A paper I presented at the Oil & Gas Symposium, Hastings District Council, 11 October 2013.
A paper I presented at the Oil & Gas Symposium, Hastings District Council, 11 October 2013.
When it comes to mining, Australia has many lessons for us. A 2009 report from the Queensland Government and Centre for Social Responsibility in Mining (CSRM) at University of Queensland showed that housing affordability often declines for people in mining towns who aren’t working in the industry.
Stats from the Real Estate Institute of Queensland (REIQ) show a close correlation between Queensland resources and property booms — median house prices in one suburb soared 65 percent in a year. Great if you’re a property investor, but if you just want an affordable home for your family you might be out of luck.
CSRM studies have documented the “two-speed economy” that follows mining “boom towns”, where people who aren’t working in the industry get a sharp shock when they realise that normal life is suddenly a lot more expensive.
A US Department of Agriculture study published last year found that in three states experiencing petroleum booms, a large increase in production caused only modest increases in local jobs and median household income and employment rose 1.5 percent on pre-boom levels.
There is a range of other peer-reviewed empirical studies on the subject (a few listed below), and I’m happy to look at evidence to the contrary.
So while some incomes will rise during an oil boom, the cost of living for everyone is likely to increase as well — meaning those on a fixed income are in fact worse off. We know that most of the high-paying jobs that go with the territory go to specialists who are brought in.
While this may not on its own be reason enough to say “no” to oil and gas exploration here, it’s important to understand the real opportunities and risks before rolling out the red carpet.
And communities aren’t the only ones thinking hard about the pros and cons. Two months ago Rabobank Group said it would no longer provide finance to anyone involved in extracting unconventional fossil fuels such as oil shales through fracking (see their Oil & Gas policy).
One of the world’s largest lenders, Rabobank is worried about the impact oil and gas production is having on people, productive agricultural land, wildlife and the climate — as well as the release of greenhouse gases and their warming of the planet.
As we are seeing in Taranaki now, there is increasing conflict in the communities affected by the expansion of oil and gas there and a perceived risk to the rural sector from residents near new developments.
A letter to Tiniroto resident John Brodie from the FMG Service Centre says:
“Our Underwriters have confirmed we exclude cover of Fracking and anything related to this activity. Fracking is outside of FMG’s preferred risk profile and is not something we would be willing to cover as we do not insure any risks relating to the mining industry.”
I agree that Gisborne refusing to welcome fossil fuels production here won’t make a serious dent in global greenhouse gas emissions. But global agreements don’t happen out of thin air — they tend to come from grassroots movements that influence local government, national legislation and eventually international diplomacy.
The people of Gisborne taking a stand would help the industry and government to think twice and take notice. But that’s a decision for our community to make, and soon. Last year 2000 locals asked for public notification of any mining resource consent yet Gisborne District Council has chosen not to do so. I think now more than ever we need a forum for the community, our government, iwi and industry to sit down and talk about what the pros and cons really mean for Tairawhiti.
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Weber, J. G. (2012). The effects of a natural gas boom on employment and income in Colorado, Texas, and Wyoming. Energy Economics, 34(5), 1580-1588. doi: http://dx.doi.org/10.1016/j.eneco.2011.11.013
Jacquet, J. 2009. Energy Boomtowns & Natural Gas: Implications for Marcellus Shale Local Governments & Rural Communities, NERCD Rural Development Paper No. 43, January 2009, 63 pp., University Park, Pennsylvania: The Northeast Regional Centre for Rural Development, The Pennsylvania State University. http://www.sciencedirect.com/science/article/pii/S0301421512006702
Always a voice for sensible decision-making, Brian Wilson’s Opinion Piece on local petroleum exploration was no exception. Brian succinctly outlined some of the fundamental challenges we have as a community if the oil industry gets established in Gisborne and questioned any benefits the industry might bring.
The greatest challenge of course is a moral one: why would we welcome an industry that is, probably more than any other, responsible for causing catastrophic changes in our climate? What are we going to tell our grandchildren when they ask why didn’t we make the transition to renewable energy faster?
And yes, anyone suggesting we need to change and still using fossil fuels is compromised, but that’s a bit like saying Gandhi and Mandela should not have spoken English during their struggle against colonisation.
The transition to renewables will take time – it took petroleum a few decades in the early 20th Century to supersede coal as the primary fuel – but the longer we allow cheap access to fossil fuels, the longer the transition takes.
Humans have already discovered five times more oil and gas than we can consume without pushing planetary warming above the critical two degrees increase. We don’t need to find any more.
I was at a meeting with a representative from Z Energy recently where they talked about the concept of ‘permitted oil’ as opposed to ‘peak oil’. Last month Z Energy partnered with Norske Skog and others to invest over $13 million in a biomass development project in the Bay of Plenty using woodchips and sawdust to create biofuels. That kind of money is not just green-washing, they are serious about using our existing resources to reduce New Zealand’s $6 billlion/year addiction to fossil fuels and our community should be talking to them.
Scion, the forestry research institute has estimated that eight biomass plants around the country could replace ten percent of our crude oil requirements using just the current waste from the wood industry.
A recent Auckland University and Vivid Economics report commissioned a group New Zealand’s most influential business leaders, suggested that green growth may not out perform the dirty alternatives if the goal is short-term profit but a different way of measuring growth and wealth may be required.
“The benefits of green growth policies do not always show up rapidly as higher growth, and higher short-run growth should not be a necessary criterion for a good green growth policy. This is because conventional measures of growth do not measure the state of the economy’s stocks of wealth, and many valuable environmental outcomes are not traded in markets, so improvements do not appear as growth. A green account addresses these deficiencies.”
Renewable energy industries do however have a much higher job creation result for the same investment in fossil fuels, and Tairawhiti is well placed to take advantage of any shifts in the allocation of resources around the national economy during the transition period.
Gisborne District Council has committed to reviewing our policies and plans as they apply to petroleum exploration and production. As a result of public concern, our Council reportedly has the most robust process for assessing resource consent applications from this industry.
As a community we are still waiting to have a well-informed, rationale discussion on the issues and while central government has indicated a willingness to resource this, they are still rolling out more exploration permits and changing laws to reduce opportunities for public input in the decision-making process.
The local body elections will not provide the best opportunity to have this discussion but candidates should all be able to clarify their understanding of the issues.
A decision by Gisborne District Council to give the green light to Canadian company TAG Oil for an exploratory well to be drilled west of Gisborne city has been condemned by an RMA Commissioner.
Manu Caddie, who is also a Gisborne District Councillor, says he is supporting an application for a judicial review of the decision based on the public interest test, cumulative effects and the way potential cultural impacts have been handled in the assessment phase.
“Two thousand local residents signed a petition last year requesting any application to drill in the district be publicly notified. All they want is a chance to look into the application and make submissions if they have concerns.”
The Council’s Regional Policy Statement and Combined Regional and District Plan are largely silent on drilling activities and the Council has agreed to review the plan once the Parliamentary Commissioner for the Environment issues her report on fracking later this year.
“The PCE in her interim report on fracking raised a number of real concerns about drilling on the East Coast and the lack of regulation in the petroleum industry as a whole” said Mr Caddie. “Until those concerns are addressed the public should have the right to examine applications and comment on them.”
“An industry representative said just last week that they have nothing to hide, so why are they afraid to give our community the opportunity to be part of the decision-making process.”
Mr Caddie said he understood the company had threatened to leave the district if the application was publicly notified and comments from vested interests meant staff felt pressure to let the application go through non-notified. “I’m sure everyone will deny that is the case, but this is what staff have told me.”
Mr Caddie said it was a sad day for the district and democracy. “The petition of 2,000 citizens must be the largest set of submissions Council has received on a single issue and it is bitterly disappointing that a simple request to have the opportunity to make comments at a public hearing – for or against the proposal – has been seen as less important than the desire of the company to rush into drilling.
Mr Caddie said he believed Council had good grounds to notify the application – while the risk of significant immediate pollution may be limited to a well explosion like the one that happened in the United States last month or limited contamination of land and streams, the cumulative effects of the activity should be taken into account at each stage and the RMA allows for public notification when the risk may be small but the potential effects significant if something goes wrong.
“There is scant information in the application on the process for rehabilitating the site while industry publications suggest at least half of all wells corrode within 30 years allowing fugitive emissions of gas and oil, long after they have ceased production. The area is around known fault lines and aquifers, who knows what impact drilling into those could have.”
The documentation provided with the Council decision suggests one or two individuals within local iwi had signed off on behalf of the tribe with no evidence of hui-a-iwi to provide a mandate or majority of iwi members’ endorsement.
“Iwi and hapū have a right under Te Tiriti o Waitangi, New Zealand law and international agreements to make free, prior and informed decisions on activities that impact on their traditional lands, waterways and air space. From the information supplied I can’t see evidence of that happening in this situation and a number of iwi members have expressed extreme frustration with the process used by the company to consult with iwi.“
Mr Caddie said central government should provide much more support and resources to iwi and hapū that are faced with extractive industries moving into their area.
“Around the world we have seen indigenous peoples welcome industries that make grand promises then leave after ruining the environment local peoples have depended on for generations. It is a familiar story we are seeing played out in our own backyard.”
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Gisborne District Council: Decision Documents
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CONTACT: Manu Caddie – Tel. 0274202957 / Email: firstname.lastname@example.org
A Gisborne District Councillor says the government is picking winners and industries other than oil and gas would grow the regional economy if similar public funds were committed to other parts of the economy.
Manu Caddie would prefer to see government support for developing industries on the East Coast such as renewable biofuels and biochemicals, internet-based small businesses, high tech food production with the associated intellectual property and what he terms ‘lifestyle relocators’.
“We could wait for a new mill to be built and employ a few hundred on minimum wage or we could get on with attracting a hundred innovative, high earning business owners that want to live in places that are vibrant and well connected but out of the rat race of the sprawling metropolitan areas. Compared to the larger centres we have very cheap commercial and residential property prices, a compact city, relaxed lifestyles and relatively unspoiled environment.”
Mr Caddie says the Government has a fundamentally flawed policy of prioritising petroleum development without any plan to reduce greenhouse gas emissions let alone transition the country away from fossil fuels.
“There may well be some short-term economic gain for some members of the community if a significant amount of hydrocarbons can be extracted, but the evidence from overseas is that in mining boomtowns the economic benefits accrue to a certain part of the population while others are worse off and inequalities increase.”
“The region has not had a properly informed debate on the costs and benefits of mining here. There has been no independent analysis and advice on our situation and what the alternatives could be that would deliver more sustainable employment and environmental benefits. If the Government wants to pick winners then at least make it evidence-based instead of ideological. Environmentally sustainable mining is an oxymoron and given the scientific evidence on the impacts of fossil fuel consumption, the issue really is a moral question more than anything else.”
Mr Caddie says he agrees with Steven Joyce and Meng Foon that education needs even more attention.
“This is as much about families and students getting the support they need and taking responsibility as it is about the quality of teaching and approaches to formal learning. More sophiscated understanding of and flexibility around the relationships between schooling, family dynamics, employment and lifestyle choices is critical.”
“Only one in four Gisborne school leavers have NCEA Level 3 or above, nearly ten percent lower than the national average. Between half and three quarters of young people say they do not plan to continue with any form tertiary training after leaving school. A higher proportion of Gisborne young people work in agriculture, fishing, forestry and manufacturing than the national average.”
Gisborne has about 150 young offenders under 17 years. Based on 2001 estimates from PriceWaterhouseCoopers, each year offences committed by young people in Gisborne cost around $2.5 million in Police, court and sentencing costs.
“There is a significant underclass emerging that are extremely disconnected from mainstream society, community leaders, public institutions, employers and community organisations need to get a whole lot smarter about how we think about this part of the population and just focusing on economic development will not be sufficient.”
An overdue government report on the “benefits, impacts and risks” of petroleum development across the East Coast is a sloppy marketing campaign for the industry paid for by taxes and council rates, according to some councillors from Gisborne and the Hawkes Bay.
Gisborne District Councillor Manu Caddie said the $130,000 report released today was originally due in November and the lack of a good news story must be embarrassing for the Government. “The study is riddled with errors, clearly biased and provides less than half of the information promised in the Terms of Reference” said Mr Caddie.
The East Coast Oil and Gas Development Study was funded by the Ministry of Business, Innovation & Employment with support from local authorities on the East Coast from Tararua to Gisborne.
“The study makes some optimistic claims about benefits but glosses over the risks and has almost no worthwhile analysis of the economic impacts let alone social and cultural impacts of this industry should it come to dominate the region” said Mr Caddie.
“One of the few redeeming features of the report is that, based on geological analysis and economic modelling, it suggests commercial petroleum development in the region is highly unlikely” said Mr Caddie. “The study provides a good case for the government to support industries that will produce more sustainable, long-term employment with much lower risk to the environment and existing primary industries.”
One of the bitter ironies of the report is that it relies on production scenarios supplied by Apache Corporation, a company that has since pulled out of exploration in the region. While the report tries to reassure the public and decision makers that well integrity is not a risk, just last week Apache Corporation had a blowout at an exploratory well being drilled only 330m below the surface near New Orleans.
Similarly the study suggests a subsurface safety valve eliminates the risk of hydrocarbon or chemical leaks should a well be compromised, yet according to the US Minerals Management Service such valves have a ‘high failure rate’.
Hawkes Bay Regional Councillor Liz Remmerswaal said the study is inconsistent and selectively quotes from the Parliamentary Commissioner for the Environment’s interim report on fracking.
“The PCE report identified seven key concerns about any petroleum exploration or production on the East Coast and while the MoBIE study says it will not make recommendations it then suggests the questions raised by the PCE do not need to be addressed before exploration starts” said Ms Remmerswaal.
The PCE report also provides evidence on how reinjection processes used in fracking operations overseas have caused significant earthquakes. The MoBIE report is not only silent on these concerns, it recommends the reinjection of waste products from the drilling process.
Both councillors believe the government and councils should commit similar funds to a study on sustainable energy opportunities for the region.
Last month a government-funded trade delegation visited DLR, one of the world’s leading energy market analysts, the same organisation that was recently commissioned by Greenpeace to produce a plan for 100 percent renewable energy use by 2050 for New Zealand.
The Greenpeace report reveals that 250 companies in New Zealand are already researching and commercialising clean technology with Investment NZ suggesting at least 60 of these are world-class enterprises. These companies have potential revenues of $7.5-22billion, significantly higher than the total revenue for even the most optimistic East Coast petroleum development scenarios. The Greenpeace report also provides evidence that clean energy jobs are more secure, safer, often pay better and are created at 3-4 times the number of fossil fuel jobs for the same investment.
“The MoBIE study has some generous claims about how many local people will be employed but why they assume at least half will be local residents is unclear, especially as Apache Corporation representatives speaking at public presentations very clearly refused to promise any direct local employment in the industry” said Mr Caddie.
The report identifies known aquifers in the region and discusses their protection and exclusion from exploration zones though some confusion exists about how the Napier MP and Minister for Local Government Chris Tremain claimed credit for excluding aquifer areas in Hawkes Bay but no where else in country.
“The Minister acknowledges the significant risk to aquifers during drilling and production phases but has only focused on protecting his home patch” said Mr Caddie. The study suggests excluded areas should be identified through changes to regional and district plans.
“It’s a bit fresh that this study is launched the same week as Hawkes Bay Regional Council is asking for a drought to be declared and the study says fracking requires ‘large volumes of water’” said Ms Remmerswaal. “But other than implying a massive new dam will solve the problem, little assessment is made of the existing competition for scarce water resources let alone the impacts of a new industry requiring large volumes to be used and contaminated in the process.”
The councillors are also concerned that the report relies heavily on the few examples of fracking in Taranaki which has very different geology and the regulatory history of the Taranaki Regional Council which the PCE report revealed had been operating outside the law in relation to fracking according to their own lawyers assessment.
Apache Corporation announced the withdrawal from a joint venture on the East Coast in January leaving Canadian company TAG Oil with responsibility for an exploration operation in a complex area both in terms of the geological and cultural landscape. Marauder Resources which holds other permits for exploration in Hawkes Bay received a warning from auditor KPMG last year that the company may not be able to ‘continue as a going concern’.
Liz Remmerswaal 027 333 1066 (will be outside HBRC from 11am-12pm)
Manu Caddie 0274 202 957
Download the MoBIE study and government comments here:
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It has been an exciting week for the oil and gas industry. Todd Energy published a 180 page ‘no worries’ fracking tract and the Government announced plans to open up a large area across the flats and into the hills between Te Karaka, Tiniroto and Frasertown for petroleum exploration.
Todd acknowledges in its submission to the Parliamentary Commissioner for the Environment’s inquiry that “many of the environmental risks raised as concerns relating to hydraulic fracturing apply to all exploration and production drilling.” That’s been my concern for some time and I agree to a point with industry suggestions that most of these risks can be managed with ‘best practice’ and strong regulation.
The claim that opposition to fracking in New Zealand is being based not on evidence, but on misinformation and emotion really is ironic. Are the professors at Duke University, Cornell University, Penn State or the University of Alberta misinforming us with their peer-reviewed, published empirically evidenced papers? Which regulators that have concluded fracking was the cause of water contamination, earthquakes and/or air pollution were being too emotional in their reports?
We hear claims that there has ‘never been a major incident in Taranaki’, yet a recent oil spill that reached the Kapiti Coast took 265 days to ‘clean up’ and in one year alone three workers were killed on Taranaki wells. Taranaki Regional Council reports reveal chemical contamination of ground water near the Kapuni well so bad that it should not even be used for irrigation, let alone stock or human consumption.
No one is suggesting that every injected well results in drinking water pollution or dangerous earthquakes, but the evidence from independent scientists all over the world confirming contamination makes it clear that fracking is causing serious issues. The Todd submission acknowledges that there are real problems to deal with. Common concerns relate to water pollution through fugitive emissions from well casings, air pollution from flaring and spray disposal, soil pollution from spills, leaks and dispersal, significant earthquakes caused by the pressurised reinjection of fracking waste, radioactive material to be disposed of as part of the fracking process and the list goes on.
Todd Energy says a moratorium on fracking until we sort out the regulations would scare off overseas oil companies. These are the companies that spend well over $100million every year lobbying US politicians and threatening all sorts of calamity if profits are not prioritised over other considerations.
There will be stronger measures on climate change from the US after Hurricane Sandy and Obama’s reelection, but New Zealand politicians are still not prepared to commit the country to a realistic transition plan away from fossil fuels. Todd Energy argues that natural gas is a better option than coal, but conveniently overlooks recent research including a study from Cornell University that found the greenhouse gas footprint of natural gas could be at least 20 percent higher than that of coal (Howarth, R. W., R. Santoro, and A. Ingraffea, 2011).
Putting aside any moral obligation to future generations who will be the victims of a lack of climate justice in our time, we should be clear about the local risks and benefits of the industry. Three studies due before Christmas will help with that assessment and Gisborne District Council will consider them all carefully.
In the meantime interested members of the public might like to check out the maps of the proposed exploration permit areas, find out some more about what is planned and give feedback to local councilors, iwi leaders and/or the Minister of Energy and Resources by the end of January.
I was pleased to hear about the various pieces of work to be included in the study initiated by the Ministry of Business, Innovation and Employment on the likely impacts of petroleum exploration and production on the East Coast.
Ramping up fossil fuel production in New Zealand is the number one priority in the Energy Strategy of the current Government. We should not be surprised therefore that the Terms of Reference for the East Coast study will deliver results focused on the potential economic benefits for the country and the region. It is a shame they are not going to have the analysis peer-reviewed or use global scientific experts to assess the environmental risks.
Ministry officials have told me the assessments of the likelihood and impact of potential environmental risks associated each scenario (high, medium, low production levels) would be included but only at a very high level. Localised environmental risks such as hydrocarbon and toxic chemical leaks into the air, water and soil are of concern to many landowners and residents. There are also the global impacts of continuing to make cheap fossil fuels available while we know they are contributing to catastrophic climate change – no study is able to justify what has become an indefensible situation we are all responsible for.
While the oil industry argues the foreign exchange earnings from their products help pay for our schools and hospitals, they also need to acknowledge the intergenerational injustice the industry is causing. The Government has no transition plan to renewable energy and no strategy to reign in greenhouse gas emissions to 1990 levels by 2020. Carbon emissions of each production scenario are not included in the MBIE study.
All of the analysis on the national and local economic impacts of petroleum production has been outsourced to NZIER, the organisation that recently suggested climate change should be considered New Zealand’s “least important environmental issue”. Parliamentary Commissioner for the Environment described the analysis in a 2009 report by NZIER as “muddled and superficial”, “too superficial to lead to well-reasoned priorities” and “fundamentally flawed”.
BERL last month published an economic study for Southland that demonstrated the benefits of alternative industries for the region would outweigh the jobs and income from fossil fuel extraction. That is the kind of study we should have to sit alongside the MBIE project.
MBIE staff assure me that labour estimates in the report should be able to quantify the types of jobs the industry would require under each scenario and the likelihood of local people being employed in those roles.
The economic analysis should also include assessments of the likely impacts on existing businesses from land use changes, pollution, regional brand impacts, though MBIE say this is only going to be at a very high level. Federated Farmers and Hort NZ seem relaxed about the potential impact of thousands of oil and gas wells, tens of thousands more truck movements each year and the storage and disposal of toxic waste. Farmers and growers I have spoken to sit across the continuum, some are strongly opposed to the oil industry establishing itself here, others are quite open to the idea.
The capacity and expertise required by consenting authorities on exploration and production issues are outside the scope of the MBIE study but of real concern to many locals. Councils and central government should be able to work toward agreement on what resourcing is appropriate for government to provide given the royalties flow back to central government but local authorities have to do all the regulation and manage community expectations and concerns.
The MBIE study should be interesting reading alongside the PCE report on fracking due in the same month and the research Professor Caroline Saunders has been working on for Gisborne District Council that looks at the positive and negative impacts on provincial communities when an oil boom hits town.
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Oil lobbyist David Robinson in a recent column said we should let the public make up their own minds: “we can argue back and forth, back and forth using hand-picked examples of why each point of view is right. But that’s not helping anyone.” Of course he included with this statement with a few hand-picked examples.
I guess I do have personal ideology as Mr Robinson claims but I don’t agree it should be ‘put aside’ – it’s an ideology that favours all of the relevant information being made available to the public so we can make free, prior and informed decisions. Any opposition I have has developed since looking beyond the industry PR spin ($185m worth of lobbying in the US alone last year) and trying to take seriously the science related to human use of petroleum and its impact on the planet.
Beyond the climate implications, it seems useful to refer to people with direct experience of the industry, like Caleb Behn who acknowledges the income that can be derived from oil. Weighing these benefits with the negative social, cultural, economic and environmental impacts in his homelands, Caleb is strongly opposed and warns others to look carefully at the situation in British Columbia and Alberta.
The farmer speaking in Gisborne this week is in no way ‘philosophically opposed to the oil and gas industry’ – if Mr Robinson had read her story in The Washington Post he would have seen that Ms. Vargson and her husband used to maintain a herd of dairy cattle but got out of that business because of methane getting into their well water, a fact confirmed by the state regulators. The couple now work at other jobs and worry their son won’t be able to farm there either. Ms. Vargson permitted drilling of a gas well in the pasture behind her home, but the experience has raised serious doubts. Drilling “can be done safely,” she said. ”I believe that the technology is there.” But she added: “I believe that for the most part the industry takes a lot of shortcuts.”
The Royal Academy of Engineering (RAE) and UK Royal Society’s fracking report probably hasn’t been widely promoted because it omits some key facts: the RAE’s ex-President is Lord Browne, Chairman of Cuadrilla, the UK’s leading fracker. Lord Browne was head of the RAE until last year and owns 30% of Cuadrilla.
The RAE is also part funded by the oil and gas industry. In the last three years the RAE has taken £601,000 from oil companies with links to fracking. The same organisation has awarded cash prizes to BP engineers for their work in hydraulic fracturing.
The influence of the oil and gas industry on the RAE has not decreased with Lord Browne’s departure. His successor – Sir John Parker – is closely connected to the fracking industry. Before taking over at the RAE, Parker headed Anglo American with their fracking interests in in South Africa. Parker is a gas man through and through – some of his previous positions include non-executive director at British Gas, Chairman of National Grid Transco (gas distribution) and non-executive of BG Group (which has coal bed methane interests in Scotland).
Mr Robinson says renewables are too expensive, I agree. If it wasn’t for the one trillion dollars of annual public subsidies awarded to the fossil fuel industries and permissive legislation that allows continued access to relatively cheap fossil fuels, renewable technology would be affordable to most of us.
It was great to hear Rod Drury this week talking about how his software company may soon overtake Fonterra as New Zealand’s largest business. IT entrepreneurs are keen to move to Gisborne for the lifestyle and environment it currently offers. Some locals have been in contact with a biochemicals company in California that has huge potential and is interested in establishing a demonstration plant on the East Coast. These seem like far more sensible opportunities for our community to encourage than the dirty business of oil.
This article originally appeared as an Opinion Piece in The Dominion Post on 10 May 2012.
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Oil industry representative David Robinson’s Opinion Piece on Tuesday said it’s time for the truth about oil drilling. It promised facts but provided only rhetoric. Mr Robinson says there have been no ‘major incidents’ in oil production in New Zealand, which is simply not true. The following incidents, all undeniably major, are examples of facts the oil industry tries to keep to itself.
In 2007 the Umuroa facility, operated by Norway’s Prosafe and Australian company AWE, spilt 23 tons of crude oil off the Taranaki coast. The spill affected nearly 15 kilometres of coastline, took 232 days to clean up and resulted in a successful court prosecution.
In 2010 Austrian oil giant OMV accepted responsibility for a large spill from the Maari field that saw oil washing up on Kapiti Coast. The Rena disaster revealed just how ill equipped authorities are to contain anything beyond a minor inshore spill under perfect weather conditions.
The offshore wells in Taranaki are at depths of no more than 150 metres, the Raukumara Basin off East Cape where Petrobras has been given a permit to drill is up to 3,100m deep and the BP exploratory well that blew out in the Gulf of Mexico for three months in 2010 was at a depth of only 1,500m. Anadarko (one of the DeepWater Horizon companies) has plans to drill off the coast of Taranaki and Otago in up to 3,000m of water.
In 2009 the Montara spill off the west coast of Australia resulted in the equivalent of one Rena sized disaster every day for 74 days in a row. Why would New Zealand be immune from such risks?
Over the past 15 years 282 fatalities among Petrobras staff and contract workers have been documented in accidents at oil rigs and refineries. Petrobras has suffered 27 rig blowouts since 1980 and was the first company allowed to drill at depth in the Gulf of Mexico after the BP disaster. Just before oil was due to start flowing a production riser broke away, if it had happened a few days later there could have been a repeat of the Deepwater Horizon disaster less than a year later.
Claims that a recent GNS report on earthquakes and fracking in Taranaki suggest there is no credible link, overlook the fact pointed out by seismology expert Michael Hasting that the GNS seismic detectors are not calibrated for nor close enough to fracking operations to determine any relationship. GNS should also acknowledge they are contracted to the industry when they comment on overseas reports citing evidence of a direct link.
If the industry is committed as Mr Robinson says to proper public consultation then they should agree to all resource consent applications for mining activities being subject to full notification.
The industry asks the public to trust them on their record in Taranaki. But with only 40 wells drilled, no independent scientific studies, sparse regulation and minimal monitoring, we need to consider the overseas evidence.
Professor Avner Vengosh from Duke University has led some of the most comprehensive studies on water quality related to fracking and found a direct link between water contamination and hydro-fracking. Professor Karlis Muehlenbachs at the University of Alberta cites the industry’s own publications that show up to 60% of well casings will fail within 20 years of construction. The list of peer-reviewed independent studies showing problems with the practice is growing but there are still huge gaps in knowledge about health and environmental impacts in particular.
This week it has been revealed that Germany is following France, Bulgaria and a number of other jurisdictions in Canada, USA and Australia with an indefinite ban on hydraulic fracturing.
New Zealand has too much to lose if large-scale petroleum extraction goes ahead. Our economy depends on quality food production, processing and exporting – why put it all on the line for a few years of income from petroleum exports? When consumers learn that Taranaki farmers are being paid by the oil industry to use their farms to absorb highly toxic fracking waste, our milk and meat will quickly lose its wholesome appeal. But our own health aside – how will our export markets react to the news that New Zealand milk products may derive from Taranaki cows grazed on land that has fracking waste spread over it?Mr Robinson said it’s time we had a reasonable conversation about the future of the oil and gas industry in New Zealand. Let’s just make sure the conversation is based on the full facts.
I’ve decided to keep a running record of a few of the serious incidents Petrobras has been associated with in the last year or two – these are just the ones we hear about…
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- 30 barrels spilt from a Petrobras rig off Rio on 13/2/12.
- 160 barrels of oil leaked from Petrobras platform offshore from Sao Paulo
- Brazilian navy fuel barge sinks in Antarctica with 63 barrels of Petrobras produced fuel onboard, incident hidden by four government ministries responsible for the Antarctic mission
- death of another Petrobras employee and injury of two others in a Boxing Day accident on the PUB-03 oil rig in offshore waters in Rio Grande do Norte state, northeast Brazil
- fire on the same day at its Duque de Caxias oil refinery in Rio de Janeiro are just the latest in a series of deadly incidents and accidents earlier in the year. The refinery is already the subject of a criminal investigation launched by the Federal Police Department of Environment and Heritage after tests carried out by technicians from the State Environmental Institute (INEA) and the Pontifical Catholic University of Rio de Janeiro (PUC-RJ) on a nearby river found high levels of pollutants during December 2010 and in August of this year. A spokesperson for the Police said the material dumped in the river violated the limits set by environmental law.
- a spill from a project co-owned by Petrobras and Chevron spewed 3,000 barrels of oil into the sea and took a week to get under control. Local government authorities have taken a civil lawsuit against the polluters claiming US$11billion in damages.
- a Petrobras worker was killed and his colleague badly disfigured from a refinery explosion in Argentina that was similar to another fatal accident two years earlier.
- A major incident in the Gulf of Mexico involved a deep sea riser coming loose with a 130 tonne buoy narrowly missing another rig as the company prepared to start the first new extraction since the Deepwater Horizon disaster. Had the break happened a few days later when oil had started pumping, analysts claim it could have resulted in a disaster similar to the BP oil leak in 2010.
- An article in the Washington Post quoted engineers worried about the risks of a technology still being tested. Ricardo Cabral de Azevedo, a petroleum reservoir engineer at the University of Sao Paulo who has done research for oil companies in the US, said the industry is worried about the ultimate fail-safe: the blowout preventer, a complex device that slices through pipe to instantly cap a well in a disaster. At BP’s Macondo field, the BOP, as it is known in the industry, suffered compound failures. Azevedo said companies may be pushing the bounds of technology by going deeper than 2,500m or more of water (as is the case in parts of the Raukumara Basin). “It is a problem because all the equipment has to go to higher pressure, and higher pressure may cause failure,” Azevedo said of the BOP. “We really don’t know if it will function.”
A Gisborne District Councillor has told the Select Committee considering a bill that would regulate the Exclusive Economic Zone that the government was playing Russian Roulette with coastal communities.
Manu Caddie, one of 129 submitters on the Exclusive Economic Zone and Continental Shelf Bill, was speaking to the Local Government and Environment Select Committee today when he explained that oiled debris from the Rena was now washing up on Gisborne city beaches and a “one pager” of rules for EEZ exploration applications was grossly insufficient.
Mr Caddie said the Bill does not provide details on what the new regulations will be, resources to clean up anything but a minor spill are non-existent and the public should have input on the detail of rules governing exploration and extraction in the EEZ.
“If the Interim Impact Assessment Guidelines become the requirements within the EEZ Act then they omit detailed baseline sampling of the current state of the area where the activity is proposed” said Mr Caddie. “How can contamination be proven if no baseline sampling is provided beforehand? The wording at present is very vague and should be more prescriptive.
Mr Caddie also pointed out that an oil slick is no respecter of jurisdiction and will not stay within the EEZ.
“Local councils and iwi authorities should be given a veto power if there is enough local concern and support for such a position.”
Mr Caddie stressed that the proposed timeframes between when an application is received, must be notified, submissions made and hearings/decisions is far too short.
“Companies could work on an application for many years and communities will have less than three weeks to read, analyse and respond to complex technical reports, Impact Assessments, financial calculations and other application details – so the timeframes should be more like 3-6 months for submissions.”
In response to a question from Labour List MP Moana Mackey, Mr Caddie said he was very concerned about the imbalance in resources. Mining companies have “bottomless pockets” compared to the councils and communities that will be affected by an application according to Mr Caddie who represents the Gisborne City Ward and is on the committee of a marae near Ruatoria. “The Government needs to provide public resources and expertise, such as university and CRIs, to councils, iwi and communities that wish to make submissions on an EEZ application” said Mr Caddie.
“All the best practice in the world will not be able to ensure deep sea drilling doesn’t go wrong – the Government is playing Russian Roulette with our coastal area. Rena, Montara and Deepwater Horizon have proven there does not exist the technology or resources to contain anything but a minor spill very close to shore under perfect marine conditions.”
Mr Caddie suggested if the Committee had read the report by the National Commission on the Deepwater Horizon disaster they would know it had identified serious systemic problems within the petroleum exploration industry that have still not been addressed. Many of the same companies involved with the Deepwater Horizon spill are active in the burgeoning New Zealand exploration industry.
Mr Caddie said the safety record of applicants needs to be considered carefully and pointed out that Brazilian oil giant Petrobras has had two significant oil spills since November and two workers killed and a number seriously injured in the last six months alone. One of the spills has seen the companies involved taken to court by local authorities for $11billion. BP is in court this month trying to limit their liability to $30-40b and otherwise could face $100b.
Green MP Gareth Hughes asked Mr Caddie if a climate change clause should be included and Mr Caddie agreed with that the suggestion that climate change impacts should be considered for all applications under the proposed legislation.
It seems the tide is turning.
The Dominon Post reports that over 300 people participated in a protest on Wednesday in Napier organised by local farmers to coincide with the Apache presentation to the Hawkes Bay Regional Council. Concerned residents in Hawkes Bay have a long and growing list of questions they would like answered by the companies and councils involved. Until satisfactory assurances are provided by independent experts, these citizens and ratepayers are saying they don’t want fracking to happen in their region.
Yesterday I received a copy of the letter from the Christchurch City Council dated 16 January 2012 to the Minister of Energy and Resources requesting a moratorium on fracking until an independent inquiry is completed into the practice. The resolution in the Council was passed 10 votes (including Mayor Bob Parker) to 2.
In the last month more jurisdictions around the world including a number of local authorities in Ireland and the country of Bulgaria have joined France, South Africa, New York State and dozens of smaller authorities across North America in establishing a moratorium or banning fracking completely. Many of these decisions have been endorsed by the local chambers of commerce, medical boards, oil and gas commissions and water catchment boards.
The Labour Party has this week suggested Parliament instigates a ‘robust inquiry’ into the practice in New Zealand – either by the Parliamentary Commissioner for the Environment or the Environmental Protection Agency. Unlike the recent report on fracking released by Taranaki Regional Council, the Terms of Reference for such a study would need wide agreement from experts across a range of disciplines and be at arms length from the legislators, regulators and industry.
Alex Ferguson from Apache Corporation yesterday said the company did not offer to pay for an “all-expenses trip” to North America for staff from councils in New Zealand. He also said “It is an unfortunate and not a very welcoming situation that someone decided to give this sort of distorted information to be published.”
This doesn’t seem to be the understanding of council staff who negotiated the arrangement and wrote in their report that is on the public agenda for our meeting this week: “TAG Oil and Apache Corporation… have suggested council staff travel to [British Columbia]… Apache Corporation have offered to pay external costs…”
Mr Ferguson implies I made contact with the Sunday Star Times, in fact it was the reporter that initiated contact and asked questions that I responded to based on what was in the publicly available report to Council.
I take no responsibility for how the reporter chose to frame the situation – I think he was misleading but, as Mr Ferguson acknowledges, the situation risks such interpretation which was why I made sure the reporter knew that Apache is not in charge of the itinerary. While Mr Ferguson may commute from Canada on a monthly basis, overseas travel by public servants in NZ is always viewed with particular interest by New Zealanders.
Mr Ferguson confirms TAG has drilled at Tangamatai near Whangara. Of special interest to me is that the resource consent permits the use of the product “Drill-Pro” and allow for four wells to be drilled but the TAG Oil Annual Report 2011 says they have drilled eight stratigraphic wells on the site.
I understand more drilling this week is planned at the Tangamatai property based on what I was told by someone close to the drillers, but perhaps it simply the drilling for the 700-800 explosive charges to be detonated as part of their seismic survey work near Whatatutu.
To their credit Apache Corporation has demonstrated a commitment to meeting with local residents and trying to answer the many questions presented. The proposed trip to Canada would be useful and I have full confidence in GDC staff who are competent professionals with the highest levels of integrity.
Yesterday I was pleased to receive a copy of the letter from the Christchurch City Council dated 16 January 2012 to the Minister of Energy and Resources requesting a moratorium on fracking until an independent inquiry is completed into the practice. I hear a protest has been organised by farmers in Hawkes Bay to coincide with the Apache presentation to the Hawkes Bay Regional Council this week. This month a number of jurisdictions around the world have banned fracking completely. It seems the tipping point may be close.
We have much to thank the oil industry for – that source of energy has enabled humans to achieve all sorts of things that people living 100 years ago would never have dreamed about. I love the fact that I can take my family on holiday to Tauranga and complete the trip in four hours instead of the week or two it would take by horse (if the weather was fine!), I love the medicines, food, clothing and technology that uses cheap oil and gas in their production and distribution processes.
I also know that future generations are going to look back on us in disbelief that we burnt good oil so quickly and carelessly. In light of the overwhelming evidence (well canvased in The Gisborne Herald letters page!) on human caused climate change and peak oil, ‘responsible extraction of fossil fuels’ is quickly becoming an oxymoron.
This is a conscience issue for me, based on the current scientific consensus about the causes of accelerating climate change, I feel I must have some tangible commitment to an urgent transition away from our reliance on fossil fuel toward renewable energy sources.
I currently own a hybrid car that alternates between petrol and electric propulsion. Recently I looked at buying a fully electric car but I could not afford it without adding 40% to our mortgage! I couldn’t help but think that the cost of that electric vehicle, which had been converted from petrol, would be much cheaper if it was more expensive to produce and consume fossil fuels here and overseas. Economies of scale mean that when more people do more of something we usually find cheaper ways to do it.
A recent OECD report estimates New Zealand taxpayers give fossil fuel users around $70 million each year from the public purse. If that is not bad enough, the same report suggests Norway – the country our government suggests we emulate – subsidises fossil fuels to the tune of over $1.8billion per annum. Recent editorials in this newspaper have claimed supporters of investment in renewable energy are proposing subsidies that would be an exercise in ‘government directed disaster’ – I imagine $1.8 billion could be considered a fair amount of government direction.
While the government says it is committed to reductions in carbon emissions, it has made fossil fuel production a key part of the national economic development plan. The 2011 Energy Strategy says the goal is to make this country a “highly attractive” global destination for petroleum exploration and production companies.
The Listener’s latest editorial claims “The current infatuation with the oil and gas sector runs the risk that the necessary investment in and support for new forms of renewable energy will be diminished. Of particular concern is that although the Government is rolling out the red carpet to international exploration companies, the enormous potential gains to be made from greater energy efficiency are going begging.”
Last week over 450 global investors controlling tens of trillions of dollars from four continents gathered at the UN for the biannual Investor Summit on Climate Risk & Energy Solutions.
“Climate change is certain to be a major factor in investments for the foreseeable future—perhaps the biggest investment factor of our lifetimes,” said Kevin Parker, global head of Deutsche Asset Management – this bank alone is worth US$4 trillion dollars.
The NYC summit presented a number of notable achievements including a record $260 billion invested in clean energy in 2011 and over one trillion dollars in the past six years. There was a 36% increase in solar power investments alone (reaching US$136.6 billion) in 2011. The highly successful but recently scrapped US Treasury Grant Program paid out around $9.6b over 30 months and leveraged nearly $23 billion in private sector investment for 22,000 projects in every state across a dozen clean energy industries. Investors signed onto an action plan calling for greater private investment in low-carbon technologies and tougher scrutiny of climate risks across their portfolios.
The world is moving towards renewables driven by the inescapable logic of clean energy. Gisborne may have an opportunity to tie ourselves to an outdated, dirty and what many believe irrational industry in its twilight years, or we could, with the support of central government and private investors, be a region that was bold enough to not only recognise the need for sustainable change but actually lead and prosper from it.
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NOTE: The original post suggested Norway subsidised the fossil fuel industry to the tune of $100b, this was a miscalculation using an online currency conversion tool. The figures are from this OECD report: www.oecd.org/dataoecd/55/5/48786631.pdf
This is a list of questions relating to the Apache/TAG exploration plans for the East Coast that I will try to post answers for – feel free to ask any other questions in the Comments Box below to add to the list.
The responses are my understanding at the time of writing and do not necessarily reflect GDC or anyone else’s opinion or position.
The staff report on the proposed visit is available here.
A discussion on Radio NZ Morning Report (23/1/12) about the trip is available here.
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1. Who is the GDC staff member going on the trip to Canada?
Trevor Freeman, Manager of Environmental Services and District Soil Conservator is the staff member that his manager is recommending for the trip. Trevor’s participation is yet to be confirmed, it is a recommendation to the full Council meeting on 26 January and councillors may decide he should not go or that GDC should fund it without Apache assistance.
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2. How are they and GDC going to manage the moral/ethical pressure (subconscious as well as conscious) of being beholden to the oil company that is hosting-paying for them to make such a trip?
The itinerary will be on the public record once confirmed – and is in fact still open if people have suggested contacts that the group could visit near Calgary, Fort St John and Victoria, BC. Trevor will provide a full report to Council on his return and is expected to establish contacts with regulators and other stakeholders in Canada that should be broader than just those arranged by Apache Corp. By definition subconscious pressure will be difficult to manage, but staff understand that Apache Corp. representatives will be at only a few of the meetings scheduled – probably only the meetings with their Canadian staff.
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3. Why to Canada and these parts of Canada in particular?
British Columbia seems to be the area that Apache is most active in fracking – including in 2010 the largest frack job ever completed at that time. It seems sensible to make contact with people there who have seen the impacts firsthand and establish some ongoing connections between us and them as a way to share learning, experience, policies, concerns, etc.
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4. Why is this money being accepted by GDC for just one individual to travel all that way to look at a few examples and talk to just a few people in the world when there’s masses and masses of information and research available to many and from all points of view?
GDC can and will still access as much of the reliable information available online and from various academic and independent sources as it comes to hand. This is an opportunity to see the impacts firsthand, to build networks and build the capacity of GDC staff to understand the process which our district has no previous experience with. I am working on a primer on fracking that collates the most compelling peer-reviewed evidence against the practice to share with my colleagues and the public – assistance with this project would be appreciated!
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5. What could be achieved by the money being used for a panel of widely respected district people (Council, Iwi, other community interests) to independently review all available information and report to the district on all the issues as they apply to the East Coast (and if necessary, interview people by skype, define what trips to observe directly should be made by whom about what)?
This could also be something GDC require Apache to fund as part of any new consents application. Apache has reportedly invested $100million in the project, so they should support a robust investigation process by NZ regulators and the public, and their representatives have made public comments to that effect.
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6. What is GDC’s logic and rationale for a geotechnical / soil conservation staff member going?
Most of the resource consent applications will relate to disturbance of the soil and discharge to land – there is also likely be water take and possibly discharge to air consent applications and the individual going to Canada is responsible for all these areas as Manager of Environmental Services.
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7. Who initated this oil-company funded trip?
I understand it was recently proposed by the company to staff from the three councils involved (Gisborne District Council, Hawkes Bay Regional Council and Horizons Council).
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8. What and whose purposes and intent is the trip designed to serve?
My understanding, based on the report going to Council this week, is that the trip is designed to help build the knowledge of GDC staff in relation to Apache Corp. operations in Canada and the regulatory framework employed by Canadian authorities. I guess the company hopes the visit will reassure Council staff who work on behalf of their residents and ratepayers that Apache Corp. is a socially and environmentally responsible company that is regarded with respect in the areas of Canada it operates. My support for the trip will be because it enables our staff to also have direct contact with environmentalists, First Nations representatives, politicians and regulators who may have concerns and even direct opposition to Apache Corp. activities.
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9. What alternative uses of $ oil company offering for: research / review / staff training / were debated/considered – if any?
The trip is seen as a valuable learning opportunity for staff. It is expected that the costs will be between $3-5k and these will be incurred by GDC and then reimbursed by the company. Further staff training, research and reviews will definitely be required and may be funded as part of any consent application and/or funded by Gisborne ratepayers, central government and possibly academic institutions – like Auckland University that next month is hosting a visiting researcher from Duke University that has published papers documenting the dangers of fracking.
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I’ve asked Apache/TAG Oil and GDC staff to comment on the following questions and will post responses if/when they provide them:
What environmental and public health risk assessments are being undertaken before drilling is finally scheduled, and by whom?
What insurance cover will be in effect, covering landowners and GDC, to cover loss of potable water supply due to petroleum contamination, land erosion etc.?
Is a survey of water supply catchment significance, in relation to proposed drilling sites being undertaken?
What would be the proposed method for handling drilling water flowback and drilling waste disposal, bearing in mid the hazardous chemical nature of oil shale or oil source rock detritus?
What engineering measures would be envisaged to prevent long-term corrosion and seismic shock damage to well casing which could result in petro-chemical contamination of aquifers?
What fracking chemicals are expected to be used for oil shale work: BTEX volatiles, barium, diesel oil?
What fracking pressures would you expect to be used if working into oil shale?
At Whakatutu, where do you anticipate that the high volumes of drilling water needed will be obtained from?
Will the well borers used by Tag/Apache test completed cement casing, if ‘yes’, what is the method of testing?
To what depth would bore cementation be taken, from the surface and how many steel liners would be used to below waster aquifer depth?
Would you anticipate using ponding areas for storing flowback water etc. at the drilling site?
If commercial quantities of gas or oil are found, what would be the means for transporting the gas/oil from the drilling site and to where?
Aquifer water in the vicinity of drilling sites should be pre-tested for petroleum contaminants prior to commencement of drilling and reasonably frequently after drilling.This testing should, ideally, be undertaken by an organisation unrelated commercially to the petroleum industry?
In view of the fact that drilling operations are subject to material failures, human error, faulty cement injection and seismic shock damage, what assurance can the petroleum industry give that aquifer contamination will not occur as a result of such factors?
Does Tag Oil/Apache acknowledge that deep drilling and fracking can result in earthquake shocks, as acknowledged by the USA Geological Survey after the series of shocks experienced last year in Northern Dakota, also at a Cuadrilla Ltd. Drilling site near Blackpool, in England, as acknowledged by the U.K. Geological Survey?
In view of the fact that deep drilling and fracking can cause earthquake shocks, is a survey of faultlines being undertaken across the proposed drilling area, in relation to possible earthquake shock generation? ( Ref: Deep drilling and high-pressure injection caused a series of earthquake shock in the Denver, Colorado area, between 1961 and 1966, when toxic chemicals were being disposed of underground, the disposal method then being abandoned due to the earthquakes).
Gisborne District Councillor Manu Caddie has renewed his call for the government to suspend the East Coast exploration permit for Brazilian energy giant Petrobras following another death on a rig operated by the company.
Mr Caddie says the idea that Petrobras has a good safety record is a myth.
“The government and big oil lobbyists in New Zealand have claimed Petrobras is one of the safest oil companies in the world. The list of incidents involving Petrobras over 2011 must see it come close to being one the most dangerous employers and polluters on the planet.”
Mr Caddie says the death of another Petrobras employee and injury of two others in a Boxing Day accident on the PUB-03 oil rig in offshore waters in Rio Grande do Norte state, northeast Brazil and another fire on the same day at its Duque de Caxias oil refinery in Rio de Janeiro are just the latest in a series of deadly incidents and accidents earlier in the year.
The refinery is already the subject of a criminal investigation launched by the Federal Police Department of Environment and Heritage after tests carried out by technicians from the State Environmental Institute (INEA) and the Pontifical Catholic University of Rio de Janeiro (PUC-RJ) on a nearby river found high levels of pollutants during December 2010 and in August of this year. A spokesperson for the Police said the material dumped in the river violated the limits set by environmental law.
A major incident in the Gulf of Mexico in March involved a deep sea riser coming loose with a 130 tonne buoy narrowly missing another rig as the company prepared to start the first new extraction since the Deepwater Horizon disaster. Had the break happened a few days later when oil had started pumping, analysts claim it could have resulted in a disaster similar to the BP oil leak last year.
In August a Petrobras worker was killed and his colleague badly disfigured from a refinery explosion in Argentina that was similar to another fatal accident two years earlier.
In early November a spill from a project co-owned by Petrobras and Chevron spewed 3,000 barrels of oil into the sea and took a week to get under control. Local government authorities have taken a civil lawsuit against the polluters claiming US$11billion in damages.
“Petrobras is not a model corporate citizen and the new Minister of Energy and Resources should not be allowing it to operate in New Zealand waters” said Mr Caddie.
“Under the draft EEZ legislation hurriedly introduced to Parliament, local authorities have no role in decision-making about proposed offshore drilling and can only make a submission within the short timeframe like everyone else” said Mr Caddie.
“While the politicians and industry have been claiming that New Zealand deep sea drilling will be based on ‘international best practice’ and robust regulations, the draft bill that is supposed to reassure the public and establish adequate safeguards for people and the marine environment contains absolutely no specifics on safety standards, environmental protection or drilling practices.”
An article in the Washington Post earlier this month quoted engineers worried about the risks of a technology still being tested. Ricardo Cabral de Azevedo, a petroleum reservoir engineer at the University of Sao Paulo who has done research for oil companies in the US, said the industry is worried about the ultimate fail-safe: the blowout preventer, a complex device that slices through pipe to instantly cap a well in a disaster.
At BP’s Macondo field, the BOP, as it is known in the industry, suffered compound failures. Azevedo said companies may be pushing the bounds of technology by going deeper than 2,500m or more of water (as is the case in parts of the Raukumara Basin). “It is a problem because all the equipment has to go to higher pressure, and higher pressure may cause failure,” Azevedo said of the BOP. “We really don’t know if it will function.”
“So we have dodgy companies operating under dodgy regulations using dodgy technology in a dodgy environment – what makes us think New Zealand will be immune from the kind of disasters that are increasingly common under such conditions?” said Mr Caddie.
While the petroleum industry and government continue to claim there is minimal risk from deep sea oil and gas exploration, a recent oil and gas rig blow-out in Australia produced the equivalent of one Rena spill every day for 74 days in a row.
New Zealand should learn from the Montara oil and gas spill in Western Australia in 2009. A massive slick was released following a blowout from the Montara wellhead platform and continued leaking for over two months. The Australian Department of Resources, Energy and Tourism estimates that the Montara oil leak could have been as high as 320 tonnes per day.
Mr Pfahlert claimed the industry has a spotless safety record, then when reminded of just two recent rig spills in Taranaki he acknowledged there have been more than minor spills in New Zealand. He neglects to also say that Taranaki drills are based in an average of just 150 metres of water. The Raumkumara Basin permit allows drilling in depths of up to three kilometres, the same as the Montara well. The Deepwater Horizon exploratory well that blew out last year was only half as deep.
The Montara and Deepwater Horizon spills suggest, as our Anglican Bishops recently pointed out, that current technology is being pushed beyond safe limits. While there are many deep sea wells being drilled around the world, the risk from deep sea drilling is far greater than the wells New Zealand has benefited from to date in Taranaki. The Raukumara Basin is one of the most geologically unstable areas of New Zealand, the whole plan really is nuts.
The government is rushing legislation to regulate the Exclusive Economic Zone with submissions due this week. The recent major spills, including it seems the Rena disaster, have shown that design, planning and operational decisions cause most spill disasters and it is impossible to adequately regulate against human error. All the regulation in the world can’t clean up a relatively small spill like the one in Tauranga let alone if it had been an oil tanker or well blow out which are thousands of times larger.
The Rena was carrying only around two million litres of oil when it ran aground and only a small proportion of that has so far been released into the sea.
In 2003 the Capella Voyager carrying 126,823,466 litres of oil ran aground near Whangarei and fortunately did not spill its load. If the government’s plans for deep sea oil drilling go ahead, we will see many more large oil tankers operating in NZ waters increasing the risk of another accident.
In 1989 the Exxon Valdez oil tanker also hit a reef. It was carrying 208 million litres and spilled as much as 100 million litres. The effects are still being felt.
East Coast communities have categorically refused to accept the risk being imposed on their coastline and traditional fishing grounds by the government and petroleum industry.
It is pleasing to hear Labour have changed their position on deep sea drilling as the current situation in Tauranga reveals nothing can stop more than a minor oil slick. We can only hope the anger and grief being expressed by Bay of Plenty residents shows the National Party how unacceptable their policy is to coastal communities around the country.