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6/6/2018 — Oil and Gas
Govt ban endangers Methanex future

The New Zealand Herald reported yesterday that the country's largest user of gas in the manufacture of methanol faces a bleak future under the Government's ban on offshore exploration.

The newspaper said a briefing paper from the Ministry of Business, Innovation and Employment (MBIE) - one of a number of just-released documents on the oil and gas industry released by Energy Minister Megan Woods' office - said Methanex would not be able to operate at full capacity from 2021 and would stop completely after 2026.

“Methanex will require a new discovery if it is to continue operating in NZ over the medium to long-term.”

The Herald said Methanex's managing director Dean Richardson declined to comment on the MBIE paper yesterday.

Canadian listed Methanex last year had 270 staff in New Zealand, earning twice the average Taranaki wage, and about 100 contractors.

It contributed $640 M to the Taranaki economy, accounting for 8% of the region's economy, and $834 M to the national economy.

The paper said: “Methanex is as dependent on producers of natural gas to supply it with sufficient gas at affordable prices, as producers of natural gas are dependent on Methanex to provide a major demand outlet with a flat demand profile.”

In April the Government announced a ban on granting new offshore oil and gas exploration permits. More than 30 existing permits, 22 for offshore oil and gas exploration, are unaffected by the ban.

Dr Woods claimed at the time that if those permits, which cover 100,000 sq km were continued or taken up, exploration would continue for more than a decade.

The Government has since announced measures for the Taranaki from its Provincial Growth Fund to soften the blow.

However, the Herald said a lot of the document, including any conclusions and the scenarios the ministry was asked to advise on, has been redacted. It said the direct contribution of the oil and gas sector to gross domestic product in 2013 was $1.7 billion, rising to $2.8 B when added-value manufacturing was included.

The MBIE paper said the Taranaki benefits disproportionately from this economic contribution.

The paper said the Taranaki had been affected by the recent oil price slide, with the impact felt much more broadly than just the immediate oil and gas sector. The report cited industry money given to community groups, schools and the coastguard.

MBIE also modelled oil and gas development scenarios on the impoverished East Coast of the North Island. Small-scale industry would grow its gross disposable income to $160 million and create 199 jobs. That would rise to $1.4 B and 1,163 on a large-scale development.

Source: nzherald.co.nz

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Prime Minister Jacinda Ardern announcing in April that the Government would offer no new offshore oil permits, with Regional Economic Development Minister Shane Jones making his discomfort clear. Photo Kevin Stent, Fairfax News.