Scope for Pioneering Marine Gas Hydrate Development in New Zealand

Abstract

New Zealand is one of several Pacific margin nations with substantial resources of gas hydrate identified from geophysical reconnaissance and being characterised through continuing research. There is no immediate prospect of development of marine gas hydrate resources for energy and/or other uses, due to the absence of any proven technology for extraction of hydrocarbon gas at commercially meaningful rates. In general, the most advanced programmes directed at surmounting technical and other obstacles to marine gas hydrate development are being undertaken by large state-controlled enterprises within the jurisdictions of high-growth energy-short Asian economies. In contrast, New Zealand has a relatively small population and economy, within a large mainly marine jurisdiction which is relatively remote from major energy markets. New Zealand has a natural gas market consuming about 200 billion cubic feet (or petajoules; close to 5 billion cubic metres) per year. Almost half is used in petrochemicals (methanol, mainly exported, and urea, primarily for agricultural fertiliser), with about one quarter used directly by other industry and in commercial and residential premises. The balance is used for electricity generation, mainly to meet periodic peak demand in a system dominated by renewable generation (hydroelectricity, geothermal, wind and solar). Natural gas is supplied from onshore and offshore fields in the Taranaki Basin, western North Island. The natural gas industry with its extensive mid-stream infrastructure developed in response to discovery of those fields from 1959 (onshore) and 1969 (offshore, Maui field). Ultimate reserves in all discovered and developed fields are currently estimated to total up to about 9 trillion cubic feet, of which only about 2 trillion cubic feet remain to be produced – equating to 10 years of current consumption. A shortfall in deliverability could eventuate within 3-5 years. Gas hydrate resources fall within the definition of petroleum which in New Zealand is governed by the Crown Minerals Act 1991. This statute (and its predecessor the Petroleum Act 1937) vests rights to petroleum in the Crown (the state), and provides for issuance of exclusive permits for exploration, and subsequent development and production (“mining”) of any discovery demonstrated to be commercial. A decade ago, research results had amply shown the large scale of New Zealand’s marine hydrate resources, and government explicitly recognised its potential as an eventual “backstop” to conventional natural gas, exploration for which was also given encouragement under an “Action Plan” in 2009. This plan included “undertaking further work to realise the potential of New Zealand’s gas hydrate endowment”. From 2012, New Zealand has run annual Block Offers for petroleum exploration, and in 2015 for the first time, provision was made for applications for conditional gas hydrate exploration permits – the first country in the world to do so other than in mandating activities by state enterprises. The conditionality recognised the immaturity of technology and of many regulatory aspects, and any gas hydrate permits could not overlap permits for conventional petroleum; nevertheless applications were received from a start-up company, bidding a substantial work programme. However, while considerable further research has refined the understanding and documentation of New Zealand’s principal gas hydrate resources, the possibility of their eventual commercial development has failed to gain much traction. Community attitudes to the petroleum industry were impacted by the Macondo disaster in the US in 2010, and in respect of carbon-based energy resources generally, at much the same time by the Pike River coal mine disaster in New Zealand. Climate change is considered very seriously in New Zealand, and the Paris Agreement was followed by a change of government to a coalition including the Green Party, in 2017. The present government has set aside the Energy Action Plan of its predecessor, and banned the issuance of any new offshore petroleum exploration permits, ostensibly to accelerate achievement of a new zero carbon economy. New Zealand’s marine gas hydrate resource endowment remains a subject of multi-faceted research, but unless a future government implements a further major policy change, the likelihood that these resources would be developed is remote. Any opportunity for pioneering technological and regulatory arrangements here is foreclosed for the time being.

AAPG Datapages/Search and Discovery Article #90348 © 2019 AAPG Asia Pacific Region Geosciences Technology Workshop, Gas Hydrates – From Potential Geohazard to Carbon-Efficient Fuel?, Auckland, New Zealand, April 15-17, 2019