What will happen when our country cannot rely on the black stuff?
Andrew Little MP gives his view of the Government’s plan to end oil and gas exploration.
OPINION: Last week’s announcement that no new block offers for offshore oil and gas exploration was long term notice that change is happening.
Because the reality is the world is changing.
Just about every government in the world signed up two years ago to the Paris Accord to reduce the planet’s carbon emissions and reliance on fossil fuels.
For a country whose main exports are climate-dependant, we have a big stake in how the world deals with climate change.
It isn’t just governments taking action. The car industry is starting to prepare for a different world. Volvo and other European car makers will abandon internal combustion engines within 20 years. The Japanese are well ahead in electric vehicle technology.
Oil companies like Shell are changing. They are moving away from fossil fuels to renewable energy technology as part of their commitment to reduce their emissions, and also because consumers are demanding it.
Shell’s departure from New Zealand is part of its plan to focus on its remaining oil and gas reserves that it knows it can viably produce at US$40 a barrel.
In New Zealand, it isn’t viable to explore at US$70 a barrel.
That is why last Thursday’s announcement made it clear that only future permits would be affected. All existing 22 permits in Taranaki continue unchanged. Existing exploration and production rights are unaffected. Onshore permits will continue to be let in Taranaki for the next three years, and there will then be a review about what happens after that time.
Let’s be clear about what existing rights actually mean. The 100,000 square kilometres of area offshore that is permitted but not yet explored can still be explored.
Viable reserves that are discovered can still be put into production.
Existing fields under production, like Kupe, can still be further developed as additional reserves are discovered.
Long term supply contracts vital to businesses like Methanex will be unaffected, and there will continue to be new supply opportunities into the future.
This industry will be around for another 30 to 40 years at least. Job losses from the industry are a long way away. There is a decent amount of time for local leaders and the government to work on the transition.
But let’s be honest about jobs in the industry. It has been facing uncertainty over the last few years. There hasn’t been a summer exploration campaign for the last two summers. It just hasn’t been economic to do so.
Oil and gas companies have shed jobs. So have allied businesses, especially heavy engineering. Tenix went out of business. Energyworks suffered. All engineering businesses have diversified to keep themselves going.
Thinking leaders in the community have been asking for a couple of years now about spreading the risk for Taranaki. What do we do when we can no longer rely on the black stuff?
The coalition government has been committed from the outset to revitalising the regions. Most regional economies are slowing and people are leaving for opportunities elsewhere. Taranaki is no different. That’s why we have the provincial growth fund worth $3 billion over three years.
The government has already announced initiatives for the region worth $20 million. Some of those are feasibility studies into alternative energy and other economic opportunities. The government has the means and the will to work with local leaders on developing the next generation of wealth creation for Taranaki. Let’s use the time we have. There is no leadership in hoping we can hold on to the status quo forever.
Leadership means anticipating the threats to our national livelihood, looking through short term political cycles and doing the right thing.
I look forward to playing my role in this great region’s future.
Andrew Little says the decision on oil and gas is notice that the world is changing.