It looks like the Government’s plans to open up New Zealand’s deep and clean oceans to dangerous deepwater drilling could be in deep trouble.
Today’s Herald reports that plunging global oil prices have forced explorers to scale back plans in New Zealand. This is not breaking news as such, as the price of oil has been collapsing over the last six months, but we are now starting to see what this actually means for the oil industry. And it’s bad news for them and the Government.
With oil now below $50 a barrel, plans for drilling in risky areas like the Arctic and off our coastlines are looking shakier than the Wellington fault line. The thing is, not only is deepwater drilling dangerous, it’s also very, very expensive. And oil giants looking to drill in New Zealand, like Anadarko and Statoil, need a high oil price to keep the shareholders happy. Otherwise these projects just won’t break ground, or our deep ocean floors.
And if you don’t believe me, just look at what the analysts are saying. Woodward Partners have declared that: “In New Zealand, the ebb in [exploration] activity that has been coming for some time is in our view now at risk of a much sharper decline than might otherwise have been the case.”
“It would be naive to think that work programmes would not be at risk should the current oil price environment continue or, worse, further deteriorate for an extended period.”
They know they are in deep trouble.
Around the world we are already seeing climate wrecking shale oil projects in the US being put on ice; drilling rigs standing idle and there’s talk of stockpiling oil on supertankers. I wonder whether Simon Bridges has considered auctioning off the Hauraki Gulf as a parking lot for global super tankers, such is his desire to please the oil industry.
In their desperate defence, industry insiders will tell you that deepwater projects have a longer investment horizon, but the reality is that the industry no longer has the luxury of time.
As the price of oil remains low and the cost of getting to the harder to reach reserves sky-rockets, the good news is that the cost of cleaner, safer energies like wind and solar are falling. It’s the perfect storm and makes climate action easier and the cheaper choice for powering our homes and businesses.
We may not be there yet, but 2015 could be the year that we level the playing field.
The deepwater oil drilling and fracking industry is in trouble, and so is one of the Governments major economic plans. At the same time the clean energy sector is growing stronger and smarter, and the investment community knows this.
As a recent Forbes article concluded: “Renewable energy is a technology. In the technology sector, costs always go down. Fossil fuels are extracted. In extractive industries, costs (almost) always go up.”
One can only sensibly conclude that if we want to build a cleaner, cheaper more stable economy and create many tens of thousands of jobs, we must seize this opportunity to put our great innovators and energy experts