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John Pfahlert has spent more time than usual talking up the benefits of petroleum following the Gulf of Mexico disaster is that. David Palmer talks to the face of the industry about balancing his job with his outdoor lifestyle and oil in general.
“My job is to help provide a legislative environment that’s conducive to producing petroleum.” He’s also the shirt in the steam press between two fired-up views of our natural environment: economic resource versus priceless sanctuary. At least the genial Pfahlert has a balanced view. He has worked for the Department of Conservation and is an enthusiastic tramper and touring cyclist with a preference for off-beat destinations. He and his wife Liz cycled 4000 kilometres from Paris to Istanbul a couple of years back (John pictured on tour), and earlier this year spent six weeks climbing mountains and touring in Patagonia. “Being from the West Coast I like cities only in small doses. I much prefer to get out and clomp around in hiking boots in the middle of nowhere. We’re very fortunate in New Zealand to have a quarter of our land area as substantially unmodified landscapes.” He also enjoys a form of aviation that makes little impact on nature; building and flying remote control model aeroplanes: the big old-fashioned gull-wing types. Outside Taranaki our petroleum industry goes generally unnoticed over the sea horizon. So it’s worth reminding ourselves that it’s New Zealand’s third largest export earner, paying more taxes last year than the banking industry. It also directly employs 1500 people. But Pfahlert is willing to face less positive aspects highlighted by the Gulf of Mexico. “There’s a risk you can’t remove. You can minimise it, which I think we’ve done over the past 40-odd years in New Zealand. But the reality is our oil spill response system couldn’t cope with a spill that size. It’s designed around a couple of ships colliding and leaking a thousand tonnes of bunker fuel in sheltered waters. We simply lack the resources to respond to disasters 150 kilometres off-shore in water 1500 metres deep. “But what I tell people is, Boeing doesn’t design airliners to protect people when they crash – they design them to fly, using every possible system to prevent them crashing. The same applies in our industry. We design it to never have a blow-out using a raft of technologies, systems, training, rules and regulations. “Of course you can’t guarantee against human error. But you balance the risk against the benefits. We currently produce an amount equivalent to 50 percent of New Zealand’s petroleum needs.” And the reality is that petroleum will remain an essential commodity for many years to come. Renewable energy is separated from its big future by its current lack of financial competitiveness, while public enthusiasm for electric-powered cars forgets that most of the world’s electricity is generated from a non-renewable resource, namely coal. Renewable energy also costs environmentally, Pfahlert notes. Without petroleum, our annual two percent increase in energy usage would need a new hydroelectric dam every few years, drowning ever more of our natural environment. “And every wind farm gets an appeal to the Environment Court on aesthetic grounds.” He’s confident the oil will last until alternative energy potentials are fully realised. “Many in the industry would agree we’ve probably used half of what’s available. But that doesn’t take into account what might be discovered in deep ocean basins and places that have never been looked at before. The easy oil has been discovered. Which brings a whole bunch of new technical challenges.” The oil industry has been encouraged by the change in government, Pfahlert says. “The previous administration appeared conflicted about whether to develop the sector. I think that while both main parties have a clear focus on renewables, the current government won’t develop them at the expense of petroleum development.” He says the industry welcomes the upcoming proposals for changes to the Crown Minerals Act. “We’re looking forward to some dialogue with the government over improvements but most of it will be just tweaking. The main thing is probably the royalty regime. While the government cut is low by international standards, our remoteness and complex geology ramps up the costs. Anyway last year the government took $985 million in royalties, so they’re not doing too badly.” The industry would like to see some more of the government’s profits go into Crown Minerals to speed up routine processing and add firepower when analysing policy changes. And while welcoming promised increases in geological research funding, Pfahlert says, “I think there could be a more strategic look at how government invests in petroleum research using the intellectual horsepower in universities and the private sector. An additional commitment of $5-10 million per annum would give us a much better understanding of petroleum systems and modify the risk profile for companies investing here.” In the wake of the Gulf of Mexico Pfahlert expects the government to introduce an, “RMA-look-alike outside the 12-mile limit. It will give the public a degree of engagement and require the industry to demonstrate that its activities have no adverse effects on the environment. We’ve no problem with this. “However, we don’t want to have to apply for a resource consent involving public submissions on every individual drilling operation or seismic survey. We would prefer a public consultation process run by the Environmental Protection Authority to establish a set of rules over drilling and survey operations out on the shelf, with companies getting a general clearance when they adhere to those rules.” Pfahlert identifies three issues threatening to impact adversely on the industry. “The government is working on proposals for iwi to have veto over regional council rights to process resource consent, and potentially to leverage what in effect is a royalty from petroleum development. This creates uncertainty around making long-term investment.” With off-shore wells costing $25 million apiece – despite a 90 percent failure rate – consortiums paying out against the odds don’t need extra political costs. Another issue involves bio-security. “MAF wants our drilling rigs cleaned of marine growths before they arrive here. We’d prefer each rig examined before it comes to assess whether there is a risk and avoid unnecessary cleaning. If we’re going to demand that rigs are cleaned before coming to New Zealand then their owners may want them cleaned before they go back, and we don’t have the facilities for that here.” The third issue concerns marine reserves. “We have good cooperation with the Department of Conservation and personally I think conservation groups have a legitimate set of arguments for protecting some coastal resources. But the government has added a whole bunch of marine reserves that will now be closed to exploration.” He points in particular to the proposal to create a marine reserve off the West Coast that will run out to the 12-mile limit. “We have no problems with reserves relatively close to the shoreline. But reserves further out, perhaps encompassing large swathes of continental shelf, will be a problem for us if they are forever closed off to development.” Pfahlert is confident about the future of petroleum development here but counsels against getting carried away by hype. “There are geological structures around New Zealand with the potential for a billion-barrel field, but based on discoveries to date we’re realistically looking at fields in the 50 to 100 million-barrel zone. My personal preference is for steady measured growth.”
Energy NZ Vol.4 No.5 September-October 2010 |
As the sole employee of the Petroleum Exploration and Production Association of New Zealand (PEPANZ), Pfahlert is a public and political advocate for our petroleum industry.