OPERATIONS

NZ energy sector in flux

LAST week was a big one for the New Zealand energy sector, with the release of the government's annual energy review, the collapse of state-owned coal miner Solid Energy, and Maori activists stepping up their fight against exploration plans by Statoil off the North Island.

The activists, backed by Greenpeace, which holds token shares in the oil company, addressed Statoil's annual shareholder meeting in May, and have since had discussions with the partially Norwegian government-owned oiler.

Activist Mike Smith told Statoil the company had no permission to be in his tribal waters, and he would take the fight to the United Nations.

Statoil holds a 15-year permit to explore 10,000sq.km of the offshore Northland Basin, in water depths below 1000m.

It's a frontier, largely untested area that will be costly to explore, and Statoil may not have the stomach for a protracted fight.

Three of the five Northland tribal groups have officially come out against Statoil's plans, and opposition seems to be growing, with a complaint now filed with the Waitangi Tribunal alleging that the NZ government has violated the Treaty of Waitangi by not consulting the tribes before offering the leases for exploration.

The spat with Statoil comes as NZ has made a concerted effort to invite explorers in, to offset its declining petroleum resources.

The NZ government's Energy in New Zealand 2015 report, prepared by the Ministry of Business, Innovation and Employment, has shown that the Pacific nation's energy mix is changing, but that petroleum exports are still vital to the economy.

"Renewable energy made up 39.5% of New Zealand's total primary energy supply, up 1.3% from the previous year," MBIE's manager of energy and building trends, Bryan Field, said.

"This is the highest contribution on record and places NZ third on this measure internationally, after Iceland and Norway. This was due to strong growth in geothermal electricity generation in 2014."

Also in 2014, electricity consumption returned to growth after three consecutive years of decline.

It was up 1.2% to 39,210 gigawatt hours, largely due to increases from the agriculture, forestry and fishing sectors.

Energy in New Zealand 2015 also shows that the level of proven and probable remaining reserves of oil and gas reduced during 2014 to 115 million barrels, down 17% from the same date the previous year.

The level of 2P remaining reserves of gas as at 1 January 2015 was 2373 petajoules — down 10% from the previous year.

"The biggest factor in the reduction in remaining reserves of oil and gas was production during the year," Field said.

"On the other hand, exploration activity in 2014 was high. All up, a total of 33 wells were drilled in 2014, 22 of which were exploration wells," he added.

Over $2 billion was spent on oil and gas exploration and development in 2014, 30.9% from 2013 — the highest level of expenditure on record.

Despite low oil prices, and a general lack of success in the offshore areas, Energy Minister Simon Bridges said in a statement that there is "serious momentum" building behind the government's oil and gas exploration sector.

"As the world transitions to a low carbon future, energy diversity is the key to achieving energy security, accessibility and affordability, and environmental sustainability," he said.

"This is why this government takes a long-term view, with a mixed and balanced approach where we'll pursue opportunities in both renewable and non-renewable energy."

The government has credited the rise in domestic renewable energy use to the growth in geothermal generation, which is edging out coal.

Earlier this month utility company Genesis Energy said it's on track to shut down its last two coal-fired power plants by December 2018, effectively marking the end of coal power in NZ.

That's the end for Solid, which has suffered from a "perfect storm" of a high dollar and plunging coal prices.

The company went into voluntary administration last week after the company's debts mounted.

Solid, which has also invested in renewal energy and coal seam gas trials, is likely to be broken up and sold.

The NZ government hopes it can continue trading until 2018.

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