A fossil(ising) fuel industry
population and that is continuing to increase and it will use more of everything.
‘‘We’re pretty confident there are sufficient resources to continue to meet that need.’’
Madgwick admits a need for renewable energies and less consumption but points to technological advancements that will maintain a healthy life for the petroleum industry.
‘‘While there will be lots of different sources of energy, ours will be one of those in that mix of sources.’’
But if the last two years are any indication of what the industry faces, that confidence might be years away from being justified.
Port Taranaki’s 2016 annual report revealed a 42.3 per cent nosedive in offshore business and 9.8 per cent drop in bulk liquid revenue.
And despite industry leaders hinting at a healthy return, Taranaki Regional Council’s half year report for Port Taranaki, ending December 31, says otherwise.
The 4 per cent fall in profits is attributed to a 39 per cent decrease in offshore operations due to reduced exploration.
This trend is expected to continue into the next six months, but could well be longer than that ‘‘mainly due to lower levels of offshore activity and contracted bulk liquid pricing adjustments’’.
A desire to kill the industry has also become a frequent chant on streets throughout the country and most recently in a well-organised protest around the New Zealand Petroleum Conference in New Plymouth this week.
While not everyone agrees with the protesters’ calls for an end to oil and gas use, the political tide is slowly turning against using fossil fuels as they currently are.
Emily Bailey, a protest spokeswoman for protest group The People’s Climate Rally, says it is vital government and business leaders formulate a post-petroleum strategy as oil and gas are ‘‘physically running out’’.
‘‘They may create new technologies like fracking (hydraulic fracturing), which might give them a chance to boost production again but then when that hits peak, they’ll need to find new technology again,’’ she says.
‘‘At the end of the day, there’s only so much resource left in the ground and it will come to an end; there’s no question about that.’’
But it’s not the disappearance of a finite source that is worrisome to the industry, rather a lack of investment interest.
The government is pushing to increase the value of petroleum exports from $3 billion to $30 billion by 2025, but their efforts are not making much headway right now.
The recent addition of more than 3600 square kilometres of Southland land to the country’s annual Block Offer – a tender for permits allowing oil and gas exploration – seems hopeful in boosting activity but, reflecting on 2016’s results, this could be another flop.
Last year, the Block Offer placed 525,515 square kilometres up for tender – 62,040 square kilometres of which was in Taranaki – but only permits covering 219 square kilometres of onshore Taranaki were granted. As far as offshore goes, the suspected location of the majority of New Zealand petroleum resources, no permits were granted.
And a recent review from the International Energy Agency (IEA) – an independent organisation that aims to ensure reliable, affordable and clean energy – points to a bleak fate attributable to a disinterest in exploration and the prediction of a ‘‘tight supply situation’’ with higher gas prices by 2027.
The review also forecasts the petroleum sector is unlikely to grow due to the increasing push for clean energy. ‘‘In recent years the role of fossil fuels has changed and their contribution to the economy is on the decline, while the importance of renewable energy in power generation has increased,’’ the review says.
Union organiser Ross Henderson is another one who believes the industry’s glory days are behind it.
‘‘Yes it would be great to come back to what it used to be but I don’t think oil and gas is the future,’’ he says.
Henderson is calling for a just transition – a framework developed by the trade union movement to protect workers’ jobs and livelihoods when economies are shifting to sustainable production – as he worries for Taranaki union members who might be left in the dust of the oil and gas industry decline.
‘‘They need to be trained in new skills,’’ he says.
‘‘They’re perfectly capable, they just need a little help along the way.’’
Though industry leaders remain confident of a thriving sector for decades to come, ANZ chief economist Cameron Bagrie, who visited New Plymouth last week, says nothing good can last forever.
‘‘Volatility is the name of the game,’’ he says.
‘‘Oil is coming back up but it’s not great, it’s mediocre.’’
He adds: ‘‘The market is a lot better but we still need to be cautious.’’
Bagrie says those in the industry should stop trying to predict the future and prepare themselves for a blunt impact with reality.
‘‘The idea you’re going to have one career for life is a joke.
‘‘Things are moving at such an exponential pace,’’ he says.
‘‘What we’re seeing is a massive structural change.’’