Taranaki knows the drill

Cloud passes Mt Taranaki as below the Maui production station at Oaonui continues its work.
Cloud passes Mt Taranaki as below the Maui production station at Oaonui continues its work.
The hardware of the Taranaki oil and gas industry, offshore rigs and onshore processing stations.
The hardware of the Taranaki oil and gas industry, offshore rigs and onshore processing stations.
The hardware of the Taranaki oil and gas industry, offshore rigs and onshore processing stations.
The hardware of the Taranaki oil and gas industry, offshore rigs and onshore processing stations.
Shell's Pohokura manager John McDonald with a bottle of condensate.
Shell's Pohokura manager John McDonald with a bottle of condensate.
Small clusters of oil wells can be found spreading across the countryside, hidden in some of...
Small clusters of oil wells can be found spreading across the countryside, hidden in some of Taranaki's quiet rural corners.
Shell's Pohokura manager John McDonald at the onshore processing facility, considered the modern...
Shell's Pohokura manager John McDonald at the onshore processing facility, considered the modern face of the industry.
The hardware of the Taranaki oil and gas industry, offshore rigs and onshore processing stations.
The hardware of the Taranaki oil and gas industry, offshore rigs and onshore processing stations.
The hardware of the Taranaki oil and gas industry, offshore rigs and onshore processing stations....
The hardware of the Taranaki oil and gas industry, offshore rigs and onshore processing stations. Photos by Chris Morris and supplied.

As the hunt continues for oil and gas off the Otago coast, Chris Morris visits Taranaki, the home of New Zealand's hydrocarbon economy. In the first of a three-part series, he gets a feel for the scale of the industry.

Taranaki could, just possibly, offer a glimpse of Otago's future.

A future that could unfold if Dunedin finds itself next to a major natural gas field, until now hidden below the seabed in deep water off the coast.

But if a visit to Taranaki offers a glimpse of what the oil and gas industry looks like on the ground, it is a fleeting one.

Forget about a skyline dominated by industrial chimneys and hulking oil rigs - Taranaki might be oil and gas country, but the industry remains one largely viewed from a distance, across farmers' paddocks or at the end of quiet rural roads.

The industry is there though, make no mistake about it, and the locals know it - for better or worse.

The Otago Daily Times spent a week in Taranaki exploring the industry, talking to big oil companies, the smaller businesses that fed off them and those who oppose its very existence.

While businesses celebrated the jobs and wealth created by oil and gas, opponents described an industry disrupting previously quiet rural areas and repeated dire warnings of climate change.

It has echoes of the debate unfolding in Dunedin, where supporters of the industry point to potential economic riches while opponents warn of environmental risks and predict jobs and money will flow offshore.

Numbers tell their own story.

In 2012, 7700 people across New Zealand were employed by the big oil companies or the businesses feeding off them, according to figures provided by Venture Taranaki, the region's economic development agency.

The bulk of those jobs were found in Taranaki, where about 5500 people were at work in the industry, the figures showed. That meant for every Shell employee based in New Plymouth, many more worked for design, engineering, accounting, painting, plumbing, aviation, abseiling and other businesses that relied on oil and gas activity.

And that meant men and women from all walks of life who lived and worked in Taranaki, buying homes, raising families, paying rates and spending their money in the region's cafes, bars and supermarkets.

A map of Taranaki shows the industry's expanding footprint, revealing a region dotted with 17 major producing gas and oil fields, six of them offshore, all developed since the 1960s.

Each field boasts its own collection of wells - meaning more than 600 now scattered across the province - its own production facility, and, where activities take place off the coast, an offshore rig.

In some cases, giant heavy industrial developments also sprawl next door, including at Pohokura, on the eastern edge of New Plymouth, where the methanol-producing Methanex plant feeds off the area's natural gas field.

The result of all this activity is a steady flow of jobs and money for the local economy, but also taxes and royalties worth hundreds of millions of dollars each year to the Government.

Venture Taranaki chief executive Stuart Trundle doesn't mince words when asked, during an interview with the Otago Daily Times, about the industry's significance to Taranaki's economy.

''You don't need to be a rocket scientist. There are two industries that drive our economy . . . dairying and oil and gas,'' he said.

''It [oil and gas] is a critical and pivotal driver of economic confidence, as well as economic activity.''

But the numbers and the rhetoric provide only part of the picture, and say nothing of the view of the industry from the ground.

The first clues to the industry's presence can be found amid the hushed cabin chatter of strangers and friends on a flight into New Plymouth.

As the aircraft descends, gruff young men talk about life on offshore rigs, safety, and the weather at sea, while a landscape of farmers' paddocks stretches away in all directions from the dominating mass of Mt Taranaki.

A fleeting glimpse of chimneys pumping out clouds of steam is lost as the aircraft banks away, and the chat continues.

On the ground there is more to see, but it takes a bit of finding.

At first glance, New Plymouth, population 74,187, appears a typical service centre found at the heart of New Zealand's regional economies.

A collection of main street bars, restaurants and retailers is ringed by shopping malls, supermarkets and light industrial businesses, while traffic hums along the city's twin one-way streets.

The history of oil and gas extraction actually stretches back to the earliest days of the town.

In the 1860s, residents noticed an oily residue on a New Plymouth beach, leading to the drilling of the Alpha well - one of the world's first oil wells, and the first to be drilled in the Commonwealth, according to an industry history.

More than a century later, one of the city's bars, Rig 66, promotes itself with a picture of a drilling rig, while, on the waterfront, the city's famous wind wand sculpture competes with the soaring smokestack of a now-decommissioned gas-fired power plant nearby.

The old plant, at the bustling Port Taranaki, points to the city's long history of oil and gas activities, while a bright orange offshore supply ship tied up nearby is evidence of the industry's modern presence.

And, there on the horizon, sits a small - almost indistinguishable - man-made object, sometimes visible and other times lost amid the sea haze.

It could be mistaken for a passing ship, but locals confirm it is, in fact, the unmanned offshore platform associated with the Pohokura gas field.

The gas field itself was discovered east of New Plymouth in 2000, and began producing in 2006, following the completion of a $1 billion onshore processing facility and offshore rig by a consortium of Shell, Todd Pohokura and OMV New Zealand.

Shell's Pohokura manager, John McDonald, was only too happy to give the Otago Daily Times a tour of the gleaming onshore processing facility, considered the modern face of the industry.

He explains the offshore platform acts as a link between the field's collection of offshore wells and the processing plant onshore.

Wells tap into the reservoir of natural gas - found 3.5km under the sea floor - and connect by pipes to the rig, which funnels the gas and condensate collected into a single combined pipeline to be taken ashore.

Both the rig, and the processing plant on shore, are unmanned except for maintenance visits, their activities controlled from the headquarters of Shell Todd Oil Services (STOS) in New Plymouth.

Once ashore, the mixture passes through pipes and processing equipment with a rhythmic hum, where it is split into separate streams of gas and condensate and made ready for shipment.

Gas is sold on the North Island market, transported by pipeline to buyers ranging from the largest industrial consumers, such as Methanex, to the operators of gas-fired power plants, wholesalers such as Contact Energy and, through them, individual households.

Most of the condensate - a yellow-green tinged, oily liquid - is taken by ship to Australian refineries to be turned into petrol, diesel and other products.

It is sold mainly on the Australian market, although some finds its way back to New Zealand, Mr McDonald explains.

And, if needed, gas extracted from the Pohokura field can actually be pumped back into the reservoir to await better market conditions, once the condensate is separated from it and sold.

All of which is very impressive, but - no doubt - doesn't by itself assuage fears of a catastrophic meltdown and a gas-fuelled fireball.

Indeed, the dangers of the site are one of the reasons the facility is operated remotely, keeping staff out of harm's way, and why the company strictly enforces health and safety requirements, he says.

However, while a gas release is possible, each well is designed to be ''inherently safe'', Mr McDonald says.

That includes safety valves inside each well, kept open by hydraulic pressure and designed to shut automatically in an emergency.

Line-of-sight gas detectors and acoustic sensors also search for any telltale signs of a gas release, while infrared sensors look for sources of excessive heat, and the first signs of trouble will trigger a shutdown.

The company works hard to mitigate the facility's environmental impact, he says, and boasts a spill- and injury-free record at the site since operations began.

While the emphasis on safety might pervade Shell's talk of the industry, the Pohokura facilities are not typical of what oil and gas infrastructure looks like on the ground.

Indeed, Shell staff were so proud of the Pohokura facility's relatively compact footprint, they asked for photographs of it to avoid showing the sprawling Methanex plant next door - in case the wrong impression be given. And, further south, larger processing plants from an earlier era can be found along the coast, glimpsed first from the highway as chimneys peeking up from behind a tree line, or from across farmers' paddocks.

Get close enough and the facilities seem empty despite their size - rows of workers' cars lined up outside, but little sign of human activity behind the heavily signposted, secure gates and fences.

One of the largest facilities to be built is also one of the oldest - the Maui offshore gas field's processing plant at Oaonui, on the west coast, completed in 1979.

The plant remains in operation today, connected to a large, permanently-staffed offshore rig linking the gas field to the shore, and a second, unmanned offshore rig, Maui B, added in 1992.

The Otago Daily Times found a sprawling facility of pipes and chimneys during a visit to the front gate, while a back road to the coast offered a sea view but no sign of the offshore platforms lost somewhere in the haze.

Further down the coast, similar facilities can be found at Kupe, near the South Taranaki coast, and Kapuni, further inland, but still in the south.

And, like Pohokura further north, the Kapuni field has also attracted its own big neighbour, in the form of the Ballance Agri-Nutrients urea plant pumping out vast quantities of its product next door.

The giant plants are a legacy of ''Think Big'' projects that followed an escalation of the industry in Taranaki after Shell's arrival on the scene in the 1950s.

But not everything in Taranaki's oil and gas industry is big.

Today, at the other end of the spectrum from Methanex's mass, small clusters of oil wells can be found spreading across the countryside, hidden in some of Taranaki's quiet rural corners.

One cluster, owned by Tagg Oil near the community of Stratford, has grown from a single exploratory well in 2006 to more than 70 - either drilled or consented - today.

The development has in some cases triggered complaints from neighbours upset at the disruption caused to their rural ambience by heavy trucks, noise and vibration.

New Plymouth Mayor Andrew Judd agrees challenges come with the industry, and need to be addressed, but says the oil companies work hard to fit in with the community.

And the benefits - jobs, wealth, growth and oil companies' sponsorship of events and facilities - can not be overlooked, he says.

''You cannot undervalue any of that because collectively that adds up to a big part of why we're a vibrant province.

''What does the community get out of it? It makes us who we are.''


Coming up in the Otago Daily Times as Chris Morris continues his investigation in Taranaki:
Part 2: Winners and losers: who is benefiting from the Taranaki oil and gas finds, and who is paying the price.
Part 3: Shell NZ chairman Rob Jager shares his views on what oil and gas has done for Taranaki, climate change and Otago's prospects.


- chris.morris@odt.co.nz 

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