“NZ’s economic engine will seize under oil ban”, is the New Zealand Herald headline over a rant by radio talkback star Mike Hosking.
“What this government is doing to places like Taranaki with its ban on new exploration licences for oil and gas is economic sabotage,” he thunders.
Well, not quite.
Only this week, listed oil explorer NZ Oil and Gas and its partners have started drilling the Kohatukai-1 exploration well south-east of New Plymouth. The objective is to test the Matapo and Mangahewa sands that deliver gas in the Pohokura, Turangi and Mangahewa fields north-east of the city.
The well will be drilled to a depth of more than 3,600 metres and is expected to take two months. NZOG has a 25% stake in the permit, as does its parent company Ofer Global Group. Operator AWE owns 12.5%, with the balance held by its parent company, Mitsui E&P Australia.
Earlier reports indicated as many as 20 wells being drilled both onshore and offshore in the region before early 2019.
With international crude oil prices rising (Brent crude reached $US81.5 a barrel this week), and predictions they may soon go to $US100 a barrel, the incentive for re-working drilling schedules has sharpened.
Tamarind publicly notified marine consent applications in early May for public submissions to drill five sidetrack offshore wells in the Tui field, in the Taranaki Basin from early 2019.
Todd Energy is well under way with preparations to begin drilling and hydraulic fracturing six new wells at the Mangahewa G site, north Taranaki, in late 2018. Contractors are finishing off laying the 4.5 kilometre gas pipeline from the site to the Mangahewa production station in preparation for the wells being drilled and fractured.
The drilling and fracturing phase of the programme could see employment for up to 150 people.
OMV, which earlier this year acquired Shell NZ assets, is planning to drill nine offshore exploration wells during the 2019/2020 summer across six permits in the Taranaki Basin.
Tag Oil recently finished drilling to 3000 metres onshore at Puketea-1 well in the Puka permit, north Taranaki. The well flowed oil at 600b/d.
This company which has producing fields, Cheal and Sidewinder, also holds the permit for the Cardiff Deep field, where earlier exploration tapped a large hydrocarbon column. If the international oil and gas prices keep rising, exploitation of a field like this becomes more economic.
Meanwhile NZ Oil and Gas is still seeking partners for drilling the Barque prospect offshore in Canterbury.
Development of Barque could double New Zealand’s current oil and gas production. Up to $15bn in GDP could be generated over the life of the field. In total, up to 5,740 FTE jobs per year could be created during construction, and around 2,000 enduring jobs in the region. NZ Oil & Gas is the operator of the Clipper joint venture, where the Barque prospect is located.
Natural gas from New Zealand has environmental benefits as an ideal energy source for the transition to renewables. For example, carbon emissions would drop if dairy plants transitioned from coal to natural gas.
If this is the positive side to recent moves by the government on banning the issue of new permits for offshore oil and gas exploration, there is still the negative fallout from its decision which has drawn harsh criticism.
The proposed ban on new offshore exploration looks likely to halt plans by Methanex for a $100m-plus emissions reduction project at its Motunui plant. It may also put paid to a similar investment to modernise the urea plant.
Certainly Energy and Resources Minister Megan Woods is still in the firing line over her handling of the issue. She has been heavily criticised for the way in which she rubbished advice from her ministry officials on the impact of the ban.
In Parliament she is pushing through legislation to give effect to the ban, sending it to the Environment select committee after cutting consultation down to just four weeks.
That committee hasn’t handled Crown Minerals legislation before. All previous Crown Minerals amendment bills have gone before the Economic Development Select Committee. Woods reports to the Economic Development committee in her capacity as Minister of Energy and Resources.
PEPANZ, which represents stakeholders, calls the rushed legislation ‘an undemocratic disgrace’ that came with ‘a shocking lack of consultation’.
The minister was attacked from both left and right for her actions.
She must have found it galling to be criticised by Greenpeace’s Russel Norman, who told her the government must not cave in to pleas for special treatment by the oil and gas industry by extending drilling permits that are set to expire.
Green Party energy spokesperson Gareth Hughes chimed in, saying oil explorers shouldn’t be offered special treatment to extend or waive that time limit.
“I struggle to see the point in banning offshore exploration for oil and gas if existing companies with huge blocks can hold off from exploring until way later down the track.”
National’s energy spokesman Jonathan Young says Megan Woods is showing a shameful abuse of process by rushing through a Bill to ban new offshore oil and gas exploration that is bad for the economy. He promises the next National Government would repeal this politically driven ban. He says it would restore certainty to a vital industry that has very long investment cycles and can’t be shut out of the conversation about New Zealand’s future energy needs.