Mobil Oil New Zealand Ltd’s plans to deal with the remnant diesel and petrol pollution underground could also cost the council money.
After operating at the site for nearly 70 years, Mobil closed its Fryatt St bulk storage terminal in 1995, progressively removing above-ground infrastructure until 2007.
Mobil leases the site from Chalmers Properties, a subsidiary of Port Otago, and it is obliged to hand the port company back a clean site — either remediated, or with a consent for contamination under way.
Environmental site assessments have found residual contaminants underground.
Contaminants were found in groundwater up to 40m south of the site.
Accordingly, the company has applied to the Otago Regional Council for resource consent to "passively discharge" hazardous substances into land in such a way that could result in the pollution entering water.
Neither the company, the regional council, nor the city council, view the effects on the environment as more than minor.
Nevertheless, the city council has opposed consent being granted.
Infrastructure and development general manager Simon Drew said, in the city council submission, recent monitoring of groundwater at the site identified hydrocarbon concentrations exceeding the Australian and New Zealand guidelines for fresh and marine water quality.
There was a risk of adverse effects on the environment if contaminants leached into stormwater infrastructure and the harbour.
Mr Drew said the mitigation measures proposed did not do enough to manage the risk and implementing the company’s environmental management plan would have costs to the council, which the council did not agree to.
It opposed the consent being granted, he said.
It also wanted the environmental management plan for the site to be expanded to include parts of Halsey St that could be affected.
Mobil’s terminal closure report from last year detailed the potential risks posed by the petrochemical contamination.
Labourers doing underground excavation work could potentially be exposed, but appropriate health and safety controls could be in place to manage that risk, it said.
Soil and groundwater disturbed during earthworks could be appropriately managed.
Any risk of vapour affecting indoor air in buildings built in the area could be managed through appropriate building design such as ventilation, the report said.
The underground contamination was "unlikely to migrate beyond the current extent and ... unlikely to pose a future risk to Otago Harbour", the company said.
A hearing was set for the end of the month.
Port Otago chief executive Kevin Winders said the port company was keen to see the matter resolved.
There were no fixed plans for the site at present, but it presented a range of opportunities for the port company, he said.
Aside from the former Mobil terminal site, the port owned a lot of the land in the general area, near the Leith wharf and X/Y sheds.
"There’s a great opportunity to utilise that [site] for port activities," Mr Winders said. "Or, if we get a commercial opportunity, we could take that opportunity as well.
"We’ve got options, but we are waiting for the site to be handed back to us so we can get on with it."
