Energy Minister Megan Woods and her shadow minister Jonathan Young go head-to-head as bill banning new oil/gas exploration passes

The Crown Minerals (Petroleum) Amendment Bill has passed its third reading in Parliament.

New offshore oil and gas exploration has now officially been banned, while onshore exploration will be limited to Taranaki until at least 2020.

Green Party Co-leader James Shaw said: “This is a significant day for our transformation away from fossil fuels, and towards a clean, green, low carbon future.

“This Bill is an essential first step in winding down offshore exploration for new sources of fossil fuels.”

Meanwhile National's Energy and Resources Spokesperson Jonathan Young reiterated his commitment to revoking the ban if elected into government, citing the need for gas in the transition to a low carbon economy.

Questions remain unanswered

Some hours before the Bill was passed, debate between Energy and Resources Minister Megan Woods and Young heated up.

Woods was unable to specifically tell Young how many megawatts of new renewable generation would be needed to reliably replace coal, gas, and diesel generation.

Instead she said: “We have hundreds of megawatts of consented but not yet built renewable energy.

“We also know that technological change to store the roughly 6 terawatts of surplus energy we produce in summer, that we can use in winter, is coming, not just through battery power but through things like molten salt, like hydrogen, and a range of other storage facilities.”

Woods couldn’t tell Young how many megawatts of new renewable generation is being built in the next 12 months.

She pointed to Genesis Energy in recent weeks committing to building a "100-megawatt" wind farm in Taranaki, then said it was over to “individual generators” to respond to the signals the government is sending around the demand for more renewable energy.

Woods was again challenged by Young, who said: “Considering that wind generation over the last 13 weeks was just 25% of its installed capacity, what level of investment would be required for wind energy to meet the requirements that she is expecting, particularly around the new Waverley Wind Farm, when she is quoting 100 megawatts?”

Woods responded acknowledging wind energy on its own isn’t sufficient to provide the security of supply.

She then again pointed out: “To ask that question without also including what needs to be done in terms of storage capacity misses the opportunities that sit in front of this country.”

The stand off between Woods and Young followed one on Tuesday when the electricity market was essentially used as a political football.

Wholesale electricity prices have sky-rocketed over the past month in part due to hydro storage levels at New Zealand’s major lake and river systems falling to 62% of the historical average for this time of the year, and in part due to an outage at the country’s largest gas field, Pohokura.

While Young pointed to the situation to highlight the need for gas, Woods said: “What recent events are showing us is what a precarious security of supply situation we're in when we need to rely on gas for peaking.

“That's why this Government is intent on building a resilient energy system with more resilient forms of renewable energy.”

Wholesale electricity

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Jubilation and disappointment 

Greenpeace responded to the legislation passing, saying: “The science is very clear - we only have 10 years to halve our use of oil, gas, and coal or face the displacement of millions of people, catastrophic sea level rise, more extreme weather, and mass species extinction.

“That’s going to mean massive change - not business as usual - and we need to be prepared to take bold steps like this to protect humanity and the planet.”

The Petroleum, Exploration and Production Association of New Zealand said: "The people most affected by this decision haven’t been listened to and now face real uncertainty.

“The Government’s own advisors say this decision will cost the Crown billions of dollars and will more than likely increase emissions, but it’s the human cost that is most striking…

"Experts warned this move will increase the cost of electricity to New Zealanders but this has been ignored. This is not good news for households struggling with the rising cost of living.

"We need natural gas as a transition fuel towards a lower carbon economy. Turning off the tap when we have nothing concrete to replace it with is dangerous and irresponsible.”

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35 Comments

Banning gas and oil exploration while importing and using gas and oil seems wrong. I can't help feeling there will be some karmic consequences to all of this.

Seems wrong? That's not very scientific.

And we have to realise that Woods can't point to what will be driven, now this decision has given the signals. The dinosaurs are merely pointing to a lack of planning (which they themselves actively facilitated) to complain about a lack of planning.

We need to be a bit beyond such humbug.

100% correct Zach

I actually like the ban on oil exploration, but i don't like the lack of plan to compensate. I would rather tax the oil extraction and use that to invest in renewable until you go critical mass to switch. I know that most people call that counterproductive but would work.

Please don't make me vote for National. This is loony tunes stuff that is not sustainable for a population of 5 million people in the South Seas with gas being excluded. If only NZ First could have retained their 14% before the Dirty Politics 4 weeks out from the Election, this would have resulted in a stable Government. Greens - seriously?

Changing from energy based on fossil fuels to that based on renewable sources is a a little bit like changing jobs; its far more secure if you have the other job already line up to step into.
Megan Woods doesn't inspire confidence when she glibly comments: "it was over to “individual generators” to respond to the signals the government is sending around the demand for more renewable energy."
Whoa! We will blindly keep the Greens happy but dam the consequences.
In answer to two supplementary Questions, she didn't know what energy requirements would be required to meet that of loss of non-renewable sources let alone any indication how this would be met.
While not disagreeing with the intent; this is at best decision making based on naive hope and pray policies that offers no planned transition and certainty without security of future energy supplies.

i think you forget that the government is the major shareholder in three energy providers and can at board level instruct the building of more generation and storage, even go as far as partake in a capital raising to accelerate the building program, make up for all the years of milking the companies to make the countries books look good.

Sometime ago, Jacinda tried to appease the country with the statement that all would be well with oil exploration in the short term as existing exploration consents would be honoured.
With both Shell Oil and TAG Oil having sold out and now departed, it highlights that not all exploration wells are productive or economic but often it is the information gain from such exploratory drilling that is of value.
Jacinda has naively not understood that exploration is not about an individual event; rather it is a process over a period of time with numerous exploratory events.
While the need for a transition to renewable energy supplies is unquestionable; the blood-rush knee-jerk action (seemingly the cost of the Coalition Agreement with the Greens) is cause for concern over the next few decades.
Can Governments get it wrong? Of course they can; remember Bill Birch's knee-jerk "Think Big" energy projects which proved to be unquestionably a major policy disaster. This current Government will match that.

Not sure why you bring Shell into it, they had decided to leave long before the coalition govt was formed, under the term of the National govt. And it could be argued their exit process started way back in 2005 when they decided to quit the South Pacific islands.

(2005) https://www.radionz.co.nz/international/pacific-news/158809/shell-oil-co...
(2015) https://www.stuff.co.nz/business/74955666/shell-considers-selling-its-nz...
(Apr 2017) https://www.stuff.co.nz/business/91266659/shell-new-zealand-swaps-assets...

Oh, and as far as I can see, Tag Oils assets in NZ were all onshore.. so not affected by the ban. And the company that brought them is the one with the offshore permits.

Seems like a bit of a beat up to me.

With both Shell Oil and TAG Oil having sold out and now departed, it highlights that not all exploration wells are productive or economic but often it is the information gain from such exploratory drilling that is of value.

Nothing in the second half of that sentence follows on the first half, apart from its location.

Oil companies would be here for "information gain" though overall their efforts would not be economic or productive? They're not charities.

I disagree with the way this decision has been made. However, as per the example of Shell already pulling out from before this, it's a different question of whether it actually makes much difference (another reason I'd doubt it was necessary). Most arguments in favour of it making a huge difference seem to rely too much on these sort of platitudinous arguments "it's a process", or "it's the learnings they're here for, not the money".

"Think big" has turned out over many years to be a huge bonus for NZ. Why would you think it was a disaster?

I just received the following statement from TAG Oil, so have updated the story I did on it yesterday.

CEO Toby Pierce said the Government’s change in policy regarding oil and gas exploration was not a direct reason why it will sell its New Zealand assets. But, it did play a role in it.

Mr Pierce said the company had already started a process to seek additional capital to cover the work it is required by the Government to do in the permits it holds.

“We had discussed this with Tamarind, who went away and then came back with an offer for the whole New Zealand portfolio.”

Mr Pierce said this process had started before the Government announced its offshore exploration ban. However, they noticed potential investors became much less interested in New Zealand after that was announced.

I can't believe she seriously thinks batteries can be used to meet the 7TWh winter energy defect she talks about. Even just 3TWh at $1000/kWh would be $3 trillion, over 10x NZs GDP. Madness. Storing that much energy is very hard, hence why we rely on gas storage and coal stockpiles. To say that you can replace hydro therming thermal stations with intermittent wind shows she's getting some terrible advice. Let's hope the existing fields can go for a lot longer than we think!

Elliot - don't get into GDP, it's a nonsense measure, done using nonsense digits.

'Replace' also indicates there's some assumptioning going on.

We need to fit in with realities, what seems to be the prevalent approach is to make realities fit us. Realities will win - we need an attitudinal change.

It was always felt that the Minister of Energy was a make work job, but the Minister's comments yesterday showed she has no understanding of the subject "One of the things that we know is that wind energy on its own is not sufficient to provide the security of supply that our energy system needs. What I said in a previous answer is that we are a country that produces roughly 6 terawatts of surplus energy in the summer months and has roughly the same deficit in the winter months. So to ask that question without also including what needs to be done in terms of storage capacity misses the opportunities that sit in front of this country."
This is just plain wrong - first out, there is a difference between energy and power. Then there is no surplus in renewables. That is why we have to burn gas all year round, and coal now (November is a summer month). .
The only interest is whether it was written by someone else, and the Minister did not understand what she was saying, or whether it was all her own work.

Inflation in electricity prices? Under a Labour government? Surely not.

What a nice party we are having. The sun is shining and all is well, not a cloud in the sky. Jobs for all and houses getting cheaper. What fun. Enjoy the endless summer.

Oh blow it out your other end honestly. Residential electricity customers have carried the burden of electricity price rises since the "reforms" of the late 90's (by the Nats).

What we have here is a low flow year and worn-out equipment on the gas supply from Taranaki.

So that looks to be....hmmmm *zero* percent related to the exploration ban?

While you are obviously right to say a dry season has nothing to do with any government, the current situation simply highlights a huge flaw in Labour-Green position on energy security. The entire world is investing in LNG as a fall-back to option to ensure that they have energy security if other sources fail to produce to the needed levels. Meanwhile in NZ, Labour and Greens are about the only government in the world who discourages investing in LNG and is happy to puts NZ energy safety in jeopardy.

The issue is that the government has gone about this with secrecy and they did not air their policies on this pre-election. Something as fundamental as this surely deserved a lot more discussion and transparency. It required contingency plans, investment plans, how these plans will be financed, etc.
It required a really comprehensive plan as how NZ as a country will go about this. From replacing existing fossil fuel running motor vehicles to building more power generation sites to upgrading the distribution grid etc. Yet we just told no more gas for NZ, Suck it up, Should there be no rain, sun or wind, then just pay exuberant electricity prices and shut up

Green Party policy announced a couple of weeks prior to the election - https://www.greenpeace.org/new-zealand/press-release/on-climate-policy-j...

You cannot seriously take a policy released before the election as a Guaranteed Govt decision.

Even more so when the Greens aren't formerly in Government - they are a confidence and supply to the Governing coalition of NZ First and Labour.

'The entire world is investing in'.

Think about that statement - two problems with it. One is that 'investing' really menas using energy to create infrastructure. The other is that if the 'entire world' is doing it, it's going to be very, very, temporary.

And it's a significant step down from oil/coal in EROEI terms, so less work done per tankful, as we remember from LPG/CNG cars. Less work means less wealth underwritten, more and more virtual bets not backed.

So goodbye global finance......

There is huge potential in in-house water storage, as an energy-retention device (otherwise known as storage). On-site solar to domestic hot water is a no-brainer - and a big load relief.

Then there's peak load changing - dong the washing when the sun shines.

Then there's passive solar housing (which will have to be retro-alteration given the lack of remaining time). House temp/humidity/air control using sun and thermodynamics rather than commercially-ticket-clipped complex technology.

Last but not least, is our obligation to our offspring - which burning Fossil fuels does not honour.

I dont disagree with you powerdownkiwi. I do believe that we need to change the pattern of our energy consumption. To be able to really do that we also need changing our 'working hours' and our proximity to our works (or alternatively how fast we can get there). We need to work less hours, with breaks between working hours that allows people to be home when there is a surplus of energy to consume (e.g. between 11-3 pm). You maybe able to do some energy intensive tasks remotely (like washing your cloths) but a lot of other activities (such as cooking, ironing, hanging cloths to dry under the sun, etc). require your presence.

Then there's reality.
1. Can I afford to install all this stuff? No
2. Will my boss won't let me go home in the middle of the day to do the washing, so I can make use of the sun to dry them? No

As for our offspring, most of them would not even be here if it weren't for burning fossil fuels.

Amazing what modern appliances can do.. internet connected, built in timers etc.

2a) modern washer/condenser drier combo. Don't need to go hang things out.
2b) Wash during the day, hang out in the evening when you get home, bring in the next evening after the day sun has dried it out for you. In winter may require a slight final dry on the airing rack indoors to get the evening dew off if you don't get home early enough.

Its not exactly that hard.

You are right, Its not exactly that hard, but
2a) You are saying I should use my electric appliances more? - a very green initiative.
2b) NZ Weather

Noncents - let's assume you haven't a device to grind.

I am proof that it is worthwhile for one (of a couple) to not 'work' in the income sense, but to address energy/work in the domestic sense. We're miles ahead of two-income, pay-forever-for-everything couples. There are powerful people who wold like the status-quo to continue, as it contributes to their mana. But it is unsustainable - so by definition it is somewhat impermanent, regardless of troll output.

Having been self-sufficient in energy for 20 cumulative years, I'll tell you weather is not a spoiler, just a work-around. As are most things.

I actually agree with all of what you are saying. It is something I am also trying to do, I am someway there, albeit still quite a way to go.

I do disagree with the way it is being implemented.The government has not reduced demand. That is the core issue as far as I am concerned.

As a nation our usage will not drop. There is no "alternative" at this stage so we either suffer catastrophic failure, or we import fuels with a significantly larger carbon footprint.

Both are very poor outcomes given the intent of the bill. I have an expectation that the government would aim for a smooth transition, rather than a sink or swim outcome, that at this stage is looking more like sink or sink.

I hope the greens legalise weed soon as I need some to get on the same we have no answers but everything will be fine page.

I'm all for zero carbon, but it should be the carbon price and exploration price driving the exploration decisions not appalling policy made on the hoof.

4.5 windfarms per year until 2050 did I hear her right?? Does this pass any reality checks?

David MacKay did the numbers years ago. Megan Woods is clueless.
"Then we conclude: if we covered the windiest 10% of the country with windmills (delivering 2 W/m2), we
would be able to generate 20 kWh/d per person, which is half of the power used by driving an average fossil-fuel car 50 km per day."
http://www.withouthotair.com/Contents.html

Has anybody got any links to the study of a tidal generation system between the manukau harbour and pakuranga inlet? Portage road is about 1km long so wouldnt take much. 24/7 energy generation 365 days per year and zero transmission loss. Is this an urban legend or has it been given due diligence.

NZ is focused on climate change meanwhile farms are polluting the waterways with nitrates and the commercial fishing industry is cleaning out our seas.

Climate change is an issue but it’s only part of the problem. Pollution and over fishing are equally as bad but largely ignored by successive govts.