‘A Very High-Risk Way To Spend $1 Billion’: Experts On NZ First’s Oil And Gas Policy

Kate Newton
Climate Change Correspondent

New Zealand First’s
oil and gas exploration policy is “a very high-risk
way to spend $1 billion“, a resources law expert
says.

Another researcher in the field says the policy
is unlikely to achieve the party’s aim of shoring up
domestic fuel supply.

At the party’s campaign launch
on Sunday, leader Winston Peters announced New Zealand First
would
invest $1 billion in a ‘National Subsurface Development
Survey’, to identify and create a single dataset across
oil, gas, geothermal and carbon dioxide storage
sites.

Peters said New Zealand potentially held
Norway-scale energy prospects beneath the seafloor and the
odds of a major commercial discovery were “well above 90
percent”.

“If we identify those reserves in our
basins, we will have the ability to utilise the natural
resources we have to make our country secure, prosperous and
to build real resilience.”

University of Waikato
energy and natural resources law professor Barry Barton said
he did not know where Peters got the 90 percent figure
from.

“And in a situation like this, even to use the
word ‘reserves’ is dangerous. The best you can hope for is
you find something that may be a resource.”

Barton
said what the party was proposing investing in was “not
investment-grade stuff”, but a first step that might yield
nothing at all.

“The challenges of taking geophysical
survey data further, to work it up to be a prospect that
would actually justify drilling and exploration wells, is
considerable,” he said.

“It’s a very high-risk way to
spend a billion dollars, isn’t it?”

Even a significant
find somewhere like the Great South Basin – one of the areas
Peters singled out – might not necessarily be
useable.

“Many New Zealand fields have turned out to
be gas-rich and light on oil. If that was to happen again,
if you’ve got a big gas discovery near the Auckland Islands
or something, the challenge of bringing it ashore and then
what you’re going to do with it when you bring it ashore is
very considerable,” Barton said.

New Zealand not
‘energy-poor’

Peters said surveying would take two
years, and within six years, the country could have a
pathway to own and control its own supply of energy, through
a Norwegian-style sovereign fund.

Energy Resources
Aotearoa chief executive John Carnegie backed
that timeframe, saying the Pohukura field, offshore from
Taranaki, took just six years to get up and
running.

But Pohukura was not a good example, Barton
said.

“Bear in mind that the platform is within plain
sight from the highway … and indeed, some of the reservoir
is exploited from onshore wells, which are far cheaper and
far easier to get up and running.”

$1 billion would be
far better spent on funding home insulation to make energy
use more efficient, or accelerating the growth of renewable
energy.

“Home insulation sounds incredibly boring, but
you can … get better homes for people, it can happen
quickly, it employs a lot of people, and the results are
pretty much guaranteed.”

The country’s abundance of
renewable sources, and new firming options like biomass,
made New Zealand energy-rich without the need for fossil
fuels, he said.

“We have to stop telling ourselves
that we’re energy-poor.”

Policy ignores ‘structural
issues’

University of Canterbury civil engineering
professor David Dempsey said government-sponsored
exploration surveying had been a good thing for New Zealand
in the past.

However, there were “structural issues”
that would likely prevent the policy from achieving its aims
of providing domestic fuel security and revitalising the
domestic fossil fuel industry, he said.

“For a start,
we don’t really have bipartisan agreement.

“That
creates an enormous amount of risk for companies who would
… need to be pretty well convinced that they have freedom
to operate for a long period of time.”

New Zealand no
longer had any refining capacity, which it would need to
ensure true domestic security throughout the supply chain,
Dempsey said.

In the meantime, parts of the economy
were already transitioning away from oil and
gas.

“Domestic transport, a lot of that will end up on
electric. Probably gas is being forced to transition away
more than anything else, over timeframes that are likely to
be shorter than anything they can promise.”

Some fuel
types – such as diesel and aviation gas – would take longer
to transition away from.

“It would be nice, I suppose,
to do those domestically, but whether or not we could afford
to or convince others to come down and do it affordably,
that’s where I see more of the challenge.”

Potential
for geothermal, CO2 storage

Dempsey was pleased to
see the inclusion of geothermal energy and carbon dioxide
storage in the policy, though.

“Those are both things
that we could potentially use more of in the future,” he
said.

“They’re already doing a lot on the
supercritical geothermal, but there’s plenty of low
temperature distributed [geothermal] resources that could
also be looked at.”

Barton said there was already “a
fair bit” of survey data available on the country’s
geothermal resources but New Zealand First had a point that
surveying techniques had advanced since that work was
done.

The range of uses for geothermal had also
expanded, even at relatively low temperatures.

“We
have got other ways to look at geothermal as well,
relatively low temperature resources, for
example.

“Groundwater doesn’t have to be all that hot
to be useful for a greenhouse, for example – electricity
generation is only one way to use geothermal.”

It also
made sense to gather additional data about underground
reservoirs and other natural formations where carbon dioxide
could be stored permanently, he said.

“That is quite
possibly one of the technologies that we will need to rely
on to reduce our overall greenhouse gas
emissions.”

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