David Clendon
Boom times for oil and gas?

This morning’s  Dominion article about ‘boom times’ for the gas and oil exploration industry is an intriguing, even slightly funny, mix of boosterism, drum beating and dissimulation.

The Chair of PEPANZ appears almost breathless with excitement as he seeks to fulfil the primary objective of his organisation, “to publicise, promote and advance the interests of the oil and gas exploration industry in New Zealand”.

The East Coast, we are told, has been only ‘lightly explored’.  In fact there have been  surveys done of the area’s onshore and offshore potential since at least the 1970s, and the likely existence of  reserves recognised, albeit in a number of discreet fields rather than one large single reserve. All that has changed is that in the face of declining reserves of cheap, readily accessible oil and gas elsewhere, the industry is moving to ‘frontier’ areas with  a much higher risk profile than would have been contemplated even a decade ago.

Apache we are told is a ‘solid’ company, and isn’t it good that Shell are now players in the South Basin?

With a US$43 billion asset base, Apache are certainly in a position to accept some financial risk from frontier exploration, especially when our government is hanging so much of its misguided economic policy on the back of an extraction-based model worthy of 19th century robber barons.   We  New Zealanders of course will be carrying 100% of the environmental risk – it is our land, water and coastlines that could be irreparably damaged in the event of  a major accident.

And of course while it is noted that Shell has entered the fray in the South Basin, no mention is made of ExxonMobil and Todd both bailing out on the grounds of unacceptably high risk due to the harshness of  the environmental conditions and  remoteness.

Explorers apparently are not put off by protests from Greenpeace (who we are told are only in it for the headlines) nor by ‘local tribal groups’.  That sounds to me like throwing down a wero, a challenge,  one which I’m sure nga iwi o te motu will not hesitate to take up!

We are told that fresh water contamination from fracking (hydraulic fracturing) in the US has only been due to ‘cowboy’ operators cutting corners, but we need not fear for our precious water resources because the Government will ensure that no such operators will be allowed here. I wonder how our single inspector will detect the presence of cowboys, assuming they are astute enough not to turn up wearing a ten gallon hat and carrying a six-gun?  How will he or she manage to be present at every site throughout every operation to spot corner cutting?

We desperately need a government with a progressive, 21st century economic policy, based on the kind of initiatives that groups like Pure Advantage are advocating.  We need a clean green economy that works for everyone, not a backward looking ‘drill and hope’ mentality that creates so much environmental and economic risk for so little benefit.

6 thoughts on “Boom times for oil and gas?

  1. David says “on the back of an extraction-based model worthy of 19th century robber barons.”

    YOU use this to your advantage every time you drive your car and for every item that’s been trucked to your supermarket

    David says ” We New Zealanders of course will be carrying 100% of the environmental risk – it is our land, water and coastlines that could be irreparably damaged in the event of a major accident”

    Yeah – much better to make some other unknown country take your risk for your petrol you put in your car.

    Like or Dislike: Thumb up 6 Thumb down 5 (+1)

  2. The point is there will be no boom times for NZ. Royalties may be just a mirage. The MED commissioned Woodward report confirms domestic production from existing fields is falling off a cliff and royalties will have shot their bolt within 2 years.

    Most of the much hyped royalty figures for frontier fields are 25 years away according to the Report and assume more oil will be found. Not that you would know this from the Dom Post and other coverage.

    For a dissection of the Woodward report see http://oilshockhorrorprobe.blogspot.com/2011/09/oil-royalties-mirage.html

    Like or Dislike: Thumb up 6 Thumb down 2 (+4)

  3. I don’t think Exxonmobil and Todd were put off by the conditions – these guys operate in the North Sea and the Arctic, neither of which are easy, and Shell isn’t being put off. What put them off is the lack of potential resource. Basically there wasn’t enough upside to even do an exploratory hole. Shell is in a different permit which may be better (though if it were I’d have expected exxon/todd to have been first port of call as they were already there and could share information).

    NZ is going to continue to struggle because I think fundamentally our prospectivity is pretty low. The only fleeting interest of oil majors, even when they are finding it hard to access resources in other areas, shows that.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  4. Photonz1 said,
    “David says “on the back of an extraction-based model worthy of 19th century robber barons.”

    YOU use this to your advantage every time you drive your car and for every item that’s been trucked to your supermarket”

    Your charge doesn’t change the truthfulness of David’s claim one little bit.

    Like or Dislike: Thumb up 2 Thumb down 2 (0)

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