Fracking should not be banned in New Zealand, Parliament's environmental watchdog says in a landmark report, but the industry is poorly regulated and guidelines must be updated before the industry expands beyond Taranaki.
The Parliamentary Commissioner for the Environment Jan Wright today released her long-awaited investigation into oil and gas drilling, including hydraulic fracking.
An interim report released in 2012 found no evidence of major environmental problems as a result of onshore drilling in New Zealand, and concluded that the risks were low if best practice was used.
The updated version said Government had a chance to "get ahead of the game" before "unconventional" fracking became widespread in New Zealand.
Dr Wright said: "At the end of my interim report... I made a commitment to evaluating whether government oversight and regulation of oil and gas production in New Zealand is adequate for managing the environmental risks of the industry.
"Even without the potential for rapid growth, I have found it to be not adequate."
Green groups had hoped for a moratorium on fracking until best practice laws were introduced.
Dr Wright said that this was unnecessary because Government had time to impose new rules before fracking activity increased.
At present, fracking was limited to Taranaki, where industry used "conventional" techniques to extract trapped gas.
Government and council regulations were inadequate for coping with potential industry expansion into other regions, where riskier, more unconventional techniques could be used.
Exploratory drilling had taken place in the East Coast Basin, near Gisborne and Dannevirke, where conditions were very different to Taranaki.
Dr Wright said the region was drier and more dependent on a number of key aquifers.
There were also major known earthquake faults in the region, and wells could be more vulnerable to damage from seismic activity and more likely to leak into groundwater.
The report said conditions in the East Coast were similar to mining regions in Australia and US, where authorities had struggled to keep up with a massive increase in fracking activity.
Dr Wright made a number of recommendations, including the development of a national policy statement on "unconventional" oil and gas drilling.
She said regional council plans needed to be amended to deal with oil and gas wells.
At present, most council plans did not distinguish between drilling for water and drilling for oil and gas.
Read the full report here: