Waikato regional economic profile - Waikato Regional Council

4.3.4 OilWaikato does not produce oil, but it relies on it as a fuel for transport and industry.Although regional data are not available, New Zealand’s oil demand has grown steadilysince the mid 1980s. In 2010, New Zealand consumed 147,000 barrels per day, whichrepresented an increase of 12.2 per cent since 2000. 191 Oil currently provides over halfof New Zealand’s consumer energy demand, and almost 98 per cent of our transportfuel. 192New Zealand’s oil is extracted from 18 fields in the Taranaki region and almost all of itis exported. Imported crude oil is processed at Marsden Point Oil Refinery, whichproduces 75 per cent of the fuel consumed in New Zealand each year.A pipeline from Marsden Point to Auckland carries 40 per cent of total fuel volumes,with the remainder transported by two ships to a network of ten coastal terminals. Thelargest storage facility is at Wiri in South Auckland: 33 per cent of New Zealand’s fuelconsumption passes through each year. 193The National Infrastructure Plan (2011) states that oil infrastructure has been highlyreliable, with no significant supply interruptions to date. However, some storageterminals may be near the end of their useful life and some investment andrationalisation in these areas can be expected over the next ten years. 194 Oil supply, onthe other hand, is altogether less certain.World oil production is dominated by a relatively small number of countries. Major oilexporting countries production volumes are reducing, or at least slowing as large and‘easy’ oil reservoirs are drained, leaving smaller and more difficult fields for production.However the developed world’s demand for energy is unabated. Concurrently, demandfor oil in emerging economies such as China, India and Brazil is rising. Risingeconomies such as China and India have put increasing demands on global oilreserves as they continue to grow. This development and higher standards of living insuch populated and increasingly urbanised countries raises national oil consumptionlevels through increases in demand which ultimately leads to increased pressure on oilreserves. 195According to the International Energy Agency (2010), production from known oil andgas reserves will fall by approximately 40-60 per cent by 2030. The largest oilproducing countries in the world are now beginning to see the pinnacle of oil extractionin their regions. As reserves decline and with demand continuing to rise, prices willescalate as the resource becomes more and more sought after. 196The International Energy Agency anticipated in 2010 that world oil production fromknown sources would go into permanent decline because the production rate from newfields is smaller than the depletion rate. Remaining oil reservoirs of significance lie nowin areas of political instability and difficult to access areas such as polar and offshoreregions. This adds risk to oil supply, increasing the vulnerability of importing countriesand increased costs at the consumer level from raised cost of extraction. 197191BP (2011, p. 9).192Ministry of Economic Development (2010, p. 9).193New Zealand Government (2011g, p. 34).194New Zealand Government (2011g, p. 34).195International Energy Agency (2010, p. 5).196WWF (2011, p. 14).197Krumdieck et al (2011, p. 8).Page 62 Doc #: 2069885