July 2018

NZIER to look at impacts of oil and gas decision 

The economic and environmental impacts of an end to offshore exploration for oil and gas will be the focus of new research commissioned from the New Zealand Institute of Economic Research (NZIER).

The work is being commissioned by PEPANZ because of serious concerns around the lack of robust analysis of the decision and the consequences it will have.

The research will look at the potential impacts on jobs, incomes, households and businesses. It will analyse the consequences for Government royalties, exports, and industries that rely heavily on energy, as well as the regional impacts for areas like Taranaki.

The research will be robust and independent, looking at different scenarios out to 2040 and also covering the impact on New Zealand’s net carbon emissions. It is expected to be completed in late August. 

Advice from the Ministry for Business, Innovation and Employment just two days before the decision warned: “MBIE considers banning future offshore petroleum exploration to be detrimental to a number of public policy objectives, most notably:

o   increasing risks around security of supply,

o   increasing costs to consumers,

o   increasing global greenhouse gas emissions if Methanex is forced to reduce output,

o   a decrease in economic activity in Taranaki,

o   and reduced Crown revenues from lower future royalties.”

The documents also confirm it was a 'political decision' with no written paper or formal decision made at Cabinet. 

Economic impacts of Zero Carbon Bill 

A summary of research into the economic costs of the Zero Carbon Bill and a new 2050 emissions reduction target have been released, showing that economic growth will take a hit under all scenarios.

Modelling by NZIER forecasts real GDP could drop by an average of $7.8 billion per year for a zero net emissions target, compared to the status quo:

"The New Zealand economy will continue to grow under all scenarios modelled, but average real GDP growth will fall from 2.2% in the baseline to between 1.5% and 2.1% across our eight core scenario/target combinations.

"Per-household welfare, as measured by real Gross National Disposable Income, will be between $13,600 and $46,800 lower than status quo by 2050 for the ZNE scenarios...The costs of meeting 2050 emissions targets fall disproportionately on lower income households."

We also note the "heroic" assumption in most scenarios that the rest of the world will match New Zealand's policy actions. So far this is clearly not the case, and it remains to be seen what impact this will have on the international competitiveness of New Zealand industries.

Overall we think this is very useful analysis and highlights the big choices and trade-offs we need to make as a nation.    

Todd Energy opens new $12m control centre

Todd Energy has opened a new $12 million operations facility at the McKee Mangahewa production station in North Taranaki.

The Tikorangi building was opened by the Minister of Energy and Resources Megan Woods last month and is designed to meet high wind and earthquake loads.  

McKee Mangahewa is the company's largest onshore natural gas production station and a major contributor to New Zealand's annual natural gas supply.

"The operations facility supports significant economic benefits and helps to deliver security of natural gas supply to meet the country's energy demands," Todd Energy Chief Executive (and PEPANZ Chair) Joanna Breare said at the launch. 

Finalists announced for Deloitte Energy Excellence Awards

Finalists for the 2018 Deloitte Energy Excellence Awards have been announced, including four finalists for the PEPANZ-sponsored 'Community Initiative of the year': BP New Zealand, Flick Electric Co, Genesis and New Zealand Aluminium Smelter.

Chair of the Judging Panel Elisabeth Welson says that 2018 was a busy, but rewarding few weeks for the judges. “The strength of the entries across all the different award categories made for vigorous discussion around the judging table and we congratulate all of the finalists coming through in what had been a consistently high quality field of entries.”

The awards ceremony is held in Auckland on the 22 August 2018.