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Petroleum conference reignites oil drilling debate

Published: 8:39PM Thursday September 20, 2012 Source: ONE News

The Government is backing an economic boost from oil and mineral exploration, but the move is controversial.

While New Zealand has a lot of unexplored regions - and the potential to unlock millions in untapped resources - debate is raging about whether the economic benefit outweighs the environmental impact.

"This is a revenue stream for the Government that is very, very large," Earthquake Recovery Minister, Gerry Brownlee told TV One's Close Up.

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"You've got to realise that the world is not going to go away from being a hydrocarbon economy, literally, for decades."

A Government-commissioned report estimates New Zealand could earn an extra $1.5 billion a year with 10 new oil or gasfields.

It says 'black gold' could make New Zealand richer by lifting the country's GDP, but after tax and royalty payments around 90% of the profits will go off-shore.

"It will make a significant difference to New Zealand right now," said David Robinson from the Petroleum Exploration and Producers Association.

"The figure of 90% of the money going off-shore is simply incorrect - 43% of that money comes to New Zealand and that equates to $400 million in royalties and in excess of $300 million in tax.

"That's in excess of $700 million going right into the pockets of Kiwis today, and that's funding all the important things for New Zealand - like the roads, like the schools, like health, like education," said Robinson, who has been fronting a two day petroleum conference in Wellington.

Even environmentalists can't argue with the glossy economic picture oil companies present.

"From a short term economic point of view it's a very, very good thing," said Rick Boven, an economic and environmental strategist.

"But if everyone does this in the world then the consequences for the climate in the long term are bad, and that's bad for our economy and for our environment as well."

Many have been turned off the idea of oil drilling after the devastation wreaked by the 2010 Deep Water Horizon explosion in the Gulf of Mexico, and locally the Rena oil spill when the container ship ran aground on the Astrolabe Reef in October 2011.

"You've got to remember that New Zealand has a vibrant oil and gas industry right now, it's a very significant employer in Taranaki, it's been there for in excess of 100 years, so we've demonstrated our capability to produce oil and gas safely and cleanly here in New Zealand," said Robinson.

"Of course there will always be the residual risk of an incident occurring here in New Zealand, but one has to remember that that is extraordinarily unlikely."

Robinson said the oil industry has made the Taranaki region "absolutely thriving".

"Unemployment rates in Taranaki are 4.5%, if we compare that to Poverty Bay the unemployment rate is closer to 8.5%," he said.

"It is a very, very important part of the Taranaki economy, and that could be lifted and shifted to another part of New Zealand as well."

Describing himself as very much an environmentalist, Robinson said: "The reality simply is that oil and gas are really what is fuelling the world today and it will be quite a number of years - many decades in fact - before it is replaced by some of the new technology.

"Today New Zealand needs an economy that performs, and we need regional jobs for Kiwis - oil and gas could provide that.

"It could also provide the money we need as a nation to invest in some of the science and technology, which New Zealanders are so good at, but at the moment all we see is cuts to science, technology and to education, and to all those important areas.

"Right now the New Zealand economy absolutely needs a boost - we're seeing agriculture perform to the highest level it possibly can, there's only so many more cows we can milk.

"The reality is if we can produce oil and gas from one of these other basins it is real jobs for real Kiwis."

But Boven disputed this, saying New Zealand has the potential to make money from a lot of different areas.

"We have opportunities in many industries - we have opportunities to add value to food, to opportunities in innovation and technology - so we don't have to do this, it's a choice that we can make," he said.

"There are many countries around the world that are thriving economically that don't have oil and gas reserves."

He admitted that the decision on whether to drill for oil and gas was a "very difficult" one, but said he fears it will be made for short term economic reasons.

"I think that it should be made with a full understanding of what the long term implications are, including the long term economic risks from, for example, a binding global climate agreement that might restrict output," he said.

"A lot of that risk is going to be carried by the offshore or capital investors who are going to invest in this, but New Zealand's economy will follow the path that is led by the resources that are available to it.

"If we have cheap oil, for example, which is being touted here, then we will have an oil-based economy. If the world decides to change direction and actually protect itself against climate risk, then we become exposed as a result of that."

However, the Government has already found the path to oil has been blocked by loud and active protests.

Local iwi and green groups fought a high profile campaign - even taking to the seas - in a bid to stop Brazilian oil company Petrobras, when it began exploration in the Raukumara Basin.

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