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: email@example.com
Gisborne District Councillor Manu Caddie has welcomed the interim report on fracking by the Commissioner for the Environment.
Mr Caddie said he was pleased Commissioner Dr Jan Wright had repeated a number of concerns raised by local residents. “Many ordinary people have raised these same issues and been dismissed and belittled, not only by the industry and politicians but also by local critics who think they know better.”
The report says a list of questions ‘need to be asked and answered’ in relation to the specifics of the East Coast situation. “The report’s revelation of previously secret legal advice to Taranaki Regional Council suggests councils would be in violation of the Resource Management Act if plans continued to omit rules related to discharge of fracking reiterates the need for an urgent review of the Combined Regional and District Plan for Gisborne” said Mr Caddie.
“This should be enough for the Minister to reconsider his proposal to accelerate petroleum development on the East Coast” said Mr Caddie. “Let’s take it slowly and see what happens with the permit areas that have already been granted to the Canadian companies. The PCE makes it clear that oil rushes are not good for the host communities.”
Mr Caddie said he is satisfied with Dr Wright’s assessment that the environmental impacts of hydraulic fracturing may be managed at an acceptable level of risk and appreciates that the PCE is reserving the right to call for a moratorium once she has completed her investigation into regulations.
“Not knowing who is responsible for well integrity seems like a pretty fundamental problem already identified by the PCE and the kind of ambiguity we saw contribute to the Deepwater Horizon and Pike River disasters.”
Mr Caddie said the PCE and government seemed to be at odds on industry claims that everything is fine and New Zealand is a world leader in fracking regulation.
“Given the lack of confidence the PCE has in the current rules and plans, I look forward to her final report that will make recommendations to ensure we don’t see a continuation of the cowboy approach taken by at least one regional council and an over-enthusiastic central government.”
At the end of the day, local communities will decide what is appropriate for them and local regulators will rely on these kind of ‘expert’ reports to inform local decisions. For this reason Mr Caddie is disappointed many of the issues explored in the report seem to end half way through the investigation – the section on well construction and completion is a good example of this. “I have spoken to the PCE staff who say further evidence and analysis of the issues will be included in the final report as this was all they could do to date.”
Mr Caddie said the ‘contribution to climate change’ section clearly needs more work. “The PCE says climate change is the biggest issue facing the world then implies we don’t need to be concerned if New Zealand exports all fossil fuels because they won’t impact on our greenhouse gas emissions.”
The report quotes a range of studies, experts and news reports but neglects to provide a systematic assessment on the validity of competing claims. For example the PCE quotes a recent Cornell University report suggesting fracking produces more greenhouse gas than coal and cites criticism of that study but provides no suggestion on what the most likely emissions scenario is.
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.