Billions seen in 'game-changing' gas boom

Dave Cull
Dave Cull
The first taste of petroleum money could be just weeks away in Dunedin, as Texas-based oil giant Anadarko prepares to move its state-of-the-art drilling ship into Otago waters, it has been confirmed.

A natural gas boom worth billions of dollars to the regional economy could follow in the ship's wake, with thousands of jobs potentially created across Otago, it has been suggested.

As arguments for and against the industry's arrival in Dunedin continue, a report by economic analyst Berl has outlined the possible regional benefits of an oil or gas strike anywhere in the South Island.

It calculated a large offshore gas field could be worth $8.1 billion to the economy of any region hosting the industry, and $3.1 billion in regional GDP, while creating 11,540 jobs.

The report was prepared in March 2012 for the Ministry of Economic Development, but had not previously been seen by Dunedin Mayor Dave Cull.

He told the ODT yesterday the report did not allay public concern about fossil fuels and climate change, but the economic benefits - if applied to Dunedin or Otago - would be ''more than significant''.

''It could be a game-changer in terms of the economy.''

His comments came as Anadarko New Zealand corporate affairs manager Alan Seay confirmed the company's exploration ship, the Noble Bob Douglas, was due in Otago waters by the end of the month.

The company planned to begin drilling a test well 60km off the coast of Otago Peninsula, at the bottom edge of the Canterbury Basin, early next month, in search of a viable natural gas field, he said.

The ship would be serviced initially from the company's base in New Plymouth, but crew rotations, food and other consumable items would be ferried to and from the ship by helicopter from Dunedin, he said.

A joint venture comprising Shell, Austrian giant OMV and Mitsui, of Japan, also planned its own test well in the Great South Basin, most likely in the early summer of 2016-17.

The companies were yet to decide whether to site a logistical base in Dunedin or Invercargill.

However, if one or both fields proved to be viable and full production ensued, the economic benefits for Dunedin, Otago and New Zealand could be ''enormous'', Mr Seay said.

''The uplift from a large discovery offshore of Otago would be enormous for the regional economy and for the country as a whole.''

The Berl report's analysis was based on a hypothetical gas field located well offshore, with 30 production wells, a 45-year lifespan, and with gas processed offshore before being shipped directly to overseas markets.

The report anticipated total spending would reach $19.2 billion during the development, operation and decommissioning of the field, the majority of which - spent to develop the field and build a floating liquefied natural gas facility - would go to overseas companies.

However, $8.1 billion, or $179 million each year, would be spent within the regional economy, generating 11,540 full-time equivalent jobs, it said.

Total spending and the benefit for the local economy would peak during the field's appraisal and development phases, again during any second round of drilling, and finally during the field's decommissioning.

At other times, there would be a steady level of employment and local economic benefits during the production phase, it said.

A subsequent report by the Ministry of Business, Innovation and Employment, published in August 2012, said regions involved would benefit through ''job creation, higher wages, higher demand for local goods, services and capital, and new investment in the region''.

That was despite some skills and specialist equipment necessary to develop the oil and gas industry in new regional centres needing to be imported initially.

Over time, regions would develop their own pool of expertise, and those with ''unproven'' oil and gas potential could benefit from ''many millions of dollars of new investment'', it said.

Petroleum Exploration and Production Association of New Zealand chief executive Dave Robinson sounded a note of caution when contacted by the Otago Daily Times.

He said the number of variables in the hunt for a commercially-viable gas field meant it was difficult to be specific about potential economic benefits, and failure remained the most likely outcome.

However, the type of returns detailed in the Berl report were ''absolutely not pie in the sky'' for Dunedin and Otago, he believed.

''One of the absolute black and white realities of the petroleum sector is if you have a petroleum industry, it is very meaningful from a revenue and economic point of view, in the region in which it occurs and for the country that produces them.

''These sorts of resources are highly sought-after all around the world.

''Any nation that has petroleum tries to develop them, because they are very, very lucrative for the countries that have them.''

Mr Cull said despite the potential economic benefits, environmental concerns would remain.

Accidents could come in many forms, from a rig explosion to a shipwreck, and there was ''a whole lot of scenarios that don't involve a blow-out like [the Gulf of Mexico]'', he said.

Risks could be managed ''to a large extent'', but climate change could not, if the hunt for fossil fuels continued unabated, he said.

-chris.morris@odt.co.nz

subjective

Depends on the stats you read. 70% is the most honest.

 

Spill unlikely

I would restate Saffron's view in the converse. The chance of an oil spill large enough to breach near rig containment and to land any oil slicks which have not broken up and evaporated naturally,  on the Otago coastline a few weeks later, is being grossly overstated by those of Saffron's persuasion. In fact, the chance of any spill at all is pretty darn remote, for good geological reason.

Look, we all know it is very unlikely to happen. I know it, you know it, and those of Saffron's persuasion know it too, deep inside themselves. And come April, when the drilling is done, this should be pointed out.

Oil and gas

There has been an oil and gas industry off the Taranaki coast for 45 years without a problem. It is my hope that my grandchildren will be able to say this of the Otago oilfields. Taranaki and New Zealand have gained billions of dollars from this industry, now it's Dunedin's turn.

Paid for by....

The risk of something going wrong is being totally down-played by those with $$ in their eyes. That's a worry. It means it will come as a nasty shock and the response will be pathetic. A no regrets policy is needed to protect Dunedin's future.  

old school thinking

Our debt was caused by this type of thinking......rugby makes money so we need a big stadium to cash in.  Oil makes money so we need to drill for more. They don't! That's why they are taking the risk that they are with deep sea drilling. They are running out and can't make the profits they are used to, so instead of pouring their money into an alternative they are going out on a limb. Either way the oil industry is dying, like the rugby industry. It's a sinking ship.  That's all there is to it. Sorry.

tired old chestnut

Of course we drive cars. Get real.There is very little else  if you're not 20 years old to get around in. But most are conscious of minimizing that fuel usage until the big players allow another alternative to be marketed. Which they wont unless someone tries to get the message accross to them. I am so sick of this 'greenie' throw away label that you all use to write off the work of forward thinking people. Most of my greenie mates are professional people of all walks of life. Some are ordinary working class battlers. Your generalisation does you no credit. Indeed I am sure the label redneck could apply accross all socioeconomic levels also, not just beer swilling yobos. Denegration is a cheap shot. The point is there are many options for Dunedin's future, not just  one. But whatever it is, it has to be actioned by us if we are going to retain the power over our own destiny, not hand it on a plate to more multinationals. And it has to be innovative and sustainable to go the distance. Oil is neither. Come up with a bit more than 'dirty dole bludging, combie driving greenies' for god sake to get you opinion accross or I despair for the future in this place. Not economically but intellectually.

 

Oily beaches

Steve: if they discover oil or gas off of Dunedin we won't get it here, there won't be an on-shore pipeline to a giant refinery or gas liquefier at the Port of Otago (where would it go? Aramoana?). These days they load at sea - that means a giant gas liquefier  like Shell's FLNG, or direct loading of oil tankers at the well head (that means storage for a whole tanker full of oil sitting out there on the Southern Ocean).

Chances are it will be directly exported, we'll see it arrive back, shipping costs included, as refined petrol.

The country will get the 5% of gross that the government has negotiated - (what a bunch of business no hopers National are, how about the 50% that Norway gets from its oil? why aren't we using that as a benchmark? how did that sweetheart deal get negotiated?) Dunedin will little if any oil directly, maybe some blobs on our beaches.

It'll happen

If this doesn't happen now then it will in the future unless some foray into electric cars are made the cost of fuel in the future will increase therefore because it is all about money they will come no matter what anybody says. For the NZ Government to allow this without a full response team in place paid for by Anadarko is saddening to say the least.

 

We need the oil or gas

I saw the protestors at Port Chamers and whilst I disagree with them I do support their right to protest. They have the right to drive down to Port Chalmers in cars powered by oil that came from someone else's back yard leaving behind their carbon footprint. I wonder if they ever fly, drive or take a bus? I would have a little more respect for the protestors if they walked, cycled and didn't use anything made of oil based plastics. Of course the greenies keep telling us we are environmental vandals but that doesn't stop them from driving their smoke belching VW Combis and their ancient gas guzzling converted mobile homes. Dunedin is a financial basket case in need of economic development, the greenies are happy to make sure that never happens whilst they continue enjoying the benefits of oil that comes from somewhere else.

Wealth creation

Sparrowhawk: with all respect "zero point free energy" is up there with perpetual motion machines - it requires suspension of various conservation laws.

Solar passive architecture, retrofits, new cityscapes are great ideas but don't create new wealth in our community since they are hard to export.

Some sorts of businesses are more valuable than others, to make our local economy more vibrant we need to concentrate on things that bring wealth in from outside - we need to add value to raw resources (manufacture stuff) or provide services to external - especially good are businesses that leave the wealth they create in the local economy - that are owned locally, or employ the bulk of their employees locally. These are the businesses we should support in preference over all others - if you're manufacturing electric cars more power to you, or dip into your bank account and help fund the local guys who have been trying to get a locally designed small wind generation system off of the ground. 

Selling coffees at the airport to oil and gas crews as they change from their helicopters to their planes is not a business plan that will bring millions of dollars into the local economy, neither is retrofitting houses or creating cityscapes (that money for that would already be here).

Remember $20m of our wealth is being sucked out of our economy every year and being sent to Aussie banks just to pay the interest on our stadium, that's $20m a year that 5 years ago was being spent in shops down town, or was being invested in local  businesses - we're doing this with one arm tied behind our back.

Most exploration wells do

Most exploration wells do not find economic sized reserves of oil and gas. However, its Anadarko's money that is spent, not ours, so no loss there. In fact a bit of a gain through NZ provided services.

Let''s hope for a good discovery. It would mean a lot for Dunedin and NZ, in terms of jobs, taxes, royalties to give a boost to our economy, and our sustainability. 

Just like Anadarko's present well offshore from Taranaki, I predict there will be no oil spill. The chances of a spill even 1/1000'th of the Macondo blowout are infinitesimal. And condensate or light oil evorates rapidly, so even in the even more infinitesimal chance of a spill breaching containment, nothing would come ashore anyway

To those who want to see investment in 'green' sources of energy, there are plenty of options available for you to stick your own money into any number of schemes. That line of argument is irrelevant to the pros and cons of this well.

Yes, listening

Sparrowhawk says "There is a whole green economy just waiting in the wings for you to get behind" and gives many examples.  I like the idea.  Where it hits difficulties is, to take 2 of his examples "growing and exporting organics, solar passive architecture" is that no matter how worthy the product it does not result in an "economy" until there are clients.  And those clients have to be numerous enough and prepared to pay.  There are some, certainly.  World-wide there are large numbers.  There are also green innovators and producers, world-wide.  I wish that there were opportunities for Dunedin to pick itself up out of debt and joblessness by the types of enterprise Sparrowhawk advocates, but I reckon it will be a very long time before this is more than wishful thinking.  We cannot force other people to pay for what we want to produce.

Oil spills happen!

Safron Johnston raises a very good point. What's not hypothetical, however, is that oil spills happen. In 2009 an oil well accident off the coast of Western Australia spewed oil into the Timor Sea for 74 days before finally being brought under control. While the impact on marine life will never be known, West Australians were thankfully spared the worst impacts of this disaster due to the state's vastness. The same can't be said for its Indonesian victims. 

Should a similar spill happen off the coast of Otago it will be a very different story with a disastrous environmental, social and financial cost that will reverberate for years, or even decades. 

Oil is good

You bring to the table some great ideas and all of them I would back hands down. What Dunedin and in fact the whole of New Zealand fails to grasp is that we are a small under populated little country at the bottom of the world that the rest of the world couldn't give a hoot about. Why can''t we watch movies on Netflix? Why are we stuck with slow broadband speeds, why dont we have proper 2 lane highways North to South or'a nationwide train network? It's because we are only 4 million people in size. So we can be as clean and green as you like but how are we to pay for it? How can we sustain all that 'green' when we dont have the economy to survive now without massive offshore investment. Your head is so far in the green sand and it scares me that the way forward is so rose tinted and I am afraid life as those who live in reality TV land where it all comes to you because it does is just not real. What does Dunedin have to offer apart from a uni/poly and a little tourist stuff. My answer is not much. So yep I am giving it 2/3 years and if it goes the way I think it will ie left behind in every possible way....higher flight prices..less employment...no concerts...less students...falling investment...higher debt...then abroad I will head along with the teacher, nurse, midwife and medic that makes us up as a family.

one question

sparrowhawk

where's all the money to develop these going to come from if not from old ideas. Old
ideas fund new ones not the other way round. Dunedin needs money to do the things
you suggest. The rate payers can't afford to pay for it so who does?. However I would back
your suggestions, as I agree they are the way forward to a degree. But without investment into Dunedin I can't see them ever happening

Greenies

lovedunedin

I never said that people who care for the environment do not work. I said that greenies tree huggers etc who will jump in to their 4 wheel drives and drive for kms to hug a tree or protest about drilling at the drop of a hat don't work how can they work when they are always stopping others from work? . I know more just 1 or 2 greenies, I have always found them to be self centred and unwilling to listen to other opinions. Nor did I imply that they are sick. What I said was that could always swap from their unemployment benefits to the sickness if that didn't want to work.

Ride a horse, walk or bike if you really are so worried about the environment and stop buying anything made of plastic like laptops tvs mp3 players food wrapped in plastic. Go and live the simple life where you grow your own food, make your own clothes and entertainment.

I too care about my environment but I also care about the financial future of my children. And in my opinion my children's well being and that of my friends comes before anything else. But unlike others who supposedly care about the environment I don't put myself or my beliefs, or opinions first before the greater good for the many as do the few who think they have the right to speak for us all

For Dunedin to progress ahead and for jobs and wealth to be created

In Dunedin we need to welcome anyone who maybe willing to invest in our community , at the same time working on a balance that will safe guard our environment. But as with everything in life, there are risks. You can't have reward without risk. So find a balance where the gains out way the risks. Put things in place so the dangers are minimised. Putting safe guards in place will also create jobs in Dunedin

In my opinion most (not all) greenies are just eco terrorist wantabes, who think nothing of breaking the law and invading and or damaging others property. They care about no one apart from themselves. Even the hippies from yesteryear would laugh at them.

not listening

It's all there if you care to look. There is a whole green economy just waiting in the wings for you to get behind from manufacturing alternative energy systems, researching zero point free energy generation, growing and exporting organics, solar passive architecture, and building industry, retrofitting houses for energy conservation, creating food-creating cityscapes, setting up recharge site for electric cars, manufacturing electric cars, marketing them. I could go on and on but your not listening. You want to stay as you are complaining instead of looking at it differently. Your choice, but get off our backs. We are the future. You''re the past . Sooner or later you'll see that things have to change. I just hope its not too late. But hey! Your choice. Anyway, you like Chch so much, you go, you radicle you. In fact there are going to be loads of disaster zone needing rebuilds. You'll be in your element. Me? I'd rather avoid the hassle and have a perfectly good functioning city stay that way. Here's to a new future, not an old tired one.

The benefits to Aberdeen

Well, lovedunedin, I can probably answer your query on whether we would want to live and bring up children in Aberdeen. I moved there when I was eight, the year before the oil boom started and lived there until I was 17. I had a wonderful childhood in Aberdeen. Its beautiful heritage granite buildings stand out in my memory. Also the wonderful public flower displays - Aberdeen won the Britain in Bloom competition so many times they had to stop it from entering! Two world renowned Universities, one founded in 1495 and the other now a centre of excellence for oil related technology. Excellent schools, museums, parks and art galleries, the gateway to beautiful Royal Deeside and the Highlands. The list goes on. The only thing it didn't do was build a fancy new stadium or build any 28 storey hotels. Perhaps we could learn some lessons from the canny Aberdonians! Oh, the other thing I could just mention is that a year or two ago a rich oil tycoon offered the city a huge sum of money to radically redevelop a park right in the centre of the city. The City Council held a referendum and 52 % of the residents voted for it. However, the Council decided this wasn't enough of a mandate to make such a dramatic change. The thought of what our sorry council would do if the oil boom eventuated is what scares me!

Oil is good

Time for people to wake up. Dunedin is dying. It boomed from gold and those days are now long gone. Jobs are going left, right and centre and ask any new graduate nurse who finds there are no jobs here. Its time we embraced oil, mud heck anything that will boost employment and put us back on the road to improving. Get your heads out of the sand in 5-10 years time Christchurch will be up and running and we will be left with no concerts, no jobs, and no future bar a few cruise ships. Watch as the students leave in their hundreds the overpriced crap rentals for a bright modern city that will be Christchurch. I am over the same old save the planet rubbish. There are 4 million of us here we do our bit pro rata for our size so stuff green and move forward or watch as people leave here. I will with my family and soon if this place sticks its head in the sand. Come on all you greenies tell me how we will grow and survive here and I will get behind you...oh that's right you can't all you can do is spray water and moan!

you're confused

Dunedin is not a conservative town. It's died in the wool Labour. It is in fact conservative politics that are possibly bringing disaster to a beach near you. It is luddites of the conservative bent that haven't grow out of their industrial mindset of the last century that need an upgrade to the new world we are all entering, like it or not. It's a new world where innovation has to take over where the old thinking is too scared to go......a post carbon world. The technlogy  is there. We just have to get rid of the old thinking. What made people rich in the past is not going to do it now. Wake up!

Oil and Gas

The Dunedin mayor should be out knocking on the relevent doors and pleading a case for the on-shore facilities to be built in Dunedin. Get your heads out of that old conservative noose and get Dunedin on the road to prosperity, where it deserves to be. People suggesting that it will ruin the tourist trade etc are just ill-informed of what the financial benefits will be for Dunedin. If the local council are not willing to go the extra mile to get this opportunity for the local people, then hire someone who will, and at the next local elections ,vote for those who are progressive in their thinking onto the council. Dunedin,don't let this opportunity pass you by. Between Dunedin and Oamaru, Dunedin has a heads up with the Momona airport, as a lot of workers will be needing easy access to an airport.

Oil boom

@  gazzamombazza  Tell us the 'positive difference the oil and gas industry can make to a community' since you worked through it.  

Would we want to live and work and bring up our children in Aberdeen? 

 

Tourists

@ Fernforn   

..and we know why they come.......  they love this charming city with its architecture and close access to natural splendour. Not many cities in the world have this, so let's not destroy it.

Ign is green

Ign is 'green' if he thinks that people who care for the environment do not work or are sick. They do care what will benefit Dunedin- that is the point.

Oil Slick Lotto

This is oil and gas Lotto, but there's a lot more than your $20 at stake here. "Could" occurs 8 times in this story, "if" four times, possible and hypothetical once each. In the interest of balance we need the same number of ifs applied to the risk - If there's a spill, If there's a fire, If there's a machinery breakdown, If there's an earthquake, If there's any kind of accident, If there is disturbance to the movements and breeding of marine animals, If the government manages it well (ha!). I need to know the odds before buying into this massive gamble.

Bah

And you know that to be true because? What John Key is using our taxes for is sooo much worse. He bails out corporations. Thats what you should be worried about.

Wake up

Firstly, there is nothing wrong with Dunedin. If you don't like it leave.

Secondly, you are so far out of touch its unreal. It's not the Greenies on the dole, or not caring about jobs. It's people who refuse to change. Who sleepwalk through life thinking that life is the same as it was 50 years ago when industry cared. They do'nt and you are being duped.

Get out into the real world

In the name of all that is holy, do you think for one minute that Mr Cull or any of us have any sway over whether oil/gas is drilled for or not.

They will drill, they will not wait for things to be safer or until it's ok with you. There is product under the sea floor (maybe) and they want to get it out. The debate is whether Otago or Southland will benefit from the financial ripple or not.

The UK model is hugely relevent, Aberdeen and surrounding areas benefited enourmously from the industry and that was not just the jobs for offshore workers (in actual fact as many of them flew in from elsewhere as relocated to the district).

The spin-offs are massive and wide reaching. 

Become a milionaire

If you are going to drill for oil and gas in New Zealand waters this is the way to manage it, not the current National plan to claim just 5% of the value of anything - Norway is an example of a country run by people that think beyond the next election, who plan for the future rather than our current government's "pillage for our mates" resource management plan.

Peak oil is upon us,  none is being made in other than in geological time, it's only going to be worth more in the future, let's wait until deep water drilling technology is safer and cheaper and let our kids, or our retirements benefit rather than sending 95% of our natural wealth overseas. In the mean time if we can get our community leaders to come down off of their cloud of maybes and work on concrete local development that creates new companies and jobs maybe they'd become worth all that money we pay them.

geeez

geez ppl let's get with the programe and back anything that will help Dunedin out of it sorry state we find it in now. I don't care what it is, if there is a chance that Dunedin will benefit from it im going to back it. As for the greenies........ don't be scared if drilling brings in work you can always swap over to sickness benefits, or move away to somewhere green, where you won't have to worry about jobs being created, and the stress of actually working for a living.

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