In a scathing Environment Court decision, the Environmental Protection Authority has been ordered to pay $110,000 to an oil and gas company it prevented from disconnecting a floating production station from the Tui Oil Field off the coast of Taranaki.
The EPA issued abatement notices to stop BW Offshore removing the Umuroa from the field early last year, saying the company could not rely on a 2017 EPA ruling allowing them to do so.
The regulator was concerned unplugging flowlines connecting the vessel to Tui risked spilling oil into the ocean.
The Umuroa was contracted to Tui operator Tamarind Taranaki which collapsed in December 2019, leaving the Government with an estimated $155 million bill to decommission the field.
Initial legal wrangling failed to overturn the abatement notices and eventually, a two-day appeal was heard in the Environment Court which cancelled them in October.
In the same month the Umuroa went into voluntary liquidation.
BW Offshore said it had cost $31m to have the vessel at Tui in 2020 while it missed out on $46m in potential earnings elsewhere.
Tamarind Resources' FPSO Umuroa off the Taranaki coast. Photo / Tamarind Resources
In November, the company made an application for court costs against the EPA of almost $300,000.
It argued the basis for the EPA abatement notices was without merit or substance.
"The EPA did not file any expert evidence to support its arguments, in circumstances where it would reasonably have been expected to do so if there had been a proper basis for the abatement notices," BW Offshore said.
The EPA submitted that no order for costs against it should be made against it.
"As a regulatory consent authority the EPA has performed it duties properly and acted reasonably, and the appeal arose out of a genuine dispute about legal rights - the effect of the 2017 ruling - which was in the interests of the parties to resolve," it argued.
In his decision, Judge Smith noted that it was unusual to award costs against a regulatory body, but that the EPA's actions displayed a level of blame that met the threshold for this.
"The EPA's case demonstrated a narrow focus, the EPA did not adapt to the changes that occurred between issuing of the abatement notices and the hearing," Judge Smith said.
"In particular detailed evidence as to the security of the field was provided to the EPA well before this hearing."
Judge Smith said the EPA did not fulfil its role properly.
"No experts were called by the EPA, and the Profac report relied on by the EPA had not been reviewed in light of expert evidence from BW Offshore.
"As noted in the court's decision there was no evidence advanced, either in the abatement notices or any time prior or since, that there are [environmental] effects from the disconnection that are more than minor."
The Tui Oil Field sits off the coast of Taranaki. Photo / Mike Scott
New Plymouth mayor Neil Holdom, whose district's coastline would potentially have been affected by any oil spill, however, backed the EPA stance.
"There was widespread support for the EPA move because we all understood that they were exercising caution and looking to mitigate perceived environmental risk.
"We would rather they overreached and protected our environment and were very conservative than going with what companies are asking them to do to protect their own future profits."
Taranaki Chamber of Commerce chief executive Arun Chaudhari took a more dim view of the EPA's actions.
"The EPA didn't do its due diligence properly and had a report that was not really reliable and BW Offshore shouldn't have had to sink in so much money when it was actually another company that went bankrupt.
"BW Offshore has been punished for no real fault of theirs really."
In November, the Ministry of Innovation, Business and Employment, which is now overseeing the decommissioning of the Tui, signed an agreement with BW Offshore to remove the Umuroa from the field. The vessel is expected to leave mid-winter this year.
