With crude oil standing as New Zealand’s fourth-largest export commodity by value and the oil industry responsible for thousands of high wage jobs and hundreds of millions of dollars in government tax and royalty revenue, the sector is crucial to the country’s economy.
Success to date remains largely confined to the Taranaki region of the North Island, but the NZ government is now looking at the potential for growth and development opportunities.
Initial analysis by the Ministry of Business, Innovation and Employment has suggested, assuming patterns follow that of Taranaki, that exports could hypothetically grow by $1.5 billion per annum, royalty payments could increase by $320 million per annum, and a further 5,500 jobs could be created.
With direct and indirect effects, New Zealand’s national GDP could increase on average by $2.1 billion for each year of a 30-year development of a new basin.
Looking at the impact of field development scenarios, it is estimated that a single field could generate between $557 million and $3.2 billion in regional GDP over the life of the development.
This positive outlook has now led to a joint economic development study being commissioned by the Ministry in conjunction with regional economic development agency Business Hawke’s Bay, on behalf of eight East Coast councils, to look at the potential for and benefits of developing an oil and gas industry on the North Island’s East Coast.
“There is significant interest in exploring the region and there is real potential to grow the oil and gas industry, boost the regional economy and create much needed jobs in areas of the East Coast that have high levels of unemployment,” Economic Development Minister Steven Joyce said. “But first we need to understand what the opportunities are. The study will give us a much clearer idea of the region’s oil and gas reserves and the resulting economic benefits; what sort of infrastructure may be required; and outline any environmental risks.”
Energy and Resources Minister Phil Heatley says that as part of the study, input will be sought from a range of interested parties, including industry and local iwi.
“We know how successful oil and gas has been for Taranaki with higher regional wages and low unemployment,” Heatley said. “The oil and gas industry in Taranaki underpins a thriving community by providing thousands of jobs and contributes billions to the New Zealand economy. This joint report will give us a steer on what the potential is for the East Coast. I will personally be visiting the region in the near future to discuss opportunities with community and iwi leaders.”
The study will include:
- An overview of general development potential in the region, including a report on geology and oil and gas prospects
- A detailed assessment of one potential development scenario by an existing permit-holder, including field development and construction, infrastructure and labour requirements, and environmental (footprint) impacts. This assessment would be peer reviewed by an independent consultant
- A report on significant aquifers in the region (to ensure their protection)
- An economic study of the national impacts of this potential development scenario (referred to above), and ‘high’ and ‘low’ alternative scenarios
- A study of the local economic impacts of those scenarios
- A high-level assessment of the environmental footprint of those scenarios
The study is expected to be completed before the end of the year.