web analytics

Local Bodies: The Great Oil Gamble and Wasted Opportunities

Written By: - Date published: 8:37 am, April 7th, 2014 - 24 comments
Categories: energy, national, same old national - Tags: , , , ,

bsprout at LocalBodies allows us to repost some of his interesting pieces. This one from last thursday asks why National are so fixated on selling our oil and gas exploration rights.

‘Gamble Big’ rather than ‘Think Big’ should be this National Government’s mantra.Opening up huge areas of our land and territorial waters for open slather oil and gas exploration is a gamble on so many levels. When many countries like Denmark are actively chasing a sustainable, clean energy future, this government is throwing all its hopes on a big strike of fossil fuel.

It is a gamble that in the twenty years or so before any worthwhile production will occur, that there will still be a high level of demand for the polluting fuel (given the growing urgency around climate change). It is a gamble that during the most dangerous exploration phase that the Government has limited public scrutiny and involvement in initial consents. It is a gamble to drill at depth of over 1,000 metres – the deeper the drill, the greater the risks. It is a gamble that the Government sees no benefit in ensuring thatMaritime New Zealand is capable of managing a serious spill and Anadarko’s own response plan reveals it would take up to 115 days to get a relief rig on site. We are also gambling with our clean green brand that 75% of our exporters are reliant on, one spill could tip the balance of our already shaky image.

While the Government is prepared to gamble on a fossil fueled future, there are readily available sources of cleaner more sustainable energy under our noses. If the same amount of money that is being spent subsidising oil corporates ($46 million a year) was directed into research and technology to tap into these opportunities we could be self sufficient in energy in the same time it would take for deep sea oil to become productive.

Rather than hoping for a large single source of energy from an oil or gas strike (that we will still have to pay commercial rates for) we should spread our attention to the smaller scale opportunities that could collectively be quite substantial:

  • The bio-waste on farms is a largely untapped energy source that could enable most of our dairy farms to be self sufficient in energy and capturing waste before it enters our water systems and atmosphere. I like the description of letting this waste run off the farm without being properly utilized as ‘energy leakage’.
  • Our timber industry produces a large amount of unused waste as trees are harvested and logs prepared for export. Converting waste wood into bio-fuel is a logical way of managing a generally discarded material.
  • Rather than seeing our sewage ponds as an ongoing municipal cost, the algae found in them could produce an income through the production of bio-diesel.
  • Many of our landfill sites are burning off methane into the atmosphere that could easily be captured as a source of natural gas for local use.
While John Key and his mates may enjoy gambling big with New Zealand’s future, I would rather take smaller risks and invest in longer term, sustainable options.

24 comments on “Local Bodies: The Great Oil Gamble and Wasted Opportunities ”

  1. Lanthanide 1

    I suspect the reason none of the things being suggested at the end of the post are being done basically boils down to profitability. These processes are expensive and in their infancy. No one wants to invest the big up-front dollars in order to capture potentially meagre gains, especially if in 10 years time the technology has improved, rendering the old plant and equipment obsolete.

    • Draco T Bastard 1.1

      The only organisation that has the patience to invest in this type of R&D is government but our government has spent the last thirty years denying that it even has a major role to play in R&D. And all Labour have come up with R&D credits which international have shown usually don’t work (Marianna Mazzacuto, The Entrepreneurial State).

    • Lanthanide, I agree that none of my list would probably attract interest from larger commercial entities except maybe in the production of the technology that supports them. I am talking about multiple small scale projects that meet the needs of individual businesses and local communities. Large scale energy production can actually involve large inefficiencies.

      We should be looking at multiple small scale solutions rather than looking at large, one size fits all, approaches. We don’t need to have these projects returning profits, most will probably just meet immediate needs and be just cost effective. The gains will be: a reduction in reliance on imported energy, a reduction in our current account deficit and, over time, reduce the costs of expensive national infrastructure.

      • Draco T Bastard 1.2.1

        I agree that none of my list would probably attract interest from larger commercial entities except maybe in the production of the technology that supports them.

        Nope, all the larger private entities would be interested in would be when they can come in and hoover up all the gains.

        I am talking about multiple small scale projects that meet the needs of individual businesses and local communities.

        None of which have the capacity to support such R&D. The nation does.

        We should be looking at multiple small scale solutions rather than looking at large, one size fits all, approaches.

        Once the government has done the R&D we can put in place small scale solutions that meet the needs of the local community.

    • Naturesong 1.3

      I suspect that some of these ideas may not seem profitable simply because externalities and subsidies are not accounted for.

      For instance, cost of river pollution, who pays? Currently no one, or occasionally a local community project (volunteers) to clean up a section of the river that has been polluted by either farm runoff or manufacturing waste.

      And if you remove the subsidies from fossil fuels (tax credits, exploration data and research), suddenly the alternatives look more and more competitive.

    • Naki Man 1.4

      Well said Lanthanide. Common sense and some people are not bright enough to work it out.
      USA has been down this road and given up after wasting millions

  2. tricledrown 2

    Nationals fossils (front bench and underlings)
    Have fucked up with mining and drilling.
    So spin
    National irrigation policy is in tatters after trustpower and other private investors are pulling out of hawkes bay dam.
    Farm research restructuring by by Joyce is sabotaging years of intellectual capital built up in Agricultural research.
    Not for the first time National destroyed longterm research when they first came to power completely destroying our world leading wool research unit at lincoln .
    Nactional are a bunch of bean brained bean counters.
    Who are only intetested in image over substance.

  3. Ad 3

    Was very encouraged by Z Energy getting their unsubsidised tallow-to-biodiesel plant up and running.

    Such a huge opportunity for Fonterra to dedicate their waste stream to diesel. They still don’t have enough pressure on their sustainability measures.

    Hopefully the wood waste stream in Kawerau will go into major commercial scale as well.

    What’s Labour and Green policy on biofuel commercialisation?

  4. tamati 4

    Yet even the Greens haven’t ruled out supporting a government that allows off shore oil drilling!

    • Naturesong 4.1

      I think you’ll find that they support any current deep sea wells (currently no deep sea wells) with conditions.

      Those conditions in a peak oil world (here now), are likely to make it unprofitable for deep sea drilling.

      The above consession is due to Labours position, and the Greens having to engage in real politik

      Greens Energy Policy

      D. Deep Sea Drilling, Hydraulic Fracturing (‘Fracking’), and Related Extractive Activities

      The increasing world wide demand for fossil fuels is leading to more extreme measures of fossil fuel extraction, including deep sea drilling and hydraulic fracturing. Both methods have significant environmental risks, and our capacity for dealing with even a small oil spill is very limited. The Green Party will:

      1. Make each of the following activities a prohibited activity:
      a. All new deep sea drilling within territorial waters, the Exclusive Economic Zone and the continental shelf for fossil fuels (with deep sea defined as below 200 metres). Fossil fuel exploration and exploitation in the Ross Sea region.
      b. Underground coal gasification.
      c. Exploitation of gas hydrates (e.g. methane hydrates).
      d. All new coal seam gas projects.

      2. Place a moratorium on hydraulic fracturing for oil and gas within territorial New Zealand, the Exclusive Economic Zone and the continental shelf until it is proven safe.

      I would like to see the Greens promote revaluing any oil and coal found down to 20% of it’s current book value (as per 350.org). At which point alternative energy sources become not merely an alternative, but the default.

      • fisiani 4.1.1

        ie. no jobs under the Greens, no looking for vast wealth, no hope, no future.
        Greens tied to hip with Labour so under Labour no jobs, no wealth, no hope no future.
        And you wonder why 90% of people do not vote Green…..

        • Tracey

          nope. and i dont wonder why 99.7% dont vote for act or dunne either.

        • Draco T Bastard

          Mining and drilling don’t produce many jobs anyway and the vast wealth will just be sold off leaving us poorer. On top of that it will actually be burned pushing ever increasing AGW which will result in an Extinction Level event meaning that we will have no hope and no future following National’s path.

          The Greens on the other hand push creating more jobs by researching, developing and producing renewable energy assets. This will produce far more jobs and real wealth (as opposed to just money) than anything that National proposes. This would be due to National only being interested in lining their and their mates pockets with money.

          • aerobubble

            Bridges says we should do both, how naive. Huge welfare assistance goes into maintaining a oil based transport system and once the reality of climate change threats finally dawns on the simpleminded Bridges and his ilk, there will be a huge crash in stocks for oil and a societial shift away from these fuels. Simply put, the huge expense of getting the fuel out of the ground, refining it, transporting it, and then maintain the equipment (and collapse of social addictions to it use) will mean even a surplus of such fuels will be re-purposed to other ends.
            In fact we are already see the rot, as ‘tallow’ and other additions are mixed into petroleum to maintain the current infrastructure, and its ensuing culture of excess. The Greens recognize that the culture of excess, eating several Earths is unsustainable, just Bridges is too think to understand the meaning of that word, unsustainable means his petroleum economy is a modern dinosaur extinction now inevitable.

          • Tamati

            Yet the Greens still won’t rule out supporting a Government that continues deep sea oil drilling. If they won’t stand up for their policies, are they really policies or more like aspirations or dreams?

            • aerobubble

              That’s dumb. The sooner we all know how much is left, the sooner the reality of the end of oil makes Green policies more applicable. Sure Greens don’t want it, but its not the end of the world looking for these resources, in fact the sooner they get it done…

  5. Tracey 5

    Anadarko has just had to pay out 5.5b (USD) for past cleanup failures… I guess from their point of view it is cheaper to leave behind a mess, take the profit and wait for someone to sue….

    • Tracey 5.1

      nadis has quite rightly corrected me. anadarko inheritted these messes, they didnt create them.

      • Naturesong 5.1.1

        Yes and no.

        They purchased Kerr-McGee with the full knowledge of the lawsuit against the company.
        Then did some really dodgy splitting off of the liability onto a shelf company with no resources in order to avoid having to pay for it.
        So they tried to get the upside of the purchase (plant, contracts etc) and tried to legally separate the downside.

        After the settlement, Anardarco shares rose, as it the settlement is widely believed to be far less than the cost of cleaning up all the sites. And it doesn’t even touch the damage and misery caused to thousands of people who lived (and continue to live) in areas polluted by Kerr-McGee

        NY Times

  6. exitlane 6

    Another massive gamble is that the projected revenue from royalties will actually eventuate in 10 or 20 years time (should any oil actually start to flow). There are huge assumptions from the Govt that royalty rates will remain as high as they are today.

    But with all the big oil companies showing declining production in spite of massive increases in capital, and dwindling profits, you can confidently expect the heat to come on governments for seriously lower royalties rates as this squeeze gets tigher

    The projected royalty revenue may well be a mirage


  7. aerobubble 7

    Agreed. Its coal mining all over again. They get to open cast deniston and then find the coal price has crashed….

    Look at the Great Reagan mantra about revenue, that lowering tax would increase government revenue. Yeah, duh, when the huge massive dump of cheap high density fuel hit the world econmy, the growth in the economy would naturally mean that lower taxes would see citizen take gambles and thus return more revenue. Nothing to do with Reagan, just you’re classic politician getting out in front and declaring that what was about to happen whoever was in power was going to happen anyway.

    And therein lies the problem for conservatives. Now lower taxes do not translate into higher revenues for government because there is no trend of cheap energy.

    In fact lower taxes means parasite industries get to maintain their high energy use processes, and society of waste gets to maintain its lifestyles.

    Now higher taxes means higher revenue, and higher revenue is necessary to protect the wealth of
    the rich as inequality sets to destabilize nations. Its in the interest for the wealth to vote for high taxes as then they retain their relative wealth, otherwise they risk losing it if they let large mobs demand redress. i.e. Key wants more welfare and more taxes if he wants the rich to remain rich.

Recent Comments

Recent Posts

  • Worsening housing crisis must prompt action
    A growing public housing waiting list and continued increase of house prices must be urgently addressed by Government, Green Party Co-leader Marama Davidson said today. ...
    10 hours ago
  • Twenty highlights of 2020
    As we welcome in the new year, our focus is on continuing to keep New Zealanders safe and moving forward with our economic recovery. There’s a lot to get on with, but before we say a final goodbye to 2020, here’s a quick look back at some of the milestones ...
    3 weeks ago

  • Jobs for Nature funding will create training and employment opportunities
    A major investment to tackle wilding pines in Mt Richmond will create jobs and help protect the area’s unique ecosystems, Biosecurity Minister Damien O’Connor says. The Mt Richmond Forest Park has unique ecosystems developed on mineral-rich geology, including taonga plant species found nowhere else in the country. “These special plant ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Pre-departure testing extended to all passengers to New Zealand
    To further protect New Zealand from COVID-19, the Government is extending pre-departure testing to all passengers to New Zealand except from Australia, Antarctica and most Pacific Islands, COVID-19 Response Minister Chris Hipkins said today. “The change will come into force for all flights arriving in New Zealand after 11:59pm (NZT) on Monday ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Bay Cadets learn skills to protect environment
    Bay Conservation Cadets launched with first intake Supported with $3.5 million grant Part of $1.245b Jobs for Nature programme to accelerate recover from Covid Cadets will learn skills to protect and enhance environment Environment Minister David Parker today welcomed the first intake of cadets at the launch of the Bay ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Cook Islanders to resume travel to New Zealand
    The Prime Minister of New Zealand Jacinda Ardern and the Prime Minister of the Cook Islands Mark Brown have announced passengers from the Cook Islands can resume quarantine-free travel into New Zealand from 21 January, enabling access to essential services such as health. “Following confirmation of the Cook Islands’ COVID ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Supporting communities and landowners to grow employment opportunities
    Jobs for Nature funding is being made available to conservation groups and landowners to employ staff and contractors in a move aimed at boosting local biodiversity-focused projects, Conservation Minister Kiritapu Allan has announced. It is estimated some 400-plus jobs will be created with employment opportunities in ecology, restoration, trapping, ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Border exception for some returning international tertiary students
    The Government has approved an exception class for 1000 international tertiary students, degree level and above, who began their study in New Zealand but were caught offshore when border restrictions began. The exception will allow students to return to New Zealand in stages from April 2021. “Our top priority continues ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Tiwai deal gives time for managed transition
    Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • New member for APEC Business Advisory Council
    Prime Minister Jacinda Ardern has appointed Anna Curzon to the APEC Business Advisory Council (ABAC). The leader of each APEC economy appoints three private sector representatives to ABAC. ABAC provides advice to leaders annually on business priorities. “ABAC helps ensure that APEC’s work programme is informed by business community perspectives ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Govt’s careful economic management recognised
    The Government’s prudent fiscal management and strong policy programme in the face of the COVID-19 global pandemic have been acknowledged by the credit rating agency Fitch. Fitch has today affirmed New Zealand’s local currency rating at AA+ with a stable outlook and foreign currency rating at AA with a positive ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Additional actions to keep COVID-19 out of NZ
    The Government is putting in place a suite of additional actions to protect New Zealand from COVID-19, including new emerging variants, COVID-19 Response Minister Chris Hipkins said today. “Given the high rates of infection in many countries and evidence of the global spread of more transmissible variants, it’s clear that ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • 19 projects will clean up and protect waterways
    $36 million of Government funding alongside councils and others for 19 projects Investment will clean up and protect waterways and create local jobs Boots on the ground expected in Q2 of 2021 Funding part of the Jobs for Nature policy package A package of 19 projects will help clean up ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Zealand Government acknowledges 175th anniversary of Battle of Ruapekapeka
    The commemoration of the 175th anniversary of the Battle of Ruapekapeka represents an opportunity for all New Zealanders to reflect on the role these conflicts have had in creating our modern nation, says Associate Minister for Arts, Culture and Heritage Kiri Allan. “The Battle at Te Ruapekapeka Pā, which took ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Better care for babies with tongue-tie
    Babies born with tongue-tie will be assessed and treated consistently under new guidelines released by the Ministry of Health, Associate Minister of Health Dr Ayesha Verrall announced today. Around 5% to 10% of babies are born with a tongue-tie, or ankyloglossia, in New Zealand each year. At least half can ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Prisoner disorder event at Waikeria Prison over
    The prisoner disorder event at Waikeria Prison is over, with all remaining prisoners now safely and securely detained, Corrections Minister Kelvin Davis says. The majority of those involved in the event are members of the Mongols and Comancheros. Five of the men are deportees from Australia, with three subject to ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Pre-departure COVID-19 test for travellers from the UK and the US from 15 January
    Travellers from the United Kingdom or the United States bound for New Zealand will be required to get a negative test result for COVID-19 before departing, and work is underway to extend the requirement to other long haul flights to New Zealand, COVID-19 Response Minister Chris Hipkins confirmed today. “The new PCR test requirement, foreshadowed last ...
    BeehiveBy beehive.govt.nz
    3 weeks ago