8 Jan 2014

Great South Basin drilling welcomed

9:32 pm on 8 January 2014

Energy and Resources Minister Simon Bridges is welcoming Shell's decision to drill for gas in the Great South Basin off the Otago- Southland coast.

Simon Bridges: ad hoc discounting makes a significant saving.

Simon Bridges: ad hoc discounting makes a significant saving. Photo: NZ GOVERNMENT

The energy company and partners OMV and Mitsui E&P plan to drill a $200 million test well for natural gas some 150km offshore from Dunedin in 1350 metres of water in 2016.

Mr Bridges said on Wednesday the resources sector is already important to New Zealand's economy and the Great South Basin has the potential for development akin to the country's only petroleum-producing region, Taranaki.

The minister said in 2012, the Government collected $300 million in company tax from the oil and gas sector and $380 million in royalties, and he expects that to grow.

Shell said it has not yet decided whether Dunedin or Invercargill will be the base for its drilling programme.

Dunedin mayor Dave Cull told Radio New Zealand's Summer Report programme on Wednesday that he personally favours the development of renewable fuels to combat climate change, but his council would try to maximise the economic benefit of the drilling.

Southland leaders such as South Port chief executive Mark O'Connor are celebrating the drilling plan, but not expecting to benefit directly this time.

"It's highly likely, depending on the final location they identify, that it may well be closer to Dunedin and therefore it makes sense to service that initial exploration project from Otago. Southland's input and involvement is probably going to be reasonably limited, but we're taking a longer term view."

Mr O'Connor said Southland businesses have spent six years gearing up to service the petroleum industry.

Anti-drilling protest

Anti-oil activists are running a protest summit this weekend in Dunedin, and a spokesperson for Oil Free Otago, Niamh O'Flynn, says Dunedin should be seeking jobs in cleaner, greener industries.

Ms O'Flynn said the protest would include a symbolic blockade of part of Otago Harbour. "We need to be standing our ground and saying 'No, we're not having this industry here' and and we need to be looking for jobs in sectors that are going to be long term and actually provide jobs for our people."

Meanwhile, Greenpeace wants to see the environmental impact assessment report for the planned new exploratory gas well. Campaigner Steve Abel said the environmental impact assessments for drilling by US oil company Anadarko were not made available until after the Government had approved the exploration.

Shell New Zealand chairman Rob Jager said the company has nothing to hide when it comes to the well, but would not be drawn on whether the environmental assessment would be made available.

A spokesperson for Energy and Resources Minister Simon Bridges said Shell has not lodged any reports with the Government, but they would be available under the Official Information Act once received.