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NZ Petroleum Conference - highlights - Part 1

By Neil Ritchie

The New Zealand Petroleum Conference 2017 – held in New Plymouth for the first time this week – was, overall, a better and more upbeat event than last year’s conference in Auckland.

The total number of delegates from Taranaki, around the country, and overseas exceeded 450 – significantly more than the 350 or so at the 2016 conference.

Apart from the predictable anti-oil protest, which briefly delayed and disrupted the first full day of proceedings, the conference went well -- due in part to the police presence inside and outside the conference venue, the TSB Showplace, and ever-present security guards throughout the event.

And there was also slightly more of a “unified” approach as the scheduled political panel – comprising National, Labour, NZ First, Act, Maori Party and Green Party representatives – never went ahead because of Wednesday’s weather disrupting flights into New Plymouth.

Firstly, local hapu Ngati Te Whiti, which has seen oil and gas exploration and production activities for over 160 years, officially welcomed delegates on Wednesday and fondly farewelled them the following day.

Next on Wednesday was a well-informed new Energy and Resources Minister, Judith Collins, who said there were early signs of better times and resilience in the industryworldwide, including in New Zealand.

Despite the current prolonged downturn in world oil prices and subsequent reductions in exploration and production expenditures, she said such cycles were always temporary, with recoveries inevitably following market downturns.

“It’s promising to see signs that global oil prices may have reached their lowest point in this commodity cycle, indicating a sustained recovery. Additionally, the current high level of merger and acquisition activity globally, and particularly in NZ, indicates a continued willingness to invest in the sector.”

Ms Collins said the contribution the petroleum sector made to economies around the world was still significant, including in New Zealand. While Kiwi oil exports had slipped from being the country’s fourth largest export to sixth, there were no signs that contribution would slip further any time soon.

“And gas is a major contributor to domestic industries, households and electricity generation.”

She added that oil and natural gas production still contributed more than $NZ2.5 billion each year to New Zealand’s gross domestic product (GDP).

“Jobs in the sector are typically highly skilled and well-paid, and there are flow-on effects too, with other parts of the economy benefitting from the industry’s demand for goods and services.”

The minister said significant potential still existed for further discoveries and the subsequent development of new fields – “not just in Taranaki but other parts of the country.

“Looking at NZ more broadly, in addition to our producing oil and gas fields in the Taranaki Basin, we offer 17 known petroleum basins across our Exclusive Economic Zone. These frontier basins are largely underexplored and are considered to have significant potential for commercial petroleum discoveries.”

Ms Collins added that some offshore oil and gas fields were, for the first time, nearing the end of their economic lives and “we need to think about how best to decommission them”.

The government’s NZ Petroleum & Minerals (NZP&M) unit was already working with other government agencies to develop the regulations for decommissioning.

She said that following concerns raised by the Parliamentary Commissioner for the Environment about liability for the failure of onshore petroleum wells, as well as NZP&M’s investigation last year into historic abandoned wells, “I’d like to announce that consultation has begun on potential responses to this issue.

“Realistically the likelihood of well failure is low and operators are usually responsible for managing any issues.”

She added that of the almost 1000 wells drilled in NZ to date, third parties had only had to pay in four cases.

“As an industry we need to work out the best way to manage this. The consultation document is available on the Ministry of Business, Innovation and Employment (MBIE) website, and I’m looking forward to hearing your views,” she told delegates.

The Government was also looking at offshore financial assurance. Last year NZP&M officials worked with the Ministry of Transport to develop legislation to ensure operators of offshore installations had appropriate levels of insurance to cover the costs of potential oil spills. “All of this work is about being clear in our expectations of industry and creating the regulatory certainty you need to get on with the job.”

And she quoted a recent International Energy Agency report that estimates oil and gas will make up about half the world’s energy consumption in 2040. Most of the projected growth in oil demand to 2040 will come not from fuel for passenger vehicles but from freight, aviation and petrochemicals, where alternatives are scarce, says the IEA.

Ms Collins also said NZ was also playing its role in encouraging renewable energy, with the country’s 80 percent plus renewable electricity production, and a greater uptake of electric vehicles.

She further said the petroleum industry had a role to play in transitioning to low carbon fuels. Carbon emissions from natural gas were only 40 percent of those from coal.

And, in closing the conference on Thursday, the Petroleum Exploration and Production Association of NZ (Pepanz) chief executive Cameron Madgwick said this year’s was a success in terms of its content and networking opportunities. As well, he announced the 2018 conference will be held in New Plymouth. “And Pepanz will be making any necessary changes to ensure that the 2018 conference is the best event it can possibly be.”