15 Dec 2016

Oil and gas exploration permits fall short

6:02 pm on 15 December 2016

Just a single government oil and gas exploration permit has been granted this year, after a continuing downturn in the petroleum industry.

Offshore natural gas, oil

The number of exploration permits granted fell from nine in 2015 to just one this year. Photo: 123RF

The permit was granted to Todd Energy in Taranaki and covered 219 square kilometres, inland from Inglewood.

The single permit contrasts with nine offers accepted last year and 15 in the year before that.

Ministry of Business, Innovation and Employment officials said the single acceptance was matched by fewer companies making an offer in the first place.

It would not reveal how many companies made an offer or who they were.

Energy and Resources Minister Simon Bridges said a global downturn in the petroleum industry dating back to 2014 was having a profound effect on exploration worldwide.

That had spread to New Zealand, he said.

Ministry figures showed global expenditure on petroleum exploration and production fell 25 percent in 2015 and was forecast to drop another 24 percent this year.

The companies Anadarko and Apache had cut their exploration spending by between 60 and 80 percent, it said.

Earlier in the year, Anadarko and Statoil relinquished exploration opportunities they had already acquired in New Zealand.

There was still oil and gas exploration going on under earlier permits, Mr Bridges said.

A total of $7.7 billion had been invested in oil and gas exploration and production in New Zealand under the block offer scheme until now, he said.

The oil industry's current difficulties have been widely blamed on competition between frackers and horizontal drillers in the United States, and oil producers in Saudi Arabia, which pushed supply up and prices down across the world.

Several days ago, OPEC and some non-OPEC oil producers agreed to cut production, in an attempt to push prices back up.

Brent crude - a key indicator - did just that, but its rally to $US55 a barrel then subsided to $US53.

The environmental group Oil Free Wellington was glad the latest block offer fell short.

"It is great news for the climate," spokeswoman Michelle Ducat said.

"We have just had the hottest year on record so we know the situation is urgent.

"Instead of pouring millions into a failing fossil fuel agenda the government should be investing in a just transition away from fossil fuels."

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