The race is on as Dunedin vies with Invercargill to secure
hosting rights for an oil and gas base, after confirmation
oil giant Shell plans to drill a test well in search of
natural gas off the Otago coast.
Shell's plans to drill as part of a joint venture, probably
in the summer of 2016-17, came as another oil giant,
Anadarko, prepared to begin drilling its own test well, 60km
off Otago Peninsula, next month.
News of Shell's plans was met with excitment and concern in
Dunedin yesterday, some city councillors calling for the red
carpet to be rolled out and others warning against welcoming
the ''unethical'' industry.
Dunedin Mayor Dave Cull - who remained personally opposed to
the increasingly difficult search for fossil fuels - said he
was nevertheless ''cautiously optimistic'' the city could
benefit from Shell's plans.
He was encouraged the company was prepared to invest up to
$200 million in its search for natural gas, and not oil, off
the city's coast.
However, with the test drill not scheduled until 2016, and
any full-scale extraction - if it eventuated - a decade away,
he cautioned against too much excitment, too soon.
''What comes out of it, in terms of job creation and business
and economic development, will depend on the size of what
''If they are going to be drilling, this is pretty good, and
clearly Dunedin is very well placed to offer the services and
facilities that they might need,'' he said.
Some councillors were quick to celebrate, Cr Andrew Noone
saying it was ''fantastic news''.
''It's now a two-horse race, so we have got a 50% chance of
securing a supply base,'' he said.
Deputy mayor Chris Staynes agreed, saying news of Shell's
test drill was ''great'', while Cr Andrew Whiley described
Shell's announcement as ''simply awesome''.
All three men hoped the industry would eventually provide a
much-needed boost for the city's ailing economy, but Cr
Staynes also suggested Dunedin could do more to secure
hosting rights for any logistics base that might follow.
That should include considering an extension of Dunedin
International Airport's runway, at a suggested cost of about
$20 million, possibly shared between the council and central
government, he said.
Cr Staynes planned to raise the idea in due course, and said
it was an incentive the council could offer to encourage
Shell and Anadarko to establish their bases in the city.
The move would allow larger jet aircraft to land, which the
industry could use - among other things - to ferry emergency
equipment to the area at short notice, he said.
Extending the runway had been considered before, and deemed
uneconomic, but could stack up if the city secured hosting
rights as a logistical base and the economic benefits that
came with it, Cr Staynes said.
It might even help Forsyth Barr Stadium attract more big
musical acts, adding to the economic benefits, he said.
The idea won support from Otago Chamber of Commerce chief
executive John Christie, who said yesterday it would be a
''really good thing for the city''.
Mr Cull also said the idea would be worthy of consideration
if a case for it could be made, such as improving emergency
Royalties from oil and gas revenue could help cover the
debt-servicing costs associated with such an investment, but
only if the Government agreed to share them with councils, he
The council would ''certainly consider'' investment in
infrastructure or other incentives to support the industry in
Dunedin, but the oil companies' needs would only become clear
in time, he said.
However, other councillors maintained their opposition to the
industry, including Cr Aaron Hawkins, who said the council
had a ''moral obligation'' to protect the interests of future
''I don't think it's fair to clamour over a few jobs now and
leave our grandchildren to pick up the tab environmentally
''Frankly, I think that's a very selfish way of looking at
Cr Jinty MacTavish agreed, saying the city would not spend
money to try to attract the ''unethical'' tobacco industry,
and should avoid the oil and gas industry for the same
''It's an unethical business and I wouldn't like to see
Dunedin setting out to attract it.''
Oil Free Otago also reiterated its opposition to
''short-sighted'' drilling in a statement released yesterday.
Despite that, Port Otago chief executive Geoff Plunket said
Shell's announcement was ''very positive'', and the two
companies were in regular contact.
Port Otago, like the rest of the city, was ''well placed'' to
host a logistical base, Mr Plunket believed.
Mr Cull agreed, saying Port Otago's round-the-clock service
would be attractive to the oil industry, while the city's mix
of engineering businesses, infrastructure, hospital and
aviation services also suited the companies' needs.
South Port chief executive Mark O'Connor agreed, telling
Radio New Zealand it was ''highly likely'' it would make more
sense to service initial drilling plans from Otago.
Of the other city councillors spoken to yesterday, Crs
Neville Peat, David Benson-Pope and Richard Thomson expressed
either concern or outright opposition to the drilling plans,
while Crs Doug Hall, Hilary Calvert, Mike Lord and Lee
Vandervis welcomed Shell's plans.
Crs John Bezett and Kate Wilson could not be contacted.
Drilling in the South
• Texas-based international oil and gas company.
• What: Deep-water test well 60km off the coast of Otago
Peninsula, at the bottom of the Canterbury Basin.
• Value: $130 million
• When: February 2014
Shell (with OMV New Zealand and Mitsui E&P
• Joint-venture partnership between three companies
• What: Exploration well in Great South Basin liscensed area;
exact location to be determined
• Value: $100 million- $200 million
• When: Summer 2016-17