File Ref: EEZ100017 - EPA...MEMORANDUM File Ref: EEZ100017 To: Richard Johnson, Manager, EEZ...

MEMORANDUM

File Ref: EEZ100017

To: Richard Johnson, Manager, EEZ Applications

Copy To: Siobhan Quayle, General Manager Climate, Land and Oceans

Manager, Kaupapa Kura Taiao

Acting Manager, EEZ Compliance

General Counsel

From: Senior Advisor, EEZ Applications

Date: 20 April 2018

Subject: OMV New Zealand Limited application for a marine discharge consent –

decision under section 40 of the Exclusive Economic Zone and Continental

Shelf (Environmental Effects) Act 2012.

Purpose

1. The purpose of this memorandum is to record the reasons for your decision to determine the OMV New

Zealand Ltd (OMV) marine discharge consent application as complete under section 40 of the Exclusive

Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (EEZ Act).

2. This decision falls within your statutory delegation, as provided in the instrument of delegation from the

Chief Executive of the EPA.1

Recommendation

3. It is recommended that you:

a. Agree that OMV New Zealand Ltd’s application for a marine discharge consent (EEZ100017) is

determined as complete under section 40 of the EEZ Act.

1 Instrument of Delegation - Chief Executive to EPA Staff (3 November 2017):

http://epa/edrms/acc/1/md/edmd/2017_11_03_EEZ_Delegation_CE_to_staff.pdf

http://epa/edrms/acc/1/md/edmd/2017_11_03_EEZ_Delegation_CE_to_staff.pdf

EEZ100017 OMV New Zealand Limited marine discharge consent application – Determination of completeness Page 2 of 12

Project Description

4. OMV are proposing to undertake an Exploration and Appraisal Drilling (EAD) programme starting in 2019

and possibly continuing up to 2025. This EAD programme will involve the drilling of up to nine exploration

wells and three appraisal wells in the Taranaki Basin.

5. The EAD programme will be located across six permits which have been granted to OMV under the Crown

Minerals Act 1991 - PMP38160 (Maari), PEP51906 (Cascade), PEP57075 (Cloudy Bay), PEP60091 (Te

Whatu), PEP60092 (Ridgeline) and PEP60093 (Toutouwai).

6. The EAD programme will use a Mobile Offshore Drilling Unit (MODU).

7. This application relates only to the discharge of trace amounts of harmful substances from the deck drains

of the MODU as offshore processing drainage. No other activities related to the EAD are the subject of

this application.

Legislative context

Section 20B restricted activities

9. Section 20B of the EEZ Act outlines restrictions on discharges of harmful substances into the sea or into

or onto the seabed of the EEZ from structures. No person may discharge a harmful substance from a

structure or from a submarine pipeline into the sea or onto the seabed of the EEZ unless the discharge is

a permitted activity, is authorised by a marine consent or is authorised by sections 21, 22, or 23 of the EEZ

Act.

10. OMV’s application is for the discharge of harmful substances from offshore processing drainage from the

deck drains of the MODU. This is restricted under section 20B of the EEZ Act.

Completeness assessment and notification requirements

11. Under section 38 of the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012

(EEZ Act) any person may apply to the EPA for a marine discharge consent to undertake a discretionary

activity. The application must be made in the prescribed form, fully describe the proposal and include an

impact assessment (IA) prepared in accordance with section 39 of the EEZ Act and requirements

prescribed in regulations.

12. In addition to the matters required under section 39 of the EEZ Act, regulation 35 of the Exclusive Economic

Zone and Continental Shelf (Environmental Effects – Discharges and Dumping) Regulations 2015 (D&D

Regs) requires that the IA describe the effects of the activity on human health.

13. The EPA must return an application for a marine discharge consent as incomplete under section 43 of the

EEZ Act if it considers that the application does not comply with section 38 (including because the impact

assessment does not comply with section 39 or any requirements prescribed in regulations).

14. If the EPA is satisfied that an application for a publicly notifiable marine discharge consent is complete, it

must give public notice of the application and serve a copy of the notice on those persons and groups

listed under section 46(1)(b)(ii) of the EEZ Act within 20 working days.


EPA completeness assessment of OMV’s marine discharge consent

application

15. I have reviewed OMV’s IA under section 40 of the Act to determine whether it complies with the criteria in

section 38 of the EEZ Act.

Prescribed Form

16. The application for a marine discharge consent has been made in the prescribed form.

Fully describe the proposal

17. The application forms and IA (including its supporting technical reports in the appendices) fully describe

OMV’s proposal to discharge trace amounts of harmful substances from the deck drains of the MODU.

Impact Assessment

18. The IA addresses the matters listed in section 39 of the EEZ Act and regulation 35 of the D&D Regs. More

details are outlined below.

Section 39(1)(a) EEZ Act: Describe the activity for which consent is sought

19. Section 3 of the IA describes the activities for which consent is sought.

20. Section 3.1 of the IA outlines the proposed operations including the 12 proposed well locations and the

water depth at each location.

21. The EAD programme will start in 2019 and possibly continue up to 2025.

22. OMV have not contracted a MODU yet, therefore, section 3.2 of the IA outlines general information about

the typical design of a deck drainage system.

23. Harmful substances will only be stored or handled in what the IA has called the “hazard area”. Drains from

these areas are routed to a water treatment system which is composed of multi chambered settling tanks.

From here all fluids are put through an Oily Water Separator (OWS). When the oil content of the fluids are

less than 15 ppm the fluids can be discharged into the marine environment.

24. There will be a separate drainage system for the parts of the MODU described in the IA as the “non hazard

areas”. Harmful substances will not be permitted to be present in non hazard areas.

25. Section 3.4 of the IA outlines the process behind the selection of harmful substances. OMV are not aware

of exactly which substance will be used at this stage as this will depend on the requirements of the drilling

and exploration programme.

26. Section 3.3 of the IA describes the risk mitigation measures needed to firstly reduce the possibly of a spill

of harmful substance occurring and secondly to capture and clean up the spill.

27. Section 3.4 of the IA outlines that if a spill occurs it will be cleaned up appropriately, however, there is still

a possibility that there could be trace amounts of harmful substances which could run off the hazard area

into the deck drains, through the settling tanks and then be discharged.


28. Section 3.7 of the IA has estimated that potentially 250 millilitres of harmful substance could be discharged

along with storm water.

29. There is no information provided in the IA on the frequency of these discharges since this will depend on

the number of spills that will occur. The decision making committee may wish to seek further clarification

on this issue.

30. I consider that the description of the activities for which the marine discharge consent is sought (section

39(1)(a) EEZ Act) is in:

a. such detail as corresponds to the scale and significance of the effects that the activity may have on

the environment and existing interests (section 39(3)(a) EEZ Act); and

b. sufficient detail to enable the EPA and persons whose existing interest may be affected to understand

the nature of the activity and its effects on the environment and existing interests (section 39(3)(b)

EEZ Act).

Section 39(1)(b) EEZ Act: Describe the current state of the area where it is proposed that the

activity will be undertaken and the environment surrounding the area

31. The IA has grouped the nine exploration wells and three appraisal wells into three Areas of Interest (AOI)

which are labelled in the IA as North, Central and South.

32. Section 5 of the IA describe the current state of each of the AOIs where the activity will be undertaken and

the surrounding environment with respect to:

a. the physical environment (meteorology, waves and currents, air quality, thermoclines and sea

temperature, water quality, bathymetry and geology and seabed substrate);

b. the biological environment (benthic invertebrates, cetaceans, pinnipeds, plankton and primary

productivity, fish, cephalopods, marine reptiles and seabirds);

c. marine classifications (based on the Marine Environment Classification (MEC), a Geographical

Information System approach for the classification of the New Zealand marine environment) and

sensitive sites;

d. the cultural environment; and

e. the socioeconomic environment.

33. The IA describes the existing environment in the North, Central and South AOIs in a general sense. The

IA does not describe the existing environment around each proposed well location in specific detail.

34. Section 5.4 of the IA describes the cultural environment and provides a brief overview of the iwi and their

rohe in the North, Central and South AOIs.

35. Section 5.5 of the IA describes the socioeconomic environment and provides a brief description of

recreational and commercial fishing.


36. I consider that the description of the current state of the area where OMV proposes to undertake the

activity and the environment surrounding the area (section 39(1)(b) EEZ Act) is in:





EEZ Act).

Section 39(1)(c) EEZ Act: Identify the persons whose existing interests are likely to be

adversely affected by the activity

37. Section 4.1 of the IA has identified activities and parties who may have existing interests in relation to the

proposed discharges.

38. This identifies that the existing interests are deep water commercial fishers, customary fishers and

associated quota holders.

39. I note that although the IA recognises customary fishing rights under the Fisheries (Kaimoana Customary

Fishing) Regulations 1998, it does not reference Māori customary fishing rights that are provided for under

the Fisheries (Amateur Fishing) Regulations 2013.

40. Iwi groups located inshore from the three AOIs are considered by OMV to be existing interests.

41. Section 4.2 of the IA lists the groups that OMV have either engaged with, advised or requested to meet

regarding the proposed discharge.

42. The identification of existing interests has been informed by OMV’s assessment that the potential effects

on the marine environment are limited due to the small volumes that may be discharged.

43. Section 5.4 of the IA also describes the cultural environment in the areas closest to the AOIs. This also

includes a description of customary and iwi fishing interests and interests under the Marine and Coastal

Area (Takutai Moana) Act 2011 (MACA), although, as noted above, this does not include a description of

customary interests under the Fisheries (Amateur Fishing) Regulations 2013.

44. Table 25 in Section 7 makes reference to the importance of the environment to Kaitiaki, which appears to

differ depending on the consequence level. It unclear what the applicant means by these statements.

45. I consider that OMV has made a reasonable effort (section 39(4)) to identify existing interests likely to be

adversely affected by the activity (section 39(1)(c) EEZ Act) and that identification is in:





EEZ Act).


Section 39(1)(d) EEZ Act: Identify the effects of the activity on the environment and existing

interests (including cumulative effects and effects that may occur in New Zealand or in the

sea above or beyond the continental shelf beyond the outer limits of the EEZ)

46. Section 7 of the IA outlines the environmental, cultural, socioeconomic and human health risk assessment.

47. The risk assessment has been adapted from the approaches proposed by MacDiarmid et al. (2012) and

Clark et al. (2012) and uses estimates of consequence and likelihood to estimate the level of risk.

48. The risk assessment determines the level of risk to

Sediment quality

Water quality

Benthic invertebrates

Marine mammals

Seabirds

Marine reptiles

Fish

Cephalopods

Primary producers

Marine environmental classifications and sensitive sites

Cultural environment

Recreational fishing

Commercial fishing

Cumulative effects

Human health

49. The risk assessment is largely influenced by the results of the harmful substance dilution calculation which

is outlined in section 3.7 of the IA. As the exact substances which may be discharged are unknown, this

harmful substance dilution calculation assesses the risk of a number of substances which have different

degrees of aquatic ecotoxicity to provide an indication of the likely level of risk associated with the

discharge.

50. I consider that the information provided regarding the effects of the activity on the environment and existing

interests (including cumulative effects and effects that may occur in New Zealand or in the sea above or

beyond the continental shelf beyond the outer limits of the EEZ) meets the requirements of making a

reasonable effort (section 39(4)) to identify the effects of the activity (section 39(1)(d) EEZ Act), and the

information is in:


the environment and existing interests; (section 39(3)(a) EEZ Act); and

b. sufficient detail to enable the EPA and persons whose existing interests are or may be affected to

understand the nature of the activity and its effects on the environment and existing interests (section

39(3)(b) EEZ Act).


Section 39(1)(e) EEZ Act: Identify the effects of the activity on the biological diversity and

integrity of marine species, ecosystems, and processes

51. Sections 7.2.2, 7.2.3, 7.2.5 and 7.2.6 of the IA identify the effects on a range of different organisms (listed

in paragraph 46 above).

52. The results of the risk assessment for all of these organisms will provide information which could be used

to help determine the effects on biological diversity, integrity of marine species, ecosystems and

processes.

53. As outlined above the risk assessment results for these organisms was largely based on the results of the

harmful substance dilution calculation which is outlined in section 3.7 of the IA along with a consideration

of the likely distribution of these organisms.

54. I consider that the information provided identifies the effects of the activity on the biological diversity and

integrity of marine species, ecosystems, and processes, meets the requirements of making a reasonable

effort (section 39(4)) to identify the information required by section 39(1)(e) of the EEZ Act, and the

information is in:


the environment and existing interests; (section 39(3)(a) EEZ Act); and



39(3)(b) EEZ Act).

Section 39(1)(f) EEZ Act: Identify the effects of the activity on rare and vulnerable

ecosystems and habitats of threatened species

55. The description of the existing environment in Section 5 of the IA lists the species including threatened

species that may be present in the AOIs.

56. Section 5.3.2 of the IA lists the sensitive environments that may be present in the AOIs.

57. Sections 7.2.2, 7.2.3, 7.2.5 and 7.2.6 of the IA identify the effects on a range of different organisms which

include rare and vulnerable ecosystems and habitats of threatened species (listed in paragraph 46 above).

58. As noted earlier, the conclusion of these risk assessments (in sections 7.2.2, 7.2.3, 7.2.5 and 7.2.6) are

based on the results of the harmful substance dilution calculation which is outlined in section 3.7 of the IA.

59. I consider that OMV meets the requirements of making a reasonable effort (section 39(4)) to provide the

information required by section 39(1)(f) of the EEZ Act in:





39(3)(b) EEZ Act).


Section 39(1)(g) EEZ Act: Describe any consultation undertaken with persons described in

paragraph (c) and specify those who have given written approval to the activity

60. Section 4.2 of the IA describes the stakeholder engagement process and includes the groups that OMV

have engaged with, advised or sent a request to meet with. These included:

Iwi and Hapū;

Fisheries; and

Taranaki Regional Council and the Department of Conservation (DOC) offices in Taranaki and Golden

Bay.

61. The engagement process for this application has been limited to certain key target groups based on OMV’s

assessment that the effects from the discharge will be limited to a very small area and are likely to be

negligible.

62. I consider that OMV has made a reasonable effort to consult with affected and interested persons and I

consider the description of any consultation undertaken with persons whose existing interests are likely to

be adversely affected by the activity (section 39(1)(g) EEZ Act) is in:





EEZ Act).

Section 39(1)(h) EEZ Act: Include copies of any written approvals to the activity

63. No written approvals were obtained or included in the IA at the time of lodgement.

Section 39(1)(i) EEZ Act: Specify any possible alternative locations for, or methods for

undertaking, the activity that may avoid, remedy, or mitigate any adverse effects

64. The executive summary of the IA states that there are no alternative locations where this activity could

take place as the location of the MODU is determined by where hydrocarbons are expected to be located.

65. OMV’s Petroleum Exploration Permits (PEPs) require them to drill at least one well or surrender the permit.

66. Section 3.9 of the IA describes the only other alternative approach to discharges which is to collect all of

the deck drainage and to transport it onshore to be disposed of. The IA lists the disadvantages of this

approach.

67. I consider the information provided on possible alternative locations, or methods for undertaking the activity

that would avoid, remedy or mitigate the adverse effects (section 39(1)(i) EEZ Act) is in:






EEZ Act).

Section 39(1)(j) EEZ Act: Specify the measures that could be taken to avoid, remedy, or

mitigate the adverse effects identified (including measures that the applicant intends to

take)

68. The IA has listed a number of measures that will avoid, remedy or mitigate the adverse effects identified.

69. Section 3.2 of the IA describes the physical barriers that are present on a typical MODU. These include

bunding, the creation of a hazard area (where harmful substances can be used and stored and a non-

hazard area (where harmful substances are not permitted).

70. Section 3.3 of the IA outlines the systems and procedures that will be put in place to reduce risks. These

include training for staff, maintenance and routine checking of equipment, the use of spill kits and the

prohibition on helicopter refuelling on the MODU.

71. Section 3.4 of the IA outlines, how OMV intend to select the least hazardous substances necessary to

complete the job. OMV have also stated they will fully comply with the requirements of the Hazardous

Substance and New Organisms Act 1996 (HSNO) and Health and Safety at Work Act 2015 (HSWA).

72. Section 3.4.2 of the IA describes the requirements to have an Emergency Spill Response Plan (ESRP) for

the MODU which must be approved by the EPA under the D&D Regs.

73. Section 3.4.2 of the IA describes how the Safety Data Sheet (SDS) for all harmful substances will be

provided in the ESRP. SDSs contain information about the substance including information about their

ecotoxicity and environmental fate as well as information about what to do in the case of an emergency

such as a spill.

74. Appendix A of the IA outlines the conditions that OMV have suggested should apply should the marine

discharge consent be approved.

75. Section 39(5) of the EEZ Act requires the measures that must be specified under section 39(1)(j) include

any measure required by another marine management regime and any measures required by Health and

Safety at Work Act 2015.

76. Section 2.4 of the IA specifies the measures required by the following marine management regimes that

OMV suggest may avoid, remedy, or mitigate adverse effects of the activities on the environment or

existing interests:

Health and Safety at Work Act (2015)

Hazardous Substances and New Organisms Act (1996)

Resource Management Act (1991)

Crown Minerals Act 1991;


Maritime Transport Act 1994

Biosecurity Act 1993;

Marine Protection Rule: Part 131

77. I consider that OMV has provided information required by section 39(1)(j) and section 39(5) of the EEZ

Act in:



b. Sufficient detail to enable the EPA and persons whose existing interest may be affected to understand


EEZ Act).

Section 39(2)(a) EEZ Act: Description of effects of the activity on human health

78. Section 39(2)(a) of the EEZ Act and regulation 35 of the D&D Regs require that an impact assessment for

a marine discharge consent must include a description of the effects of the activity on human health.

79. Section 7.3 of the IA provides information about the impacts on human health. The risk assessment

considers the risks from direct exposure and from the consumption of fish.

80. I consider that OMV has provided information required by section 39(2)(a) of the EEZ Act and regulation

35 of the D&D Regs in:



b. Sufficient detail to enable the EPA and persons whose existing interest may be affected to understand


EEZ Act).

Conclusion

81. I have assessed the IA against all the criteria in section 39 of the EEZ Act and regulation 35 of the D&D

Regs. I conclude that OMV’s application for a marine discharge consent, referenced as EEZ100017

complies with section 38 of the EEZ Act.

82. I observe that for all matters outlined in section 39 of the EEZ Act and regulation 35 of the D&D Regs

matters, the application contains information that is in;

a. such detail as corresponds to the scale and significance of the effects that the activity may

have on the environment and existing interests (section 39(3)(a) EEZ Act); and

b. sufficient detail to enable the EPA and persons whose existing interest may be affected to

understand the nature of the activity and its effects on the environment and existing interests

(section 39(3)(b) EEZ Act).

83. 1 also consider that OMV has made a reasonable effort to identify the matters described in section 39(1)(c)

to (f) and section 39(2) pursuant to section 39(4).

Recommendation

84. It is recommended that OMV's application for a marine discharge consent, including its accompanying IA

complies with section 38 of the EEZ Act and therefore should be determined as complete under section

40 of the EEZ Act, for the reasons set out in this memorandum.

r)-Q--l/4-/I~g

Date

Senior Advisor

EEZ Applications

Decision

85. That you:

a. Agree that OMV New Zealand Ltd's application for marine

discharge consent (EEZ100017) is determined as complete

under section 40 of the EEZ Act.

Yes

20 April 2018

Richard Johnson

Date

Manager, EEZ App ications

Climate, Land & Oceans

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