The Auckland Council has approved oil exploration permits off the city's West Coast in a submission to the Government.
However, it wants the boundaries set 12 nautical miles offshore to protect the endangered Maui dolphin and the risk from any oil spill.
The Government is looking to allocate petroleum exploration permits in three basins offshore Auckland at the end of next year.
The basins are the Reinga Northland Basin (85,009sq km), New Caledonia Basin (49,051sq km) and Taranaki (55,0323sq km).
The permits allow for exploration at least six nautical miles offshore.
Under the Resource Management Act, the council regulates and assesses the environmental effects of any mining activity.
In a report considered by councillors today, officers said there was a significant potential for economic benefits for Auckland if oil or gas production wells were developed off the city's coast.
"Oil and gas exploration has environmental risks that are of low likelihood but high consequence.
"In Auckland this relates principally to Maui's dolphins and to drilling well blowouts,'' the report said.
Maui dolphins are found off Auckland's west coast adjacent to the block areas. They are on the verge of extinction with an estimated 55 dolphins remaining.
Officers said the Maui dolphins were generally found close to shore and extending the oil exploration boundaries to 12 nautical miles would protect their environment.
Councillor Wayne Walker said he was opposed in principle to drilling for oil off the coast because the risk was huge and the ability to clean up a spill was in question.
"The impact on the New Zealand economy would be nothing short of devastating.
"Having said that I think our submission is pragmatic. It is crucial to protect the habitat of the Maui dolphin,``Mr Walker said.
Consultation on next year's block offers closes today.
The areas will then be finalised and the tender round for bids runs from April to September next year. Permit grants - running for up to 15 years - are expected to be announced in December next year.
Oil and gas activities are managed under the Crown Minerals Act.
Last year, oil was New Zealand's fourth largest export product - after dairy, meat and wool - with a value of more than $2 billion. The Government received about $400 million in royalties and $300 million in tax.