Boost for oil and gas exploration

Acting Minister of Energy and Resources Hekia Parata said the Government's goal was to make the most of New Zealand's abundant energy resources including hydro, wind, geothermal, oil, gas and minerals. Photo / Thinkstock

The Government revealed further steps to boost oil and gas exploration as it released its Energy Strategy 2011 yesterday including law changes to allow for extraction of unconventional energy sources such as offshore "fire ice" deposits.

Acting Minister of Energy and Resources Hekia Parata said the Government's goal was to make the most of New Zealand's abundant energy resources including hydro, wind, geothermal, oil, gas and minerals.

Parata also released an independent report assessing New Zealand's oil and gas potential which estimated the Government could earn more than $3 billion in royalties from oil and gas fields already in production, which undiscovered fields could quadruple to $12.7 billion.

Parata said the Government was also seeking public submissions on changes to the way permits are issued for oil and gas exploration, to "streamline" the process for all parties including iwi and other community groups.

The issue came to a head this year when the Government granted Brazil's Petrobras an exploration permit for an area off East Cape without consulting local iwi.

In addition, Parata said the Government was also reviewing the Crown Minerals Act and was seeking public input on changes for which it hoped to pass legislation next year.

Those changes will include clarification of how new technologies such as underground gas storage, underground coal gasification and exploration for methane hydrate or "fire ice" deposits in offshore waters are managed under the act.

Methane hydrates or "fire ice" is methane gas locked in icy deposits at low temperature and high pressure under the ocean floor.

New Zealand has some of the most abundant deposits in the world off the east coast of the North Island and off the south coast of Fiordland.

Commercially viable extraction of a fraction of those deposits - likely to involve melting them by injecting water and chemicals into wells - could provide the country with more than enough gas for decades.

The Government appears serious about exploring the resource and two years ago asked Aberdeen University of Petroleum Engineering Consultants to consider the economics of methane hydrate extraction in a report on this country's petroleum exploration laws and regulations.

Japan is leading development of methane hydrate extraction techniques but has not yet begun commercial operations.

Potential environmental hazards include seabed subsidence and landslides, potentially contaminated wastewater and the inadvertent release of methane into the atmosphere where it is a potent greenhouse gas.

The announcement of the strategy comes just a few days after Environment Minister Nick Smith announced a new regime under which environmental and other issues around deep water oil and gas exploration in New Zealand's offshore exclusive economic zone and continental shelf would be managed.

Parata said fossil fuels would continue to play an important role in the global economy, and New Zealand was no exception.

"We can't just turn off the tap in our journey to a lower carbon economy.

"We also can't ignore the major economic opportunity that continuing global oil demand could provide New Zealand."