Iran has announced the discovery of a new oilfield containing 53 billion barrels of crude.
So what does that say about the NZ government’s move to be a world leader in shutting down the issue of new permits for oil and gas exploration – a move which Jacinda Ardern characterised as her government’s “nuclear free moment”.
Critics say the ban on future oil and gas exploration is an empty gesture in the global context of climate change.
They point out that China is aiming to double the share of gas in its overall energy mix over the next ten years. Around half of its gas imports is likely from pipelines, including from Russia.
The remainder will come from imported LNG. China has invested in LNG terminals to facilitate these imports.
A major discovery of gas in NZ could help to meet that demand and displace coal consumption.
Currently half of the gas produced in NZ is converted to methanol for export. More methanol is produced and used in China than any other country.
Much of the methanol produced in China is made from coal. Its manufacture emits nearly three times as much CO2 than methanol produced from gas. It also requires substantial quantities of water and produces waste products of ash, slag and atmospheric emissions.
And so gas exported from NZ as methanol reduces global CO2 emissions and improves global environmental outcomes.
Andrew Jefferies, CEO of NZ Oil and Gas, told the NZ Petroleum Conference NZ is predominantly a light oil province.
“Even as the world reduces emissions to the level demanded in Paris, every forecast suggests oil will be used for decades to come. So it follows that anyone wanting to reduce emissions should prefer to produce oil from NZ.
“NZ light oils will displace production of extra heavy oil overseas. Oil discoveries in NZ would leave an equivalent amount of less attractive oils in the ground.
“Our analysis shows that producing NZ light oils will reduce global CO2 emissions per litre of petrol by about 20%. Even though that oil would probably not be used in NZ, it would offset use of those oils elsewhere.
“It is better for the world to use light oil from NZ than to produce oil from open cast mines of tar sand in forested Canadian wetlands”.
Jefferies noted that in a competitive world NZ does not have many competitive advantages. One of the few it has is a massive continental shelf – the fifth largest in the world. Beneath it lie vast quantities of undiscovered natural gas, and probably some light oil.
“It will benefit the world to find it, produce it, and export it to energy-hungry markets of the world”.,
Unfortunately the government’s decision has driven away some of the oil majors which have the skills and resources for the difficult work of oil and gas exploration.
The question is whether those companies which still hold permits to explore in NZ waters will persevere.
Austria’s OMV, which operates the Pohokura, Maui, and Maari fields, has plans to drill a well in the Great South Basin and has succeeded in securing a consent from the Environmental Protection Agency.
Its permit requires it to drill one exploration well in the area off the Otago coast before July 1, 2021.
It is a high-risk venture estimated to cost around $80m, and OMV with its partner Mitsui, which has a 17% stake in the permit, is said to be looking for other companies to spread the risk.
A large discovery from NZ, if used – for example – to create LNG exports, could help to displace coal.
Given the proposition that oil and gas from NZ can be part of the solution to a safer and better world, shouldn’t even the eco-warriors of Extinction Rebellion be supporting it?.