Govt has declared its aspirational (but uncosted) decarbonising goals – and the oil giants have their goals, too

The government is wrestling with the goal of decarbonising the economy—at a  cost  nobody  can guess at.   It  says  it wants NZ’s electricity system to  become 100% renewable.

But,  Energy Minister  Megan Woods insists,  “we  won’t  die in a  ditch over the last couple of percent if it places unreasonable costs on households and puts security of supply at risk”.

For those   eager  not to  join  her  in the   ditch  (or anywhere else),  it  would be  reassuring,  given the  government’s performance  other major policies (for  example  KiwiBuild),  to  have a   clearly defined  policy  rather  than aspirational  ministerial  hopes.

Let’s  face  it:  there  will be a   cost,  possibly a  high one,  to decarbonising the  economy.

But will   NZ’s  effort  make any  significant  difference to global warming?  After all,  NZ’s  greenhouse gas emissions  are  just 0.17% of  the  world’s  total ,  compared  with China’s  26%, the US  14%  and the  EU  9%.   

Here’s the   conundrum:  if  climate change is such a  threat to NZ,  how  can we be sure  of  security of supply  when the hydrology  or  wind patterns  break  away  from  the current  trends?    What happens  in a  really  dry year?    Or  a   summer  when the  wind doesn’t blow?

Woods  is  “ confident new technologies will be developed to help us get there affordably”.

But what, exactly,  inspires such  confidence?

Well, apparently,  we  can “have an ambitious goal while also being pragmatic”.

Woods  says  the  government will be conducting five-yearly assessments 

“ … to ensure the energy trilemma of affordability, sustainability and security is well managed.  A simplistic trade-off won’t be needed. We will move our country towards a zero-carbon future while keeping power prices in check for households.  An investigation into customer electricity pricing is under way with decisions on that to be released imminently.

“We also know reaching our aspirational goal of 100% renewable electricity by 2035 will mean a sharper focus on lowering process heat and transport emissions. This work is already being prioritised.

“My renewable energy strategy work programme will also assist New Zealand’s transition to a low emissions economy”.

Woods   argues  the government  will keep   power prices   in check   for households.

Does that mean other users must subsidise households, thereby raising their costs and (no doubt) prices?

The Minister,  almost  as  an  afterthought,  does   concede  the need for  further work, such as  storage solutions, exploring a transport emissions reduction target and revising the National Policy Statement for Renewable Electricity Generation,  to be  investigated.

Again, one might ask,   what cost would be involved  with these  issues and their solutions?

It  is  not   surprising some  New Zealanders worry  that   ministers  with little  experience,  who  can   no longer  rely  on  teams of  public servants  in  departments  like the defunct  Ministry of Works or  Ministry of  Energy for expert  advice,  are  charting  the  future  for  such a crucial   pillar of the  economy as energy  supply.

Those   NZers   may be  relieved  that,  despite  the   government’s decision  last year  to issue  no  more permits  for  offshore oil and gas exploration,   at   least  two  major  companies are pressing ahead  with  drilling  programmes  in  existing  permits.

Exploration is on the rise in the next 12 months, with two projects scheduled off Taranaki and a third planned in the Great South Basin.

Austrian oil explorer OMV is headlining investment for three drilling programmes using two separate rigs.

The company, with offices in New Plymouth, has contracted Norway-based oil services company Archer Oil to use the Emerald modular drilling rig from March 2020 for ‘brownfield’ redevelopment of the Māūi field.

OMV is now the country’s largest liquid hydrocarbon producer, and third largest natural gas producer with shareholdings in the Maari, Maui  fields  and Pohukura  gas field and production station.

The CSOL Prospector rig arrived in June to undertake three-and-a-half months’ development drilling for Tamarind Resources at the Tui oil field in Taranaki.

Tamarind  hopes to  extend the life of the  Tui field over the next few years,  producing  up  to  6m  barrels of  oil.  Apart  from  investing  in the Tui field, Tamarind  spent  $44m  in  buying  the NZ assets  of  Vancouver-based  TAG  Oil   which  operated  the Cheal, Sidewinder  and Supplejack projects in  onshore  Taranaki  and is  busy  expanding  production from  those  small onshore  fields.

OMV has confirmed its selection of the COSL Prospector to drill in the Great South Basin this summer.

The firm has contracted the four-year-old harsh environment rig for only one well off the South Island – the Tawhaki-1 well, about 146 kilometres off the coast south-east of Balclutha.

The rig is currently being used for a development drilling programme in the Tui oil field off the Taranaki coast.  That is expected to be concluded by late October.

It will then be used by OMV and its partners for a three-well exploration campaign off Taranaki.  The location of those wells hasn’t been publicly confirmed.

OMV and partner Mitsui have been exploring in the Great South Basin for 12 years but are yet to drill a well.  Their 16,715 square-kilometre permit, extended by the government last year, expires in July 2022 and requires the drilling of a well by July 2021.

If that drilling is successful the permit can be extended out to 2030, but would also require the drilling of two further wells by July 2022.

OMV    plans to spend $500m to redevelop the Māui and Pohokura fields.

The company has invested more than $2bn in NZ since 2000 and contributed $1bn to the NZ economy in taxes and royalties.

So  what  odds   might be  given on  the oil giants,  as against  the  government, in achieving   their energy  goals?





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