Marsden Point operated as New Zealand’s only oil refinery for nearly 60 years.
At its peak in the 1980s, it employed about 1700 people. When it was closed in 2022, nearly 240 people lost their jobs.
The site, now run by Channel Infrastructure, operates as New Zealand’s largest fuels import terminal, storing and distributing 40% of the country’s fuel.
In recent weeks, a slew of ministers have visited. NZ First has floated the idea of introducing New Zealand’s first Special Economic Zone (SEZ) to help pump investment into the site and life into the Northland economy.
Ralph Sims, Massey University Professor Emeritus of Sustainable Energy and Climate Mitigation, told The Front Page that, for years, the International Air Transport Association, of which Air New Zealand is a member, has looked at sustainable aviation fuels.
“Marsden Point could be a world-leading centre for producing sustainable aviation fuels.”
Channel Infrastructure chief executive Rob Buchanan told The Front Page that sustainable aviation fuel could flow through its infrastructure today.
“So, as that industry transitions from fossil jet to sustainable aviation fuel over the next 20 to 30 years, that product can come straight through the Marsden Point import terminal system like it can today.
“One of the unique features of our location at Marsden Point, and actually it’s a function of our history, is we’ve got a very large landholding which is consented for at least the next 35 years for fuel manufacture. So, one of the significant opportunities that we’re exploring is renewable fuels manufacturing on our site.”
There was a range of decommissioned refinery assets and tanks available for fuel storage, he said.
“One of the projects we’re working on with a consortium of international investors is indeed repurposing some of the old refinery assets for biofuels production in New Zealand.”
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In 1964, Prime Minister Keith Holyoake opened Marsden Point, heralding in a “new energy era”.
Its construction began two years earlier, with contractor Bechtel finishing it for £10 million. According to the Reserve Bank’s inflation calculator, that’s more than $556m today.
Within just three years, expansion was on the horizon. But it wasn’t until 1973 that a $160m project was approved.
In the mid-1980s, the refinery expanded and upgraded to allow for increased production. Extra tanks, utility supplies, and environmental treatment units were added, along with a 170km pipeline between Marsden Point and Wiri, South Auckland.
In 1988, the introduction of the Petroleum Sector Reform Act saw the energy industry deregulated.
The company and its shareholders decided overwhelmingly to close the refining operation.
Despite some community opposition, it ceased activity in 2022. The Cabinet noted that the closure of the refinery was expected to have “little impact on fuel supply resilience under most disruption scenarios”.
The privately owned Marsden Point was New Zealand’s only fuel refinery until it was decommissioned in 2022. It would instead become an import-only fuel terminal under the name Channel Infrastructure, a publicly listed company.
Some 3.4 billion litres of already-refined fuel pass through the facility each year – equal to 40% of New Zealand’s total petrol and diesel demand and 80% of total jet fuel demand.
The company has been earning more from its import-only operation, last year announcing a half-year profit of $16.6m, an increase on the previous year of 45%.
Last year, Channel Infrastructure commissioned an independent assessment of the “capital cost of recommissioning a refinery”.
It was found that the cost would be in the range of NZ$4.9 billion to NZ$7.3b. Resources Minister Shane Jones admitted the figure was too steep, calling it a “stupendous” amount of money.
The Government’s Fuel Security Study has noted that re-establishing the Marsden Point oil refinery or developing a new one would be inefficient, because of either its high costs and/or limited effectiveness.
New Zealand First’s Winston Peters and Shane Jones announced earlier this month that the Marsden Point Rail Link design would be open for discussions with investors and potential builders.
The link, estimated to cost at least $300m, would provide rail to Marsden Point and Northport.
It’s all while Channel Infrastructure pushes ahead with its own development plans. A refurbished fuel tank collaboration with Z Energy, for example, is designed to store an additional 30 million litres of fuel.
The company is investing up to $30m over two years for the tank and other developments planned for Marsden Point, including a bio-refinery.
Dubbed the Marsden Point Energy Precinct Concept, it forecasts that an additional 2.5 billion litres of jet fuel would flow through over the next 26 years.
“We’ve got the ability to store more fuel,” Buchanan said. “We’ve got the ability to manufacture biofuels at Marsden Point, noting the feedstock for biofuels is domestic, so we aren’t subject to the geopolitical risks that come with international shipping.
“We think it’s a real opportunity for an energy security play for New Zealand in a world which is quickly becoming more geopolitically contested.”
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting, who joined NZME in 2016.
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