Venture Taranaki has joined in on the fracking debate, releasing a study that forecasts billions of dollars and thousands of jobs over the next decade if fracking is allowed to continue.
The economic development agency and Wellington-based economic analysis company Berl have developed a report on the economic impact of the fracking of onshore oil and gas wells in New Zealand.
The report presents three fracking scenarios covering the consequences of the practice being banned, allowed to continue as now, or expanded into emerging areas of exploration including coal-seam gas and shale oil.
Yesterday a VT contingent travelled to Wellington to report the study's findings to Treasury, the Minister of Energy and the Ministry of Business, Innovation and Employment. Today, the findings are published exclusively in the Taranaki Daily News.
At a time when anti-fossil fuel activists and environmental campaigners are calling for a moratorium on fracking in New Zealand, the new study evaluates its worth to the New Zealand economy.
It claims fracking has the potential to annually deliver almost $800 million in GDP and create more than 7000 jobs under a growth scenario over the next 10 years.
But if a moratorium is introduced and fracking is banned, the GDP would reduce to $215 million and create fewer than 2000 jobs.
"In an industry where a single well strike can add $1 billion onto the nation's balance sheet, the value in optimising the productivity of existing wells cannot be underestimated," the report says.
The report criticises perceptions that profits from oil and gas activity in New Zealand disappear offshore or into a central royalties fund, that it employs few New Zealanders, and that the nation does not benefit. "This simply isn't the case.
"The economic rewards from oil and gas extend far beyond royalties. The value that could be added by fracking lies in jobs, innovation, added-value manufacturing, regional growth, and greater energy security for our national economy."
New Zealand's base-load domestic energy demand is 160 to 170 petajoules a year.
By 2018 the country is forecast to experience a shortfall between demand and supply, which will require either increased imports, new discoveries, and/or embracing new technologies that will enable the extension of existing fields.
"Fracking is one of those technologies, and can help New Zealand meet the energy demands of current and future generations," the report says.
Whatever the future holds for fracking in New Zealand, it is critical a view is taken that balances risk and reward, Venture Taranaki chief executive Stuart Trundle said.
"This report informs the national debate and quantifies for the first time the economic benefits that new technologies can deliver in helping to unlock the wealth beneath our feet.
‘In doing so New Zealand will move closer to fully and safely optimising our natural resources, which will benefit not just current but future generations."
OIL INDUSTRY 'GAME-CHANGER'
The oil and gas industry has the potential to be New Zealand's economic game-changer, New Plymouth MP Jonathan Young said yesterday.
After sitting through a presentation on Venture Taranaki's report at Parliament, he said its contents were robust and added vitally needed information to the national debate on fracking.
"It's also interesting that today the Taranaki Daily News editorialised on the suggestion that the community might need to be approached for hospital service funding because district health boards are so badly in debt," he said.
"We all know that each week New Zealand is borrowing money from overseas. New Zealanders need to realise that the oil and gas sector and its future development has the potential to be the financial game-changer that could allow us to do such things as provide extra funding for hospitals.
"Let's not be mistaken that we might get that extra funding simply by printing money."
Energy and Resources Minister Phil Heatley said the report made it obvious the oil and gas industry was doing for Taranaki exactly what the dairy industry was doing - contributing to a healthy regional economy.
"I would love to see other regions experience the same economic boost, and fracking is one of the technologies than can allow that to happen," he said.
"But I'm aligning with the Parliamentary Commissioner for the Environment in her opinion that proper regulation and environmental management has to keep pace with these technologies."
FRACKING FORECAST TO BE CRITICAL TO OIL, GAS PRODUCTION IN FUTURE
Fracking has been responsible for the viability, extension and improved yield of a number of onshore wells in Taranaki, the Venture Taranaki report on the economic impact of the controversial procedure says.
It has provided confidence in the supply of natural gas that has resulted in significant new investment in the region.
"Indeed, an increasing proportion of natural gas production is as a result of fracking of existing wells in existing fields rather than the introduction of new production wells or fields," the report adds.
Pointing out that between 1989 and mid-2011 a total of 65 fracks were undertaken on 39 wells across 13 onshore Taranaki fields, it forecasts that fracking will be critical to sustaining and growing gas and oil production not only in Taranaki, but all of New Zealand.
Natural gas plays a crucial role in New Zealand's energy supply, the report says.
"While industry can substitute other forms of energy into their process - albeit likely at higher cost - ensuring continuous electricity generation is dependent on the on-demand supply of peaking electricity that gas can provide.
"With current gas reserves falling, it is important that new sources of gas are developed to ensure the on-demand electricity can continue to be generated in periods of low renewable output."
The VT report adds that the role of gas in terms of export growth and added-value manufacturing should not be underestimated.
"Natural gas is a feedstock into methanol production. Methanex is a major New Zealand exporter, contributing around $300 million to New Zealand's exports," the report says.
"With access to the necessary gas at the appropriate price, Methanex's exports can potentially exceed $1 billion."
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