Young eco-warriors press for change – if they get what they demand, they should brace for a lower standard of living

The latest  cohort of school students  took  to the  streets  last week  to  demand  climate  change action. In  Wellington, several thousand strikers marched to Parliament.

Izzy Cook, one of the organisers, said they had their own list of demands.

“Investing in a just transition to a sustainable future, reducing agricultural emissions, prohibiting the use of fossil fuels nationwide so phasing them out, getting climate education [and] honouring our neighbours in the Pacific Islands.” 

 The demands were handed over to Climate Change Minister James Shaw.

But he said it’s not just him who needs to be listening.

If you can now buy a house (thanks to the govt’s policies) you may balk at your power bill (thanks to the govt’s policies)

As  the  Ardern government grapples  with  the  housing  crisis  it inherited — and which  it compounded in its 3 ½  years in office — it looks like it  will have  another  on  its hands in  the  energy  sector.

When   it  sought the  plaudits  of the  climate  change  warriors   and   other  Greenies  by placing a   ban   on exploration   for  natural gas,  it did not  appear to  realise that supplies of   natural gas already were running down fast.

Prime Minister Jacinda Ardern was quoted at the time  as  saying “I don’t think  they  (the petroleum exploration industry)  was blindsided”.

She  insisted  the  country  knew  the  Labour Party  wanted to  move away  from fossil  fuels.

So  what  have been  the consequences?

NZ  imported more  coal  in 2020  than in  2017  and 2018  combined.

Climate Change Commission has plenty of new energy developments to consider before completing its final report

Thirteen   wind farms, each the size of the country’s  largest, will need  to be  built in the  next  15 years  to power  the  country’s fleets of  electric vehicles, and boilers. That’s  what the Climate Change Commission has urged in its  recent    report to the  government.

Whether   the  country’s power  companies  will see it  the  same way  as the commission is  far   less certain. Already  Contact, one of the biggest, has stepped  up  to the plate and says  it  will  invest $580m  to build a  new  geothermal  station at Tauhara.

Contact’s  chairman, Rob McDonald,  says:

“We believe the Tauhara geothermal project is NZ’s  best  low-carbon ren ewable electricity opportunity.  It will operate 24/7, is not reliant on the weather  and is ideal for displacing  baseload  fossil fuel generation  from the  national grid which  will significantly reduce  NZ’s carbon emissions”.

Construction is  expected to be  completed  by  mid-2023. Japan’s Sumitomo Corporation  is  leading the build, in partnership   with Naylor Love  and Fuiji Electric.

Meanwhile   Genesis Energy  is  reviewing whether it  should keep its investment in the offshore Kupe  oil and gas field,  or look at “better investment  opportunities”.

It  says the field  has “attractive” cash flow and a  strong  growth outlook, and its operators are looking at further development, including  further  exploration and drilling  another well.

Kupe  provides  around 15% of  the  country’s  natural gas  and half  of  LPG demand.

Last  August  its gas  reserves  were revised  upwards  by  more  than 20%.  Its  importance to  the  country  has  risen  after  Beach  Energy  and NZ  Oil  and  Gas (Genesis’  other  partners  in Kupe)  relinquished  PEP  52717 (Clipper)  which contained  the promising Barque  prospect off  the  Canterbury coast  this  week.

NZ  Oil  and  Gas  said  it  was with “much regret”  they  gave  up the permit  after years of  work to mature  it  and  bring in appropriate partners. CEO Andrew  Jefferies  says  he  expects it  will not be  the  last offshore  acreage  to suffer  the same fate.

He  points to a  confluence of  events including adverse regulatory settings, the  dry  hole in OMV’s Tawhilki permit,the recent announcement

Terminating the  Wherry-1 drilling, and the effects of Covid drill costs having  formed  a perfect storm, making  the task of finding suitable drill partners in the required timeline impossible.

Both  Beach  and  NZOG  reaffirm their commitment  to NZ  with  Kupe   which they say “remains a  key supplier to the  country’s energy needs”.

At Kupe they are halfway through a major compression project  to maintain production, and say  the offshore  permit has both development and near-field  exploration potential.

Their enthusiasm  for  Kupe  suggests   both   could be interested   in  channelling  more of  their capital,  now  they  will be  no longer funnelling   any  towards the  Barque prospect, into Kupe. They might  also  be interested  in snapping  up   Genesis’ stake  if it comes on the market.

However  that  works  out, there  are  other interesting  moves   in the  energy  field  which makes  some of  the  Climate Change Commission’s scenarios  look  out of  date  even  before  they reach the government.

Energy  consultants    report   keen interest by  overseas  interests  in investing   in large-scale  solar  projects  in NZ,  now  that  the price  of  solar  equipment   is falling.   Where big solar  farms   can  be  located  adjacent to large sources  of demand,   the  lower  transmission costs  are  said  to make  the economics  look very attractive.

With  the  government  moving  last week to  stiffen up the Emissions  Trading Scheme, incentives  in the  energy  sector   are  changing  rapidly. Climate Change Minister James Shaw  claims  the government  had to lift the price  to emit  because  the  scheme had  failed to deliver on its primary purpose  of bring down carbon emissions.

The  Climate  Change Commission will have to bring these developments into consideration before its final report  reaches the government  for  action next  December.

CO2 emissions from energy are down on Trump’s watch – thanks to fracking and competition

Energy and climate change are key issues in the November 3 US presidential elections. Democratic challenged Joe Biden says he will return the US to the Paris Climate Accord, from which President Donald Trump withdrew, and hasten new and renewable energy projects.

But a new Energy Information Administration report demonstrates how fracking and competitive energy markets have done more to reduce CO2 emissions over the last decade than regulation and renewable subsidies.

Earlier this year the International Energy Agency said the US saw the largest decline in energy-related CO2 emissions in 2019 on a country basis due to a 15% reduction in coal for power generation while US emissions are now down almost 1 Gigatonne from their peak in the year 2000, the largest absolute decline by any country over that period.

 

According to the Energy Information Administration report, energy-related CO2 emissions in the US fell 2.8% last year with energy companies replacing coal and heating oil with less expensive natural gas. Hydraulic fracturing combined with horizontal drilling produced a surge of natural gas production in the Midwest and Southwest. With natural gas prices falling, many coal plants have shut up shop.

 

Between 2007 and 2019, CO2 emissions from coal declined by more than 50% and by 15% in 2019 alone. Between 2016 and 2019 the share of electricity generated by natural gas rose from 33.7% to 38.1% and by non-carbon generation (including nuclear and hydropower) to from 35.5% to 38.2%. Coal generation fell from 30.3% to 23.3%.

The report says power generation from natural gas accounts for 60% of the country’s decline in CO2 emissions from electricity since 2010. The carbon intensity of the country’s energy declined at about the same rate during the first three years of the Trump Administration, as from 2009 to 2016.

 

Great news from Kupe (if drilling permits could be acquired) – NZ has bigger gas and oil reserves than previously reported

In these  days  of  doom  and  gloom  over the  impact of the  Covid-19  pandemic, any outfit  which can trigger  a  ray  of optimism   deserves a  salute  from  the  rest  of the  country.

Fisher & Paykel  Healthcare, for  example,   reported  this  week that in the  four months to  July 31 it recorded a 390% lift  in the  sales of  its hospital  respiratory care  products,    compared with  sales in the same period  the previous  financial  year.  This  remarkable  performance reflects a changing trend in clinical practice to lead with nasal high flow therapy for treatment of Covid-19 patients in hospital. Global  sales   for  the Auckland-based  company of both invasive ventilation and Optiflow consumables in July have returned to similar levels to the peak it saw in April.

No  wonder  this   is   the  top capitalised   company  listed  on   the  NZX, valued at  over  $20bn.

In a  very  different  field,  but  like  the  F&P Healthcare report barely getting a mention  in the mainstream  media,  was   the  announcement   that  reserves  in  the  Kupe  gas and oil field  offshore  in  Taranaki  are  significantly   greater  than previously  reported.  This  means the  field’s  life  is  likely  to be  extended beyond  the 15-20  years  expected  when  it first  came on  stream   in  2009.

OMV Taranaki wins consents (but with robust conditions) to take vital step for NZ’s energy industry

Oil and gas company OMV Taranaki has won consents to undertake the drilling of up to 10 exploration and appraisal wells, as well as the associated discharges, within its petroleum exploration permit in the Maui Field in the Taranaki Basin.

This is  seen  as a  vital  step  for the  energy  industry  in NZ,  because  reserves  of  oil and  gas  could  run out  within 11  years  at  present  rates of  consumption.  And  with  the  economy  under the whip,  any  extension  of  those reserves   would come as a  welcome  fillip.

OMV  will be  aiming  to  build    on  its  success  in the  last drilling season   with  its  wildcat  well  Toutouwai-1, 50km  off the  Taranaki coast,   penetrating  several  layers of   hydrocarbons.   Because  of  the Covid-19 pandemic it  had to withdraw  from  further  work proving  up  the Toutouwai   discovery.

Why climate change zealots should join the champions of NZ oil and gas exploration

As   from  tomorrow  NZ  will be staring  goggle-eyed at  a  budget  deficit,   the size of which it has   never seen  before.

That deficit  will  signal  the depth of the  economic  pain  being  inflicted  on the country by the Covid-19  pandemic.

The  burden  will  have to be   carried   not only  by this generation  but the next  and probably the  one  after that.

So would  the government  welcome   anything  that  might  ease  the   burden?    An  oil or  gas  discovery, perhaps?

Critics of the oil industry should be careful about what they wish should happen to it

When  Energy  Minister  Megan  Woods  announced  in February the government was  taking action  which   would lead to  lower petrol prices,  she  probably  didn’t  envisage  the outcomes delivered to the  fuel  market  by the impact of   the Covid-19  lockdown.

Z Energy   which has  45%   of  the  market  has just announced  a  loss of  $88m for the year.

So the  government  which  has argued  since being elected    that  motorists were  being “fleeced”    and  blamed   the  petrol  resellers   for  their high margins  now  has a different  problem  on  its  hands.

Instead  of  the   huge  revenue  flows   it  extracted  from  motorists  for  the various  taxes  it  imposed  on petrol  (which  sent  prices  soaring) it  has  a  big  hole  opening   in the  National  Land Transport  Fund.  The   government  may now  have to  find    other   means  of  funding  transport projects  either under  way  or planned.

Promising gas find is reported without much hoopla – Taranaki will welcome the boost but the Greens are coy

In  another  era,  it  would have  been the  lead story  on  every  news channel.  But in a  country  brainwashed  into believing  it’s  apocalypse now,  either  from  global warming or  Covid-19  (and possibly  both),   news  of   a  “significant”   oil and gas  discovery offshore  in Taranaki  barely  registered   in the   mainstream  media,  although the   New Zealand  Herald    did   record  it   in the  business  pages.

There  has not  been a  major energy   find  in NZ  since  2006, and given  New Zealand has  only 11  years  of  gas  reserves left,  the discovery could be an exciting  outcome     at a  crucial   phase for the  NZ  economy.

Austrian giant  OMV reported  the Toutouwai-1 wildcat, drilled to a total depth of 4,317m some 50 km off the Taranaki coast in 130m of water, encountered several hydrocarbon-charged reservoir zones during drilling.

Climate change policy is not stable – something has to break

Pretty much everything has a breaking point.  The only questions are where, when and how.  Might it be coming soon with climate change policy?

This week there was disarray in the Australian Liberal and National party coalition over the costs of climate change policy.  This was one of the issues which helped sink Malcolm Turnbull’s premiership.  It’s significant because political parties have a big incentive to hide the washing of their dirty linen, certainly until they have agreed an electorally marketable compromise.

And in the UK, Boris Johnson’s Conservatives have been hinting that they might bring forward to 2032 the proposed date to ban the sale of petrol and diesel-powered vehicles.