV GSB LIMITED APPLICATION FOR MARINE DISCHARGE

CONSENT TO DISCHARGE OFFSHORE PROCESSING DRAINAGE

(HARMFUL SUBSTANCES FROM DECK DRAINS) 5

EEZ 100018

IN THE MATTER of the Exclusive Economic Zone and

Continental Shelf (Environmental Effects) Act 2012 10

AND

IN THE MATTER of a Decision-making Committee

appointed to consider a marine discharge consent 15

application made by OMV GSB Limited for the

discharge of trace amounts of harmful substances

from deck drains in the Great South Basin

Held at: Distinction Hotel, Dunedin 20

Decision-making Committee

Mr M Farnsworth (Chair)

Mr G Shaw 25

Dr N Crauford

30

2

I N D E X

DAY THREE (1 August 2019)

5

Opening Statement from the Chair 3

Presentation by Liz Palmer 5

Questions from Committee 13

10

Presentation by Fiona Clements 16

Questions from Committee 20

Closing representation by Mr Winchester 21

Questions from Committee 30 15

Closing remarks from the Chair 31

3

OPENING STATEMENT FROM THE CHAIR

CHAIR: Kia ora tatou, people, the DMC whanau, tena

koutou katoa to the family of the DMC process, a 5

warm and welcome to the third day of the hearing,

of a hearing convened by the EPA to hear an

application by OMV GSB Limited for the discharge of

trace amounts of harmful substance from an offshore

processing drainage from the deck drains of one or 10

more of its MODUs.

We have some new people here this morning, so some

quick introductions. I am Mark Farnsworth, I am the

Chair of the DMC, an independent Hearing Commissioner

based in Northland. To my left, I have Dr Nicki Crauford 15

and to my right I have Greg Shaw. And over here I have a

series of EPA staff who are here to assist. In

particular, can I single out Gen Hewett, if you've got

any questions about anything talk to her. And I'm going

to ask the Hearing Manager Paula Duffy to do a quick 20

commercial break on health and safety.

MS DUFFY: Good morning, everybody. Please ensure that

you sign the attendance register upon your arrival.

If you didn't do that, just at the break could you

please pop and sign that. 25

Please ensure that you turn your cellphones off and

any electronic devices at least to silent mode so we

don't get any interruptions this morning.

The camera that you see here was for Skype the last

couple of days, we don't have any Skype calls today but 30

there is absolutely to be no recording, visual or audio,

of this hearing without the prior approval of the

Committee.

4

The hearing is being recorded for transcription

purposes, so assume that the mikes are live at all times

and there will be a transcript available for you on the

website.

For health and safety, if an alarm is activated 5

please exit this room and follow the green emergency exit

signs. You came up through the lift, if you head back in

that same direction but before you hit the lifts you need

to turn right and follow those exit signs or come down at

the bottom of the hotel foyer and the emergency assembly 10

point is that blue building right there on Liverpool

Street.

In the event of an earthquake, please do not leave

the building, drop, cover and hold and wait here until we

get further instructions from the venue. 15

Thank you very much.

CHAIR: Just to reiterate a number of things. We are

here to listen and it's very important that people

understand that we have not made up our minds in

any shape or form. We are here to hear, consider 20

and decide.

One of the aims of the DMC is to ensure that

everyone gets a fair go within the confines of the

hearing process. And to that degree, if there's

repetition or matters that go on, I will bring them to a 25

conclusion.

Anyway, as simple as that. Any questions that you

have, please talk to Gen. Only the DMC can ask questions

of submitters, no-one else. If you have something that

you would like us to consider that needs to be put, 30

please talk to Gen Hewett.

Okay. I think we've got a relatively short morning

this morning, so we will make a start. I think is it Liz

5

Palmer who's here, thank you. And contrary to the press

report we will give you a fair hearing, Ms Palmer

PRESENTATION BY LIZ PALMER 5

CHAIR: Good morning and welcome.

MS PALMER: Thank you, shall I start now? 10

CHAIR: Yes, you can.

MS PALMER: Thank you. I appreciate the time that I've

been given to present this today. My name is Liz

Palmer. I am a project financial adviser for a

corporate consultant. I state this not to assert 15

myself as an expert but to say I understand the

corporate structure, dialogue and motivation. I

submit as a concerned citizen of New Zealand with

the intention of assisting the DMC in this process.

I am presenting this in bullet points that I put to 20

you recently.

Significant use of assumptions and out-dated

information resulting in uncertainty and incompleteness.

I see little certainty in the dialogue used in this

application, nor in supporting reports. I see the use of 25

assumption, and outdated data (marine ecology data from

1958, deep water corals information from 1981, pollution

studies 1987 and weather conditions from 4 years ago,

this is a nonsense considering the current state of

affairs). Never in our human history have we seen 30

changes to the condition of the planet happening so

quickly. I question the relevance of expert reports,

when they are based on such outdated data.

6

The 'certainty' that impacts from the activity are

negligible must be questioned. OMV state that there are

significant risks of bringing the toxic waste to onshore

(and no doubt significant costs) however there are

apparently only negligible risks when diluting the 5

substances, spilling a bit, then discharging them into

the ocean. I fear this is a case of 'what the eye

doesn't see...'

While wading through this information, it is

appallingly clear that there are many unknowns. How can 10

impacts be assessed as negligible when there are so many

unknowns?

Unknowns include frequency of an event; current

state of the ocean is unknown; effects of fast-changing

conditions are unknown; cumulative effects are unknown; 15

vessels (for the duration of the consent) are unknown;

location of the wells (for the duration of consent) are

unknown; economic benefits are unsubstantiated and

economic costs are unknown; substances are unknown and I

don't believe should be looked at in isolation; 20

therefore - risks are unknown.

Assumptions are evident in the prolific use of

phrases such as negligible consequence; rare likelihood;

while theologically possible; substances would be

undetectable (by humans); temporary in nature; are 25

expected to be; intermittent nature of discharge and the

high mobility of fish reduces any potential threat. This

last point has not been assessed. It has been presumed

and calculated by assumption. Is this good enough? I

suggest not. There is no mention of the fact, which is 30

common knowledge, that fish aggregate near rigs, which in

turn attracts bird life. There is no mention that rig

lighting attracts bird life. There is no mention from

the oil industry experts of the fact that certain fish

7

are susceptible to harmful toxins from very small

quantities, again common knowledge.

I understand these are qualified assumptions,

however they are qualified assumptions from within the

oil industry and I questioned whether the DMC has a 5

balanced input of information required to make a

justifiable decision.

I understand that uncertainty is defined by law,

however I am not alone in querying the use of this

dialogue. The 2018 Stantec Report recommends the DMC 10

clarify what OMV's commitment really is. For example,

'wherever possible' has been translated by the author to

mean 'cost/availability'. Environmental risk has been

lowered to 'as low as reasonably practical', again a cost

measurement, commonly known as weighing a risk against 15

the trouble, time and money needed to control it.

You have a report that states there are no

uncertainties. I am sure it is not intentional, however

I consider the report cursory.

If mankind is to effect the necessary change of 20

behaviour required, to keep the planet in a livable

condition, no government agency can be seen to supporting

such activities. This agency should go to great length

to do just the opposite. The EPA Statement of Intent

says the client should be at the forefront of all 25

decisions it makes, as a government agency I trust the

client is the people of New Zealand.

Inconsistencies in the application around economic

benefits, raising question of process. OMV states there

are no economic benefits of this activity. OMV has 30

provided brief and general reference to investment in

New Zealand since 2002, around $3 billion. In this brief

discussion on economic benefit, OMV has made no attempt

8

to forecast any benefits the proposed GSB EAD programme

may contribute going forward.

Economic benefit, in the current environment, needs

careful consideration. A recent report commissioned by

Westpac examined future threats to our economy, suggests 5

a $30 benefit to GDP through to 2050 by adopting a smooth

transition by New Zealand business to meet climate

obligations. It went on to suggest growth is not

protected to be evenly distributed. Renewable energy

sources such as wind, hydro and solar will be among those 10

industries to prosper, alongside fishing and non-ferrous

metals, while fossil fuel industries will contract; and

added - a sector's capacity to decarbonise is positively

correlated with projected growth. I would suggest that

OMV's failure to properly address economic benefit is a 15

lack of understanding in the above matters. I have been

given to understand that OMV is still seeking investment

for this operation. Perhaps the above knowledge, coupled

with OMV's loss of social license, is hindering this

process. 20

It appears to be acceptable for the applicant to

extract facts around the whole proposal when trying to

justify the economic benefits of the activity, while also

being acceptable to limit facts to an isolated activity

while assessing the environmental impacts. 25

This raises the question of joint processing and

decision-making on related applications. The application

clearly states that EPA will be hearing more than one

application and I fail to see in all fairness why the EPA

does not exercise its right to ask that the related 30

applications be heard at the same time. Although the

numerous applications may not yet be technically lodged

by the applicant, they are most certainly before the EPA.

9

Can a decision, that safeguards the life supporting

capacity of the environment, be made, in all fairness,

when all the applications are not heard together?

Inadequate determination of existing

interests/stakeholders and reporting of engagement. The 5

application is, I believe, vague in the reporting of

feedback from any consultation undertaken. There is

explanation of the method of determining "existing

interests", but actual reporting on consultation that may

have occurred is insufficient or non-existent. It 10

appears everyone listed may have been sent the draft

application, but this should not be considered

consultation because it puts the onus of a response on to

the affected party, whereas the burden of communication,

I believe, lies with OMV. There are no written approvals 15

with this application.

For example, OMV states, "There are a number of

customary rights along the shoreline adjacent to the AOI.

The nearest 24 kilometres away. In theory, these rights

could give rise to an existing interest. If so, they are 20

highly unlikely to be affected." This is intentionally

vague, obviously a matter of opinion. The matter is

dismissed at this point and discussed no further.

For an organisation that prides itself in historic

and extensive engagement with stakeholders since 2011, it 25

offers little evidence of this. In fact, OMV reports

that "face-to-face meetings have not been possible with

all groups prior to the submission of this application".

No explanation given, certainly not due to time

constraints. 30

While stating that its discussions are confidential,

evidence of actual discussions taking place and being

properly reported should, I believe, be a minimum

requirement. There is no reporting of feedback from

10

consultation with the listed regulators, TAs or shipping

interests. I believe this is both desirable and

necessary for the DMC to determine that consultation has

been adequately undertaken.

OMV states "it has worked hard to build and maintain 5

trusted working relationships with many groups and

individuals in the area it operates in New Zealand". I

do not agree. This is an example of the puffery used

throughout this application.

A summary of what can be teased out of the material 10

provided, is that stakeholders, particularly iwi, found

it hard to properly assess any affects this venture may

have on them due to the process of separating relevant

consents, and any information these may contain.

Stakeholders ask that they be consulted further wen these 15

applications are made. This is a concern, as further

applications, if any, are non-notifiable. The EPA in its

Statement of Intent talks of increasing the frequency and

quality of engagement with specialised groups such as

environmental non-government organisations. One way this 20

can occur, I believe, is in the expectations of the

consultation process of its applicants.

One might argue that we are all stakeholders when it

comes to this industry. The facilitating of the

extraction of fossil fuels, which this consent forms part 25

of, affects every living thing on the planet.

I consider the consultation undertaken by OMV to be

cursory and unclear by way of feedback. The lack of

reporting of engagement would suggest the inadequacy of

the process. 30

Cumulative impacts assessed in a way systemic to the

industry. Cumulative means "including all amounts that

have been added before". Within this meaning, I would

expect to see the cumulative impact of adding more toxins

11

to the ocean to be assessed for the purpose of this

consent. Instead, we are provided with a wordy report of

cumulative impact based on all amounts added by other

operators in the area. As OMV may potentially be the

last operator in the area, with the issue of new permits 5

no longer lawful, this is nonsensical. Nowhere have I

seen a proper assessment of the current state of the

ocean from which to examine the impact of adding more

toxins.

It appears to be an assumption that we are starting 10

with a clean slate. I need no expert to tell us this is

not the case. It is common knowledge that plastic, a

product of fossil fuels, is a major pollutant in the

ocean. The ocean has five major gyres (permanent

currents) that can carry pollutants all around the 15

planet. This being so, I would imagine that the study of

cumulated impacts, of polluting one particular area,

would be difficult to assess. OMV have stated that any

adverse effects would be negligible due to the mobility

of fish, but clearly mobility is also relevant to the 20

spread and cumulation of waste from an oil rig, including

those under consideration today.

I believe cumulative impacts cannot be properly

assessed if all activities of the EAD are not considered

together. This thin edge of the wedge approach to the 25

consenting process, in my opinion, is no longer relevant

nor fair. It is well-known that tonnes of drilling

fluids and metal cuttings are disposed of daily by

offshore rigs.

Use of precedent in relation to the rope of EPA. 30

Certain narrative used in this application insinuates

acceptability, suggests business as usual, and approval

as a fait accompli. For example, "substances already

12

approved for use elsewhere by the EPA". A gentle

reminder perhaps from the applicant of a precedent?

Having viewed the earlier application of OMV for

activities in Taranaki, I question if this regurgitation

of information is considered adequate for the DMC to make 5

a just and fair decision, at this time.

The approval of a previous consent, in an area where

the world's rarest dolphin calls home, must not set a

precedent, in fact I believe quite the opposite is true.

I would ask that this application be assessed through 10

fresh eyes with consideration to the fast changing state

of the world, and the downward spiraling social licence

of this sunset industry.

Even in America, last month, the House of

Representatives passed amendments that block the 15

expansion of offshore oil drilling in the Atlantic,

Pacific and Eastern Gulf of Mexico, along with a block of

funding seismic blasting in the Atlantic Ocean. I

understand the consent under consideration is for a

permit that could end as late as 2030. This is the exact 20

time period when a just transition to renewable energy is

required. Sustainable management of our natural

resources must also include 'cessation' if crises is to

be averted.

Request to decline the application and provision of 25

reasons for this decision. The dialogue has changed.

This systematic use of language, to say very little, no

longer has social licence, nor the integrity needed to

make decisions that sustainably manage the remaining

resources on this planet. I ask that you exercise a duty 30

of care in making this decision.

Economic benefits are not established either for

this current activity or the entire EAD programme. The

information provided is cursory at best. The EEZ Act

13

places a focus on economic development. The ability of

this industry to ensure such development is questionable

in the long-term.

I do not believe the interests of New Zealanders,

either environmentally or socially, are properly 5

addressed in the consultation process undertaken by the

applicant.

The cumulative effects of this activity are complex

and hard to assess. I consider the amount of puffery in

the assessment reinforces this observation. The 10

applicant's conclusion that cumulative effects are

negligible also highlights this difficulty. However,

this does not make the conclusion acceptable.

I am uncertain of the independence of the material

the DMC must decide upon. Most of the assessments and 15

evidence produced for this application are from within

the oil industry. If the strength of the EPA is to

remain independent, then this must be seen to occur.

The EPA must put their client to the forefront of

every decision they make. As a government agency, I 20

would expect the people of New Zealand to be that client.

With this in mind, I ask the DMC to use all their power

to ensure this activity does not proceed. We are all

caretakers of the environment. I ask that you favour

caution and environmental protection when making your 25

decision to decline this application. You have a real

opportunity to make a positive and material difference to

the challenges facing our country. I urge you to look at

the tools available to you to do the right thing.

CHAIR: Thank you, Ms Palmer. Dr Crauford, have you got 30

some questions?

DR CRAUFORD: Ms Palmer, I don't have questions for you

because if I was to ask questions, I think it would

be repeating a lot of what has happened prior in

14

the last couple of days. I don't think you've been

here for other parts of the hearing, have you?

MS PALMER: No, I've read some feedback.

DR CRAUFORD: Some of the issues that you raise have

been discussed in other parts of the hearing, so if 5

you have the time you might like to have a look

through the transcript and you might get some

answers to some of the issues that you have raised.

MS PALMER: Yes, the transcripts were only available for

day 1 which didn't address that. 10

DR CRAUFORD: Okay, it will be available shortly for

other days as well. For example, the issue of

birds, we spoke about that yesterday.

MS PALMER: Okay.

DR CRAUFORD: So, I will leave you to have a look 15

through that.

MS PALMER: Thank you.

DR CRAUFORD: Thank you for your submission.

CHAIR: Mr Shaw?

MR SHAW: Yes, Ms Palmer, you started off by stating 20

that the data used was outdated. Now, I'd be very

interested to know whether you had available at

your disposal more relevant data which you refer to

when preparing your submission?

MS PALMER: What in particular are you asking about? 25

MR SHAW: All of the data that you've mentioned here,

marine ecology, pollution studies, weather

conditions etc.

MS PALMER: Oh, that data was from the appendix of the

application submitted by OMV. 30

MR SHAW: Yes. I'm asking, you were saying it was out

of date, do you have or did you look at your own

data in order to make that comment?

15

MS PALMER: Well, I made the comment based on the year

it was produced.

MR SHAW: So you don't have any alternate data?

MS PALMER: Well no, I'm not an expert witness, so no I

don't. I am just commenting that the data that has 5

been used seems to be very much out of date,

bearing in mind the conditions, fast changing

conditions.

MR SHAW: But you can't offer any alternative to prove

your hypothesis? 10

MS PALMER: I'm commenting on the age of the

documentation. I live in a university city,

there's people studying marine science every single

day here. We run courses for that. I know of

people that are out there in vessels studying the 15

marine environment. That I would believe is common

knowledge. So, we didn't stop looking at deep

water corals in 1958, we didn't stop looking at

pollution studies in 1987, we haven't stopped

looking at the weather from 4 years ago. So, 20

obviously I would imagine there's more information

out there. Why would we stop looking at it? But

it's not upon me to be producing that information.

MR SHAW: No further questions.

CHAIR: Ms Palmer, thank you very much for taking the 25

time to present to us this morning, thank you.

MS PALMER: Thank you, Mr Farnsworth.

CHAIR: We now move to the second item on our agenda

which is sustainable Dunedin city and it's Ms Fiona

Clements. Welcome. 30

16

PRESENTATION BY FIONA CLEMENTS

MS CLEMENTS: Tena koutou, tena koutou, tena koutou

katoa. (Addresses in Te Reo Maori). 5

CHAIR: Kia ora.

MS CLEMENTS: Kia ora, my name is Fiona Clements and I

am the Chair of Sustainable Dunedin City.

Sustainable Dunedin City is an incorporated society

which began in 2007 and its purpose is to 10

facilitate a positive, secure and sustainable

future for Dunedin City in the face of challenges

posed by climate change and unsustainable resource

use.

The Society conducts research and disseminates 15

information on climate change and sustainability,

promoting awareness of these issues to the wider

community. The Society aims to influence

individuals, businesses and governments to adapt

their behaviours and policies to reflect the 20

importance of these issues.

The Society fosters linkages between organisations

with objectives similar to or complementary to the

Society.

It hosts around 400 members of the Dunedin community 25

and as the Chair, I speak on their behalf.

I would like to thank the DMC for the opportunity to

speak to our submission and the OMV for witnessing the

great opposition from Dunedin City and further afield to

their consent application. 30

I ask the DMC today to not only listen with their

heads but also with their hearts, and that we acknowledge

the failing system that we work within.

17

Today we would like to reiterate and reinforce all

those who have spoken before us in opposition of this

consent application. We believe these people have the

best interests of the environment of the Great Southern

Basin in mind. 5

Today we speak to the uncertainty held within this

consent application. Firstly, the consent application

does not verify what harmful substances will be

discharged. Without this information, how can we be sure

our environment is being protected? 10

We also have no idea of the frequency of the harmful

substances being discharged. The only certainty we hold

is that they are harmful.

There is no specific definition of what trace

amounts are for these harmful substances as trace amounts 15

can vary based on the type of substance, this is

insufficient detail to approve its consent.

The uncertainty around the insufficient and

inadequate information provided in regards to harmful

substances gives cause for alarm as to how these can be 20

mitigated or mitigation steps be implemented when they

are unknown.

The results of discharge can lead to accumulation in

the marine environment. There is insufficient

information on the cumulative effects of these harmful 25

substances in the proposed discharge on its own. There

is insufficient information and research data on the

potential cumulative effects with other discharge

substances from the drilling activities. There is an

issue on the calculations for estimating the dilution of 30

harmful substances and plume modelling of discharge as

this has been based on Taranaki conditions.

There are major concerns relating to insufficient or

inadequate information on the existing environment, as

18

information from Taranaki has been used to inform this

consent instead of the actual environment this consent is

being asked for. There is no mention of what

environmental conditions are deemed the same in the

Taranaki to the Great South Basin to make such a 5

comparison acceptable.

We are uncertain about the levels of ecotoxicity of

the hazardous substances mentioned in Stantec's

uncertainty report and we believe that no ecotoxic

substances released in the marine environment are 10

acceptable. We believe no hazardous substances should be

replaced into the marine environment or any environment

and that no environmental effects are considered to be

acceptable. Only regenerative or cradle to cradle

objectives are sufficient as acceptable. 15

This application does not take any regenerative

approaches to its mitigation. Therefore, it is

unacceptable to approve its consent.

There is uncertainty and inadequate information

regarding the type of mobile offshore drilling unit that 20

is to be used in this consent, giving no certainty that

discharges will be mitigated in a regenerative manner.

Secondly, stating that extreme events are unlikely

to occur during the time period that drilling is expected

to take is not an adequate mitigation tactic in the 25

current ecological conditions that we find ourselves in.

Extreme events have been occurring in Aotearoa as our

planet strives to balance itself from the extractive

industries that continue to profit from her well-being.

We are also uncertain whether CH4 emissions from 30

offshore platforms have been taken into account as

evidence from nature.com suggests that CH4 is a dominant

component of emissions from offshore oil platforms

released as a result of gas fluring and venting,

19

equipment leaks and evaporation losses with concomitant

emissions of CO2 mainly due to gas flaring. Among a

variety of CH4 sources, current estimates suggest that

CH4 emission from oil and gas processes account for

approximately 20% of worldwide antigenic emissions. We 5

cannot continue to add to this number by consenting this

application.

We believe that the precautionary principle needs to

be used in this instance because extensive scientific

knowledge on the matter is lacking. There is a social 10

responsibility to protect the environment from harm.

We also speak to point 39 of the EPA Consideration

Report, namely that from Catherine Ducker that states, I

do not consider that a condition requiring an engagement

agreement with Whakatipu Runanga and Ngai Tahu iwi and 15

tapu is necessary. The Ngai Tahu claim area includes the

Great South Basin and, as kaitiaki of this area, we are

uncertain that the marine environment and whakapapa of

Tangaroa has been taken into account. We believe that

those sitting before us cannot even begin to understand 20

the concept of whakapapa in relation to Tangaroa. And

that those ancestors, mammals and other sea life,

including our endemic seabirds who we regard as taonga

and that live in the marine environment in question, are

not taken into account. We are certain that there should 25

be an impact assessment and a meaningful cultural

assessment of the effects of harmful substances on these

species. A cultural assessment such as the whakapapa

from Mason Durie would be appropriate. We are certain

that these harmful substances will have an effect on 30

these species.

I am certain that the marine environment in question

holds no value to those concerned as it does to local

20

Runanga and that all they see is a way to make profit

from continuing to extract fossil fuels.

I am certainly uncertain about the uncertainty held

within this consent application process. (Speaks in Te

Reo Maori) for us and our children after us, today we 5

challenge the DMC to stand on the right side of history

and decline this application for consent and we ask the

EPA to hold public notified hearings for the latter

non-notified applications due for the furthering of this

process. (Speaks in Te Reo Maori). (Waiata). Thank 10

you.

CHAIR: Kia ora. Mr Shaw, do you have any questions?

MR SHAW: No, no questions.

CHAIR: Dr Crauford, any questions?

DR CRAUFORD: Yes. You mention an agreement with Ngai 15

Tahu or local Runanga. Are you representing Ngai

Tahu?

MS CLEMENTS: I am Ngai Tahu, yes, but I do not

represent the Runanga, no.

DR CRAUFORD: Okay, thank you. 20

CHAIR: Thank you, Ms Clements, for that.

MS CLEMENTS: Thank you.

CHAIR: That brings us to the conclusion of the

submitters' presentation. We now move to OMV has

the right of reply. Now, Mr Winchester, would you 25

like us to adjourn for a while?

MR WINCHESTER: No, thank you, Sir, I think I'm happy to

go now.

30

21

PRESENTATION BY MR WINCHESTER

My right of reply won't be lengthy and I am

happy to deliver that orally and back that up with 5

anything in writing should you require it.

CHAIR: I haven't discussed the need for how we want to

handle the right of reply, so just pause for a

minute. (Committee members confer).

Mr Winchester, it would come as no surprise that we 10

welcome an oral presentation but we certainly would like

it backed up by a written copy of the right of reply,

please.

MR WINCHESTER: That's fine, Sir. I am reading from

some notes which hopefully I will be able to 15

transform into a summary of the right of reply

relatively quickly.

CHAIR: Thank you.

MR WINCHESTER: Probably before I speak to the right of

reply, the DMC yesterday asked about a record of 20

OMV's spills of harmful substances associated with

its historical exploration drilling activities. I

have filed this morning with Ms Hewett a memorandum

which outlines a response to that. Does the DMC

have that before it? 25

CHAIR: Yes, we do.

MR WINCHESTER: I am happy to answer any questions about

it. The short point is that there has been one

such spill in 174 days of exploration drilling

conducted by OMV in its history in New Zealand. 30

And the circumstances of the spill were that it

wasn't captured by the deck drainage system, is the

essence of what happened. So, some contaminated

rainwater, 2 litres of that, was discharged

22

directly to sea and a small proportion of that

rainwater contained water based drilling muds, of

which a component was a classification 9.1

substance. So, that happened in 2014, Sir.

CHAIR: Thank you. Any questions? 5

DR CRAUFORD: No.

CHAIR: Mr Shaw?

MR SHAW: Just to clarify, modifications have been made

to prevent that from happening again; is that

correct? 10

MR WINCHESTER: Well, I understand that OMV's approach

is continuous improvement. Obviously, this was an

unplanned activity and it has sought to learn from

that, take necessary precautions. It incorporates

these experiences into its business processes and 15

it takes them into account in things like rig

selection processes. So, it definitely has

resulted in improvements and responses by the

government.

MR SHAW: This data doesn't tell me, I assume, when that 20

operation was undertaken that you had an

understanding of what the expected rainfall would

be in that area?

MR WINCHESTER: Look, Sir, I'm sorry -

MR SHAW: My question is, assuming everyone had done 25

their homework properly and prepared for this, then

why did this first incident occur? And are we

likely to have a similar one in the Great South

Basin where potentially the amount of rainfall is

far more in excess of what was recorded in this 30

event? I'm just wondering whether data of the

rainfall has been obtained as well in allowing them

to improve their methodology? If you can follow

what I'm trying to say.

23

MR WINCHESTER: Yes, I understand that. I can't answer

that question, Sir, in that I'm simply delivering

the information that was provided to me. I would

observe that was under a different regulatory

regime. This is now specifically dealt with, these 5

activities are dealt with now under the EEZ Act and

associated regulations, and there is a different

level of regulatory oversight in these types of

activities.

CHAIR: Do you want to come back to that? 10

MR SHAW: Yes, we may have some more questions around

that.

MR WINCHESTER: All right, Sir. I'll endeavour to

assist you as far as I can within my understanding

of events but, as I said, I am relaying the 15

information provided to me.

MR SHAW: It's not just we need a bigger bucket. You

need to start at the beginning of the process as to

what's caused it.

MR WINCHESTER: Indeed, Sir, and I suppose my response 20

to that is, you have before you evidence which

indicates that that issue has been specifically

considered by OMV and a highly conservative

approach taken in relation to this proposal and

these sorts of risks have been specifically taken 25

into account.

MR SHAW: Thank you.

CHAIR: Okay, Mr Winchester, you can carry on.

MR WINCHESTER: Thank you, Sir. I suppose, as a

starting point I should say that OMV maintains the 30

position that it set out in its opening submissions

and the evidence which it has presented to the DMC.

In terms of the other information which is before

the DMC, there's nothing which has been submitted during

24

the course of the hearing which causes it to change its

view or doubt the evidence that it has provided.

OMV understands that the marine consent and public

hearing process is daunting to lay people and submitters

and it also accepts that a lot of the information which 5

is in the public domain about this application is

technical and lengthy. That is a consequence of the

EEZ Act and the process. It does require significant

scientific and technical information.

OMV understands and it fully accepts the 10

frustrations of submitters who are confined by the scope

of the application and the constraints that that places

on evidence and information which is relevant to the DMC

decision. From OMV's perspective, that legal position is

unsatisfactory but, as I said in opening, those are the 15

cards that we are all dealing with and we don't really

have any choice in that matter.

Given those factors, OMV acknowledges the input of

submitters to the process, the obvious effort and deep

feelings that they express and acknowledges the efforts 20

they have gone to in order to express their views and

concerns and the manner in which they have conducted

themselves.

In my submission though, despite the procedural

complexity and the scientific and technical information 25

which has been produced, in reality the application and

its assessment in terms of risks and effects is

relatively straightforward, and a number of submitters

have effectively conceded this point in acknowledging

that the activity for which consent is sought is 30

irrelevant in terms of effects. And the real effects

they are concerned about are somewhat different.

In my submission, the fundamental issue before the

DMC is submitted to be one of risk, rather than effects,

25

because there is no certainty that there will be any

spills or harmful substances and hence discharge to the

deck drainage system and then to the marine environment.

And the evidence identifies that the risk of the spill is

very low and the information I've submitted in response 5

to the DMC's request obviously demonstrates that.

There will only be effects if there is a spill and

then based on all the assumptions used by OMV, which in

my submission are not only appropriate and appropriately

certain, but they are highly conservative. The 10

assessment is that the effects of the discharge of a

harmful substance as defined will be negligible.

With respect, those assessments of risk and effects

stand to reason and cannot be seriously challenged and

have not been in this instance by expert evidence. 15

There has been a very strong theme from submitters

about uncertainty. In my submission, if the application

and the evidence is carefully considered, there is ample

certainty about what you are considering because the list

of harmful substances is defined in regulations, it's a 20

specific list of harmful substances, and that is the

trigger for consent and the consent potentially applies

to any or all of those substances.

So, what's been assessed for the purposes of

identifying potential risks and effects is the most 25

ecotoxic substances on that list that might ever be used

on a MODU.

And the results of that assessment have been clearly

and thoroughly assessed by Mr Forrest and explained to

the DMC and it is submitted to be the best information. 30

So, in my submission, there is no material

uncertainty. This is what is known as a black box

application; it's very common and the method of

26

assessment and the assumptions used are entirely

reasonable in the circumstances.

I want to now turn to respond to or clarify a number

of specific matters that have arisen during the course of

the hearing. 5

The first is the suggestion by numerous submitters

that OMV has not been transparent in pursuing this

application and is somehow unfairly taking advantage of a

legal loophole to avoid fronting up to issues submitters

want to make about climate change and fossil fuel use. 10

That is not accepted.

In my submission, the EPA in this DMC is not the

correct forum for this issue and these concerns to be

raised. If people have concerns about the process, and

again those concerns are heard and understood, this is 15

fairly and squarely an issue for Parliament. The law is

what it is and everyone is bound by that. And if people

think that that is wrong, then it's up to them to

persuade Parliament to change the law.

In that respect, Parliament recently changed the 20

Crown Minerals Act to remove the ability to seek or issue

further offshore exploration permits for oil and gas.

And in doing so, Parliament also consciously and

deliberately preserved existing oil and gas exploration

permits and can only be assumed to know that in doing so, 25

it preserved and locked in the legal obligations set out

in permits between the Crown and permit holders.

There is ample evidence in the public domain that

indicates that Parliament knew exactly what it was doing

when it amended the Crown Minerals Act. There are 30

numerous public statements by the Prime Minister, the

Minister of Energy and the Minister of Regional Economic

Development that clearly outline that the government knew

what it was doing.

27

The Prime Minister said, "We are protecting existing

exploration and mining rights. No current jobs will be

affected by this and we are honouring all agreements with

current permit holders". She also said, "We are striking

the right balance for New Zealand. We are protecting 5

New Zealand industry and protecting future generations

from climate change".

And the climate change Minister, Mr Shaw, said, "We

would like to be able to move faster on this transition

but we always did say we would honour existing permits". 10

I understand that people have an objection to the

current state of affairs. OMV is not responsible for

that, nor is the EPA, nor is this DMC. It's a job for

Parliament.

So, in terms of the law and what OMV's exploration 15

permits involve, that expressly involves a legal

obligation on OMV to carry out the exploration activities

specified in that permit, and that is an obligation on

Crown.

This present application is a necessary part of 20

complying with that obligation.

What OMV is doing is therefore not only lawful, it

is entirely consistent with Parliament's intentions.

And similarly, the marine consent process in the

scope of this application is prescribed by law. There 25

has been substantial discussion between OMV and the EPA

about how marine consent applications are to be

considered and determined and OMV is following what the

EPA has concluded as required, which is a notified

application for discharge of harmful substances 30

considered on its own and on its merits.

What I am essentially saying, is the unbundled

approached to marine consents for offshore exploration is

not an idea advanced by OMV. This is exactly the same

28

process as what happened with regard to the Taranaki EAD

programme.

The second point I want to suggest is suggestions

around the present application having been wrongly

assessed as being complete under Section 40 of the Act by 5

the EPA. That decision has been made by the EPA. They

are the relevant decision-maker for that and the DMC,

with respect, does not have the ability to change that,

except to the extent that you might conclude that the

application should be declined on its permits. 10

In any event, OMV's experience is that a Section 40

completeness assessment is not a rubberstamping exercise,

as some submitters have suggested. It is rigorous and

the EPA is not only the expert body which has carried out

numerous such assessments on a range of different 15

proposals but history has shown that it sets a pretty

high bar in terms of adequacy of information. And that,

of course, is demonstrated by the amount and detail of

information submitted by OMV in this instance.

There was a suggestion yesterday by Ms Larsson of 20

Greenpeace regarding OMV's position on consultation and

nothing really turns on it but, in my submission, it was

a misrepresentation of the clear evidence that you heard

from Mr Park about consultation and engagement.

On my understanding of what Ms Larsson said, she 25

suggested that OMV had chosen not to consult with

environmental groups because it considers there is a

constraint on consulting with groups other than existing

interests and that, as a consequence, its consultation

for this proposal was compromised. 30

I heard Mr Park's evidence. I've checked his

written evidence and that's simply not what he said.

Mr Park was very clear that OMV has consulted with a

range of groups, whether they are existing interests or

29

not, and has at its discretion gone well beyond those

defined as existing interests for this application,

including Greenpeace in Austria through OMV's Head

Office. OMV has never suggested, nor did Mr Park's

evidence say, that the definition of existing interests 5

is a constraint on its ability or willingness to consult.

Finally, not quite finally, second to last point in

terms of economic benefits. I repeat and confirm that

the economic benefits are not claimed by OMV for this

application. 10

So, as such, I did have an exchange with you, Sir,

in opening about whether it was a balancing exercise or a

weighting exercise in terms of section 10 and section 59.

In my submission, it doesn't arise in this instance as

there is no balance between economic benefits and 15

environmental factors that needs to be undertaken.

I would say, in terms of what the nature of the

exercise before the panel, before the DMC is, there's no

case law as to whether the EEZ Act decision-making on

applications is a weighting or balancing exercise, 20

certainly compared with the considerable body of RMA case

law. In my submission, it is really a matter of applying

section 59 of the Act to the extent it is relevant to and

engaged by the present proposal.

Finally, it's really a factual matter. There was a 25

question asked of Mr Hollinger about the dimensions in

deck height of the prospector rig. I can advise the DMC

that the main deck is 20 metres above water when it is in

drilling mode. That the air gap between the lower part

of the rig to the water level is 12 metres for drilling. 30

And in the case of a bad storm and large waves, the what

is known as survival mode configuration has the main deck

at 22 metres above water level.

30

That's all I have to say. I am happy to answer

questions but I would register my thanks to the DMC for

the careful consideration of matters and certainly to the

EPA staff for the professional way in which they've

handled this hearing. 5

CHAIR: Thank you, Mr Winchester. Dr Crauford, do you

have any questions?

DR CRAUFORD: No, I don't have any questions.

CHAIR: Mr Shaw, do you have any questions?

MR SHAW: Just a technical one about these wave heights. 10

The deck levels 22 metres in survival mode and I

read that the height of the largest wave recorded I

think was 23.4 metres in that area. So, therefore,

the deck would be awash with water when that wave

struck, is that my understanding? Could somebody 15

answer that?

MR WINCHESTER: I am not an expert and the maths, as far

as I can tell, sounds right but I suggest that if

you want some clarity on that I can have

Mr Hollinger consider that question and furnish a 20

written response.

MR SHAW: Yes, I would appreciate that.

MR WINCHESTER: Thank you, Sir, I'll do that.

CHAIR: Okay. Any other questions?

MR SHAW: And that's allowing for the wind driven 25

effects of the waves as well?

MR WINCHESTER: Right, thank you, Sir, I'll make sure he

understands the question and provides a response as

soon as he can.

MR SHAW: That's it. 30

CHAIR: Nothing else from anyone? Ms Hewett, anything

from you that we need to consider?

MS HEWETT: Perhaps a date for any written closings

might like to be confirmed.

31

CHAIR: Of the closing statement?

MS HEWETT: Yes.

CHAIR: Mr Winchester, when would you provide that?

MR WINCHESTER: I suspect I will have some time today to

work it up. Shall we say Monday next week? 5

CHAIR: Yes, that would suit us admirably. And

conditions, an up-to-date set of conditions, have

we decided on that?

MR WINCHESTER: I think the position remains as set out

in opening and in Mr Gartier's evidence but I can, 10

as with the written right of reply, I will furnish

OMV's preferred set of conditions as part of that.

CLOSING REMARKS BY THE CHAIR 15

CHAIR: Right. So, before we adjourn for the day,

adjourn this hearing, clearly we are not closing it

at this present point in time, Mr Winchester and 20

Mr Harwood, can I just make a couple of

observations.

One, I'm going to thank you both for your

forbearance and the way you conducted yourselves.

You could have made my life very difficult but you 25

chose to sit and listen and on behalf of the DMC,

we thank you for that, both of you for that. It

helped the smooth running of the hearing.

To the EPA staff, thank you for the assistance over

the course of the last three days. 30

And for the one person that remains in the audience,

we appreciated all the submitters, and of course the

press down the back who have attended.

32

And the stenographer, of course, a very important

person, thank you for your diligence.

So, that just leaves me with the task of trying to

get my tongue around a mihi for the day which I will do,

and please forgive the way I do my Te Reo, even though 5

I've spent many years living on the Peninsula, I still

can't get it right. (Mihi in Te Reo Maori). Greetings

to everyone, we have come to the end of the process.

Therefore, greetings to Ngai Tahu who are the iwi of the

area. DMC whanau, to all the people who made this 10

hearing, Tena koutou katoa. Safe travels home everyone.

Tena koutou, tena koutou, tena koutou katoa, thank you

very much.

We are adjourned.

15

Hearing adjourned at 9.59 a.m.