Deep sea oil dilemma

By Jay Harkness

We all know the world needs to stop using fossil fuels, given that the emissions from their use are a major contributor to climate change. But there’s little consensus on when phasing out their use should begin.

Many politicians – mindful of the need to reduce debt,fund essential services and get re-elected – say New Zealand should be a fast follower and wait for others to cut their emissions before we cut ours.

David Robinson from the Petroleum Exploration and Production Association of New Zealand concedes that oil is a transitional fuel but he isn’t advocating for that transition to begin anytime soon.

Most climate scientists say the world is about to lose the chance to limit climate change to a two degree Celsius average global increase.

The “Unburnable Carbon 2013: Wasted capital and stranded assets” report, produced in part by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, is unequivocal.

It says that if global warming is to be kept at two degrees, half of all the proven reserves of fossil fuels will have to stay in the ground. That means we shouldn’t even be thinking about the unproven reserves of the sort Anadarko is searching for off New Zealand’s coasts.

When people talk about climate change, they understandably talk about the likely impacts on our way of life. An increasing body of work also points to its many impacts on nature.

Some of these impacts are described in the book Living in a Warmer World edited by New Zealand climate scientist Jim Salinger. It describes how a fungus, linked to climate change, has killed off species of frogs and toads in Costa Rica and how mass coral bleaching was first noticed in the Florida Keys in 1980.

It says other species are coming under pressure as their habitat shrinks. The lowest elevation limits of 16 butterfly species in the Sierra de Guadarrama, in Spain, rose an average 212 metres in 30 years as the average temperature at the previous lowest extent increased by 1.3 degrees Celsius.

This has translated into a 33 per cent reduction in habitat. In Canada the pine-bark beetle, which has been moving north as temperatures have risen, is killing huge swathes of boreal forest. The subsequent increase in bush fires is reducing the habitat of the woodland caribou.

New Zealand’s native plants and animals are, of course, not immune to the threats posed by climate change. For instance, the gender of a baby tuatara is determined by the temperature while eggs incubate in the soil. If it’s too warm, a breeding season could result in only males.

Alarmingly, biologist Terry Root, from California’s Stanford University, advocates for a type of ecological triage in response to climate change in her essay “Biodiversity: How will wildlife fare as the globe warms”, published in Living in a Warmer World.

She says the species that are essential to the lives of others, such as those that help pollinate crops, must be saved at the expense of the nice-to-haves as the planet warms.

Opening up new, deep sea oil frontiers off New Zealand’s coasts will lead to a small but undeniable increase in the chances that global warming will break the two
degree mark.

However, for many voters – whose taxes aren’t covering the costs of superannuation, roads and health – turning their backs on the potential royalties from drilling “just” for the sake of the climate is a bridge too far.

Even from a purely economic perspective, the deep sea equation is not straightforward. A serious spill has the potential to cost a lot more than it could ever make New
Zealand in royalties both directly, through the costs of a clean-up attempt, and indirectly, by damaging the clean green image on which New Zealand markets itself and
many of its products to the world.

The chances of a major blow-out are not high. But if a problem develops the chances are that it will be far more significant than if the well was in water less than 200 metres deep. It took engineers almost three months to successfully design and build a cap for the well beneath the Deepwater Horizon in the Gulf of Mexico in 2010.

BP will have to pay US$90 billion if all claims for compensation and fines are met – more than Iraq had to pay in today’s money for its invasion of Kuwait.

By contrast, companies drilling in New Zealand’s Exclusive Economic Zone are only required to carry NZ$30 million worth of liability cover to meet the terms of their licences.

Anadarko says things have moved on a long way since 2010. Anadarko’s ship is carrying a capping stack on board so there wouldn’t be delays while a cap was designed and built.
But there’s no denying that New Zealand is remote.

If a relief well was needed to stop a blow-out (this is what finally plugged the Macondo Well beneath the Deepwater Horizon), a second rig would probably have to travel
from as far away as Singapore to drill it.

In November Forest & Bird made a submission with Greenpeace to Parliament’s Regulations Review Committee, arguing the regulations created under the new
Exclusive Economic Zone Act (which sets the conditions for oil exploration in the EEZ) were meaningless, given they didn’t comply with international environmental law. At the
time of writing the committee had not made a ruling.

In October Greenpeace released an independent study that modelled where the oil from a deep sea blow-out in either the Romney or Caravel basins – west of the North
Island and east of the South Island – would end up.

The results were dramatic. The Prime Minister immediately described the report as an attempt at scaremongering but the government refused to release Anadarko’s spill
modelling, which the company had to submit to get its licence.

It later emerged that the flow estimates Greenpeace’s consultants used were lower than those used by Anadarko.

Forest & Bird Advocacy Manager Kevin Hackwell says deep sea drilling undeniably poses a major threat in the short and long term to New Zealand’s natural heritage as
does the wider “drill, dam and dig” approach to economic development.

“We should make no mistake. Taking a short-term, she’ll be right approach to climate change is the wrong thing to do by New Zealand’s flora and fauna.”