Shell New Zealand chairman Lloyd Taylor and Todd Energy managing director Richard Tweedie recently independently highlighted the bright or bleak future facing the country, depending on the number and size of the hydrocarbon discoveries of the next few years.
The industry has probably never been healthier in terms of the number of players, the acreage permitted, the committed work programmes and the scheduled drilling programmes, especially in the Taranaki Basin.
However, this country is on the edge of an energy crisis, with several more Pohokura-sized gas fields needed to be found within the next 10-15 years to prevent widespread gas supply disruptions, and power cuts if this country has more cold, dry winters, with surging spot electricity prices and further government-imposed conservation measures.
"The industry is robust, probably more robust and healthier than it's ever been, but the ultimate test is the sustainability of the industry," said Dr Taylor.
"Our major gas resource is Maui, which is depleting rapidly and we are not replacing that production. Our reserves are not growing.
"Without being a doom and gloom merchant, the industry is not healthy from a long term perspective.'
Mr Tweedie predicts serious power supply shortfalls - "it's going to be lights out" - from 2009 or earlier if the development of the offshore Pohokura field is delayed or third party access to the Maui pipeline is not gained.
"New Zealand is on the edge of an energy crisis. Even if Pohokura comes onstream in 2005 and the Methanex plants close from around 2004, even if we have a new combined cycle power station every few years, we still hit the wall in 2009."
Mr Tweedie believes the only hope of pushing the crisis out to perhaps 2015 is if major electricity generator Genesis Power switches its 1000MW Huntly power to run completely on coal and not gas. But then that would increase greenhouse emissions, which would fly in the face of the government's intention to sign the Kyoto Protocol.
Dr Taylor says most of the industry is made up of small healthy independents whose exploration efforts are focussed on onshore Taranaki, with a few onshore North Island and South Island frontier basins.
But these frontier regions had not yet yielded the discoveries needed to replace New Zealand's rapidly dwindling reserves base.
"So, from that point of view, the industry is in a relatively unhealthy state, without a growing industry in terms of production and reserves."
Small independents simply do not have the financial capacity or the technical ability to explore the offshore frontiers, especially deepwater regions. So there needs to be changes to such things as the Acceptable Frontier Offer regime, with its impossibly tight three-year drill-or-drop requirement.
Dr Taylor applauded the work of the government's Crown Minerals unit in recent years, in highlighting New Zealand and attracting more petroleum investment. However, the government needed to facilitate more and help the industry in general overcome this country's "tyranny of distance", which meant high exploration operating costs.
Mr Tweedie said large experienced players were needed for not only exploring frontier and deepwater regions, but helping with such discoveries as the offshore Kupe field. Genesis had recently bought two Kupe licence interests from Shell NZ, but lacked the exploration and production expertise necessary to develop the marginal resource.
