Cheal Petroleum Ltd Cheal Production Station Monitoring Programme Annual Report Technical Report

Transcription

1 Cheal Petroleum Ltd Cheal Production Station Monitoring Programme Annual Report Technical Report Taranaki Regional Council ISSN: (Online) Private Bag 713 Document: (Word) STRATFORD Document: (Pdf) November 2017

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3 Executive summary Cheal Petroleum Ltd (the Company), a subsidiary of TAG Oil New Zealand Ltd, operates a petrochemical production station located on Mountain Road at Ngaere, in the Waingongoro catchment. The Cheal Production Station processes oil and gas from the Cheal group of wellsites. This report for the period July 2016 to June 2017 describes the monitoring programme implemented by the Taranaki Regional Council (the Council) to assess the Company s environmental and consent compliance performance during the period under review. The report also details the results of the monitoring undertaken and assesses the environmental effects of the Company s activities. The Company holds three resource consents in relation to the Cheal Production Station, which includes a total of 42 conditions setting out the requirements that the Company must satisfy. The Company holds one consent to take and use groundwater for water flooding purposes, one consent to discharge stormwater and treated waste water onto land in circumstances where it may subsequently enter an unnamed tributary of the Mangawharawhara Stream, and one consent to discharge emissions related to production activities into the air at the site. During the monitoring period, Cheal Petroleum Ltd demonstrated an overall high level of environmental performance. The Council s monitoring programme for the year under review included seven inspections, six water samples collected for physicochemical analysis, and two ambient air quality analyses. Stormwater system inspections showed that discharges from the sites complied with consent conditions. Receiving water inspections and sampling showed that the discharges were not causing any adverse effects on the tributary of the Mangawharawhara Stream at the time of monitoring. There were no adverse effects on the environment found as a result of the exercise of the air discharge consent. Ambient air quality monitoring at the site showed that levels of carbon monoxide, combustible gases, PM 10 particulates and nitrogen oxides were all below levels of concern at the time of sampling. No offensive or objectionable odours were detected beyond the boundary during inspections, and there were no complaints in relation to air emissions from the site. During the year, the Company demonstrated a high level of both environmental performance and administrative compliance with the resource consents. For reference, in the year, 74% of consent holders in Taranaki monitored through tailored compliance monitoring programmes achieved a high level of environmental performance and compliance with their consents, while another 21% demonstrated a good level of environmental performance and compliance with their consents. In terms of overall environmental and compliance performance by the consent holder over the last several years, this report shows that the consent holder s performance remained at a high level in the year under review. This report includes recommendations for the year.

4 i Table of contents Page 1 Introduction Compliance monitoring programme reports and the Resource Management Act Introduction Structure of this report The Resource Management Act 1991 and monitoring Evaluation of environmental and administrative performance Process description Resource consents Water abstraction permit Water discharge permit Air discharge permit Wellsite consents Monitoring programme Introduction Programme liaison and management Site inspections Chemical sampling 8 2 Results Water Inspections Results of discharge monitoring Results of receiving environment monitoring Summary of consented water abstractions reported by Cheal Petroleum Air Inspections Results of receiving environment monitoring Summary of flaring volumes reported by the Company Investigations, interventions, and incidents 18 3 Discussion Discussion of site performance Environmental effects of exercise of consents Evaluation of performance Recommendations from the Annual Report 23

5 ii 3.5 Alterations to monitoring programmes for Recommendation 24 Glossary of common terms and abbreviations 25 Bibliography and references 27 Appendix I Resource consents held by Cheal Petroleum Ltd Appendix II Air monitoring report List of tables Table 1 Consents for production activities at wellsites associated with Cheal Production Station 7 Table 2 Results for discharge monitoring from the Cheal Production Station (TRC site IND001056) 12 Table 3 Results of receiving environment monitoring in relation to the Cheal Production Station 13 Table 4 Results of carbon monoxide and LEL monitoring at Cheal Production Station 15 Table 5 Daily averages of PM 10 results from monitoring at Cheal Production Station 16 Table 6 Summary of performance for consent Table 7 Summary of performance for consent Table 8 Summary of performance for consent Table 9 Evaluation of environmental performance over time 22 List of figures Figure 1 Location of the Cheal Production Station and associated sampling sites 12 Figure 2 Daily groundwater abstraction under consent Figure 3 Air monitoring sites at Cheal Production Station for Figure 4 Ambient CO levels in the vicinity of the Cheal Production Station 15 Figure 5 PM10 concentrations (µg/m³) at the Cheal Production Station 16 Figure 6 Summary of monthly gas flaring volumes at Cheal Production Station 17 List of photos Photo 1 Cheal Production Station 4

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7 1 1 Introduction 1.1 Compliance monitoring programme reports and the Resource Management Act Introduction This report is for the period July 2016 to June 2017 by the Taranaki Regional Council (the Council) on the monitoring programme associated with resource consents held by Cheal Petroleum Ltd (the Company). The Company operates a petrochemical production station situated on Mountain Road at Ngaere, in the Waingongoro catchment. The report includes the results and findings of the monitoring programme implemented by the Council in respect of the consents held by the Company that relate to abstractions and discharges of water within the Waingongoro catchment, and the air discharge permit to cover emissions to air from the site. One of the intents of the Resource Management Act 1991 (RMA) is that environmental management should be integrated across all media, so that a consent holder s use of water, air, and land should be considered from a single comprehensive environmental perspective. Accordingly, the Council generally implements integrated environmental monitoring programmes and reports the results of the programmes jointly. This report discusses the environmental effects of the Company s use of water, land and air, and is the eighth combined annual report by the Council for the Cheal Production Station Structure of this report Section 1 of this report is a background section. It sets out general information about: consent compliance monitoring under the RMA and the Council s obligations; the Council s approach to monitoring sites though annual programmes; the resource consents held by the Company/companies in the Waingongoro catchment; the nature of the monitoring programme in place for the period under review; and a description of the activities and operations conducted at the Cheal Production Station and associated sites. Section 2 presents the results of monitoring during the period under review, including scientific and technical data. Section 3 discusses the results, their interpretations, and their significance for the environment. Section 4 presents recommendations to be implemented in the monitoring year. A glossary of common abbreviations and scientific terms, and a bibliography, are presented at the end of the report The Resource Management Act 1991 and monitoring The RMA primarily addresses environmental effects which are defined as positive or adverse, temporary or permanent, past, present or future, or cumulative. Effects may arise in relation to: a. the neighbourhood or the wider community around an activity, and may include cultural and socialeconomic effects; b. physical effects on the locality, including landscape, amenity and visual effects; c. ecosystems, including effects on plants, animals, or habitats, whether aquatic or terrestrial;

8 2 d. natural and physical resources having special significance (for example recreational, cultural, or aesthetic); and e. risks to the neighbourhood or environment. In drafting and reviewing conditions on discharge permits, and in implementing monitoring programmes, the Council is recognising the comprehensive meaning of effects inasmuch as is appropriate for each activity. Monitoring programmes are not only based on existing permit conditions, but also on the obligations of the RMA to assess the effects of the exercise of consents. In accordance with Section 35 of the RMA, the Council undertakes compliance monitoring for consents and rules in regional plans, and maintains an overview of the performance of resource users and consent holders. Compliance monitoring, including both activity and impact monitoring, enables the Council to continually re-evaluate its approach and that of consent holders to resource management and, ultimately, through the refinement of methods and considered responsible resource utilisation, to move closer to achieving sustainable development of the region s resources Evaluation of environmental and administrative performance Besides discussing the various details of the performance and extent of compliance by the Company, this report also assigns them a rating for their environmental and administrative performance during the period under review. Environmental performance is concerned with actual or likely effects on the receiving environment from the activities during the monitoring year. Administrative performance is concerned with the Company s approach to demonstrating consent compliance in site operations and management including the timely provision of information to Council (such as contingency plans and water take data) in accordance with consent conditions. Events that were beyond the control of the consent holder and unforeseeable (that is a defence under the provisions of the RMA can be established) may be excluded with regard to the performance rating applied. For example loss of data due to a flood destroying deployed field equipment. The categories used by the Council for this monitoring period, and their interpretation, are as follows: Environmental Performance High: No or inconsequential (short-term duration, less than minor in severity) breaches of consent or regional plan parameters resulting from the activity; no adverse effects of significance noted or likely in the receiving environment. The Council did not record any verified unauthorised incidents involving significant environmental impacts and was not obliged to issue any abatement notices or infringement notices in relation to such impacts. Good: Likely or actual adverse effects of activities on the receiving environment were negligible or minor at most. There were some such issues noted during monitoring, from self reports, or in response to unauthorised incident reports, but these items were not critical, and follow-up inspections showed they have been dealt with. These minor issues were resolved positively, co-operatively, and quickly. The Council was not obliged to issue any abatement notices or infringement notices in relation to the minor non-compliant effects; however abatement notices may have been issued to mitigate an identified potential for an environmental effect to occur. For example: - High suspended solid values recorded in discharge samples, however the discharge was to land or to receiving waters that were in high flow at the time; - Strong odour beyond boundary but no residential properties or other recipient nearby.

9 3 Improvement required: Likely or actual adverse effects of activities on the receiving environment were more than minor, but not substantial. There were some issues noted during monitoring, from self reports, or in response to unauthorised incident reports. Cumulative adverse effects of a persistent minor non-compliant activity could elevate a minor issue to this level. Abatement notices and infringement notices may have been issued in respect of effects. Poor: Likely or actual adverse effects of activities on the receiving environment were significant. There were some items noted during monitoring, from self reports, or in response to unauthorised incident reports. Cumulative adverse effects of a persistent moderate non-compliant activity could elevate an improvement required issue to this level. Typically there were grounds for either a prosecution or an infringement notice in respect of effects. Administrative performance High: The administrative requirements of the resource consents were met, or any failure to do this had trivial consequences and were addressed promptly and co-operatively. Good: Perhaps some administrative requirements of the resource consents were not met at a particular time, however this was addressed without repeated interventions from the Council staff. Alternatively adequate reason was provided for matters such as the no or late provision of information, interpretation of best practical option for avoiding potential effects, etc. Improvement required: Repeated interventions to meet the administrative requirements of the resource consents were made by Council staff. These matters took some time to resolve, or remained unresolved at the end of the period under review. The Council may have issued an abatement notice to attain compliance. Poor: Material failings to meet the administrative requirements of the resource consents. Significant intervention by the Council was required. Typically there were grounds for an infringement notice. For reference, in the year, 74% of consent holders in Taranaki monitored through tailored compliance monitoring programmes achieved a high level of environmental performance and compliance with their consents, while another 21% demonstrated a good level of environmental performance and compliance with their consents. 1.2 Process description The Cheal-A wellsite was first established on Mountain Road at Ngaere by NZOG Services Ltd in Austral Pacific developed the neighbouring Cheal-B wellsite in July 2006 and started construction of the Cheal Production Station adjacent to the Cheal-A wellsite in late The production station was commissioned in August 2007 and the tie-in to the Cheal-B pipeline was complete in December The owners of the Cheal facilities, including Austral Pacific Energy (NZ) Ltd, were placed in receivership in April The consents were transferred to Cheal Petroleum Ltd in October 2009 and the site is now operated by TAG Oil. The production station continued to operate during this transition. Consents for Austral Pacific s Cardiff wellsite on Brookes Road were transferred to Cheal Petroleum in December This site is now known as Cheal-C and is operated by TAG Oil as part of the Cheal group. Consents were granted to Cheal Petroleum for construction of three additional exploration wellsites in the area, being Cheal-D, Cheal-E and Cheal-G. Construction and commissioning of a multiphase pipeline from Cheal-E to the Cheal Production Station was undertaken in the year. The production station processes oil and gas from the Cheal wellsites. Some gas is used to power the site and to generate electricity for supply. Construction of a new gas processing plant and pipelines were completed in the year to process raw inlet gas to New Zealand gas specifications for delivery on

10 4 the First Gas pipeline system for domestic use. Stormwater from the Cheal-A wellsite and Production Station is collected in a large skimmer pit in the northwest corner of the site prior to discharge. Photo 1 Cheal Production Station 1.3 Resource consents Water abstraction permit Section 14 of the RMA stipulates that no person may take, use, dam or divert any water, unless the activity is expressly allowed for by a resource consent or a rule in a regional plan, or it falls within some particular categories set out in Section 14. Cheal Petroleum Ltd holds water permit to take and use groundwater for water flooding purposes. This permit was issued by the Council on 8 September 2016 under Section 87(d) of the RMA. It is due to expire on 1 June There are 17 special conditions attached to this consent. Condition 1 requires a bore completion report is provided prior to exercising the consent. Condition 2 states that the bore may not tap more than one aquifer. Conditions 3 to 6 deal with the construction, protection and identification of the bore. Condition 7 requires a water sample to be collected from the well. Conditions 8 to 14 deal with the rate of taking, provision of water take and groundwater records, and accuracy and accessibility of the measuring equipment. Condition 15 requires the adoption of the best practicable option to minimise adverse environmental effects. Conditions 16 and 17 are lapse and review provisions. The permit is attached to this report in Appendix I. This summary of consent conditions may not reflect the full requirements of each condition. The consent conditions in full can be found in the resource consents which are appended to this report.

11 Water discharge permit Section 15(1)(a) of the RMA stipulates that no person may discharge any contaminant into water, unless the activity is expressly allowed for by a resource consent or a rule in a regional plan, or by national regulations. Cheal Petroleum Ltd holds water discharge permit to discharge treated stormwater and produced water from hydrocarbon exploration and production operations at the Cheal-A wellsite and Cheal Production Station, onto and into land in circumstances where it may enter an unnamed tributary of the Mangawharawhara Stream. This permit was issued by the Council on 10 November 2011 under Section 87(e) of the RMA. Changes to the conditions were made on 29 April 2013 upon application by Cheal Petroleum to allow for an increased stormwater catchment area. It is due to expire on 1 June There are 13 special conditions attached to this consent. Condition 1 requires the consent holder to exercise the best practicable option to prevent or minimise effects. Condition 2 states the size limit of the catchment from which stormwater may be discharged. Condition 3 requires the consent holder to advise the Council seven working days prior to commencement of any site works or drilling operation. Condition 4 requires the consent holder to maintain a contingency plan to the satisfaction of the Council, detailing measures and procedures to prevent, remedy and mitigate environmental effects of spillage or discharge. Condition 5 requires management and maintenance of the stormwater system in accordance with information submitted in support of the consent. Condition 6 requires all stormwater and produced water to be directed for treatment through the stormwater treatment system before being discharged. Conditions 7 and 8 set requirements on the minimum size and design of the skimmer pits. Condition 9 outlines standards that the constituents in the discharge shall meet. Condition 10 states that the discharge shall not give rise to an increase in temperature of more than two degrees Celsius after allowing for a mixing zone of 25 metres. Condition 11 states the effects that shall not occur in the receiving water as a result from the discharge, after allowing for a 25 metre mixing zone. Condition 12 requires the consent holder to advise the Council in writing at least 24 hours prior to the reinstatement if the site, which shall be carried out so as to minimise adverse effects on stormwater quality. Condition 13 provides for review of the consent. The permit is attached to this report in Appendix I. This summary of consent conditions may not reflect the full requirements of each condition. The consent conditions in full can be found in the resource consents which are appended to this report Air discharge permit Section 15(1)(c) of the RMA stipulates that no person may discharge any contaminant from any industrial or trade premises into air, unless the activity is expressly allowed for by a resource consent, a rule in a regional plan, or by national regulations. Cheal Petroleum Ltd holds air discharge permit to discharge emissions into the air during flaring and to discharge miscellaneous emissions from tank vents and generators arising from hydrocarbon

12 6 production activities including emergency situations and well workovers at the Cheal-A wellsite and Cheal Production Station. This permit was issued by the Council on 10 November 2011 under Section 87(e) of the RMA and is due to expire on 1 June There are 12 special conditions attached to this consent. Condition 1 requires the consent holder to adopt the best practicable option to prevent or minimise effects. Condition 2 and 3 require the consent holder to keep logs of flaring and to submit a monthly flaring report to the Council. Condition 4 requires provision to the Council of an annual report detailing activities and measures undertaken relating to flaring. Condition 5 requires the consent holder to keep, and make available to the Council, a record of all smokeemitting incidents. Condition 6 states that the consent holder shall make available upon request an analysis of a typical gas and crude oil stream from the wells. Condition 7 stated that there shall be no alterations to plant equipment or processes which may alter the nature of the flare without consulting the Council. Condition 8 requires the Council to be notified if a flaring event is expected to exceed five minutes duration. Condition 9 requires the consent holder to control all emissions of the specified contaminants in order that the maximum ground level concentration at the site boundary measured under ambient conditions does not exceed relevant ambient air quality standards. Condition 10 states that the consent holder shall control emissions to the atmosphere, other than those specified in condition 9, in order that they do not cause hazardous, noxious, dangerous, offensive or objectionable effect at or beyond the wellsite boundary. Condition 11 requires all permanent tanks used as hydrocarbon storage tanks to be fitted with vapour recovery systems. Condition 12 is a review provision. The permit is attached to this report in Appendix I. This summary of consent conditions may not reflect the full requirements of each condition. The consent conditions in full can be found in the resource consents which are appended to this report Wellsite consents The Company also holds consents for production activities at wellsites associated with the Cheal Production Station. A summary of these consents is provided in Table 1. Production activities at Cheal-A are covered under the production station consents.

13 7 Table 1 Consents for production activities at wellsites associated with Cheal Production Station Wellsite Consent number Purpose Issue date Expiry To discharge emissions to air during flaring from well workovers and in emergency situations and miscellaneous emissions associated with production activities at the Cheal-B wellsite 23/3/ Cheal-B To discharge treated stormwater and treated produced water from hydrocarbon exploration and production operations at the Cheal-B wellsite onto and into land in the vicinity of the Ngaere Stream in the Patea catchment 23/3/ To discharge treated stormwater, treated produced water and treated wastewater at the Cheal-C wellsite onto and into land in the vicinity of an unnamed tributary of the Mangawharawhara Stream in the Waingongoro catchment 22/7/ Cheal-C To take and use water from an unnamed tributary of the Mangawharawhara Stream for hydrocarbon exploration activities at the Cheal-C wellsite 22/7/ To discharge emissions to air associated with production activities from up to 10 wells at the Cheal- C wellsite, including: flaring associated with emergencies (including operational emergencies) and maintenance; emissions from gas treatment or production plants; and minor emissions from other miscellaneous activities 11/6/ To discharge emissions to air associated with hydrocarbon producing wells at the Cheal-D wellsite 5/6/ Cheal-D To discharge treated stormwater, treated surplus drilling water and treated produced water from hydrocarbon exploration and production operations at the Cheal-D wellsite, onto land and into an unnamed tributary of the Kahikatea Stream 2/4/ To discharge emissions to air associated with hydrocarbon producing wells at the Cheal-E wellsite 1/11/ Cheal-E To discharge treated stormwater, treated surplus drilling water and treated produced water from hydrocarbon exploration and production operations at the Cheal-E wellsite, onto land and into an unnamed tributary of the Ngaere Stream 6/5/ To discharge emissions to air associated with hydrocarbon producing wells at the Cheal-G wellsite 5/2/ Cheal-G To discharge treated stormwater, treated surplus drilling water and treated produced water from hydrocarbon exploration and production operations at the Cheal-G wellsite, onto land where it may enter the Tuikonga Stream 23/8/

14 8 1.4 Monitoring programme Introduction Section 35 of the RMA sets obligations upon the Council to gather information, monitor and conduct research on the exercise of resource consents within the Taranaki region. The Council is also required to assess the effects arising from the exercising of these consents and report upon them. The Council may therefore make and record measurements of physical and chemical parameters, take samples for analysis, carry out surveys and inspections, conduct investigations and seek information from consent holders. The monitoring programme for the Cheal Production Station consisted of three primary components. Biomonitoring of the tributary of the Mangawharawhara Stream is not undertaken in relation to activities at the production station due to the lack of a suitable upstream control site. The point of entry for any discharge that reaches the tributary is immediately below the ponds at Ngaere Gardens. Sampling and visual inspection of the stream are the main means of receiving environment monitoring Programme liaison and management There is generally a significant investment of time and resources by the Council in: ongoing liaison with resource consent holders over consent conditions and their interpretation and application; in discussion over monitoring requirements; preparation for any consent reviews, renewals or new consent applications; advice on the Council's environmental management strategies and content of regional plans; and consultation on associated matters Site inspections The Cheal Production Station was visited seven times during the monitoring period. With regard to consents for the abstraction of or discharge to water, the main points of interest were plant processes with potential or actual discharges to receiving watercourses, including contaminated stormwater and process wastewaters. Air inspections focused on plant processes with associated actual and potential emission sources and characteristics, including potential odour, dust, noxious or offensive emissions. Sources of data being collected by the Company were identified and accessed, so that performance in respect of operation, internal monitoring, and supervision could be reviewed by the Council. The neighbourhood was surveyed for environmental effects Chemical sampling The Council undertook sampling of both the discharges from the site and the water quality upstream and downstream of the discharge point and mixing zone. The combined Cheal Production Station/Cheal-A wellsite discharge was sampled twice, and the samples analysed for chloride, hydrocarbons, suspended solids, temperature and ph. The unnamed tributary of the Mangawharawhara Stream was sampled concurrently, and the samples analysed for, chloride, hydrocarbons, suspended solids, temperature and ph. The Council also undertook sampling of the ambient air quality outside the boundary of the site. A multigas meter was deployed on one occasion in the vicinity of the plant, with monitoring consisting of continuous measurements of gas concentrations for the gases of interest (carbon monoxide and

15 9 combustible gases). A PM 10 particulate monitor was deployed concurrently with the multi-gas meter. Two nitrogen oxide measuring devices were also deployed in the vicinity of the plant on one occasion during the year under review. The Company supplied data on flaring causes and flare and fuel gas volumes throughout the period.

16 10 2 Results 2.1 Water Inspections Seven inspections were carried out at the Cheal Production Station and associated facilities in the year. The following was found during the inspections: 22 August 2016 The stormwater systems including ring drains and skimmer pits were checked at Cheal-A. As noted in the previous inspection (22 June 2016), subsidence in the ring drain by the exit gate adjacent to the flare pit on the eastern boundary needed attention. The consent holder was asked to enlarge the outer bank of the ring drain to ensure that all stormwater from the site was diverted for treatment through the skimmer pits, preventing stormwater from overtopping into the adjacent paddock. Minimal flaring was being undertaken at the time of the inspection, with no odours or smoke noted. 27 September 2016 The Cheal-A site was neat and tidy with all site stormwater systems, including ring drains, bunds, skimmer pits and separators, clear of contaminants. No flaring was evident and no smoke or odours were noted. The Council had received notification about a rig being mobilized to the Cheal-B site, however there was no activity on the site at the time of the inspection. A workover rig was on the Cheal-E site at the time of the inspection. The stormwater system was satisfactory. Minimal flaring was observed, with no odours or smoke noted. Empty 200 litre drums were to be removed as planned. The Cheal-C site was secure with no activity observed at the time of the inspection. 17 October 2016 The skimmer pits at Cheal-A were slightly turbid but no hydrocarbon sheen was observed. There was good filtration in the ring drains with grasses growing. The flare pit was in operation with a minor amount of smoke observed flowing offsite. The discharge from the skimmer pit was clear. It was noted that the discharge was mixing with water discharging from the neighbouring property that was "milky" in appearance. There were no effects evident from activities occurring on the wellsite. There was no activity at the Cheal-E site. The ring drains in most places were full of grasses which will greatly improve and lower the concentrations of suspended solid entering the skimmer pits. The skimmer pits were clear with the bottom of both pits visible. The receiving stream looked clear and healthy. It was noted that a variety of containers were being stored near the permit office without bunds. Some of these chemicals were harmful to aquatic life and it was noted that crude oil slops had spilt onto the ground. Other areas of the site also contained IBC's that were not bunded, or where drip trays had been left onsite and crude oil had spilt onto the ground (minor amounts). The flare was in operation and no smoke was observed. No activity was occurring at the Cheal-B site. It was noted that there was a lot of vegetation in the ring drain, helping to reduce the concentration of suspended solid in the skimmer pits. The skimmer pits were clear with the bottom of the pits visible. The discharge looked clear, with no effects noted in the receiving environment.

17 11 The consent holder was asked to undertake works to remove unwanted containers from Cheal-E and Cheal- B and provide appropriate storage/bunding for those containers/drip trays that would remain on site. 17 January 2017 An inspection was carried out at the production station and associated well sites Cheal-B, Cheal-C and Cheal-E. In general all sites were found to be neat and tidy. There was no discharge from the Cheal Production Station site, with ring drains and bunds secure. Minimal flaring was being undertaken with no smoke or odours noted. There was no activity at the Cheal-B site. Processing and testing equipment were present at the Cheal-C site. Staff were advised to cut gorse away from the shut-off valve on the skimmer pit to provide easier access to the valve if this was required for an emergency. No flaring or odours were noted. The Cheal-E site was unoccupied. The skimmer pits were checked from outside of the compound; these were not discharging and tadpoles were present indicating good water quality. No flaring or other activity was observed. 22 February 2017 Inspection of the Cheal Production station and Cheal-A wellsite, and the Cheal-E wellsite revealed that the stormwater systems were operating according to design and in compliance with resource consent special conditions. Ring drains and bunds were clear of contamination and obstructions. The water quality in both skimmer pits did not give rise to any concerns and aquatic life was evident in both systems. Minimal flaring was being undertaken at Cheal-A with no smoke or odours observed. No flaring was occurring at Cheal-E. No activity was observed at Cheal-B, Cheal-C or Cheal-G wellsites. 20 April 2017 The site was inspected after a prolonged period of, at times, quite heavy rainfall. The stormwater and associated treatment systems were secure and all site water was being directed through the system. The site was neat and tidy. Some flaring was being undertaken, with the flare burning cleanly and clear of smoke. 26 June 2017 The sites were inspected after a period of inclement weather; the stormwater systems had coped with the rainfall with skimmer pits on all sites observed to be clear of contaminants. No adverse downstream effects were evident. Minimal flaring was being carried out at Cheal A with no smoke or odours observed.

18 Results of discharge monitoring Figure 1 Location of the Cheal Production Station and associated sampling sites Chemical water quality sampling of the combined discharge from the Cheal Production Station/Cheal-A wellsite was undertaken on two occasions during the year. Table 2 below presents the results. The location of the sampling site (IND001056) is shown in Figure 1. The results show the discharge was in compliance with the resource consent limits at the time of sampling. Table 2 Results for discharge monitoring from the Cheal Production Station (TRC site IND001056) Parameter Units 14-Oct May-17 Consent limits Chloride g/m Hydrocarbons g/m 3 < Suspended solids g/m Temperature Deg. C ph Results of receiving environment monitoring Chemical water quality sampling of the receiving environment was undertaken in conjunction with discharge monitoring. The results are presented in Table 3 and the sampling sites are shown in Figure 1.

19 13 Table 3 Results of receiving environment monitoring in relation to the Cheal Production Station Date 14-Oct May-17 Parameter Units Upstream (MWW000237) Downstream (MWW000238) Upstream (MWW000237) Downstream (MWW000238) Chloride g/m Hydrocarbons g/m 3 <0.5 <0.5 <0.5 <0.5 Suspended solids g/m Temperature Deg. C ph The results indicate that the discharge was having a negligible effect on the water quality of the tributary of the Mangawharawhara Stream, and was in compliance with all applicable consent conditions at the times of sampling Summary of consented water abstractions reported by Cheal Petroleum Figure 2 Daily groundwater abstraction under consent The consent holder supplied daily abstraction data for the period under review. Figure 2 shows that daily abstractions of groundwater under consent were well within the limit of 800m 3 per day. The Cheal-C surface water take under consent was not exercised during the year under review.

20 Air Inspections Air inspections were carried out in conjunction with site inspections as discussed in Section above. No issues regarding air quality were noted during the monitoring year Results of receiving environment monitoring Carbon monoxide and combustible gases During the monitoring year, a multi-gas meter was deployed on one occasion in the vicinity of the plant. The deployment lasted approximately 50 hours, with the instrument placed in a down-wind position at the start of the deployment. Monitoring consisted of continuous measurements of gas concentrations for the gases of interest (carbon monoxide and combustible gases). The monitoring sites used in the year under review are shown in Figure 3. Because of the nature of the activities on the site, it was considered that the primary information of interest in respect of gases potentially emitted from the site was the average downwind concentration, rather than any instantaneous peak value. That is, the long-term exposure levels, rather than short-term maxima, are of most interest. The gas meter was therefore set up to create a data set based on recording the average concentration measured during each minute as raw data. Figure 3 Air monitoring sites at Cheal Production Station for The details of the sample run are summarised in Table 4 and the data from the sample run are presented graphically in Figure 4. The consents covering air discharges from the Cheal Production Station have specific limits related to particular gases. Special condition 9 of consent sets limits on the carbon monoxide, nitrogen dioxide and fine particle (PM 10 ) concentrations at or beyond the production station s boundary. The limit on the carbon monoxide is expressed as 10 mg/m³ for an eight hour average exposure. The maximum concentration of carbon monoxide found during the monitoring run was 11.9 mg/m³ while the average concentration for the entire dataset was 0.13 mg/m³ which comply with consent conditions. This is similar to the results found in previous years.

21 15 Table 4 Results of carbon monoxide and LEL monitoring at Cheal Production Station Period (from-to) 19 June to 21 June 2017 Max Mean Min CO(ppm) 10.4 LEL(%) 0.20 CO(ppm) 0.11 LEL(%) 0.00 CO(ppm) 0.00 LEL(%) 0.00 Notes: (1) the instrument records in units of ppm. At 25 C and 1 atm, 1ppm CO = mg/m 3 (2) because the LEL of methane is equivalent to a mixture of approximately 5% methane in air, then the actual concentration of methane in air can be obtained by dividing the percentage LEL by 20. Figure 4 Ambient CO levels in the vicinity of the Cheal Production Station Lower Explosive Limit (LEL) gives the percentage of the lower explosive limit, expressed as methane that is detected in the air sampled. The sensor on the instrument reacts to gases and vapours such as acetone, benzene, butane, methane, propane, carbon monoxide, ethanol, and higher alkanes and alkenes, with varying degrees of sensitivity. The Council s Regional Air Quality Plan has a typical requirement that no discharge shall result in dangerous levels of airborne contaminants, including any risk of explosion. At no time did the level of explosive gases downwind of the Cheal Production Station reach any more than a trivial level PM 10 particulates In September 2004 the Ministry for the Environment enacted National Environmental Standards (NESs) relating to certain air pollutants. The NES for PM 10 particulates is 50 µg/m³ (24-hour average). The same limit is imposed on consent , in condition 9, which provides for the discharge of emissions to air from Cheal Production Station.

22 16 Particulates can be derived from many sources, including motor vehicles (particularly diesel), solid and oilburning processes for industry and power generation, incineration and waste burning, photochemical processes, and natural sources such as pollen, abrasion, and sea spray. PM10 particles are linked to adverse health effects that arise primarily from the ability of particles of this size to penetrate the defences of the human body and enter deep into the lungs, significantly reducing the exchange of gases across the lung walls. Health effects from inhaling PM10 include increased mortality and the aggravation of existing respiratory and cardiovascular conditions such as asthma and chronic pulmonary diseases. During the reporting period, a DustTrak PM 10 monitor was deployed on one occasion in the vicinity of the Cheal Production Station. The deployment lasted approximately 50 hours, with the instrument placed in a down-wind position at the start of the deployment. Monitoring consisted of continual measurements of PM 10 concentrations. The location of the DustTrak monitor during the sampling run is shown in Figure 3. The results of the sample run are presented in Figure 5 and Table 5. Figure 5 PM10 concentrations (µg/m³) at the Cheal Production Station During the 50 hour run, from 19 to 21 June 2017, the average recorded PM 10 concentration for the first 24 hour period was 13.4μg/m³ and 15.5μg/m³ for the second 24 hour period. These daily means equate to 27% and 31%, respectively, of the 50 µg/m³ value that is set by the National Environmental Standard and consent Background levels of PM 10 in the region have been found to be typically around 11 µg/m³. Table 5 Daily averages of PM 10 results from monitoring at Cheal Production Station 50 hours (19-21 June 2017) 24 hr. set Day 1 Day 2 Daily average 13.4 µg/m³ 15.5 µg/m³ NES 50µg/m³

23 Nitrogen oxides From 2014 onwards, the Council implemented a coordinated region-wide compliance monitoring programme to measure nitrogen oxides (NOx). The programme involves deploying measuring devices at 28 NOx monitoring sites (including two sites in the vicinity of Cheal Production Station) on the same day, with retrieval three weeks later. This approach assists the Council in further evaluating the effects of local and regional emission sources and ambient air quality in the region. The consent covering air discharges from the Cheal Production Station has specific limits related to particular gases. Special condition 9 of consent sets a limit on the nitrogen dioxide concentration at or beyond the production station s boundary. The limit is expressed as 200 µg/m³ for a 1-hour average exposure. NOx passive adsorption discs were place at two locations in the vicinity of the Cheal Production Station on one occasion during the year under review. The discs were left in place for a period of 21 days. The calculated 1-hour theoretical maximum NOx concentration found at Cheal Production Station during the year under review equates to 13.4 µg/m³. The results show that the ambient ground level concentration of NOx is well below the limits set out by consent The full air monitoring report is attached to this report in Appendix II Summary of flaring volumes reported by the Company A summary of flaring volumes at Cheal Production Station is provided in Figure 6. During the period under review, Cheal Petroleum kept the Council informed of all non-routine flaring at the production station. The majority of this flaring related to mechanical failures (September and October 2016). At most, light smoke was generated by these flaring events with no offsite effects. No complaints were received by the Company or the Council during the year under review. Figure 6 Summary of monthly gas flaring volumes at Cheal Production Station

24 Investigations, interventions, and incidents The monitoring programme for the year was based on what was considered to be an appropriate level of monitoring, review of data, and liaison with the Company. During the year matters may arise which require additional activity by the Council, for example provision of advice and information, or investigation of potential or actual causes of non-compliance or failure to maintain good practices. A pro-active approach that in the first instance avoids issues occurring is favoured. The Council operates and maintains a register of all complaints or reported and discovered excursions from acceptable limits and practices, including non-compliance with consents, which may damage the environment. The incident register includes events where the Company concerned has itself notified the Council. The register contains details of any investigation and corrective action taken. Complaints may be alleged to be associated with a particular site. If there is potentially an issue of legal liability, the Council must be able to prove by investigation that the identified company is indeed the source of the incident (or that the allegation cannot be proven). In the period, the Council was not required to undertake significant additional investigations and interventions, or record incidents, in association with the Company s conditions in resource consents or provisions in Regional Plans.

25 19 3 Discussion 3.1 Discussion of site performance Monitoring of the Cheal Production Station during the year found that the site was generally well managed. There were some minor matters noted at the Cheal-A wellsite in relation to the ring drains, and maintenance of these was undertaken by the consent holder as requested. At the Cheal-E site the consent holder was asked to move containers containing hazardous substances that were being stored without bunds. 3.2 Environmental effects of exercise of consents Stormwater system inspections showed that discharges from the sites complied with consent conditions. Receiving water inspections and sampling showed that the discharges were not causing any adverse effects on the tributary of the Mangawharawhara Stream at the time of monitoring. There were no adverse effects on the environment found as a result of the exercise of the air discharge consent. The ambient air quality monitoring at the site showed that levels of carbon monoxide, combustible gases, PM 10 particulates and nitrogen oxides were all below levels of concern at the time of sampling. No offensive or objectionable odours were detected beyond the boundary during inspections and there were no complaints in relation to air emissions from the site. 3.3 Evaluation of performance A tabular summary of the consent holder s compliance record for the year under review is set out in Tables 6-8. Table 6 Summary of performance for consent Purpose: To discharge treated stormwater and produced water from hydrocarbon exploration and production operations at the Cheal-A wellsite and Cheal Production Station, onto and into land in circumstances where it may enter an unnamed tributary of the Mangawharawhara Stream Condition requirement 1. Adopt best practicable option Means of monitoring during period under review Inspections Compliance achieved? 2. Stormwater collection from catchment area no larger than 3 ha 3. Advise Council at least 7 days before site works commence 4. A contingency plan be maintained detailing measures to avoid, remedy and mitigate spillage or discharge 5. Management and maintenance of stormwater system Inspections Notifications received Latest update received 2012 Inspections Mostly. Some maintenance works requested by Council

26 20 Purpose: To discharge treated stormwater and produced water from hydrocarbon exploration and production operations at the Cheal-A wellsite and Cheal Production Station, onto and into land in circumstances where it may enter an unnamed tributary of the Mangawharawhara Stream Condition requirement 6. Stormwater and produced water treated through stormwater system before discharged 7. Design of skimmer pits to meet minimum size and hydrocarbon capture requirements 8. Stormwater retention areas to be lined 9. Constituents meet specified standards 10. Temperature increase less than 2 Degrees Celsius after 25 metre mixing zone 11. No effects to receiving waters after 25 metre mixing zone 12. Advise Council prior to reinstatement of site Means of monitoring during period under review Inspections Inspections and sampling Inspections Sampling Sampling Inspections and sampling Site not reinstated Compliance achieved? N/A 13. Review provision Next option for review in June 2023 N/A Overall assessment of consent compliance and environmental performance in respect of this consent Overall assessment of administrative performance in respect of this consent High High N/A = not applicable Table 7 Summary of performance for consent Purpose: To discharge emissions into the air during flaring and to discharge miscellaneous emissions from tank vents and generators arising from hydrocarbon production activities including emergency situations and well workovers at the Cheal-A wellsite and Cheal Production Station Condition requirement 1. Adopt the best practicable option Means of monitoring during period under review Inspections and review of records Compliance achieved? 2. Maintain a flaring log Review of records 3. Provide monthly flaring data Records received 4. Provide an annual air emission report Report received