Government aims to strike balance ending offshore oil exploration: PM

Wednesday, 11 April 2018

Prime Minister Jacinda Ardern says the end to oil exploration is for future generations.

Prime Minister Jacinda Ardern says 'transitions have to start somewhere', after announcing an end to offshore oil exploration.

There are 27 fields in New Zealand currently producing oil and gas. The last of the permits ends in 2030, but if a discovery is made, production could continue for decades. All existing permits will be protected under the Government's plans.

The industry has warned ending oil exploration will do little to cut emissions in New Zealand or overseas, as the move will not affect demand or supply.

'This is about striking a balance,' Ardern said at a press conference, alongside Energy Minister Megan Woods (Labour), Climate Change Minister James Shaw (Greens), and Economic Development Minister Shane Jones (NZ First).

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The decision was not part of the Labour-Green confidence and supply agreement or the Labour-NZ First coalition agreement. It was also not explicitly detailed in Labour's election manifesto, but it was one of the Green Party's campaign promises.

From left: Minister for Energy Megan Woods, Prime Minister Jacinda Ardern, Regional Economic Development Minister Shane Jones, and Minister for Climate Change James Shaw at the Government's announcement they will end oil exploration.

'Transitions have to start somewhere. And unless we make decisions today that will essentially take place in thirty years time, we risk abrupt shocks.'

Green Party co-leader James Shaw said it was a step in the right direction, but said he would liked to have seen a faster transition away from fossil fuels.

'Today we have drawn a line in the sand and set our country on the path to a clean energy, low carbon future. This represents an enormous opportunity for the creation of new jobs and new technologies that our dependence on fossil fuels has held back for too long,' he said.

Jones said NZ First had only backed the deal on the proviso all existing permit-holders were protected, and the transition happened over time, to give the industry certainty.

Meanwhile, National is labelling the move 'economic vandalism that makes no environmental sense'.

Alongside an immediate end to new offshore permits, some onshore permits will be offered to the industry for the next three years in onshore Taranaki, none of which will be on conservation land.

The decision to continue to offer onshore permits was partly a concession to NZ First, which expressly supports extractive sectors. The move is also designed to head off the risk of judicial review.

Less than a month ago, Ardern created huge expectation among environmental activists by declaring the Government was 'actively considering' a call to end exploration.

Since taking office, Ardern has said the Government will move towards having 100 per cent of electricity generation coming from renewable sources by 2035, while the economy will be carbon neutral by 2050.

Over 1000 people packed into Victoria University to watch the Prime Minister announce the policy.

TARANAKI 'TRANSITION'

About 4500 people are employed directly in the oil and gas exploration industry, the bulk of which are based in Taranaki, which has had an oil industry for more than a century. Including related industries, the number of jobs linked to the industry is estimated to be around 11,000.

Ardern said none of the jobs in the industry would be immediately affected by the decision, but the landscape would change down the track.

The Government has already begun taking steps to try to soften the blow.

The last of the permits ends in 2030, but if a discovery is made, production could continue for decades.

On April 6, Jones announced almost $20 million in funding from the provincial growth fund, mostly to improve tracks on Egmont National Park and improve the Taranaki Cathedral as a tourism destination.

Jones acknowledged there would be people who were fearful about the future, but said they had certainty all current permits were protected, and now had a clear timeline.

'No-one is going to wake up tomorrow and find they don't have a job… We must be prepared to stand up and lead the transition.'

THE INDUSTRY

While oil can easily continue to be imported, the move could mean a major change to the dynamics of the gas industry, used by hundreds of thousands of homes for heating and cooking.

Oil companies hold 31 active oil permits, 22 of which are offshore. While the last of the permits ends in 2030, if a discovery is made, production could continue for decades.

Prime Minister Jacinda Ardern has labelled climate change as her generation's 'nuclear-free moment'.

Some of the fields off the coastline of Canterbury, Otago and Southland are believed to hold the potential for vast gas fields, which could cut demand for coal for industrial heat.

Of the four exploration permits off the east coast of the lower South Island, the most promising is the Barque Prospect, located 60km off Oamaru in the Clipper permit. It is estimated to contain 5 trillion cubic metres of oil and gas.

If successfully exploited, the Barque Prospect is forecast to add thousands of jobs to the region's economy, along with $15 billion in GDP, and $32b in royalties and taxes over its lifetime. New Zealand Oil and Gas (NZOG) was originally given until April 19 to explore the prospect, but in late January that deadline was extended until April 20, 2019.

WAS THE INDUSTRY 'BLINDSIDED'?

The oil industry has claimed it has been blindsided by the move, with little warning or consultation.

Jones said that statement was 'unfair', and Ardern and Shaw said this move was clearly signalled.

The Petroleum Exploration and Production Association (Pepanz) has argued that ending oil exploration will do almost nothing to reduce the global supply of oil, and could worsen the environmental impacts as production moved to other countries.

Act Party leader David Seymour said the decision put thousands of jobs at risk and could harm the environment.

'The oil and gas industry creates thousands of jobs, contributes $2.5 billion to the New Zealand economy and $500 million to the Government in royalties each year,' Seymour said.

'Not only will this policy make us poorer as a country, it will drive production of oil and gas overseas which will harm the environment.'

'ECONOMIC VANDALISM'

Meanwhile, National Party energy and resources spokesperson Jonathan Young said the move to end oil exploration was 'economic vandalism'.

Ardern said there will be no more offshore exploration permits, and no new onshore ones outside Taranaki.

About 4500 people are employed directly in the oil and gas exploration industry, the bulk of which are based in Taranaki.

The end to exploration would affect downstream industries, as well as the oil and gas industries, which would mean fewer jobs, he said.

National climate change spokesperson Todd Muller said the decision did not make sense environmentally.

PROTECTION FOR WILDLIFE

Conservation groups Forest & Bird and World Wide Fund for Nature (WWF), along with the Green Party said the end to oil exploration was a step forward in protecting ocean wildlife from oil spills and seismic testing.

Forest & Bird chief executive Kevin Hague said endangered whale and dolphin species would be safer from the threat of oil spills and the 'sonic barrage' of seismic testing.

An oil spill from deep sea drilling would be a catastrophe for native penguins, dolphins, whales, and marine industries like fishing and marine farming, he said.

WWF-New Zealand chief executive Livia Esterhazy said the announcement was welcome news for the endangered Māui dolphins.

The dolphins live off the west coast of the North Island, and over 30 per cent of their habitat was open for oil exploration. Seismic blasting for oil could have physical impacts on dolphins and cause long-term behavioural changes, Esterhazy said.