Dealing with petrochemical companies

Nationally, petroleum exploration and extraction has increased dramatically over the past few years.

For many landowners the idea of someone knocking on your door with legal agreements to access your property can be nerve-wracking to say the least. Even in areas like Taranaki, where oil and gas activity has been commonplace for some time, the rights of landowners are not widely understood.

There is little doubt that exploration and extraction of petroleum andgas resources leads to substantialbenefits in the form of Government royalties, increased employment andthe overall economic benefits to our GDP.

However, with the benefits also come costs, as acknowledged by DavidRobinson, chief executive of thePetroleum Exploration and Production Association of New Zealand (PEPANZ).

"As an industry we cannot say that no-one will be affected by new rigs operating, of course there will be," Mr Robinson said.

"For some people there will be more traffic on the roads and more noise. I apologise for this inconvenience and disturbance and thank them for their tolerance."

When oil and gas activity is based on your farm, the effects felt by the wider community can be magnified and there can be real impacts on your farm productivity, farm value and amenity. Sometimes it can be hard to fully understand what the impacts willbe, but an appropriately negotiated access agreement goes a long way to ensure adequate compensation.

Rich Flitcroft, who heads Billings Lawyers' oil and gas sector in New Plymouth, advises farmers that it is vital to get legal advice from a practitioner with working knowledge of the Crown Minerals Act before signing anything.

"Farmers need to appreciate that they are giving property rights to petrochem companies and once granted will have great difficulty in trying to have them removed or altered," Mr Flitcroft said.

For those concerned about the costs generated by getting legal advice, he advises that, "the Crown Minerals Act requires the party seeking access to pay for the reasonable legal costs you incur in receiving advice".

Mr Robinson agrees that landowners should get as much information as they can when approached by an oil and gas company.

He encourages those entering into land access agreements to ask questions, raise concerns and have good discussions around their expectations and the expectations of the operators.

"Our industry is open and willing to share information about what we are doing and how we are doing it."

Many landowners believe they are required under the Crown Minerals Act to accept the deal proposed by the oil and gas company entering their property.

"In actual fact, the Crown Minerals Act sets down a process for negotiating access rights. The terms of access prepared by petrochem interests often request greater rights than the Crown Minerals Act otherwise would entitle," Mr Flintcroft said.

Mr Robinson also offers some commonsense advice.

"Successful land access agreements are based on honesty, openness and good communication. If both parties enter into discussions in good faith then there will be benefits for everyone involved," he said.

Federated Farmers is working with PEPANZ to update its Land Access Guidelines for Oil and Gas, but warns these guidelines are not a legal opinion and do not address individual circumstances.

The most important thing is that landowners understand the conditions and potential outcomes of any agreement they sign.

Farmers should always obtain legal advice, including by calling 0800 327 646.