Black gold, dark clouds

On a stifling hot January summer night, Ben Sarten stepped inside the Tikorangi house he was raised in, closed the door and wondered where he was.

“This doesn’t feel like home anymore,” he told his parents Clare and Alan.

“The noise. The rigs. The powerlines. All the lights. It’s taken away the night sky. It’s pretty sad really.”

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With three pipelines crossing their family farm, two sets of powerlines and an oil and gas well on their farm edge, the Sartens see each day the impact of bringing New Zealand‘s oil and gas wealth to the surface.

So do almost all Tikorangi residents. For decades the north Taranaki rural community has been the most heavily explored and developed oil and gas area in New Zealand. But it may soon have challengers to that crown.

Drilling consents granted, lodged and pending are at an all-time high. Huge swaths of Taranaki could potentially be like Tikorangi, which is exactly what Prime Minister John Key would like to see.

On Thursday he told an audience of 100 farmers in Inglewood the amount of wealth that exploration could release meant it was in everyone’s best interests to build respectful relationships with the oil companies.

Depending on your point of view and where you live, Taranaki is either the benefactor or the victim of the Government’s race to balance its books and increase exports to 40 per cent of gross domestic product by 2025.

Oil and gas is already the country’s fourth largest export product, contributing $2.5 billion to government coffers in the three years to 2011. With a further $8.5b predicted to come its way should exploration and development patterns continue, a surging oil and gas industry is key to government goals.

It also brings as many as 7700 jobs. Most of those are in Taranaki and are the same ones often touted as the cushion against the hard landing forced on so many other provinces during the global financial crisis.

Despite that, there is a groundswell of opposition to oil and gas exploration edging ever closer to populated areas. The most recent example, a community delegation of Tikorangi residents to New Plymouth District councillors last month.

“Help us,” pleaded Abbie Jury in their bid to stop Greymouth Petroleum developing its Kowhai C site close to the middle of a widely dispersed but cohesive rural community. “We can accept all the other sites but this is too much.”

Though the site has not yet been given consent, the council has never turned down an exploration application outright. That’s not to say it doesn’t at least try to stand up to central government and limit its sprawl. So far it hasn’t been too successful. On Tuesday the council’s request to the Ministry of Business, Innovation and Employment that urban areas and land near New Plymouth Airport to be excluded from future oil exploration was turned down flat.

“The Government makes it clear it is going to happen,” says council consents manager Ralph Broad.

“If we were to do something that was quite different and quite restrictive on oil and gas it wouldn’t go unnoticed by central government.”

In Tikorangi, many feel the whole community will be affected by the noise, traffic and light the Kowhai C site will generate, and are angry they weren’t more widely consulted by Greymouth before it lodged its plans.

There are other concerns. Greymouth has stated it is drilling just one well but has applied to drill eight. It has also bought 30 hectares of land despite only needing 1.4ha. There are reasons for this. Applying for eight is standard practice and the land’s owner did not want to lease.

Regardless, residents see Kowhai C as potentially morphing into another busy industrial site like Todd Energy‘s Mangahewa C. But rather than a site in the hills behind their community, this one will be in its heart.

Like so many other media-shy companies, Greymouth requires questions in writing which are answered in kind.

“Greymouth is 100 per cent committed to consultation and engagement with the Tikorangi community,” writes Lara Walker, Greymouth’s planning and markets general manager and public face of its Tikorangi operations.

“Our policy is to consult directly and we have been very active with this exercise. Greymouth is also an enthusiastic sponsor of the community.”

“We always attempt to identify a site that has impacts on the least people as possible,” she says later over coffee, briefly straying from her list of written answers.

And despite directional drilling technology giving some freedom to drill pad locations, there is no alternative to the Kowhai C site, she says. She also shakes her head at concerns the operations will expand to cover the 30ha they own.

What the company does not use will be leased back to agricultural contractor Ken Moratti.

Regardless of how much consultation Greymouth is undertaking in Tikorangi, its name is often uttered with anxiety regarding what it will do next, Clare Sarten says.

“Lara said they hear all these rumours about what we [Greymouth] are going to do, stuff we don’t even know we are doing. I said to her, ‘well why don’t you tell people what you are doing.’

“Rumours go around. You can’t stop that, so tell people what you are doing.”

To that end Todd Energy, the other big player in Tikorangi oil and gas and operator of the massive Mangahewa C production site, has started issuing full-colour community updates.

Featuring pictures of smiling rig workers and the top-echelon management team casually splayed out on a grass bank at Womad, the first update would appear to be ongoing commitment to candour from an industry renowned for keeping cards close to its chest.

“We are trying to be open about how we operate here,” says Todd Energy operations general manager Andrew Clennett during a tour of the noisy Ensign drilling rig at Mangahewa C.

“It’s an industrial process and it’s about recognising it looks messy. We don’t want messiness to be in people’s faces, though. There are steps we are taking to minimise, minimise, minimise. But it is an industrial process. It’s not the floor of Intel.”

Methods to shrink its industrial footprint include housing staff on site to cut traffic, restricting truck movements, sound-proofing, and the commissioning of a $40m drilling rig that promises to be quieter and less obtrusive.

“The fact of the matter is the easy oil is gone, and now exploration is being brought closer to humans,” Mr Clennett says.

“Our main focus is how we can build a sustainable operation within the community. Because the skills we are building here, we want to be able to use in other places.”

Mr Clennett‘s frankness, the printed updates, the millions in funding to the Len Lye Centre and support for other community projects have another bottom-line benefit for Todd. In a world market scrapping over a limited supply of oil and gas experts, reputation is money.

“A good reputation helps to attract better employees, because everyone wants to work for a company and feel good about it,” says Massey University communication, journalism and marketing lecturer Dr Mark Avis. “That is not going to happen if the company has a negative reputation.”

TODD ENERGY

Todd Energy traces its lineage back to 1929 with the founding of the Associated Motorists Petrol Company Limited, which later became Europa Oil New Zealand Limited.

For the purposes of conducting exploration activities, Todd Energy entered into a joint venture agreement with Shell Petroleum Mining Company Ltd & BP Oil Exploration Company in 1959, which led to the discovery of the Kapuni field.

Demand generated by the onshore Kapuni field saw further exploration in Taranaki and the discovery of the offshore Maui gas and condensate field in 1969.

Todd Energy‘s original interests in the Kapuni and Maui fields are part of a portfolio of producing and development fields and the company is now one of New Zealand‘s leading energy producers.

Like Greymouth, Todd Energy is 100 per cent New Zealand owned and the Todd family is estimated to be worth $3 billion.

GREYMOUTH PETROLEUM

Formed in 2000 by lawyer turned investment banker turned oil baron Mark Dunphy and rich-list investor Peter Masfen, Greymouth is now the country’s largest holder of onshore exploration and production acreage in Taranaki. It directly employs around 200 people in Taranaki and last year paid $40 million in taxes.

The country’s second-largest privately owned oil and gas operator, it was last year embroiled in controversy when Dunphy and Masfen fell out with minority owner and former chief operating officer John Sturgess. The souring relationship was believed to be behind a $650m “expression of interest” by Canadian company Tag Oil to buy Greymouth.

Called Greymouth because of Dunphy and Masfen’s ancestral ties to the West Coast town, the company also has four permits to exploit and produce petroleum in an area covering 9000 square kilometres in, and adjacent to, the Straits of Magellan in Chile.

Source: http://www.stuff.co.nz/taranaki-daily-news/news/8631612/Black-gold-dark-clouds


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