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9/11/2018 — Oil and Gas
Black Wednesday ominous for NZ’s long-term future
By Ross Louthean

Wednesday, November 7 saw the Government use its numbers in Parliament to push through its bill to verify halting future new offshore exploration permits and confining new exploration to the onshore Taranaki.

A week ago there was a hint that the Ardern Coalition Government might cool its heels after evidence from producers and other interest groups highlighted the looming issue of NZ perhaps running short of gas in 10 years to provide domestic markets and also methanol producer Methanex Corporation, which is a major employer and exporter from the Taranaki.

However, led by Energy Minister Megan Woods the Crown Minerals (Petroleum) Amendment Bill passed its third reading in Parliament.

This came on a day when it was revealed that one of the most active explorers and producers in NZ, TAG Oil Ltd (TSX: TAO; OTCQF: TAOIFF) was upping stakes by planning to sell to Malaysia-based Tamarind Resources, which operates the maturing Tui oil fields.

TAG had been a good risk taker on exploration in NZ, but obviously just sees obstruction ahead – all from the political mantra of climate change that some advocates still call global warming.

TAG is selling production and exploration licences to Tamarind for $US30 million and will receive a 2.5% gross overriding royalty on future production from all NZ assets, and up to $US5 M from milestone events.

Only a few weeks ago, Australian company Melbana Energy Ltd (ASX: MAY) sold its 30% interest in the Puka field to partner TAG. The message has gone out in the resources sector – New Zealand is guilty of sovereign risk, and has a Prime Minister who, despite her winning personality, has pandered to the organisation that exaggerates issues and worse – Greenpeace.

The business website Interest’s writer Jenee Tibshraeny said new offshore oil and gas exploration has now officially been banned, while onshore exploration will be limited to Taranaki until at least 2020.

She said Energy & Resources Minister Megan Woods left many questions from National’s spokesman Jonathan Young unanswered.

National's Energy and Resources spokesman Jonathan Young iterated his commitment to revoking the ban if elected into government, citing the need for gas in the transition to a low carbon economy.

Interest said that some hours before the Bill was passed, debate between Woods and Young saw the Energy Minister unable to specifically tell Young how many megawatts of new renewable generation would be needed to reliably replace coal, gas, and diesel generation.

Instead she said: “We have hundreds of megawatts of consented but not yet built renewable energy. We also know that technological change to store the roughly six terawatts of surplus energy we produce in summer, that we can use in winter, is coming, not just through battery power but through things like molten salt, like hydrogen, and a range of other storage facilities.”

Woods couldn’t tell Young how many megawatts of new renewable generation is being built in the next 12 months.

She pointed to Genesis Energy in recent weeks committing to building a “100-megawatt" wind farm in Taranaki, then said it was over to “individual generators” to respond to the signals the Government is sending around the demand for more renewable energy.

Woods was again challenged by Young, who said: “Considering that wind generation over the last 13 weeks was just 25% of its installed capacity, what level of investment would be required for wind energy to meet the requirements that she is expecting, particularly around the new Waverley wind farm, when she is quoting 100 megawatts?”

Interest said Woods responded acknowledging wind energy on its own isn’t sufficient to provide the security of supply.

She then again pointed out: “To ask that question without also including what needs to be done in terms of storage capacity misses the opportunities that sit in front of this country.”

Oh really? What mention has been made by senior Government officials that the coal and gas-fired Huntly power station operated by Genesis Energy has been providing critical back-up because of the lack of hydro and wind power. This back-up requirement, has supported in recent years by energy companies seeing shortcomings from existing renewable energy

Interest and other media outlets have pointed out that in the past month wholesale electricity prices have soared in part due to hydro storage levels at major lake and river systems have fallen to 62% of the historical average for this time of the year. Adding to this was an outage at the country’s largest gas field, Pohokura.

Greenpeace’s comment on the ban legislation was, as usual, warped on science and high on absurd alarm. “The science is very clear - we only have 10 years to halve our use of oil, gas, and coal or face the displacement of millions of people, catastrophic sea level rise, more extreme weather, and mass species extinction.”

The Petroleum, Exploration and Production Association of New Zealand (PEPANZ) told Interest: “The people most affected by this decision haven’t been listened to and now face real uncertainty. The Government’s own advisors say this decision will cost the Crown billions of dollars and will more than likely increase emissions, but it’s the human cost that is most striking.”

PEPANZ added: “Experts warned this move will increase the cost of electricity to New Zealanders but this has been ignored. This is not good news for households struggling with the rising cost of living.

“We need natural gas as a transition fuel towards a lower carbon economy. Turning off the tap when we have nothing concrete to replace it with is dangerous and irresponsible.”

Perhaps New Zealand looking into the immediate future will resemble South Australia where, under its last Labor Party Premier, blew up all its coal-fired power stations and pushed for more wind power, only to see a massive State-wide blackout from a storm which saw all power finally restored two days later – with the last area to turn on a positive switch was Snowtown, home of Tilt Renewables’ big wind farm.

A costly solution was building a multi-million dollar battery power station which has not lived up to expectations.

Adelaide is now dubbed the blackout capital of Australia, and South Australia has the highest power costs. So who will be blamed in New Zealand when the lights go out or the gas cooker is off?

Sources: interest.co.nz; nzresources.com

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