Are NZ resource projects in for some bold Government action?

Posted in: Perspectives: Monday, 04 January 2010

NZResources.com - 04 January 2010

Are NZ resource projects in for some bold Government action?

By Richard Michael, Chief Executive, Straterra

The year 2010 certainly looks set to be a very interesting period in New Zealand’s natural resources history - at least from a political and economic point of view.

The first year of a new government’s parliamentary term is generally when the administration get its ducks in a row, upskill and make some of the structural changes required.

However, the middle year of the three year parliamentary term is usually when we see the output that builds the legacy of what the entire term will be about.

With this government well ahead in the polls, this can very much be a ‘golden year’ with the opportunity to make some major decisions before we get into 2011 and an election starts to loom.

The natural resources industry will certainly be looking for some bold action from the Government in 2010. The announcement of the Schedule 4 Review and the action plan for New Zealand’s petroleum resources clearly signal that the Government sees this as a crucial year for the sector too.

The Schedule 4 review has been welcomed by most New Zealanders as a sensible approach and the outcome is eagerly awaited by the industry.

Inevitably, the resulting debate will be highly emotive with extreme views on both sides. Our country’s clean green image and the value of that to our tourism industry are crucial elements of the NZ economy.

Great sensitivity and care will be needed to ensure we can unlock more of our natural resource potential in ways that our acceptable to the Government and the public.

As a sector we need to be constantly aware of our environmental responsibilities. The opportunity exists for us to work closely with the environmental movement and close liaison and consultation could achieve the dual aims of benefiting the environment while achieving the economic benefits the Government and the sector are looking for.

Through its action plan for petroleum the Government has clearly signaled that it wants to realise more of the vast potential of this sector.

The indications are that it is prepared to be bold and innovative. Feedback on the action plan, and five supporting expert reports has been invited - and this is due by January 29.

The Government already invests in the sector, supporting geotechnical investigations across the country and initiatives to significantly increase oil and gas production in NZ. It also appears to be open to considering other options including a Government-owned national oil company.

This may yet prove to be too radical a solution but it does show a willingness to look at all options to realise the significant potential of these resources.

The high returns seen from the Maari and Tui fields show that even relatively small finds can have a major bearing on our economy. The 150 million barrels produced by these fields last year made oil our third biggest export earner.

GNS Science surveys suggest further finds could dwarf this and that by 2025 the amount of currently untapped oil and gas could be worth about $30 billion a year in export receipts. The tax receipts for this would be enough to wipe out the current cash deficit.

We have only scratched the surface - and with the right conditions in place we can be within reach of achieving massive benefits for the sector and for NZ as a whole.

The aggregate sector can certainly be held up as an example of the mutual benefits that can be achieved by close liaison. The industry has done an excellent job in working with local government to help ensure that aggregate resources and other minerals are treated fairly in planning processes.

It is certainly our hope that in 2010 we will get to a point where all known natural resources are marked on a district plan. Any decisions impacting on them can be made in a timely and logical manner rather than, as is often the case, finding that valuable resources have been covered over or access to them has been cut off by residential or commercial developments.