To drill or not to drill, that is the question

A large number of police, both on land and on the water, patrolled from Port Chalmers to Aramoana...
A large number of police, both on land and on the water, patrolled from Port Chalmers to Aramoana when the oil exploration ship Polarcus Ailma slipped into Otago Harbour in 2011.

A key to Dunedin's future prosperity could lie buried beneath the seabed just 60km off the coast. But so, too, could the seeds of an environmental catastrophe. Reporter Chris Morris talks to Dunedin's mayoral candidates about oil and gas.

When a delegation from oil giant Shell visited Dunedin earlier this year, the debate over drilling erupted.

The group was in town to talk to the city's business leaders about their industry and their plans, but instead found themselves face-to-face with vocal protesters vowing to fight.

Eventually, after 12 minutes of abuse and dire warnings amid a growing police presence, the meeting was abandoned, leaving the audience to bemoan a ''lost opportunity'' while the protesters celebrated.

However, fast forward six months and the city seems no closer to resolving the debate.

As the Otago Daily Times discovered, Dunedin Mayor Dave Cull and his eight rivals for the mayoralty remain as divided as ever about the industry and what it could do for the city.

Mr Cull and two challengers - Green Party candidate Aaron Hawkins and Steve McGregor - have reiterated their opposition to drilling off Dunedin's coast, raising fears of an environmental catastrophe.

However, the city's six other would-be mayors have all thrown their support behind the oil giants, saying their arrival would be good for the city's economy and pose little threat to its beaches and wildlife.

In the meantime, oil giant Anadarko has confirmed plans to drill a $100 million test well 60km off the coast of Otago Peninsula, at the bottom of the Canterbury Basin, in January.

Shell, meanwhile, will decide by the end of the year whether to drill, in what could be an up-to-$238 million programme.

Exactly what was out there remained uncertain - natural gas was considered more likely than oil, but that could only be confirmed by drilling.

The economic benefits were also uncertain, with some supporters pointing to the economic boost enjoyed by North Sea oil-base Aberdeen, in Scotland, while critics argued the potential benefits were overstated or an illusion.

Any decision to proceed with full-blown extraction off the Dunedin coast was also likely to be at least five years away.

If extraction did proceed, the direct benefits to Dunedin's economy would come primarily if it secured the right to host a supply base, with spin-off benefits for the city's businesses.

Mr Cull told the Otago Daily Times he was against continuing the hunt for fossil fuels - including off Dunedin's coast - when the world was already heating up.

That was because of the threat of climate change globally, and also the risk of an environmental catastrophe locally, he said.

However, a final decision on drilling was out of the council's hands, with block offers handled by the Government and oil companies deciding whether prospects warranted drilling, he said.

If full-scale drilling did take place off Dunedin's coast, it would be years away, and Mr Cull said he would want strict safeguards in place.

He would also push for an agreement on regional royalties for Dunedin, which could pay for a major project like extending Dunedin International Airport's runway, but accepted the city's businesses could also benefit from drilling.

''If the Government decides to give the consent . . . I'd be very supportive of Dunedin businesses getting in on that.''

Mr Cull rejected criticism not enough was being done to attract the industry, pointing to presentations and a promotional DVD - from himself and council staff - to oil companies in recent years.

''You could send them as many Christmas cards as you like. They've made it clear, it won't make any difference. They will base themselves where it best suits them for their purposes.''

He also fended off criticism the council was not listening to its community, saying the public would be consulted early next term to shape a submission on the Government's block offer process.

His views were backed in part by Mr Hawkins, the Green Party candidate, who said he was ''unequivocally opposed'' to drilling off Dunedin's coast.

Drilling would be a ''huge gamble'' when most jobs would go to overseas specialists, and the first ''whiff'' of a spill would destroy Dunedin's $100 million-a-year wildlife tourism industry, he said.

The cost of any cleanup would also be paid for twice by Dunedin's residents, through rates and taxes.

He predicted both oil and gas deposits were waiting off the coast, and talk that focused on gas was ''a smokescreen from oil companies'' to make drilling more palatable.

The city also had a ''moral obligation'' to help address climate change, and pressing ahead with drilling was ''like playing a game of chicken and putting your foot on the accelerator'', he said.

The council needed to take community concern ''more seriously'', although the council's plan to consult early next term would be a positive first step, he said.

Mr McGregor also added his concern, saying drilling would put at risk the city's wildlife, as well as its tourism and fishing industries, in return for ''a few specialised jobs''.

He had helped clean beaches after the Rena disaster off the coast of Mount Maunganui, and so had witnessed the destruction of an oil spill first hand.

The council needed to have more of a say in the decision to drill, because ''we are the ones taking all the risk'', and royalties should be used within Dunedin, including to pay off Forsyth Barr Stadium debt, he said.

Despite the trio's concerns, Dunedin's six other mayoral candidates all backed drilling.

Andrew Whiley remained ''fully supportive'' of the industry, hoping a supply base in Dunedin would bring significant economic benefits to the city.

''The benefits for Dunedin and Otago are quite dramatic, and for all parts of the Dunedin community,'' he said.

He did not believe royalties should stay within Dunedin, saying some of those raised by the Government would flow back to the city anyway, but was annoyed by the apparent lack of action by the council.

''I'm fairly frustrated in the mayor and the current council saying `we want jobs' . . . but yet they want to cherry-pick what jobs come to Dunedin. I think that's a very simplistic view.''

Kevin Dwyer said he, too, supported oil and gas extraction off the coast, citing the jobs it would create, particularly within Dunedin's engineering sector, which ''needs a bit of a boost''.

The world would always need oil, if not for cars then for other machinery, and the risks were minimal, particularly if a viable gas field was confirmed, he believed.

''Sixty kilometres is a long way out. I think sometimes you just have to take the risk,'' he said.

The council should be more proactive in its efforts to attract the industry, perhaps by offering land for a supply base at little or no cost, or other incentives, he said.

It should also forget about seeking a slice of royalties, which would come to the city via the Government anyway, and ''just be happy to have the jobs here'', he said.

''Opportunities don't come like that very often . . . they need to make it easier for them to come here than to go somewhere else.''

Olivier Lequeux also wanted to see oil and gas extraction off the coast, although he expected it would provide an ''add-on'', and not a major boost, to the city's economy.

He compared debate over the industry to that surrounding nuclear power, which focused on the dangers despite few incidents.

''The risks are minimal in comparison to the gains . . . they can be managed,'' he said.

Talk of a share of royalties was a ''red herring'', but the council needed to stop ''sitting on the fence'' and send a message to the industry that the city was open for business, he said.

Pete George said he would support the industry as long as plans were in place to manage risks, ''which I believe will be the case''.

However, the risks from extraction 60km off the coast were ''slight'' compared to those from cruise-ship and container-ship traffic, which passed up and down Otago Harbour regularly, he said.

Economic benefits could come from jobs created as a result of the city becoming a supply base, but should be looked at as ''a possible bonus'', and he doubted the city could keep a share of royalties for itself.

Despite that, he questioned the current council's commitment to attracting the industry, saying Mr Cull ''seems to be conflicted'' because of his personal opposition to oil and gas extraction.

The council needed to present ''a much more positive public face'' to attract the industry to the city, he said.

Cr Lee Vandervis said he also supported drilling as ''a necessary step'' in the transition to a predominantly electric-powered society.

There were potentially ''significant'' benefits to be had for the city's economy, as demonstrated in New Plymouth, and the risks would be similar ''although they may be less if the field turns out to be primarily gas'', he said.

While the negative effects of a spill could be ''very severe'', it seemed ''hypocritical to me'' to rely and oil and gas from other parts of the world and not use the local resource, he said.

The current council was putting up ''emotive barriers'' to drilling, but Cr Vandervis said he would welcome the industry while highlighting public concern about possible pollution and ensuring response measures were in place.

Hilary Calvert said as long as environmental safeguards were in place, she would be ''happy'' for drilling to occur.

The benefits could be similar to those enjoyed by New Plymouth, ''which appears to be thriving businesses, in part based around the fact they have people extracting things from under the ground'', she said.

While those benefits were ''not likely to be huge'' for Dunedin, support for drilling would send a pro-business message to other potential investors, she believed.

For that reason, the city should not worry about securing a slice of royalties either, she said.

''I think them coming here is a favour and us and we should ask them nicely,'' she said.

''Once you say to people you have to pay us to be here, you have got a problem.''

 


Mayoral candidates on oil and gas

Kevin Dwyer

I think sometimes you just have to take the risk

- Supports oil and gas extraction.

- Economic benefits for Dunedin; environmental risks can be managed.

Andrew Whiley

The benefits for Dunedin and Otago are quite dramatic- Supports oil and gas extraction.- Benefits for Dunedin businesses, jobs.

Mayor Dave Cull

In principal, planet-wide, as a species, we should be looking for other forms of energy that we know we're going to have to find

- Opposed to oil and gas extraction.

- Wants agreement on safeguards and royalties if it proceeds.

Aaron Hawkins

I'm unequivocally opposed. I think safe oil and gas exploration is an oxymoron

- Opposed to oil and gas extraction.

- Threatens Dunedin's wildlife tourism industry

Hilary Calvert

I think them coming here is a favour to us and we should ask them nicely

- Supports oil and gas extraction.

- Would send positive message about business-friendly Dunedin.

Pete George

I think you would have to look at it as a possible bonus

- Supports oil and gas extraction.

- Risks slight compared to threat from container and cruise-ship accidents.

Lee Vandervis

To rely on oil and gas imported from other parts of the world, but not use the local resource, seems hypocritical to me

- Supports oil and gas extraction.

- Significant potential economic benefits, environmental risks lessened if gas.

Olivier Lequeux

The risks are minimal in comparison to the gains

- Supports oil and gas extraction.

- Need oil and gas, and the jobs the industry would bring to Dunedin.

Steve McGregor

The risks are great. The oil companies are drilling in deep ocean in some of the wildest seas in the world

- Opposed to oil and gas extraction.

- Concerned about environmental risks; jobs and other benefits go offshore.



chris.morris@odt.co.nz

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