Energy Resources Aotearoa says gas producers were severely damaged by the previous ban on oil and gas exploration.
It's asked the Government to underwrite the risk of oil and gas exploration.
Government ministers say they've made no decisions.
Energy Resources Aotearoa chief executive John Carnegie says it would only protect the sector from pernicious future policy changes.
"Oil and gas exploration companies are worried that any investment they make in New Zealand could be eroded or stripped away if the Government changes."
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Episode Transcript
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Speaker 1 (00:00):
In an oil and gas lobby group has written to
Energy Minister City and Brown asking him to consider underwriting
oil and gas exploration by private companies. The argument mounted
by Energy Resources Altered Or is that we need something
like this to get oil and gas prospectors back to
New Zealand after the last governments offshore oil and bass
exploration gan ban scared them off. Green Party Colia Chloe
(00:22):
Swarbricks has gas production peaked in twenty fourteen and underwriting
exploration for more would be quote deranged. John Carnegie as
chief executive of Energy Resources Altered Or and he's with
us now, Hi John.
Speaker 2 (00:35):
Hey jackire do yeah, well think so?
Speaker 1 (00:36):
So just explain to us what exactly were you proposing.
Speaker 2 (00:41):
Well, actually, just before getting into that, we're a pan
energy sector group. We represent the entire value chain of
the energy sector, so we proudly represent the oil and
gas sector, but we also represent electricity producers and distributism
fueled distributors. But look in terms of your question, but
(01:06):
I actually think in terms of for your listeners, it's
important to put what we've asked for in context. And
they're two points. The first is we've actually got an
energy shortage and some in fact, might call it a crisis,
and we felt that during the winter it's cause havoc
to industry and households. And actually we might think we
(01:27):
didn't have blackouts, but we did because they were managed
behind the scenes by two of our major exporters. So
you know, now, what we need now is policy settings
that encourage investment and new exploration and appraisal to unclog
the closed pipeline and deliver affordable, secure energy. And the
second point is actually that gas producers were actually damaged
(01:50):
badly by the twenty eighteen exploration ban, and so what
we're talking about is actually just re leveling the playing field.
Governments all over the developed world are setting fixing settings
to ensure they've got a reliable pipeline of secure and
affordable energy. And in fact, I think just last week
(02:11):
or the week before, this government invested sixty million dollars
in deep geothermal research. And while that's great, it doesn't
solve the now problem and we need natural gas for that.
Speaker 1 (02:22):
Yeah, okay, So to exectly what you asked of the minister,
just explain to us what you proposed in terms of
the government underwriting exploration.
Speaker 2 (02:31):
Well, look, we didn't have a firm view on the
type of mechanism the government could choose. But look, the
Minister has for months been talking about the need to
offer gas produces some form of protection via bonds or
I think the Minister mused publicly about long term contracts,
and actually for months we've been publicly agreeing so in
(02:54):
fact that only Radio and New Zealand seemed to be
surprised by our letter and our suggestion that the Minister
the government do what he has been suggesting. In fact,
actually we're mystified why it's taking so long. I mean,
the bottom line for us Jack is that oil and
gas expiration companies are worried that any investment they make
in New Zealand could be eroded or stripped away if
(03:16):
the government changes. So you know, this isn't a To
call it a subsidy would be a complete mischaracterization. It's
effectively like the government taking an insurance policy out against itself,
against its future self that promises no adverse rule changes
that would again damage the sector.
Speaker 1 (03:39):
But what would happen if you didn't find anything? Who'd
be on the whole.
Speaker 2 (03:43):
That's the risk that would be borne by the sector.
Speaker 1 (03:48):
Born by the textpayer as well.
Speaker 2 (03:49):
Right, No, no, not at all. This is this is
this is an underwright that would only protect the sector
from pernicious future policy changes. This government has said, and
in fact they're in the process of reversing the oil
and Gas band, which we applaud, but we've already had
(04:10):
the opposition saying they're going to put it back in.
Now who would invest under those conditions? So the problem is, well, well,
you know, there's certainly plenty of gas out there and
New Zealand is ripe to be explored. Investors are loath
to invest. They have no confidence to invest that their
(04:32):
investment today will be kept whole tomorrow if a new
government comes in. And so actually, again the beauty of
this is that there's no if policies don't change, then
this is a completely costless policy. It would never get triggered.
(04:53):
But it is, as I said, like a guarantee.
Speaker 1 (04:56):
So okay, I'm just going to read the letter here,
so quote this is what you say. Our preferred option
is for the Crown to prioritize new gas exploration. The
most efficient means of covering the security of supply risk
is some form of risk reward arrangement. This would entail
the government underwriting gas exploration and appraisal, whereby the government
takes part or all of the risk if natural gas
(05:17):
should not be produced, while sharing some of the reward.
If it is so, Just to be totally clear, under
that wording, if you were to explore for gas and
not find any, wouldn't the government then be on the hook?
Speaker 2 (05:34):
Well, no, the idea is that you know, here's because
here's the risks are quite nuanced.
Speaker 1 (05:42):
Jack, Sorry, just to be totally clear, because you were
saying that you were saying you want to stop like
a government of the day in the future saying, oh,
you found gas, sorry to bear, we're not going to
let you extract that gas because we're going to reintroduce
this thing. Yeah, but the of that would suggest that
the word this is that should natural guess not be produced,
(06:05):
but it wouldn't be produced if you didn't find it, right, Well,
that's right, So the text player would be potentially be
on the hook for that risk as well.
Speaker 2 (06:13):
Well. I mean, this is one of the one of
the options that we've put forward. It's one of a
number of options.
Speaker 1 (06:18):
I mean, you haven't found you haven't found gas in
the past though, eh like there was.
Speaker 2 (06:22):
Last time found. In fact, the most recent discovery was
the Tutor Way field in twenty twenty, so there is
penny of gas there. And part of the problem with
the band is that there are gas rich basins off
the east coast of both islands that were effectively sterilized
(06:43):
by the ban, preventing the future expirations. So you know that,
as I said, Jack, the damage to the sector has
been severe, and you know, it's it's actually extraordinary that,
you know, what other country would the future of a
(07:05):
sector be banned. And then the country, having realized that
we need the product, has come back to the sector
to say come and help us out. We need you
to secure our energy future. And so the sector is
standing by ready to help. It's just gun shy.
Speaker 1 (07:26):
So how has the Energy minister responded?
Speaker 2 (07:31):
Well, well, the energy well, in fact it's the Resources minister.
Minister Jones, like the Energy Minister, he's committed to keeping
the lights on an energy affordable. We haven't heard back
from the ministers at this point, but I do know
that Minister Jones has publicly and often said he's keen
(07:53):
to atone for the harm the oil and gas ban
has done to the industry, And I guess that was
the point I was making. What other industry has its future, band,
has its investment pipeline strangled, and then it's called on
to help when a country realizes it needs their help
to ensure reliable, affordable energy.
Speaker 1 (08:12):
It's like a compensation for the way in which that
band was introduced, is what you're suggesting.
Speaker 2 (08:17):
Pretty much. And you can't make this stuff, you know.
I couldn't make this stuff up. Yeah, you know. It's
the damage has been severe, and now the country realizes
how much we need natural gas to help us actually
as we journey towards the low emissions future.
Speaker 1 (08:35):
Hey, thanks for your time, John, We appreciate it. That
is our energy resources Altered or chief Executive. For more
from Heather Duplessy Allen Drive, listen live to news talks.
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio.
In an oil and gas lobby group has written to
Energy Minister City and Brown asking him to consider underwriting
oil and gas exploration by private companies. The argument mounted
by Energy Resources Altered Or is that we need something
like this to get oil and gas prospectors back to
New Zealand after the last governments offshore oil and bass
exploration gan ban scared them off. Green Party Colia Chloe
(00:22):
Swarbricks has gas production peaked in twenty fourteen and underwriting
exploration for more would be quote deranged. John Carnegie as
chief executive of Energy Resources Altered Or and he's with
us now, Hi John.
Speaker 2 (00:35):
Hey jackire do yeah, well think so?
Speaker 1 (00:36):
So just explain to us what exactly were you proposing.
Speaker 2 (00:41):
Well, actually, just before getting into that, we're a pan
energy sector group. We represent the entire value chain of
the energy sector, so we proudly represent the oil and
gas sector, but we also represent electricity producers and distributism
fueled distributors. But look in terms of your question, but
(01:06):
I actually think in terms of for your listeners, it's
important to put what we've asked for in context. And
they're two points. The first is we've actually got an
energy shortage and some in fact, might call it a crisis,
and we felt that during the winter it's cause havoc
to industry and households. And actually we might think we
(01:27):
didn't have blackouts, but we did because they were managed
behind the scenes by two of our major exporters. So
you know, now, what we need now is policy settings
that encourage investment and new exploration and appraisal to unclog
the closed pipeline and deliver affordable, secure energy. And the
second point is actually that gas producers were actually damaged
(01:50):
badly by the twenty eighteen exploration ban, and so what
we're talking about is actually just re leveling the playing field.
Governments all over the developed world are setting fixing settings
to ensure they've got a reliable pipeline of secure and
affordable energy. And in fact, I think just last week
(02:11):
or the week before, this government invested sixty million dollars
in deep geothermal research. And while that's great, it doesn't
solve the now problem and we need natural gas for that.
Speaker 1 (02:22):
Yeah, okay, So to exectly what you asked of the minister,
just explain to us what you proposed in terms of
the government underwriting exploration.
Speaker 2 (02:31):
Well, look, we didn't have a firm view on the
type of mechanism the government could choose. But look, the
Minister has for months been talking about the need to
offer gas produces some form of protection via bonds or
I think the Minister mused publicly about long term contracts,
and actually for months we've been publicly agreeing so in
(02:54):
fact that only Radio and New Zealand seemed to be
surprised by our letter and our suggestion that the Minister
the government do what he has been suggesting. In fact,
actually we're mystified why it's taking so long. I mean,
the bottom line for us Jack is that oil and
gas expiration companies are worried that any investment they make
in New Zealand could be eroded or stripped away if
(03:16):
the government changes. So you know, this isn't a To
call it a subsidy would be a complete mischaracterization. It's
effectively like the government taking an insurance policy out against itself,
against its future self that promises no adverse rule changes
that would again damage the sector.
Speaker 1 (03:39):
But what would happen if you didn't find anything? Who'd
be on the whole.
Speaker 2 (03:43):
That's the risk that would be borne by the sector.
Speaker 1 (03:48):
Born by the textpayer as well.
Speaker 2 (03:49):
Right, No, no, not at all. This is this is
this is an underwright that would only protect the sector
from pernicious future policy changes. This government has said, and
in fact they're in the process of reversing the oil
and Gas band, which we applaud, but we've already had
(04:10):
the opposition saying they're going to put it back in.
Now who would invest under those conditions? So the problem is, well, well,
you know, there's certainly plenty of gas out there and
New Zealand is ripe to be explored. Investors are loath
to invest. They have no confidence to invest that their
(04:32):
investment today will be kept whole tomorrow if a new
government comes in. And so actually, again the beauty of
this is that there's no if policies don't change, then
this is a completely costless policy. It would never get triggered.
(04:53):
But it is, as I said, like a guarantee.
Speaker 1 (04:56):
So okay, I'm just going to read the letter here,
so quote this is what you say. Our preferred option
is for the Crown to prioritize new gas exploration. The
most efficient means of covering the security of supply risk
is some form of risk reward arrangement. This would entail
the government underwriting gas exploration and appraisal, whereby the government
takes part or all of the risk if natural gas
(05:17):
should not be produced, while sharing some of the reward.
If it is so, Just to be totally clear, under
that wording, if you were to explore for gas and
not find any, wouldn't the government then be on the hook?
Speaker 2 (05:34):
Well, no, the idea is that you know, here's because
here's the risks are quite nuanced.
Speaker 1 (05:42):
Jack, Sorry, just to be totally clear, because you were
saying that you were saying you want to stop like
a government of the day in the future saying, oh,
you found gas, sorry to bear, we're not going to
let you extract that gas because we're going to reintroduce
this thing. Yeah, but the of that would suggest that
the word this is that should natural guess not be produced,
(06:05):
but it wouldn't be produced if you didn't find it, right, Well,
that's right, So the text player would be potentially be
on the hook for that risk as well.
Speaker 2 (06:13):
Well. I mean, this is one of the one of
the options that we've put forward. It's one of a
number of options.
Speaker 1 (06:18):
I mean, you haven't found you haven't found gas in
the past though, eh like there was.
Speaker 2 (06:22):
Last time found. In fact, the most recent discovery was
the Tutor Way field in twenty twenty, so there is
penny of gas there. And part of the problem with
the band is that there are gas rich basins off
the east coast of both islands that were effectively sterilized
(06:43):
by the ban, preventing the future expirations. So you know that,
as I said, Jack, the damage to the sector has
been severe, and you know, it's it's actually extraordinary that,
you know, what other country would the future of a
(07:05):
sector be banned. And then the country, having realized that
we need the product, has come back to the sector
to say come and help us out. We need you
to secure our energy future. And so the sector is
standing by ready to help. It's just gun shy.
Speaker 1 (07:26):
So how has the Energy minister responded?
Speaker 2 (07:31):
Well, well, the energy well, in fact it's the Resources minister.
Minister Jones, like the Energy Minister, he's committed to keeping
the lights on an energy affordable. We haven't heard back
from the ministers at this point, but I do know
that Minister Jones has publicly and often said he's keen
(07:53):
to atone for the harm the oil and gas ban
has done to the industry, And I guess that was
the point I was making. What other industry has its future, band,
has its investment pipeline strangled, and then it's called on
to help when a country realizes it needs their help
to ensure reliable, affordable energy.
Speaker 1 (08:12):
It's like a compensation for the way in which that
band was introduced, is what you're suggesting.
Speaker 2 (08:17):
Pretty much. And you can't make this stuff, you know.
I couldn't make this stuff up. Yeah, you know. It's
the damage has been severe, and now the country realizes
how much we need natural gas to help us actually
as we journey towards the low emissions future.
Speaker 1 (08:35):
Hey, thanks for your time, John, We appreciate it. That
is our energy resources Altered or chief Executive. For more
from Heather Duplessy Allen Drive, listen live to news talks.
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio.
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