With a brake on the building of new hydro-facilities on environmental grounds, the focus is on coal and gas
veryone
who turns on their hot tap expects hot water and New Zealanders, who
pay some of the lowest electricity prices in the world, are no different.
About 80 per cent of their power is generated from water, which is a
renewable resource.
There is considerable potential in har-nessing the country’s rivers
to generate more electricity to meet future demand, but there is a powerful
body of opinion that believes dams and hydro-power stations are environmentally
intrusive at best and seriously damaging at worst.
Oil, gas and coal are New Zealand’s other energy resources, but
two of these are generally deemed environmentally unsound – albeit
there are strong arguments for them too – and the third, gas, may
run out. So the search for gas, as well as other fossil fuels, continues.
One
company that is continuing to explore is Wellington-based Todd
Energy. Managing director Richard Tweedie
believes there is a greater likelihood of discovering gas and oil offshore.
“We have been in deepwater before – it’s all high risk
and very expensive,” he says.
“But we’ll continue to explore. Our exploration and production
business is very strong, and we have good reserves, and our producing
fields still have gas in them.”
|
||
Todd
Energy recently acquired the McKee and Mangahewa fields from Shell,
and these have potential. “Our downstream gas business is also
strong and we’ve grown quite well in that,” continues Mr Tweedie.
He argues that industrial growth is being hampered by the authorities
being overly protective of the environment. “This government wants
to lead New Zealand down an environmental path that actually puts our
relatively small industrial base at risk,” he warns.
“The government is talking about a carbon tax in 2008, when we
probably don’t need one because we have sufficient forests to absorb
all the carbon dioxide. There’s a high degree of cynicism because
it is seen as just another tax.
“Politicians
will argue that you have to change people’s behaviour. But about
60 per cent of our CO2 emissions come from cows – it’s a fact.
It’s the methane produced by grass-chewing livestock, but farmers
are exempted and cement works have been exempted because the government
knows they would just go off and produce somewhere else like China.
“About 80 per cent of our electricity is generated by a renewable
resource – water. Why does New Zealand need to be leading the world;
a country with only four million people contributing just 0.2 per cent
of CO2 emissions?” he asks.
Todd
Energy is opting out of the coal-mining business. The world is awash
with coal, points out Mr Tweedie. Australia, for example, just across
the Tasman Sea, is the world’s largest exporter of sea coal, he
says. “Making money from New Zealand coal is problematic.”
The significant coal fields are located on the South Island and it is
difficult to transport coal to the North Island because the huge ocean-going
carriers lack a deep-water berth there.
With a brake on the construction of new dams and hydro-power stations
on environmental grounds, coal is unlikely to satisfy future demand,
says Mr Tweedie, and with gas reserves dwindling there will be only
a few choices remaining.
“If
we do not discover more gas, my view is it will be coal. It would have
to be a big coal-fired station north of Auckland, close to where the
market is and near Whangerei where you can bring big vessels in. And
my bet is that it would probably be coal from Australia,” he suggests.
Another alternative could be liquefied petroleum gas (LPG), given that
the infrastructure is already in place for gas. For Mr Tweedie, the
main objective is to increase business and Todd Energy has made several
acquisitions in recent years, aside from the recent Shell deal.
It
now wholly owns the supply business of the Bay of Plenty Electricity
company and 34 per cent of King Country Energy, a power generator and
retailer, as well as some LPG production and distribution businesses.
Todd Energy’s own electricity generation includes both geothermal
and hydro-power facilities.
New Zealand relied heavily on coal until the early 1980s when hydro-power
began to take over as the main resource. The 100-year-old state-owned
mining firm Solid Energy
exports high-quality coal to 15 countries, but mainly to Asia and particularly
to Japanese steel-makers.
The firm, whose main shareholder is still the government, made record
foreign exchange earnings topping $100 million last year. More than
half its annual output of three million tonnes is exported.
About 80 per cent of electricity is hydro-generated
|
||
Although
New Zealand’s share of the world coal trade is small – less
than 0.5 per cent of the seaborne global trade – Solid Energy has
been able to significantly develop and expand its international markets
since it entered the arena in 1976. About four-fifths of its output
is used in steel-making, both abroad and at home.
Chief executive Dr Don Elder
says few New Zealanders realise how much of their electricity is still
derived from coal. “You won’t find too many schools or hospitals
outside of the South Island or the top of North Island that don’t
run on coal.
“In
current economic terms, we have enough coal in the country for at least
2,000 years, while in the world there is only enough for 250 years at
the current rate of use. So we are very well off here.”
Minister of energy Pete Hodgson says much of the offshore blocks of
North Island are unexplored, so he is hopeful that more gas will be
discovered. He says New Zealand’s oil is mostly processed in Singapore
and refined oil is imported from Indonesia or Saudi Arabia because of
the type of oil, as well as the different fuel requirements of a small
domestic market.
“There is an issue about whether maxi-mising our potential resources
would be a wise decision,” he adds. “We could become a huge
exporting nation or we could continue to explore and remain as we have
been for the past 20-30 years at a rate that, despite uncertainties,
will enable us to maintain a degree of self sufficiency.”
[email protected]