Resources Minister Shane Jones has expressed scepticism about the viability of a liquefied natural gas (LNG) import terminal as a solution to New Zealand’s energy challenges. Instead, he advocates for significant investments in geothermal energy as a more sustainable and robust alternative.
Jones has requested that officials evaluate the decommissioning costs associated with oil and gas assets to determine if New Zealand may have imposed stricter requirements than necessary.
Jones’s comments follow the unintentional disclosure of sensitive information redacted from a regulatory impact statement (RIS) concerning the repeal of the offshore oil and gas ban, which was presented in Parliament.
This document revealed commercially sensitive data: “As of July 2023, the estimated decommissioning costs of our four offshore fields are $2.044 billion and 21 offshore fields are $491.027 million,” the unredacted RIS stated.
Shane Jones has raised concerns about the significant variability in the costs associated with decommissioning oil fields, which can range from approximately $2.145 million to $1.028 billion. This disparity has led him to question whether these costs are excessively high.
He emphasised the need to strike a balance between ensuring that investors are not overwhelmed by financial burdens and preventing situations like the Tamarind imbroglio, where the financial collapse of Tamarind Taranaki left the Tui oil field abandoned and resulted in a cleanup bill for the government estimated at $394 million in 2021.
Jones advocates for a pragmatic approach to environmental issues, suggesting that while it is crucial to mitigate long-term environmental problems, some ecological changes may be acceptable if they allow for sustained access to oil and gas resources. He noted that nature has a way of recovering, stating, “Mother nature will take care of some fish. Barnacles, whelks—something will occupy that space over time.”
Jones also minimised the extent of the government’s commitment regarding the LNG import terminal.
An LNG import terminal would subject New Zealand to global liquefied natural gas prices and could lead to an increase in imports, which may contradict NZ First’s principles of self-sufficiency.
Jones believed that geothermal energy was a viable long-term solution for New Zealand’s energy requirements. This idea gained momentum following the release of a GNS-commissioned report by Castalia.
The report indicated that a geothermal energy source could generate 2000 MW of electricity by 2050. New Zealand is particularly well-positioned to harness geothermal energy, given that it requires temperatures of 373 °C and pressures of 220 bars.
This continuous nature of geothermal energy would ensure a consistent baseload electricity supply, as noted in the report.
According to Jones, geothermal energy would also require huge investment from the government.