New Plymouth mayor Neil Holdom. Photo: RNZ / Robin Martin
- New Plymouth mayor calls for Labour Party to support oil and gas exploration through to 2050
- Neil Holdom says energy policy affected by constraints of electoral cycle is not working
- Holdom wants to see a bipartisan approach taken to energy policy
- Labour Party says it is happy to take bipartisan approach but restarting oil and gas exploration is not something it could agree to
The mayor of New Plymouth is calling for the Labour Party to commit to supporting oil and gas exploration - both onshore and off - through to 2050.
Neil Holdom, who has a background in the energy industry, says Labour needs to get in behind exploration to help stabilise the faltering energy sector or outline what its strategy is.
"With the issues going on in the energy sector right now it's really clear that we can't have energy policy set by the limit time of electoral cycles.
"I'm really challenging Labour to reach out across the table and work with the coalition to find an energy policy that keeps the lights on and allows the manufacturing sector to keep producing goods to export."
One of New Zealand's biggest gas users Methanex announced it was temporarily shutting its Taranaki methanol plant and selling the gas to power companies Contact Energy and Genesis Energy.
The decision to close until the end of October was expected to have a positive affect on Methanex's books but it was not immediately clear what it meant for its workforce.
"Energy Minister Simeon Brown and Resources Minister Shane Jones have been thrown a hospital pass from the former Labour government with energy rationing for industry seeing both Methanex and our Aluminium Smelter cutting production right now just to keep the lights on while other industries are getting ready to close permanently.
"Electricity spot prices have doubled, we're burning gas and diesel to keep the lights on and businesses across the country are preparing to lay off staff and shut up shop due to soaring energy prices."
Holdom said the former government's decision to "prematurely end oil and gas exploration" had not worked.
"It's clear that is having a massive affect on energy prices right now, but it's also had a chilling affect on investment and their proposal to build Lake Onslow has also chilled investment right across the sector.
"Labour had the view that if they strangled the supply of gas the economy would somehow quickly adapt and ultimately that's not working. The fact we're likely to build an LNG import facility highlights the policy had the wrong objective and has failed."
According to Infometrics data, the oil and gas industry contributed $1.82 billion to the Taranaki economy in 2019, a year after the new offshore exploration ban came into place. At present it contributed about $1.26 billion.
Employment in the sector was hard to estimate because the industry had an extensive supply chain, but a report commissioned by Venture Taranaki in 2023 showed the oil and gas exploration and extraction side of the business had declined by 25 percent since 2018.
Energy costs for New Zealand's health and education sectors were rising by $48 million more a year from October 2024 as gas prices soared, he said.
"Schools and hospitals were collectively paying around $22 million a year for gas. From 1 October 2024 they will have to buy from the open market at around $70 million a year for their 1.8 petajoule requirement.
"Forty-eight million dollars a year pays for a lot of teachers and nurses. That money will come out of our education and health budgets for a failed energy policy which has seen gas replaced by imported coal and diesel generation while emissions go through the roof."
The Labour Party had an opportunity in opposition to send a message to manufacturing workers worried about losing their jobs, he said.
"They need to explain to New Zealanders what their policy is around energy, to put their party political objectives to the side and commit to a science-based policy which puts energy security, affordability and jobs for Kiwis front and centre."
Labour Party leader Chris Hipkins said it was more than happy to work together on bipartisan approaches to energy security.
"We are particularly interested in shared approaches to storage and dry year solutions, but we do have bottom lines and restarting oil and gas exploration is not something we could agree to."
Hipkins said there were several reasons for this.
"All existing production permits can already run their course and were left untouched by our government.
"The reality is that there has not been a commercially viable new find since the early 2000s - putting all our chips on this as a solution is not a way to secure our future."
Hipkins said any new exploration permit would take years to come to production - probably around a decade, so did not offer the short-term solution the government was looking for.
"Our immediate priority is finding ways to progress the gas transition plan and the broader energy strategy that we started in government - we have not received any updates on this and would work with the government on progressing this.
"In government, it was a central priority of ours to offer energy security to schools and hospitals through the state sector decarbonisation programme - the funding for this was scrapped and we would encourage the current government to immediately reinstate this."
Hipkins said Labour would work with the government to partner with industry to move away insecure coal and gas, and to back New Zealand businesses and jobs.