From oil dependence to local resilience

NZ Government's Oil Emergency Response Strategy

On behalf of the Sustainable Energy Forum, I got in touch recently with the team in the Ministry of Economic Development working on the Government's Oil Emergency Response Strategy, which is designed to deal with short-term oil supply disruptions. I asked how things were going with the Strategy, which has been in preparation for a while (SEF made a submission on a consultation document in relation to the Strategy a couple of years ago), and also whether consideration would be given to diverting Tui oil field production for New Zealand domestic use in the event of a severe supply disruption. I thought you might find the MED's response interesting:

"The Oil Emergency Response Strategy is currently in the very final
stages of completion, and should be publicly released by the end of this
month, or very soon after.

Given SEF's main interest in long term oil depletion, it may be worth
pointing out that the Strategy explicitly does not attempt to address
long term oil supply issues and is confined to short term oil supply
disruptions only.

With regards to your question about the Tui oil field, this is a highly
unlikely scenario. While in the event of an oil emergency the government
does have a range of legislative powers that could be used to direct
domestic oil to the New Zealand refinery, this is a highly unlikely
intervention that would only be considered in the event of a very severe
and prolonged emergency. Producers generally have long term contracts to
adhere to, and there are also possible constraints for the New Zealand
Refinery to refine domestic oil. If the Government were to intervene in
the domestic oil market it would likely only be to temporarily increase
production rates. We plan to further investigate issues like this and
others with the key stakeholders in an ongoing work programme following
the release of the Strategy. "

So, while the diversion of Tui production is not regarded as likely, it is clearly on the table.

As world oil supplies deplete, a "short-term" emergency has the potential to merge into a long-term emergency, so even though long-term response is the most important thing, it's worth keeping an eye on what this Strategy contains if you're interested in policy responses at a national level.

Regards
Tim Jones

Tags: Tui, depletion, disruption, domestic, emergency, oil, production, response, supply

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Replies to This Discussion

Permalink Reply by Paul Kennett on July 2, 2008 at 12:50

Southend Cycles in Levin have several electric bikes available.

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Permalink Reply by Deirdre Kent on July 3, 2008 at 11:26

Thanks Paul and Tim for all this help. Will follow up

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Permalink Reply by Tim Jones on July 11, 2008 at 16:48

I've now had a response from someone within the oil industry on the question of whether Tui oil production, currently exported, could be diverted to Marsden Point and refined for domestic use. It is:

"Obviously I can't speak for the New Zealand Refining Company (NZRC) but I think it would be possible to refine Tui at NZRC although I think it reasonable to assume that if significant quantities were processed they might have problems meeting current product specifications for some products (e.g. diesel cloud). However on an emergency basis that may be able to be managed in the system (i.e. wouldn't cause consumers problems when used even if it wasn't completely to specification). I don't believe any modification of the refinery would be necessary."

So I think the short answer is "yes, it could be done". The Tui field is expected to have a lifetime of 15 years, though I'm not sure what the projected depletion curve is. Currently, Tui production for export is roughly equal to 2/3 of what we import.