Game On Anadarko!

Climate Action Wellington’s commitment to stop Anadarko drilling in the Pegasus Basin

A beautiful Interislander ferry trip to the south island. You’ve had your photo taken with Gandalf in Wellington. You have your camping gear for a stay in the Abel Tasman. You’ve even had your whale watching experience with a humpback whale which was migrating through the Cook Strait. On your right as you leave Wellington harbor is the wind farm on the Makara hills. On your left is the oil spill from Anadarko’s attempt to drill for oil in a body of water described as “one of the most dangerous and unpredictable in the world.” Tourism Gold!

Our government and industry bodies are singing the potential of Anadarko’s exploration permit in the Pegasus basin south of Wellington. With an exploration permit covering 4,272 square kilometers, and a possible yield of up to 150 million barrels of oil, it sounds as though we’ll all be filthy rich on oil money. Of course such an opinion assumes that either you have shares in Anadarko or that our government will make its fair share from the profit. We know the last one isn’t true, and for most people reading this the first one isn’t true either. The truth is that by allowing deep water oil drilling we run the risk of catastrophic oil spills. We’ve seen the impact of a single boat on the Bay of Plenty, in the form of the Rena disaster. We’ve seen the impact of the oil spill in the Gulf of Mexico. And we know that we do not have the capacity to deal with a major oil spill in this country.

This is why the recently formed coalition of environmental campaigners, Climate Action Wellington, is saying “Game On” to Anadarko today. We want to send a promise to the board of Anadarko and that promise is “we will stop you from drilling in our waters.” We’ve seen the government’s first attempt to mine our National Parks stopped by 40,000 protestors on Queen Street. We’ve already seen Petrobras cancel their plans of exploration in the Raukumara basin, because of staunch opposition from the local communities. Just imagine what will happen when 400,000 Wellingtonians realize that Anadarko want to drill just south of Lyall Bay. With Wellingtonians having just finished the annual beach cleanup I don’t think we’ll be very happy!

Companies and the government have been talking a lot about the possibilities for jobs and funds from big drilling projects in our waters. But the reality is that these jobs, the few which actually appear, are given to skilled people who build drilling rigs on a regular basis. They aren’t given to the father of a struggling, state housed, family of five in Strathmore. Of course the same applies to anyone working on a rig. These are usually skilled contractors who aren’t from the local communities which are at risk from a possible oil spill. The other argument in favour of such projects is that these people spend their wages in the communities. This one is particularly crazy. I’m very sorry, but I can’t imagine a person manning an oil rig in the Pegasus Basin popping up to the fish and chip shop once a week. And on the flip side of the coin, locals who rely on fishing and tourism for their livelihoods stand to lose hugely if an oil spill occurs.

With very little to be gained employment-wise from these developments, some might look to the government to give New Zealanders their fair share from Anadarko drilling for our oil in our waters. Unfortunately, the government would be paid a minor portion of what Anadarko would make from drilling south of Wellington. New Zealand’s take from oil drilling, including taxation and royalties, is one of the lowest in the World. Figures covering 1998-2007 show us to be the fourth lowest, just above Morocco. This makes James Weir’s piece mentioned earlier quite strange when he talks about how we could become the Mozambique, or Norway, of the pacific. In order to become like these bastions of oil drilling we’ll need to increase our tax take from the process. Mozambique collectively takes over 60% of the profits from drilling operations in the form of royalties and taxation. Norway takes over 70%. Compare this with our collective 45% and you’ll begin to see my point.

The annual fee for exploration rights is $3.50 per square kilometer. So to begin with the government really won’t get much by letting Anadarko look for oil on New Zealand property. If we’re really lucky Anadarko’s exploration will take longer than expected and may have to start paying $8.50 per square kilometer; the oil exploration equivalent of a late fee. If they finally start drilling for oil we will see roughly 5% of the value of the oil drilled or 20% of their profits, whichever is larger in the form of royalties. If we assume that the 150 million barrels of oil figure is correct, and assume a steady price at the predicted $100 per barrel, and include taxation as well as royalties New Zealand could receive roughly $600 million in the collective tax take, assuming no over head costs. To put this in perspective the clean-up costs from the oil spill in the Gulf of Mexico were over $40 billion.

Some have also mentioned the importance of these operations to our economy. For example, the fossil fuel industry contributed $1 billion to our government’s tax take in 2009. However, contrast this with tourism where in the same year $1.6 billion was collected purely in the form of GST, and where over $21 billion was spent directly on New Zealand businesses. Unfortunately, New Zealand’s Clean Green image and tourism industry would be at threat should a major oil spill occur, particularly if it’s near the Cook Strait which is a major tourism route on the Interislander and Blue Bridge ferries.
Some have called for more stringent measures to guarantee against the risk of oil spills. However, there are no guarantees against accidents. One opinion piece in the Dominion post called for "watertight provisions regarding compensation and liability for cleanups in the event of a spill. Foreign companies allowed to extract oil from the ocean floor must have no wriggle room when it comes to paying for any harm they might cause.” While a step in the right direction, were this to happen, there are some things which can’t be compensated for. Another spill the size of the Rena would be devastating, let alone a larger one. The ocean, beaches, fisheries are not something that can be just cleaned up with compensation money. They are ecosystems that people flora and fauna rely on - The simple option here is simply to not have oil exploration

However, economics doesn’t define this issue. What does define this is the importance of human well being, our environment, and creating a sustainable society. To focus on an industry which exploits our resources and gives little back to the communities they take from, is against the principals of Climate Action Wellington and simply isn’t fair. At a time when we face potential disaster from the multitude of environmental issues plaguing us, especially climate change, and at a time when the gap between rich and poor is the widest it has ever been, we should be moving towards a society based on sustainable development and one in which everyone has their essential needs met.

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