Govt’s oil block offer takes in sensitive spot

The Government’s oil and gas exploration “block offer 2017” has been announced, offering up eight new onshore and offshore areas, including a swath of land through Southland.

While national parks remain protected from exploration, a 3568sq km permit map of the new Southland basin takes in the southern shores of Lake Te Anau, which is sure to become a focus for environmentalists.

While 45 exploration permits had been awarded since 2012 under the relatively new annual “block offer” by the Government, just one was granted last year as major companies withdrew exploration funding in the face of the global oversupply of oil, and subsequent low price. New Zealand is considered a ripe “frontier” exploration target, with potentially big rewards.

But there remains a high risk of finding nothing, with large costs of more than $100 million for a single, test-well exploration programme.

Relatively new Minister of Energy and Resources Judith Collins was upbeat about the sector’s potential when addressing the annual petroleum conference in New Plymouth yesterday; which attracted up to 200 protesters outside, on opening.

However, Ms Collins did acknowledge the present challenges faced from the global oil glut, and the sector in New Zealand “having to downsize”.

“It’s promising to see signs that global oil prices may have reached their lowest point in this commodity cycle, indicating a sustained recovery,” Ms Collins said in her speech.

Collins’ predecessor Simon Bridges originally signalled the Government’s intent to include Southland in future block offers in September 2015.

Collins said there was at present a high level of merger and acquisition activity globally, particularly in New Zealand, which indicated a continued willingness to invest in the sector, she said.