The drilling and the protesting has begun... But amongst all the rhetoric, scaremongering and promises of outrageous fortune, lies a prety simple question we should all be asking
The summer of protest has begun. This week the Greenpeace-led Oil Free Seas flotilla headed out to one of two deep-sea sites to be explored by Texan oil giant Anadarko, this one off Raglan, the other off Canterbury. The protest is ramping up because the industry is doing the same, with New Zealand now getting a proper once-over by the global oil and gas industry.
Back in September Energy and Resources Minister Simon Bridges announced that the groundwork laid by his predecessors, Gerry Brownlee and Phil Heatley, was paying off:
“The summer ahead will be one of the largest on record for oil and gas exploration in New Zealand with 13 exploratory wells being drilled offshore and 27 onshore. The industry is expected to spend $600 million to $755 million.”
The government has said in the past that it reckons the sector can grown from $4 billion today to $12 billion.
So New Zealanders will be confronted repeatedly by a crucial question this summer: Is it worth it? It's a question that tugs at who we are as New Zealanders – conservers of a 100% Pure and priceless environment or a little battler trying to earn a first world living and diversify our national income. The answer is by no means black and white. Or black and green, for that matter.
At the moment we've been drilling for oil and gas in just one of 17 potential basins. Find them in another basin and the benefits have been described as "transformational" by the industry. If you doubt, consider Norway.
Last year it produced 1.9 million barrels of oil a day and earned $122 billion in exports. Over 40 years petroleum production has added more than $1800 billion to the country's GDP. And yes, that's the right number of zeroes. Norway is using that money to pay for its superannuation and, amongst other things, move to renewables.
Norway also raises some serious questions as to whether more drilling would really put our tourism, agricultural sector and clean, green image at risk. Think of Norway and many still think of pristine fiords, despite its vast oil industry and spills every year. It has twice as many tourists each year as New Zealand.
And while much of the criticism is about the risk of oil spills, what if gas is found? (It's more likely they'll find off Canterbury than oil). That has the potential for great environmental as well as economic benefit. As one industry insider told me, if a significant and sustaiable gas find was made off Canterbury, you could offer free conversions and get a significant chunk of the national fleet converted from petrol to CNG, cutting more greenhouse gas emissions than you could shake a whole (CO2 absorbing) forest of sticks at.
But in this industry, with big profit comes big risk. Well, very small risk but big, massive potential damage.
How small is the risk? Here's Environment Minister Amy Adams yesterday:
“The best international evidence tells us that on average, 2.5 loss of control events happen per 1000 wells – or a 0.25 per cent chance."
It's interesting to note David Robinson, the key lobbyist for the petroleum industry these days, when he says that unlike a Deepwater Horizon-style well, no New Zealand oil wells thus far have been gushers. That is, the oil doesn't flow out, it has to be sucked. So if something was to go horribly wrong off Taranaki now, the spill size would be expected to be minimal. If they find the same sort of wells elsewhere, we simply couldn't have a Gulf of Mexico-sized blowout. If they find the same sort.
But if a spill did happen – and the exploratory phase tends to be the riskiest phase – the damage to our reputation, our environment, to our national economy would be catastrophic. Only the densest spin doctors deny that. It'd be a mess. What's more Maritime New Zealand has no hope of coping with a deepsea spill.
A report commissoned by Greenpeace this year and written by Dumpak shows just how bad. A spill at either of the Anadarko sites could continue two and a half months before a clean-up vessel could be found (probably somewhere in Asia), have its existing contract terminated, steamed down to New Zealand (we're talking 2-3 weeks before it even arrives), and its work completed. The government dispute this.
Using Dumpak's estimates, which it says are industry standard, we're talking about something like 300 Renas worth of oil washing around, some of it reaching our beaches. That's right, 300.
Is that a satisfactory plan? Well, obviously no.
Here's the nub of it. Even with such a tiny risk, any wise government would follow the precautionary principle and have a complete response plan in place. That is, we'd have our very own clean-up vessel, safely docked in New Zealand and ready to sail at a moment's notice should the worst occur. That's the obvious way to cover the critics' concerns.
The problem is that such a ship would cost tens of millions of dollars to build, buy and maintain. Those inside government have told me it's just unrealistic.
So here's the real choice, in more sophisticated terms. We can explore for gas and oil that could be worth billions -- a game-changer -- and which presents only the tiniest risk of serious environmental damage. But only if we put the bulk of country's economy at jeopardy with a clean-up plan that's, well, not much of a plan at all. It's like asking a skilled and professional acrobat to do her routine without a net, knowing that if she makes it we both get rich, but if she falls its our bones that get broken.
So we come back to the same question. Is it worth it? What do you think?
(However there is one other side to this debate I haven't had time to canvass here - the green economy. I'll cover that in my next post, over the weekend or early next week).