Global Processing

New Zealand considers east coast oil and gas operations

March 8, 2013

New Zealand is considering whether to develop an onshore oil and gas industry on the East Coast of the North Island, following a government report looking into the potential benefits, impacts and risks of drilling operations in the region, the New Zealand Herald has reported.

According to the East Coast Oil and Gas Development Study presented by economic development minister Steven Joyce and energy and resources minister Simon Bridges, if sufficient reserves of oil and gas are found in the area this could bring billions of dollars in revenues to the economy and create more than 2,300 jobs.

The study was commissioned by the government to look into the potential benefits of developing oil and gas operations for the country, as well as the possible risks and the overall impact of the industry. Provided that decent reserves were found in the East Coast area, this could have a major effect on the economy, households and businesses not just in the region but in the entire country, Joyce said in a statement on Tuesday.

The report noted that in all cases revenues would be generated through drilling operations, with figures estimated to reach NZ$90 million ($74.5 million) with a small-scale development and NZ$2 billion ($1.66 billion) in a large-scale development. In a large-scale development scenario with abundant reserves, the industry could contribute up to NZ$7.7 billion ($6.37 billion) to national GDP, the report stated.

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According to minister Joyce, oil and gas operations in the area would add between NZ$360 million ($298 million) and NZ$5 billion ($4.14 billion) and are likely to create around 1,000 jobs. About half of the newly created jobs are expected to go to locally based employees but in time the proportion of locally based workers would reach 95 percent, the study found.

Newly developed operations could bring about benefits to the area similar to those in a region like Taranaki, where the oil and gas industry generates NZ$2 billion ($1.66 billion) to annual GDP, supporting more than 5,000 regional jobs.

However, there are critics who oppose the potential development, highlighting the fact that this might harm the environment and pollute waterways. Gisborne councillors are among the people who disagree with the report, claiming that its conclusions are biased and unjustifiably optimistic, ignoring the risks. Manu Caddie, Gisborne district councillor, said that the government is focusing too much on mining and drilling operations instead of looking for more sustainable options to boost the local economy.

A similar view was shared by the Labour Party, which argued that an estimate of between 200 and 2,000 jobs being created sounded as if the government was picking random figures. Moana Mackey, Labour's energy and resources spokeswoman, added that the country has the potential to develop sustainable policies but the government does not have the political will to explore them.