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11/1/2019 — Oil and Gas
Employer group push for offshore exploration

Otago Southland Employers Association chief executive Virginia Nicholls has argued the cause for continued, offshore oil and gas exploration off the coasts of Otago and Southland.

In an opinion piece in the Otago Daily News she said the hasty passing of legislation banning offshore oil and gas exploration is another example of how little the Ardern Government is considering longer-term implications of its ideologically-driven law-making.

“Our country's ongoing energy security is an issue for all New Zealanders, but the Crown Minerals (Petroleum) Amendment Bill, passed under haste on November 7, will impact significantly on this.

“It deserved far more consultation and analysis than was permitted by its fast-tracking.

Nicholls said the Minister for Energy Dr Megan Woods admitted that no assessment had been undertaken of just how the ban imposed by the new law would lower greenhouse gas emissions, or what the economic fallout will be.

The people of Taranaki, however, are now discovering the latter, she said.

“Some commentators argue the ban will actually lead to an increase in carbon emissions, because in the absence of a new gas supply coming on stream here, users will either be compelled to import fuel potentially from less environmentally-conscious producers or switch to coal, which is hardly an eco-friendly substitute.

Energy costs are likely to increase, which will hurt not only the economy but the most vulnerable in society.

“Many New Zealanders may not be aware that our current gas supply is likely to last for just seven more years and production volumes will diminish from 2021 onwards.

“Given that the Government has effectively ruled out new offshore oil and gas exploration; and the fact onshore activity is unlikely, our chances of finding alternative gas supplies within our jurisdiction rest on prospecting activities permitted before the legislation came into force. Two of these are in South Island waters, off the coast of Otago and Southland.

The prospects are in designated zones of the ocean floor: the Barque prospect about 60 kilometres east of Oamaru, and PEP 50119 in the Great South Basin, off the south-east coast of Otago-Southland. Both areas are recognised as containing hydrocarbon resources potentially viable for commercialisation.

Studies suggest Barque is a similar size to Taranaki's largest oil and gas field, Maui. It could double New Zealand's current oil and gas production, contributing up to $15 billion in GDP and $32 billion in royalties and taxes over its lifetime. Up to 5,740 jobs could be created during its construction, and 2,000 enduring jobs thereafter.

Should the prospect in the Great Southern Basin prove viable, it offers comparable economic benefits in terms of employment, contribution to GDP, tax and royalties and investment in the local and regional economy.

The words used to describe the type of transformation we could see under either of those scenarios are ‘game-changing.’

Virginia Nicholls cited New Zealand Oil & Gas chief executive Andrew Jefferies as saying if NZ dairy plants transitioned from coal to natural gas, and if fertiliser and methanol plants could be built here, New Zealand gas would be better for the Earth than alternative energy sources such as Canadian tar sands, or bitumen from Venezuela.

“Everyone acknowledges that we need to move away from the consumption of fossil fuels, but until sufficient alternative energy sources are found we need to secure our energy future so we can sustain our economy and our homes.”

The Otago Daily Times pointed out that NZ Oil & Gas has until April 2019 to commit to drilling off Oamaru, and April 2020 to similarly commit to the Toroa permit, south of Dunedin. OMV was granted a two-year extension in October, pushed out to July 2021, to drill an exploratory well off Otago's coast.

Source: odt.co.nz

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Virginia Nicholls.