Trying to attract a stranded asset

Shane Jones is an outdated fossil of a minister. Born in 1959, his model of how our economy and society should look is stuck sometime in the late 70's: a dirty, fossil-fuel powered, racist, sexist, homophobic shitstain of a country which most of us never experienced, and most of those who did are glad we moved on from and desperately want to forget. But he's energy minister now, and that means being able to inflict his peculiar pathologies on the nation, including promoting the gas industry. And not content with moving to return us to the 70's by repealing the offshore drilling ban and making the government liable for oil companies' cleanup bills, he's currently touting for business in Singapore, offering new concessions in a desperate effort to attract foreign gas companies to come her and drill:

In a speech to the energy industry in Singapore this week, Shane Jones signalled a major change to New Zealand’s oil and gas exploration rules.

It appears the Government plans to remove restrictions that previously limited oil and gas exploration to defined block offer areas and instead allow oil and gas companies to apply for exploration permits across all of New Zealand’s territory.

Reading the speech, Jones doesn't just want drilling off Taranaki - he wants it in "the East Coast basin, Canterbury basin, and the Great South Basin" as well. Which would be a disaster for Aotearoa. But the good news for us - and the problem for Jones - is that no matter how far he lowers his pants to attract the oil industry, only a moron will take him up on it.

Part of this is what Jones calls "political risk" - the risk that the next government will simply ban drilling again and legislatively revoke all the permits without compensation. And part of it is because there's probably no gas to find (companies have been looking for years, and we haven't had any new offshore fields discovered since the early 2000s). But the fundamental reason is simply economics: even if they discovered a huge new field tomorrow, it would take a decade and a billion dollars to develop. And there simply won't be a market for gas in Aotearoa in a decade to repay the investment.

Gas was already dead - being driven out of the electricity market by wind and solar, and out of the industrial sector by the ETS and the push to reduce emissions. The writedown of supplies last week (if real, and not an industry scam to panic the government) is going to be the nail in the coffin. Methanex, the cornerstone user of the entire industry, won't stick around without supply, and will likely shut down permanently in a year or two (its already more profitable for them to simply onsell its gas to others). And the remaining big industrial users will see price hikes and supply shortages in their future and run for the exits. So, by the time a hypothetical new gas field came online in 2035 or so, it would be a stranded asset, with no-one to buy the gas. Anyone who wants to do it is ether a fool or a scammer.

Unfortunately, Jones seems unable to understand this. Which means we'll have to put up with more of his desperate efforts to "attract business" until we finally rid ourselves of him and his outdated worldview in 2026.