The risk and reward of offshore mining

What are the risks and rewards in looking for new oil and gas fields off the coast of Te Waipounamu? Kaituhi Mark Revington reports.

Early in 2013 Simon Bridges, the Minister of Energy and Resources, was welcomed on to Takahanga Marae in Kaikōura along with representatives from Anadarko, the Texas-based oil exploration company.

The Minister and Anadarko had been invited there by Te Rūnanga o Kaikōura, to talk about their plans to explore for oil in the Pegasus Basin, roughly 170 km offshore. They probably thought they were walking into a lion’s den. They were nervous, says Tā Mark Solomon, wearing his hat as chair of Te Rūnanga o Kaikōura.

“I invited Anardako, who have the block off our shore, to present to us along with the ministry. It would be fair to say they tried to restrict who we had on the marae. My response was you do not tell the tangata whenua who they have on their marae. Only we can do that. We know how to run a meeting; we will control the meeting.

“They came, incredibly nervous, both the ministry and Anardarko. They answered what questions we put within the confines of time available, and followed up with written answers to the questions that weren’t answered on the day.”

Despite the full-scale charm offensive, many Ngāti Kuri weren’t convinced that any seismic surveys or exploratory drilling would be safe, or that the whales which have made Kaikōura famous as a tourist destination in recent years would be safe.

Kaikōura would take all the risk and get none of the benefit, Tā Mark told the men from the ministry. It was a town with an economy based on environmental tourism, and any potential accident or oil spill would spell disaster.

The men from the ministry, and the Crown’s various regulatory authorities involved in deep sea oil and gas exploration, have been back to Kaikōura but many aren’t convinced by the risk reward scenario they paint.

“I asked for the meeting with Anadarko and they wanted upfront dialogue with the community,” says Tā Mark. “I have no issue with them. I can’t fault their willingness.

“But we don’t believe the New Zealand Government has policies in place to protect us from a spill; nor do we believe New Zealand as a nation has the resources. We’re being used in many ways as an experiment, and as Anadarko admitted on television, it would take a fortnight to get equipment here.

“Our opposition is about the government not having the processes to be able to address a spill. The Minister, Simon Bridges, was on television talking about our response boats — three 11-metre aluminium boats! If you look at the (BP) Gulf of Mexico spill, they had over 100 ships trying to contain that. They failed miserably. What are we going to do with three aluminium dinghies? We would have to rely on an international response because we only have capability for lesser scale port events.”

Some months later, Kāti Huirapa Rūnaka ki Puketeraki hosted a Ngāi Tahu wānanga to present an overview of existing and proposed mining and exploration.

The wānanga included presentations from the Ministry for the Environment, the Environmental Protection Agency, New Zealand Petroleum & Minerals, the Department of Conservation, Maritime New Zealand, the Petroleum Exploration and Production Association of New Zealand, and the Parliamentary Commissioner for the Environment, Jan Wright.

Those at the wānanga also heard the story of the Tui Mine Restoration Project which saw restoration of the Tui Mine on Mt Te Aroha at a cost of $20 million. It was a reminder that good outcomes can be achieved through collaboration, and also of the environmental disasters that can occur.

Proponents of the government’s strategy of encouraging oil and gas exploration point to the potential economic benefits. The Taranaki Basin, which covers an area of around 330,000  km, has been the main focus for oil and gas discoveries, with production starting in the late 1950s and more than 400 exploration and production wells drilled, both onshore and offshore. Find another Taranaki Basin, and the economy would get a $2.1 billion boost with an extra 5500 jobs, according to exploration enthusiasts. Opponents point to the risk,  say the focus on oil and gas exploration is short-sighted, and point to climate change as one pressing reason why the world needs to stop burning fossil fuels.

Therein lies the conundrum. The world appears unlikely to run out of oil any time soon because the industry keeps developing innovative ways to access deposits, and the rest of us keep on driving our cars and jumping on planes.

There were 500 deep water wells in 2012, but that is expected to more than double by 2020 to 1250 deep water wells, according to Halliburton Senior Business Development Manager John Warren, who was a keynote speaker at New Zealand’s annual petroleum conference this year.

Deep water drilling is opening up access to new reserves, while on land, the development of the controversial practice of fracking has allowed access to new reserves of oil and gas. A recent cover story in The Atlantic asked: “What if we never run out of oil?”

The International Energy Agency predicts that the United States will be pretty much self-sufficient in petroleum by 2035, due to advances in exploration and production through fracking.

New Zealand’s oil, gas, and mineral resources are managed by New Zealand Petroleum and Minerals (NZP&M), which is tasked with maximising gains to New Zealand from the development of mineral resources.

It believes the Taranaki Basin is under-explored, with “considerable potential for further discoveries”. The rest of New Zealand is severely under-explored, according to NZP&M, but test drilling to date suggests “considerable potential for commercial hydrocarbon discoveries under New Zealand’s largely untouched seabed”.

But any drilling will be at depths far greater than before. In Kaikōura, they are worried about the effect of seismic surveys on the whale watch companies, the effect of any drilling on the coastal environment, and peoples’ ability to collect kaimoana (seafood) if there is a disaster of the type seen with the Deepwater Horizon rig, in the 2010 BP oil spill in the Gulf of Mexico.

Oil industry experts say any similar incident is extremely unlikely due to tighter regulations and the lessons learned from the Deepwater Horizon event. An explosion on that rig caused a blowout which killed 11 crewmen and started a fire which couldn’t be put out. The rig eventually sank, leaving the well gushing at the seabed. Since then, massive capping stacks have been invented to stop oil gushing from undersea wells.

Essentially the position of the Minister, Simon Bridges, his experts, and the industry is, “trust us. We don’t want a disaster and we’re taking all necessary steps to make sure it won’t happen”. It came through clearly in a fiery interview on Campbell Live between Bridges and John Campbell. The chances of a spill are statistically small, says the Minister, due to the vigilance of his officials and the industry. Critics say the country and communities like Kaikōura should not have to live with that risk.

The position of Te Rūnanga o Ngāi Tahu is to respect the wishes of papatipu rūnanga, although both proponents and opponents of the government’s exploration programme want Ngāi Tahu to be the big stick on their side. Work has begun, following the hui at Puketeraki, to bring papatipu rūnanga together to establish a cohesive approach to the kaupapa that can help Ngāi Tahu employ that stick more effectively.

So far Te Rūnanga o Kaikōura remains opposed to any form of offshore exploration within its rohe. Moeraki is taking a different stance, says David Higgins, Upoko Rūnaka and the rūnanga’s TRoNT representative.

New Zealand Oil & Gas, which holds a permit for exploration off the northern Otago coast , has met rūnanga representatives, he says. “The company has been proactive in seeking the support of tangata whenua and they have spoken with Waihao and Moeraki, although Moeraki is closer to the exploration area.”

The company has been upfront with information, he says, and in return Moeraki has produced a list of expectations and conditions, which includes the distance to be kept from marine mammals during seismic surveys.

David says the expectation of Moeraki are similar in many ways to Kaikōura, but the rūnanga is taking a pragmatic stance in attempting to work with the exploration company to mitigate any possible risks.

“We had a good look at the example of Kaikoura, and included all their points in the list of expectations and conditions we provided to the company. We are being very pragmatic. We want the best deal we can get for the rūnanga and the North Otago community.”

Amazon eco – warrior

For a lesson in the pitfalls of mineral extraction for indigenous people, talk to Atossa Soltani, who, as the latest Hillary Laureate, recently spent a week as a guest of Ngāi Tahu. She is founder and director of Amazon Watch. She is also sometimes called “the Erin Brokovich of the Amazon”, a reference to a successful lawsuit Amazon Watch led against oil company Chevron on behalf of 30,000 indigenous Ecuadorians. The lawsuit asked that Chevron be held accountable for the dumping of billions of gallons of crude waste that left an environmental disaster in the Amazon. An Ecuadorian court agreed and ordered Chevron to pay US$9 billion to clean up the contamination, and another US$9 billion in damages. Chevron has since appealed and accused Amazon Watch of attempting to defraud the company.

Soltani says she first felt a calling to help save the Amazon rainforests in the 1980s. She began working for the Rainforest Action Network and then founded Amazon Watch. Her battle to save the rainforests, which are often called “the lungs of the planet”, has taken her into shareholder meetings with Amazon chiefs in full native costume, and into Brazil with Avatar director James Cameron.

The strength of Amazon Watch is in building alliances, she says. “It has taken a commitment to listen, a commitment to be patient, and a commitment to build alliances over time. Often indigenous communities I work with, they set the agenda, they decide what their vision is, and then give us the mandate. We facilitate.

“Every year I march into shareholder meetings of the major oil companies with Amazon chiefs in traditional regalia. Often these community leaders are incredibly clear and eloquent in articulating the paradigm war that is going on between the indigenous vision of what is development and wealth, and the pursuit of wealth through exploitation of resources.

“Of course there will always be some fossil fuel consumption, but the level at which we are consuming cannot be sustained. Most of the remaining resources of fossil fuel, whether oil, gas, or coal, need to stay underground in perpetuity if we don’t want to send the climate into chaos.

“According to the International Energy Agency, we can’t even afford to burn two thirds of the remaining oil, gas and coal reserves found on the planet Why are we spending $600 billion to $700 billion a year looking for more oil, gas and coal?. That makes no sense.”

 A guide to Māori and mining

<i>Māori and Mining, which highlights the issues and challenges of mining and its impact on Māori communities, was published in October by the University of Otago.

The book gives visual examples of the most common types of mining in Aotearoa, including the controversial hydraulic fracturing or ‘fracking.’ It looks at Māori values, drawing from Māori resource management plans and other source documents. The legal context of mining as it affects Māori is examined, as is mining’s economic merits. The last chapter considers the environmental impacts of mining, noting both good and poor practices as well as raising the issue of global climate change.

Māori have responded to the issue of mining in three main ways: as an economic opportunity, provided that there are environmental safeguards; as a discussion around Treaty rights; or as an environmental issue requiring strong opposition in order to carry out traditional and enduring relationships with Papatūānuku (Earth Mother), Tangaroa (God of the Sea) and future generations, say the 11 mostly University of Otago-based authors.

The guide is available as a free PDF download on the University of Otago website.