By Neil Ritchie
NEW ZEALAND’S oil and gas industry and associated supply chain sector has grown significantly during the past four years, a study by the economic development agency of the Taranaki region has found.
According to the report by Venture Taranaki, entitled The Wealth Beneath Our Feet – The Next Steps, the employee growth rate from late 2010 to late 2014 included a much larger number of people employed directly and indirectly in the petroleum sector, with total numbers jumping by more than 50 per cent – from about 7,700 to about 11,720.
Of these 11,720 jobs, about 7,070 are based in Taranaki, an increase of 1,980 since 2010.
The petroleum sector today injects almost NZ$2.8 billion into the nation’s economy, up from about NZ$2.5 billion in 2010.
The latest report by Taranaki’s economic development agency updates and extends the findings of the 2010 Wealth beneath our Feet report that defined for the first time the full extent of oil and gas employment and value in the region.
The second report goes beyond the economic and employment impacts to include detailed snapshots of various production processes, regulatory environments, current activities and future opportunities.
Venture Taranaki chief executive Stuart Trundle said the report sought to increase understanding and inform perceptions around the value of oil and gas to the whole New Zealand economy.
“We have been able to include much greater detail around the benefits, going beyond qualitative analysis to measure ways in which the oil and gas industry in New Zealand makes a positive contribution to the nation,” he said.
He says that since 2010 there has been unprecedented exploration activity, both onshore and offshore exploration interest had moved to a number of new frontier basins and prospectivity remains positive.
“Aspects such as the transfer of skills and innovation to other industries and beyond the traditional energy province of Taranaki all hold the key to leveraging our oil and gas resources.”
The 2010 report ended with a “wish list”, based on the data presented at that time, foreseeing the potential of oil and gas delivering maximum value to the nation.
This included changing New Zealand’s “philosophical definition” of the oil and gas industry, building stronger partnerships to foster industry development, and shifting the “government partnership” approach (decreasing direct government involvement but increasing its supervisory and regulatory roles).
“While some progress has been made towards these items, more can still be done to leverage these opportunities,” Mr Trundle said.
He adds that this latest report is intended to assist communities, decision makers and the industry itself in its decision-making, with a view to maximising the economic returns for New Zealand.
“While the data captured in this report represents a point in time, and any commodity market is subject to price fluctuations, there are a number of strategic discussions needed between stakeholders to ensure that current and future generations will benefit from oil and gas.”
“From developing a blueprint for the industry to recognising the importance of the supply chain or leveraging innovation to building stronger links between regions, there are opportunities to position oil and gas as a significant component of New Zealand’s economic future.”
The latest reports also says the Kiwi oil and gas industry has been “a core component of New Zealand’s economic evolution”, with petroleum liquids (principally crude oil and condensate but also naphtha) still the country’s fourth largest export earner,
“Direct” energy exports totalled about NZ$1.6 billion for the year to June 2014, while “indirect” exports, principally methanol, were estimated to be about NZ$1 billion.
Natural gas also underpinned the energy needs of major industries and products for export.
New Zealand’s energy self-sufficiency is currently about 83%, with oil contributing about 33% of total primary energy supply, and natural gas a further 22%.
“The government has set an ambitious target to raise the ratio of New Zealand’s exports to GDP by 40% by 2025… and oil and gas are key to realising that goal,” the report said.
Mr Trundle said analysis included in the new document was completed last September, before global oil price slumps really started to affect the world oil and gas sector.
But despite current depressed global prices, “there remain a number of factors that suggest a positive outlook for the oil and gas industry in New Zealand,” he said.
These include continued investment in existing fields; the recent upward revision of known gas reserves by 31% to 2642 petajoules, the highest in 13 years; and the expected sharp uplift in oil production during 2015, from five to seven million barrels, taking total production to 18 or 19 million barrels.
There is also continued interest in and initial exploration of frontier basins and entry into the country by multinational and global corporations, the continued expansion of existing production facilities, and a government that supports and encourages the industry.
Taranaki is the hub of the nation’s industry expertise and infrastructure (and) the region is still considered under explored by global standards with potential for further discoveries.
Mr Trundle told Oil & Gas Australia that other research conducted by Venture Taranaki that looks at the supply and demand of skills around project work in the sector “has long indicated that 2015-2016 was going to be quieter (and) this research has project activity kicking off again from mid to late-2016”.
The report adds that Taranaki’s oil and gas industry successes and expertise have made “a significant contribution to the New Zealand economy and will play a pivotal role in attracting further investment.
“Taranaki’s oil and gas industry is crucial in ensuring the energy supply that supports our economic growth as well as our social activities and wellbeing.”
The Petroleum Exploration and Production Association of New Zealand (Pepanz) welcomed the release of the report in late March, with chief executive Cameron Madgwick saying: “If the findings… are anything to go by… all we have to do is look to the wealth that already lies beneath our feet to continue to grow.
“New Zealand holds a vast amount of petroleum potential (and) as an industry we still believe we have more to contribute and we are aware as we continue to grow we need to do so responsibly.”