Ardern defends short consultation period on oil/gas exploration ban

Business

PM sees no issue with public only having 2 weeks to make submissions on new offshore oil/gas ban; Denies move has created uncertainty for bidders in Block Offer 2018

29th Oct 18, 6:52pm by Jenée Tibshraeny

Parliament's Environment Select Committee is backing proposed legislation to ban new offshore oil and gas exploration and limit onshore exploration to Taranaki.

Having received 2,249 submissions on the Crown Minerals (Petroleum) Amendment Bill in the two-week timeframe the public had to have their say, the Committee recommends by majority that it be passed with only a few minor tweaks.

Prime Minister Jacinda Ardern announced the Government’s plan to ban new offshore exploration on April 12. The Bill to make this possible was introduced to Parliament on September 24. Submissions closed on October 11. The Bill is now expected to have its second reading in Parliament on Thursday.

Asked in her post-Cabinet press conference on Monday why the consultation period was so short, Ardern reiterated this was to ensure Block Offer 2018 (which will offer onshore exploration permits in Taranaki) could go ahead this calendar year.

Had the Government tried to push on with the offshore ban under the current law it would’ve risked being challenged in court, as the Crown Minerals Act's purpose is to “promote prospecting for, exploration for, and mining of Crown owned minerals for the benefit of New Zealand”.

Asked by interest.co.nz whether she genuinely believed there’d be any interest in Block Offer 2018 in light of the current situation, Ardern said: “I think it needs to be put in the wider context.

“Last block offer had one successful offer, so I don’t think it would be fair to simply make that assumption based on the wider decision here, because there actually has been a change in the uptake in the last few years…”

Challenged whether it was a good idea to rush through legislation for the sake of a block offer that potentially wouldn't attract much interest due to investor uncertainty, Ardern said she’d personally told permit holders the commitments of their existing permits would be honoured – so there was certainty.

It is worth noting that the Government earlier this month showed this commitment to an existing permit holder; granting OMV a two-year extension on the conditions of its permit to explore in the Great South Basin.

Nonetheless Woodward Partners’ energy analyst John Kidd last month made the comment that uncertainty created by the offshore ban made bidding for onshore permits so unpalatable that Block Offer 2018 was pretty much redundant.

He said holding it up as the reason to fast-track a major legislative review was “disingenuous and serves only to mask the true objective of seeking to minimise public discussion and critique”.

Kidd suggested the Government would be better off canning Block Offer 2018 and taking time to get the legislation right, before pressing on again with Block Offer 2019.

By the time Block Offer 2018 (which was previously planned to be launched in April 2018) is ready to go in early/mid 2019, it will nearly be time for the launch of Block Offer 2019.

The Committee’s report

The Environment Committee acknowledged submitters were concerned about the lack of public consultation and insufficient time given to the select committee to consider the Bill.

However it said: “Many submitters expressed support for the Bill, noting it is an overdue first step away from reliance on fossil fuels.

“The majority of these submitters suggested that the Bill should go even further, and advocated a complete ban on all permits.”

Supporters of the Bill said it would help develop alternative energy sources, show leadership on the world stage, align with New Zealand’s international commitments, and support greater climate change action.

These submitters also commented that the Energy and Resources Minister’s discretion to extend the duration or area of existing permits should be limited.

“A number of submitters requested that petroleum permits should not be granted over national parks. The committee notes that new provisions around accessing Taranaki conservation land for new petroleum permits are intended to make access more restricted,” the Committee said.

It also noted that “many” submitters opposed the Bill.

“They commented that there are no viable low-emission energy alternatives to oil and gas, and that New Zealand’s existing natural gas reserves equate to only about 10 years of demand.

“Part of this concern was a view that there is no overarching plan to support New Zealand in its transition to a low-carbon economy.

“Likewise, submitters expressed concern that the Bill could affect the cost of living if future energy supplies are constrained or if reliance on international sources of energy increases.”

These submitters also commented that the impact on climate change wouldn’t be substantial.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

47 Comments

by powerdownkiwi | 29th Oct 18, 7:26pm 1540794388

She's showing leadership. Meaning she is the future, the nay-sayers are the past. It's about that simple, now.

Has she got the whole picture? Not publicly, she hasn't. Still thinks Child Povery can be solved as a stand-alone, still applauds efforts at even more sprawling infrastructure tacked on the peripheries an already-unsustainable disaster-in-waiting.

But in attempting to safeguard our life-support system, she's the best option we have - I even put her ahead of a certain Green co-leader,,,,,

by nymad | 29th Oct 18, 8:53pm 1540799592

Sorry; leadership?
Leadership on what, exactly?

When I think of leadership, it's not defined as arbitrary decision making in fields that you obviously have no expertise in.

There are going to be some winners from this decision - namely the zero marginal cost generators who now no longer have CGGT bids anchoring the marginal price of electricity.
The environment and the consumer certainly aren't going to be winners, though..

by powerdownkiwi | 30th Oct 18, 8:28am 1540841316

Following the Nymad theory of existing expertise, the world is flat, there's a heaven above and a hell below. Oh, and we are the centre of everything.

Time we moved on, Nymad. Economics - which you claim expertise in - was a way of reading tea-leaves for a temporary time. It forgot to count real stuff. It had to be found out.

Time we grew up and moved on, beyond those fighting doomed rearguard actions.

by nymad | 30th Oct 18, 8:38am 1540841929

An ironic comment on multiple levels.
Unfortunately I doubt intentional.

by powerdownkiwi | 31st Oct 18, 8:46am 1540928777

The only geometric form capable of supporting endless growth is flst plane. Spheroids don't do it - they're finite.

So folk like me have long regarded Nymad-types as flat-earthers.

by nymad | 31st Oct 18, 9:07am 1540930060

Here we go with more convenient ignorance (or misunderstanding) of the arguments of smarter people.

Because I have asked you so many times, and I think in logarithmic terms, what's one more time...
I challenge you to quote myself or any economist stating that we do not live within a finite scope.
Surely this realisation that you cannot must lead you to question where your understanding of what economists argue is faltering.

by steven | 30th Oct 18, 3:23pm 1540866238

Have to get through to the stupids, time running out to deal with climate change. This action is actually minimal if not pathetic yet such as yourself think its not based on "expertese"? A massive amount of scientists with qualifications and experience in the arena of CC are telling us we have to move faster.

by nymad | 30th Oct 18, 4:16pm 1540869379

"expertese" is an interesting spelling, Steven.

Those same scientists are advocating that we 'transition' to a lower emission state through strategic planning. They aren't advocating countries unilaterally outlaw fossil fuel extraction.
Why not? Because that's a categorically stupid idea if you have no plan for energy substitutes.

by Jamin | 29th Oct 18, 9:50pm 1540803018

On this issue you're right powerdownkiwi. The world desperately needs more bold leadership like this on global warming. No matter which way you look at it fossil fuels are the past and if we are to tackle global warming we need meaningful intervention on a government level.

by imhenry | 30th Oct 18, 8:09am 1540840149

Don't get your hopes up 2020 is coming, REVERSAL

by RickStrauss | 30th Oct 18, 8:16am 1540840572

Indeed, Simon Bridges will lead the CCP to victory!

by Ex Expat | 30th Oct 18, 9:49am 1540846184

Your posts are becoming as banal as mine Mr. Street and that's not a compliment.

by RickStrauss | 30th Oct 18, 11:24am 1540851858

Eh, they're nowhere near that bad yet.

by Boatman | 30th Oct 18, 10:58am 1540850317

@pdk You have made some thought-provoking observations .

While I am still left gob-smacked over the Oil and Gas issue , I think you are right about the lack of an holistic approach to poverty generally .

We need to be brutally honest with ourselves as a nation, about the causes of poverty .

We have a large financially illiterate sector in our population who use pay-day lenders which are a sure path to penury for many . We need laws to protect those vulnerable to these predatory lenders, and the Government is showing some leadership in addressing this . I await the draft legislation with eager anticipation as I hope its not a whitewash

We do not adequately teach kids about how to handle money at school , so when they grow up they can at least do a simple household budget .

Saving requires discipline and making hard decisions about allocating our meagre resources . Its not easy for many , but it can be done . My first paycheck was $83.62 A MONTH it was a pittance , yet I was able to save on that by putting $8 in my POSB savings book on pay day , and forcing myslef to live on the rest . Credit cards were only given to the wealthy back then , unlike today where we have Uni students with credit cards .

The fact that we have a new social class called the "working poor " is just not on in a society which takes pride in trying to be egalitarian

The Government should reduce income tax for the first $20k per annum to just 5% and let these folk work their way out of being the in the working poor class.

Instead we have a families package and WFF tax credits and all manner of complicated calculations to get some of your own money back , and which many of the working poor cannot access .

Its social engineering at its very worst .

On the score of urban sprawl, we need to recognize that we have few options when we have an open-door immigration policy , and we need to house everyone .

I dont profess to have the answers , but we did elect these folk to sort these things out. I wish them well

by steven | 30th Oct 18, 3:28pm 1540866506

Its not money we need to teach and its not just the kids but energy.

No problem with reducing tax on the low income just as along as that is compensated for by taxing those paying little ie a land / wealth tax. Almost TOP territory really.

WFF reduces inequality, sadly it seems we are as a nation unable to think beyond our wallets.

by Hamish | 30th Oct 18, 4:34pm 1540870446

WFF reduces inequality? I thought there were multi-house owners in this country who could or did offest rental property losses against their income thereby qualifying for WFF? Or have I misread this anomaly....

by rastus1 | 30th Oct 18, 4:41pm 1540870900

WFF is asset tested so the rental would cut them out.

Tragically though, the asset test prevents the struggling saver getting accommodation supps, whilst the home owner with huge equity can continue to qualify.

Go figure.

by Pragmatist | 31st Oct 18, 9:15am 1540930510

You sure about that? Nothing I've seen indicates it is asset tested.

by Basel Brush III | 29th Oct 18, 7:29pm 1540794556

They would not listen anyway but the outright ban ignores the differential gains of allowing gas recovery (the hydrogen or cleaner end) as opposed to heavier (more carbon concentrated and dirtier) products.
Then they haven't got a science brain amongst them.
Note the TIL /Hiringa project relies on gas supplies which is most likely to now use LNG after the local gas runs down or out. Still hope for stranded gas though.

by sharetrader | 29th Oct 18, 8:08pm 1540796902

you mean this process of which we have plenty of free steam production in the middle of the north island

The most common hydrogen production process is natural gas reforming — sometimes called steam methane reforming because it uses high-temperature steam. When exposed to steam and heat, the carbon (C) atoms of methane (CH4) separate. After two successive reactions, they reform separately to produce hydrogen (H2) and carbon dioxide (carbon dioxide (co₂)). This operation therefore requires natural gas

by Basel Brush III | 30th Oct 18, 2:45pm 1540863913

That old process unfortunately adds to the CO2 burden while the Hazer process as in Hiringa converts the C to very valuable graphite for possible use in battery manufacture.
The steam may be free but the CO2 ain't.

by Stuart | 30th Oct 18, 7:19pm 1540880374

I thought graphite anodes had given way to Silicon anodes in Lithium polymer battery construction like over 8 years ago.

by Yankiwi | 30th Oct 18, 6:32am 1540834343

To meaningfully contribute to reducing global warming, address demand. Removing local supply without changing local demand has the unfortunate side effect of increasing our carbon footprint due to transportation costs incurred. Until demand is meaningfully addressed, it is just virtue signaling.

by steven | 30th Oct 18, 3:36pm 1540866962

Hmmm,

To start with we seem to export our sweet anyway and import it refined as fuel or as sour crude to refine here. So no we simply will be exporting less, ergo less carbon emissions. Meanwhile as prices rise it means ppl seek other forms of (say) transport like move to EVs. Or company's move to more renewables aka the USA mid states who are putting it in hand over fist. Supply and demand can really follow a simple curve as prices go up other cheaper energy is used eg EVs which then can use wind and solar in turn we can see tha happening in the interest in EVs selling like hotcakes.

by Yankiwi | 31st Oct 18, 1:22am 1540902176

Agreed that at present, our sweet crude is worth more on the world market than it is domestically. It does seem a bit silly to export crude and to also import crude. It would be better to source our crude locally. Even if we consumed 100% of our crude oil production, we would still be importing around 2/3 of our consumption. In other words, consuming the local production would reduce both import and export transportation carbon costs. A more rational near-term legislation would be to ban crude exports instead of the virtue signalling ban of exploration. This would result in local production going to local consumption, minimizing the carbon costs of transportation. Also note that the ban isn't just about crude, but includes LNG. There are definitely issues in the future in regards to LNG production vs demand in NZ. A good aspect of LNG is that it has a much lower carbon footprint as compared to crude oil consumption. Why NZ hasn't pursued LNG powered vehicles?

Reminder, the primary issue is that the offshore oil/gas ban doesn't materially address NZ CO2 emissions, it just guarantees that we will be off-shoring our petrochemical sourcing. I would far prefer legislation that has the explicit goal of reducing demand for hydrocarbon consumption, as well as finding sustainable and carbon neutral consumption processes (biofuels, generating hydrocarbons from CO2 and H20 using renewable energy sources, etc.).

by Advisor | 30th Oct 18, 8:01am 1540839667

Do we have reliable energy infrastructure, industry analysts believe we don't. The O&G exploration ban would've seemed more of a calculated move rather than a kneejerk reaction, had the government rolled out a transition plan towards a sustainable post-hydrocarbon energy infrastructure.
Oh right. There is the 100k out of SJ's slush fund appropriated for a new energy development centre business case.

by waymad | 30th Oct 18, 9:20am 1540844404

There is no discernible 'transition' plan. When - not if - local gas sputters to a halt, we will import LNG in VLGC's, most likely somewhere on the East Coast, and pay for the transport, the import facilities, and the conversions required. All of which increase net global carbon emissions: VLGC's run on bunker oil....

The O&G debacle is the equivalent of teaching a child to swim by parading them to the edge of the deep end of the local pool, and unceremoniously shoving them in. 'Hope ya Float, kid...'

by profile | 30th Oct 18, 9:54am 1540846466

Don't worry Waymad -solar and wind will save us. On track to supply 2.4% of global energy demand by 2040.

http://images.huffingtonpost.com/2016-01-27-1453901667-6538243-renewabl…

by Hamish | 30th Oct 18, 10:21am 1540848112

An old mate of mine pointed out that money is never a problem. Either earn more, or spend less.

by Stuart | 30th Oct 18, 7:13pm 1540879991

We already import most of our fuel, and there is a transition plan underway being administered by the Ministry for the Environment, with 2046 being when oil and gas is no longer produced here. Try using Google.

by Foyle | 30th Oct 18, 9:38am 1540845494

2 weeks for submissions = Coalition F*****g Taranaki, but doing it with the lights off as they are embarrassed by what they are doing.

by nymad | 30th Oct 18, 10:04am 1540847086

Don't worry, this is leadership apparently.
Jacinda's whimsy and Shane Jones' regional development fund will all make up for it.

Perhaps Genesis can get a hold of some of Trump's clean coal for Huntly.

by Hamish | 30th Oct 18, 10:23am 1540848203

Yeh but we're getting the next great walking track here. p.s. it's raining today.

by xingmowang | 30th Oct 18, 10:03am 1540846988

The essence of the problem is that whether NZ has a political system that produces good governments and good political leaders.

I doubt it.

by gingerninja | 30th Oct 18, 10:20am 1540848033

xingmowang, I couldn't disagree more. No political system is perfect but when compared on a global scale, NZ has a stunningly beautiful political system. And whilst NZ is not perfectly governed, it is governed considerably better than most of the world. NZ consistently ranks highly on almost every measure of governance. I'm not a Kiwi, so my respect for their political system doesn't come from a sense of personal pride or nationalism. You may not like how NZ is being currently governed, which is your prerogative, one you have vocalised on here many times.
Thankfully, being resident in NZ you are free to comment and criticise its politics and in a few years, use your vote to express your desires, and then thanks to MMP, you stand a good chance of seeing your vote represented in government!

by Roger Witherspoon | 30th Oct 18, 10:59am 1540850342

It seems Xingmo is not free to say what he thinks. He is presumably posting to maintain his good credit status with the CCP. Authoritarian governments tend to make bigger mistakes, Mao's Great Leap Forward by starving 80 million to death comes to mind. His officials told him they had bountiful rice harvests so he exported it. Presumably he was quite happy to kill off the people he had no use for.

by Foyle | 30th Oct 18, 11:05am 1540850729

The global failure of representative democracy is that it can't manage problems and issues efficiently over long term, because 3-4 year terms punish politicians who try to forward plan - they take the pain of expenditure, but reap no reward for the infrastructure or savings delivered 10 years down the track.

And average voters are too short-term in their choices to overcome this problem.

So we are left in a dire situation in the Western world where we are no longer capable of building or planning for new infrastructure at needed rate.

Chinese govt are pretty horrible, even evil (currently wiping out Uigher culture/religion, previously eradicating Tibetan culture, and generally screwing anyone who isn't Han), but they at least do infrastructure development well. Singapore also does a good job, while being very authoritarian.

We need to find a way to focus western politicians on the long term. I would suggest linking their superannuation or long term performance bonuses to long term economic success of the country.

by gingerninja | 30th Oct 18, 11:28am 1540852139

I agree that there are undoubtedly flaws in western democracy and lack of focus on long term infrastructure spending is certainly a biggie (acutely so for NZ). However, much of NZ infrastructure problems are also related to small population size.
Much of the huge infrastructure systems built elsewhere in the world happened in completely different economic scenarios. For instance, the train and tube networks in the UK were predominately built in the Victorian era by mega rich private companies and individuals (and then subsequently bought by governments before being privatised again). Those massive infrastructure spends were only possible because industrialisation and imperialism allowed some individuals to become *that* wealthy, and there was also a sense of optimism that led to belief in progress which encouraged such projects.

The political climate in NZ seems to be that government shouldn't take on debt and political parties often boast about how little debt they will accrue. From my perspective, government debt shouldn't be thought of in the same way as private debts and governments should borrow big to invest in infrastructure when it will ultimately lead to greater productivity and growth in the decades that follow. But that all seems to be about political sentiment rather than 3-4 years terms. If the public could see the value of big infrastructure spending or there was a bipartisan agreement on such things, it could still be possible within the current NZ political system. I think that China may have waaaaaay overshot on infrastructure spending and some of their huge projects are and will be physically deteriorating before they are ever used or needed, and that their debt may bite them on the ass at some point before the infrastructure ever pays itself back.

by Pragmatist | 30th Oct 18, 11:33am 1540852412

Its not just long term Infrastructure spending. Anything with a timeline longer than a single digits number of years is haphazard at best.

by Foyle | 30th Oct 18, 12:18pm 1540855106

When you have ~7% GDP growth (I know, mostly faked data by party apparatchiks, but still pretty good growth) long term debt incurred by overspend on infrastructure evaporates in pretty short order. Also chinese govt has ability to steal off chinese people with near-impunity if they so desire - they may just do a grand reset if economy really goes in toilet.

by alpappy | 30th Oct 18, 10:27am 1540848463

Leadership more like dictatorship. Policy on the hoof . She and labour are ruining this country!

by Stuart | 30th Oct 18, 1:12pm 1540858352

And I suppose Trump would be making america great again if not for that pesky senate and house of representatives?

Fossil fuel vehicle bans in EU countries begin in 2020. On this issue of fuel sources and private passenger transport: we can adapt, or slide backwards.

by Roger Witherspoon | 30th Oct 18, 10:50am 1540849804

I am biassed on this whole anti mining thing. Maybe it's because I grew up in a coal mining village. I hear coal mining in Aussie is going well as the Chinese currently prefer clean burning good quality Aussie coal to their own dirty brown stuff. Why is coal seen as the footstep of doom? Take Jacinda's car and aeroplane travel away. Why should the rest of the world allow us to bludge off them? By all means put up petrol tax to ration usage, but why shoot ourselves in the foot? Why are we choosing national suicide?

by Stuart | 30th Oct 18, 1:18pm 1540858720

Coal is an incredibly valuable resource, and I'm still opposed to mining it in the open slather fashion some pundits put forward. If Stephen Hawking is to be believed, the sum total of energy in the universe is equal to the number 1. We can convert it into various forms, electrical, kinetic and vice versa, but you must extend that logic to coal and it's finite nature to see the problem. Even nuclear energy is 'greener' than coal. Coal should be used for steel production, burning it is an unfathomable waste from a stellar-nucleo-synthetic perspective. We can't re-synthesise it in human time-scales.

by profile | 30th Oct 18, 2:20pm 1540862420

If you are feeling guilty about coal use in steel then just use charcoal - Brazil has around 1 million ha of dedicated charcoal plantations.

by Roger Witherspoon | 30th Oct 18, 3:53pm 1540867985

Exactly, coal is just compressed wood from forests that flourished in the high CO2 atmosphere in previous ages long ago. Coal mining is dangerous and air pollution from burning coal is a real killer, but why the extreme angst, the footsteps of doom, as it were?

by Stuart | 30th Oct 18, 7:06pm 1540879569

Why do you think there is angst? Hippies are rather peaceable people ;-)

I'm not seeing any guilt, blame laying or whatever it is you perceive. Everyone is in this together. Although I do see plenty of climate change deniers indulging in emotive rhetoric and inflaming discussions, is that the angst you're talking about?