The following statement was issued by Prime Minister Jacinda Ardern on Thursday morning.
Planning for the future - no new permits for offshore exploration
The Coalition Government is taking an important step to address climate change and create a clean, green and sustainable future for New Zealand, Prime Minister Jacinda Ardern announced today.
“There will be no further offshore oil and gas exploration permits granted,” said Jacinda Ardern.
Minister Woods has announced that this year’s block offer will be limited to onshore acreage in Taranaki alone.
“We are protecting existing exploration and mining rights. No current jobs will be affected by this as we are honouring all agreements with current permit holders.
“There are 31 oil and gas exploration permits currently active, 22 are offshore. These permits cover an area of 100,000 sq kms, nearly the size of the North Island, and run as far out as 2030 and could go an additional 40 years under a mining permit.
“Today we are providing certainty for industry and communities so they can plan for the future. We are making careful and considered changes over time and supporting communities with a managed transition.
“We will be working with the Taranaki community and businesses in particular on this as a long term project and I will be visiting myself later in May to underline this Government’s commitment to ensuring there is a just transition to a clean energy future.
“Last week’s announcement of the Taranaki Action Plan was a first step in that process.
“All three of the parties in this Government are agreed that we must take this step as part of our package of measures to tackle climate change. I’m grateful for the support of New Zealand First in ensuring the transition away from fossil fuels protects jobs and helps regions equip themselves for the future. I also thank the Green Party for their continued advocacy for action on climate change.
“In each of the last two years only one permit has been granted for offshore oil and gas exploration. This decision does not affect current reserves or the potential finds from current exploration permits. As the industry itself admits, there is good potential for more to be found.
“This is a responsible step which provides certainty for businesses and communities that rely on fossil fuels. We’re striking the right balance for New Zealand - we’re protecting existing industry, and protecting future generations from climate change,” said Jacinda Ardern.
This is National's response:
The Government’s decision to ban gas and petroleum exploration is economic vandalism that makes no environmental sense, National MPs Jonathan Young and Todd Muller says.
“This decision will ensure the demise of an industry that provides over 8000 high paying jobs and $2.5 billion for the economy,” Energy and Resources Spokesperson Jonathan Young says.
“Without exploration there will be no investment in oil and gas production or the downstream industries. That means significantly fewer jobs.
“This decision is devoid of any rationale. It certainly has nothing to do with climate change. These changes will simply shift production elsewhere in the world, not reduce emissions.
“Gas is used throughout New Zealand to ensure security of electricity supply to every home in New Zealand. Our current reserves will last less than ten years – when they run out we will simply have to burn coal instead, which means twice the emissions.
“The Government says that existing wells will continue but that’s code for winding the sector down.
Climate Change Spokesperson Todd Muller says the decision makes no sense – environmentally or economically – because less gas production means more coal being burnt and higher carbon emissions.
“Many overseas countries depend on coal for energy production. Those CO2 emissions would halve if they could switch to natural gas while they transition to renewable energy.
“By stopping New Zealand’s gas exploration we are turning our backs on an opportunity to help reduce global emissions while providing a major economic return to improve our standard of living and the environment.
“We need to reduce global CO2 emissions. But there is no need to put an entire industry and thousands of New Zealanders’ jobs at risk.”
Mr Young says the Government’s decision today is another blow to regional New Zealand, and Taranaki in particular.
“It comes hot on the heels of big decisions that reduce roading expenditure, cancel irrigation funding, and discourage international investment in the regions.
“This is simply Jacinda Ardern destroying an industry in the cause of a political slogan pushed by Greenpeace.”
This is the industry's response:
The Petroleum Exploration and Production Association of New Zealand (PEPANZ) is very disappointed in the Government’s decision to halt offshore Block Offers, saying it is likely to affect New Zealand’s energy security and international reputation.
"The decision is a lose-lose for New Zealand’s economy and environment, likely to threaten jobs and mean higher prices for consumers," says PEPANZ CEO Cameron Madgwick.
"This will do nothing to reduce global greenhouse gas emissions and could make them worse. Because petroleum is produced to meet growing global demand, not exploring and producing in New Zealand simply means other countries will produce it instead and we will have to import it at higher cost.
"It also means New Zealanders will miss out on the substantial economic benefits that could come from new developments. The Government receives around $500 million a year in taxes and royalties per year from the sector and employs over 11,000 people at peak times, all of which will decline without new activity.
"Our known gas supplies will run out in 11 years. Apart from importing fuels with higher emissions, where else will we get energy from and how much will it cost consumers and businesses?
"Natural gas and oil provide over half of New Zealand’s energy and are crucial to households, businesses, schools and hospitals. While other sources of energy are being developed there is no realistic way they can cover this demand in the immediate future.
"We are already seeing the potential impact this week with coal being used for electricity generation to ensure security of supply following the interrupted gas supply from Taranaki.
"We are disappointed there has been no direct consultation with the industry and it is also a surprise given the Labour Party’s 2017 energy manifesto talked of continuing offshore exploration.
"Huge investments have been made by companies already anticipating offshore block offers which have now gone to waste and people’s jobs will likely be affected. It sends a worrying message to domestic and international investors on how open New Zealand is as a place to invest and create jobs.
"We ask the Government to talk with the industry urgently. In the meantime, we will be carefully considering the ramifications of this decision and our options going forward."
Here is a link to a detailed story Jenée Tibshraeny wrote two weeks ago on what a ban on oil and gas exploration would mean for New Zealand.
More coverage on this issue to come...
114 Comments
A pointless (virtue signalling) gesture that does nothing for the planet, but does sabotage NZ's economy.
-we will simply import more hydrocarbons which at margin are sourced from more carbon producing shale sands, and which will incur more CO2 production in transport to NZ
-incur more overseas debt
-miss out on oil and exploration license revenue
-put a whole lot of oil and gas industry NZer's out of work
-kill NZ businesses
-displace the exploration and production to less environmentally conscious locations (fuck-you planet!)
-provide financial support for more despotic, theocratic, oppressive and misogynistic regimes
-appease a few very short-sighted/thick Greens.
Our civilisation is in process of transitioning to renewables and battery electric vehicles anyway. It just won't happen overnight. But this move by NZ govt only serves to increase CO2 production above what it would otherwise be. It is complete idiocy that can only satisfy short-sighted people too thick to consider obvious consequences.
The claim we can transition to renewables is bullshit if it is made in context of maintaining the status quo. The claim comes from people that don't understand energy density, and the inertia on the reliance of current systems.
http://www.sciencemag.org/news/2018/03/meet-vaclav-smil-man-who-has-qui…
Hi Scarfie, have a read of this
http://www.spiegel.de/international/germany/high-costs-and-errors-of-ge…
A Governments job is to lead and often that means pushing something. In Germany's case by going heavily solar they,
a) seeded the market and as a result renewables install costs have dropped to the point its cheaper than coal.
b) they set their economy up for the long term impacts of high energy costs in a more ramped way.
Steven, your comment raise a much needed debate about the role of government. You say "A Governments job is to lead", however this is just your opinion.
Your a) and b) comments fall into the realm of making a BUSINESS case for going solar. You first need to debate whether this has anything to do with government, and if you think yes (I disagree), then you need to do some analysis as to whether the effect you raised in a) is attributable solely to what the government did, or whether this was always going to happen anyway through normal business.
Pat a 5% return is fine in a diverse portfolio.
Best return obtained by using every drop you make, ie a zero export device. Also make sure the water is on night rate thru the winter, a small element(say 750watts) for your water heater will make sure the solar can drive it in the summer.
Pat, The reason I put the water heat on night rate, is to lower the daytime load and devote the solar purely to driving day time heating ie A heat pump or heater of some sort. The Water element plus heater could be 4-6Kw,
total load so little chance of the solar driving it. A heat pump with a COP of 5 may only draw 1Kw.
I think about it differently. I'm using the hot water cylinder (HWC) as a dump load. By handing control of the HWC over to an arduino microcontroller with a voltage & current sensor on the inbound main house line you're effectively turning your HWC into a battery. Every 50Hz mains cycle the microcontroler is measuring outbound power and making a decision about whether to turn the HWC on or off. Net outcome is very high self consumption. It's easy to build, schematics here. http://www.mk2pvrouter.co.uk and information here https://openenergymonitor.org/ I notice that the idea has been commercialised here and even Harrisons energy in NZ sells an equivalent product.
Andrew, My point is not is it the best possible return, but in a diverse portfolio is it ok?
Interestingly as an asset class, in an environment of low returns, maybe saving devices should be considered.
ie electric vehicle return on investment (ROI) , insulation ROI, cyclinder wrap ROI.
No he is in-correct, you both make 2 mistakes.
a) you ignore the limits of production and b) the cumulative amount extracted.
So,
a) we are at (more or less) peak oil ie the world cannot increase production so by NZ not producing any more that production cannot be replaced.
b) The final total amount extracted and burnt will be less hence ultimate CO2 level will be less.
Your logic is that of an economist.
You might want to school yourself up
https://ourfiniteworld.com/2018/04/04/why-the-standard-model-of-future-…
Population is indeed the problem ..
10,000 years ago humans and livestock were a mere 0.01% of land-air vertebrate biomass.
► Humans and livestock are now 97% of land-air vertebrate biomass.
► Our crop and pasture lands caused 80% of all land vertebrate species extinctions.
It was the easy energy that got us here.
BUT energy consumption per human must increase to keep economic growth going .. and population is now the only real driver of economic growth.
So now you are in a cul de sac - you state Oil prices are going to rise while decreasing population (lowering demand). Its an economic (religious) miracle.
heres a snapshot for you
"Money is a store of value. When energy was cheap that surplus became stored in assets of some kind. Gradually since the 1980s energy became too expensive to realize a surplus so debt has been added to close the deficit.
Basically the net energy could no longer drive the economy on its own so prices were too low to keep the system in balance. By increasing debt prices for goods and services could rise relative to energy costs making it appear that energy was costing less and less each year. So it appeared to be more abundant and cheaper.
This false signal has deceived the world into believing that price will meet any scarcity in the system. Or technology will meet demand.
Economists are alchemists.
As long as physical supply could continue to grow at whatever the cost debt can continue to grow and this makes people think there is no crisis because debt creates new money.
Once peak production is reached the system unravels. The debt becomes unhinged and can not be paid back with interest which makes all investments worthless.
This event will create huge deflationary pressure as liquidity evaporates. As prices fall the real cost of energy will not it will then be obvious that it has been unaffordable all this time.
So the problem will be that $20.00 oil can no longer drive enough profits to afford it. The oil companies will be forced to close because they can’t produce oil cheaply enough and the can’t mask the problem with cheap credit.
This is already happening in the tight oil plays. They are effectively Ponzi schemes in that the initial investments will never be returned. The dividends investors have been receiving are just percentages of their equity investments. That is how unaffordable oil or energy continues to flow until it consumes all stocks of value that have accumulated in the system when it was a surplus energy environment.
So sorry to say everyone’s 401k and pensions and real estate and precious metals are worthless they have been traded into the system to keep the lights on.
There was no choice so don’t blame your congressman he’s just as dumb as the rest of us who have believed that infinite growth can exist in a Finite World.
Doesnt matter if you ignore facts or not because you dont like them, they are still facts.
The rest of your post is full of assumptions that frankly dont hold water, except the last one, indeed mining needs oil its not viable without it.
hence really your entire counter argument is "what you are saying wont work so I will reject that for a fantasy I like based on wish".
good luck with that.
PS mining is like oil it will peak so investing in most mining is a really bad idea.
PPS On good news recent battery developments suggest rare earths and minerals wont be needed in a new generation of battery making any investment you make on old tech a stranded asset and then a loss.
Foyle...whats vyour solution then? Do nothing? Or have you a better idea? Please share with us.
More bad news due to inaction - https://www.stuff.co.nz/environment/climate-news/103036988/studies-say-…
The combination of PV, battery and eventually molten salt breeder reactors are on track to become the cheapest energy sources within 20-50 years. We really don't need to do anything with regard to regulations, economics is already driving all the necessary changes.
Demonstrably false. Nothing NZ does will make any significant difference to global emissions. We are irrelevant as a CO2 emitter or a market to drive replacement technology development. We will just end up importing the greater shortfall in fossil fuels.
This can only be viewed as an imbecilic and exceedingly costly exercise in virtue signalling to satisfy a few ignorant and insulated urbanites. It is going to hurt GDP, make the budget even more impossible to balance, impoverish a province, and leave NZ beneficiaries even worse off through lower tax revenues available to distribute.
Screw NZ, let's not have a conversation about this. Meanwhile Ardern is off to burn a few tens of tonnes of jet fuel on a European Junket FFS.
Per capita NZ is actually a very high emitter. In terms of leadership what NZ does has an impact on the world beyond of size.
No one is insulated from this, however yes more than a few and that includes many in the Green party are deluding themselves that they are.
... we will continue using fossil fuels , mostly imported , and much of it produced in jurisdictions of lower industry standards than ours ...
Jacinda is outsourcing our oil needs to grubby producers and tin-pot dictatorships ...
... I have no clue how that improves the planet in the slightest ... apparently it's " sending the message " or some similar feel-good nonsensical twaddle ...
It is devoid of positive effect, because it will only be substituted by increased exploration and extraction in places with less efficient production (tar sands etc) and nasty politics without consideration for the environment. It is globally negative. And serves only to take a huge shit on NZ economy in places that don't vote Labour or Green. Calling it Virtue Signalling is really too kind.
You are in-correct.
As oil left in NZ territory is not extracted the cumulative amount extracted is less. Since the final total amount extracted and burnt will be less the ultimate CO2 level will be less.
In terms of oil sands Shell for one has (totally?) abandoned the Canadian tar sands, the CO2 emissions and environmental damage is just too huge and the coming law suits concerning. Then there is the actual cost of extraction for deep water and tar sands. The oil companies used to assume that even at $150US+ a barrel people would pay, July 2008 proved that assumption wrong. Our global economy cannot function and grow with energy at that cost, in fact even over $80 is questionable.
"As oil left in NZ territory is not extracted the cumulative amount extracted is less. Since the final total amount extracted and burnt will be less the ultimate CO2 level will be less."
How so? demand has not changed - if anything it is still increasing. So basic economics suggests another supplier will step in to fill the gap. i.e. extraction will not decrease.
I don't have enough information on this to form an informed opinion - as I suspect is the case with most commenters. What I've found out so far is:
1. With existing exploration NZ gets a fee and a few percent of revenue. How much revenue? Not sure yet.
2. Current off shore exploration permits last out to 2030 so we have another 10 years at least of possible discoveries.
3. This change stops licenses to explore for more sources, and it appears only 1 permit application per year was received in the last 2 years.
4. Apparently NZ oil is not particularly suited to refining to petrol - if so, this would render the point re importing hydrocarbons moot as we already have to do this. All our oil is exported and from the sounds of it use for plastics production rather than petrol.
I don't have clear information on this but these things don't seem to align with the rants here, I'd be keen to receive a more fact-based analysis with less rant than the above.
I'm not at gut level in favour of stopping all new exploration permits but I'd like to see a sound economic analysis of it instead.
I have industry experience, and for the most part you are right. The main thing to remember is we aren't just talking about Oil, we must also include gas.
1. Royalties are paid on everything we extract.
2. Existing permits do indeed continue for a while yet, but planned exploration is minimal. Most is purely to meet the permit requirements. A lot of permits have been surrendered.
3. Exploration is winding down in NZ anyway. Economically and technologically we are not a great source.
4. Most of our condensate is exported, however a small amount does go to Marsden point.
In addition to 4.
Gas is far bigger in terms of local consumption. We consume about 191 PJ of Gas nationwide. This is about the same as our annual electricity generation (20% of which is gas fired),
With diminishing reserves, and no new exploration - what will everything switch too?
I will admit this move has given me mixed feelings. I have enjoyed the freedom and ease of living that the oil industry has offered through my lifetime, but I do know that we cannot continue doing this, and not being fully informed on what we do for alternatives, it makes me a bit nervous. I think I feel a bit relieved that we at least are prepared to do something, even though, at the same time, I have a measure of fear.
The transition from oil and gas will not be as easy as the transition to it was, but I think we all know, no matter how little, that we cannot continue on the same path. Even Foyle knows that to be truth in the end.
What a silly misinformed comment. Please tell us what your motivation is for the accepting the pollution and environmental degradation that comes with fossil fuel consumption. Do you own a refinery? Why else would you do their bidding and put your family's health at risk? Go back to your rural farm you country bumpkin.
It doesn't cure cancer either. It does however reduce our risk exposure to large scale oil spills for meagre return. It also helps guide investment away from a shrinking industry. Middle Eastern producers will remain cost effective compared to NZ production long after demand has considerably shrunk due to renewable energy generation growth and electric vehicles.
Yours is the silly uninformed comment.
You will put your family's health at risk by not using oil-based products. Pharmaceuticals and much of the equipment used in hospitals are oil-based.
Or will you carry on using the products, regardless?
Yes, of course you will.
Can you produce any evidence that the slow ~1°C/century warming we are experiencing is going to have a negative impact on NZ?
-Any warming will improve agricultural yields in our temperate climate, particularly in the south island
-Current sea level rises of ~2mm/year are almost constant since 1860's (well before rise in CO2, for unexplained reasons), and have almost no impact on anything in NZ.
-There is no demonstrated increase in bad weather. Global cyclonic activity is showing no signs of rising over last decades.
-Higher CO2 is well known to have a profound impact on increasing plant growth and reducing plant water needs that is hugely beneficial in feeding the world.
Foyle. You have not done your homework. For example, recent evidence from NASA reports that world sea level rise is currently 3.2 mm pa. and is now increasing exponentially, although they do use the rather cagey words "increasing incrementally". Furthermore, all of your arguments have been disproved or have serious flaws but I have not the urge to try to educate you. https://sealevel.nasa.gov/news/108/new-study-finds-sea-level-rise-accel…
Didge you can't find any reference to exponential sea level rise because that is nonsense on your part. Get some perspective. Sea levels were 3 metres higher than today in NZ less than 10,000 years ago. The Aborigines walked to Tasmania 12,000 years ago. Sea levels change.
"In North Island locations the early-Holocene sea-level highstand was quite pronounced, with RSL up to 2.75 m higher than present. In the South Island the onset of highstand conditions was later, with the first attainment of PMSL being between 7000–6400 cal yr BP."
https://www.sciencedirect.com/science/article/pii/S0277379115301232
Profile and Ex Expat. Go try arguing that with NASA. Can you read or are you too biased to face facts?
https://climate.nasa.gov/news/2680/new-study-finds-sea-level-rise-accel… Published Feb 2018.
Time to catch up with what is really happening you ostriches. Not what happened over 10 millenium ago!
The PM should lead by example and forswear the personal use of any oil-based products, including those used for artificial fibres for clothing, pharmaceuticals, cosmetics, jewelry, footwear, handbags and other bags, and any printed papers, books and magazines.
She won't do that, of course, because she is just a virtue signalling hypocrite.
What has she actually achieved?
Are we going to use less fuel? no
Are we going to create less carbon emissions? no
Are we any "greener" as a result? no.
All she has done, is end something early (as I have said in other articles, it is winding down naturally anyway) without providing any viable alternatives.
It’s ok, The coalition is spending 400k on finding out how financially beneficial state highway 43 is to Taranaki’s economy.
They are also spending mega millions on a flippen walkway.
Yeah that will replace all the lost jobs in Taranaki and bring in billions to our economy.
Absolute blatant Coalition of Losing dreamers that are going to do so much damage to NZ no one will be laughing.
Forget the overpriced housing costs In Auckland, this lot are out of their depth and they need to go!!!!!
The MAN2,
that's what happens when you lead the tree huggers into power with a weak coalition submissive partner.
We are super clever bush-dwelling people ... our intelligence stretches far beyond our time ... we think 50 years ahead while others are stupid enough to grow, prosper, and advance .. silly them. well done We.
We will save the world by being frugal and borrow to build a road or a hospital but Hey, we will be carbon neutral ... because we will produce less oil but import more until 2050 and cause more emission getting all that to us, but hey, That will be on someones else's account like Singapore or China, No us ... it will all be about Clever Invoicing !
It does not matter if you are poor but it is a world's first to be a Clean and Miserable poor nation.
At a time when Nations are almost going to wars to secure a patch for exploration or transportation of Oil and Gas, and times when countries are fracking rock and sand to extract oil, Nations digging 6 km deep to extract Gas and transform their economy like Egypt, Israel, Greece, and Cyprus - at such times, we will be Proud , Stand to face the world and tell them we could have it but we chose Not to, because we are Clean!
Environmental Initiatives like this one will save our coastal areas from rising sea levels and will protect us from the effects of climate change. That is because we contribute about 20% to the world's CO2 emissions ... Oh, sorry was that 20% or 0.02% ?
but anyway you get the point ..all contributions actually count eh?
Well done Greens, enjoy it while you can - the damage of this CoL term will go beyond 3 years of losses and mess ...
I have a feeling that this CoL have just "secured" another term in 2020 votes!
meanwhile not having oil company shares maybe a good idea, they will get their pants sued off....and when Govn's wade in, messy....
https://climatecrocks.com/2018/04/11/reckoning-fossil-fuel-lawsuits-pop…
Labour led government in NZ is very similar to Liberal Party led government in Canada.
They have nearly all features that you can from Bai Zuo (https://www.youtube.com/watch?v=1zoomb3qptg).
Southern Hemisphere satellite anomaly 0.1 degrees C above the 30 year average satellite record. Inter-glacial warming rate slower now than the 1910-1940 rate. Virtue signalling bullshit from our leader.
https://www.nsstc.uah.edu/climate/2018/march2018/GTR_March2018.pdf
and taken out of context I will suspect.
It is simple, look at all the events around the world, look at the costs both are rising all explained by science.
So if you want to ignore science, math and data, well use a witch doctor in future and not a GP, bound to go well for you.
Cherry picking still I see.
Yet NZ sea waters is 6C higher than normal.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11973975
ARGO buoys show top 2km global sea temperature rising at a rate of just 0.3°C per century for last 10 years. It is getting warmer, but at an exceedingly slow rate that will never have any significant impact on the world before PV and batteries complemented by nuclear power make it all a non-issue in a few decades.
The more I think about this move it doesn’t make any sense. If you want people to stop using petroleum products you should either tax petrol (not popular) or subsidize alternatives to make them more competitive (electric vehicles, renewable generation). The lost local production will just be replaced by overseas production and negatively impact our balance of trade.
Your premise is in-correct, we are at peak oil, so no generally we cant increase production elsewhere.
Also the total oil extracted and burnt has an impact on the final CO@ level, so NZ and indeed other countires not extracting oil means an ultimately lower CO2 level.
We are in fact not at peak oil. Significant new reserves booked in US shale and record production everywhere. Unconventional resources have completely torched the Hubbert theory of peak oil.
Global Energy demand will not materially move on NZ banning exploration. But the economy will be affected. Not arguing any Environmental impacts just getting the economics corrected.
Of course it doesn't make sense. The general public comprehensively believe that the petrol they put in their car is the be all and end all of oil use.
The whole country needs to blink a few times to clear their eyes, then look around.
Heck I would give them all glasses, except oil is used in all the machinery to extract the sand, coal is used in the smelting process to make the glass. Oil, coal, and gas were all used to make the metal frame.
Even if they used a natural crystal for a lens, and wood for a frame, they probably still needed metal tools (made using Fossil fuels) to shape, cut and make them.
No oil, means nothing, nada, zip. Basically we go back to the stone age.
If people really are concerned about "man made climate change" then the they need to change their own habits first. Getting rid of their mobile phone would be a great start.
I certainly have the opinion that we will regress as a society/economy, but we dont have to fall back to the stone age though if really stupid we might well.
There are alternatives to oil like PLA plastic is plant based however it isnt going to be cheap so our consumer and retail culture is simply buggered.
Also fuel oil with bio-diesel however modern economy class airlines will not survive on Jet A1 in the 300~400US a pop range they will cease to exist.
If you look at the estimate on the world's carrying capacity without oil its about 2billion and when you look back at that population v date you get the 1920s. Rather better than the stone age but this might be the best case, it might be more like the 1700~1880s.
Yes, it is interesting.
Our underlying issue is that we have no substitute for core minerals/metals.The only way we have of extracting, producing, and refining them is through the use of oil based machinery. We need all of these for electricity/computing/civilisation in general.
Even in the 1700s we were still using coal, oil, and Whale Oil. Not too mention copious quantities of wood.,
The main driver of all the issues is population.It is the one environmental concern no-one (particularly the Greens) are willing to address.
If we agree that the 1900's is a good level how do we depopulate in a socially/culturally/ethically/morally way to get there? After all we need to remove almost 2/3rds of humanity to achieve that.
Steven I understand what you are saying about being at peak oil production, and therefore stopping production in NZ will decrease overall production.
However, my understanding was that with new technologies, there is a lot more production capacity, at the right price (e.g. if it gets up to US$70-$80 a barrel). So (given this understanding), yes we are at peak oil production when limited by the current oil prices, but not as oil prices move.
No, you are in-correct on several aspects.
background,
there are about 2.4trillion barrels of conventional oil of which we have used about half, the cheap to extract half.
Today the marginal cost of a new oil field is about $85 a barrel but the current oil price is $60 (ish) So what oil company in its right mind will spend 8 years and billions in developing a field at say $80 if the price is by then not above this? You would get a shareholder revolt, and actually this is why we see the oil majors cancelling field development many fields are simply un-economic and probably never will be.
Example, the problem with what is left is its significantly more expensive to get out. Take the BP Horizon field that blew up, the costs if I recall correctly are around $150US a barrel this is a) above the peak price in July 2008 of $148 a barrel which sent us into the GFC.
Technology,
Is by and large able to extract oil out of a field quicker, there is little evidence that the technology improvements get significantly more out.
Now technological progress probably will make some fields economic, sure, ie a $90 barrel field becomes $80 so its worth doing. However a $120 barrel field dropping to $110? no still not economic and there is a diminishing rate of return.
Economics.
In terms of "move" I touched on that earlier. This was a big mistake ppl were making ie that no matter the price of oil say $200 even $500 a barrel ppl would pay it. However what we actually see is the economy cannot stand oil prices much above $100~120 and maybe not even that high these days without going into recession ergo there is an upper limit we cannot go past.
Thanks for the analysis Steven.
I firstly just wanted to put 'peak oil production' in context, being that it depends on the price that we are prepared to pay for it, rather than our physical ability to extract it (i.e. it is economics) - you have confirmed this in your analysis.
Secondly, since we are focussed on the economics, the limiting factor in 'peak production' is the consumer's top price they are willing to keep paying as supply decreases. The limiting factor is not the current price of oil.
Using your figures, once the cheap stuff runs out, the marginal cost of new oil fields can increase to $100-$120 before oil becomes uneconomic.
You have the marginal cost at $85, which as you point out means that there are a lot of producers sitting on capacity while the oil price remains low at $60.
So there is plenty of extraction still to be had under your top demand price of $100-$120.
So, putting this all together, I suppose the only way that Ardern's decision limits climate change is if the marginal cost of production of new oil fields in NZ is below $100-$120.
So we wind down this industry and the good paying jobs goes with it but we as a society don't use less oil and gas.
The stone age ended not because we ran out of stones but because we found something better. Banning oil and gas exploration here does not actually mean new alternatives are developed.
Well to start with as the USA is finding there are new jobs created installing and maintaining wind and solar. The advantage of which in terms of jobs is the wind and solar will last for ever while oil and gas is gone in 20~30years, not even one person's working life.
"new alternatives" very true there no cheap, flexible, energy dense replacement energy sources but we will be forced off them in the next few decades anyway due to rising costs of extracting what is left.
It’s a win, for stupidity over common sense. What an opportunity missed to create great wealth for the Country, especially for the regions. Now instead of working on an oil rig, a bloke from say Westport will be on the dole, suffer depression and contribute bugger all to society other than dysfunction. But hey, better that than ruin the environment right? The Greens are a joke, an idealistic bunch who are not in the real world and are usually from private school backgrounds where they are raised to think money grows on trees.
... yes , we were producing and exporting good quality light crude and nat-gas ... about half as much as the heavy crude we import from the Saudis ...
Helen Clark destroyed the sustainable native logging industry on the West Coast .... putting 200 + out of jobs , and reducing our export earnings , plus annihilating a world's best practice industry ....
... now Jacinda Ardern is following in her footsteps by wrecking another industry of world class standards , jobs , and exports ...
2020 can't come soon enough !
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