KEY POINTS:
On a dour April Aberdeen day, a roadshow rumbled into town. It takes a lot to move these hard people of Scotland's northeast, a port city of imposing grey-granite buildings and wide streets; an industrial powerhouse fuelled by the North Sea oil industry.
On this day, though, 500 people flocked to see these foreign visitors. The drawcard? A recruitment team from a petroleum region on the other side of the world - Taranaki.
"We were delighted," says Stuart Trundle, chief executive of economic development agency Venture Taranaki.
"Having 500 people turn up for a little old region like Taranaki demonstrates the currency that the nation has offshore but also the appeal for oil and gas players. If you're stuck out on an oil rig in the middle of the North Sea or off Taranaki, at least the lifestyle benefits were about 30 degrees warmer in Taranaki."
The fact that nine people had taken time out to fly halfway around the world on the trade mission to several British centres says two things about Taranaki.
First, it demonstrates the go-getter, proactive approach the region has taken, a factor which helps explain why the province of 104,000 people is one of New Zealand's economic sweet spots.
Second, it highlights the lengths the region is having to take to redress the skills shortage which looms as its greatest threat.
Trundle says that over the next few months, "several tens" of families will move to Taranaki as a result of the roadshow, filling jobs in a range of sectors.
But if a recent report commissioned by Venture Taranaki is to be believed, it is going to have to do a lot more. The report, prepared by the Business and Economic Research (Berl) consultancy, says Taranaki is about to ride a significant boom over the next 20 years.
"The Taranaki region is benefiting from a fundamental shift in the global economy," says the report, published in November. "Increased activity, along with a growing middle class has seen the demand for energy and commodities increase significantly over the last five years. Berl does not see this demand changing in the future.
"The Taranaki region, with its agriculture, food processing [meat and dairy] and energy focus, is well-placed to take advantage of this fundamental shift."
Indeed, indicators show the region is doing very nicely already. The National Bank's regional trends report for February showed Taranaki's quarterly growth for December was 3.3 per cent, far better than the next-best regions (Northland and Southland were both on 1.8 per cent).
Commercial building activity was up 30 per cent, its real estate market outshone the national market and retail sales rose more than anywhere else.
At the heart of Taranaki's fortunes lie the dairy boom, with Fonterra's increased payout to farmers, and the resurgence of oil and gas.
After a quiet patch, the country's sole petroleum-producing region is gushing again. Government revenue from Taranaki's oil and gas fields is expected to jump from $113 million in levies and royalties to $175 million in the next few years.
The industry's overall economic contribution of $1.6 billion a year is on the up, too, in light of several finds.
Four major projects - Pohokura, Tui, Maari and Kupe - have rejuvenated the oil sector, adding more than 140 million barrels of new reserves. Several major gas plants are ramping up production as well.
The $1 billion Kupe project is due on-stream next year and Canadian giant Methanex says it is planning to fire up half its mothballed Motunui methanol plant, subject to gas supply negotiations.
And while the region has been explored for about 140 years, there are still new areas to be probed. Companies have until the end of this month to bid for 12 onshore Taranaki blocks, the largest quantity of onshore acreage available in more than 20 years.
So while the South Island's Great South Basin and other exploration areas are exciting interest, there's still plenty of life left in old faithful yet.
"We see a bright future and that's why we're investing 50 per cent of a billion- dollar project [Kupe]," says Origin Energy NZ general manager Chris Bush. On top of that is the $115 million acquisition of Swift Energy's oil and gas assets.
"And there's more capital to go in on top of that," he says. "Internationally, Taranaki oil and gas is pretty small [less than 1 per cent of the world's production]. But it's the centre of oil and gas in New Zealand and, after a period of significant dormancy up until the Maari field was produced, we are in a real heyday at the moment. A number of projects are coming in one after another.
"The question for me is: 'What's next? What is coming after Kupe and Maari and some of the others?'"
It's a question David Salisbury, chief executive of New Zealand Oil & Gas, is asking, too. Thanks to its 12.5 per cent share in the better-than-expected Tui field, money is flowing into the company faster than even the most optimistic predictions expected.
NZOG's revenue for the nine months to March 31 was $153 million, more than $140 million of which was thanks to Tui. Its $52 million investment in the project was paid back within 4 months. Its 15 per cent stake in Kupe is expected to start bringing rewards next year, too.
Notwithstanding those successes, Salisbury has his eyes on the horizon. "The issue for a company like us is always once you've got something under way, you need to be replacing it. You're on a constant cycle and, the bigger you get, the faster the cycle is. If we produce a million barrels a year, we have to replace a million and find some more to grow."
While Taranaki remains central to NZOG's immediate plans, Salisbury wonders whether it will be so forever.
"Taranaki is going to be core to us because of Tui and Kupe and some of the other activities we have under way with exploration. But I think to achieve our growth targets, to sustain a larger company, it drives us outside of Taranaki.
"The key to this business is you need a portfolio of opportunities; you go after the ones that are the most attractive and let others drop. But to do that you need to have a constant churn of new opportunities and Taranaki is just not big enough to provide that level of activity in itself."
But although NZOG's future might not always be so tied to Taranaki, it has a lot of work to do there in the meantime. And that means a lot of work for locals.
During the exploration phase, most of the money goes into the pockets of foreign companies. Of NZOG's $20 million to $25 million exploration budget, most is spent on "shooting" - probing an area's geology - interpreting the data and on drilling work, expert activities carried out by overseas operators (although Salisbury points out that offshore rigs need the support of local companies for transport, fuel, accommodation and food).
But once a project moves into the production phase, local contractors and workers profit. At the Kupe site, up to 400 workers are helping to construct the production plant.
"Local contractors are certainly getting a good spending boost," says Salisbury.
At the Port of Taranaki, owned by the Taranaki Regional Council, chief executive Roy Weaver is already experiencing the boom. Crude oil being transported through the port has increased more than 25 per cent, and Weaver says the offshore supertankers have all led to increases in business as tugs and servicing vessels shuttle in and out.
By watching what comes through the port, Weaver is also tracking the progress of the region's other major industry - dairy.
With the world's largest dairy ingredients manufacturing site along the coast - Fonterra's Whareroa plant, near Hawera - the port sees plenty of the country's dairy output. Whareroa has five powder plants, two cheese plants and others producing cream, casein and whey. Every hour, it can churn out more than 42 tonnes of powders, 12 tonnes of drysalt cheese and 10 tonnes of mozzarella.
About 80 per cent of those products are handled through the port, a figure that puts a smile on Weaver's face. "We got a further boost last year when Fonterra closed three grated cheese export plants from around New Zealand to focus manufacturing on Eltham in Taranaki.
"As a result, our container throughput has surged over 1000 per cent from 6000 TEU [a measure equivalent to a 20-foot container] per annum in 2001 to 65,000 TEU per annum predicted for this year," says Weaver.
You don't have to spend long in Taranaki, watching milk tankers snake along under the shadow of the mountain, to be reminded that dairying is big, big business.
It's a lesson farmer Peter Adamski thinks many in the country need reminding of. "Every other industry was going to be the next big thing but, basically, New Zealand is still an agricultural economy," he says from his farm at Omata, on the outskirts of New Plymouth.
Dairy is the region's largest single sector, accounting for about a fifth of Taranaki's GDP, and 14 per cent of the country's dairy GDP and employment.
Adamski, the Taranaki chairman of Dairy Farmers of NZ, milks 113 cows on the property he and his wife, Kathleen, bought seven years ago. He's typical of cow cockies across the region: his income this year is up, thanks to Fonterra's increased payout. But his production is down about 8 per cent, thanks to the drought.
"We had more rain than last year, but it came in big bursts - 110mm in three days, then nothing for weeks. We went 25 days without rain - for Taranaki we need rain every week," says Adamski.
The other factor biting away at profits is increased costs. "Fertiliser is going up 40 per cent again, there have been increases in fuel prices and feed. It was $255 a tonne for palm kernel, now it's $400-plus." Like many in the region, though, Adamski took advantage of the higher payout to pour some money into the farm. There's a new hay shed and 7ha of new paddocks thanks to the development of previously ungrazeable land.
"A lot of farmers committed themselves to spending early, replacing equipment and machinery."
The drought will have caused some to pull back, but contractors across the region are still flat out. "The contractor for the job at this place came out six weeks late because the last guy just kept him going and going. He has been busy right through, working non-stop."
Taranaki-born and bred, Adamski can't imagine farming anywhere else, although he has noticed plenty of change.
"When we arrived here there were three dairy farms below us [on the road]. They've all gone to grazing and subdivision now."
He thinks farmers have changed their attitudes as the industry has restructured and farms are run much more as a business. "There's not the same feeling of a co-operative as we had even five years ago. Farmers are more educated but old-school farmers had that co-operative spirit."
One indication of how much more business-minded dairying has become is the amount of farm amalgamation, and the growth of townie investment in the country.
"There are new guys investing in farming; bankers or business people. They are moving money from one area to another and they're looking for a payback."
Farmers aren't missing out themselves, though. "You're finding there are equity partnerships, guys from Taranaki pooling together and buying elsewhere," says Adamski. "Heaps of them have invested in the South Island. Taranaki can't expand dairy-wise. There's the odd piece of land around but, basically, it's at its peak, other than through the amalgamation of farms and reducing cost structures, so they have to look elsewhere."
Reflecting these changes, the average herd in Taranaki is now 260, up from 170 about 10 years ago. A decade ago, there were 2500 farm units; now there are 1850, Taranaki Regional Council figures show.
"My gut feeling is it's mainly local people buying out the neighbours," says council resource management director Fred McLay. The intensified use has put pressure on the land and the council is urging farmers to carry out riparian planting and fencing to protect waterways.
"At the moment, it's happening too slowly," says McLay.
The other area in which the squeeze on dairy is being seen is through land prices. "We certainly have seen some high prices paid for dairy land here," he says. In February, one dairy farm sold for $9.45 million. In October 2005, the median Taranaki farm price was $500,000. In October last year, it was $1.45 million.
There's plenty of cash sloshing around Taranaki, then, but you won't find much pretension.
There's something about the way they do business - it's somehow more genuine, there's more comradeship.
Roy Weaver, who arrived as chief executive at the port in 2001 after a stint at the Port of Timaru, says Taranaki immediately struck him as a vibrant community. "It reminds me of the South Island: self-sufficient, parochial and focused in business. There's a strong predominance of people working in their own businesses and that, I think, reinforces a self-reliant attitude."
Weaver says you'll find people wearing many hats - running their own businesses but also getting involved in sporting and community leadership roles.
"That can be seen as a weakness but I see it as a strength because you're getting cross-connections, for instance, linking the port and the engineering people through the Engineering Taranaki Consortium."
Weaver is chairman of the consortium, a cluster of 12 major engineering industry firms. The collective approach allows them to attract and pitch for major projects which otherwise might be awarded to companies outside the region.
But it's not just oil and gas where clusters prevail. Other clusters are up and running, including Education Taranaki, a group of schools and institutions which work to attract foreign students to the region.
Associate Minister of Energy and New Plymouth local Harry Duynhoven thinks the "whole-of-Taranaki" approach to dealing with the big oil companies is key.
"It's fairly well known in the sector throughout the world that this is an area where it's not like going to a part of the world where no one has done anything," says Duynhoven, who remembers cycling down the road as a child to watch oil drilling and worked in the industry as an electrician.
"They know when they come to Taranaki that people have the skills and the knowledge and they know what is reasonable and what isn't. It's not like going to a small outpost."
Weaver believes the collective approach will need to be adopted in Southland too if there's an oil strike in the Great South Basin.
Side benefits of the engineering consortium have included improvements in health and safety standards, and a boost for apprenticeship and training schemes - a perfect way to encourage young locals to take up trades in Taranaki, rather than heading for the bigger centres.
"They can see when they look around the consortium that there are Taranaki kids who grew up and are now running companies turning over $10 million-plus," says Weaver.
At Venture Taranaki, the local government agency charged with driving economic growth, personal experience alone is helping build evidence of a pattern that sees people returning to the region. Michelle Jordan, the economic development manager, came home seven years ago. "I went away to university and came back essentially a decade later after doing the big OE and building up experience in project management and marketing experience.
"I was at that point where we wanted to make different lifestyle choices - buying a house worked out really well and it's a good place for your family." A few years ago, it was not so common for people to return. "I've noticed among my group of friends, more and more of them are coming home as they enter their early 30s."
That's helping to build the sense of community, a big part of the way business is done. "People know each other; they know each other's kids," she says.
Nick Fleming, who as well as being a senior enterprise adviser at Venture Taranaki also acts as New Zealand Trade and Enterprise's representative in the region, spends a lot of time talking to companies.
"They tend to work among themselves so the knowledge of who has got what skills in the province is pretty good.
"We have a stronger proportion of engineering, scientific people who are challenged by developing things.
"They don't necessarily make the greatest marketers but they're passionate about what they do and finding a niche."
So strong is the feeling of regional patriotism, Fleming says, "You hear us referred to as the Republic of Taranaki. It's just a fact of geography, but that isolation is really not there. There's a collective feeling".
Ah, yes, the geography. To reach Taranaki, you have to make an effort. Far from State Highway 1, it's a destination, not a transit point. But those who are grappling with skills shortages insist Taranaki's location is not so much of an issue.
"In some discussions, it's a bit of a hindrance, in others it's a bit of an attraction," says Chris Bush, of Origin. Sometimes, it's the lifestyle opportunities on offer - think the mountain, surf and fresh, country air - which swing the deal.
As David Salisbury, of NZOG, points out: "It's an hour's plane ride from Auckland or Wellington or a couple of hours' drive. It's not that isolated, not if you've got people used to working in desert sands or remote locations.
"There is difficulty attracting people but, if we were sitting in Aberdeen or in the Middle East or North Africa, we'd be having the same discussion."
The problem, really, is the global squeeze. "The international industry is going through a buoyant period - very, very high salaries and packages being offered worldwide," says Salisbury.
Bush agrees: "There is a shortage of people in the industry worldwide and, as a result, demand for salaries is climbing all the time."
So how does Taranaki compete? And how will it find the people to fill the vacancies predicted in the Berl report on Taranaki's future growth?
The report estimates employment in the region will grow 2 per cent a year to 2026 and that the Taranaki economy will grow faster than the national economy, partly because of the growing importance of the oil and gas sector.
"Associated industries such as engineering, as well as the other manufacturing, hospitality, and transport and storage industries, are also likely to see rapid expansion. Along with business, finance and property services growth, these industries are expected to add around 16,500 FTEs, or 77 per cent, of the region's employment growth by 2026," says Berl.
Stuart Trundle, Venture Taranaki chief executive, knows there's hard work to be done - and efforts such as the trade mission to the UK last month are going to have to be a feature of the region's strategy for some time to come.
"I think every region will have to confront the issue of retention strategies ... but we've also got to constantly be bringing new blood into the system as well."
Generally, though, Trundle thinks Taranaki is well-placed to handle the expected growth.
"I think one of the benefits of a province like Taranaki is there was a lot of great leadership throughout the generations, so we've got an infrastructure, social and culturally, that has quite a significant amount of stretch.
"We've got roading, port and schooling infrastructure and building blocks around health that are capable of growth.
"This region is incredibly well endowed with water and power infrastructure [because] I think what happened was the energy sector demanded those investments."
If Taranaki does expand as predicted, will New Plymouth burgeon into a city rivalling its metropolitan cousins?
Trundle is adamant: "No, I don't think that's the vision. I think the vision is keeping all those strengths that have made this a powerful provincial centre without losing that one-eyed view of what the province needs. That's always the challenge as urban centres grow: how do you keep that parochial sense of pride in place?
"I think one of the strengths of New Plymouth is that it has global aspirations while still having Taranaki ethos."
The Republic of Taranaki seems unlikely to fall any time soon.
Black and White Gold
Taranaki oil
* At January 1, 2007, Taranaki had 97.14 million barrels of oil and 52 billion cubic metres of gas left in its producing reserves.
* Since then, things have heated up at other fields, including Kupe, Tui and Maari.
* By the end of February, the Tui field alone had produced 9.1 million barrels of oil.
* The Kupe gas project is a joint venture between Origin Energy (50 per cent), Genesis Energy (31 per cent), NZ Oil & Gas (15 per cent) and Mitsui E&P (4 per cent).
* Kupe is expected to produce about 254 petajoules of natural gas, 1.1 million tonnes of LPG and 14.7 million barrels of light oil. Production is expected to begin in the middle of next year.
Taranaki dairy
* Taranaki produces about 20 per cent of New Zealand's milk.
* Fonterra's decision to lift its payout to a record $7.30 put an extra $40,000 into the pockets of the average Taranaki cow cockie, compared with what they expected based on the December forecast.
* The average herd size is 260 cows and there are 1850 farm units in the province.
* Land prices for dairy properties have soared from a median price of $500,000 in October 2005 to $1.45 million last October.
