The fact that the ban on new offshore oil and gas exploration permits was announced so quickly – and with seemingly so little research – should worry us all, writes Jenée Tibshraeny.
This column was first published on interest.co.nz.
‘Think globally, act locally.’ That’s a nice phrase that that can be applied to the environmental movement. It implies that people in different communities should do what they can to contribute towards a greater cause.
For those with the ability to do so, this might mean opting for an electric car or choosing to buy products that have been sustainably made. For those in less privileged positions, this might simply mean putting more effort into recycling.
The government appears to believe that by deciding not to issue new offshore oil and gas exploration permits it is ‘thinking globally, acting locally’. It is essentially saying, ‘Look world, we are taking the lead on a global issue that needs decisive action’. The aspiration in this is energising and invokes ‘proud Kiwi’ feelings.
The problem is, I am not convinced the government is in fact ‘acting locally’ and considering the situation New Zealand is in as it seeks to solve a global problem. It appears to be ‘thinking globally, acting globally’.
I might be wrong. I hope I am wrong.
The missing facts
The issue that I would like to highlight in this column is that the government has failed to take the public with it, as it has made a major decision about our future.
Yes, the government has been open about prioritising environmental issues, Prime Minister Jacinda Ardern campaigning on climate change being her generation’s “nuclear free moment”.
But it hasn’t actually put forward a convincing, facts-based case explaining where New Zealand will get its energy from in 10 years’ time when our current gas reserves are depleted.
It hasn’t said: “14% of New Zealand’s energy needs are met by gas. We currently produce all the gas we use. We project that by 2025, X% of this energy will come from energy sources A, B, C, and by 2030, X% will come from energy sources A, B, C and D.
“We are creating these incentives to help clean energy companies ramp up production. We are working on initiatives with Clean Energy Company X and Clean Energy Company Y. We are putting these measure in place to ensure that during the transition energy costs in New Zealand won’t soar.
“We aren’t pulling the rug out from beneath Methanex and the other manufacturers heavily reliant on gas, as we are confident they have future-proofed their businesses. We can categorically say we won’t need to spend tens of billions of dollars to build the infrastructure necessary to import gas (which is likely to be more expensive) when we realise we have a fuel shortage.
“Turning to oil, 46% of the country’s energy needs come from oil. We import all the oil we use. We export all the oil we produce as it is good quality and therefore worth more. By 2030 we will have the infrastructure in place to service a vehicle fleet that is X% electric.
“We project that the price of electric cars and trucks will fall by X%. If they don’t, we will subsidise them. We plan to invest $X in electric rail.
“There is no point cutting our oil supply, if our demand stays the same.”
This is not only what I would like to hear, it is what I would expect to hear from a government that makes a big call without so much as going through a consultation process before reaching a decision.
Dare I say it, but perhaps this is an issue that deserves a ‘working group’. It is a complex scientific, economic, and social issue that requires research and public consultation. Perhaps the government has beavered away on this quietly, but I am dubious.
When I interviewed Energy and Resources Minister Megan Woods at the end of February, she didn’t know how to pronounce ‘Schlumberger’ – the name one of the multinational oil and gas companies operating in New Zealand. Make of this what you want.
Instead of producing a speech or media release anything akin to what I have written above, the government has highlighted the fact that it last week threw $20 million at Taranaki to help it diversify its economy.
With most of this going towards tourism initiatives, only $100,000 was allocated to putting together a business case for a ‘New Energy Development Centre’.
What an insult! The government would’ve been better letting the issue be, rather than sprinkling the region with a patsy amount of misguided sympathy money.
The bigger picture
Looking at the bigger picture, the problem with the government making a relatively abrupt announcement on oil and gas exploration is that it makes New Zealand look unstable to oil and gas investors. We can assume the government doesn’t care, as it doesn’t want them here anyway.
But what if it turns out we can’t substitute all our gas use with alternate energy sources, at a reasonable cost?
The government has highlighted the fact there are currently 31 active exploration permits in New Zealand. If new supply is discovered, mining permits could last up to 40 years.
The difficulty is, progressing a project from the exploration to the production stage is costly and involves a great deal of investment. The government putting a big ‘not really open for business’ sign on our door does nothing to attract investment.
Let’s look at New Zealand Oil and Gas (NZOG) and Beach Energy. They have a joint permit to explore in the Canterbury Basin off Oamaru – an area with huge potential. NZOG’s CEO, Andrew Jefferies, told me it would cost around $50-$60 million to drill an exploration well in the Basin.
NZOG and Beach Energy could probably only fund around half of this. They would need to attract investment from other companies to fund the other half. From that point, there is only around a 20% chance of them making a find that’s worth progressing to the production stage.
If they decide to go down this route, and pipe the oil/gas onshore, $6.3 billion dollars would have to be spent to set up the appropriate infrastructure. This would be a game-changer for both the region and the country, and investment from both the public and private sectors would be necessary.
But what are the odds of getting to this stage?
As Jefferies says, they’re lower today than they were yesterday.
A matter of confidence
I’m not sure whether the exploration currently under way will buy us as much time as the government is implying to find replacement sources of energy for gas at least (keeping in mind the fact we import all the oil we use). Had the government taken its time in exploring this issue, we might have more certainty.
I admire the government’s intentions around climate change – what sort of a soulless young person, or should I say New Zealander, would I be if I didn’t?
I just want the government to instil some confidence in me that it has made the right decision. I want it to demonstrate that it has in fact acted locally, as it has thought globally.
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