Politics

The end is nigh for oil exploration

Existing oil and gas exploration permits will remain, but all signs point to them being the last of their kind. Shane Cowlishaw reports.

Inside Wellington’s TSB Arena, there was a definitive hint of nervousness as members of the petroleum industry quizzed the energy and resources minister on the future of their industry.

Perhaps it was due to having just run the gauntlet of protestors outside, with many needing a phalanx of police to ensure their safe entry.

But more likely it was the looming prospect that the future of oil and gas exploration could be limited under the new Government.

Several of the queries from attendees of the NZ Petroleum Conference focused on the future of gas as an export commodity. Greymouth Petroleum chief executive Mark Dunphy was blunt in his question.

“My company supplies gas to people who manufacture sugar, glass, wood products, fertilizer, many other core industries that I think help keep New Zealand competitive.

“I’m hoping this Labour Government will be very focused on the economics to the consumer when it considers changes to this area.”

Megan Woods’ responses were deflections, rather than answers, as she repeatedly referred to a looming announcement from Prime Minister Jacinda Ardern on the future of exploration permits that is expected within weeks.

Energy and Resources Minister Megan Woods won't say whether future exploration permits will be issued. Photo: Lynn Grieveson
 

Earlier in her keynote speech, Woods told the industry she would not be making the traditional annual announcement for exploration permits known as a block offer.

But she told them that they would have a valuable part to play in creating a pathway to the Government’s goals of 100 percent renewable electricity by 2035 and being carbon neutral by 2050.

“In our view, there are two choices, bury our head in the sand and assume the transition will take care of itself, or be responsible and make plans now for our future.

“No one is talking about making abrupt, jarring change in our economy and by planning now, that is what we can avoid.”

Woods said she had instructed officials to begin work on transition planning for the future.

She assured conference attendees that existing permits, some of which extend out to 2046, would be honoured. She also hinted that there could be a place for gas beyond the dates set, due to the country’s heavy reliance on hydro-electricity and the peak effects of a dry spell.

Despite this, all signs point to the halting of future exploration permits, or at least a severe restriction of them.

Speaking to media after Woods' speech, Cameron Madgwick, chief executive of the lobby group Pepanz, said there had been no consultation on the topic despite the Government preparing to make an announcement within weeks.

Ardern’s unexpected appearance earlier this month to accept a petition from Greenpeace calling for an end to oil exploration was taken by some as an indicator of the coming decision.

The Prime Minister has adopted a strong stance on climate change and while her decision to make an appearance before the block announcement is believed to have unsettled some in her cabinet, the task of convincing her political partners about the way forward on exploration was not too arduous.

At first blush, it would appear Labour would have its hands full satisfying both its partners in Government - New Zealand First and the Greens.

Whatever happens, almost everyone agrees change is coming. What shape that takes will be keenly watched.

The former are self-styled protectors of the regions, with saving jobs in places such as Taranaki important to maintaining their supporter base, while the latter has long called for a complete ban to future exploration and drilling.

It’s understood that while New Zealand First remains fiercely committed to growing the regions, their main concern was about the retention of existing permits.

With those ringfenced, they are happy to move towards using the regional development fund to finance alternative projects such as clean energy with an aim to replace or supplement the employment currently generated by the oil and gas industry.

This would leave the industry with National as its main political ally. National says it doesn't believe the Government will end exploration any time soon.

Whatever happens, almost everyone agrees change is coming. What shape that takes will be keenly watched.

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