Oil strike could be worth $600m
A controversial oil exploration on the East Coast of the North Island could pump at least $600 million into the country's economy.
The joint-venture of Canadian companies TAG Oil and Apache Corp is set to pay 5 per cent of the value of every barrel of oil it sources from its New Zealand acreage.
Should they fulfil their stated potential of extracting 12 billion barrels from the land – which includes sprawling rural sections in the East Coast, Poverty Bay and Hawke's Bay – the strike would be worth $600 million to the country.
No estimates for the lifetime of the oil field have been given.
TAG has stated that up to 95 per cent of the oil would have to be sourced via "unconventional" methods – namely the controversial technique of fracking, a technique involving pumping water and chemicals under high-pressure underground to fracture rocks and force out gas and oil resources. Opponents claim it increases seismic instability and threatens water sources with chemical pollution.
One of the biggest opponents of the government's exploration policies, Green Party energy spokesman Gareth Hughes, says no price tag is "worth the risk".
"We need to protect our environment and protect our people from potential health risks," Hughes told the Sunday Star-Times. "We know fracking overseas has been implicated in air pollution, water pollution and there is a potential link with earthquakes. It is not worth it.
"The government has this `drill it, mine it' approach to economic development ... we are being put at risk by these technologies and it is Kiwis who will pay the costs.
"The profits, the jobs, the royalties, the taxes – hardly any of that is going to come to New Zealand."
Energy and Resources Minister Phil Heatley told the Star-Times last weekend that he wasn't "aware of any reason" to stop energy companies from fracking in New Zealand.
It followed confirmation that three local bodies – the Kaikoura District, Christchurch City and Selwyn District councils – had called for a government moratorium on the practice pending full investigation of potential risks.
On Wednesday, a GNS Science study – commissioned by the Taranaki Regional Council – was released stating there was "no evidence" fracking in Taranaki had resulted in seismic activity in the region.
Fracking involves fracturing rock formations by pumping liquids thousands of metres under the earth's surface. It has been happening in Taranaki since 2000.
Despite Heatley's assurance that fracking was safe, Hughes said the government's approach left a lot to be desired.
"Heatley needs to get his head out of the sand," Hughes said.
"Numerous states and countries have banned, or placed moratoriums on, fracking.
"They have obviously found reasons why they need to act precautionary ... Heatley should do the same.
"I think he has been blinded by visions of drilling and mining New Zealand."
Hughes urged the government to ditch the "drill it, mine it" approach and instead properly investigate alternatives such as renewable energy.
The joint venture between TAG and Apache covers nearly 700,000ha of land on the East Coast of the North Island.
In a letter to investors, TAG chief executive Garth Johnson wrote of the company's 2012 goals: "We will continue to execute our strategic growth plan by continuing to build reserves and cash flow in our lower-risk ventures in Taranaki, while working towards the big prize of commercialising the East Coast Basin in the coming months and years."
The company would adopt "an aggressive drilling campaign".
Sunday Star Times