Huge step on road to no gas

THE momentous decision announced by the coalition Government last week to quit all offshore oil and exploration was never going to appease all parties; never could, never would.

Greenpeace, Oil Free Otago, Forest & Bird and Climate Justice Taranaki were not going to horse trade with the Petroleum Exploration and Production Association of New Zealand, Business New Zealand, or industry leaders Methanex or New Zealand Oil & Gas.

Both the former National government, and latterly Labour, have paid no end of lipservice to the global clamour of ‘‘transitioning’’ away from fossilfuel extraction.

But it is Labour, New Zealand First and the Green Party who have taken the leap of faith, effectively banning any new offshore oil and gas exploration, while retaining mineralrich Taranakionly for any future onshore exploration.

Oil and gas exploration and development was for years the cornerstone of National’s postglobal financial crisis (200708) economic recovery programme.

In 2012, National introduced the annual ‘‘block’’ tender offer, and substantially boosted scientific hydrographic research into many of the offshore blocks, including offshore Otago and into the raw Southern Ocean.

However, where once the number of annual new permits was in double figures, that dwindled to just two over 2016 and 2017, as low global oil prices made exploration too expensive, with five major companies departing from New Zealand waters.

The pending Block Offer 2018 — historically released in March — may have forced Labour’s hand.

Prime Minister Jacinda Ardern’s campaign call of ‘‘my generation’s nuclearfree moment’’ came home to roost, with environmentalists stridently reminding her of that pledge.

New Zealand’s new transition stance will no doubt garner plaudits when Ms Ardern attends the Commonwealth Heads of Government Meeting in London this week.

New Zealand’s renewable energy sources account for about 80% of the country’s annual generation, the 20% balance taken up by coal and gas, topping up peak periods and being necessary during adverse weather events, such as drought.

But coal and gas will remain Plan B in times of peril, for some time yet.

Just last week, coal had to be used to fill the gap when Taranaki gas supplies were interrupted — such is the fragility of the overall energy resource.

Who, early last week, did not go home on the country’s coldest night this year and crank up the heating without consideration for climate change?

An example of where New Zealand is ultimately headed can be found in Australia, where on its east coast there is also an offshore drilling ban. East coast gas prices have almost tripled since the ban.

New Zealand can presently bask in its ‘‘state of transition’’. However, the faroff reality is that, once gas reserves run out, in theory in about a decade, and present oil and gas targets prove unviable, the transition policy dictates no more searching offshore.

The country will have to import gas, as it does now its heavy crude for petroleum refining.

That future gas cost will be daunting, with a double whammy, given there will be no balancing exports of oil to help offset imports.

We’ve stepped on to the long road of transition, but the most formidable of hurdles are not yet even on the horizon.

The 30years on scenarios of supply, demand and cost merit severe scrutiny now, as both Ms Ardern and Opposition leader Simon Bridges will be drawing pensions by then.

Whether history chalks up the Labour coalition decision as political will or the peoples’ will is a moot point — for better or worse, New Zealand embarked on its transition away from fossil fuel use in April 2018.