Megan Woods still in the firing line over handling of energy legislation

“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.

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