The interim report on fracking by the Parliamentary Commissioner for the Environment, Dr Jan Wright, has provided an analysis of the issues around the controversial technology, and a cautious conclusion that the environmental risks can be managed - with the provisos of operational best practice and effective regulation.
Fracking, or hydraulic fracturing, involves injecting fluid containing sand and chemicals at high pressure to fracture rock to increase oil and gas extraction.
The process has faced opposition and calls for further scrutiny in many places in the world where it is being used. In New Zealand, it has been used in Taranaki for 23 years and could be used in Southland, where large gas reserves in shale (clay) deposits in the Waiau basin have been identified.
Dr Wright's investigation came after requests from MPs, councils and the New Zealand public. The report has not appeased environmentalists, who are upset she believes a moratorium on the issue is not currently justified. But it has been welcomed by the National-led Government, which has promoted oil and gas exploration and production, and mining in general, as the cornerstone of economic recovery and employment.
While Dr Wright has not closed the door on the technology, neither has she left it wide open. Her report states she is not confident operational best practices are being implemented and enforced in this country and is therefore conducting a further investigation into such regulation, and will not make formal recommendations until then.
Her interim findings in relation to government regulation show the current system "is complex and fragmented", meaning important issues can be overlooked, that too much trust is being put on the drilling companies to do "the right thing" in terms of health and safety as well as the environment, and that a "social licence" for fracking has to be earned, as communities are divided over the issue.
She has also outlined four areas of oil and gas production that must be effectively managed in order to prevent contaminants (the chemicals in fracking fluid, salty water deep underground, or the oil and gas themselves) finding their way into groundwater aquifers.
Those aspects are location, well design and construction, surface spills and leaks, and waste disposal. She states if they are not well-managed: "The potential for important aquifers to be contam- inated as a result of fracking is very real."
She finds "the same aspects of the process are critical" when it comes to the potential for triggering earthquakes. The report also briefly examines the issue of climate change and the debate over fossil fuels, but draws no conclusions.
One clear warning Dr Wright does make is the scale and pace of change - from exploratory drilling to production - "requires forethought now". Certainly, given the increased interest in the process from oil and gas companies and in light of the damning report from the Royal Commission on the Pike River Coal Mine tragedy, which slammed management practices and ineffective government regulation - it is reassuring such issues are being highlighted now.
The Government is reviewing health and safety legislation in the light of the Pike River tragedy, which claimed 29 lives. And while Energy and Resources Minister Phil Heatley and Environment Minister Amy Adams welcomed Dr Wright's findings, Ms Adams said she had instructed her ministry to produce guidelines on the roles of central and local government regarding control of fracking.
The economic opportunities provided by mining and drilling our natural resources are significant, and therefore the process of fracking deserves to be fully explored.
The Government holds up Taranaki as an example of the economic rewards on offer from oil and gas, citing $2 billion contributed to gross domestic product, $400 million in annual royalties, $300 million from company taxes and more than 5000 jobs.
Dr Wright says she hopes her report will be "a helpful contribution to the public debate".
It has certainly not ended that debate, by providing conclusive evidence either way, which is possibly what some were hoping for. Her next report, due next year, which will contain recommendations on the regulation of fracking, will therefore be eagerly anticipated.
