Potential South Island gas bonanza tests the new Government
By Richard Harman (author)
What is thought to be a massive gas find --- as big as the Maui field – off the east coast of the South Island is likely to test the pragmatism, of the new Government and the relationship between the Greens and Labour.
New Zealand Oil and Gas wants to start drilling in the Braque, field, 60 km off Oamaru, by April next year.
In an economic impact study released yesterday, the company claimed the field had the potential to generate $15 billion in GDP and $32 billion in royalties and taxes over its life and could create up to 5,700 jobs annually during the construction phase.
However, the company's CEO, Andrew Jefferies, was taking a cautious line at the company's annual meeting in Wellington yesterday.
“We are by no means ready to commit to drilling in Clipper, and if we do the chance of success is about one in five,” he said.
“So success is uncertain.”
However, he said success in the south would be a game changer.
Under current law, the approval process for an offshore exploration well requires approval from the Environmental Protection Authority who say they normally make a decision within 70 days.
There is currently no scope for a Government Minister to intervene in the process.
But last night, the new Energy Minister, Megan Woods, told POLITIK she was seeking advice on the proposal "not only on the economic benefits but also on the broad environmental issues.”
The Greens, who totally opposed all offshore oil exploration in 2014 but who appear to have pulled back from that position weren’t saying anything.
Their Leader, James Shaw, referred POLITIK TO Woods but it was clear he was familiar with her position.
One industry executive was surprised by Woods' equivocation.
There are fears within the petroleum industry that the new Government could start listening to some of the more extreme environmental voices who totally oppose any petroleum exploration at all.
Some Greens supporters, particularly Greenpeace, vehemently oppose offshore drilling.
Certainly NZ Oil and Gas appears wary of the change.
“We have just seen the government change, as governments will change in every democracy," said Jefferies.
“The new prime minister announced a change in block offer exploration policy that is on its way.
“That policy change shouldn’t adversely affect our current portfolio, but it reminds us that even in stable, well-governed countries, the policy environment can alter.”
So far Jacinda Ardern has refused to go as far as the Greens and block new offshore wells.
Speaking on RNZ’s “Morning Report” on September 12 she was asked whether she would commit to no new deep sea oil and gas drilling.
“No,” she replied.
Morning Report: “Why not?”
Ardern: "For us, that's about just transitions, and actually as David Parker, our environment spokesperson (now Minister) has pointed out, some of that transition will involve moving to gas.”
Morning Report: “So you are not ruling out new consents for oil drilling?”
Ardern: “I want to take advice on that when we are in office. But it is about a transition for us. We are not going to have a jarring halt.”
Jefferies picked up on the theme of transitioning from high carbon fuels like coal to lower carbon ones like gas.
“If you ban exploring and producing gas in New Zealand: you will use more coal elsewhere; rob the developing world of a supply of clean, lower-emission, ethically-managed fuel; and rob ourselves of the means to grow and transport produce using locally derived energy."
If NZ Oil and Gas do decide to drill --- and that would seem likely --- then the political reaction to that well will be watched very closely not just by the petroleum industry but by business as a whole, who are still trying to get a fix on how interventionist this Government will be.