Guest Post: Deep Sea Oil Drilling in NZ : just who is crazy?

March 28th, 2014 at 11:00 am by David Farrar

A guest post by Assoc Prof Bob Lloyd, director of Energy Studies at Otago University:

I think the time has come to ask, “Just who is crazy when it comes to the arguments for and against exploring for oil off the NZ coast?” The numbers coming from climate change scientists vary from very scary to the “Oh shit it’s too late” variety. The very scary numbers suggest we have around two decades to decarbonise the world’s economy. The “too late” variety come from people like NASA scientist Jim Hansen, who researched the earth’s past climate to obtain a safe CO2 limit of 350 ppm in the atmosphere. We are now close to 400ppm. Hansen’s numbers suggest we should stop all CO2 emissions now and sequester carbon by tree planting and burying biomass as carbon in the soil.

To ensure a habitable climate for future humanity and provide energy for our continued social existence we must stop carbon dioxide emissions and start the transition to a sustainable energy economy. With the present (unsustainable) world economy so closely linked to fossil fuel use, it would be very difficult to stop all emissions immediately. Even Jim Hansen realises this. Some years ago he suggested a transition program where developed countries should close down all coal-fired power plants by 2020 and developing countries do the same by 2030. Hansen opposes any further exploration or exploitation of non-conventional hydrocarbons. There is no evidence that his advice is being followed.

I’ve been looking at these problems for years: it has made me very pessimistic. My pessimistic reputation led to a group of university students giving a lecture titled “Cheer up Bob”: they argued that change was possible — and that they were up to the challenge. From this grew a local consortium that wants to prevent exploration for deep sea oil and/or gas by Anadarko and Shell. This oil and gas is not part of the world’s known reserves: by all scientific accounts it cannot be used if we are to keep our climate habitable.

This proactive, enthusiastic Oil Free Seas Flotilla group wants to prevent human distress and suffering. It wants to preserve the earth’s climate for future generations. It wants an orderly transition to sustainable energy sources that don’t emit the greenhouse gas carbon dioxide. The group does not want to shut down the world economy by preventing all existing emissions. Members are not protesting the existing extraction of known resources in Taranaki. They realise we need clear market signals that transition from fossil fuels is the only sensible choice. NZ progress depends on our investment in wind energy, solar energy and biomass resources.

The opposition to deep sea oil drilling is not against the use of conventional oil, especially for purposes that don’t emit carbon into the atmosphere. In fact the best use of remaining oil reserves may well be for construction materials, pharmaceuticals, fertiliser production and lubricants. Future generations may disbelievingly ask their parents, “You actually used to burn this valuable stuff?” 

Because natural gas is a lower greenhouse gas emitter than coal by around 50%, the use of gas in power stations is preferable to coal. Yet as world gas use is still increasing, in ten years the emissions reduction will be wiped out. In addition, gas substitution for coal doesn’t focus on a shift to sustainable energy sources in the short time available. Such a substitution also delivers profits to the very companies — such as Anadarko and Shell — that will invest in yet more oil and gas exploration and so again deliver more CO2 into the atmosphere.  We have to stop the cycle of fossil fuel dependence, not extend it. The gas transition argument is not valid.

So is the protest against oil drilling crazy, or are the people ignoring climate change deluded? New Zealanders must answer this urgent question. Are short term profits for a few worth the incredible risks involved to all?  Vested interests want to continue the status quo, by using all the oil, gas and coal until the earth is wrung dry by fracking, deep sea oil and gas extraction and mining the dirtiest coal. The two thirds or so of existing fossil fuels that cannot (should not) be extracted add up to hundreds of trillions of dollars of profits. But what do profits mean when the earth is uninhabitable? Or more to the point, what do dollars mean when there is nothing to spend them on?

The failure of international climate change negotiations shows that world governments are incapable of acting on this issue. The visible signs of global warming increase every year. Why? Because governments focus on economic growth at all costs and are at the same time subservient to the fossil fuel lobby. Unless the general population of all countries, including NZ, express concern by protesting this insanity, governments will continue not to act.

I am not alone in my views. Another group, Wise Response, is a raft of prominent New Zealanders from a wide range of professions and backgrounds. It’s calling for a cross-party risk assessment of how best to future-proof New Zealand against the climate, energy and financial challenges posed by our fossil fuel dependent society. Wise Response will present a submission to Parliament in April. When their team arrives at the Beehive, they will have the future of all New Zealanders in mind: regardless of political persuasion.

Kiwiblog is generally happy to run occasional guest posts to air different points of views.

Bob Lloyd is with Wise Response.

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36 off shore wells under Labour

March 2nd, 2014 at 7:00 am by David Farrar

Amy Adams pointed out:

David Cunliffe latest attempt to rewrite history on oil and gas exploration highlights an on-going, casual relationship with the truth, Environment Minister Amy Adams says.

“As a minister in the previous Labour Government, David Cunliffe knows there was no environment oversight and certainly no public involvement in the exploratory drilling process under his watch,” Ms Adams says.

“Once again he has been caught out being tricky with the truth. He is trying to create a distraction from Labour’s woeful environmental credentials.

“Under his government, 36 wells were drilled in the EEZ between 1999 and 2008 with no legislation in place to protect the environment.

“In fact, the Labour regime only required the Minister for Energy and Resources to sign a permit and required no formal environmental assessment at all. That’s it – no public comment, no submissions, no consideration of environmental effects.

Not enough people know this. Labour signed off on 36 oil wells, with no requirement at all for a formal environmental assessment. The law passed by National requires the EPA to do an independent assessment.

“The ridiculous thing about David Cunliffe’s argument is that the EEZ Act introduced by this Government actually replaces a non-existent environmental regulatory regime for drilling in the EEZ, where the public had no say.

“Under this Government, the public will for the first time get a chance to have a say. The Environmental Protection Agency (EPA) can call for submissions from the public prior to granting a consent for exploratory drilling, if the EPA feels it is required. And before any production drilling can take place, a full public process must be held.

As always Labour is do what we say, not do what we did.

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Shane Jones wins the battle over oil drilling in Labour

January 23rd, 2014 at 1:00 pm by David Farrar

The Herald reports:

Leader David Cunliffe yesterday said Labour supported deep sea oil and gas exploration “in principle” but would pass laws to toughen environmental protection. …

His comments were in line with those of deputy David Parker last year which followed mixed messages from the party, with economic development spokesman Shane Jones extolling the benefits in terms of jobs while other MPs such as Phil Twyford attended anti-Anadarko protests. Mr Cunliffe yesterday said New Zealand’s law didn’t require world’s best practice in deep sea oil exploration, “so we will be changing the law so it does and we will expect future consents to meet those standards”.

That’s a big victory for Shane Jones. He has been almost the lone voice in favour of deep sea drilling, but now Labour is officially in favour of it also. I suspect it won’t stop some of its MPs still leading protest marches against it though, as they maintain their Yeah, Na strategy.

Of course if there is a change of Government, the Greens might make banning all mining and drilling a condition for coalition!

But for now, good to see some more rational policy from Labour.

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Pro Oil and Gas Otago

January 21st, 2014 at 1:00 pm by David Farrar

The ODT reports:

A group of Dunedin businesses is moving to claim the high ground as debate intensifies over the arrival of oil companies in Otago waters.

However, with Anadarko’s drilling ship, the Noble Bob Douglas, due by the end of the month, protest group Oil Free Otago has also warned more protest action could be expected.

The warning came days after a group of four Dunedin businessmen created a new group, Pro Oil and Gas Otago, to spell out their support for gas exploration off Dunedin’s coast.

The group’s Facebook page has attracted more than 1300 ”likes” since Saturday, including from pro-drilling city councillors Andrew Whiley and Mike Lord, and support was continuing to climb.

Spokeswoman Robyn Broughton, of Dunedin, said the group wanted to counter ”scaremongering” by opponents of oil and gas exploration, and planned to meet representatives from the Dunedin City Council and oil companies.

A public event designed to demonstrate the city’s willingness to embrace the industry and its potential economic benefits was being discussed, although plans were yet to be confirmed, she said.

The city had an opportunity for ”astronomical” economic benefits from a natural gas find, but public debate to date suggested the city would not welcome the industry.

”I don’t want to see my grandchildren raised in London or Europe. I want something that will encourage our young people to come home … [gas drilling] has the ability to do that,” Mrs Broughton said.

It’s nice that some people are prepared to speak up for economic growth.

Their Facebook page now has almost 3,000 likes.

 

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The Press on oil exploration

January 9th, 2014 at 11:00 am by David Farrar

The Press editorial:

It is a long way from the exploration of a promising-looking gasfield and the development of a productive operation, and the outcome is far from certain. But the news that a well-resourced international consortium has committed $200 million to explore the Great South Basin, off the southeast coast of the South Island, is very welcome. Oil and gas production from wells in the Taranaki basin are already our fourth biggest export and generate hundreds of millions in revenue for the Government. The industry has made Taranaki one of the most prosperous regions in the country and created more than 3000 jobs. Finding another such productive area has long been sought. The areas with the greatest potential at present are in the Great South Basin and off East Cape. A successful result in either would be an enormous boost to our prosperity.

Yet one a Labour/Green Government would be against.

The search did not begin again in earnest until three years ago, when Dutch energy giant Shell along with the Austrian company OMV began to explore. Those two companies, along with the Japanese industrial conglomerate Mitsui, believe the seismic results are good enough to warrant the $200m commitment. Good enough means they believe there is 30 per cent chance of a commercial discovery.

30% is pretty high.

Green groups have predictably objected. Last year a meeting in Dunedin at which Shell was to talk about its plans with business owners was abandoned because of interruptions from anti-oil drilling protesters. Their objections are deeply misguided.

I would have thought Green groups would welcome NZ producing more of its own energy, rather than importing it from other countries.

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Greenpeace loses in court

December 20th, 2013 at 10:00 am by David Farrar

Stuff reports:

Greenpeace has lost a bid to have the granting of Anadarko’s offshore drilling permit declared erroneous in the High Court.

Greenpeace’s case was based on Anadarko’s omission of annexes from the impact assessment it was required to submit to the Environmental Protection Authority (EPA) to be granted a petroleum exploration permit for an area in the Taranaki Basin.

Anadarko is drilling an exploration well it began within the permit area on November 26. …

The High Court ruled the evidence did not indicate any error by the EPA, and said there was no evidence that resubmitting the impact assessment supplied in the discharge management plan would achieve any meaningful objective.

A “careful and proper consideration of the completeness of the impact assessment” has been undertaken by the EPA. In addition, the impact assessment was independently and internally reviewed, Justice Mackenzie found.

The EPA will be pleased with the ruling that it has done its job well. Oil drilling and prospecting is not without risk, but the probability of a major problem is very very low.

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Espiner on oil

December 2nd, 2013 at 7:11 am by David Farrar

Colin Espiner writes at Stuff:

I think the Green Party is, overall, a force for good in New Zealand politics and provided it sticks to its core environmental principles rather than social activism it’s likely to do very well again at the next election.

But every now and again the Green Party requires calling out. And its implacable opposition to exploratory drilling by Texan oil company Anadarko off the west coast of the North Island is one of these times.

The hyperbole and rhetoric spewed by the Greens and other assorted opponents of deep-sea drilling for oil and gas is out of all proportion to the risks involved in this venture, and has been driven far more by emotion than it has by logic or science.

A campaign of fear and loathing.

It’s true that deep-sea oil drilling has risk. It’s true there have been accidents – most of them during the 1970s and 1980s, when the technology was still relatively primitive and safety and environmental standards lax by today’s measure.

The notable exception, of course, was Deepwater Horizon, which exploded and sank in the Gulf of Mexico in 2010, killing 11 people and spilling more than 600,000 tonnes of oil into the sea.

A report into that disaster found a litany of safety breaches, poor decisions and cut corners, which sparked a wave of regulation- tightening at other deep-sea oil rigs around the world. Both the energy sector and governmental environment watchdogs agree the industry is far safer now than it was even three years ago.

Those risks will never be completely extinguished, of course. But the same goes for flying in a plane. The chances of your flight crashing are extremely low. Every possible safety precaution is taken. It remains possible you will crash. But you still fly, because the benefits outweigh the risks by such a large margin that most people agree it’s worth it.

No human activity can be made risk free.

The benefits to our economy from deep-sea oil drilling are similarly huge. The Government has estimated the potential returns at $12 billion a year if even one new offshore oil field is found.

In the context of our economy, that’s about the relative size of the worth of Australia’s mineral deposit trade with China. It has the potential to transform New Zealand into a wealthy nation with a high standard of living and first-class social services.

Other nations have become rich from deep-sea oil, most notably Norway, which has managed to keep its reputation as a clean and green nation while pocketing $122 billion, which it uses to fund the world’s most generous welfare system.

Greens and Labour have huge spending plans, but consistently oppose economic development which would help fund that spending.

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Herald says if there is that much oil there, we should dig it up

November 27th, 2013 at 2:00 pm by David Farrar

The Herald editorial:

Now Greenpeace has given up its seaborne protest against exploratory oil drilling off Raglan it is not clear what it intended to prove out there. Once one vessel of its flotilla entered the statutory exclusion zone the protest statements became somewhat contradictory. Sometimes they said their action showed the exclusion zone was not justified, at other times they reckoned it proved Anadarko Petroleum was reckless.

They seem very disappointed they were not arrested.

A report commissioned by Greenpeace last month imagines an undersea drilling accident could release 40,000 barrels a day. If we have an oil well of that scale and pressure under our continental shelf it would be very good news indeed and we should find it.

A very good point. The price of oil is US$93 a barrel or NZ$113 a barrel. So that would be $4.5 million of oil a day. Over a year that is $1.65 billion. Why would we want that left there, so we have to buy more oil from the Middle East instead?

Unfortunately for our prospects of wealth, but reassuring for our coastal environment, few experts agree with the Greenpeace report. If oil or gas reserves can be found, they are likely to have a gentle flow more easily plugged.

The good news is that even looking for the oil is involving spending of $1 million a day – which benefits the NZ economy.

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Labour’s drilling split

November 27th, 2013 at 5:35 am by David Farrar

Stuff reports:

The standoff over deep sea drilling off the Raglan coast is threatening a split in Labour.

Labour MP Shane Jones has backed oil drilling giant Anadarko in a move which puts him at odds with other members of the caucus, including environment spokeswoman Moana Mackey who today called for a slow down in the mineral exploration programme. …

Speaking on Maori TV’s Te Kaea tonight, Jones was outspoken about attempts to stop Anadarko from deep sea drilling and said the protesters should remember that the company had a statutory right to be there.

“Protesters need to bear in mind we are buying oil out of the Gulf of Mexico and other far-flung places when we should be focusing on making an industry in our own country.”

Anadarko was spending a million dollars a day on its programme and that was good for New Zealand, Jones said.

Jones is Labour’s spokesperson on economic development and is ranked No 5, on their front bench. I hope he speaks for Labour, but does he?

But Mackey appeared to back the protesters and blamed the Government for Greenpeace’s announcement that it intends to challenge the Environmental Protection Authority’s (EPA) decision to allow Anadarko to carry out deep sea drilling off the Raglan coast .

She said the regulatory environment under which Anadarko was permitted to drill was “deliberately permissive” and the process had been a shambles.

She also accused the Government of being desperate to expedite deep sea oil and gas exploration because it had no plan B for jobs – which also puts her at odds with Jones, who believes mining is a potential boon for jobs.

Mackey is ranked No 18 and is the Environment Spokesperson. Will the views of No 18 trump the views of No 5?

David Shearer is the Energy Spokesperson. What are his views? Maybe Labour can have three different policies on this issue, rather than just two!

Labour leader David Cunliffe was unavailable for comment.

I bet he was.

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Hooton on Greenpeace

November 24th, 2013 at 9:00 am by David Farrar

Matthew Hooton writes in NBR:

They were there, they said, for everyone.

This week, Greenpeace chief executive Bunny McDiarmid led a self-described flotilla to try to stop Texas-based company Anadarko from exploring for oil off the West Coast of the North Island. The effort, according to Ms McDiarmid, was “in defence of our oceans, future generations, our climate and our coastline.”

Her sidekick, former Green Party co-leader Jeanette Fitzsimons, went further, claiming to speak for all living creatures.

Both insist Anadarko is not welcome in our waters. …

In my life, I have swum in the ocean, sailed Lasers, gone snorkelling, caught the odd fish, water-skied, built sand-castles and strolled along Piha at sunset. The New Zealand coastline and ocean are as much mine as Ms McDiarmid’s. So too “the climate.” I also have just as much interest as her in “future generations.” Indeed, when I speak of these things, I do so without ambiguity or conflict.

In contrast, Ms McDiarmid speaks as a paid employee of a multinational empire with assets of $350 million and annual revenues of $435 million, of which about $110 million is paid to head office in Amsterdam.

The New Zealand franchise raises around $8.5 million a year, of which $2.5 million is spent on further fund-raising and another $2 million is paid to Amsterdam, including for the rights to use the Greenpeace brand. It is a similar setup to an oil company or fast-food chain.

Greenpeace is indeed a multinational brand.

Speaking, therefore, without the same financial interest in the matter as Ms McDiarmid, I say Anardako is welcome in my country, including along my coastline and out in my oceans. I hope they find oil, and lots of it, and I hope others do too.

Speaking on behalf of future generations, I then hope Energy Minister Simon Bridges gets on a plane to Norway before too long and learns what a successful oil industry and associated investment fund can do to transform the living standards of a small country, while not compromising its tourism industry or natural beauty. I hope that Mr Bridges and his superiors understand that if New Zealand does not drill our oil and sell it to transform our living standards, then – as global supplies eventually become scarcer over the next century – someone will one day come and take it. It’s always better to sell something than have it stolen. Mr Bridges should also increase the royalties the oil companies have to pay.

Having said all this, I also understand that there is a risk, albeit miniscule, of a serious spill. This would kill birds, seals, dolphins and whales, and swimming, snorkelling, sailing and sandcastles would be out of the question for a while. But I also know the environment would heal itself much quicker and more completely than Greenpeace will tell us, as was the case in Brittany after 1978, Prince Williams Sound after 1989, the Gulf of Mexico after 2010 and the Bay of Plenty after the Rena in 2011. It is a risk, in my view, worth taking.

Next time Ms McDiamid purports to speak for me, I would kindly ask her to also make these points. If her bosses in Amsterdam will allow it.

We’ve had drilling for decades in Taranaki. I get sick of people in Auckland and Wellington demanding that people in Taranaki and the West Coast should lose their jobs, to make them feel better.

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The secret report that has been online for two years

November 22nd, 2013 at 12:00 pm by David Farrar

Labour proclaimed:

Documents obtained by Labour show the Government has kept secret the real risk of an incident including a major oil spill occurring at the depths of Anadarko’s proposed Kaikōura drilling site, Labour Leader David Cunliffe says.

“The Government has constantly told the public deep sea oil exploration will be safe.

“However, documents obtained under the Official Information Act show Environment Minister Amy Adams had international research 13 months ago showing there is a 70 per cent probability of a ‘reportable incident’ occurring within a year at the 1500m depth of the Kaikōura well.

This so called secret document has been held in a top secret location – the world wide web. It’s been there for the last two years. Someone should introduce Labout to Google.

“This research shows while existing shallow water sites such as Taranaki carry a risk of only around 10 per cent, the risk is dramatically increased at deeper levels.

“Amy Adams went to great lengths to keep this information from the public. In fact, she told Parliament there is a ‘very low risk’ of a large scale oil spill occurring.

Which there is. Labour are conflating an oil spill with a reportable incident. To do this, you need to be either very stupid or very misleading.

PEPANZ set the record straight:

 “Communities are calling for more responsible information about deep sea drilling. Instead, Labour Leader David Cunliffe’s announcement today is riddled with inaccurate assertions which are harmful to the oil and gas industry here in New Zealand and potential investors looking to come to our shores.

 “Labour claims they have ‘unearthed’ secret documents hidden by the Government – the truth is you can find the report online here. Or use Google.

 “They claim there is a “well /drilling site” in Kaikoura – again, this is incorrect. Anadarko has planned seismic surveys for the area – but that’s as far as it goes.

 “Taking information out of context or using images without the commentary and research it was published with is misleading and does not contribute to a balanced conversation that our country needs to have about energy.

“For example, a graphic used in a report written by Academic, Mark A Cohen, which Labour is referring to, used on its own suggests the deeper you drill offshore the probability of an incident grows to up to 70%. But when reading the report in its entirety it is clear that those statistics are about the number of incidents reported - injuries, falls or spills. The 70% does not refer simply the probability of a large oil spill – in fact it is saying the more people and machinery you use – the more chance there is of a cut finger, injury, fire or any other incident that you would see on a construction site anywhere.

So if someone drops a wrench on their foot, bruising it, then Labour is trying to make you think that is equivalent to a major oil spill!

This is akin to conflating the crime rate with the homicide rate.

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Good news for the West Coast

October 25th, 2013 at 9:00 am by David Farrar

Stuff reports:

Australian miner Bathurst Resources has hopes of gaining access to the Escarpment coal mining site by Christmas after receiving final Environment Court approval for the controversial project on West Coast conservation land.

The court’s final approval was granted yesterday. It had said on August 8 that it intended to grant consent to the Escarpment mine on the Denniston Plateau, near Westport. However, the approval may be appealed. An appeal must be lodged within 15 days. …

The Government welcomed the court’s decision, labelling it exactly the type of investment the country needed to create jobs and higher incomes.

The Green Party decried the sacrificing of the Denniston Plateau and its unique landscape and threatened species for an open cast coal mine.

Have you seen photos of the Plateau? It’s pretty ugly to be blunt.

The company was still confident of producing about 180,000 tonnes of coal from Escarpment by the end of June next year, Bohannan said. It would be taken by rail to Lyttelton and shipped from there, and also shipped from Westport to Taranaki for export.

Bohannan said the coal would end up in steel mills and other production facilities in Japan and China mainly. Economic Development Minister Steven Joyce and Energy and Resources Minister Simon Bridges welcomed the decision.

“The Escarpment Mine and associated works are expected to create 225 direct jobs and approximately $85 million each year will go to employees, suppliers, contractors and transport providers,” Bridges said.

“This is great news for the West Coast. The mine will inject almost $1 billion into the New Zealand economy over six years, and provide $30 million each year in royalties and taxes,” Joyce said.

West Coasters need jobs. This will provide them.

On a sort of related issue Stuff reports:

Raglan residents are fuming after learning that a United States oil company is a month away from drilling off their coastline the deepest exploratory well in New Zealand’s history.

Texas-based Anadarko Petroleum Corporation plans to begin drilling the well in 1500 metres of water before December.

Anadarko was held liable, with BP by a US judge for the Gulf of Mexico oil spill of 2010. The company paid BP US$4 billion to settle claims.

Raglan Fishing Charters’ Brian Hooker is worried about the environmental impact on marine life and is threatening to lead a fleet of boats to picket the Anadarko vessel the Noble Bob Douglas when it arrives at the end of next month.

Drilling will be carried out in water 1500m deep at the Romney Prospect in the Taranaki Basin about 100 nautical miles (204km) west of Raglan after the Government granted a licence in 2006.

So the exploration will be 204 km offshore. That is akin to the distance between Wellington and Wanganui.

I also note he licence was granted in 2006. Will Labour condemn the exploration?

The well will be New Zealand’s deepest and comparable to the Macondo well, which spilled an estimated 4.9 million barrels of oil into the Gulf of Mexico during 87 days in 2010 after an explosion that killed 11.

Don’t you love it when media report advocacy as fact. Who says it is comparable to the Macondo well? Is it also comparable to the 39,999 wells that didn’t have a spill?

Mr Hooker is angry no-one consulted the people of Raglan and asked his opinion before the licence was granted.

“People are going to get riled up. They [Anadarko] are going to get a lot of obstruction to that job.”

Anadarko would be in the neighbourhood for a short time but its activities would have a permanent effect, he said.

“It’s going to ruin the seabed and the sealife. It’s going to f…… change the ecosystem on that coast and for what reason? For gold.”

You would think the exploration is happening 2 kms off-shore, not 204 kms out to sea.

The Dom Post editorial is a good read also:

Instead it has been left to industry spokesman David Robinson to point out that Greenpeace’s worst-case scenarios take no account of the differences between the Gulf of Mexico and New Zealand’s waters or the technological developments since the Deepwater disaster. Here, unlike the Gulf, the most likely finds are gas and light condensate, not heavy black oil. Here, the pressure in underwater fields is typically so low gas and condensate have to be pumped out. At Deepwater Horizon oil spewed out. Then, a cap for the well had to be designed and built before it could be deployed. Now so-called “stacking caps” are kept at strategic locations around the world, available to be deployed at a couple of weeks’ notice.

None of that is an excuse for complacency. Immense damage could be done even by a seeping well in a couple of weeks. But nor is it reason to turn the country’s back on an industry that could provide a massive boost to the economy, generate a swag of high-paying jobs and swell stocks of a scarce resource.

Details most would be unaware of.

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How likely is an oil spill?

October 23rd, 2013 at 1:00 pm by David Farrar

The Herald reports:

New oil spill models have depicted the dramatic impact deep-sea blowouts would have on New Zealand, spreading across our most important fishing ground and hitting Auckland’s iconic west coast beaches.

The report, commissioned by Greenpeace and produced by data science agency Dumpark, sought to gauge the blow-out effects of two planned deep-sea drilling locations off the North Island’s west coast and the South Island’s east coast.

But an industry spokesperson last night slammed the study as inaccurate, “fear-mongering” and “science fiction”, while Government officials also described such a large-scale spill as unlikely.

This got me thinking. How likely is a large spill? Is it 5%? 1%? Less than 1%?

The Deepwater spill of course is the worst case example. But how likely is such a major spill. I found out that there are in fact over 4,000 rigs in the Gulf of Mexico. And Greenpeace is freaking out over one proposed exploration by Andarko.

One site gives some stats:

 Improvements in technology and better government oversight have made drilling inherently safe. In fact, since 1975, offshore drilling has had a 99.999 percent safety record [source: EIA]. The amount spilled has decreased from 3.6 million barrels in the 1970s to less than 500,000 in the ’90s. Believe it or not, more oil actually spills into U.S. waters from natural sources and municipal and industrial waste than it does than from offshore oil and gas drilling. As far as the toxic chemicals are concerned, specialists say most of them are at insignificant levels since discharges are regulated by state and federal laws. The mercury released, for example, isn’t enough to be absorbed by fish [source: Jervis].

So if I recall $2.2 billion is being spent in NZ on exploration. Do we want to turn that down for worry about the 0.001%?

Surely the debate should be about do we have the right risk management framework in place, not about trying to ban an entire industry.

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Jones supports drilling and mining for Tainui

October 23rd, 2013 at 11:00 am by David Farrar

Stuff reports:

Labour economic development and Maori affairs spokesman Shane Jones, has applauded moves by Waikato-Tainui to explore the benefits of mining for oil and minerals.

The tribe is holding an “information sharing” hui today at Hopuhopu, and has invited members of the petroleum industry, government ministries, Waikato Regional Council and the Maori Land Court to teach them more about the sector.

Mr Jones reckoned the tribe’s investigations could prove a canny development.

“There is not an iwi in the country that does not want to see industry and jobs but we can’t be too picky or finicky as to where we find these jobs,” he said.

The issue of mining and oil exploration was shrouded with “emotionalism” but he said the decision for Maori should be made on sound science and fact.

“More often than not the factual information is hard to uncover because it is under layers of polemic.”

He said New Zealand’s environmental management framework was robust and would answer any environmental questions, and he called for the energy sector to work more closely with Maori.

It’s good to see Shane Jones say this, and he believes it.

But I don’t think we should assume Jones speaks for Labour on this issue. Their environmental and energy spokespersons go around condemning mining and drilling whenever they can.  It’s the old trick of different messages for different people.

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$2.2b – just on exploring

October 10th, 2013 at 4:00 pm by David Farrar

The Herald reported:

A report into the oil and gas sector says the “rubber’s finally hitting the road” with $2.2 billion about to be spent exploring around New Zealand.

The 2013 Edison Yearbook update finds that the exploration and production sector is embarking on its most intensive and expensive campaign ever and says heavyweights not already here, but known to be interested in New Zealand, include Chevron and Woodside.

During the next 12 months there are 98 wells to be sunk, 27 of them offshore.

Superb. Do we want to say no to $2.2 billion of economic activity? I know some political parties do, but I don’t.

Anadarko and Origin’s pending drilling of the Caravel prospect in the Canterbury Basin could be “transformational” for the New Zealand exploration and production sector.

“If, as Anadarko’s analysis suggests, a discovery is gas-rich, the implications for the South Island in particular would likely be game-changing.”

We have one of the largest EEZ’s in the world. It it called an exclusive economic zone for a reason – to utilise it for economic development.

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So what is Labour’s policy on oil and drilling?

July 22nd, 2013 at 1:24 pm by David Farrar

Stuff reports:

Controversial Labour Party bigwig Shane Jones has moved to position the party well clear of the Greens and their “anti-development” message.

In Taranaki for a two-day visit with party justice spokesman list MP Andrew Little, the regional development spokesman spent much of the first day pow-wowing with oil and gas industry players.

“I am keen to defang these misapprehensions that are abounding that somehow industry has disappeared from our purview.

“Nothing could be further from the truth and if my visit provides the opportunity to reinforce the centrality of jobs, the importance of industry and the need for a future Labour-led government to assuage whatever anxieties might be there in the minds of employers or future investors then I am up for the task,” he said.

Offshore oil and gas drilling was an essential feature of domestic and export growth, Mr Jones said, and businesses and enterprises enabling it would get full government support.

Shane may say this, and believe this, bus his caucus doesn’t. They’ve voted with the Greens on pretty much every law around drilling and off-shore oil.

They send Shane into Taranaki to say Labour supports off-shore drilling, and Moana Mackey into Gisborne to say they’re against it.

UPDATE: Further proof of Labour saying one thing in Taranaki and another thing elsewhere. Last year Grant Robertson was campaigning against oil prospecting.

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Editorials 3 June 2010

June 3rd, 2010 at 11:15 am by David Farrar

The Herald wants an FTA with Russia given priority:

Last year, New Zealand exports to Russia were worth $187 million, a modest sum even if well up on the $51 million of a decade earlier. As Russia has a population of 142 million, those figures hint at the potential of a free-trade pact.

But more telling still is the fact that not so long ago, New Zealand enjoyed thriving commercial arrangements with the former Soviet Union despite an often strained diplomatic relationship, not least over the invasion of Afghanistan.

But Keith Locke supported that invasion, so maybe we should make Keith the free trade negotiator for Russia :-)

The Press supports the creation of a new bank:

The proposal to merge three finance organisations to create a new locally owned bank is a timely one.

For the finance institutions themselves, it is an opportunity, driven by necessity, to turn themselves into stronger, more robust entities, particularly after the turmoil of the last three years or so.

For investors, looking to diversify their investments away from the great Kiwi stand-by, domestic real estate, it could provide a worthwhile and productive place to put their money.

And for borrowers, particularly small-business owners who have complained of being cold-shouldered by unsympathetic banks during the financial crisis, it could provide a friendlier, more knowledgeable lender to local business. …

The three entities involved – Pyne Gould Corporation’s finance arm Marac Finance, the Canterbury Building Society and the Southern Cross Building Society – are established names in finance.

They have not been unscathed by the upheavals of the financial crisis, but they have survived it with credit ratings still at very respectable levels for non-bank institutions.

Two have BB+ ratings and the other a BB rating, which is at the high end for entities that are not banks.

But still not great. The acceptable grades are:

  • AAA : the best quality borrowers, reliable and stable (many of them governments)
  • AA : quality borrowers, a bit higher risk than AAA
  • A : economic situation can affect finance
  • BBB : medium class borrowers, which are satisfactory at the moment
  • BB : more prone to changes in the economy
  • B : financial situation varies noticeably

Once you start to get into CCC and below, institutions are officially vulnerable.

The Dom Post talks off shore drilling:

But for recent events in the Gulf of Mexico, the Government would be making more of a fuss of Brazilian oil giant Petrobras’ decision to explore for oil and gas off the East Coast of the North Island.

The world’s fourth-biggest energy company, a world leader in offshore drilling, this week won the right to explore about half of the Raukumara Basin, which extends north and east of East Cape. The company will spend up to US$118 million (NZ$174m) over the next five years gathering seismic data and drilling an exploratory well.

The project will create jobs and draw international attention to New Zealand as a potential source of petroleum.

But the big gains will come if Petrobras makes a commercial find. Already the petroleum sector generates about $3 billion a year in export revenue. Energy Minister Gerry Brownlee has estimated that figure could rise to $30b by 2025 if preliminary estimates of New Zealand’s petroleum resources prove to be correct.

Which would make a huge difference to our standard of living, and ability to fund health and education services.

However, celebrations this week have been muted by the ongoing disaster in the Gulf of Mexico. Six weeks after an explosion on BP’s Deepwater Horizon rig killed 11 workers, the well 1.6 kilometres beneath the sea is continuing to spew between 1.9b and 3b litres of oil a day into the gulf, polluting the fragile Louisiana coastline, threatening fisheries and destroying the livelihoods of fishermen and tourist operators.

For that reason it is essential that the promised overhaul of New Zealand’s health, safety and environmental arrangements for offshore petroleum operations is completed well before any deepwater drilling begins.

Agreed.

The ODT looks at Facebook and privacy:

Facebook, once a small, “free” social networking site for university undergraduates to share personal information, has become a vast subdivision on the information super highway.

It is expected soon to reach a landmark figure of 500 million registered users.

This would make it the third largest country on Earth, bigger than all but India and China.

On Monday this week – “Quit Facebook Day” – Canadian campaigners urged people worldwide to remove themselves from the site.

They, and many others, were riled about the way in which they felt their privacy was being purloined for profit.

Quite why they should have been so surprised is another matter: you do not pay upfront to belong to Facebook, but the company must make ends meet – and a tidy profit – somehow.

That “somehow” is no great secret.

The site sells advertising to companies tailored to the defined demographics of its users.

The “footprint” they create in their Facebook activities is like gold to advertisers and marketers who will pay accordingly.

I was talking last night to someone about Facebook, with the idea being that if a user is aged under 18 then their privacy settings are set by default to not share data with anyone but friends.

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