Industry sees need for community engagement

An outlook on the next 10 years for oil and gas exploration and production in New Zealand centred on regulatory and environmental issues, with an emphasis on community engagement.

The other hard question was the current oil price hovering over $US50 ($NZ66) per barrel, and what that meant for the big players in New Zealand, including Norway's Statoil, Shell, OMV and Origin Oil, many of whom have joint venture interests around the South Island.

On the closing day of the three-day inaugural Advantage New Zealand Petroleum Summit 2015, the panel discussion, chaired by Woodward Partners director and head of research, John Kidd, outlined regulation, the environment - ''an area of weakness'' - and the effects of the oil price as the topics of concern, to delegates yesterday.

OMV New Zealand managing director Peter Zeilinger said outside Taranaki, where he mostly receives positive comments, the rest of the country needed discussion opened up.

''Start on the topic of fracking [elsewhere] and it all goes pear-shaped,'' he said.

He said the country's regulatory framework, overseen by permitting agency New Zealand Petroleum & Minerals (NZPM), opened up discussion, but society in general needed more discussion.

Rob Jager, chairman of Shell New Zealand and industry lobby group the Petroleum Exploration & Production Association of New Zealand (Pepanz), said it was important to open discussion on several fronts, and proposed changes to legislation should be for the benefit of the environment, as well as the oil and gas sector .

''We have the makings of world-class regulations [in New Zealand] but it is clunky in places,'' he said.

For the sector especially, it created ''uncertainty and more costs'' in the applications and consenting process, a theme echoed by other speakers.

One speaker noted the rejection of two seabed mining permits in the associated resource sector during the past two years, as highlighting how initial investment is stalled.

In these cases the two had spent about $90 million, but both fell at the marine consenting hurdle.

Mr Jager said: ''We want certainty on what we need to provide and when; that makes [decisions on] significant investment easy to make.''

NZPM general manger James Stevenson-Wallace agreed legislation was ''clunky in places'', and debates with the community were ''haphazard'' at times.

He noted ''fringe'' elements, such as some environmental groups, gained a lot of attention, whereas it was ''middle New Zealand'' and their concerns which had to be targeted for increased explanation.

There were numerous ''societal expectations'' on what the oil and gas sector undertook, and the public therefore had to have input, Mr Stevenson-Wallace said.

On the question of the low oil price, which many environmentalists saw as an aid to their aims, it would appear the large companies already in New Zealand were prepared to ride out this storm.

Mr Kidd said while up to $US8 billion in projects around the world had been shelved during the past year, that did not mean exploration in New Zealand was now ''less relevant''.

Origin Energy chief executive Paul Zealand said with less cashflow there was less to spend, which meant protecting existing assets.

''It's about how to keep operations alive and still have cash in [the] long-term game. It takes 15 years to monetise,'' he said of turning investment into a cash return.

While Mr Zealand did not have a problem with low oil prices, for one or two years,

Mr Zeilinger did, given drilling obligations and rig commitments were stuck in 2012-13, when oil was over $US100 per barrel.

At $US50 barrel, work was ''quite tough'', and the company had ''more projects than cash at present''.

New Zealand's disadvantage was the lack of rigs, and $30 million costs to get one here, he said.

• Simon Hartley was assisted to the conference by Pepanz and Freeman Media.

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