Oil industry says it had no warning of ban

The fossil fuel industry says it has been blindsided by today's announcement there will be no new offshore oil exploration permits issued.

Prime Minister Jacinda Ardern and Minister of Energy and Resources Megan Woods on Thursday morning said with a few exceptions for onshore drilling in Taranaki, it was time to phase out the hunt for more oil.

"Today we are providing certainty for industry and communities so they can plan for the future," said Ms Ardern. "We are making careful and considered changes over time and supporting communities with a managed transition."

 But Cameron Madgwick, CEO of Petroleum Exploration and Production NZ (PEPANZ), told The AM Show there has been no consultation with the industry.

"The minister has said of course there will be some planning with the sector moving forward, but when I think about planning I get all the right people in the room on day one and I thrash the ideas around and think and weigh up the various perspectives, and then come to my conclusions - rather than come to my conclusions and then get everyone in the room."

Megan Woods.
Megan Woods. Photo credit: The AM Show

Ms Woods said the feedback she's had from the industry is that they're "grateful that they have got this clarity".

"A lot of money has been invested already in these exploration permits, the work has been done, and I see no reason why people won't use that resource. They've done the work."

Some of the existing permits are valid until as late as 2046, she said, giving the industry plenty of time to transition. Around 4600 people are directly employed in the New Zealand oil industry, 3900 of those in Taranaki.

Ms Woods said the decades-long phase-out won't result in thousands suddenly out of work, as happened in the UK in 1984 when then-Prime Minister Margaret Thatcher shut 20 coal mines down.

"No one that has woken up this morning to this news that is currently employed in this industry has any reason to think their job is going to disappear overnight. It is exactly the opposite."

But Mr Madgwick reckons the impact will be felt right away.

"This is a move that will have almost immediate impacts on investment attractiveness of New Zealand in our sector, and I suspect further afield."

He believes the Emissions Trading Scheme is working to reduce New Zealand's emissions, and "simply arbitrarily banning one fuel" isn't the way forward.

"We now join the elite club of Belize, Costa Rica and France that have banned exploration. I don't think that's really the way the world's going."

The Government's move actually covers both oil and gas, with exceptions in place for onshore digging in energy-rich Taranaki.

No warning?

Labour and the fossil fuel industry have differing views on whether Thursday's announcement was to be expected, or came out-of-the-blue.

"It was in our manifesto," said Ms Woods. "Jacinda, in some of the first interviews she gave when she became leader, talked about this. We very clearly signposted it. It comes as no real surprise."

In October, Ms Ardern told Newshub Nation 2017's block offer for exploration was likely to be the last.

But ending exploration does not appear to have been in the party's manifesto prior to the September election. The word 'oil' isn't mentioned in the party's climate change policy on its website, and searches for 'oil drilling', 'oil exploration' and 'block offer' on the site bring up zero results.

No results Labour oil
No results. Photo credit: Labour/Newshub.

Its climate change policy does mention a "transition for workers in industries that need to reduce emissions", and its environment policy says: "New Zealand has a significant petroleum production industry in a world still heavily reliant on oil and gas. But we and the rest of the world must nonetheless transition rapidly to renewable energy."

Asked if Labour had lied about its plans, Mr Madgwick said he wouldn't use "that word".

"All we've been told prior to today is they wanted more time."

Time is running out, however. Thousands of scientists signed an open letter last year warning it was almost too late to stop devastating runaway climate change, which has been driven largely by the burning of fossil fuels over the last 150 years.

"Soon it will be too late to shift course away from our failing trajectory, and time is running out," the letter warned. "We must recognise, in our day-to-day lives and in our governing institutions, that Earth with all its life is our only home."