Govt told to change how gas dollars spent

The Government is being told that if it wants to gain greater acceptance for the oil and gas industry it needs to  change the way it spends the $400 million in annual royalties from the sector.

A "petroleum summit" being held in Wellington was also told companies in the industry needed to make a much bigger effort to build relationships and trust in the areas where they worked.

Brian Small, an owner-director of public affairs firm Busby Ramshaw Grice said there was potentially a gap between public nervousness about the industry, and the way the sector saw its future.

Politicians needed to look at new investment strategies using the royalties from oil and gas.

"It's being used at the moment  to pay for the groceries, but it's my strong belief that policy development in that area could make a great difference to New Zealanders' acceptance of potential growth in this industry," Small said.

City dwellers might accept a trade-off if the royalties were reinvested in "future proofing" such as investment funds and renewable energy. That would recognise the royalties came from resources that were extracted only once.

Small also pointed to the experience of Brazilian company Petrobras as a "very unfortunate" example of problems for new companies coming into the industry in this country.

"It was allowed to come in, in my view far too cold and far too fast without the necessary groundwork being done in the community," he said.

"If the Government seriously wants to build up this industry, and seriously wants to take the revenue and tax income from it, then it needs to work harder to pave the way for companies to go into other areas apart from Taranaki." Companies needed to work equally hard.

Petrobras ran into opposition after gaining an exploration licence covering a large area in the Raukumara Basin, offshore from East Cape.

Taranaki Regional Council chief executive Basil Chamberlain noted that "sadly" none of the royalties from the oil and gas extracted in his region went specifically to the area.

"Which is something we think needs to change a little," he said.

Taranaki was home to all oil and gas being produced in New Zealand, with 20 fields in production, and 20 to 30 wells drilled annually  for the past several years. It was also home to substantial gas-based petrochemical manufacturing and electricity generation.

The economic benefit of oil and gas was "hugely significant" for the region, while the industry had a dedicated focus on compliance with environmental requirements.

Chamberlain also entered the hydraulic fracturing debate, saying extensive monitoring and investigation of the technique in Taranaki was not turning up any significant issues.

"For Taranaki to date, let me be clear, there is no evidence of any substantial adverse environmental impacts directly arising from hydraulic fracturing activities. Without wishing to provide too blunt an analogy, we have a few people crying foul murder, but no dead bodies can be found and no missing persons reported."

The council was confident hydraulic fracturing could and would be managed effectively with minimal risk to the environment, for the benefit of New Zealand.

Hydraulic fracturing was not especially new, but its more sophisticated and widespread use, along with other advancements was revolutionising the industry. It was "a seriously big economic deal, and it's also a game changer for New Zealand, as for numerous other countries", Chamberlain said.

Gisborne District Council environment and policy group manager Hans van Kregten said there was a need for an economic game breaker on the East Coast. But many people were concerned that any benefits from oil and gas would be short term and residents in the area would only get crumbs.

The Taranaki example showed it could be different, but the evidence for that needed to be provided.