How should we think about the 10 June announcement of new oil and gas exploration programmes off the Taranaki and Otago coasts? Is this good or bad news? The New Zealand Oceans Foundation thinks that this is good news. Here is why.
New Zealand is in transition. To reduce greenhouse gasses to net carbon zero by 2050, Government and its science and industry partners are leading the necessary transition from a fossil fuel to a renewables economy. During this transition period, as we begin to replace New Zealand’s light transport fleet with electric cars, commit to large scale afforestation, reprice carbon and move to 100% renewable sources of energy from solar, wind, hydro and geothermal, we need to secure an ongoing supply of natural gas. This gas is required to fire the process heat needed by New Zealand’s large industrial consumers (milk powder, paper production, cement, steel, ammonia-urea, methanol and users) as well as by domestic consumers.
Most of this gas comes from the offshore fields of Maui and Pohokura, but these fields have a limited life. We cannot wait for them to run out before we look for new sources of offshore gas. It takes several years, possibly up to ten, to turn a newly discovered offshore gas field into full production, if necessary economic, environmental and safety measures are to be developed and put in place, as they must be. If existing fields run out in the meantime, we can import natural gas as a stopgap, but shipping natural gas from other countries incurs additional transport costs and an additional carbon footprint, which is not what any responsible government would want to do. Besides it transfers economic activity, and part of our carbon footprint, to another jurisdiction and is not an example of good global leadership.
So it makes both good environmental and economic sense for the government to allow existing exploration permits to be exercised. This is not a loophole. When the government announced its intention to prohibit the issue of new exploration permits it also made it clear that the legal and contractual rights of existing permit holders to explore for oil and gas would be honoured. The government is not in the business of tearing up existing rights.
There is an additional reason why the new exploration programme is good news. OMV-NZ and Tamarind are bringing in the latest in international exploration technology to drill for gas. The COSL Prospector was built in 2014. It is massive. It has a gross tonnage of 34,526 tonnes and a draught of 17.5 metres. It can operate in water up to 1500 metres deep. It is semi-submersible and self-propelled, with a speed of 6-7 knots. It brings the most modern gas exploration technology to New Zealand’s oceans.
The Prospector will be operated initially by Tamarind off the Taranaki coast, and later in the year will be used by OMV-NZ to explore the Tawhiki structure off the Otago coast some 130 kms SE of Balcutha. This structure is in 1200 metres of water, so it is well within the capability of the Prospector (the Pohokura field off Taranaki, by contrast, is in only 70 metres of water). If commercial quantities of hydrocarbons are found then up to 5 appraisal wells will be drilled. If the economics work out then the government will be able to consider whether exploration should proceed to extraction. By that time we will be well down the track towards net zero carbon, so any decisions then can be taken on the basis of scientific and environmental knowledge developed during the intervening years.
While we transition to a green economy it makes sense to develop our scientific and technical knowledge around how best to preserve the ocean environment whilst also considering whether we wish to develop New Zealand’s offshore gas reserves further. We get the possibility of an additional natural gas resource to give our industries additional time within which to convert to renewable energy. And we get the possibility of shifting the balance of the land based economy more towards our oceans. As the New Zealand Oceans Foundation, we are in favour of that.