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Government's latest block offer would open up a large part of the West Coast for prospecting, in an area which included the Victoria Forest Park.
The 200,000ha park near Reefton does not have Schedule 4 status and is categorised as a forest park, which is a lower ranking than a National Park.
Energy Minister Simon Bridges has been criticised in the House by the Green Party today for being unaware that the conservation park was within the block offer site.
Greens energy spokesman Gareth Hughes said: "It's unacceptable that the Energy Minister has never heard of the Victoria Forest Park, the conservation area that he is now hoping will be exploited for oil and gas."
But Mr Key said the minister was not required to take the park into account.
"My understanding from officials is that his officials didn't advise him that the forest park was included.
"The reason they didn't was because they didn't think it was necessary to do so. There are already 58 mining permits on the piece of land already."
He said 12 of these permits were granted by the previous Labour Government. Neither iwi or the Department of Conservation objected to prospecting in the region.
"His legal requirements are whether its Schedule 4 or whether it's a National Park, not a forest park."
Energy Minister Simon Bridges accused the Greens of "shifting the goalposts" for criticising oil exploration within non-Schedule 4 land.
He said: "We consulted with iwi, Ngai Tahu, also with the councils and the Department of Conservation and none of them had any concerns about this particular area."
The exploration permit would allow a mining company to prospect in the region or undertake low-level drilling limited to an area of around 4sq km.
Any significant drilling would require resource consent and an access agreement from the Department of Conservation.
DOC said the park contained "untouched landscapes with stunning river, lake and mountain scenery, as well as pristine beech forest."
It also featured a number of ecological areas and a "wildlife corridor".
It has been mined since the 19th century and there is a 230 hectare open cast gold mine within the park, though this is scheduled to close next year because of the falling price of gold.
Labour MP for the West Coast Damien O'Connor said there was nothing new about mining within the forest park.
"Victoria Forest Park has within its area two very big mines and so none of this was a surprise."
But he said the minister's failure to do his homework on the region "had stirred a hornet's nest unnecessarily that the mining industry now has to deal with".
The Department of Conservation said its records showed more than 40 mining-related permits had been approved in the last 20 years within the park's boundaries, most of them for coal or gold.
The Ministry of Business, Innovation and Employment asked for DOC's advice on the block offer.
The department told the ministry that prospecting, exploration and mining was permitted because it was not Schedule 4 land.
It also said that the conservation values of the land would need to be considered in relation to future access agreements.
There are around 20 forest parks across the country, which are designed to protect catchments of forested mountain ranges.
- By Isaac Davison of the New Zealand Herald