Changing the zoning of harbourside land would "kill" Dunedin's chances of becoming the base for an offshore oil industry.
Dr Henry described the harbourside industrial area as "unique in the world" because of its "cluster" of engineering industries close to a harbour.
The council's proposed plan change 7: harbourside would allow industrial harbourside land to be used for residential and commercial purposes.
Asked by Cr Fliss Butcher what impact the plan change would have on Dunedin's prospects of becoming a base for offshore oil production, Dr Henry said: "It will kill it. It won't happen."
Asked by Cr Michael Guest what he would say to Dunedin residents who did not want a base in the city, Dr Henry used the examples of Scottish cities Dundee, which had declined after not becoming involved with the North Sea oil industry, and Aberdeen, which had grown after becoming an oil base.
Dr Henry said a base to service an oilfield in commercial production would require 400,000sq m of industrial land.
He considered there was sufficient space within Dunedin's harbourside.
During the past two months, the Institute of Geological and Nuclear Sciences vessel Reflect Resolution had carried out seismic testing of the Eastern Great South Basin, beginning 100km east of Dunedin and extending towards the Bounty Islands.
It had since moved to another area off the Nuggets to work for Greymouth Petroleum.
Another company, Australia World Wide Exploration, had a rig drilling around the North Island and Dr Henry said there was the possibility it could be brought south to drill 30km-40km off the Moeraki coast early next year.
Origin Energy Australia had also been carrying out seismic testing south of Timaru.
Dr Henry said Dunedin was central to all the activity - aside from that further south in the Great South Basin - and noted both the ports of Bluff and Timaru were working on proposals to become the shore base for future exploration.
During the exploration drilling phase, a shore base would require space for storing drilling equipment, an airport from which to operate helicopters, and fuelling facilities for supply vessels.
Ultimately, if an oilfield was brought into production, 3000-5000 jobs would be created onshore, with a requirement for office space, storage space, catering, construction and wharf space that could operate "24/7".
Dr Henry considered such a base would not add to the noise made by existing industries in the harbourside area.
One of the big issues for bases in other countries was traffic.
Oil would not be brought to a shore base but would be loaded directly from rigs to ships for transport to refineries.
The Otago Chamber of Commerce and industries in the harbourside area are campaigning against the council's plan change.
They said Dunedin's role in offshore oil exploration could be threatened by introducing apartments, cafes and restaurants to the area.
Economic development committee chairman John Bezett told the Otago Daily Times yesterday the council was well aware of potential benefits to Dunedin from offshore oil and gas exploration and the council would provide the services required.
"It just makes sense. We wouldn't turn that sort of thing away."
He shared the concerns of industrial workers in the harbourside area over the possibility of job losses from the plan change, but believed the council should "hold to its course" and follow through with the Environment Court process it was engaged in.
He said the council had the option of withdrawing stage 2, the most contentious part of the plan change.
"You can't have a situation where the likes of the chamber and outside influences can come in to try and change the legal course the council is taking at the moment. And that is what they are trying to do.
"What I would say to people who are concerned about it - just wait and see what happens, because there are a number of alternatives that the council will consider, and hopefully sooner rather than later."
Council general manager strategy and development Nicola Johnston told the ODT yesterday the council employed environment scientist Dr Mike Patrick, of Nelson, last week to investigate the possible requirements of the oil industry.
Dr Patrick had worked for the council previously when the focus had been on oil exploration in the Great South Basin.
