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?