New dawn after oil and gas
As the sun begins to set on offshore oil and gas exploration, Christina Persico investigates how Taranaki is preparing to fill the gap in its future economy.
Heading to the office in Taranaki in 2060 may involve using a self-driven hydrogen-powered car to get to the laboratory where a robot will assist you with experiments on developing alternative food sources.
That is only a speculative glimpse into a future that has suddenly been brought into focus by the government’s announcement last week that offshore oil and gas exploration is over.
The move was met with shock and anger in the oil and gas industry, with many questioning how Taranaki’s economy, and New Zealand’s oil and gas supply, will survive in the future. Among those was New Plymouth mayor Neil Holdom, who described the move as ‘‘a kick in the guts’’ and told the Government the region needed transition plans.
It really should not have come as a shock. After all, earlier this year Shell announced it was pulling out of New Zealand and the world is increasingly turning to alternative energy sources. In fact plans are already afoot in Taranaki for a future without the petroleum industry.
One of these plans is the Tapuae Roa – Make Way for Taranaki Action Plan which pegs clean energy, food, Ma¯ ori economy and the visitor sector as the ‘four futures’ that have the potential to bolster the economy, along with the existing pillars of dairy and agriculture.
The plan was developed by the region’s four councils and representatives from iwi, business and the community to transition the region forward over the next few decades.
The plan is being led by the inexhaustibly enthusiastic hotelier and former New Plymouth mayor Peter Tennent. It should come as no surprise that despite the eventual winding-down of oil and gas, he is excited about the region’s future in the coming decades.
‘‘In 50 years’ time I think our reliance on oil and gas will have changed significantly. The game is changing.
‘‘Fifty years is a long time away – and the world would have changed within 10 years.’’
That said, he feels the Government got it wrong in ending new offshore exploration and that they should have set a future deadline for the end of oil and gas, which would have given them time to transition to alternatives.
‘‘We want the future generations to have a Taranaki at least as pristine as it is now, but the economy’s got to be able to pump,’’ he says.
Filling the future void in both business confidence and economic activity is no small task, but the government has acknowledged the role it has in facilitating the transition. A week before Ardern began closing the door on oil and gas, Regional Economic Development Minister Shane Jones delivered an injection of $19.7 million into Taranaki through the Provincial Growth Fund (PGF).
The money is earmarked for 11 initiatives, including $5 million for Taranaki Cathedral, $13.3million for Mt Taranaki track and facilities upgrades, $100,000 towards investigation of a new energy development and research centre, $250,000 towards a business case development for hydrogen fuel adoption, and $125,000 towards a feasibility study in food developments including experimental cultivation.
Some are already moving to futureproof their businesses by investing in non-traditional industries.
One of these is Taranaki’s Nga¯ ti Ruanui Holdings, which has stepped outside the box and is coding and designing robots and investing in growing fruit for export.
Debbie Ngarewa-Packer, kaiarataki of Nga¯ ti Ruanui, says the reality is they are getting better returns from these than they would from agriculture.
‘‘We’re very much diversifying towards horticulture because we see that these very valuable food sectors are fast becoming the new normal.’’
There has been a developing trend of investors moving away from oil and looking for sustainable alternatives, she says.
"It’s a way of looking at how we shift away from a finite resource and invest in more serious ways of being sustainable.’’
But she recognises the challenges technology and automation may bring in the future.
‘‘Our robots are being created to be part of the future economy and we need to be at the end that’s programming and creating these, not the end that gets replaced as an unskilled labour force.’’
She said Ma¯ ori had already made moves into new investments, and the ‘‘Ma¯ ori can’t do it without us mentality’’ had to die down.
‘‘What’s good for Ma¯ ori is good for the whole region,’’ she says.
Less sure about futuristic jobs is Stratford mayor Neil Volzke.
Many workers in the oil and gas industry have ‘‘very specialised’’ skill sets and he believes they will find it difficult to transition to new industries.
He suggests a logical move to ensure a bright future would be to pour money into renewable energy.
‘‘To me it would seem more logical to incentivise clean energy alternatives at the demand end of the equation,’’ he says.
South Taranaki District mayor Ross Dunlop sees sustainable energy as the way forward, and suggests a fund be created which further progresses the development of alternative energy.
"We need to find out what the Government’s plan is to support our people and work with them, the industry and key stakeholders to develop a sustainable plan to soften the very real impacts."
The money from the PGF offers the chance to test new economic opportunities, he says.
‘‘It’s a start point to manage the transition to a future economy – but it’s not the complete solution.’’
While oil and gas and dairy are often regarded as the pillars of the Taranaki economy there are already other major players that provide a model of success and are also poised to grow in the future.
Nationwide meat processor ANZCO Foods contributes $275.7 million each year to the economy and has had a long presence in Taranaki. The Eltham processing site has been in operation for 22 years and the Waitara manufacturing site has grown to a 24-hour operation in the last year.
‘‘We’re proud of the contribution we make to New Zealand’s regional economy and we see this significant annual contribution increasing as ANZCO’s business continues to grow,’’ group chief executive Peter Conley says.
They have also been looking at ways to add value to lesser-used parts of the product, turning them into ingredients for pharmaceuticals and food products.
‘‘These sectors tend to be less volatile that the traditional meat processing business, often have consistent and higher margins and provide additional employment opportunities.’’
‘‘ANZCO is a significant part of the Taranaki economy and our range of contributions make a substantial difference to the region.’’
If you ask New Plymouth MP Jonathan Young, he’ll say the real work in how to keep Taranaki working in the future is just beginning.
‘‘Essentially the Tapuae Roa Action Plan has all the right fundamentals in the four futures strategies,’’ he says.
‘‘The strategies were designed to add diversification to the existing economic landscape rather than replace it, so the Tapuae Roa Action Plan is unlikely to replace the petroleum industry which has nearly 70 years of maturity in Taranaki.
‘‘The Provincial Growth Fund does not create ideas; it only helps them get legs.’’
He says the clean energy research that had been undertaken in the region needed natural gas as a feedstock to develop low and zero emission fuels like methanol, hydrogen and liquefied natural gas.
‘‘The Government are investing $150,000 to do feasibility studies in the potential of these green fuels. What if those studies say that an ongoing supply of natural gas as feedstock is needed?’’
He says Taranaki can also be promoted as a lifestyle destination for internet-based businesses.
‘‘When the Government talks about a ‘just transition’, it’s hard to think what 4500 people earning on average over $100,000 will do if the petroleum industry isn’t around.
‘‘Our survival is up to us. To stay an attractive place, we must not lose our creativity and love of life. A thriving region is firstly about passion and attitude – about loving this place.’’
‘‘In 50 years’ time I think our reliance on oil and gas will have changed significantly.’’
Peter Tennent
- Action Plan Lead Team Chair
‘‘What’s good for Ma¯ ori is good for the whole region.‘‘
Debbie Ngarewa-Packer
- Nga¯ ti kaiarataki
‘‘To stay an attractive place, we must not lose our creativity and love of life."
Jonathan Young
- National MP, New Plymouth
‘‘It’s a start point to manage the transition to a future economy – but it’s not the complete solution."
Ross Dunlop
- South Taranaki Mayor