By Libby Middlebrook
Between the lines
Oil companies must be breaking out the bubbly this summer.
Not only are energy consumers gobbling up more oil and gas than ever, but the Organisation of Petroleum Exporting Countries (Opec) has clawed back crude oil supplies.
International crude prices are at 10-year highs and several promising oil and gas prospects popped up around New Zealand at the close of the 20th century.
US-based Westech Energy and Enerco made a major hydrocarbon discovery offshore from Wairoa, on the North Island's east coast.
Taranaki's Mangahewa discovery persuaded Methanex New Zealand to reverse its decision to mothball its Waitara Valley plant after a predicted fall in gas supplies.
Those sorts of discoveries are good news not only for exporters and investors, but also for consumers.
Without more of them, New Zealand could face an energy crisis within the next decade, with fields like Taranaki-based Maui expected to run dry by 2007. This field is the major source of gas and oil for New Zealand, contributing about 70 per cent of the country's gas needs.
At present there are not nearly enough wells in production to replace Maui and that means importing gas, which can be costly.
"New Zealand has got an energy crisis on its horizon and that's because of gas," said Richard Tweedie, managing director of Todd Energy.
"There's an attitude among politicians and business that gas is going to drop from the sky. We've all drilled a lot of wells over a long time and there have been no significant discoveries so I don't hold any naive hopes. We're now drilling the ones that had been dismissed in the past."
Surprisingly few exploration wells have been drilled in New Zealand - only 300 since the first in 1865.
Few dispute New Zealand's petroleum potential, but high exploration costs and difficult weather in the promising Great South Basin off the South Island have counted against development in the past.
Because it takes about five years between discovery and development, replacement wells and fields must be found during the next two years.
"But we're not going to be able to do that if politicians are stupid about putting all sorts of taxes on it. The end result will just lift the cost of energy and that will directly flow through to our export industries," says Mr Tweedie.
I don't see a lot of medium to long term thinking from politicians on these issues."
New Zealand already has a relatively fair taxation regime. But while improving technology will no doubt continue to renew enthusiasm for exploration in New Zealand, government policy still needs to encourage further domestic and foreign investment to avoid the energy crisis many are predicting.
Fingers crossed.
Supply of gas merits more than hot air
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