By Jenée Tibshraeny
‘Think globally, act locally.’
This is a nice phrase that that can be applied to the environmental movement.
It implies that people in different communities should do what they can to contribute towards a greater cause.
For those with the ability to do so, this might mean opting for an electric car or choosing to buy products that have been sustainably made.
For those in less privileged positions, this might simply mean putting more effort into recycling.
The Government appears to believe that by deciding not to issue new offshore oil and gas exploration permits it is ‘thinking globally, acting locally’.
It is essentially saying, ‘Look world, we are taking the lead on a global issue that needs decisive action’.
The aspiration in this is energising and invokes ‘proud Kiwi’ feelings.
The problem is, I am not convinced the Government is in fact ‘acting locally’ and considering the situation New Zealand is in as it seeks to solve a global problem.
It appears to be ‘thinking globally, acting globally’.
I might be wrong. I hope I am wrong.
The missing facts
The issue that I would like to highlight in this column is that the Government has failed to take the public with it, as it has made a major decision about our future.
Yes the Government has been open about it prioritising environmental issues; Prime Minister Jacinda Ardern campaigning on climate change being her generation’s “nuclear free moment”.
But it hasn’t actually put forward a convincing, facts-based case explaining where New Zealand will get its energy from in 10 years’ time when our current gas reserves are depleted.
It hasn’t said:
‘14% of New Zealand’s energy needs are met by gas. We currently produce all the gas we use.
‘We project that by 2025, X% of this energy will come from energy sources A, B, C, and by 2030, X% will come from energy sources A, B, C and D.
‘We are creating these incentives to help clean energy companies ramp up production. We are working on initiatives with Clean Energy Company X and Clean Energy Company Y.
‘We are putting these measure in place to ensure that during the transition energy costs in New Zealand won’t soar.
‘We aren’t pulling the rug out from beneath Methanex and the other manufacturers heavily reliant on gas, as we are confident they have future-proofed their businesses.
‘We can categorically say we won’t need to spend 10s of billions of dollars to build the infrastructure necessary to import gas (which is likely to be more expensive) when we realise we have a fuel shortage.
‘Turning to oil, 46% of the country’s energy needs come from oil. We import all the oil we use. We export all the oil we produce as it is good quality and therefore worth more.
‘By 2030 we will have the infrastructure in place to service a vehicle fleet that is X% electric.
‘We project that the price of electric cars and trucks will fall by X%. If they don’t, we will subsidise them.
‘We plan to invest $X in electric rail.
‘There is no point cutting our oil supply, if our demand stays the same.’
The reality
This is not only what I would like to hear, it is what I would expect to hear from a Government that makes a big call without so much as going through a consultation process before reaching a decision.
Dare I say it, but perhaps this is an issue that deserves a ‘working group’.
It is a complex scientific, economic, and social issue that requires research and public consultation.
Perhaps the Government has beavered away on this quietly, but I am dubious.
When I interviewed Energy and Resources Minister Megan Woods at the end of February, she didn’t know how to pronounce ‘Schlumberger’ - the name one of the multinational oil and gas companies operating in New Zealand.
Make of this what you want.
Instead of producing a speech or media release anything akin to what I have done above, the Government has highlighted the fact that it last week threw $20 million at Taranaki to help it diversify its economy.
With most of this going towards tourism initiatives, only $100,000 was allocated to putting together a business case for a ‘New Energy Development Centre’.
What an insult! The Government would’ve been better letting the issue be, rather than sprinkling the region with a patsy amount of misguided sympathy money.
The bigger picture
Looking at the bigger picture, the problem with the Government making a relatively abrupt announcement on oil and gas exploration is that it makes New Zealand look unstable to oil and gas investors.
We can assume the Government doesn’t care, as it doesn’t want them here anyway.
But what if it turns out we can’t substitute all our gas use with alternate energy sources, at a reasonable cost?
The Government has highlighted the fact there are currently 31 active exploration permits in New Zealand. If new supply is discovered, mining permits could last up to 40 years.
The difficulty is, progressing a project from the exploration to the production stage is costly and involves a great deal of investment.
The Government putting a big, ‘not really open for business’ sign on our door does nothing to attract investment.
Let’s look at New Zealand Oil and Gas (NZOG) and Beach Energy. They have a joint permit to explore in the Canterbury Basin off Oamaru - an area with huge potential.
NZOG’s CEO, Andrew Jefferies, told me it would cost around $50 million to $60 million to drill an exploration well in the Basin.
NZOG and Beach Energy could probably only fund around half of this. They would need to attract investment from other companies to fund the other half.
From that point, there is only around a 20% chance of them making a find that’s worth progressing to the production stage.
If they decide to go down this route, and pipe the oil/gas onshore, $6.3 billion dollars would have to be spent to set up the appropriate infrastructure.
This would be a game-changer for both the region and the country, and investment from both the public and private sectors would be necessary.
But what are the odds of getting to this stage?
As Jefferies says, they’re lower today than they were yesterday.
A matter of confidence
I’m not sure whether the exploration currently under way will buy us as much time as the Government is implying to find replacement sources of energy for gas at least (keeping in mind the fact we import all the oil we use).
Had the Government taken its time in exploring this issue, we might have more certainty.
I admire the Government’s intentions around climate change - what sort of a soulless young person, or should I say New Zealander, would I be if I wasn’t aspirational and didn’t?
I just want the Government to instil some confidence in me that it has made the right decision.
I want it to demonstrate that it has in fact acted locally, as it has thought globally.
If you're interested in this topic, see this story I did a couple of weeks ago on what an exploration ban would mean for New Zealand. It includes a lot of data that helped inform the opinion expressed in this piece.
86 Comments
The problem is that the CoL hasn't thought this through at all.
Q. Will banning oil exploration in NZ prevent a single drop of oil being produced globally?
A. No.
Q. Why is gas exploration being banned when it will help to remove the need to burn oil and coal in other parts of the world?
A. Err, dunno. Didn't think of that.
Q. Why are we only talking about oil being used for fuel, when it has a vast range of other important uses, including some that are literally vital for saving lives?
A. See previous answer.
No doubt others could add many more questions.
Q. If we dont produce any oil and gas by 2030 ........... where will it come from ?
A. Shipped in massive vessels with a huge carbon footprint and at huge additional cost from overseas
Q. Why not shut down Solid Energy ...... its mining activities are way more damaging than exploration for gas ?
A. Because the Unions would not have a bar of it .
Q. We earn massive taxes and revenue such as Royalties from our fields which pays for health and education ........ as this income declines , what will be be replaced with as a revenue stream ?
A They dont have a clue .......... did not think about it
This Government is a bunch of idealists , who dont have a clue how the real world works
$20 million in walking track upgrades etc. This is such a joke. The government is shutting down an industry that hires high skilled labour and the likes of geologists, engineers and science researchers. The appeasement package includes more hospitality and tourism; this government is such an insult to intelligence.
Q. Why are we only talking about oil being used for fuel, when it has a vast range of other important uses, including some that are literally vital for saving lives?
This is a very tiny portion of petrochemical usage that pales in comparison to that used in transport. Also most of the products that use petrochemicals are manufactured overseas, hence the drilling ban will have zero impact. Nice try though. Are you a lobbyist for the energy sector? Didn't think so, just another wanna-be.
Q. Will banning oil exploration in NZ prevent a single drop of oil being produced globally?
A. Possibly - more interest in renewables
Q. Why is gas exploration being banned when it will help to remove the need to burn oil and coal in other parts of the world?
A. Who knows - but its better in the ground or do you have a new planet to move to?
Q. Why are we only talking about oil being used for fuel, when it has a vast range of other important uses, including some that are literally vital for saving lives?
A. At the rate we are going oil wont save us...more like speed up our demise (WW3?)
"A. Possibly - more interest in renewables"
unlikely, oil doesn't just provide "energy" oil and its derivatives make up part of just about all of the products we use on a daily basis.
"A. Who knows - but its better in the ground or do you have a new planet to move to?"
Exploration isn't the cause of the problem, it is the result. Stop consuming and the exploration will naturally stop.
"A. At the rate we are going oil wont save us...more like speed up our demise (WW3?)"
Oil is why we are here today. Without it (and the other hydrocarbons) we would be back in the stone age chewing on roots that we dug up with a stone axe.
If you think intelligent life is a bad thing then why are you still drawing breath? All life on earth is doomed without intelligence to intervene within the next billion years or so as sun gets hotter and bigger, it is actually something of a miracle it has lasted this long without a cataclysm wiping it out. We are almost certainly the only ntelligence to arise in 3.8billion years of life on earth so hoping for something better to come along is pretty optimistic.
I think we should let the market do it's stuff, governments often stuff it up.
http://www.spiegel.de/international/germany/high-costs-and-errors-of-ge…
NZ's oil extraction industry is an outsourced industry to Canada and the US.
Very limited number of NZers are in that industry anyway.
Taranaki economy will feel the impact but Shane just gave some fund to the region to further develop tourism to hopefully offset any negatives.
Banning tourism would have done more for the planet. Whats the carbon cost of the average tourist visit? And our local environment would be better without all the infrastructure and waste needed and created by tourism. The jobs pay low wages which mainly are done by foreigners we also have to import so they can damage our environment!
Well written article, discussing the data rather than superficial sound bites.
A very large aspect in long term energy usage reduction isn't increasing energy usage efficiency or even energy source change. It is the number of people that are consuming energy. The population is still growing at an exponential level, and last time I looked there are finite resources. It doesn't matter whether one is conservation minded if one has three or more children as the downstream increase in resource utilization will dwarf the small savings from using electric cars, renewable energy, etc... First, focus on the primary issue, and then focus on the secondary issues. I consider that the person driving a gas guzzler with two children to be more ecological than the person driving an electric car with four children. The person with four children has to assume that all of their offspring will consume 50% less than the person with two children in order to have balance. Not happening.
Where will we source the fuel we need for shipping, aviation, agriculture, earthworks, land management, recreation (assuming most road traffic can go electric in 2-3 decades). Where will we source the nitrogen fertilizers we need for productive agriculture? If the answer is internationally then explain why this makes any difference to the planet, and tell us where the extra billions in export earnings necessary to pay for it are going to come from.
Stunningly stupid and environmentally negative move by coalition to wipe billions off NZ GDP and destroy 10's of thousands of jobs. They are obviously operating far far beyond their level of competence.
Didn't you hear? we will be going back to wood fired steam engines, .. See, 1B trees in 25 years will make a lot of fuel to burn ... unless there will be electric tractors, trucks, and machinery ...but jokes aside, we will wait for the new clean hydrogen engines run by water only ...
This CoL is giving stupidity a bad name. This blow to the NZ business has done its damage on this CoLs big time, I bet some idiot has advised them to use their public capital and go for it while they have support ....
As I said before, Jacenda only feels at ease when talking about such a crucial subject with Students at ViC UNI , mainly Green and Labour supporters trucked from all over the place to avoid an empty theater ...
Very nice piece indeed Jenee, keep up the good work.
My understanding of the policy environment is limited but my assumption is giving fracking and the price of oil, undersea drilling isnt that lucrative in the current environment. Is that fair?
Because, if our reserves aren’t economic, then I support the suspension of permits on the basis that oil is yesterday and we need to move forward.
However, if our reserves are economic, I’m keen to drill baby drill with one condition - higher royalties and an insurance arrangement in the case of a we’ll failure.
They aren't yet widely available/affordable. They are a step in the right direction, and after a couple of generations they may be suitable as replacements for 90% of ICE light vehicles.
But they aren't an energy source, so much of the oil product we burn to move cars around will still be burnt to move cars around, but it will be burnt in a power plant and sent down powerlines to charge batteries instead. More efficient, but far from removing the need for oil.
Indeed:
New Zealand Oil & Gas wishes to address the potential impact of the New Zealand Government's announcement today about the future of offshore exploration.
The government's announcement will not have any immediate material impact on the operations or financial position of the company. Potentially transformational New Zealand Oil & Gas exploration prospects in the Canterbury and the Great South Basins are unaffected by today’s announcement and the company is continuing to market these world-class prospects.
New Zealand Oil & Gas also intends to manage the risks associated with the government's policy change by investing in exploration and production assets in other jurisdictions. We are focusing on assets where our New Zealand capability can add value, with a preference for gas assets because gas is seen in most jurisdictions as a vital energy source for the transition to a lower carbon world.
We note that the announcement is a sudden change of policy, which has not been consulted on and appears to conflict with the government's pre-election promises.
New Zealand Oil & Gas chief executive Andrew Jefferies commented, "Renewable energy can provide almost all our electricity needs in a year of normal rainfall. But another two thirds of our national energy use is industrial and transport related, for which complete renewable alternatives are not currently economically viable. Therefore the choice for New Zealand is whether we use our own resources for our own benefit, or New Zealanders rely on overseas energy sources benefitting those economies."
Good article, thanks Jenee.
As with my post in the previous thread and as you highlight here, it is indeed hard to track down meaningful and empirical information on this issue. Plenty of angry ranting all over the place, but little information that can lead one to a sound understanding of the pros and cons.
It could be (as you highlight) that this entire ban is relatively devoid of significant effect (and hence, value either way...potentially making it as valuable as a flag referendum) given the number and potential timeframe of the permits in existence already.
In terms of immediate and even medium term operational,the impact it is indeed minimal. The industry has been winding down for the last 5 years.
But what Jacinda has done is:
a) Shown the Govt will effectively kneecap an industry at any time and without warning. Doesn't exactly scream "Transparent". So in terms of global business we are essentially now "unstable" politically. Why would you invest here?
b) She has just alienated a whole lot of middle (and regional) NZ. Everyone is now thinking "who is next"? Mining? Farming? Forestry? Manufacturing? Logistics? Electricity generators? All are major polluters in the same way as "Extraction".
c) Failed to provide any alternatives. So she clearly has no solutions to the actual problem.
d) Most importantly she has destroyed the hope that was in Taranaki. It is now on life support here. What future do locals have? Low wage tourism? Farming? Everyone knew the downturn here was likely to be permanent, but they always held some hope of a potential new find. That hope and the future is now gone.
Everyone knew the downturn here was likely to be permanent, but they always held some hope of a potential new find. That hope and the future is now gone.
Everyone will be hoping for a new find in the declining industry prior to the existing permits expiring in 2030, huh.
NZ's biggest source of GDP in 2016 was the property sector ... Not sure if that is still the case.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=118…
So when early man stood up and announced ............
"Today we are going to stop using stones because ;-
We are going to run out of stones
Stones diggers are damaging the environment
Stones will have no use in 1000 years
and the earth is flat "
Everyone knew it was BS because the stone age ended , and we still use stones .
They'll all rise tomorrow morning and go to work - in the Nak. I don't expect them to take on a West Coast complex about not "being told what to do on the Coast". Anyhow, it's always been growing grass is what's important.
The Jones Boy has come of age - What a Statesman. Finding a way to lead the world on climate change. Who'd a thought.
Russia, Saudi Arabia and many dictatorships should send our Prime Minister a 'Thank You!' card for removing competition. We just outsourced our energy demand issues to countries with poor human rights records and lower environmental regulations...now we're supposed to feel good about it? Unfortunately we have not done good in the world today and it sits very uneasy with me.
NZ is a downright minnow in production and consumption of oil. The big producers in Mid East, Russia, US, Sth America and Africa won't even notice. This is just a symbolic move and shows we're preparing for and keeping up with the inevitable switch to higher/cleaner tech. Sure a few fossils will oppose change, but luckily visionaries don't pay attention to those types and our progression is all the better for it.
Well said. We are small fry in a dying industry.
We elected a government to make decisions. You won’t like all of them, but if the majority are for the better then you will benefit overall.
If we want to be “consulted” on every decision they make, then why have a government at all. We could run the whole country from Facebook polls, and let the “people” make every decision.
Put it this way I don't see Shell on the horizon. That was their decision. Writing is on the wall? In our part of the world anyhow. These industries don't last forever and a day.
https://www.radionz.co.nz/news/political/354933/govt-tells-oil-industry…
Labour Minister fronting up. Guts.
It is actually sad to read a lot of negative comments here, especially people said it won't help the environment, it is like saying I am just one person what I do won't change the world same as plastic bags you might not see your impact to the environment because you said everyone uses it. It is our selfishness that will kill our planet or the next few generation (not this generation). Most of us don't care about the environment anyway: how often do you see your colleague put a recyclable item to a general rubbish bin?
Back to Labour, I am not 100% convince with their decision but I will support it because it will do us more good than harm. It is a bold step to go along with out our clean, green image and I hope that other leaders will slowly follow (just my hope). Happy day everyone, everyday you can breath clean air is another blessing day.
A couple of days ago I drove past a house that had obviously missed the rubbish collection for the week. Overnight the bag had been ripped open, probably by cats, and I could the thing was full of recyclables. Yes, we need to learn some sharp lessons bloody quickly.
I would like to see the end of bottled water for the plastic bottle reason alone.
Absolutely agree. I come here to read more informed articles and opinions but some if these folks are as hysterical as on Fluff.co...
An end to new permits does not equal an end to petrol use.
An end to new permits does not equal no more royalties paid by oil companies.
Petrol companies pay SFA company taxes anyway do is future revenue loss significant? Doubtful
This is a sunset industry. It's already struggling here because of fracking in the US. Engineers and geologists are already leaving.
We don't use our own oil. It gets sold in Singapore and sent back as fuel oil. That's why Marsden Point is not in New Plymouth.
I think some folks need to get over these kinds of changes. We need to exit the 19th century energy economy already. Yes oil is good for fertilisers and lubricants but why burn it to get from A to B??
There is other tech out there. My neighbour who now lives in Chicago is part of a team converting CO2 into ethanol via an enzyme and some chemical process, I'm no chemist... They were doing this successfully on a test site at Glenbrook steel mill. Not sure where this has got too. Big oil might buy the ip and bury it...
I think you'll find they are using CO as a feedstock - not CO2.
Despite being backed by all the good and mighty - this is on of the dumbest initiatives ever as Caterpillar offer a stock standard engine to burn what is termed off-gas from steel mills etc thus backing out normally coal fired power generation.
There is no environmental benefit from producing alcohol vs simply fueling a gas engine to generate power.
Much lower capital, off the shelf solution and has been around for years.
The CO2 via enzymes is real Alice in Wonderland - always promising Jam Tomorrow but it's now many years since this kicked off and everyone is still waiting for jam.
Focused on what's do-able as distinct from what's economic for the same outcomes !
Doomed to become a footnote in the long history of failed and ill conceived environmental initiatives.
So Gas will run out, will I renew my gas appliances before then, probably not, will go for a ducted heat pump and electric cooking, and change from Rinnai on demand hot water to the electric equivalent or cylinder. Those kilojoules of energy provided by gas will now be supplied by renewable electricity.
The impact will be felt by the retailers of gas products immediately or very soon. Not a bad thing, just hope we can deliver the energy for the extra electrical appliances.
Everyone knows that renewable energy has to be the ultimate goal globally. But action needs to be taken in a globally coordinated fashion, not like this. We will worsen NZ’s carbon footprint by acting unilaterally. And to make this decision without consulting Taranaki businesses at all is staggering. Sadly I think Jacinta and her key advisers are demonstrating real nativity in many of the actions they are taking.
Would be far better if the COTaxers could say: X amount of geothermal/wind/hydro/solar will be available in 2025,population increase will have been stopped; so you will be able to safely buy ultra cheap mass produced completely recyclable EVs and we'll be able to leave the hydrocarbons, especially coal, in the hole. (Unless we want to get on the zillion dollar rail to the airport and fly of course.)
Its the oil and and it will end ..................... and like the stone age , when it ended we stopped using stones !
Except for :-
Roads
Concrete
Bridges
Harbours
Runways
Railway sleepers
Rail line supports
Shingle
Buildings
Engagement rings
Granite work tops
and
and
and
100,000+ houses and businesses use reticulated gas. Direct water heating with gas is more efficient than burning the gas in CCGT power station to produce electricity. Your LPG BBQ bottle is filled with NZ sourced LPG, CCGT and open cycle GTs produce power when the sun is down and the wind in not blowing.
Looking forward to my solar, battery powered BBQ, then again I might just burn charcoal.....
Seems National supporters can't think past 3 years. This does not ban oil exploration , there are still more than enough existing permits that haven't been fully used yet. The main reason they haven't been used is because the price of oil is low. There is no likelihood of the price of any fossil fuel rising significantly as the world moves away from them( except maybe gas to replace dirtier fuels). No one has thought to ask the exploration companies what actual exploration they had planned that will now not go ahead. I suspect the answer is none. they just want the "possibles" to drive( or keep ) their share prices up .
This Government is green in both the literal and metaphorical sense ............a bunch of babes who dont have a clue what its doing .
How can you ban a massive existing industry with absolutley no consultation with the stakeholders whatsoever?
Good way to maintain business confidence !
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.