Now the dust is starting to settle over the Fletcher Challenge Energy divestment process, it's time for the industry to work together to prevent the looming energy crisis, says Shell New Zealand chairman Lloyd Taylor. By Neil Ritchie

"There is more of a cluster of players now than there ever has been, but whether that cluster grows and the participants in that cluster behave as they should, and synergise as one would hope, remains to be seen," said Dr Taylor in Wellington recently. Dr Taylor is also Shell exploration and production managing director.

And he said the factors that would determine the success or otherwise of the new-look industry were not likely to be found in books or contracts. "Much of it is about behaviours, things essentially non-contractual.

"A cluster is built around trust, healthy relationships, and the mutual development of competencies and technologies to mutual advantage.

"Can this new cluster grow rapidly enough to achieve the financial capability and technical capacity to actually address the sustainability issue? That's an open question."

Dr Taylor said the industry was rapidly entering the post-Maui age, where one field would no longer dominate the country's energy scene.

After Maui had run out, possibly as early as mid-2007, new gas fields the size of the 1tcf-plus Pohokura gas-condensate find would have to be discovered every five years or so to prevent significant gas supply shortfalls.

New Zealand explorers had to find at least 120 Petajoules of new gas a year, or more if the economy was growing.

Shell's largely-completed divestment process has cemented American Swift Energy Company's place as a major player in the New Zealand industry; enlarged the role of New Zealand's biggest energy firm, Todd Energy; and allowed former FCE bidder Greymouth Petroleum to establish a solid presence in the industry.

Swift Energy bought the lion's share of the Tariki, Ahuroa, Waihapa and Ngaere (Tawn) oil and gas fields in central Taranaki. Todd Energy has taken over the McKee and Mangahewa onshore fields, plus picked up an extra 3.67% in the offshore Pohokura project; while Greymouth has bought nearly 60% of the Kaimiro and Ngatoro fields.

Shell only needs to sell 10% of Maui and two small gas wholesaling companies - Fletcher Challenge Gas Investments Ltd and Kapuni Gas Contracts Ltd - to complete the divestments process required by the Commerce Commission when it bought the New Zealand assets of Fletcher Challenge Energy last year.

Dr Taylor said the future was not about the government picking winners, but it was about the creation and development of an exploration and production cluster centred on Taranaki.

"Taranaki has a lot of unique qualities, which should help the individual cluster members develop their unique attributes and abilities".

The introduction of new players was a very healthy outcome and it was time to leave any acrimony of unsuccessful divestment bids behind.

"If the New Zealand E & P industry is to prosper, other than on the back of Shell, other players have to contribute. It's up to the other participants to now take it to the next stage."