"There's no point being sentimental about it, owning an oil refinery is nice to have, but the world has changed and the status quo is not an option". So goes the conversation that has emerged in the past six months about the future of New Zealand's only oil refinery.
I want to acknowledge that sentiment as the brutal facts of the current reality are confronted. During the past 60 years the establishment, expansion and continued operation of the Marsden Point refinery has been a significant part of the developing fabric of Whangārei.
The refinery produces 85 per cent of our jet fuel, 67 per cent of our diesel, 58 per cent of our petrol, around 80 per cent of our bitumen, all fuel oil for ships as well as sulphur for fertiliser and CO2 for carbonated drinks. It employs about 400 highly paid staff, 150 other contractors and it contributes around 8 per cent of Northland's GDP. Covid has put a hold on that.
Around 50 per cent of the fuel goes to Auckland, at up to 400,000 litres per hour, through a 170km long pipeline. Most of the rest goes round the country by ship.New Zealand largely functions on the basis of Refining NZ products. The fuel we use and the roads we ride on come from the Marsden Point refinery. It is a significant strategic asset. Anything untoward happening to disrupt production or distribution has potential consequences for our whole transportation infrastructure.
The idea of becoming nationally independent in refined oil products started in the 1950s. After heavy local lobbying, the Marsden Point site was chosen and the refinery was opened in 1964.
It was operated as a public company with major oil companies owning about two thirds of the shares and domestic investors the remainder. The price of fuel and refinery margins were government-controlled. Whangārei had good economic times around the initial construction.
The oil price shocks and carless days of the 70s were the catalyst for further expansion of the refinery under the Muldoon Government's "Think Big" energy projects in 1980.
An initial $320m estimate became a $1.84 billion project employing up to 5000 people on site. It was the country's largest construction site and an industrial relations nightmare. Significant strike action during the project led to the Refinery Expansion Project Disputes Act being enacted. The project was eventually completed in 1986, two years behind schedule with taxpayers footing the bill.
A further $300m expansion and upgrade occurred about five years ago enabling an increased capability to supply a higher proportion of NZ's petroleum products.
Whangārei was a significant beneficiary of the expansion. About 5000 well-paid people created a retail bonanza with business and new housing booming. A natural gas pipeline north, was heavily and successfully lobbied for by Northland Chamber of Commerce and local business, to be incorporated with the oil pipeline south.
As well, a community development levy of $5m was levied against the expansion and many Whangārei community facilities benefited from their share of this.
Whangārei still has a very sentimental attachment to Refining NZ with its historic and continued contribution to the community.
It was against this background that the AA Northland and district council received commentary from AA Petrolwatch spokesman Mark Stockdale, about the future of Marsden Point refinery.
"Having a domestic refinery is a 'nice to have', but it does mean fuel refined in NZ costs about three cents per litre more than importing it from massive state-of-the-art refineries in Asia. The question becomes, how much is it worth to have a domestic source?" Mark asks.
"In terms of the risk of some global supply interruption, that's more likely for oil - where the supply chain is longer and more volatile - than it is for refined fuel. So we're unlikely to be worse off.
"The refinery's extensive tank infrastructure could still be used to store more refined fuel. It has a direct pipeline to Auckland, which is much cheaper than shipping or trucking the fuel.
"It would mean we have more fuel in storage if there was a temporary supply interruption. Australia now imports the majority of its refined fuel with a number of mothballed refineries being converted into import terminals."
It appears that the writing is on the wall for the Marsden Point refinery, but it wasn't just Covid that put it there. The world has changed and the outcome of a strategic review is shortly to be announced.
Four options have been on the table, but all will involve change. It will be a difficult day for Northland because the status quo is not an option.
• John Williamson is chairman of Roadsafe Northland and Northland Road Safety Trust, a former national councillor for NZ Automobile Association and former Whangārei District Council member.