Deep sea drilling Dunedin

Guest Post: Is the “Aberdeen of the South” an idea past its time?

Is the “Aberdeen of the South” an idea past its time?

Guest post by Professor Colin Campbell-Hunt

colin pic

There are very many of us in Dunedin who will want to welcome Shell and the promise of economic activity that exploration brings. If I were to look ahead only 10 years I might be one. But I have learned a thing or two about oil and gas in the last few years that would urge caution. This is an industry that only has a decade or so of growth left, so if we want our city to invest in infrastructure for industries that will secure our prosperity for the future, oil and gas exploration should be well down the list. Here’s why.

First, even the short-term benefits may be much less than we might think. A 2012 study by the economic consultancy BERL concludes that the prime contractor for engineering and construction would be a large offshore-based multinational. Some sub-contracting work may come to local New Zealand firms, but BERL concludes that few New Zealand companies outside of Taranaki have the expertise required to win contracts for the work.

Second, the same BERL study concludes that the number of sustained jobs created for the local economy would settle at around 200 following a spurt of up to 1,000 jobs during a three-year development phase. It is unlikely that the oil or gas produced would come ashore; more likely it would be shipped directly from a sea-based platform.

So far, the project looks to make reasonable sense, both for Shell, and for Dunedin. But look out beyond 2020 and the horizon looks a lot darker for the oil industry.

The third – and far more serious concern – arises from the effect on the planet’s climate of burning fossil fuels and releasing carbon dioxide CO2 and other greenhouse gases into the atmosphere. Climate modellers at the Potsdam Institute in Germany estimate that if we put another 500 billion tonnes of CO2 into the atmosphere beyond 2013 levels, we would face a one-in-four chance of the planet warming by more than 2C. And if we were to increase that to 1,000 billion tonnes, the chances rise to 50:50.

So how much CO2 is there for us to burn? A 2013 study by the Grantham Institute at the London School of Economics reports that the world’s current proven reserves already contain between 3 and 6 times more CO2 than we could safely throw into the skies. Corporate oil alone has more than enough reserves to blow out the 500 billion tonne budget.

Why does the 2C limit matter? Beyond 2C, science warns that we open ourselves to the possibility of runaway climate change wreaking serious havoc to the world’s population, economy, food supply and political stability. These are not the wild imaginings of prophets of doom who would urge us to climb up a hill somewhere and wait for the world to end. These are level-headed assessment of risks that the human (and non-human) populations of earth are facing right now.

So where is this going to leave the oil industry? At the present rate of emissions, we will hit the 500 billion tonne warning sign in just ten years. If we wanted to keep our chances of avoiding more radical change to just 1-in-4, that would have to be the end of CO2 emissions – not another tonne, ever. Of course that is not going to happen. We are riding on a super tanker that is going to take years to bring to a halt, and this is something that is increasingly accepted – with dismay – by the people who follow these trends. The fact that the oil industry is willing to invest in exploration for new sources of hydrocarbon when we already have far more than we should ever burn tells us that they don’t believe the political will to change our ways will stiffen up any time soon. Which in turn tells us that we, the voters, want to keep our good life for as long as we can too.

But spool forward 10 years, or twenty. The pressures of climate change are only going to get stronger; the realisation of the risks we are running can only get firmer; the prospect of controls being placed on the burning of CO2 can only get greater. A far-offshore gas field is expected to have a life of 35 years. If we are beginning to understand the dangers of climate change now in 2014, we can be very sure they will have radically changed the rules for the oil industry by 2060.

So should Dunedin hitch its economic wagon to this dying industry? Should we be building the public infrastructures to support an industry that has such a poor long-term future? Should we be anxious to attract a business that might deliver 1,000 jobs for three years, then only a quarter of that for however many years it takes before expensive deep sea gas wells get shut down – if indeed they are ever put into production?

There has to be a better way. Developing assets – both physical and human – for the city’s infrastructure to be ready for a low-carbon economy and low-carbon lifestyles will give us a far greater chance of delivering benefit over their productive life than any investments we may be tempted to devote to a dying oil industry.

Colin Campbell-Hunt is a Professor in the University of Otago Business School and has written widely on New Zealand’s competitiveness.

What gift horse?

Clean Green NZ?

by Rosemary Penwarden
Published in The Star

http://digital.thestar.co.nz/olive/ode/str_daily/

“Don’t look a gift horse in the mouth” was one of my mother’s favourite sayings, a swift reminder of our luck. My mother was our family’s undisputed gift horse. MP Michael Woodhouse thinks Anadarko and Shell are Dunedin’s gift horses. In his recent “MP’s View” he reminds us of our collective luck to have these oil giants circling Otago’s deep oceans.

Mr Woodhouse asked deep sea drilling opponents five questions, admitting that some might consider them facetious but asking them nevertheless. Such dedication to one’s constituents deserves a considered response.

Why do opponents continue to refer to “oil exploration” when they know that if viable deposits are found it will be gas not oil?

Mr Woodhouse may know more than the oil companies, who can’t yet tell what’s in the Canterbury and Great South Basins. We must accept the claim that gas is more likely than oil, but the companies don’t rule out oil, as Mr Woodhouse appears to.

In a Dunedin meeting last year Shell emphasised the benefits of gas as a “green” fossil fuel, but when asked if they would therefore leave any discovered oil in the ground, answered that since they are a profit-making corporation, of course they would be pleased to strike oil. It would, after all, provide a much easier and larger profit than gas.

As for gas being “green”, burning gas releases about 75% the greenhouse gas emissions of crude oil, doing the same damage to the climate in four years that oil does in three. Gas is like the low tar cigarette version of fossil fuels – takes a bit longer but has the same effect in the end.

Is it [Oil Free Otago] opposed to deep sea drilling, any sea drilling, or any drilling whatsoever?

Human-induced climate change is a fact, as Mr Woodhouse appreciates. Of course we can’t suddenly stop using fossil fuels tomorrow. But to delay the transition in a wilfully blind dismissal of reality is only narrowing our grandchildren’s chances of survival.

Opponents of deep sea drilling are choosing to respond to the science. We want progress, using the fossil fuels we can safely use, keeping within the two degree limit of global warming agreed to by the world’s governments, to build a low carbon future.

How does it [Oil Free Otago] reconcile its protest last weekend with the use during the protest of fossil fuel-powered vehicles, petrochemical product-produced kayaks, wetsuits, oars, life jackets and other technologies that re the product of oil and gas extraction?

The argument that it is hypocritical for deep sea drilling opponents to use fossil fuel products diverts us from useful discussion. We all live in the same world. It’s a world that has been maxing out on cheap fossil fuel energy to the point where a limit is now making its presence felt from the Australian tennis open to California’s driest year on record.

While many Oil Free Otago members choose to cycle, drive electric cars and grow our own food, Mr Woodhouse’s government’s policies make a mockery of individual attempts to limit greenhouse gas emissions. The emissions trading scheme (ETS) invites the country’s largest polluters to use the atmosphere as a free carbon sewer. Fugitive methane emissions from a newly discovered gas well in the Canterbury Basin would cancel out all the individual emissions reductions of the ‘greenest’ Dunedin residents in one foul swoop.

Oil Free Otago members are calling for change. In the meantime we will happily make use of all fossil-fuel tools and products at our disposal in our opposition deep sea drilling.

How does it [Oil Free Otago] reconcile Green MP Gareth Hughes flying around the country in fossil fuel-powered airplanes protesting against the very thing he relies on to articulate his message?

Until government and policymakers take climate change seriously, beginning with transferring the $46 million subsidy from the fossil fuel industry into clean tech industries, put a realistic price on carbon and begin the other changes needed for a low carbon future, there can be no better use of fossil fuels than to fly Gareth Hughes around the country building the movement against deep sea drilling. Far better that Gareth takes the seat than an oil executive.

What is unethical about a product that the whole world relies on for its social and economic prosperity and is vital for developing countries to grow?

My first suggestion is for church-goers to attend an Anglican service, and discuss with their Anglican colleagues the reason for their decision to divest from fossil fuels. Learn why we have a moral duty to preserve the planet, not only for future generations but for all of creation. If that’s not your thing, try looking at the hard economic facts surrounding the “carbon bubble” and why it is economically irresponsible to invest in fossil fuels long term.

To continue digging up and burning oil, gas and coal in the way Mr Woodhouse’s government intends is to condemn the next generations to an unsurvivable future. Those in developing countries stand to suffer more than us. Unfair but true.

Some of us want to make damn sure our back yard is not contributing to that unsurvivable future. There’s a hell of a lot of work to be done, jobs to be had and money to be made building solutions instead of adding to the problem. Oil Free Otago want to be part of that solution.

The future is in renewable energy jobs and industries, Mr Woodhouse. I can hear my mother now: don’t look a gift horse in the mouth.