New Zealand’s Potential for Oil Independence in an Uncertain World

Ever since United States oil production peaked in the 1970s there has been debate about the ability of North America to become self reliant by producing all its own oil. Fast forward forty years and this conversation is still taking place and the U.S. is still no closer to oil independence. So what about New Zealand? Could we possibly provide for our own oil needs in the coming years?

I would like to state outright that I carry out this exercise purely as a thought exercise. I don’t believe there is much likelihood of New Zealand becoming oil independent. Even if it was possible in energy terms, the political outfall would make it extremely difficult to implement. We are an exporting nation and part of our trade agreements with other countries rely on us accepting their imports and oil is a huge part of this. It is also highly unlikely that we could produce and refine all out own oil and produce oil derived products at rates cheaper than that imported.

New Zealand imports 50.4 million barrels per year (2009) which accounts for 92% of domestic use. We produce 22 million barrels of oil per year (2010) and export 17.2 million barrels of oil per year (2009).  It is clear that current domestic production would have to increase massively in order to insulate New Zealand from global fluctuations in crude oil prices.

Crude oil is refined at Marsden Point in Whitianga. About 90% of the feedstock comes from overseas and 10% is local crude produced as a by-product of gas production at Kapuni. Roughly 32 million barrels of oil are refined every year. One pipeline carries aviation fuel to Auckland Airport and a 170km pipeline runs to the Wiri depot in South Auckland. The Wiri terminal is the largest storage depot in New Zealand, jointly controlled by the four major oil companies, Mobil, Caltex, Shell and BP. Gull built its own private depot in Mount Maunganui in 1999.

The majority of New Zealand exploration and production has been carried out in the Taranaki Basin. This began in the 1950’s and the two biggest oil fields currently producing are the Tui and Maari fields.  The Taranaki Basin is now in declining production and is expected to produce another 171 million barrels of oil according to New Zealand Petroleum and Minerals, a subsidiary of the Ministry For Economic Development. At 2010 consumption rates of 54.6 million barrels of oil per year New Zealand would exhaust this supply within three years. This is clearly not a feasible option for long term energy independence. TAG Oil however believes there is 600 million barrels of proven reserves left in Taranaki and this has the potential to give us eleven years at 2010 consumption rates.

Elsewhere in New Zealand limited exploration has occurred in the East Coast Basin, Canterbury Basin and the Great South Basin. Currently the most promising area is the East Coast Basin. Two fields, one north of Gisborne and one between Napier and Danneverke are currently being explored. TAG Oil believes there is an undiscovered resource potential of 12.65 billion barrels of unconventional original oil in place (OOIP) and 1.74 billion barrels of conventional OOIP. The potential recovery rates of 12% are similar to that of the North Dakota Bakken deposit in the United States. This means roughly 1.52 billion barrels of unconventional oil and 182 million barrels of conventional oil are thought to be recoverable from this area.

Being generous and assuming TAG Oil’s estimates are correct there are currently 2.3 billion barrels of recoverable oil from both the Taranaki and East Coast Basin. This would give us another forty-two years before these fields ran dry at 2010 consumption. If we expect our economy to grow however we would assume that our oil consumption would grow each year and so it is likely we would require far more oil during this time period.

It is clear that with current known discoveries New Zealand has no chance of being oil dependent. Our reliance on oil leaves us open to the whim of the market and we can see that affecting us with record high petrol prices seen at the pump recently. An increasing number of New Zealanders can no longer afford the lifestyles they have come to expect and we see that with reports of people staying at home during the Easter holiday break.

It is time for the National government to get real on providing sustainable transport alternatives for all New Zealanders. The time of low petrol prices is over and all indicators point to the situation only getting worse in the coming years.

http://www.southernlimitsnz.com/2012/04/new-zealands-potential-for-oil.html