‘A bit of a backdown’ on oil and gas exploration annoys Greens

It appears that the government has backed off a bit on it’s contentious ban on new oil and gas exploration, which was applauded by environmentalists and slammed by Taranaki business interests in particular. Is has been pointed out that it could lead to higher carbon emissions as more alternatives were sourced from overseas.

Hamish Rutherford (Stuff):  Symbolic backdown undermines Government’s untidy oil move

After all the hype, the Government’s troubled path to ending new oil exploration has a bizarre sting in the tail: a bit of a backdown.

In the hours before she announced a law change to give effect to decisions announced in April, which mean no new offshore permits, Energy Minister Megan Woods met with the industry to deliver a piece of good news.

Oil explorers facing deadlines on their permits to either commit to exploration wells or relinquish the permits – referred to as “drill or drop” – are likely to be given more breathing space.

It seems the deadline to drill could be pushed back for years, although Woods has not given details other than that she will consider giving more time on a case-by-case basis.

In terms of concessions, it looks like no big deal, given the Government is changing the legislation that frames the sector. No-one in the industry will celebrate this as a victory, given the overall impact of the moves by the Government.

But it seems like Woods is trying to head off a potentially major “what if?” headache.

As it stands, the Barque prospect off the coast of Oamaru will be lost forever if New Zealand Oil and Gas (NZOG) does not find partners willing to commit to the major cost of drilling, by early 2019.

Although the odds of success are put at only one in five, NZOG has claimed that, if successful, Barque could transform New Zealand’s energy outlook, with thousands of jobs and tens of billions of revenue.

Seen this way, Woods’ gesture to the industry looks like a major contradiction of the Government’s plan, to set New Zealand on a renewable future.

Reality wins over idealism?

Greens are not happy.

Both Greenpeace and the Green Party are furious, with the Government’s partners warning it waters down the moves made so far.

Given where we have come from, the latest move should be no surprise.

On a sunny day in March, Ardern walked down the steps of Parliament to greet Greenpeace activists, delivering a major shock that the Government was “actively considering” their call to end oil exploration. Although her speech was more symbol than substance, it was clear major plans were afoot.

As it turned out, the Government was not really considering anything, and it certainly did not want much in the way of advice.

Less than a month later, Ardern would lead a group of ministers into the Beehive theatrette to announce the decision, giving the impression that ministers had considered the matter.

In fact, all that had happened was that the leaders of Labour, NZ First and the Greens had reached a deal. Cabinet had no input in the decision.

Officials were so furious at being sidelined from the decision that it was leaked, spoiling Ardern’s plan for a dramatic announcement at Victoria University.

Greenpeace and the Green Party furious. Officials furious. Officials furious. It looks like this was rushed and bungled.

It should be remembered that this advice comes from bureaucrats who have not only been ignored in the actual decision-making, they are giving advice on a decision that could kill the sector they work in.

Seizing on the fact that – as in all long-term forecasting – the report on the oil exploration decision outlines a vast range of possibilities of the cost (from a few hundred million to more than $50 billion), Acting Prime Minister Winston Peters dismissed it as a “very, very bad piece of analytical work”.

It is fair to say that the official advice offers no accurate guide as to what the fiscal cost of the decision would be.

Given that we do not know the future for carbon prices, oil prices or interest rates, there is no way we could possibly know what that cost would be, a fact which seems lost on Peters.

What we do know is that there will be a cost, and it will likely be significant.

We also know that the way it was handled has had a significant impact on investor confidence in New Zealand, which seems to have dawned on the Government only months later.

It is also likely to have an impact on energy prices, both from the cost of gas to households and its impact on future electricity prices.

Woods said on Monday that, even with the benefit of hindsight and advice, she would still push for exactly the same decision.

Of course, she would say that. But it seems the Government has decided to breathe a little more life into oil exploration, just in case.

Green Party: Minister must not water down oil and gas decision

Green Party: Minister Woods must not water down decision to ban offshore oil and gas exploration

The Green Party does not support Labour Party Minister Woods allowing mining companies with existing offshore oil and gas exploration permits more time to consider if they will drill.

“Mining companies with existing licenses for drilling have a time limit on when they can explore. If they reach the time limit, their permits are handed back to the Crown”, Green Party energy spokesperson Gareth Hughes said today.

They shouldn’t be offered special treatment to extend or waive that time limit.

“I struggle to see the point in banning offshore exploration for oil and gas if existing companies with huge blocks can hold off from exploring until way later down the track.

“New Zealand took an incredibly exciting and brave step for people and planet when we decided to ban future offshore oil and gas exploration.

“It has been congratulated world-wide and New Zealanders are proud of the decision, let’s not water it down.

“I am urging her to reconsider this proposal”.

Remember Gareth Hughes? I’m not sure how much clout he has. He is till an MP but is far from prominent.