Oil Has Potential To Lift NZ To Be Another Norway
April 30th, 2008
Ian Templeton at Parliament
• Production to have “profound” effect.
• Energy sector shining in the gloom.
• NZ set to be self-sufficient by 2009.
NZ’s oil production, moving into a new phase when the $500m Maari and $1.1bn Kupe projects come on stream, is expected to have a “profound, positive” impact on the NZ economy. When oil exports from Maari join those from Tui, they will provide a cashflow equal to half the dairy industry (currently NZ’s biggest export earner).
The giant floating production, storage and off take (FPSO) vessel Raroa arrived at Wellington at the weekend, and is due to be anchored near the Maari wells, which are expected to produce about 35,000 barrels a day. Meanwhile delivery performance from the Tui Area wells is significantly exceeding pre-development predictions, with 10.5m barrels produced to the end of March. With the light, sweet crude earning an average $US91 a barrel of over the period, it has boosted NZ’s export receipts by close to $1.4bn since the wells started producing last July.
US investment manager William J Buechler says NZ is likely to become 100% energy self-sufficient by 2009, a rapid rise from being 17% self-sufficient in 2006. He compares NZ with Norway (both have similar populations of 4m). Norway’s oil and gas wealth boosted GDP per person by 288% to $US80,000 over the past 15 years, so in 2007 it was No 2 in the world. The oil effect in NZ has the potential over the next 15 years to lift the NZ economy to a similar place as Norway. Buechler says oil production from Tui and Maari is not huge by international standards, but the exploration in Taranaki and the Great South Basin, along with stirring activity in other basins, clearly underlines exploration efforts have barely scratched the surface of NZ’s oil potential. Last week Crown Minerals division of the Ministry of Economic Development announced South Korean industrial giant Hyundai is joining the hunt for oil and gas in the deepwater Taranaki Basin, signing a contract to participate in the exploration permit held by Global Resource Holdings.
Since it was awarded the permit in late 2005, Global Resources has commissioned geological studies by GNS Science to evaluate the potential of the basin. The work attracted international interest which has resulted in Hyundai Hysco deciding to enter exploration in NZ. Global describes it as a “landmark” deal. “We are looking seriously for 1bn barrels,” says Global chief, Randall Thompson.
The Maari project which is being developed by the Austrian-based oil company OMV and partners (including NZ’s Todd Energy), is said to have reserves of 50m barrels of oil, worth more than $7bn at current prices. Besides the oil produced from Maari and Tui, there will be “significant” output of fluids from Kupe (both condensate and LPG) which on present prices could outweigh the value of the gas being produced from the field. NZ can now reap the benefit of high international oil prices. Even though motorists may complain about “pain at the pump” the outlook in the long term is oil could produce the leap in living standards which Norwegians have experienced.
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