An environmental timebomb is ticking in the Nevis Valley.
A London-based mining company, Xtract Energy Plc, has been granted a mineral exploration permit covering 10,450ha of the Nevis Valley in Central Otago, including the Nevis, Bannockburn and Lorn survey districts.
Crown Minerals group manager Richard Garlick granted the five-year permit to Xtract Energy Plc, which also has a base in Australia, on May 25, 2007.
The permit gives Xtract exclusive rights to explore and test for oil shale, and permission to perform a follow-up programme involving the drilling of at least 15 holes.
Because the permit was for exploration only, no resource consent was required from the Otago Regional Council or the Central Otago District Council.
However, Central Otago Mayor Malcolm Macpherson said a resource consent application would be "enormously controversial" should the company wish to start mining oil shale.
Oil shaleFine-grained sedimentary rock, containing the tarry compound kerogen, which can be processed to extract hydrocarbons (used as fuels).
Xtract Energy is investigating a new Australian-developed technology to extract the oil from shale in enclosed vessels.
Nevis has been investigated previously, but was economically marginal.
Oil shale is found near the surface, but drilling is required as a quality control to ensure the shale on the surface is of the same quality as shale found deeper.
Xtract Australian asset management director Dr John Shirley told the Mountain Scene "hundreds of millions of tonnes" of oil shale was believed to be in the Nevis, which could lead to a "multibillion-dollar development" in the area.
Gaining resource consent for a development of that scale would likely divide the district. Dr Macpherson said two processes could be used to extract oil shale, should testing be favourable.
The drilling of holes would not require "too much" surface disturbance.
"That wouldn't be terribly difficult to consent," Dr Macpherson said.
"However, if they wanted to strip mine . . . if anyone ever proposed that, it would beenormously controversial."
Professor Dave Craw, of the University of Otago's geology department, said the Nevis was part of the coal-bearing strata found all through Central Otago.
It was between 10 million and 20-million-years-old.
While the strata was found throughout the district, the Nevis was the only area with "a significant amount of oil shale".
The oil shale had in the past been found to be marginally economic to extract, but if Xtract had more efficient new technology, "that's a different matter", he said.
If the results of Xtract's planned drilling were favourable and oil shale further below was of a good quality, "mining the oil shale would be extremely invasive", Prof Craw said.
"What you would want to know [first] is whether there's enough hydrocarbon potential in the oil shale to make it worth extracting.
"If the answer is no, then the problem disappears. But if the answer is yes . . . [Dr Macpherson] is right. That [saying it would be enormously controversial] is the understatement of the year.
"At this stage I don't think it's worth . . . worrying about until they've drilled a few holes, using somebody else's money, and found out if it's worth going any further. If it's worth it . . . there's going to be controversy."
Fish and Game Otago is seeking amendments to the Conservation Act to increase the protection over the Nevis Valley and river, while the CODC recently reviewed its landscape values and concluded the Nevis was an outstanding natural and highly sensitive landscape.
Fish and Game Otago chief executive Niall Watson said while it was "safe to say" the exploration permit issued to Xtract did not seem to houseany "serious environmental threats", the concern was over the size of the area being investigated.
"If that exploration results in identification of a potential coal mine . . . then that would clearly be incompatible with the maintenance of the conservation and recreation values in the valley.
"Mining, per se, is not the problem. It's the scale of the proposal which appears to be the [issue].
"There was some mention of oil shale being 75m deep and so it seems like a large-scale operation that might be on the same [level] as a large-scale lignite extraction.
"It doesn't seem to me to fit with the maintenance of the existing valley. I would say it would be at least as contentious as wind farms, if not more contentious because of the scale of the operation.
"It's difficult to know whether this is pie in the sky or serious. . . I think it's probably early days to get overly concerned about it."
