Nice summary, Seeby. However the underlying assumption that we need to support the NZ economy with fossil fuels to the same extent as previously is flawed. Just as Bill Birch used the oil crises of the 1970s & 80s to kick start developments in a new direction we shouldn’t, as every politician knows, let this crisis pass without exploiting it as an opportunity to get off the fossil fuel drug.
Thanks a good summary. What unpins the rational economic arguments? This is where our belief in markets falls short. Markets attempt and are sometimes successful at the narrow goal of efficient allocation of capital. They do not and will never optimise for resilience. JIT supply chains, are economically efficient (based on a narrow boundary) but turn out to be very brittle, Covid reminded us of that. But my hunch would be that virtually no company that experienced a supply chain issue during Covid has done anything different since, all acting “rationally”.
Obviously there will continue to be a need for some fossil fuel use for the future. However, surely the real failure of governments over the past decades has been no effective policy for the transition away from fossil fuel consumption. What to do when we face this failure? Solar, wind etc are effective replacements. Yes, the investment will be required but so will continued investment in fossil fuels in terms of cost of oil, new infrastructure for processing it and so on.
The failure of governments is still continuing. We have an election this year yet the main parties except the Greens hardly mention climate change effects. That MSM also fail to mention this except in vague passing comments is reprehensible.
A great opportunity for Aotearoa to reassess its alliances to the rogue regimes and their allies, that illegally attacked and supported the attacks, on the sovereign state of Iran.
Thanks for this Seeby, I broadly agree with your conclusions re the decommissioning and storage. That there is 600Ml of capacity sitting there unused seems insane, for a country now counting its fuel supply in days.
Where I'd push back is on the framing of what comes next. The SAF/hydrogen/energy precinct vision assumes we're transitioning to something at comparable scale. The physics doesn't support that. The energy density of liquid hydrocarbons, the embedded fossil energy in every step of a "green" supply chain, the sheer scale of what oil does for us: these aren't problems that diversification or low-carbon feedstocks solve at the volumes NZ needs.
I've laid this out in detail here https://energyandresilience.substack.com/p/the-limits-to-the-energy-transition - the short version is that this isn't as simple as a supply chain crisis with a technology solution. It's a structural contraction, and the policy response needs to start from that reality, not from the assumption that we'll find a cleaner substitute at scale.
Storage buys us some resilience as these crises become more common over times. However, the forward operating environment for NZ Inc isn't as simple as switch fuel and keep growing..
One often overlooked aspect of the refinery proposition is the reformer and hydrocracker. I took a look at the 2020 data and the refinery used about 11PJ of pipeline gas. The majority of this would have gone to the reformer to produce hydrogen for the hydrocracker.
Without the hydrocracker the refinery would be a very basic distillation plant with low efficiency and a reduced product range. I don’t think the gas market could supply the refinery 11PJ of gas per annum now given the decline of the Taranaki gas fields.
Hey Seeby, won't there be the same problem if the refinery is still operating? We would be importing crude oil from a source that is blocked by the conflict.
I think SAF and hydrogen pathways would both be mistakes. The future is aerogenic fuels: those made from air and excess electricity that would have otherwise been curtailed.
Marsden Point could be used for making aerogenic fuel if tons of photovoltaics are installed in Northland.
Nice summary, Seeby. However the underlying assumption that we need to support the NZ economy with fossil fuels to the same extent as previously is flawed. Just as Bill Birch used the oil crises of the 1970s & 80s to kick start developments in a new direction we shouldn’t, as every politician knows, let this crisis pass without exploiting it as an opportunity to get off the fossil fuel drug.
Thanks a good summary. What unpins the rational economic arguments? This is where our belief in markets falls short. Markets attempt and are sometimes successful at the narrow goal of efficient allocation of capital. They do not and will never optimise for resilience. JIT supply chains, are economically efficient (based on a narrow boundary) but turn out to be very brittle, Covid reminded us of that. But my hunch would be that virtually no company that experienced a supply chain issue during Covid has done anything different since, all acting “rationally”.
Obviously there will continue to be a need for some fossil fuel use for the future. However, surely the real failure of governments over the past decades has been no effective policy for the transition away from fossil fuel consumption. What to do when we face this failure? Solar, wind etc are effective replacements. Yes, the investment will be required but so will continued investment in fossil fuels in terms of cost of oil, new infrastructure for processing it and so on.
The failure of governments is still continuing. We have an election this year yet the main parties except the Greens hardly mention climate change effects. That MSM also fail to mention this except in vague passing comments is reprehensible.
A great opportunity for Aotearoa to reassess its alliances to the rogue regimes and their allies, that illegally attacked and supported the attacks, on the sovereign state of Iran.
It's a moment of reckoning!
Thanks for this Seeby, I broadly agree with your conclusions re the decommissioning and storage. That there is 600Ml of capacity sitting there unused seems insane, for a country now counting its fuel supply in days.
Where I'd push back is on the framing of what comes next. The SAF/hydrogen/energy precinct vision assumes we're transitioning to something at comparable scale. The physics doesn't support that. The energy density of liquid hydrocarbons, the embedded fossil energy in every step of a "green" supply chain, the sheer scale of what oil does for us: these aren't problems that diversification or low-carbon feedstocks solve at the volumes NZ needs.
I've laid this out in detail here https://energyandresilience.substack.com/p/the-limits-to-the-energy-transition - the short version is that this isn't as simple as a supply chain crisis with a technology solution. It's a structural contraction, and the policy response needs to start from that reality, not from the assumption that we'll find a cleaner substitute at scale.
Storage buys us some resilience as these crises become more common over times. However, the forward operating environment for NZ Inc isn't as simple as switch fuel and keep growing..
Having a refining capability is only a strategic advantage if you have your own oil. Without the oil to process you are no better off.
And you also need a feedstock that provides the necessary balance between petrol, diesel and avgas.
A better use of the monetary resource would be to support an increase in the strategic amount stored and move to reduce dependency on imported oil.
There won’t be any oil to refine there.
Why not? We can import crude can’t we?
Seeby great piece thanks.
One often overlooked aspect of the refinery proposition is the reformer and hydrocracker. I took a look at the 2020 data and the refinery used about 11PJ of pipeline gas. The majority of this would have gone to the reformer to produce hydrogen for the hydrocracker.
Without the hydrocracker the refinery would be a very basic distillation plant with low efficiency and a reduced product range. I don’t think the gas market could supply the refinery 11PJ of gas per annum now given the decline of the Taranaki gas fields.
Hey Seeby, won't there be the same problem if the refinery is still operating? We would be importing crude oil from a source that is blocked by the conflict.
I think SAF and hydrogen pathways would both be mistakes. The future is aerogenic fuels: those made from air and excess electricity that would have otherwise been curtailed.
Marsden Point could be used for making aerogenic fuel if tons of photovoltaics are installed in Northland.