31 Aug 2011

New rules for oil and gas exploration

5:16 am on 31 August 2011

The Government is to change the rules to make it easier for companies to drill for oil and gas.

The changes are included in the New Zealand Energy Strategy released on Tuesday.

Acting Energy Minister Hekia Parata says the new rules would give clarity to oil companies but also give communities, iwi and other parties interested in oil and gas exploration the chance to have their say.

Ms Parata says expanding oil and gas drilling would be good for the economy.

"We know from the science that there is significant oil and gas and mineral potential both on and offshore," she said, adding that there was a potential of up to $12.7 billion to put into the economy.

Ms Parata says the strategy predicts that by 2030 New Zealand could be a net exporter of oil.

The Green Party is critical of the move, but the Labour Party supports it as long as stringent environmental safeguards are put in place to protect against oil spills.

Ms Parata says the Government is putting in place a range of mechanisms to ensure oil and gas exploration and drilling is carried out safely.

The strategy says New Zealand must move to 90% renewable electricity by 2025.

However, the Government says New Zealand cannot shift from fossil fuels overnight as oil is a vital energy source, especially for transport.

The document says the proportion of renewable electricity last year was 74%.

Greater cost, industry group warns

An independent energy industry group says a move towards a greater reliance on renewable sources of electricity generation is likely to put more pressure on price.

Energy Federation of New Zealand chairman Rob Whitney says good progress is being made towards the target of 90% of electricity generation from renewable sources by 2025, but there may be a cost later on that people have not yet recognised.

"I'm not sure that it takes fully into account the fact that this will create a stress on our electricity system.

"A lot of the renewables are intermittent - you can't always rely on electricity generation being available when you want it and the price impact of restricting options and moving away from gas and coal in particular."

New Zealand Oil and Gas welcomed proposed rule changes that will make it easier for companies to drill. Spokesperson Chris Roberts says last year, oil was this country's fourth largest export and there is more oil and gas to be found.

However, Mr Roberts says it is important to note that New Zealand is part of an international market and finding oil here will not result in lower petrol prices at the pumps.

More detail needed, says WWF

The New Zealand branch of global conservation organisation World Wildlife Fund says the Government's energy strategy includes some positive aspects, but is lacking in detail.

WWF New Zealand's climate change programme manager Peter Hardstaff welcomes the target of 90% of electricity generation from renewable sources by 2025, but says there is no real explanation of how it will be achieved.

"We're still lacking a real idea of where we want to get to and how we want to get there. And that's particularly challenging when we've got to address climate change, reducing pollution and also the prospect of increasing oil prices over the coming years."