We risk a spiral into more broken-hearted
Sean Rush has seen kids on a troubled path secure their economic future through work connected to oil and gas activities. What now for them, he asks.
Ibecame a criminal defence lawyer in Napier, my home town, in the early 1990s. I was the son of hardworking parents who often relied on the former family benefit to get by so I thought I knew a thing or two about the tough side of life. But criminal law exposed me to an even tougher New Zealand.
It was disheartening to see young men, disproportionately Ma¯ ori, go through the system. They could be the sort of guys I went to school with and played rugby with. These kids were smart, fun, and a bit cheeky, in many ways, just like me.
They fell into a cycle that soon became apparent: small misdemeanours which ended in youth court. Then car conversion, drugs, burglary and jail time, and after that the offences become more serious: armed robbery, assault, grievous bodily harm, and sometimes drugs and gang involvement. Suddenly that cheeky kid is doing a lengthy lag in jail.
What’s this got to do with the Government’s oil and gas announcement? In one fell poorly thought through swoop, the Government dashed the hopes of many New Zealanders, and primary among them are those cheeky kids I grew up with, and their kids and mokopuna. What the sector offered New Zealand was a growing industry; energy of course, but mostly hope. Hope for a more positive economic future, for everyone.
In late 1994 I headed overseas, winding up in London working for an oil company. I met a lot of good people who cared about the environment and about the communities in which they worked. Like all big companies, they were not perfect, but the people had a passion for their job – finding energy for the world.
By the early 2000s I was missing ‘‘home’’ but struggled to see opportunities in the oil and gas industry to return to. Despite New Zealand’s offshore being six times the size of the UK’s, successive New Zealand governments had not even attempted to attract interest from new exploration companies.
The pace of the industry was set by the needs of the incumbents – that means they did new exploration when it suited them, and their global masters in many cases, not when it would benefit New Zealand. This meant the industry was pretty static.
Luckily, things changed under the Helen Clark, and John Key-led governments, both deciding New Zealand needed to look at more fully realising the country’s offshore oil and gas potential.
The industry expanded, new players entered and challenged the incumbents. I flew back from London for the 2012 Petroleum Conference in Wellington to check out the prospects. The energy was very high, there was a buzz.
My family and I took a punt and came home in 2013. Two kids later, it’s worked out for us. I also saw a future where the industry I had grown to love could do something for the kids I saw being left behind.
The Government’s announcement that it is halting exploration has well and truly ended that dream. It will have a chilling effect on new investment as well as eliminating the possibility of growth.
The rhetoric that current exploration permits can last for 40 years is a glib half-truth. Most permits require an upfront expensive commitment to seismic acquisition, worth millions of dollars, within the first three years and, if something looks ‘‘interesting,’’ a well that might cost over $100 million within the following two.
Only if that well can be successfully developed will some of the permit area stay ‘‘live’’ for 40 years, but that requires another government consent and there is now considerable uncertainty about whether it will be given.
Investors can choose other destinations to put their money. This move will not change global exploration – it will be carbon leakage in action. There won’t be any emissions reductions, and in all likelihood emissions will go up in New Zealand as we start to rely on coal again. I expect the existing permits will be handed back within 5 years.
The people I had dreamed the energy sector could help – or their children at least – are also bang out of luck. The hope of a Maui-sized gas field off Hawke’s Bay, for example, has gone up in smoke. And with it the jobs that could change lives.
Investment in infrastructure bankrolled by oil companies brings jobs, from holding the stop/go sign, digging pipeline trenches, hot trades, catering, taxis, trucking, wharfs to higher-skilled jobs like civil engineering, financing and everything in between. Royalties from one medium-sized field, like the UK’s ‘‘Buzzard’’ field would, at current oil prices, earn nearly $4 million a day in royalties.
Maybe the cycle of offending could be broken with a good job and the economic independence, choices and freedom a job brings – people like freedom when they get it and make better life choices to hang on to it. Jobs bring economic independence. A gas discovery brings jobs.
Big oil companies – the sort we need in New Zealand – do not invest in countries with unstable policy regimes. They don’t invest in a country where politicians make industry-altering decisions without any consultation, nor a dearth of analysis on what the decision means for the country and the New Zealanders who face ripping out their gas cookers and heating in a decade’s time.
This new policy will hurt New Zealanders. And it will really hurt the kids of the kids I grew up with and saw in court as a criminal lawyer; who without hope of economic opportunities in the communities they live in are vulnerable to the same fate as their dads. And that, from a country that is committed to ending poverty, is the real cost of this decision.
Jobs bring economic independence. A gas discovery brings jobs.
❚